False advertising about sperm sales is legal in Georgia, court rules

Zelt v. Xytex Corp., — Fed.Appx. —-, 2019 WL 423052
(11th Cir. Feb. 4, 2019)
Reproductive rights advocates often make the point that legal
interventions to prioritize fetal life over all other considerations have
collateral consequences far beyond abortion. 
As the court here decides, those consequences include immunizing a sperm
bank from the consequences of its fraud.
The Zelts sued Xytex, a for-profit sperm bank, for
misrepresenting the characteristics of the sperm donor whose sperm they used to
fertilize their eggs, resulting in two children.
On its website, Xytex promised it
would carefully screen men applying to donate sperm using interviews and a
physical exam to ensure their suitability to become a donor. Its website also stated
that Xytex would conduct physical exams every six months to confirm donors’
“continued good health,” update online donor profiles, and convey new
information learned about donors to clients who used sperm purchased from Xytex
so that clients could “make the most informed decision possible when selecting
a donor.”
Xytex advertised, and told the Zelts, that Donor #9623 had
bachelor’s and master’s degrees and was working on a Ph.D., had an IQ of 160,
had a “nearly perfect” medical and mental health history, had no criminal
background, was one of Xytex’s most sought-after donors, and that his sperm
were rarely available. In fact, before the Zelts’ purchases, Donor # 9263 had:
been diagnosed with psychotic
schizophrenia, narcissistic personality disorder, a drug-induced psychotic
disorder, and significant grandiose delusions; been hospitalized repeatedly for
mental health reasons; received Social Security Disability Insurance due to a
finding that he was disabled; and been arrested for burglary, trespassing, driving
under the influence, and disorderly conduct. He has no master’s degree, was
never enrolled in a Ph.D. program, and had dropped out of school, only earning
a college degree years after the Zelts purchased his sperm and used it to
inseminate Rene Zelt. He also has a felony conviction, having pled guilty to
residential burglary.
He lied on his written questionnaire about his educational
achievements and mental health background. He told a Xytex employee that he
thought his IQ was about 130, but a Xytex employee suggested to him that he had
an IQ of 160 and encouraged Aggeles to lie about his education. As alleged,
Xytex could easily have disconfirmed his lies with a quick Google search. His
physical exam was minimal and Xytex did nothing to verify anything it said
about him. “It never requested Aggeles’s medical records or asked him to sign a
release so it could obtain his medical records, never asked about his mental
health history or spoke to any of his mental health providers, never asked
about his criminal history, never requested any proof of his identification, and
never attempted to confirm his educational history.”
The Zelts alleged that the donor’s illnesses were genetic
and heriditary and that they suffered physical and emotional pain and suffering
as a result of learning the truth about their sperm donor. They spent money to
evaluate their children for mental illnesses and expect to do so in the future.
The district court granted Xytex’s motion to dismiss on the
basis that the claims boil down to a wrongful birth claim, which Georgia law
does not recognize. The court of appeals affirmed on related grounds. The
essence of the fraud is that Xytex made misrepresentations about Donor #9623
that Xytex knew would induce the Zelts to purchase his sperm. “Had they known
the truth about Donor #9623’s background, the Zelts would have acquired sperm
from a different donor, one who had characteristics they found desirable.”  However, they suffered no legally cognizable
injury, because Georgia does not allow courts to assess the difference in the
value of a child’s life with one sperm donor and the value of a child’s life
with a different donor.  [Which … doesn’t
seem to be the damages being pled, even if you kick out the emotional damages
as a consequence.]
Georgia doesn’t recognize wrongful birth claims, though it
does recognize a limited claim for wrongful conception where a botched
procedure fails to prevent pregnancy; the damages recoverable are for the resulting
medical procedures and their consequences (lost wages, loss of consortium) but
not for costs of child-rearing because parents aren’t injured by having a
child.  The Georgia Supreme Court was
unwilling to declare that “life, even life with severe impairments, may ever
amount to a legal injury.” Where a plaintiff wanted the pregnancy, but not an
impaired child, “Georgia courts will not compare the value of an impaired
child’s life to the child’s nonexistence.”
Here, the comparison was not to the nonexistence of the
child but to the child’s existence with another donor.  This wasn’t a wrongful birth action.  However, even though “[a]ssigning a numeric
value to a person’s existence with impairments … is not the same as assigning a
numeric value to the impairments only,” the task was close enough to prevent
any recovery here.  Though the court was “sympathetic”
to the Zelts’ “pain and fear over what they and their children stand to suffer,”
they suffered no legally compensable injury because their children may be
different from what they wanted. They couldn’t get damages for costs from the pregnancies,
because they wanted the pregnancies and those costs wouldn’t differ with a
different donor.
“Monetizing the detrimental value of these characteristics
is a task ‘more properly suited to legislative action[,] as the legislature
offers a forum wherein all of the issues, policy considerations and long range
consequences involved … can be thoroughly and openly debated and ultimately
decided.’” [Though one could argue that the legislature already did that, by
enacting a false advertising law that does not exclude for-profit reproductive
health care businesses like Xytex.] 
Thus, all the claims alleging objectionable inheritance from the donor
had to be dismissed, including the false advertising claims and claims under
the Georgia Fair Business Practices Act for injunctive relief, for want of
cognizable injury. 
It seems to me that the sperm were worthless to them; at the
very least they should get an award for the value of the sperm as warranted and
the actual value of the sperm, which would not require putting any number on
the value of the resulting children. But the court of appeals disagreed—their unjust
enrichment/disgorgement claims were barred because calling Xytex’s enrichment
“unjust” “necessarily implies that the Zelts’ children somehow are worth less
than they would have been worth had they been conceived using a different
donor’s sperm.”  But: if I fed my kids
cereal that falsely promised to improve their immunities and intellects, I
would value the resulting kids no less, but I still would have been defrauded
of the extra amount I paid for the cereal. 
You can put a value on the inputs without having to put a value on the
Xytex’s conduct was “[r]eckless, reprehensible, and
repugnant,” but perfectly legal.  

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