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Private Surgeon General Class Action Defender

Ninth Circuit Reverses Class Certification In Joint Supplement Case Because Not All Class Members Saw Misrepresentation

Posted in Class Certification, False Advertising Claims

The Ninth Circuit has held that a district court abused its discretion in certifying a class based on allegedly false health claims because not all class members saw the advertising. The Ninth Circuit said that the trial court thus erred in ruling that the predominance requirement was satisfied: “[I]n order for the issue to predominate, it must at least be common and there must be cohesion among the class members. It is upon those rocks that the district court’s certification founders.” Cabral v. Supple LLC, No. 13-55943 (9th Cir. June 23, 2015) (citations omitted).

The district court held that the common issue that predominated was whether the defendant, Supple LLC, had misrepresented to the class members that its dietary supplement, which contained glucosamine hydrochloride and chondroitin sulfate, was “‘clinically proven effective in treating joint pain.’” But that claim was not made in all the advertising for the product. The Ninth Circuit noted that while “some deviations from precise wording . . . might not be fatal to class certification, advertisements that did not declare [the supplement] to be ‘clinically proven effective in treating joint pain’ are a far cry from advertisements that did.”

Accordingly, the trial court erred in certifying the class: “In a case of this nature, one based upon alleged misrepresentations in advertising and the like, it is critical that the misrepresentation in question be made to all of the class members.” The Ninth Circuit cited both federal and California state court decisions in support of this holding. Cabral, citing Mazza v. Am. Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012); Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020 (9th Cir. 2011); Davis-Miller v. Auto. Club of S. Cal., 201 Cal. App. 4th 106, 124-25 (2011) (CLRA and UCL); Fairbanks v. Farmers New World Life Ins. Co., 197 Cal. App. 4th 544, 562 (2011) (UCL); Pfizer Inc. v. Super. Ct., 182 Cal. App. 4th 622, 629-30 & n.4, 631-32 (2010) (UCL and FAL), and Cohen v. DirecTV, Inc., 178 Cal. App. 4th 966, 980-81 (2009) (UCL and CLRA).

Skinnygirl Margarita Class Rejected Again: Proof Fell Below Third Circuit’s High Bar for Ascertainability

Posted in Class Certification, False Advertising Claims, Misbranding

A New Jersey federal court ruled that plaintiffs once again failed to demonstrate the ascertainability of a class of purchasers seeking to challenge “all natural” claims by the makers of Skinnygirl Margarita. Stewart v. Beam Global Spirits & Wine, Inc., No. 11-5149 (D.N.J. June 8, 2015). The court held that the Third Circuit’s high bar for demonstrating ascertainability was not lowered by its most recent decision on the issue, Byrd v. Aaron’s Inc., 784 F.3d 154 (3d Cir. 2015). The Stewart decision is notable for its analysis and rejection of plaintiffs’ effort to rely on a class action administrator’s declaration to establish a “reliable and administratively feasible” methodology for ascertaining class membership.

Ascertainability Requirements

The court noted that there are two requirements for ascertainability: (1) the class must be defined with reference to objective criteria, and (2) there must be a reliable and feasible mechanism for determining whether putative class members fall within the class definition. The court concluded that, because putative class members were simply defined as purchasers of Skinnygirl Margaritas between specified dates, the first requirement was satisfied; the second, however, was not.

The court reiterated the Third Circuit’s guiding principle, first articulated in Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d Cir. 2013), that ascertainability may not be based on the purported class members’ “say so;” a methodology that depends primarily on class members’ affidavits does not give defendants a “suitable and fair” basis for challenging class membership. In Stewart, the defendants did not sell directly to consumers and did not have records that would permit identification of class members. Plaintiffs attempted to satisfy the requirement of a reliable and feasible methodology for identifying class members by submitting the declaration of Steven Weisbrot, the executive vice president of Angeion Group, LLC, a class action administration firm, detailing the methodology proposed to be applied. The court addressed the proposed methodology in detail, finding it lacking in numerous respects. Read More

USDA to Verify Non-GMO Claims

Posted in GMO

There is now a U.S. Department of Agriculture label for non-GMO claims. In a recent memo, Secretary of Agriculture Tom Vilsack announced that the USDA would verify non-GMO claims through the Agricultural Marketing Service’s (AMS) Process Verified Program. The memo states that “a leading global company asked AMS to help verify that the corn and soybeans it uses in its products are not genetically engineered so that the company could label the products as such.”

Though the Process Verified Program is not new, this is the first non-GMO claim verified through the USDA. The memo states that “other companies are already lining up to take advantage of this service.” The USDA label is likely to provide more legal protection for manufacturers because, until now, there has been no government-approved “non-GMO standard.”

Read our previous posts on GMOs here.

POM Wonderful Inc. v. FTC: Lessons Learned

Posted in Misbranding

On January 30, 2015, the United States Court of Appeals for the District of Columbia issued an opinion in a case regarding the Federal Trade Commission’s (FTC) challenge to the advertisements of POM Wonderful’s (“POM”) pomegranate-based products. POM Wonderful Inc. v. FTC, Case No. 13-1060 (D.C. Cir. Jan. 30, 2015). POM produces, markets, and sells a variety of pomegranate-based products. The case stems from POM’s advertisements from 2003 to 2010 that described medical studies showing that daily consumption of POM’s products could treat, prevent, or reduce the risk of certain ailments, such as heart disease, prostate cancer, and erectile dysfunction.

In 2010, the FTC filed an administrative complaint charging that POM and related parties had violated the Federal Trade Commission Act by making false, misleading, and unsubstantiated representations. After significant administrative proceedings, the FTC found that POM and the associated parties were liable for violating the FTC Act and ordered them to cease and desist from making misleading and inadequately supported claims about the health benefits of POM’s products. These parties were also barred from running future ads asserting that their products treated or prevented any disease unless supported by at least two randomized, controlled human clinical trials that demonstrated statistically significant results.

POM and the associated parties petitioned for review of the FTC’s order in the D.C. Circuit and argued that the order ran afoul of the FTC Act, the Administrative Procedure Act, and the First Amendment. The opinion was predominately a victory for the FTC, as the D.C. Circuit upheld the FTC’s conclusion that many of POM’s ads made misleading or false claims and affirmed the FTC’s remedial order insofar as it required POM’s health claims to be supported by at least one randomized, controlled human clinical trial study. Nonetheless, there are several key takeaways for defendants in misbranding lawsuits. Read More

Plaintiff’s Mislabeling Claims Against Honest Tea Survive Motion to Dismiss

Posted in False Advertising Claims, Misbranding, Preemption

On January 5, 2015 Judge Kimberly Mueller of the Eastern District of California denied Honest Tea’s motion to dismiss a case involving accusations that the company misled consumers about the antioxidant content of one of its teas.  Salazar v. Honest Tea, No. 2:13-CV-02318 (E.D. Cal. Jan. 5, 2015).  The plaintiff claimed that Honest Tea has made deceptive “antioxidant nutrient content claims” on Honey Green Tea’s label since 2008.  At different points in time, the label stated that the antioxidant, epigallocatechin gallate (EGCG), “is our favorite flavonoid, one of many tea antioxidants”; “EGCG is a key green tea antioxidant”; and “EGCG is the most potent antioxidant around, and our organic green tea is packed with it.”

This setback for Honest Tea comes only six months after it won dismissal of the plaintiff’s first complaint on preemption grounds.  This time around, the Court rejected Honest Tea’s arguments, finding that the plaintiff stated a plausible claim of FDA regulatory violations, properly pled reliance and deception even though the label statements were true, and could sue over unpurchased products with different labels and different amounts of the ingredient at issue.

Plausible Claim for Violation of FDA Regulations

In its motion to dismiss, Honest Tea argued that its labeling statements did not violate the FDA regulation at issue (21 C.F.R. § 101.54(g)) because those statements do not characterize the level of antioxidants in Honey Green Tea and instead simply inform consumers that EGCG is present in the tea.  The court disagreed, finding that the statements “[ECGC] is our favorite flavonoid, one of many tea antioxidants,” and “EGCG is a key green tea antioxidant” suggest a certain level of the nutrient despite the plain meaning of the phrases.

Plaintiff Properly Pled Reliance and Deception

Honest Tea also argued that the plaintiff did not plead reliance or deception because she did not dispute the truthfulness of Honest Tea’s EGCG statements.  Without establishing that she believed the label statements to be false, Honest Tea argued, the plaintiff could not claim to have been deceived and injured by them.  The court disagreed once again.  What mattered, the court ruled, was that:

“Ms. Salazar would not have purchased Honey Green Tea had she known that the label did not contain only truthful information, or that the antioxidant nutrient content claims on the labels were unauthorized and inaccurate. These allegations are sufficient to establish an economic injury-in-fact.”

Therefore, it was immaterial whether the plaintiff thought the label statements were false.  It was enough that the plaintiff did not know the label was unlawful.  Reliance could be based on the legality of the statement, rather than its content.

Article III Standing Met

Finally, Honest Tea argued that the plaintiff lacked standing because she did not purchase the 2008 version of the product with a different label.  The court found that the various products were “substantially similar” since the plaintiff was challenging the same Honey Green Tea that was in circulation from 2008 through 2013, and all of the variations on the label related to the antioxidant content in the product.  Thus, differences between the labels, and even differences between the amounts of antioxidants in the products, were not of concern to the court.