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Private Surgeon General Class Action Defender

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.

Regulating a Healthy Lifestyle? FDA Distributes New Draft Guidance on “General Wellness Products”

Posted in Client Alerts

On January 16, 2015, the Food and Drug Administration (FDA) promulgated a much-anticipated draft guidance concerning the classification and regulation of general wellness products.  The draft guidance is the FDA’s latest attempt to provide some regulatory clarity in the wake of the explosion in popularity of wearable wellness devices and general fitness products.  The draft guidance—which slightly loosens the FDA’s hold on general wellness products—comports with the FDA’s current policy of refocusing its resources on high-risk products and away from products that present low risk to the end-user.

Read our client alert.

Kimberly-Clark Corporation Wins Motion to Dismiss in Flushable Wipes Case

Posted in False Advertising Claims

Judge Phyllis J. Hamilton of the Northern District of California recently granted Kimberly-Clark’s motion to dismiss a case challenging the truthfulness of the defendant’s claims that its wipes are flushable. Davidson v. Kimberly-Clark Corp. et al. Case No. C 14-1783 PJH (N.D. Cal. Dec. 19, 2014). The court dismissed the plaintiff’s claims based on failure to plead Article III standing, and failure to plead her claims with Rule 9(b) specificity. The key takeaway is that plaintiffs must plead specific facts regarding their alleged injury, rather than rely on general allegations regarding the experience of third parties.

In Davidson, the plaintiff challenged the “Flushable” label on four Kimberly-Clark Corp. products: Kleenex® Cottonelle® Fresh Care Flushable Wipes & Cleansing Cloths; Scott Naturals® Flushable Moist Wipes; Huggies® Pull-Ups® Flushable Moist Wipes; and U by Kotex® Refresh flushable wipes. She alleged that the “flushable” representation was false because flushing the wipes “created a substantial risk” that a consumer would clog or damage her household plumbing or municipal sewer systems. The plaintiff brought claims for injunctive relief, restitution, punitive damages, actual damages, and statutory damages under the Consumer Legal Remedies Act (CLRA), the False Advertising Act (FAL), and California’s Unfair Competition Law (UCL) on behalf of herself and other members of a proposed class. Kimberly-Clark Corp. filed a motion to dismiss, which Judge Hamilton granted.

Lack of Article III Standing for Injunctive Relief

The plaintiff’s claim for injunctive relief was dismissed for lack of Article III standing. First, the court found that the plaintiff failed to plead that she personally suffered any injury by using the flushable wipes in her toilet. Instead, she pointed to general allegations that some wipes have caused clogs or blockages in local wastewater systems, and to a few consumer comments on Kimberly-Clark’s website. Second, the court found that the plaintiff failed to plead that there was a risk of future or imminent harm because she alleged that she would not purchase the defendant’s wipes in the future. As such, the court found her injunctive relief claim was based on a hypothetical injury insufficient to satisfy Article III standing.

Rule 9(b): Plaintiff Must Allege Facts Showing Why the Claim Is False

The plaintiff’s remaining claims under the CLRA, FAL and UCL were dismissed under Rule 9(b) for lack of specificity. The court found that the plaintiff had not alleged facts showing that the products were in fact falsely advertised as “flushable.” The court stated:

“It is not enough for [plaintiff] to simply claim that [the “flushable” representation] is false—she must allege facts showing why it is false.”

The court further found that the plaintiff’s citation to articles on the Internet discussing problems with clogs and blockages at wastewater treatment facilities, and comments by consumers posted on Kimberly-Clark’s website, were insufficient to meet Rule 9(b) requirements. The articles discussing the wastewater treatment issues suggested that other causes may have been responsible for the clogging, such as people flushing “non-flushable” materials down the toilet. As for the comments by consumers on the defendant’s website, those were vague and lacking in detail, and also appeared to involve damage to septic tanks, not municipal sewer systems.

Conclusion

Judge Hamilton’s order is a victory for companies defending against false advertising claims, as it requires plaintiffs to plead specific facts showing why a representation is false, rather than just claiming that it is false. In particular, relying on general allegations, such as articles on the Internet about third-party experiences, is not sufficient.

Judge Koh Awards Double Victory in “Natural” Labeling Class Action Against Dole, Granting Decertification and Summary Judgment

Posted in Misbranding

As the food “misbranding” litigation continues to fill courts’ dockets, Judge Lucy H. Koh recently put an end to the two-year battle against Dole’s packaged fruit labeling in the Northern District of California. Dole (represented by a team of MoFo litigators led by William Stern) was first successful in decertifying the Rule 23(b)(3) “damages” class, and then won its motion for summary judgment. The case is called Brazil v. Dole Packaged Foods, LLC, No. 12-cv-01831-LHK (N.D. Cal.).

Plaintiff sued Dole in 2012, claiming the label statement “All Natural Fruit” was false and misleading because Dole’s products contained citric acid and ascorbic acid. In May 2014, Judge Koh granted certification of a Rule 23(b)(3) “damages” class of California consumers, as well as a Rule 23(b)(2) “injunctive relief” class of nationwide consumers. The case was scheduled for trial in January 2015.

On November 6, 2014, however, the Court granted Dole’s motion to decertify the damages class, finding that plaintiff’s expert could not calculate the price premium attributable to the statement “All Natural Fruit” through his regression damages model. The model failed Comcast Corp. v. Behrend’s requirement that it be consistent with the plaintiff’s theory of liability. In this case, that meant that plaintiff’s model “must measure only those damages attributable to [Dole’s conduct].” The court found that the model failed to control other variables affecting price (such as advertising and prices of competing products), and plaintiff’s expert failed to corroborate many of the assumptions he made about non-Dole products’ labels. For example:

“if the model is unsure whether the non-Dole products actually made an “All Natural” labeling claim, then how can the Court know whether the price premium the model generates is based on Dole’s labeling claim rather than on some other factor? Put simply, it cannot.”

Then, on December 8, 2014, the court granted Dole’s summary judgment motion, finding that plaintiff had no evidence that a reasonable consumer would be misled by the label. The court found that plaintiff needed some form of extrinsic evidence of deception; the named plaintiff’s testimony was not enough. The court also adopted Dole’s interpretation of the FDA’s “natural” policy, requiring the standard to be based on what is “reasonably to be expected” to be found in food products. Again, plaintiff had no evidence. The court concluded:

“Where, as here, a plaintiff offers one isolated example of deception—i.e., [plaintiff’s]—summary judgment must be granted.”

The December 8 ruling is notable because it is the first “merits” ruling in the country to decide what the FDA’s “natural” policy means. “Natural” class actions have been a favorite of the plaintiffs’ bar over the past few years, likely because the FDA declined to define the term, instead offering an ambiguous informal “policy.” Judge Koh has made clear that there are no “natural” or “unnatural” ingredients—it depends on what is “reasonably to be expected” to be found in the food product.

Both rulings in Brazil present significant hurdles for plaintiffs in the many other pending “misbranding” class actions. Plaintiffs must present a damages model that can isolate a price premium attributable to the challenged label claim, and they must provide the court with extrinsic evidence that reasonable consumers would be deceived. Neither is a simple task. While these cases are easy to file, and often easy to get past a motion to dismiss, they are turning out to be quite difficult to prove. If other judges follow Judge Koh, plaintiffs’ attorneys may soon start looking for a new class action trend.