Monday, July 09, 2012

Claim that 5-hour Energy misleads about source of boost proceeds

Podobedov v. Living Essentials, LLC, 2012 WL 2513489 (C.D. Cal.)
Plaintiffs, citizens of NY and California, sued on behalf of a class of buyers of 5-hour Energy energy shots—7 million sold per week, with a marketing budget of $90 million per year.  Living Essentials touts 5-hour Energy as effective in increasing energy, alertness, and focus; ads attribute this to the B-vitamins, amino acids, and enzymes present in the drink: “5-hour ENERGY®'s blend of vitamins and amino acids gives you hours of smooth energy;” “5-hour ENERGY® doesn't jack you up with sugar, caffeine and herbal stimulants. Instead, it's packed with stuff that's good for you—B-vitamins, amino acids and enzymes.” Plaintiffs alleged that these claims were misleading and false, because the only ingredient that has any effect is the concentrated dose of caffeine in the drink.  Plaintiffs further alleged that the name itself was misleading, since the drink doesn’t provide 5 hours of energy according to the best scientific evidence.  Further, plaintiffs alleged that evidence of deceptive intent came from defendants’ previous experience misleadingly marketing a line of products under the Chaser name, including “creating phony clinical studies, making false representations in the product name, and attributing the effects of the primary ingredient to lesser ineffective ingredients.”  They also alleged that an individual defendant, Bhargava, controlled the defendant companies and extracted all the profits, quoting him as saying that he wanted “to distribute as much cash out of the Company as possible to keep it judgment proof.”
California claims (including breach of warranty): Defendants argued that plaintiffs didn’t identify misrepresentations likely to deceive a reasonable consumer or plead reliance.  The court disagreed.  Among other things, the complaint alleged that specific statements were false and misleading, including the ones above and “A powerful blend of B Vitamins for energy,” and “5–hour ENERGY® drinks provides [sic] a boost of energy and mental alertness that last for hours-with no crash. That's because 5–hour ENERGY is packed with B–Vitamins, enzymes and amino acids. It contains zero sugar, zero net carbs, and just enough caffeine to get the ball rolling.”  These statements could reasonably be taken to suggest that the energy boost comes from non-caffeine ingredients (all but the last could even suggest that the drink didn’t contain caffeine), and were actionable.  Likewise, the complaint pled that plaintiffs relied on these misrepresentations.  The same reasoning preserved the NY claims.
The Magnuson-Moss Warranty Act claim was dismissed since the act applies “only to warranties which pertain to consumer products actually costing the consumer more than $5,” and the complaint pled that the drink sold for about $2.99 per shot.  Plaintiffs could replead with allegations, for which they had evidence, that the product was sold in multipacks costing more than $5.
The court also denied the motion to strike the allegations about Chaser.

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