Defendant WFC makes milk products fortified with algae-based DHA Omega–3 (“DHA”) under the brand names of “Horizon Organic” and “Silk.” The cartons say “DHA Omega–3 Supports Brain Health.” Plaintiffs from six states sued and their putative class actions were consolidated into one multidistrict litigation.
Initially, the court noted a dispute about whether Rule 9(b) applied but, like so many courts that find for plaintiffs, decided that even if it did apply it had been satisfied, so the question need not be resolved.
WFC argued that all the claims failed for failure to allege falsity/misleadingness or measurable injury or damage. The relevant states are Arizona, Arkansas, California, Florida, Illinois, and Missouri, and the court went in alphabetical order.
Arizona: Plaintiffs stated a claim under Arizona’s Consumer Fraud Act. They alleged that WFC claimed that consuming its product would support brain health, but that this was not true. Not only did WFC allegedly lack competent and reliable scientific evidence to support its claims, but clinical studies had found no causal link between DHA algal oil supplementation and brain health. Plaintiffs alleged that they relied on WFC’s claims in purchasing the milk. They sufficiently identified the claims, where the claims were made (on the products—with pictures!—on WFC’s websites, and in ads), the period during which they purchased the products, and why the claims were false. They alleged injury in that they paid a significant price premium over comparable products, including WFC’s other organic and soy milk products without the brain health representations: on average, half a gallon of Horizon Organic Milk plus DHA retails at $0.20 to $0.50 more than Horizon Organic Milk without DHA, while the soy milk ranges from $0.20 to $0.70 more. The results were similar under the other state laws.
Plaintiffs’ unjust enrichment claims also survived for Arizona, Arkansas, and Florida. The results on the express warranty claims were more mixed. In Arizona, privity is required and wasn’t alleged, though there’s an exception when a manufacturer’s warranty forms a separate, enforceable contract between manufacturer and buyer. The complaint wasn’t very precise, but plaintiffs did allege that they had a contract with WFC and that the brain health representation was part of the basis of the bargain, which they accepted by buying the milk, so the motion to dismiss was denied. In Arkansas, reliance is an essential element of an express warranty claim, and it was sufficiently alleged under that state’s law. The California plaintiff, though, failed to allege facts demonstrating that he gave pre-suit notice of the alleged breach to WFC, which is a required element. The motion to dismiss was granted with leave to amend.
Turning in the general direction of the merits, WFC argued that plaintiffs were proceeding on a barred “lack of substantiation” theory. Such claims aren’t cognizable under some states’ consumer fraud statutes. (The court noted that Arizona, Arkansas, and Florida hadn’t excluded lack of substantiation claims, though the other relevant states had precedent on point. WFC argued that the fact that the FTCA lacks a private enforcement provision meant that no such claims under any state law were cognizable, but the court found that a non sequitur: plaintiffs weren’t suing under the FTCA.) Regardless, plaintiffs alleged that WFC’s DHA-fortified products don’t support brain health; they alleged falsity, not just lack of substantiation, and cited studies finding no link between DHA algal oil supplementation and brain health.
WFC also argued that the state statutes’ safe harbor provisions for representations permitted by a relevant regulator barred the claims. WFC pointed to letters it received from the FDA and the FTC. In 2011, WFC responded to the FDA’s “concern regarding the adequacy of [WFC’s] evidence ‘to suggest that there is a relationship between DHA and brain and eye health in the targeted population,’” citing various studies. In 2012, the FDA responded, stating that it had “performed a cursory review of the information [WFC] has submitted,” and that “[b]ased on the information [WFC has] provided, [the FDA] would not object at this time to the DHA claims regarding brain and eye health.” Likewise, in 2011, the FTC sent a letter concerning “possible violations” of the FTCA, focusing on whether WFC had adequate substantiation for its brain claims. The FTC “determined not to recommend enforcement action at [that] time” based on WFC’s “voluntary action to modify all advertising to ensure compliance with the FTC Act.” It cautioned that “[t]his action is not to be construed as a determination that a violation of the law did not occur.”
The letters were insufficient to trigger the safe harbor provisions, which apply only to conduct approved or specifically authorized by law. Neither the FDA nor the FTC approved WFC’s labeling or ads or specifically authorized the brain health representations. The FDA’s decision not to object “at this time” was not approval. In any event, “statements made by the FDA in a letter to a corporation about its products are insufficient to accord those statements the weight of federal law to invoke the safe harbor provisions of the consumer fraud statutes.” The same with the FTC letter. A decision not to bring an enforcement action isn’t approval or agency action, but rather inaction.
Nor did the primary jurisdiction doctrine justify dismissing the claims. WFC argued that whether a manufacturer could make brain health claims, and what substantiation is required to do so, was within the FDA’s jurisdiction and its realm of expertise. But the primary jurisdiction doctrine isn’t designed to secure expert advice from agencies every time there’s an issue conceivably within the agency’s jurisdiction. It’s only for resolution of issues of first impression or particularly complicated issues Congress committed to the relevant agency. Whether the brain health representations were false or misleading, and whether consumers relied on them, weren’t technical areas in which FDA expertise was greater; courts judge misleadingness every day.
In Chavez v. Nestle USA, Inc., 2011 WL 2150128 (C.D. Cal. May 19, 2011), aff’d in part & rev’d in part, 511 F. App’x 606, 607 (9th Cir. 2013), plaintiffs challenged similar DHA brain claims. The Ninth Circuit reversed the dismissal of those claims based on the primary jurisdiction doctrine, noting that the claims didn’t necessarily trigger the doctrine and that the FDA had shown “virtually no interest” in regulating DHA in this context. The cases on which WFC relied were distinguishable—e.g., they challenged whether a product could be marketed as safe, which requires the FDA’s expertise, or they involved impliedly false claims rather than literally false statements, or they involved ingredients that had been actively and specifically regulated for decades.
WFC’s motion to strike class allegations was also premature; class certification is generally not addressed on a motion to dismiss.