Tuesday, July 14, 2015

False establishment claims not actionable under consumer protection law

Aloudi v. Intramedic Research Group, LLC, 2015 WL 4148381, No. 15-cv-00882 (N.D. Cal. Jul. 9, 2015)
Aloudi brought the usual California/warranty claims against IRG for its claims about its JavaSLIM product, a “green coffee bean extract weight loss formula.” The label says that JavaSLIM is “Clinically Proven” to cause “significant reduction in actual body mass index (BMI).” Aloudi alleged that the only “active” ingredients in the Product “are chlorogenic acids and caffeine, neither of which are effective treatments for weight loss,” but that IRG advertised that the product “helps consumers achieve ‘safe, effective, RAPID weight loss,” and “also cited and continues to cite a ‘clinical trial’ purportedly proving that [the Product’s] ingredients provide a ‘significant reduction in both body weight and all important Body Mass Index (BMI) in just a few short weeks.’”
Aloudi alleged that “there are no clinical trials or scientific studies showing that the Product or its ingredients are safe and effective for weight loss or that the Product or its ingredients cause a significant reduction in body weight and BMI.”  IRG’s failure to provide “adequate ‘substantiation’ that these statements are truthful and not misleading” allegedly violated the Dietary Supplement Health Education Act of 1994 (“DSHEA”) and therefore was unlawful under the UCL. Plus, Aloudi alleged falsity under the UCL because “chlorogenic acids have never been shown to be an effective treatment for weight control.”  Further, he alleged, the FDA determined that “there is ‘inadequate data to establish the general recognition of the safety and effectiveness’ of caffeine for the specified use of ‘weight control,’” and “there is a scientific consensus that ‘magic pills’ containing caffeine and green coffee extract, such as [the Product], do not and cannot provide significant reductions in weight loss alone.”
The court kicked out the lack of substantiation allegations because “[i]t is well settled that private litigants may not bring claims on the basis of a lack of substantiation.” Aloudi argued that IRG’s claims were establishment claims, which could thus be falsified by showing that the evidence didn’t support them.
First, the court ruled, that didn’t support the UCL “unlawful” claim, based entirely on IRG’s lack of substantiation as required by DSHEA.  RT: But that seems mistaken.  True, the UCL in general doesn’t allow consumers to bring lack of substantiation claims as falsity claims—but if the underlying law does require substantiation, the UCL is designed to create private plaintiff authority to act under the “unlawful” prong.  There might be preemption issues, but there’s a lot of law on how to manage that.
Second, Aloudi’s argument relied on Lanham Act precedent, and California law didn’t make that “establishment claim” distinction.  (It’s notable that courts usually analyze the Lanham Act and state law in pari materia when competitors are suing; why they should do that when consumers are suing, especially after Lexmark, is less clear.  Compare also the 4th Circuit’s In re GNC case, which imports explicit/implicit falsity with absolutely no analysis or argument.  This is the court’s best reason, it seems to me, but weakened by its reliance on the idea that there’s just no precedent out there supporting Aloudi’s argument.  It would be better to think about the purposes of state consumer protection laws and whether they’re well served by some kind of establishment claim doctrine.)
The court concluded that “[t]he California legislature delegated the authority to demand substantiation for advertising claims to prosecuting authorities alone.” Thus, “as a matter of law, Plaintiffs cannot bring consumer protection claims solely on the basis of a lack of substantiation.” The court therefore disagreed with McCrary v. Elations Co., No. 13–cv–00242, 2013 WL 6403073 (C.D.Cal. July 12, 2013) (“Since Defendant’s advertising expressly states that it has clinical proof to support [its product’s] effectiveness, Plaintiff plausibly alleges falsity when he contends that there is an absence of such proof.”).
RT: McCrary was right.  “Substantiation” is when the regulator says, “you say your product causes weight loss. Please prove it.”  But the advertiser here didn’t make that claim.  It made a different, stronger claim: that it’s clinically proven to cause weight loss.  If you show that the product is not clinically proven to cause weight loss, you’ve falsified—proved false—the claim the advertiser actually made, even if you’ve also incidentally shown that a different claim (this product causes weight loss) is unsubstantiated.  The instant ruling is a license to deceive, especially in the supplement space where there’s too much going on for regulators to go after everyone and too many competitors for a Lanham Act suit to be worthwhile for any given competitor.  This result is particularly bad because claims to have empirical proof are more powerful than straight-up claims.  Nor would a ruling the other way eviscerate the no-substantiation rule: it would still bar a consumer plaintiff from prevailing when the advertising claim does not invoke empirical proof and the plaintiff only attacks the reliability of the studies allegedly behind the claim.  (Note the separate issue: there are two ways to attack the studies.  Either they’re just not reliable to prove the claim made, which is a substantiation argument, or they actually show the opposite (that the product doesn’t work), which is a falsity argument. Aloudi’s first set of allegations goes to the first line of attack, but there might be the second lurking in them.)
Then the court made short work of the falsity allegations.  The allegation that there was a “scientific consensus that ‘magic pills’ containing caffeine and green coffee extract, such as [the Product], do not and cannot provide significant reductions in weight loss alone” was purely conclusory, and the remaining facts alleged were insufficient to show falsity, based on general statements by politicians and the FDA that weren’t tied to this particular product or these specific representations. Nor was Aloudi’s anecdotal experience that JavaSLIM didn’t work sufficient.
Finally, Aloudi failed to identify specific actionable omissions.
The warranty claims failed for the same reasons.

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