Friday, April 22, 2016

Cal. court sensibly rejects Fourth Circuit's GNC rule on consumer protection claims

Mullins v. Premier Nutrition Corp., 2016 WL 1534784, No. 13-cv-01271 (N.D. Cal. Apr. 15, 2016)

This case revisits an issue with which courts have struggled: when consumer plaintiffs plead that a product advertised as clinically proven isn’t, is that a mere “lack of substantiation” claim unavailable to private parties?  I think the answer is no—plaintiffs are pleading that they can show that a specific claim made by the defendant is false—and so does the court here.  Along the way, the court also deals with the hot mess that is the Fourth Circuit’s In re GNC holding, drawing its teeth in a way that should benefit future California plaintiffs, at least.

Plaintiff Kathie Sonner (a replacement plaintiff) argued that Premier sold “what amounts to worthless snake oil”: Joint Juice, a liquid dietary supplement containing glucosamine and chondroitin.  The ads claim that the product will “help keep joints flexible and lubricated.” The bottles used the slogan, “A bottle a day keeps your joints in play,” and also used the logo and contact information of the Arthritis Foundation.
Example of happy joints ad

Joe Montana endorsement

Premier chose to target consumers who suffered from joint pain and arthritis.  Its ads suggested pain relief by showing exclamations of joy by people performing ordinary activities that can be painful for people with joint pain.  Premier bid on AdWords for, among others, “arthritis treatments,” “how to stop arthritis,” “supplement for arthritis,” and “arthritis cures,” and bought ad space in Arthritis Today, the Arthritis Foundation’s magazine. Premier research and internal customer data generally shows that more than 90% of Joint Juice users suffer joint pain and are interested in pain relief.
By contrast, Premier had Hal Poret conduct a survey for this litigation, demonstrating why litigation surveys are not particularly reliable.  200 respondents had bought Joint Juice before, and 200 had purchased a product containing glucosamine, but not Joint Juice. The survey began with an open-ended question: “[T]ell us why you decided to purchase Joint Juice,” with spaces for up to twenty possible responses and an “I don’t know” option.
Then Poret asked respondents to select from a list of choices the “reasons or factors that influenced your decision to purchase Joint Juice” (or the other product).  Choices included: “I had generally heard about or read about the benefits of glucosamine”; “Statements or information I read on the Joint Juice bottle or packaging”; “The product is vegetarian” ‘ “Price/less expensive”; “Liked the taste”; “Endorsed by Joe Montana”; “Orange packaging[.]”  There were two false “control choices” (1) “Statements or information I read/heard in promotions on a home shopping channel or website, such as HSN or QVC”; and (2) “Endorsed on the Dr. Oz show or website.”  (Note that “source” statements like this are incredibly unreliable, because people’s memory for source is much weaker than their memory for content.  Getting these “wrong” wouldn’t serve as a good control for beliefs about product characteristics.)
You may notice that Poret didn’t ask whether consumers believed that Joint Juice would relieve pain or other arthritis symptoms.  Instead, he asked respondents who referred to the packaging to identify the specific statements that made an impression.  He concluded that consumers purchase Joint Juice for myriad reasons, and only 5.5% chose to buy the product because of the statements on the label. Poret concluded that “roughly 75% of respondents answered that they were not influenced by statements on the package and roughly 75% answered that they were not influenced by statements in advertising.” Instead, recommendations from friends and family members had primary weight.  Which of course explains the detailed marketing studies Premier commissioned about how to target its marketing.
Sonner’s expert disagreed, concluding that, despite serious design flaws and coding errors, the survey confirmed that most Joint Juice users bought with the hope that it will provide joint health benefits or relieve joint pain. As an example of a coding problem, Poret did not treat as motivated by joint health concerns those who tried the product to see if “it would work.” Sonner’s expert’s coding indicated that 91% of those surveyed identified joint health and pain concerns influenced the decision to buy Joint Juice.  The expert also noted that many of the offered reasons didn’t mention joint pain or health, but instead were reasons why the consumer might choose one glucosamine product over another, and thus were poor options.
Sonner alleged that, in fact, glucosamine and chondroitin do not and cannot palliate arthritic joints or improve the function of healthy joints, and brought the usual California claims.  An invalid substantiation-based claim demands that a defendant either “put up or shut up.”  By contrast, Sonner submitted evidence directly supporting her claims of falsity and misleadingness, including a lot of double-blinded studies, clinical protocols, and meta-analyses, as well as three experts, including one who testified about a medical consensus against the joint claims. This evidence raised triable issues of fact. Premier had evidence suggesting that the research was equivocal, but Sonner offered “principled” critiques of each submitted study favoring Premier.  “If a jury agrees with those criticisms, then it may also logically decide that it is misleading to claim Joint Juice can provide benefit in the face of substantial evidence to the contrary.”
Sonner alleged both falsity and misleadingness.  As to falsity, she argued that the glucosamine and chondroitin in Joint Juice were not bioavailable in sufficiently high quantities to produce any positive effect, meaning the express messages—that Joint Juice would help keep joints flexible and lubricated—were false or misleading. In addition, she argued that the packaging and ads falsely implied that Joint Juice could relieve joint pain and stiffness in arthritic joints.  Premier argued that its ads made only general health benefits and that the disclaimer on the back of the package would disabuse users of any notion that Joint Juice treats or provides relief for arthritis. Premier further challenged Sonner’s ability to prove the existence of any implied message in the absence of a consumer survey.
To prevail, Sonner needed to show that “a significant portion of the consuming public or of targeted consumers acting reasonably under the circumstances, could be misled” by the statements on Joint Juice packages.  While Lanham Act cases require survey evidence for implied falsity claims, California courts have expressly rejected the “view that a plaintiff must produce a consumer survey or similar extrinsic evidence to prevail on a claim that the public is likely to be misled by a representation.”  Sonner offered three types of evidence: the ads themselves, her experiences, and Premier’s marketing research surveys.
The court thought that this was sufficient to create a factual issue:
The name alone implies that the whole point to drinking the product is to receive joint health benefits. Sonner testified that she believed Joint Juice, like ibuprofen, would provide pain relief. While an isolated anecdotal incident is likely insufficient to show that the reasonable consumer understands this implied pain message, Sonner’s account is some evidence of Premier’s unspoken message.
Further, Premier’s own research showed that its customers “cited joint pain as the principal reason they tried and continued to use Joint Juice,” which could persuade a reasonable jury that Premier’s ads “subliminally encouraged people to buy the product to relieve joint pain.”  Sonner didn’t need her own survey when sufficient evidence could be found in Premier’s own files.
The disclaimer on the back wasn’t sufficient to prevent misleadingness.  The Gerber case rejected the assertion that “reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box.”  In the 9th Circuit, “courts cannot hold as a matter of law that disclaimers vitiate claims for misleading representations.”  The jury should review the package as a whole, especially given the evidence in the record that the disclaimer didn’t change consumers’ views about the use of Joint Juice for treating joint pain and stiffness.
Premier argued that all Sonner had was a battle of the experts, and therefore she had to lose because UCL and CLRA claims fail if the plaintiffs do not aver “that all scientists agree that glucosamine and chondroitin are ineffective at providing the promised joint health benefits.” In re GNC Corp., 789 F.3d 505, 515 (4th Cir. 2015) (emphasis in original).  In re GNC reasoned that, even if “the vast weight of competent clinical evidence” cuts against a purported health claim, the UCL claim for literal falsity failed as long as “a reasonable difference of scientific opinion exists.”
The court had noted above that California doesn’t use the explicit/implicit divide when it discussed surveys; starting with the GNC court’s error in understanding the Lanham Act standard (explicit means stated outright; it’s not a standard looking to the quantum of evidence proving the falsity), that decision is rotten all the way down.  Speaking with great restraint, the court here commented that “[t]here is cause to believe the Fourth Circuit’s characterization of California law is flawed.”  In re GNC didn’t analyze California law to predict what the California Supreme Court would do, “as district courts in this circuit must.”  Instead, it used Lanham Act precedent, which doesn’t apply. 
Moreover, the court continued, In re GNC only addressed whether a plaintiff could allege literal falsity, not whether it could use evidence of a solid scientific consensus to prove that a claim was misleading.  Given the intentional breadth of California consumer protection law, and its recognition that even technically accurate claims may mislead or deceive, “a manufacturer may not hold out the opinion of a minority of scientists as if it reflected broad scientific consensus.” Thus, “even if a reasonable expert testifies that the scientific literature is equivocal, a plaintiff may prevail under the UCL and CLRA if she proves that the expert is nevertheless incorrect.”
Sonner could therefore win in two ways.  She could prove literal falsity “if a reasonable jury concludes all reasonable scientists agree that drinking glucosamine and chondroitin do not relieve joint pain or stiffness associated with [arthritis] and that Joint Juice does not provide any general joint health benefits.”  She could do this by showing that Premier’s expert’s opinions were unreasonable.  (It is silly to call this literal falsity and not the next path also literal falsity, but at least the court gets everything else right.)  Or, she could show that “the vast weight of the competent evidence establishes that those health claims are false.” This second theory would allow her to “concede the existence of scientific studies substantiating a representation, but argue that those studies are poorly designed, incredible, or represent the view of a minority of scientists.”
There was a genuine dispute both about whether Premier’s expert’s opinions were reasonable in light of the scientific evidence and whether “the totality of the evidence” supports the conclusion that Joint Juice does not relieve joint pain or stiffness in arthritic joints or improve joint health, in general.  (Note the move, correct in my opinion, from “vast weight” to “totality of the evidence”—the standard is usually proof by a preponderance of the evidence, and there is no reason to depart from that here.)
Furthermore, even if a jury found that Premier didn’t make any implied claims directed at arthritis sufferers, there was sufficient evidence that the amount of glucosamine and chondroitin in Joint Juice could have no positive impact on general joint health.
Premier argued that, because Joint Juice is a supplement, not a drug, studies proving that it didn’t work were irrelevant, because the FDCA allows supplements to be sold even without randomized, placebo-controlled, double-blind clinical trials supporting their efficacy.  Um, no.  “That the FTC permits supplement manufacturers to make claims unsupported by randomized clinical trials is not a reason to reject the use of such studies to prove supplement claims are false or misleading.”
Remedy: The UCL allows restitution, while the CLRA allows restitution, actual damages, punitive damages, and “[a]ny other relief that the court deems proper.”  Sonner sought a full refund, and the court agreed that this could be appropriate if the product was shown to have no value.  In other cases rejecting the full refund model, consumers received a product with other benefits aside from the allegedly false claim.  But Sonner claimed that she and other Joint Juice consumers wouldn’t have bought it absent its joint-related claims—that it was nothing more than a liquid pill.  “Unlike juice, which consumers purchase for hydration, or cigarettes, which smokers purchase for flavor and to assuage nicotine cravings, Joint Juice is for all intents and purposes a liquid pill.”  Premier even stated that the only reason to buy Joint Joice was “the medicinal value of the glucosamine and chondroitin it contains.”  Given the evidence of why consumers bought Joint Juice, there was at least enough evidence to survive summary judgment as to full-value restitution.
The court did refuse to exclude Hal Poret’s testimony and survey. Poret never asked consumers whether they purchased Joint Juice because of its purported joint health benefits or how they understood the messages on Joint Juice labels and ads.  “[A]s long as [the survey] is conducted according to accepted principles and is relevant,” the “technical inadequacies in a survey, including the format of the questions or the manner in which it was taken, bear on the weight of the evidence, not its admissibility.”  The court found that the survey questions “cre[pt]  close to the general rule’s outer boundaries,” but didn’t cross them.  Sonner could address the coding and the questions on cross-examination. Indeed, her expert’s recoding offered opinions favorable to Sonner’s claims based on these data—“a fact that undermines her contention that the survey is unreliable, irrelevant, or unduly prejudicial.”

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