Washington v. Living Essentials, LLC, NO. 14-2-19684-9 (King County Super. Ct. Oct. 10, 2016)
The state sued Living Essentials seeking injunctive and declaratory relief under Washington’s Consumer Protection Act. While the court found that some of the challenged 5-Hour Energy claims had not been shown to be unsubstantiated (specifically, claims that the vitamins in the product offered benefits and that the product wouldn’t cause a sugar crash), the court found violations of the CPA relating to claims that (1) 5-Hour Energy lasts longer than a cup of coffee because of the synergistic or interactive effects of caffeine, B vitamins and nutrients in the product; (2) Decaf 5-Hour Energy would provide energy, alertness and focus that lasts for hours; and (3) doctors recommended 5-Hour Energy.
Vitamin claims included the tag lines “B Vitamins for Energy; Amino Acids Focus & Better Mood.” The ads expressly claimed that the vitamins and nutrients in 5-Hour Energy played a role in providing energy, alertness and focus and worked synergistically with caffeine to make the biochemical or physiological effects last longer than caffeine alone. The court found that Living Essentials didn’t downplay or minimize the effects of caffeine. Rather, Living Essentials claimed that the duration of the recognized physiological benefits of caffeine would be extended because of the non-caffeine ingredients in 5-Hour Energy.
|more vitamin claims|
In addition, Living Essentials introduced a decaf version, marketing it with a press release claiming that the decaf product provides “a sustained energy boost” for people sensitive to caffeine. The Living Essentials website claimed that Decaf 5-Hour Energy “gently” works to provide alertness, which it attributes to the presence of choline. These were objective claims about physiological benefits.
And Living Essentials also claimed to avoid the “crash” effect of combining sugar and caffeine, leading consumers to experience a glucose drop when they consumed competing, sugary caffeinated beverages. After NAD investigation, Living Essentials modified its advertisements to qualify the “no crash” language by including an asterisk directing consumers to a small print disclaimer saying “No crash means no sugar crash.”
|sugar and caffeine are to blame!|
Finally, Living Essentials created an “Ask Your Doctor” ad campaign. Living Essentials retained Thomas Maronick, Ph.D., a professor of marketing at Towson University in Maryland and the former Director of Impact Evaluation in the Bureau of Consumer Protection at the FTC to create an online survey of 503 physicians. Instead of asking doctors their general opinions about energy drinks/supplements, the survey asked whether they’d recommend a low calorie/low sodium energy drink for patients who already consumed such products. “Not surprisingly, the majority of doctors said ‘Yes’”—73.6%, to be exact. The survey also showed respondents a 5-Hour Energy label and a brief description of the product, and asked them if they would recommend 5-Hour Energy to their healthy patients who use energy drinks; 47.7% of the doctors said yes, while about 25% said no.
Living Essentials also conducted a follow-up paper survey done in connection with sales staff’s in-person promotional visits to doctors’ offices, in which they’d leave samples of the product and brochures describing 5-Hour Energy’s ingredients. Dr. Maronick wasn’t involved in the paper survey process and had concerns about whether such a method would suffer from biased responses. Living Essentials received 2,659 paper surveys in which about 90% of the respondents indicated that they would recommend a low-calorie energy supplement to patients who use energy supplements, and 74% would specifically recommend 5-Hour Energy. Living Essentials created ads with scripts such as:
We asked over 3,000 doctors to review 5-Hour Energy. And what they said was amazing. Over 73 percent who reviewed 5-Hour Energy said they would recommend a low calorie energy supplement to their healthy patients who use energy supplements. Seventy-three percent. 5-Hour Energy has four calories and it’s used over nine million times a week. Is 5-Hour Energy right for you? Ask your doctor. We already asked 3,000.
Placed next to the ad spokeswoman was a large stack of papers, which she flipped through or gestured to while speaking. ABC and NBC refused to run the ads without some changes, and consumers also complained.
The court considered evidence about the effects of the various ingredients, including evidence developed after the ads aired, which could “shed light on pre-claim studies” used to substantiate claims. The state argued that caffeine was the sole active ingredient in 5-Hour Energy, in the sense of having a physiological effect on the human body. The court disagreed, because B vitamins, taurine, tyrosine and choline are bioactive. However, that didn’t mean that these bioactive ingredients, in the amounts found in 5-Hour Energy, would provide the advertised benefits of “energy, alertness, and focus.” There was disagreement among the experts about whether healthy, well-nourished adults could benefit from the vitamins and amino acids or whether they’d simply be excreted. The court found that the state hadn’t shown there was no benefit whatsoever from these ingredients. However, the state did show that claims that the other ingredients had a synergistic effect with caffeine for the promised benefits of “energy, alertness and focus” were unsubstantiated; the evidence Living Essentials offered was incapable of distinguishing the effects of caffeine from the overall effects of the product. Likewise, the study of the decaf product was insufficiently reliable to substantiate Living Essentials’ claims.
Living Essentials presented evidence that it complied with industry standards in substantiating its ad claims, first, by having its advertising director conduct internet research on the formula’s ingredients, then by instituting a process for legal and regulatory review by an outside law firm, followed by retaining others to perform literature reviews, and finally by commissioning clinical studies. The advertising director’s internet research was not adequate substantiation because he “had no ability or training to assess the scientific reliability of anything he read online.” Nor was regulatory or legal review reasonable substantiation. “There is simply no evidence in the record that anyone with any science training ever assessed the ad claims and the science backing up those claims against the FTC substantiation guidelines.” Nor was there any evidence that anyone in the company ever looked at the literature reviews. Living Essentials did act reasonably in undertaking clinical studies, but the key question was whether the studies were adequate to support the ads’ claims.
Living Essentials also submitted the expert testimony of J. Howard Beales, III, the former Director of the Consumer Protection Division of the Federal Trade Commission. He testified that the claims in Living Essentials’ ads were all subjective, rather than objective, and thus could not be deceptive. The court disagreed:
The company intentionally promoted the product’s ingredients as changing the way the body functioned. It promoted the product as a healthy way to achieve these physiological results. The company spent a significant amount of money on clinical studies to establish that 5-Hour Energy was having a biochemical or physiological effect on the bodies of its consumers. As Dr. Beale admitted, if an advertiser claims that a product will change or affect the physiological functioning of the body, that is an objective claim for which scientific substantiation [can] exist.
The Washington CPA follows FTC interpretations, including the substantiation requirement. “Where implied claims are conspicuous and reasonably clear from the face of the advertisement, extrinsic evidence is not required to prove the existence of implied claims.” Also, the FTC can show misleadingness either through showing (1) actual falsity of express or implied claims; or (2) that the advertiser lacked a reasonable basis for asserting that the message was true. And here we get a little weird, because the court cited a case relying on the execrable In re GNC (not an FTC case) for the proposition that the FTC could show literal falsity “if all reasonable scientists would agree that the claims do not provide the benefits as asserted. The FTC may do this by showing the advertiser’s expert opinions are unreasonable or that no expert believes in the assertion.”
But the state was relying on the lack of reasonable basis theory, so the In re GNC dicta gets just a little worse without affecting this case, because the court declined to apply the “all reasonable scientists” standard to Living Essentials’ substantiation evidence. “The advertiser has the burden of establishing what substantiation it relied on for a claim, and the State has burden of establishing that that substantiation is inadequate.”
Under FTC guidance to advertisers of dietary supplements, claims about the efficacy of dietary supplements must be supported by “competent and reliable scientific evidence,” defined as “tests, analyses, research, studies or other evidence, based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.” The FTC weighs multiple factors to establish the appropriate substantiation, including type of product, type of claim, benefits of truthful claims, costs of false claims, expert opinion about what substantiation is reasonable, and the cost or feasibility of developing substantiation. The court noted that “[t]his does not mean, however, that an advertiser can make any claim it wishes without substantiation, simply because the cost of research is too high.”
The FTC also tells advertisers not to cherry-pick studies and to ensure that studies are relevant to the claims made in ads, including consideration of the dosage and formulation of the advertised product compared to what was studied.
Under this standard, Living Essentials’ claims that that B vitamins promote energy and amino acids promote alertness and focus were not deceptive. However, it was deceptive to claim that these ingredients worked synergistically with caffeine to enhance caffeine-derived energy, alertness, and focus. None of the studies Living Essentials submitted reliably tested that question. Likewise, the decaf ads were deceptive in claiming that the decaf product would generate energy and alertness that “lasts for hours.” Living Essentials’ substantiation relied on studies involving daily dietary supplementation of taurine in 3000 mg or more; Decaf 5-Hour Energy contains only 483 mg of taurine. And studies of the actual product didn’t show significant benefits at the 3-hour mark.
The “no crash” claims were ok, though, because Living Essentials switched to specifying “sugar crash,” and there was no empirical evidence of caffeine-related crashes in habituated users.
The “ask your doctor” ads were deceptive, because they were misleading. An expert in the science of consumer behavior and persuasion tactics testified credibly that the clear takeaway from these ads was that “doctors would recommend” 5-Hour Energy. But the surveys didn’t ask doctors if they thought 5-Hour Energy was healthy or safe. Instead, they told doctors that 5-Hour Energy was a low fat, low calorie, low sodium, sugar-free drink and asked if the doctors would recommend 5-Hour Energy for healthy patients who already use energy supplements. These questions were “biased, leading, and designed to elicit a limited response. Due to the phrasing of the questions that preceded this question, a ‘no’ response to this question suggested that the responding doctor would instead recommend a high fat, high calorie, or high sodium energy supplement, rather than allowing doctors the option of saying they do not recommend energy supplements at all.”
Another problem was that the 73% claim in the ad was based on the online survey of 503 doctors, but the reference to “3,000 doctors” was a combination of both surveys. The survey methods used for the online survey and the paper survey “differed so dramatically that the surveys could not reasonably be combined and represented as the same survey.” The doctors who participated in the paper survey weren’t randomly selected.