Lack of substantiation can be false when advertiser claims substantiation

Hughes v. Ester C Co., --- F. Supp. 2d ----, 2013 WL 1080533 (E.D.N.Y.)

Plaintiffs brought a putative class action against Ester-C, alleging that it misled consumers into thinking that Ester-C products were a form of immune system defense, misrepresented that Ester-C was a superior source of Vitamin C, and made its claims without credible scientific support. They alleged violatoins violations of Missouri's Merchandising Practices Act (on behalf of a Missouri class); violations of the CLRA, FAL, and UCL (on behalf of a California class); and violations under New York common law, including unjust enrichment, intentional misrepresentation, and negligent misrepresentation as to all class members (the court noted that there didn’t appear to be a conflict of laws as to these claims).

Ester-C’s products contain 500 mg of Vitamin C, more than eight times the recommended daily allowance, or 1000 mg (17x the RDA).  They also say that they contain Calcium, “C–Sorb Citrus Vioflavonoids Complex,” and “Naturally Occurring Vitamin C Metabolites.”  There are tablets, gummies, and a beverage mix.  They’re available at major drugstores.

The labels describe Ester-C as “The Better Vitamin C”; say it’s the “# 1 Pharmacist Recommended Brand”; and state “Immune Support,” “Ester-C provides your body with the immune and antioxidant support it needs to help keep you healthy and strong during times of seasonal change and the stresses of daily living,” “Antioxidant Support,” “Enhanced Absorption,” and “Make Ester-C part of your daily routine for optimal health ... no matter what time of year it is!”  Many of these or similar representations also appear on Ester-C’s website, on which an “expert” “claims he maintains a healthy and active lifestyle in part through the consumption of Ester-C,” and which claims that Ester-C increases absorption of vitamin C molecules, “making it easier for the body to transport [the vitamins] from cell to cell for numerous health benefits.”  Plaintiffs claimed that they relied on this language and that they wouldn’t otherwise have bought the products. 

Retailers’ marketing is allegedly similar: Amazon advertises an Ester-C product as “24 hour immune protection. [E]ster-C gives you powerful immune system support. [E]ster-C provides your body with the antioxidant protection it needs to help keep you healthy and strong....” Wal-mart claims, “[s]tay healthy with the Ester-C The Better Vitamin C Supplement Tablets,” and “[t]he Ester-C vitamin C 1000mg tablets also offer 24 hour immunity from day to day ailments like flu and fever.”  Defendants’ counsel noted that Ester-C isn’t responsible for other companies’ statements in marketing it (but see: vicarious/contributory liability) and that it has in the past reached out to ask other companies to remove language going beyond its own marketing and labeling representations.

Plaintiffs pled that the false claims increased sales and prices; a box of 90 Ester-C 500mg tablets costs about $8.44, while a comparable supplement typically costs about $7.00.  Moreover, they pled that defendants lacked credible evidence that Ester-C would work as claimed, and cited a publication by Oregon State University's Linus Pauling Institute that allegedly shows that it doesn’t work.  Plaintiffs also referred to various FTC actions against several of Ester-C’s competitors regarding claims to boost immunity/protect against illness.

The court found that plaintiffs had adequately pled their claims, despite Ester-C’s argument that they were merely alleging lack of substantiation, which isn’t privately actionable.

First, of course, we give a nod to standing.  The economic injury pled was sufficient injury in fact. Plaintiffs pled reliance, making their injuries fairly traceable to the alleged misrepresentations, and redressability would come from ending the allegedly deceptive marketing and from monetary relief. Ester-C argued that there was no standing because the plaintiffs didn’t say which products they bought or what representations they relied on, the express language of the complaint was to the contrary: they said they bought Ester-C, they noted the different types of Ester-C products, and they listed several examples of the representations upon which they allegedly relied.  These were Rule 9(b) arguments, not standing arguments.

The key issue was whether plaintiffs were really just pleading lack of substantiation with statements such as “[e]vidence ... indicates that Ester-C is not any better than other Vitamin C supplements at providing Vitamin C to the body,” and that “[d]efendants have no credible evidence that taking Ester-C will provide immune support or keep one from getting sick.”  The court agreed that lack of substantiation wasn’t privately actionable under the relevant laws, but found that plaintiffs had adequately pled falsity.  The court distinguished between unproven (not actionable) and disproven (actionable) advertising claims.  Studies that debunk the purported benefits of an ingredient can disprove advertising claims.  However, claims sounding in fraud must pass Rule 9(b), so the studies have to be specific enough.

The court also pointed to Bober v. Glaxco Wellcome PLC, 246 F.3d 934 (7th Cir. 2001), which held that, for a lack of substantiation claim to be a deceptiveness claim, the challenged advertising needed to imply substantiation.  (Note that this standard, which is that used by the Lanham Act, is potentially much broader: it recognizes the possibility that an ad claim might imply substantiation without coming out and saying “tests prove” X—especially in the health field, where consumers are likely to believe that scientific evidence is behind any given health claim.)

Here, plaintiffs did more than allege lack of substantiation by citing the Linus Pauling institute study, which was specific to the ingredients touted by Ester-C and “found no difference between Ester-C and commercially available ascorbic acid tablets with respect to the absorption and urinary excretion of vitamin C.”  “Given that Ester-C markets itself as ‘the Better Vitamin C’ and the ‘# 1 Pharmacist Recommended Brand,’ a study suggesting that Ester-C is not a superior source of vitamin C supplementation to the body than other market brands would, indeed, call into question defendants' representations.”  The study’s conclusion about Ester-C’s lack of superior bioavailability contradicts several statements on Ester-C’s website, which explicitly claims that Ester-C has “a unique and patented form of vitamin C” and that the product contains metabolites that “activate the vitamin C molecules making it easier for the body to transport them from cell to cell for numerous health benefits.” Plaintiffs alleged that these claims were false. 

In addition, plaintiffs’ allegations that defendants lacked credible scientific evidence challenged Ester-C’s express claims that clinical research supported its products.  For example, the website “expert” stated that he takes Ester-C “because it is gentler on the stomach and because of all the clinical research that supports the use of this product.”  Because Ester-C expresssly claimed substantiation, plaintiffs’ use of the Linus Pauling Institute study was sufficient to state a plausible claim of affirmative misrepresentation.  Lack of substantiation is deceptive when a claim implies (or here, outright states) that substantiation exists. Here, Ester-C made numerous claims of superiority to other products and superior bioavailability. 

Ester-C challenged the merits of the study, which wasn’t appropriate on a motion to dismiss.  And the study related to the claims on which the plaintiffs allegedly relied; defendants’ argument that the study only related to “absorption and urinary excretion,” not efficacy, was unpersuasive.  Ester-C’s label specifically claimed enhanced absorption and the like. 

Ester-C also argued that the references to FTC settlements for other products weren’t relevant because they were just settlements and because they targeted disease prevention claims.  Plaintiffs responded that, though Ester-C’s label didn’t expressly make cold/flu prevention claims, it implied them: it used a clock with circling arrows to imply “around-the-clock” immune support and stated: “Ester-C provides your body with the immune and antioxidant support it needs to help keep you healthy and strong during times of seasonal change and the stresses of daily living.”  They argued that a reasonable consumer reading that language, on a label already emphasizing Ester-C’s “better” vitamin C formula offering antioxidant and immune system support, could fairly interpret that as a cold/flu prevention message, since those illnesses are typically associated with seasonal changes. Again, this couldn’t be resolved on a motion to dismiss, even setting aside the FTC settlements as irrelevant.

Defendants argued that no reasonable consumer could receive a disease prevention claim because of the disclaimer, which stated: “This product is not intended to diagnose, cure, treat or prevent any disease.”  This disclaimer was indeed on the label, preceded by an asterisk, and several of the relevant statements on the label were followed by an asterisk. But disclaimers have to be examined in context with the allegedly misleading statements.  Similar to Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008), the presence of the disclaimer didn’t mean that a reasonable consumer couldn’t be misled.  Reasonable consumers shouldn’t be expected to look beyond misleading representations on the front of the box to discover the truth in small print. Again, a motion to dismiss was the wrong place to resolve this, especially given other allegations about how the product was marketed.  For example, Walmart’s website allegedly promised “Stay healthy with the Ester-C The Better Vitamin C Supplement Tablets…. The Ester-C vitamin C 1000mg tablets also offer 24 hour immunity from day to day ailments like flu and fever.”  Even though those aren’t claims made by Ester-C, plaintiffs argued that they showed that even retailers interpreted the product as a cold and flu prevention product.  Thus, plaintiffs plausibly pled that a reasonable consumer could be misled into believing that Ester-C’s products could prevent or shorten the duration of colds or flu.

After that, the court turned to Rule 9(b), and found it satisfied: the complaint adequately provided the “who, what, when, where, and how” of the alleged fraud.  They identified the products at issue, the specific alleged misrepresentations, where the misrepresentations were made (particular retail stores and on certain pages of the website), the time period at issue including specific purchases, the nature of the deception, and the reasons that the claims were allegedly fraudulent.  This was enough for the California CLRA, FAL, and UCL claims (the court found that plaintiffs had successfully pleaded violations of all three prongs of the UCL: unlawful, fraudulent, and unfair).

Similar results obtained with Missouri’s Merchandising Practices Act, which requires an ascertainable loss of money or property (and a product bought for personal, family, or household purposes).  Likewise with the NY claims for unjust enrichment, which doesn’t require a direct relationship between the parties, and intentional misrepresentation. Plaintiffs adequately pled that Ester-C knew the claims were false when made by pointing to the lack of substantiation, the Linus Pauling Institute’s study, and the FTC settlements.  The parties disputed whether the court could consider whether reliance was justified on a motion to dismiss.  In this case, the court couldn’t conclude as a matter of law that consumers couldn’t reasonably rely on the cited statements. 

As for the NY negligent misrepresentation claim, this requires that the defendant have been careless “‘in imparting words upon which others were expected to rely and upon which they did or failed to act to their damage,’ and where the author of the statement has ‘some relationship or duty ... to act with care’ vis-à-vis the party at whom the statement is directed.”  This requires a special or privity-like relationship as well as justifiable reliance, which the court found to be related issues: a court considering reliance under NY must consider “whether the person making the representation held or appeared to hold unique or special expertise; whether a special relationship of trust or confidence existed between the parties; and whether the speaker was aware of the use to which the information would be put and supplied it for that purpose.” 

Here, the court found that it could infer a special relationship between the parties, because Ester-C’s marketing allegedly held it out as having a special expertise on the products’ purported health benefits, including the “Ask an Expert” section of the website.  That page also stated that Ester-C “has good clinical research and is the easiest form of vitamin C to take in my opinion because it is non-acidic. The company is also completely committed to clinical studies.”  The label also at least suggests “some level of medical or scientific backing for its claims.”  Thus, it was plausible that Ester-C understood that its marketing would “would be used by consumers for the purpose of evaluating Ester-C in comparison to the numerous other brands of vitamin supplements on the market,” and that it knew that it was “targeting individuals who generally lacked the scientific or medical background necessary to carefully assess and truly evaluate Ester-C's assertions before purchase, and who would have to trust the representations as stated in Ester-C's marketing.” This was sufficient to infer a special relationship under NY law.