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.
Posts
No comments:
Post a Comment