Thursday, December 27, 2018

9th Circuit easily rejects In re GNC's "all scientists must agree" standard for falsity

Sonner v. Schwabe North America, Inc., --- F.3d ----, No. 17-55261, 2018 WL 6786616 (9th Cir. Dec. 26, 2018)

Happy holidays to me!

Sonner sued the sellers of two Ginkgold nutritional supplements for violations of the UCL and CLRA and breach of express warranty. Sonner alleged that the products were falsely labeled as capable of improving various cognitive functions when in fact they provided no such benefits, citing expert opinion and other scientific evidence (including evidence from randomized controlled trials showing no difference from placebo) in support.  The district court granted summary judgment, relying on In re GNC to hold that she couldn’t proceed on a literal falsity claim because she didn’t show that all scientists agreed that the claims were false.  Instead, it reasoned, where “both sides have produced expert testimony and scientific research in support of their claims,” but Sonner failed to critique the expert testimony and each of the scientific studies proffered by defendants by “challenging the methodology, structure, or independence of [Schwabe’s] studies,”  the evidence was “insufficient to allow a reasonable juror to conclude that there is no scientific support for [Schwabe’s] claims.”

The court of appeals reversed: “UCL and CLRA claims are to be analyzed in the same manner as any other claim, and the usual summary judgment rules apply.”  The plaintiff has the burden of proving falsity or misleadingness by a preponderance of the evidence. “Therefore, to defeat summary judgment, Sonner need only produce evidence of a genuine dispute of material fact that could satisfy the preponderance of the evidence burden at trial. Sonner easily met her burden by producing expert testimony and other scientific data that Ginkgo biloba has no more of an effect on mental sharpness, memory, or concentration than a placebo.” Requiring her to do more than that—to foreclose any possibility that the products worked—wrongly elevated her burden far beyond that applicable to summary judgment. Arguments going to the bases of experts’ opinions go to the weight of the evidence in the fact-finder’s evaluation, “an inquiry that is not proper at the summary judgment stage.”

Schwabe argued that the Ninth Circuit should follow In re GNC, 789 F.3d 505 (4th Cir. 2015), which required—at the pleading stage—a plaintiff to allege that “all scientists agree that [the products] are ineffective at providing the promised [ ] benefits” in order to allege falsity under California law.  This holding was always dumb—among other things, it rested on a misreading of the Lanham Act’s distinction between literal falsity and implicit falsity—and the court of appeals here rejected it.  “We are unpersuaded by the notion that a plaintiff must not only produce affirmative evidence, but also fatally undermine the defendant’s evidence, in order to proceed to trial.” That’s not how civil—or even criminal—litigation works.  “If the plaintiff’s evidence suggests that the products do not work as advertised and the defendant’s evidence suggests the opposite, there is a genuine dispute of material fact for the fact-finder to decide.”  

Nor were Sonner’s claims essentially “lack of substantiation” claims, which private plaintiffs are prohibited from pursuing under California law. “Sonner has the burden of proof as to her claims, unlike a substantiation claim where the onus is on the defendant to substantiate the assertions in its advertisements.” 

The breach of express warranty claims were reinstated for the same reasons.

PS: Since In re GNC purported to interpret California law, can we now defer to the 9th Circuit to say that the case isn't even right in the 4th Circuit?  I know, it would be better for a California state court to point this out--I can hope, though.

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