Battle of the experts: court deals with surveys, damages, other Lanham Act experts

In re: Elysium Health-ChromaDex Litigation, No. 17-cv-7394 (LJL), 2022 WL 421135 (S.D.N.Y. Feb. 11, 2022)

So very much going on here, including discussion of what makes controls appropriate and the challenges of surveying for materiality; I will try to skip as much detail as possible but this is roughly 200 pages of opinions. Plaintiff ChromaDex sought to exclude defendant Elysium’s survey expert and damages rebuttal expert, while Elysium moved to exclude ChromaDex’s survey, damages, FDA regulation, and clinical studies experts. Each motion was granted in part and denied in part.

Starting with the survey experts: Excluding survey evidence requires meeting a “heavy burden,” as long as a survey is “fairly prepared and its results directed to relevant issues.” As a general matter, “[e]rrors in methodology ... properly go only to the weight of the evidence” and not to its admissibility.

Elysium’s expert, Sowers, tested the allegation that ChromaDex advertising deceived customers into believing that the FDA reviewed ChromaDex’s product, Tru Niagen, for efficacy. He surveyed “potential purchasers of products to support cellular health.” The test group saw homepage statements regarding FDA involvement in Tru Niagen, including the phrases “3 FDA Safety Notifications” and “reviewed and accepted by ... US FDA.” The control group was shown the same stimulus but with the following disclaimer added: “The Food and Drug Administration has not reviewed Tru Niagen for effectiveness.”

The key question was “Does the webpage communicate anything about whether or not the FDA has reviewed the Tru Niagen product for effectiveness?” Those who ultimately said yes and that the FDA had reviewed it were asked “What do you believe effectiveness means in this context?” The expert concluded that 23.3% of respondents, net, received the message that the FDA had reviewed Tru Niagen for effectiveness.

Elysium’s survey/expert was not excluded on Daubert grounds, but the court rejected Elysium’s challenges to ChromaDex’s statements “that do no more than convey the FDA status of ChromaDex’s products,” so the survey was no longer relevant. Still, the court’s rejection of challenges to the survey may be of interest.

ChromaDex argued that Sowers should not have proceeded to ask respondents directly whether they believed the FDA had reviewed Tru Niagen for effectiveness after none of the respondents identified that as the “main” message conveyed by the webpage or thought to mention it as another message that was conveyed by the webpage. But closed-ended questions are acceptable even if respondents don’t mention something in response to open-ended questions; they may “remind respondents of options that they would not otherwise consider or which simply do not come to mind as easily.” The survey asked whether the website conveyed anything about whether the FDA reviewed the product for safety, and allowed both no and don’t know answers.

ChromaDex then argued that the survey asked about the FDA and effectiveness too much. But only a respondent who said that the website did say something about that would get later questions, “and those questions too used the terms no more than necessary to convey the query clearly, directly, and impartially. The option to select ‘Don’t know/unsure’ ensured that each survey question was not overly suggestive.”

Quibbles over the study population—it used people looking to purchase products supporting cellular health, whereas ChromaDex wanted to limit the population to dietary supplements and expand it to people looking for other benefits as well—went only to weight.

Turning to the competing study: ChromaDex’s expert, Isaacson, tested two versions of Elysium’s homepage, a video stating, “Inside this bottle is 25 years of research”; the statement “We conduct rigorous safety studies for a new dietary ingredient (NDI) submission to the FDA”; and a social media post that displays a jar of Basis and states, “Basis is clinically proven to increase NAD+ levels, which decline with age.”

test/control stimuli

His survey population differed somewhat as did the control group/questions. While the Elysium survey asked an open-ended question about whether the stimulus communicated anything about a particular subject (e.g., whether the stimulus conveyed anything about safety), Isaacson’s survey “asked a more leading question by framing a particular proposition or statement (e.g., that clinical trials demonstrated that the supplement was safe) and asking whether the communication at issue communicated or implied that statement.” Each respondent was asked about three or four statements, including one test statement and two or three distractor statements. Isaacson also asked about test cell respondents about materiality: “If you learned that the statement below is not true, would that change your likelihood of purchasing this supplement?” For materiality, the statements “The supplement described on the [material] is available in a white container” and “The supplement described on the [material] is also sold in Canada” were used as controls.

Isaacson concluded that: (1) a net percentage of 13% of the respondents who were shown the test 2019 homepage believed that it communicated or implied that clinical trials had demonstrated that Elysium’s product was safe; (2) a net percentage of 38.9% of the respondents believed that the test Facebook page and video communicated or implied that the company conducted twenty-five years of research on aging; (3) a net percentage of 21.9% of the respondents who were shown the test 2017 homepage and mission page believed that it communicated or implied that Elysium submitted an NDI to the FDA; and (4) a net percentage of 32.4% of the respondents who were shown the test post believed that it communicated or implied that Elysium’s product was clinically proven to slow the effects of aging. He also concluded that the statements were material.

The court concluded that there was no basis for the expert to opine on whether there was substantial deception in the aggregate; each challenged statement was different and its falsity/materiality needed to be established separately, although the study’s relevant conclusions might extend to a statement individually similar to one of the four challenged statements.

Elysium also challenged the materiality survey in its entirety. It argued that the questions were leading because materiality questions were asked only after the deception questions, drawing their attention to something they might not otherwise have noticed or considered relevant. In addition, the materiality portion used different controls, so a respondent could recognize that the statement remaining consistent between the two sections—the challenged statement—was the statement being tested. While surveys should control for demand effects, the surveys here didn’t suggest to consumers what the “right” answer was, only what the relevant topic was. “[T]he respondents did not know what the survey sponsor wanted to hear and what the survey sought to demonstrate and thus were not more likely to provide that response.”

The court was given more pause by the fact that respondents were asked about materiality only after they were asked questions about deception that drew their attention to a particular message, causing “focalism,” that is, causing respondents to pay “more attention to a product attribute than they would during the purchasing process,” and increasing the value they placed on that attribute. ChromaDex argued that this was a natural result of asking appropriate filter questions. But it was possible that the questions could both serve as filters and draw respondents’ attention to a particular message “such that the message took on disproportionate significance in their minds.” And the controls didn’t address that flaw. The controls, with their innocuous subject matter, did catch respondents “who would reflexively answer that learning the message was false would affect their purchasing decision about any message about the product, no matter how innocuous.” But the controls were bad for another reason: they showed up only in the second portion of the survey, whereas respondents had already been asked about the test messages. That is, “respondents were shown the control messages and immediately asked whether learning those messages were untrue would impact their purchasing decisions, without the intermediate steps of viewing an advertising statement, being asked whether that statement conveys a particular message, and then being asked materiality questions about that particular message. Respondents were never shown an advertising statement conveying the control message.” This wasn’t a good control because it wasn’t as similar to the experimental stimulus as possible. It didn’t correct for focalism, and, because they hadn’t seen ads with the controls, the controls didn’t account for respondents who would change purchasing behavior “only because they felt deceived, rather than because the subject matter of the statement tested was important to them.”

The court wasn’t persuaded that these flaws did affect the survey responses, but it was persuaded that it was impossible to tell whether that had happened.

Elysium then argued that the challenged statements being tested contained multiple facts, but respondents were just asked generally: “If you learned that the statement below is not true, would that change your likelihood of purchasing this supplement?” E.g., when the challenged statement was “The company described in the Facebook page and video conducted 25 years of research on aging,” it wasn’t clear whether consumers thought another company did some of the research, another company did all of the research, there was no research, there was only 20 years of research, the research did not pertain to aging, etc. So what was being tested for materiality? “The plaintiff has to prove both that the message is untrue or misleading and that the particular message that is untrue or misleading is material.” It was easy to see why it could be important to a consumer that there wasn’t 25 years of research, but not important that one company did that research. By contrast, Isaacson’s survey tested “Inside this bottle is 25 years of research,” against the relevant control “Inside this bottle is 25 years of research, conducted by us and others.”

Ultimately, the flaws in the materiality survey were too great for admissibility.

Damages experts: The court began with a statement that a Lanham Act [false advertising] plaintiff must prove causation to get damages.

ChromaDex’s damages expert was excluded for assuming without justification that, but for the alleged wrongful acts, Elysium would have made no sales of its Basis product and the Basis product would be removed from the market. Based on their status as direct competitors, he opined that all of Elysium’s sales would instead have been made by ChromaDex. This case was distinguishable from a more forgiving one (Church & Dwight, the pregnancy duration case) in which the parties owned the top two brands and the false advertising was of the key feature of the products. “This case by contrast involves many advertisements with different themes, none of which ran throughout the launch of the product; there is no evidence that they pertained to the key distinguishing feature between the products or that, indeed, they had salience at all in attracting consumers to Basis.”

ChromaDex’s FDA expert’s general testimony regarding relevant FDA regulatory schemes was admissible because it “may help a jury understand unfamiliar terms and concepts,” though a few scattered parts were excluded for being conclusory/otherwise not within proper scope.