is there a difference between "clinically tested" and "clinically proven" to reasonable consumers?

Williams v. Reckitt Benckiser LLC, No. 20-23564-CIV-COOKE/GOODMAN, 2021 WL 8129371 (S.D. Fla. Dec. 15, 2021) (R&R)

This long and citation-heavy opinion would be a good cheat sheet for looking at class action settlement approvals generally, especially in the 11th Circuit.

Courts often are skeptical about small differences in wording when plaintiffs challenge them as causing deception. But when it comes to surveys or, here, approving settlements, matters can differ.

The court begins with an extended discussion of how small words can mean big things; “[a]t times, the mere addition or modification of only one or two words can cause a dramatically different result.” This is important because the proposed settlement of this class action against manufacturers/distributors of Neuriva brain-health-promotion products requires only small changes in marketing claims. This is despite the fact that the underlying complaint alleges that the products do not provide any actual tangible benefits. “They say consumers are being defrauded because the products do not improve memory, focus, concentration, and other components.” The settlement lets defendants “continue selling the same supposedly useless and expensive products (but without certain marketing and sales representations about the products’ efficacy).” Defendants, on their part, “argue that the products do in fact work and that their ingredients have been successfully demonstrated to provide benefits for promoting brain health.”

The injunctive relief does what this xkcd cartoon mocks:

 

Alt text: Blatantly banking on customers not understanding that it's like a Hollywood studio advertising that their new movie was 'watched by Roger Ebert'.

Instead of marketing and labeling Neuriva products as providing results which are scientifically and clinically “proven” or which “show” benefits after being “tested,” defendants have to revise all label/marketing references for two years from “clinically proven” to “clinically tested.” For two years, they must refrain from making any reference relating to brain health function using “clinically shown” or similar language, such as “clinical studies have shown” or “clinically tested and shown” or, the magistrate emphasized, “confirmed,” “demonstrated,” “established,” or other words or phrases synonymous to “shown.” In addition, they would have to limit the use of authorized language about the studies or testing to refer to only Neuriva’s ingredients, not to Neuriva as a whole. “The parties have convinced me that these language limits and changes are significant.”

Given the risks of litigation—including the nontrivial risk of losing at trial, as similar claims had done elsewhere (with the competing product Prevagen, for example, the jury was hung and the court decertified the class)—the magistrate recommended finding that settlement was fair, despite some objections, including from Truth in Advertising, Inc. (TINA). The settlement included a fund of up to $8 million; unclaimed money would be returned to defendants. The magistrate also recommended approving the requested amount of attorney’s fees, costs, and expenses of $2.9 million. (Whether named plaintiff incentive awards were allowed in the 11th Circuit remained nonfinal pending a potential rehearing in another case, so the magistrate recommended retaining jurisdiction to entertain a motion for same if the law changed.)

The proposed injunctive relief would permit defendants to revise or modify their representations if they possess “competent and reliable scientific evidence substantiating that a representation is true” by providing plaintiffs’ counsel with 180 days’ written notice of the proposed representations and the underlying scientific evidence. The court would have continuing jurisdiction to rule on any challenge.

The magistrate initially ordered plaintiffs to explain why their proposed settlement was ok if their allegations were that the product was useless; in partial response, they emphasized that they weren’t alleging that the Neuriva products are in fact harmful if ingested or are being unlawfully sold, and noted that it was unlikely they could even seek a prohibition on their sale. They also pointed out that winning—if they did—could take many years. (If the relief is for only two years, then why does it matter if relief is pushed out to the future?)

Among other things, TINA’s objection argued that “clinically tested” in advertising implies that the product has been clinically “proven”; that the labeling restrictions are binding for only two years, while class members “would be permanently prohibited from suing.” An email from Rich Cleland of the FTC, made part of the record by TINA, pointed out that

A significant number of consumers would not see any difference between the statements “clinically or scientifically proven” and the statement “clinically or scientifically tested.” Both statements, one express and the other implied, convey that there is substantial scientific evidence supporting the underlying claim. With regards to the tested claim, whatever reason would there be for the advertiser to claim that a product has been “clinically or scientifically tested” if those tests did not support the underlying claim?”

Defendants argued that there is a significant distinction between proven and tested but also contends that both claims are true here. “Defendants explain that market research specifically directed at brain health supplements confirms the difference in interpretation and attached a supporting declaration from a Dartmouth professor,” and also relied on dictionary definitions.

As of October 14, 2021, the Settlement Administrator had received a total of 50,634 claims. Class members with proof of purchase may submit a claim for two purchased products for a maximum benefit of $65.00, while class members without proof of purchase may file a claim for up to four purchased products for a maximum benefit of $20.00 The requested claims total a bit over $935,000.

“The settlement here is a prime example of why class action settlements are highly favored in the law. Absent the settlement, the class action could have faced serious hurdles to recovery, and now the class is entitled to significant settlement benefits that may not have even been achieved at trial.”

The settlement, by the evidence, was negotiated at arm’s length and after significant investigation by plaintiffs’ counsel, including consultations with experts. Litigating these complicated claims “would have undoubtedly proven difficult and consumed significant time, money, and judicial resources.” Any victory would have taken years and was far from guaranteed. The settlement had monetary relief that was significant to the individual consumers who submitted claims—people without proof of purchase got 15 or 22% of their money back, depending on the product. And having a claims-made fund was acceptable even if plaintiff got to take the remaining money back. There was also injunctive relief requiring “significant label changes -- specifically removing the language at the heart of this case -- within six months after final approval (as opposed to years down the road).”

TINA objected that the temporary removal of “proven” and similar words was unhelpful to consumers given defendants’ ability to use “clinically tested.” But the magistrate found that the falsity theory was pretty risky—as private litigants, they couldn’t require defendants to substantiate their claims, and they might risk preemption if they tried. (The magistrate seems to be conflating the idea that private plaintiffs can’t require substantiation, which is correct, with the mistaken idea that they can’t win if they merely prove that “clinical studies don’t prove the product works.” The latter is classic falsity: by proving that the studies don’t prove the claim, the plaintiffs would have falsified the thing that defendants actually said, not put the burden on defendants to substantiate the thing they said. In fairness, there are other cases that don’t understand this distinction.) And there were other proof barriers to victory.

In my mind, the real objections are to the substance: is there really a difference between “clinically proven”/“shown” and “clinically tested” to ordinary consumers? And an injunction that lasts only two years is silly. “Plaintiffs concede that they would prefer longer than two years for the injunctive relief, but they explain that the only alternative is continued litigation, which can last for several years.” But why should we prefer these two years to future deception-free years, maybe far longer than two, which we should get if the products are in fact junk?

Defendants’ expert concluded that consistently using “Clinically Tested” will result in “consumers [who] are likely to correctly conclude that Neuriva’s ingredients have been tested, without necessarily drawing additional inferences about the level of proof or certainty those tests revealed.” This conclusion was based on her review of the record, the demographics of defendants’ customers, defendant RB’s own marketing research, and related academic research. In her view, the words used would combine with the age/income/education of the target consumer and the context of preventative health to establish that consumers would perceive a meaningful difference between a “clinically shown” versus a “clinically tested” claim. Unpersuasively, she analyzed the dictionary definitions, which have very little to do with the context of marketing a product—she would have been better off with Gricean implicature. But “tested” is, in dictionary terms, about the process, while “proof/prove” is about the outcome. [Is expert testimony about the dictionary really admissible? I guess it doesn’t matter here, but it sure seems to me that the court could just as easily read the dictionary as the expert.] 

[On review of the expert declaration, it seems like a lot of chaff, though I guess it worked! The strongest evidence--the only direct evidence--was a study of defendants' that found that 33% of respondents thought that "clinically proven" meant that the product was extremely likely to do what it said, while only 26% thought that "clinically tested" meant "extremely likely" to work. I will note that 26% is a pretty high deception percentage on its own, assuming the product is not extremely likely to work. The expert emphasized that this was less than the 28% average from all claims tested that resulted in "extremely likely" ratings. But this whole thing is extremely misleading if not outright false. To begin with, unless the expert was looking at something other than the cited report, the percentage of respondents who said "clinically tested" meant "extremely likely to work" was 28%, not 26%. The 26% number is for "clinically researched." The average "extremely likely" rating of claims tested was 24%; the research found that 28% was significantly higher than average and so was 26%. Separately, the "less than the 28% average" seems to be a made-up statistic--the expert seems to have taken the average of the claims that were significantly more convincing than average, so why the fact that "clinically tested" was  midrange in that subset matters is obscure to me. Also, as noted at the bottom of this post, the tested claims were mostly puffery/gobbledegook, and many had little to do with efficacy, driving down the overall "average" further. But the statistical tomfoolery seems to me less significant than the outright error.]

Doing a bit better, the expert “explained that older consumers, such as those 55 years and older, are typically more familiar with pitches in health advertising,” and noted that more than half of Neuriva’s sales are from this group of consumers. So too with higher-income consumers, who can pay from $30 to $80 per package, who are typically “more educated and more health literate than lower income and less-educated consumers.”

[Implicit in this analysis is that it’s ok for consumers to be induced to bet on the chance that the product works. I think that’s a reasonable position to take, but I wish it would be more clearly articulated. Right now the reasoning is all implicit: Consumers will supposedly understand that the product ingredients have been tested, which they are supposed to infer increases the chance it will work (otherwise why would the advertiser say so? In the abstract, the fact that something has been tested says nothing about the prior probability that it works) but understand that it’s just a chance, and if they want to pay their money for a chance we should let them. Perhaps ironically, the message of “clinically tested” in the pro-settlement story is therefore not at all the dictionary meaning of “tested”—it is “there’s some chance this works, but it’s not proven.” So why are we looking at the dictionary again?]

So, the injunctive relief changing the label provided benefits to the settling class [for two years]. This required labeling “that does not suggest some definitive scientific outcome or consensus” [for two years]. And no case holds that “clinically proven” has the same meaning to consumers as “clinically tested.” Indeed, one NAD case suggests that those terms are ok. Living Essentials, Chaser, NAD Case No. 4365 (July 8, 2005) (accepting change from “clinically proven” claim to “clinically tested” and from ‘Chaser has been tested and proven effective ...’ to ‘Chaser has been tested and shown effective ....’”). Also, because other brain supplements use “shown,” the settlement will put the Neuriva products at a disadvantage with its competitors, showing that the settlement provided real value.

In sum, the monetary and injunctive relief together amounted to a fair and reasonable settlement.

The requested attorneys’ fees were also fine; the parties engaged in arms-length negotiation for defendants’ agreement not to oppose a fee request up to a certain amount (clear sailing) and for unclaimed amounts of the claims fund to go back to defendants (a kicker). The court found no need to use a lodestar/hours worked approach, but if it did do that, the fees requested would be a reasonable multiple (x2.5) of fees for the hours worked. “The $2.9 million sought by Class Counsel for fees and expenses constitutes 36% of the value of just the monetary relief made available to the Settlement Class, which is well within the range approved by the Eleventh Circuit,” even ignoring the value of the injunctive relief. [Though it is almost three times the amount that seems likely to be paid out, not 36%; given sophisticated parties’ ability to predict these things, did defendants ever expect to pay $8 million?] And there was no risk that fees would deplete the separate settlement fund.

The tested claims: "Clinically proven; Traditionally used; Powered by nature; Clinically Tested; Trusted by generations; Proven with published human clinical studies; Clinically Studied; Based on Ancient Wisdom; Works naturally with your body; Clinically researched; Formulated with science in mind; 100% natural ingredients; Clinically tested & proven; Clinically formulated; Pure ingredients; Scientifically proven; developed by nutritionists; All natural; Proven natural ingredients; Carefully formulated by scientists; Wholefood nutrition; Proven active ingredients; Recommended by doctors; Made with whole foods; Nature made it, science proved it; Recommended by pharmacists; Organic; Science based approach; Recommended by nutritionists; Non GMO; Backed by science; Trusted by health care professionals;  Made with naturally sourced ingredients; Rooted in science; Natural alternative; Nothing artificial; Has been trusted around the world for more than 100 years."

The top scoring claim (combining responses about efficacy and naturalness) was “Clinically tested & proven,” with runners-up "100% natural ingredients," "Clinically proven," "Scientifically proven," and "Recommended by doctors." Of some note: The claim allowed by the settlement, "clinically tested," had the same "extremely likely to work" perception percentage as "recommended by doctors," and the defendants' own research specifically noted that it, like "clinically proven," had "a higher score than AVERAGE GENERAL CLAIM RATING at the 90% confidence level." That does seem like something the expert should have discussed.