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U.S. District Court issues important decision on dietary supplement law

On April 18, 2017, Judge Michael Vasquez granted summary judgment to Bayer in a consumer class action over its probiotic dietary supplement Phillips’ Colon Health. In re Bayer Phillips’ Colon Health Probiotics Sales Practices Litigation, No. 11-03017 (D. NJ). This important decision should help rein in the onslaught of lawsuits that improperly target dietary supplements.

First, the Court’s decision reinforces that dietary supplements are not regulated as drugs, and structure function claims need not be supported by randomized controlled clinical trials (RCTs).

Second, the opinion makes clear that private consumer class actions cannot be premised on a “lack of substantiation” theory.

Business cards into luggage tags RCTs Are Not Required

Recognizing the many health benefits of dietary supplements, Congress enacted the Dietary Supplement Health and Education Act of 1994 (DSHEA) to ensure that supplements can be marketed and sold without following the stringent requirements imposed on prescription drugs. In April 2001, the Federal Trade Commission (FTC) promulgated guidance stating that the relevant standard for dietary supplements is “competent and reliable scientific evidence.”

The FTC guidance makes clear that drug-level randomized clinical trials are not required. Instead, “competent and reliable scientific evidence” is a “flexible” standard and “[t]here is no fixed formula for the number or type of studies required.” Even “[r]esults obtained in animal and in vitro studies will . . . be examined, particularly where they are widely considered to be acceptable substitutes for human research or where human research is infeasible.” “[E]pidemiologic evidence may be an acceptable substitute for clinical data” in some circumstances.

In conflict with its own published guidance, however, the FTC and class action lawyers have brought a number of suits against dietary supplement companies on the grounds that the supplement claims are not supported by RCTs. Courts have rejected these attempts to ignore federal law. The most recent defeat for the FTC came in U.S. v. Bayer, where the Court denied the FTC’s attempt to demand drug-level clinical trials to support proper structure function claims for the same probiotic product, Phillips’ Colon Health. U.S. v. Bayer, No. 07-0001 (D.NJ).

Unfortunately, despite this defeat, the FTC continues to demand RCTs for dietary supplements. And, following that decision, an FTC attorney reportedly stated: “I don’t think [the US v. Bayer decision] was about whether you need clinical trials.”1 The most recent judicial decision makes clear that this statement is incorrect.

The Court in In re Bayer Phillips Colon Health reinforced that clinical trials are not required. The Court relied heavily on the FTC case (U.S. v. Bayer) and explained that the FTC opinion held that “RCTs are not required to meet the standard of ‘competent and reliable scientific evidence’” and that “dietary supplements do not” need to meet the “higher standard” that applies to drugs. Op. at 15. At bottom, the U.S. v. Bayer opinion means what it says: dietary supplements must be regulated as Congress intended. They are supplements, not drugs.

Private Plaintiffs Cannot Pursue a Lack of Substantiation Claim

The Court also closed the door to a claim favored by private plaintiffs — a “lack of substantiation” claim. Plaintiffs often sue manufacturers under state consumer fraud laws arguing that a particular food or supplement claim is not adequately substantiated by scientific evidence, where they cannot prove that the claim is scientifically false.

In In re Bayer Phillips Colon Health, the Court held that “[m]erely proving that the claims are unsubstantiated is insufficient.” Op. at 20. Rather, “a plaintiff must put forth affirmative evidence of falsity.” Op. at 19. Plaintiffs’ expert in this case testified that his only basis for saying that Bayer’s claims were false was that Bayer had no supportive RCT and that a number of existing RCTs did not show positive results. The Court rejected this testimony and explained that it “is nothing more than a lack-of-substantiation theory.” Op. at 24. The Court further described the expert’s opinion as “pure speculation” or an “educated guess,” both of which are wholly insufficient to survive summary judgment.

Plaintiffs around the country are pursuing similar claims based on a lack of substantiation theory and are tendering experts that apply the drug-level standard. Following the Phillips Colon Health case, courts should similarly reject these claims.

Ninth Circuit Court of Appeals Shuts Down Substantiation Claims

On April 21, 2017, the Ninth Circuit held that a district court in the Northern District of California “correctly concluded that California law does not provide for a private cause of action” for “lack of substantiation” claims under California’s Unfair Competition Law (UCL) (Cal. Bus. & Prof. Code § 17200, et seq.) and Consumers Legal Remedies Act (CLRA) (Cal. Civ. Code § 1750, et seq.).

Relevant Summary

In Kwan v. SanMedica Int’l, No. 15-15496, D.C. No. 3:14-cv-3287, Plaintiff alleged that SanMedica International falsely represented that its Human Growth Hormone (HGH) supplement provided a 682 percent mean increase in HGH levels. The district court granted SanMedica’s motion to dismiss, reasoning that it was based entirely on allegations that SanMedica’s representations lacked substantiation, for which there is no private cause of action. The district court instructed Plaintiff that if she chose to amend her complaint, she had to allege facts “affirmatively disproving” SanMedica’s representations.

Relying on the “firmly established law” in the California Court of Appeal’s decision in National Council Against Health Fraud, Inc., v. King Bio Pharmaceuticals, 107 Cal. App. 4th 1336 (2003), the Ninth Circuit affirmed.

Evaporated Cane Juice is NOT Juice

(06-06-2016) -- Evaporated cane juice, a term usually used to inform about sweeteners derived from the fluid extract of sugar cane, is present on the ingredient lists of many products we see on grocery store shelves. However, newly finalized FDA guidance on use of the term “evaporated cane juice” (“ECJ”) as an ingredient in food labels may change things.

Specifically:

FDA’s present view is that "such sweeteners should not be declared on food labels as ‘evaporated cane juice’ because that term does not accurately describe the basic nature of the food and its characterizing properties (i.e., that the ingredients are sugars or syrups) . . . . Moreover, the use of ‘juice’ in the name of a product that is essentially sugar is confusingly similar to the more common use of the term ‘juice’ – ‘the aqueous liquid expressed or extracted from one or more fruits or vegetables, purees of the edible portions of one or more fruits or vegetables, or any concentrates of such liquid or puree’ (21 CFR 120.1(a)). Thus, the term ‘evaporated cane juice’ is false or misleading because it suggests that the sweetener is ‘juice’ or is made from ‘juice’ and does not reveal that its basic nature and characterizing properties are those of a sugar."

So what is FDA recommending to food companies? "Sweeteners derived from sugar cane should not be listed in the ingredient declaration by names such as ‘evaporated cane juice,’ which suggest that the ingredients are made from or contain fruit or vegetable ‘juice’ as defined in 21 CFR 120.1 . . . . [T]he common or usual name for the [evaporated cane juice] product should be or include ‘sugar’ . . . . FDA would not object to the addition of one or more truthful, non-misleading descriptors before the common or usual name ‘sugar.’"

Red Bull Does Not Give You Wings or More Caffeine Than a Cup of Coffee

(10-17-14) -- The Austrian-based company, Red Bull GmbH, has agreed to pay US$13 million to settle its class action lawsuit pertaining to an alleged breach of express warranty, unjust enrichment, and violations of over 30 state consumer protection acts. The plaintiffs sought compensation primarily for false advertising, claiming that the Red Bull beverage does not provide more benefits to the consumer than a cup of coffee or caffeine pill, contrary to what the company’s global marketing “Red Bull Gives You Wings” campaign would have you believe. The case warrants a review of the concepts of brands and trade marks and the relative importance of each.

Red Bull markets the product as providing more energy than a cup of coffee, despite the fact that a can of Red Bull provides roughly half the content of an equivalent sized cup of coffee. Add to this, a regular serving of Starbucks coffee costs just US$1.85, a marked difference in comparison to the exorbitant cost of a Red Bull can. The suit maintains, “even though there is a lack of genuine scientific support for a claim that Red Bull branded energy drinks provide any more benefit to a consumer than a cup of coffee, the Red Bull defendants persistently and pervasively market their product as a superior source of ‘energy’ worthy of a premium price over a cup of coffee or other sources of caffeine.” In evidence submitted by the plaintiffs, it was alleged that a 7 oz. cup of drip coffee contains approximately 115-175 milligrams of caffeine, while an 8.4 oz. can of Red Bull contains 80 milligrams of caffeine.

Given 75% of Red Bull’s value is estimated to be associated with its brand, the lawsuit was not a matter Red Bull took lightly, as evident from the US$13 million payout to which it has agreed to. US residents, who purchased a can of Red Bull in the last ten years, may be eligible for either a US$10 refund or a US$15 Red Bull product purchase. If it were me, I’d take my refund to Starbucks.

Coca Cola Sued Again Over Deceptive Simply Orange Advertising

Copycat lawsuits appear to be increasing in food labeling cases. The Coca-Cola Company (“Coca-Cola”) is the latest company to be targeted with a copycat suit in California. A putative class action, Phelps v. The Coca-Cola Co., No. BC547592, filed in Los Angeles Superior Court on June 3, 2014, alleges that Coca-Cola misleadingly promoted its Simply Orange brand juices as “fresh,” “100% Orange Juice,” and “100% Pure Squeezed,” when, according to the plaintiff, those juices are actually the product of a complex engineering process and use artificial flavoring.

More specifically, the named plaintiff, Gwen Phelps, alleges that Simply Orange juices are “engineered from multiple batches of oranges and orange products eight months to a year old with algorithms and flavor packs, concocted via an unnatural process.” Plaintiff claims that this process involves stripping the juice of its color and flavor, and then “adding back into the juice natural flavors and fragrances captured during squeezing,” along with “flavor packs” created by fragrance companies. She accuses Coca-Cola of concealing its use of this process and of misleading her and others into purchasing Simply Orange products. Plaintiff has asserted claims for intentional misrepresentation, negligent misrepresentation, fraud, and violation of California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) on behalf of a class of all California residents that purchased Simply Orange products in the last ten years.

More than a dozen similar cases were filed against Coca-Cola in federal courts around the country in 2012, and later consolidated in a multidistrict litigation proceeding in the Western District of Missouri, In re Simply Orange Orange Juice Marketing & Sales Practices Litigation, No. 12-md-02361 (W.D. Mo.). Indeed, the Phelps complaint appears to largely duplicate the allegations made by these federal plaintiffs. This copycat suit was likely spurred by Coca-Cola’s unsuccessful attempt to dismiss the consolidated complaint in the Multidistrict Litigation (MDL). There, Judge Fernando J. Gaitan denied Coca-Cola’s arguments that: (1) the claims were non-actionable puffery; (2) the plaintiffs failed to allege “injury-in-fact”; and (3) the claims were preempted by existing FDA food labeling regulations.

Phelps falls in line with a recent wave of food misbranding lawsuits filed in California state courts which are largely duplicative, if not identical, to cases already pending in federal courts. This trend may stem from the view that California law is more favorable to consumer class actions. And plaintiffs are catching on that, win or lose the first time around, another forum often provides another chance.

TriVita to pay $3.5 million for deceptive claims about cactus juice product

(July 24, 2014) -- The Federal Trade Commission (FTC) has settled with dietary supplement marketer TriVita over accusations that the company advertised its cactusbased drink, Nopalea, as providing health benefits such as relieving inflammation without evidence to support the claims. FTC v. TriVita, No. 14-1557 (U.S. Dist. Ct., Ariz., stipulation approval order entered July 11, 2014). The suit, resolved the day after its filing, accused TriVita of manufacturing Nopalea and marketing it as an “anti-inflammatory wellness drink” that scientific studies have shown “reduces or eliminates the effects of inflammation on the body, relieves pain, relieves swelling, improves respiration, and provides skin health benefits,” even though no scientific studies had been conducted to support the claims. Under the settlement order, TriVita can no longer make health claims about Nopalea without clinical tests by qualified researchers supporting them. See FTC Press Release, July 15, 2014.

State AGs sue 5-hour ENERGY® makers for deceptive advertising

(07-21-14) -- The state attorneys general (AGs) of Oregon, Vermont and Washington have reportedly filed separate lawsuits against Living Essentials and its parent Innovation Ventures seeking a permanent injunction to stop allegedly misleading and deceptive advertising for 5-hour ENERGY®. According to news sources, other state AGs are expected to bring similar action; some 30 have been investigating the accuracy of company ads for the product.

Washington AG Bob Ferguson has alleged that the defendants violated the state consumer protection statute by (i) airing TV commercials with "survey results" from doctors who "recommend" the product "while misrepresenting survey results and failing to disclose key facts"; (ii) using a misleading "no sugar crash" product tagline given studies demonstrating a caffeine crash; (iii) implying that the product can be consumed by teens with the label statement, "Do not take if you are pregnant or nursing, or under 12 years of age"; and (iv) claiming that the "energy blend" in 5-hour ENERGY® and the vitamins and amino acids in Decaf 5-hour ENERGY® are responsible for the products' energy effects when the energy is actually derived solely from caffeine.

Oregon AG Ellen Rosenblum said, "This lawsuit is about requiring truth in advertising. Plainly and simply, in Oregon you cannot promote a product as being effective if you don't have sufficient evidence to back up your advertising claims." A company spokesperson reportedly characterized the Oregon lawsuit's allegations as "grasping at straws" as well as "civil intimidation" and indicated that the companies intend to mount an aggressive defense. See Oregon Department of Justice Media Release and Courier-Herald, July 17, 2014; Reuters, July 18, 2014.

Two judges in the Central District of California dismiss labeling class actions, finding claims challenging strawberry images on nature's path's cereal boxes and "natural" statements on Hain Celestial's cosmetics implausible

(07-01-14) -- Judges George Wu and Manuel Real both recently dismissed two class actions in the Central District of California that challenged the labeling of food and cosmetics as false and misleading. Defendants (represented by a team of MoFo litigators led by William Stern) persuaded the courts that the plaintiffs' claims were implausible as a matter of law. The judges dismissed both cases with prejudice.

In the first case, Shaker v. Nature's Path Foods Inc. et al, No. CV-13-1138-GW (OPx), plaintiffs claimed that the label for "Optimum® Blueberry Cinnamon" cereal was deceptive because the cereal did not contain dried strawberries and failed to meet plaintiffs' notions of "optimum." The claim was based on the image of fresh strawberries shown on top of a bowl of cereal on the front label. The court found plaintiffs' claims implausible, ruling that:

"no reasonable consumer would be deceived into believing that the Cereal – whose packaging prominently features the words ‘Blueberry Cinnamon' – contained dried strawberries by virtue of the photograph of fiber/flake cereal in a bowl, with a spoon, milk, blueberries, and a topping of fresh strawberries."

The court further held that the brand name "Optimum®" is non-actionable puffery.

Judge Real arrived at the same conclusion in Balser v. The Hain Celestial Group, Inc., No. CV-13-5604-R. There, plaintiffs claimed that the "natural" statement on the labels of Hain's Alba Botanica®line of lotion, shampoo and body wash was false and misleading because the products contained synthetic ingredients. The court disagreed, finding that "natural" is a vague and ambiguous term, and plaintiffs' alleged definition -- "existing in or produced by nature; not artificial -- is "implausible as applied to the products at issue: shampoos and lotions do not exist in nature, there are no shampoo trees, cosmetics are manufactured." The court further found that the "defendant actively defines what its use of natural means, so that no reasonable consumer could be deceived."

Together the opinions might signal renewed willingness of judges to dismiss cases on plausibility grounds and to rule on the "reasonable consumer standard" at the pleading stage. This is especially welcome news for cases challenging "natural" labels -- a favorite claim of plaintiffs' attorneys that often survives motions to dismiss.

In August of 2013, the FDA issued a regulation that defines the term "gluten-free" for food labeling.

"Gluten-free" is a voluntary label that manufacturers may elect to use in the labeling of their foods. However, manufacturers that label their foods gluten-free are accountable for using the claim in a truthful and not misleading manner, and for complying with all requirements established by the regulation and enforced by the FDA. The FDA has set a gluten limit of less than 20 parts per million (ppm) for foods that carry the label "gluten-free," "no gluten," "free of gluten," or "without gluten."

Sellers have until August of 2014 to bring their labels into compliance with the FDA regulation. After August 2014, a food that is labeled "gluten-free" but fails to meet the requirements of the regulation will be subject to regulatory action by the FDA. On its website, the FDA states: "We expect that restaurants' use of gluten-free labeling will be consistent with the federal definition . . . Given the public health significance of gluten-free labeling, we encourage the restaurant industry to move quickly to ensure that its use of gluten-free labeling is consistent with the federal definition."

Since use of the phrase "gluten-free" on a product label is voluntary on the part of the seller, and since gluten is not a nutrient whose levels must be disclosed on labels under FDA regulations, use of "gluten-free" labeling does not come within the nutrition labeling mandates of Subpart A of Title 21, Part 101 of FDA regulations governing food labeling.

See 21 C.F.R. 101.9(c) Furthermore, there are nutrition labeling exemptions for small businesses under FDA regulations. See:

21 C.F.R. 101.9(j)(1) (" The following foods are exempt from this section [on nutrition labeling of food]: Food offered for sale by a person who makes direct sales to consumers who has annual gross sales made or business done in sales to consumers that is not more than $500,000 or has annual gross sales made or business done in sales of food to consumers of not more than $50,000, provided that the food bears no nutrition claims or other nutrition information in any context on the label or in labeling or advertising" ); and

21 C.F.R. 101.9(j)(18) (" The following foods are exempt from this section: Food products that are low-volume [meaning] the person claiming the exemption employed fewer than an average of 100 full-time equivalent employees and fewer than 100,000 units of that product were sold in the United States" ).

Soy was never intended for human consumption. What?
· September 28, 2009 – 8:10 am
· Tagged block iron, enzyme inhibitors, GM soy, GMO, goitrogens, growth inhibition, hemagglutinin, natto, phytate, phytic acid, soy, soy sauce, soybean, tempeh, tofu Soy Nutrition… The Whole Soy Story

So, how much soy did Asians eat?

Not much, even though we, as a society have been led by expert mass marketing to think otherwise. Soy has never, ever been a food staple in Asian history. The exception was that the poor often used the soybean to fill their empty bellies during times of famine. Even then, the soybeans were prepared in such a way as to neutralize the natural and inherent soy toxins thus proving that even ancient Asians understood the soybean better than we do today.

To consume a serving of tofu and a couple of glasses of soy milk has become commonplace for many Americans. Soy is also touted as the original protein source for those perusing a vegetarian lifestyle.

This is absolutely in excess of the amount of soy that Asians consume. In native Asia, from where so much of this "research" is purported to have originated, a tablespoon or two of soy is simply used as a condiment. According to K. C. Chang, the editor of Food in Chinese Culture, the total caloric intake of soy in the Chinese diet during the 1930's was only 1.5 percent as compared to 65 percent for pork products.

The huge concern about consuming large amounts of soy products lies in the mega dosing of isoflavones. If consumers follow the nutritional advice of Protein Technologies International (manufacturers of soy-isolated protein) their daily genistein intake (an isoflavin found in soy) could exceed 200 milligrams per day. It goes without saying this level of genistein intake should be avoided.

Up until only two decades ago, soy was considered unfit to eat. By Asians, mind you! To see the hold soy products have on the USA marketplace is truly a miracle. Agricultural literature clearly depicts the soybean and its first and foremost use as a crop rotation plant used to fix nitrogen in the soil. Soybeans did not serve as any form of food until the advent of the Chow Dynasty. During this period, fermentation techniques brought us some of the soy edibles we see today, such as tempeh, soy sauce and natto. In the second century B.C., the Chinese discovered a porridge of cooked soybeans could be precipitated with calcium sulphate or magnesium sulphate (Plaster of Paris or Epsom salts) to make tofu. Sound healthy?

The Chinese did not eat unfermented soybeans as they did other legumes because the soybean contains large amounts of antinutrients (toxins). First among them is hemagglutinin, a clot promoting substance that makes red blood cells clump together. Soy is rich in enzyme inhibitors that block the action of much needed enzymes required to digest proteins. These inhibitors are not deactivated during cooking. They can cause gastric distress and chronic deficiencies in amino acid uptake. Protein inhibitors and hemagglutinin are scientifically proven to inhibit growth, as evidenced in studies of weanling rats that eventually failed to thrive.

Soy contains goitrogens, plant chemicals that inhibit thyroid function. And 99% percent of the soy we consume is genetically modified, otherwise known as GMO. Soy has one of the highest percentages of contamination by pesticides of any of our foods. Soy is rich in phytic acid, a chemical that blocks the uptake of essential minerals. Soy has the highest phytate levels of all the grains and legumes. The phytates have been found to be resistant even to long slow cooking in an effort to denature them. There exist hundreds of research articles on phytic acid and their effects, including binding with certain nutrients like iron to inhibit their absorption.

The marketing push for more soy products has been relentless and global. Public relations firms help convert research projects into newspaper articles and advertising copy. It has worked like a charm. Soy protein is now found in a majority of supermarket breads. Soy can be found blended in the regular old corn tortilla. Try to find a salad dressing in a health food store whose first ingredient is not soy oil. Advertising for a new soy enriched loaf from Allied Bakeries in Britain targets menopausal women seeking relief from hot flashes. It goes on and on.

For more information on the great soy misinformation please consult the well-written and respected book entitled The Whole Soy Story by Dr. Kaayla Daniel.

About The Author:
Dr. Linda Posh MS SLP ND brings a fresh perspective to natural health and nutrition. She packs a solid educational background with degrees in organic chemistry, psychology and a Masters in Communication Sciences and Disorders. Visit www.Nutra-Resources.com for information.

Rivals pounce on overblown ad claims

(05-21-14) -- Weeks after Craig Dubitsky's new company delivered its first shipment of "pink grapefruit" and "mojito mint" toothpaste to about 8,000 stores across the U.S., a letter arrived at his small Montclair, N.J., business, Hello Products LLC. The sender: Procter & Gamble Co.

The consumer products giant and maker of Crest toothpaste wanted Hello to retract its claim—on its labels, in a print ad and on its website — that its toothpaste was "99% Natural." "It really puts the fear of God into you," says Mr. Dubitsky, a 48-year-old entrepreneur. Though he stood by the claim, Mr. Dubitsky said he offered to remove it on the next batch of toothpaste labels, to be printed within a few months. That wasn't good enough. In January, P&G sued Hello, charging it with false advertising as a direct competitor under federal law. Claims about a product's benefits are almost always the jumping off point for marketing and advertising, but overstating the situation — intentionally or unintentionally — can open a manufacturer up to allegations of false advertising. Rivals can claim violations of federal law, while consumers may launch class-action lawsuits under state consumer-protection laws. Small businesses, without a team dedicated to legal and regulatory issues, can easily land on the wrong side of the rules, at least in the eyes of a rival.

Under truth-in-advertising rules, ads must be "truthful and nondeceptive" with evidence to back up their claims, according to Federal Trade Commission guidelines for small advertisers. Penalties can range from cease-and-desist orders, to fines of $16,000 a day, per infraction, according to the government agency. Since 2010, for instance, the FTC has brought charges against 65 advertisers for deceptive health ads alone.

In March, a Supreme Court ruling widened the range of businesses that can sue other companies for false advertising under the federal Lanham Act, by allowing businesses that aren't direct competitors to pursue claims.

Mr. Dubitsky of Hello settled its legal dispute with P&G in March, agreeing to stop selling products with the old label by the end of that month.

Mr. Dubitsky says he believes P&G used federal advertising laws to bully a small competitor—a trend he says he believes is also on the rise. "They were saying that we couldn't call it natural because there were chemicals involved. You know another ‘chemical' process? Photosynthesis," he says. "All this stuff is a gray area," he says about such advertising claims.

A spokesman for P&G declined to comment although it confirmed the details of the dispute. In its March statement, P&G accused Hello of violating advertising laws because its toothpaste "contains ingredients that are extensively and chemically processed," including Fluoride, and wasn't as "natural" as it claimed.

On top of legal fees, which Mr. Dubitsky said came to "six figures," his company was also left with roughly 100,000 tubes of toothpaste that couldn't be sold. Mr. Dubitsky wouldn't disclose the company's annual revenue, saying only that it's "well over" $1 million. The company currently has seven employees.

After the P&G injunction, Hello changed its packaging from "99% Natural" to "Naturally Friendly." As for the old tubes, Hello handed them out on the streets of Manhattan—getting some marketing mileage out of the problematic packages.

Many of the companies that get tangled up in false-advertising claims "are small companies that aren't intentionally doing something wrong, but simply don't know where to draw the line," says Lee Peeler, a former deputy director of Federal Trade Commission's consumer protection bureau and the president of the Advertising Self-Regulatory Council, a division of the Council of Better Business Bureaus that monitors the advertising market. Of the 150 cases of false advertising investigated each year by the council, some 95% are resolved by advertisers after being notified of a problem—such as unsubstantiated claims, misleading prices or uncredited endorsements, Mr. Peeler says.

He adds, "The Internet has really changed things for small companies, because they can now make their own ads and get them in front of consumers fast."

" The Internet makes it easier to make mistakes," says David Klein, a managing partner at Klein Moynihan Turco LLP in New York who represents small advertisers. "In order to keep up with the big players, they feel like they have to exaggerate and they can get in trouble," he says, adding that he is seeing more small firms getting caught up in false-advertising cases in recent years.

False-advertising lawsuits resulted in more than 60 court decisions in 2010, up from fewer than 10 in 1990, according to preliminary data gathered in a study by the University of North Carolina and the University of Notre Dame. "We have every reason to believe the numbers have kept going up" during the period from 2010 through 2014, says Deborah Gerhardt, a University of North Carolina School of Law professor who is coauthoring the study, to be released later this year.

Some recent cases—such as federal regulators ruling against health claims by Pom Wonderful LLC's juice (which the company is appealing)—have raised the profile of claims of misleading marketing, and may inspire similar lawsuits. Many food companies are backing away from claims of "natural" in the face of lawsuits.

Last week, Vibram USA Inc., the maker of FiveFingers running shoes, settled a class-action lawsuit, filed in U.S. District Court in Massachusetts in March 2012, over ads claiming its five-toed shoes strengthened muscles and prevented injuries. The Concord, Mass., company offered to pay a total of $3.75 million to customers, who paid about $100 for the shoes, and agreed to stop making the claims. " For us it was a decision based on legal costs," said Vibram USA CEO Mike Gionfriddo, adding that the legal fees to date are already higher than the cost of the settlement. He said the company removed the health claims in 2012, when the complaint was filed: "We didn't want to mislead our customers."

The Supreme Court holds that competitors may bring Lanham Act claims challenging food and beverage labels that are regulated by the FDA.

On June 12, 2014 in POM Wonderful LLC v. Coca-Cola Co.,[1] the U.S. Supreme Court held in an 8-0 decision that regulations promulgated pursuant to the Federal Food, Drug, and Cosmetic Act (FDCA) regarding food and beverage labeling do not preclude Lanham Act false advertising claims arising from a product's labeling.

POM Wonderful, which sells a pomegranate-blueberry juice blend, filed a Lanham Act claim against Coca-Cola, alleging that Coca-Cola's name, label, marketing, and advertising for one of its juice blends misled consumers into believing the product consisted predominantly of pomegranate and blueberry juice when, in fact, it consisted of 0.3% pomegranate juice and 0.2% blueberry juice. The Coca-Cola label displayed the words "pomegranate blueberry" in all capital letters on two separate lines. Below those words, Coca-Cola placed the phrase "flavored blend of 5 juices" in much smaller type.

The Food and Drug Administration (FDA) has promulgated detailed regulations for the labeling of juice blends and food flavoring, including the use of images of fruits and vegetables in vignettes, pursuant to the FDCA. In light of the FDA regulations in this area, both the district court and the U.S. Court of Appeals for the Ninth Circuit held that, in the realm of labeling for food and beverages, a Lanham Act claim like POM's was precluded by the FDCA, which forbids misbranding of food, including by means of false or misleading labeling. The Court of Appeals explained, "for a court to act when the FDA has not—despite regulating extensively in this area—would risk undercutting the FDA's expert judgments and authority." [2]

The Supreme Court reversed, holding that nothing in the text, history, or structure of the Lanham Act or the FDCA demonstrated a congressional intent to forbid such claims. In fact, the Supreme Court concluded that the Lanham Act and the FDCA complement each other in the federal regulation of misleading food and beverage labels. The Court explained that "[a]lthough both statutes touch on food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety." [3]

The Court rejected the argument that the FDCA precluded Lanham Act claims based on the labeling of food and beverages because such a holding would lead to a result that Congress likely did not intend. In particular, because the FDA does not preapprove food and beverage labels (unlike drug labels) and the FDA does not necessarily pursue enforcement measures against all objectionable labels, "if Lanham Act claims were precluded, then commercial interests—and indirectly the public at large—could be left with less effective protection in the food and beverage labeling realm than in many other, less regulated industries." [4] The Supreme Court concluded that it was unlikely that Congress intended the FDCA's protection of health and safety to result in less policing of misleading food and beverage labels than in competitive markets for other products.

The POM Wonderful decision is important for food and beverage companies in at least two respects.

First, it is now clear that food and beverage companies are not insulated from false advertising claims by competitors. A result of the POM Wonderful decision and the Supreme Court's decision in Lexmark International, Inc. v. Static Control Components, Inc., broadening the scope of plaintiffs who have standing to bring false advertising claims under the Lanham Act, food and beverage companies are likely to face increased litigation in this area in the future. Therefore, food and beverage companies should take appropriate steps to confirm not only that their labels comply with the relevant FDA regulations and the FDCA's statutory prohibition against false or misleading labeling, but also that the labels are not susceptible to claims of false or misleading labeling or advertising in violation of the Lanham Act. For example, these companies should carefully analyze their labels to determine whether a competitor could argue that they make false or misleading claims by implication based on the relevant context, including the images, font sizing, and placement of claims. In certain instances, additional steps, such as consumer surveys, may be appropriate when developing labels for food and beverage products.

Second, by ruling that "the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety," the Supreme Court appears to have undermined the FDCA's misbranding provisions that prohibit food labeling from being "false or misleading in any particular" in arguably any instance where the false or misleading claims are not related to health or safety.

[1]. No. 12-761 (U.S. June 12, 2014), available here.

[2]. Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170, 1177 (9th Cir. 2012).

[3]. Pom Wonderful, No. 12-761, slip op. at 11.

[4]. Id. at 12.

Under FDA regulations at 21 CFR part 111, all domestic and foreign companies that manufacture, package, label or hold dietary supplement, including those involved with testing, quality control, and dietary supplement distribution in the U.S., must comply with the Dietary Supplement Current Good Manufacturing Practices (CGMPs) for quality control. In addition, the manufacturer, packer, or distributor whose name appears on the label of a dietary supplement marketed in the United States is required to submit to FDA all serious adverse event reports associated with use of the dietary supplement in the United States. FDA regulates dietary supplement labels and other labeling, such as package inserts and accompanying literature. The Federal Trade Commission (FTC) regulates dietary supplement advertising.


LINKS:

FTC Policy Statement Regarding Marketing OTC Drugs

Fighting Pharmaceutical Counterfeits in the Middle East


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