Antitrust Law Daily Wrap Up, ADVERTISING—11thCir: Supplement Manufacturer’s Health, Comparative Claims Not Made in Contempt of FTC Settlement Order, (Apr 16, 2013)

By Tobias J. Gillett, J.D., LL.M.

A nutritional supplement manufacturer did not have to show cause why it should not be held in contempt of an FTC settlement order, barring it from making certain health claims without "competent and reliable scientific evidence" to support them and from making unsubstantiated "comparative health benefits" claims, the U.S. Court of Appeals in Atlanta has ruled (FTC v. Garden of Life, Inc., April 15, 2013, Marcus, S.). The appeals court upheld the district court’s interpretation of the order regarding the FTC’s claims of unsubstantiated health and comparative claims, but vacated its order with respect to a claim the manufacturer made but later withdrew after realizing it misstated the results of a study.

Garden of Life, Inc. (GOL) manufactures nutritional supplements. In 2006, the FTC reached a settlement with GOL, which included an injunction barring certain health claims unless GOL had "competent and reliable scientific evidence" supporting them. It also barred unsubstantiated claims "[a]bout the absolute or comparative health benefits, efficacy, performance, safety, or side effects of such product" and about "the existence, contents, validity, results, conclusions, or interpretations of any test or study."

Subsequently, GOL retained a consulting firm, ISS, headed by an experienced clinical pharmacologist, Dr. Steven Weisman, to review their scientific evidence. In 2009, GOL introduced new supplements for children. GOL placed various health claims on the packaging, in a magazine article, and in advertising, relying on ISS’s reports to substantiate those claims. GOL later withdrew one of these advertisements after discovering it misstated the results of a clinical trial, apparently as a result of a mistake by ISS.

The FTC challenged these claims as inadequately supported by "competent and reliable scientific evidence" and as making improper "comparative health benefits" claims. The agency filed a motion, requesting that the district court issuing the injunction order GOL to show cause why it should not be held in civil contempt. The district court denied the motion, and the FTC appealed.

Substantiation. The appeals court concluded that the district court did not abuse its discretion in concluding that GOL did not violate the injunction by failing to substantiate its advertising claims. The FTC had presented an expert who stated that GOL relied on insufficiently rigorous studies, while GOL had produced a declaration from Weisman describing the studies he relied on and contesting the FTC expert’s opinion. The district court found that the FTC did not "establish by clear and convincing evidence" that GOL had violated the injunction, refusing to find a violation "solely because another well-respected expert defines ‘brain development’ differently or disagrees with certain aspects of a study’s trial design.’"

The appeals court upheld this conclusion, rejecting the FTC’s argument that Weisman "did not qualify as a professional in the relevant area because the relevant area should have been construed narrowly to include only experts in child cognitive and behavioral development." The appeals court noted that the FTC did not provide any support for this "narrow reading." Rather, the court found the district court’s interpretation of its own order to be reasonable, and hence not a clear error, since Weisman was a clinical pharmacologist with 20 years of experience in evaluating scientific support for advertising claims.

Comparative claims. The appeals court also upheld the district court’s conclusion with respect to the "comparative health benefits" claims. The FTC had argued that the phrase "comparative health benefits" included claims comparing GOL’s products to those of other manufacturers. However, the district court determined that "comparative" only referred to "a claim that individuals who take a product will notice an improvement in their health compared to those who do not," and did not cover "comparisons between [GOL’s] products and a competitor’s products."

The appeals court found the district court’s interpretation to be reasonable. The district court found that the term "comparative" was "susceptible to multiple meanings" and that the district court’s interpretation did "no violence to the injunction’s plain language and preserves the meaning of all the terms in the provision."

Moreover, the court’s interpretation followed the canon of ejusdem generis, under which "when general words follow the enumeration of particular classes, the general words should be construed as applying only to things of the same general class as those enumerated." Since all other parts of the relevant section of the injunction targeted "highly specific claims regarding the effect of GOL’s products on named ailments, ejusdem generis "support[ed] interpreting ‘comparative health benefits’ in a way that excludes superiority claims, which are an entirely distinct type of claim from those covered by [the section’s] first nine subparts," in the court’s view."

Withdrawn claim. However, the appeals court concluded that it had to vacate and remand the portion of the district court’s decision addressing the claim that GOL had withdrawn after discovering it misstated the results of a clinical trial. The district court had rejected the FTC’s argument that GOL could not "rely on the underlying study at all because it was methodologically flawed and unscientific," but did not address the FTC’s other argument that the misrepresentation violated the injunction whether or not it was inadvertent. Whether or not the study was reliable, and even if GOL was not required to conduct its own studies, the injunction’s "plain language still required GOL to report truthfully the result of studies it cited."

The appeals court rejected GOL’s contention that the question was moot because it had withdrawn the claim, noting that a court could still assess compensatory fines in civil contempt even if the need to coerce compliance was no longer present. Therefore, the court remanded the case to the district court so it could "address whether GOL’s false description of the bone density study’s results constituted a violation" of the injunction.

The case is No. 12-12382.

Attorneys: Michele Arington for Federal Trade Commission. Jeffrey S. Bucholtz (King & Spalding, LLP) for Garden of Life, Inc.

Companies: Garden of Life, Inc.

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