Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal: Claims that Gerber falsely advertised anti-allergy infant formula may proceed, (Jun 23, 2015)

By Michael Menzhuber, J.D., LL.M.

Consumer claims that Gerber Products Co. made false representations that its Good Start Gentle infant formula could protect infants from developing allergies survived a motion to dismiss. The federal district court in Los Angeles ruled that the consumer stated a claim under the California False Advertising Law and the California Unfair Competition Law (Zakaria v. Gerber Products Co., June 18, 2015, Kronstadt, J.).

Background. Oula Zakaria was introduced to Gerber Good Start Gentle infant formula by her pediatrician. After researching claims made by Gerber that the use of Good State would protect infants from developing allergies, Zakaria discontinued the use of other formula products and exclusively purchased Good Start. Prior to her purchase of Good Start, The Food and Drug Administration (FDA) had rejected two qualified health claims for Good Start that were proposed by Gerber because it found little or no credible evidence between the consumption of 100 percent partially hydrolyzed whey protein formula (pHWF)and the reduced risk of allergies. Also, the findings of a study published in the Journal of Allergy & Clinical Immunology (Lowe Study) did not support the recommendation to use pHWF as a preventive strategy for infants at high risk of allergic diseases.

Zakaria brought a putative class action against Gerber, alleging in part: (1) unlawful business acts and practices, in violation of California’s Unfair Competition Law (UCL); (2) unfair and fraudulent business acts and practices, in violation of the UCL; (3) violation of California’s False Advertising Law (FAL); and (4) violation of the Consumer Legal Remedies Act (CLRA).

Gerber filed a motion to dismiss. Gerber contended that, under the doctrine of primary jurisdiction, and in deference to the FDA, the court should abstain from proceeding. Gerber also contended that Zakaria’s claims were inadequately or improperly pleaded. Zakaria contended that her allegations were supported by certain administrative actions by the FDA, as well as the decision by the Federal Trade Commission (FTC) to bring a civil action in the district of New Jersey against Gerber arising from its marketing and sale of Good Start.

Primary jurisdiction doctrine. Under the doctrine of primary jurisdiction, a court may determine that the initial decision-making responsibility should be performed by the relevant agency rather than the courts. Gerber contended that there was a need for FDA expertise in the evaluation of health claims made in the product label. However, the court determined that a stay or dismissal of Zakaria’s claims was not warranted because her claims did not raise an issue of first impression nor a complex issue.

Gerber also argued that dismissal or abstention was warranted because the FDA was currently considering certain of Gerber’s claims regarding Good Start. The court disagreed because these claims related to issues that were not material to Zakaria’s claims.

Claim for relief. Gerber argued that Zakaria’s complaint should be dismissed because it did not provide a short and plain statement of the claim showing that she was entitled to relief, as required by Federal Rule of Civil Procedure 8(a). Gerber contended that she did not have standing because her complaint referenced advertisements about Good Start that she personally did not see. Also, according to Gerber, the complaint failed to link the limited factual allegations about Zakaria’s personal experience with Good Start with the description of the FDA and FTC proceedings, or the conclusory allegations that made up her causes of action.

The court determined that, even if the references to the FDA and FTC proceedings and the advertisements not personally seen by Zakaria were removed from her complaint, the complaint would still be sufficient. The complaint still would adequately allege a sequence of events in which Gerber made misrepresentations about the health benefits of, and FDA support for, Good Start, as well as her reliance on the them when she decided to purchase Good Start instead of alternative products.

The court further determined that the references to the FDA and FTC proceedings and the other advertisements were not improper because she may have reasonably determined that these allegations were necessary to evaluate certain of her claims under Federal Rule of Civil Procedure 9(b). Also, it was significant that this was a putative class action because other putative class members may have encountered these advertisements.

Pleading fraud or mistake. Gerber argued that that Zakaria’s claims were not pleaded with the particularity required by Rule 9(b) because: (1) her complaint alleged that she purchased Good Start based on her pediatrician’s recommendation and not because of an advertisement that she might have seen; (2) she never alleged that her daughter manifested any infant allergies; and (3) the advertisement she allegedly saw referenced the qualified health claim authorized by the FDA and directed purchasers to “See Label Inside.”

The court, however, determined that the time, place, and content of the false representations, as well as the identities of the parties to the misrepresentations were all set out in Zakaria’s complaint. The court found that: (1) even though Zakaria’s pediatrician introduced her to Good Start, it was not until after she read the allegedly false and misleading statements on Gerber’s website that she ceased buying other infant formulas; (2) Zakaria was not required to allege that her daughter suffered from allergies before she purchased Good Start because Gerber had represented that Good Start would “reduce the risk of developing allergies”; and (3) even if the inside label “cured” the allegedly misleading representation on the front of the Good Start package, whether the packaging as a whole was deceptive was a question of fact that could not be resolved on a motion to dismiss.

False claims. Gerber argued that Zakaria’s complaint alleged, at most, that its health claims regarding Good Start were unsubstantiated and that to maintain a UCL or FAL claim in California requires actual falsehood in the advertising. The court disagreed. It determined that Gerber was on notice of the findings of the Lowe Study, which did not support the recommendation to use pHWF as a preventive strategy for infants of allergic diseases, but continued to advertise Good Start for this purpose. Also, the court found that the allegations that Gerber misrepresented the degree of FDA support for its claims was sufficient to plead affirmative falsehood.

Economic injury. The court determined that Zakaria’s allegations that she purchased Good Start at an “inflated cost” and would have paid less than what she did for Good Start or not purchased the product at all, but for Gerber’s misrepresentations was sufficient to allege economic injury.

The case is No. LA CV15-00200 JAK (Ex).

Attorneys: Daniel L. Keller (Keller Fishback and Jackson LLP) for Oula Zakaria. Geoffrey W. Castello (Kelley Drye and Warren LLP) for Gerber Products Co.

Companies: Gerber Products Co.

Cases: Advertising StateUnfairTradePractices CaliforniaNews