Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: False advertising claims against health and beauty products manufacturer dismissed, (May 28, 2015)

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

A health and beauty products manufacturer’s motion to dismiss an individual’s California consumer protection law claims and breach of express warranty claim was granted by the federal district court in Los Angeles (Marshall v. PH Beauty Lab, Inc., May 27, 2015, Pregerson, D.). The court denied the part of the motion to dismiss certain claims and allegations of puffery and standing grounds after the manufacturer abandoned those arguments.

PH Beauty Labs, Inc., dba Freeman Beauty, (PH Beauty) sells a line of skin care products that claim to provide anti-aging benefits. Geri Marshall purchased one of these products in spring of 2011. She continued purchasing the product until she determined that it was not providing her the promised results.

In February of 2015, Marshall brought an action against PH Beauty under the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA). In response, PH Beauty filed a motion to dismiss.

Marshall’s claims under the FAL and CLRA were time-barred because she purchased its product in the spring of 2011 but did not file her complaint until February of 2015, according to the court. FAL and CLRA claims are subject to a three-year statute of limitation. Marshall argued that her claims should not be time-barred because she made subsequent purchases of the product and these purchases may have occurred within the three-year limitations period. The court dismissed this argument as a “speculative assertion” and not sufficient to state a plausible claim within the limitations period.

Marshall also argued that the “continuing violation doctrine” applied and, therefore, her CLRA and FAL claims should not be time-barred. Under the “continuing violations doctrine”, a series of small harms, any one of which may not be actionable on its own, are aggregated into a single cause of action. The court dismissed this argument because: (1) it was unclear why Marshall could not have brought her claim after her initial disappointment in 2011; and (2) why the instance of the alleged deficiency would only be actionable in conjunction with subsequent failures of the product.

Marshall lastly argued that her CLRA and FAL claims should not be time-barred under the “delayed discovery rule” because: (1) she discovered the cause of action in May of 2014 after speaking with her counsel; and (2) she could not have discovered PH Beauty’s alleged deceptive practices earlier because she was not a skin care expert and did not have access to scientific publications. The court noted that the “delayed discovery rule” postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover the cause of action. However, it disagreed that the rule applied because Marshall knew in the spring of 2011 that the product did not deliver on its promise but waited over three years to file her complaint.

The court noted that Marshall’s UCL claim was not time-barred by the statute of limitations because the limitations period on UCL claims is four years and Marshall’s claim was filed within a four-year period. However, the court still determined that the claim should be dismissed because Marshall’s allegations under this claim constituted a “substantiation claim” rather than an “establishment claim.” In distinguishing between a “substantiation claim” and an “establishment claim”, the court noted that the former merely alleges that a defendant’s representations are insufficiently substantiated while the later alleges that the representation has been proven false. The court also noted that, while a “substantiation claim” has been sufficient in some jurisdictions to survive a motion to dismiss, a “substantiation claim” cannot serve as a basis for a false advertising or UCL claim under California law.

The case number is No. CV 15-02101 DDP (AGRx)

Attorneys: Ronald A. Marron (Law Offices of Ronald A. Marron APLC) for Geri Marshall. J. Craig Crawford (Carr McClellan PC) for PH Beauty Labs, Inc.

Companies: PH Beauty Labs, Inc.

Cases: Advertising CaliforniaNews