Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: False advertising suit against Vydox manufacturer dismissed for lack of personal jurisdiction, (Jun 3, 2016)

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

A consumer suit against the manufacturer of Vydox for making inaccurate and unsubstantiated claims about the efficacy of the product—in violation of the California Consumers Legal Remedies Act (CLRA), False Advertising Law (FAL), and Unfair Competition Law (UCL)—was dismissed for lack of personal jurisdiction by the federal district court in Los Angeles (Matus v. Premium Nutraceuticals, LLC, May 31, 2016, Pregerson, D.).

Premium Nutraceuticals, a limited liability company incorporated in Georgia, manufactured and sold Vydox, a male performance supplement. It also marketed the product to online resellers who maintained their own websites, each with their own unique claims about Vydox’s efficacy. Premium’s total sales revenue derived from the sale of products to California residents was 1.4 percent. Sales revenue from online resellers accounted for less than two percent of all of its sales.

After purchasing Vydox from a third-party reseller, California resident Robert Matus alleged that Premium’s claims of Vydox’s efficacy were inaccurate and not properly substantiated. His complaint alleged violations of California’s CLRA, FAL, and UCL, as well as negligent misrepresentation. Premium moved to dismiss for lack of personal jurisdiction.

General jurisdiction. The court found that Premium’s contacts with California were insufficient to establish general jurisdiction. Its contacts were not systematic and continuous, and its only apparent contact with California was through its website, which generated only 1.4 percent of its Vydox sales revenue.

Specific jurisdiction. Because Matus’ action was in tort, the court considered whether there was specific jurisdiction by determining whether he satisfied his burden of establishing that Premium purposefully directed its activities toward California. The "effects" test for evaluating "purposeful direction" requires that the defendant allegedly committed an intentional act, expressly aimed at the forum state, causing harm that the defendant knew was likely to be suffered in the forum state.

While Premium intentionally created and maintained a website with the intent of selling Vydox, there was no indication that it took other efforts to target California consumers. Even if Premium had purposefully directed its activities toward California, Matus failed to establish that his claims arose of Premium’s forum-related activities, the court concluded.

The case is No. EDCV 15-01851 DDP (DTBx).

Attorneys: Ryan M. Ferrell (Newport Trial Group APC) for Robert Matus. Daniel F. Crowley (Daniel Crowley & Associates) and Jeffrey Francis Peil (Charles T. Huggins, Jr., PC) for Premium Nutraceuticals, LLC.

Companies: Premium Nutraceuticals, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews