Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Hair care product developer unable to brush off misrepresentation claims, (Jul 20, 2015)

By Greg Hammond, J.D.

Consumers could move forward with false advertising claims against a hair care product developer and marketing companies under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL). The federal district court in Los Angeles denied the defendants’ motion to dismiss, finding that their “impudent” extra-territorial application of California law argument was unfounded and the consumers pleaded their claims with sufficient specificity (Collazo v. Wen by Chaz Dean, Inc., July 17, 2015, Wright, O.).

Los Angeles-based hair stylist Chaz Dean developed the hair care product line “WEN by Chaz Dean,” which is marketed by defendants Guthy-Renker Ltd., Guthy-Renker Partners, Inc., and Guthy-Renker LLC. WEN by Chaz Dean, Inc. is a California corporation with its principal place of business in Santa Monica, California.

Consumers filed suit against Guthy-Renker and WEN, alleging—in part—violations of California’s UCL and FAL. Each plaintiff allegedly suffered extreme hair loss and damage after using the WEN products as instructed. They claimed the defendant’s advertised that WEN products would leave their hair “smoother, shinier, stronger, fuller, more manageable with no frizz” and that the products would also “limit or repair damage as a result of other hair treatments.” The consumers further claimed that one or more WEN products act as a depilatory or caustic agent that damages hair strands and/or follicles, and that the defendants failed to disclose and properly warn consumers of the hazardous ingredient. The defendants moved to dismiss the FAL and UCL claims.

California law. While it was undisputed that the plaintiffs neither live nor suffered their alleged injuries in California, the defendants claimed that their own citizenship was not enough to demonstrate that the alleged harmful conduct—the manufacturing, distributing, and advertising of an alleged harmful product—occurred in California. The court found, however, that the “only unreasonableness is Defendants’ insolent argument,” because: (1) their “impudent assertion” was unsupported by any controlling law; (2) decisions regarding contents of a product and advertising a product were decisions that inherently began and ended at a company’s principal place of business, which was in California in this case; and (3) the defendants failed to carry their burden of proving California’s consumer protection laws did not apply.

Specificity. The defendants next argued that the UCL and FAL claims, which were based on the same “fraudulent course of conduct,” should be dismissed for failure to plead with sufficient specificity as required under Federal Rule of Civil Procedure 9(b). The court disagreed, finding that the consumers pleaded the “who, what, when, where and how” with sufficient particularity. Specifically, the consumers alleged that Chaz Dean and Guthy-Renker acted jointly in the design, manufacture, marketing, sale and distribution of WEN products, and further described the respective roles of the defendants (who); specific misrepresentations on which they relied when purchasing WEN products (what); the dates during which they purchased or used the products (when); they were exposed to the alleged deceptive representations by way of the WEN website, magazine, advertising, infomercials, television ads, and other direct marketing channels (where); and the defendants misrepresented their products as “gentle, natural, free from harsh or damaging chemicals, conditioning and safe,” while concealing the alleged fact that the products contained a “depilatory or caustic agent, causing a chemical reaction that damages the hair strand and/or follicle” (how).

The case number is 2:15-CV-01974-ODW-AGR.

Attorneys: Amy E. Davis (Christiansen Davis LLC) for Plaintiffs. Michael B. Giaquinto (Hawkins Parnell Thackston and Young LLP) for WEN By Chaz Dean, Inc. Jonathan Michael Jackson (Latham and Watkins LLP) for Guthy-Renker Ltd. Dina M. Cox (Lewis Wagner LLP) for Guthy-Renker Partners, Inc. and Guthy-Renker LLC.

Companies: WEN by Chaz Dean, Inc.; Guthy-Renker Ltd.; Guthy-Renker Partners, Inc.; Guthy-Renker LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews