Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Misrepresentation claims involving sale of homeopathic products effective in surviving dismissal, (Aug 5, 2015)

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

A motion to dismiss a consumer’s complaint, on behalf of herself and a putative class, that a company that sold homeopathic products and the company’s owner (collectively, “defendants”), made false representations in connection with the sale of certain of these products was dismissed in part and granted in part by the federal district court in Los Angeles. The court, however, determined that whether the consumer was entitled to injunctive relief was a matter more appropriately considered later in the proceedings (Thesier-Hendricks v. TJL Enterprises, Inc. August 3, 2015, Kronstadt, J.).

Background. Jacqueline Courtiol-Lawrence was the co-founder and president of TJL Enterprises, Inc. (TJL), a company that manufactured homeopathic products, including Colic Calm, that were sold through retail stores and online retailers. Wannita Thesier-Hendricks purchased a Colic Calm approximately five times for her infant grandson. In making these purchases, she relied on certain representations on the Colic Calm label.

The Colic Calm product did not provide the promised relief and Hendricks brought a putative class action against TJL and Lawrence alleging: (1) violation of the Magnuson-Moss Warranty Act; (2) violation of the Consumer Legal Remedies Act; (3) violation of the California Unfair Competition Law; (4) breach of express warranty; and (5) unjust enrichment. The defendants moved to dismiss the complaint.

Sufficiency of Pleadings. The defendants argued that Hendricks’ claims that Colic Calm was ineffective were implausible because: (1) Colic Calm was represented as “fast acting”, (2) she purchased the product five times; and (3) no reasonable consumer would make a series of purchases if he or she believed the product was ineffective. The court, however, determined that the defendants’ argument went to the merits of the factual bases for Hendricks’ claims. Therefore, it was not a matter that could be addressed on a motion to dismiss.

The defendants contended that the complaint should be dismissed because it was premised on a lack of substantiation of the claimed benefits of the product. They argued that Hendricks was required to offer evidence, at the pleading stage, of the claimed benefits. In the alternative, they argued that, because one of the product’s ingredients had been diluted to only a tenth of the unstated original amount, there was no evidence that this ingredient alone could not make its product effective. Hendricks, however, argued that her fraud claim was not based on an alleged absence of testing to substantiate the claims of efficacy. She also argued that synergy would not occur, for purposes of the efficacy of the product, if one ingredient was highly diluted.

The court determined that the defendants’ arguments went to the core factual issue of whether or not the products were effective and, because the allegations in the complaint were sufficient to support its basic claim, the defendants’ motion to dismiss was denied.

The defendants argued that the express warranty claims failed under both federal and state law because there was no warranty that the products were “FDA-Approved.” Hendricks argued that the juxtaposition of representations on the label, “FDA-Regulated” and “safe, gentle, and effective”, could reasonably lead consumers to believe that the defendants warranted that the products were approved by the FDA as safe and effective. The court determined that the defendants’ arguments were fact-based and, therefore, denied their motion to dismiss.

Dismissing Defendant Party. The defendants argued that Lawrence should be dismissed as a party because she neither sold nor distributed the products. However, the complaint alleged that Lawrence was personally involved in marketing the products. For this reason, and for the reason that whether the Hendricks had standing to challenge statements made by Lawrence to which she may or may not have been exposed was an issue more appropriately considered in connection with a later motion for class certification. The court, therefore, denied the motion to dismiss Lawrence as a defendant.

Striking Allegations in the Complaint. The defendants argued that Hendricks claims should be dismissed to the extent that they rely on misrepresentations and warranties that she did not consider or rely on. The court, however, found that there was no basis for striking these allegations because they were not ripe for determination.

The defendants also argued that “controlling” California law demonstrated that the alleged statement “FDA-Regulated” was unequivocally true. However, Hendricks argued that the defendants’ use of the term “FDA-Regulated” implied that the FDA had considered the safety and efficacy of the products when it had not and, therefore, constituted a misleading statement. The court determined that the issue of whether the term “FDA-Regulated” was misleading could not be resolved on a motion to dismiss.

Injunctive Relief. The defendants argued that Hendricks’ request for injunctive relief should be denied because she lacked standing to pursue it. The court determined that the issue of injunctive relief should not be resolved at this stage of the proceeding.

The case is No. LA CV15-00477 JAK (SSx).

Attorneys: Annick Marie Persinger (Bursor and Fischer PA) for Wannita Thesier-Hendricks. Matthew G. Ball (K&L Gates LLP) for TJL Enterprises, Inc., and Jacqueline Courtiol-Lawrence.

Companies: TJL Enterprises, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews