Antitrust Law Daily Wrap Up, ADVERTISING—D. Ariz.: Dietary supplement manufacturer’s claims barred by FDA regulations, (Jan 13, 2014)

By Jody Coultas, J.D.

ThermoLife International LLC could not state Lanham Act false advertising claims against competitor Gaspari Nutrition, Inc. (GNI) because the claims were barred by federal regulations, according to the federal district court in Phoenix (ThermoLife International, LLC v. Gaspari Nutrition, Inc., January 10, 2014, Wake, N.). ThermoLife was, however, granted summary judgment of GNI’s counterclaims.

ThermoLife and GNI compete in the market of dietary supplement products related to bodybuilding. ThermoLife alleged that GNI engaged in false advertising by marketing and selling its products as “safe,” “natural,” “DSHEA-compliant,” and “legal.” GNI counterclaimed that ThermoLife made false statements regarding GNI’s SuperPump 250, Novedex, Halodrol, and Vasotropin products.

ThermoLife could not state Lanham Act false advertising claims against GNI because the claims were barred by the federal regulations, according to the court. GNI contended that ThermoLife was attempting to privately enforce the Dietary Supplement Health and Education Act of 1994 (DSHEA) by asking the court to determine whether certain products were “legal,” “DSHEA-compliant,” “naturally occurring,” and/or “safe” when the FDA had not made such a determination.

The FDA regulates both finished dietary supplement products and dietary ingredients under the DSHEA, an amendment to the Food, Drug, and Cosmetic Act (FDCA). The FDCA expressly bars private enforcement of the DSHEA and private actions under the Lanham Act where the claim would require litigation of the alleged underlying FDCA violation in a circumstance where the FDA has not itself concluded that there was such a violation. A dietary supplement or ingredient is not DSHEA-compliant until the FDA proves and declares the product to be adulterated. Therefore, ThermoLife’s claims regarding whether GNI’s products were “legal,” “DSHEA-compliant,” and/or “safe” were barred. GNI’s claims were not false at the time they were made.

GNI’s statements regarding its products being natural or naturally occurring were mere puffery and not actionable, according to the court. ThermoLife alleged that GNI falsely advertised that Novedex XT was “the safest way to naturally cause positive anabolic effect,” was a “natural vehicle,” contained “naturally occurring anti-aromatase inhibiting compounds,” and had “been shown to increase natural production.” The parties dispute whether an ingredient in Novedex can be considered “natural” or “naturally occurring” because the ingredient can be synthesized from naturally occurring material. Absent a clear and unambiguous ruling from a court or agency of competent jurisdiction, statements by laypersons that purport to interpret the meaning of a statute or regulation are opinion statements, and not statements of fact. Product superiority claims that are vague or highly subjective often amount to nonactionable puffery, while misdescriptions of specific or absolute characteristics of a product are actionable. There was no standard for determining “natural” or “naturally occurring,” and no determination on the issue by the FDA at the time the statements were made. Therefore, the statements represent opinions rather than claims as to the specific or absolute characteristics of the product.

ThermoLife did not show a genuine issue of material fact regarding actual harm suffered by ThermoLife caused by GNI’s allegedly false statements, according to the court. GNI argued that ThermoLife failed to establish actual harm and, even if it had, it could not substantiate the amount of harm. A plaintiff must show that it was injured or likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products. ThermoLife alleged that steroids are not safe, legal, natural, or DSHEA-compliant, but effective. However, there was no evidence that consumers would have chosen ThermoLife’s products instead of GNI’s products had GNI’s not used the allegedly false advertising. Also, the basis of ThermoLife’s argument was that consumers purchased GNI’s products because they were more effective, not because they were advertised as safe, legal, natural, and DSHEA-compliant. GNI’s statements were not shown to have been false at the time they were made.

The court held that the false advertising claims were not barred by laches or the statute of limitations. GNI argued that the three-year statute of limitations barred the claims because ThermoLife knew or should have known before May 16, 2008, about GNI’s allegedly false advertisement of its products as safe, legal, natural, and DSHEA-compliant. However, emails presented by GNI did not show that ThermoLife knew or had reason to further investigate in 2006 or 2007 whether Novedex XT was DSHEA-compliant, naturally occurring, or safe. A party asserting laches must show that a delay in filing suit was unreasonable and that the defendant was prejudiced by the delay if the suit were to continue. GNI could not show that ThermoLife knew of the allegedly false advertising prior and nonetheless delayed two years in filing suit.

ThermoLife was granted summary judgment on GNI’s unfair competition, false advertising, false designation of origin, and/or false description claims, according to the court. GNI alleged that ThermoLife’s publication of false disparaging statements about GNI and its products constituted unfair competition, false advertising, false designation of origin, and/or false description. The statements allegedly made by or on behalf of ThermoLife were misstated and/or they were opinions, predictions, or not false. GNI could not show that the Internet posts at issue were disseminated to the relevant purchasing public or that it lost a single customer as a result. Even if the statements were false and more than opinions, predictions, and puffery, GNI failed to show any of the statements actually deceived or had the tendency to deceive a substantial segment of its audience, the deception was likely to influence the purchasing decision, or that GNI had been or was likely to be injured as a result of the false statement.

The court ordered that neither party receive damages.

The case is No. CV-11-01056-PHX-NVW.

Attorneys: Cara Molly Louise Eskay (Kercsmar & Feltus PLLC) for ThermoLife International LLC. Andrea Lynn Stone (Gallagher & Kennedy PA) for Gaspari Nutrition, Inc.

Companies: ThermoLife International, Inc.; Gaspari Nutrition, Inc.

Cases: Advertising ArizonaNews