Antitrust Law Daily Wrap Up, ADVERTISING—D.N.J.: MonaVie juice maker unable to squeeze past consumer fraud claims, (Aug 20, 2014)

By Greg Hammond, J.D.

MonaVie, Inc. was unable to evade consumer fraud claims alleging that the company falsely advertised the health benefits of its juice products. In denying the juice maker’s motion to dismiss, the federal district court in Newark determined that MonaVie is liable for misrepresentations committed by its distributors based on law of agency and found that consumers satisfied the heightened pleading standard of Fed. R. Civ. Proc. 9(b) (Pontrelli v. MonaVie, Inc., August 19, 2014, Martini, W.).

Background. MonaVie, Inc. and MonaVie, LLC (collectively, MonaVie) are in the business of manufacturing, packaging, advertising, selling, and distributing a line of MonaVie juices that contain açai berry and other fruits. Consumers alleged that the juice maker advertised a number of health benefits regarding açai, including that it can: prevent blood clots and arteriosclerosis, promote better circulation, prevent and treat Alzheimer’s disease, and improve mental focus, stamina, digestion, sleep, and sexual function. Further, the company purportedly advertised that its juices could: reverse cancer in patients with more than 90 days of life left, extend life, manage diabetes, relieve headaches and dizziness, and prevent morning sickness.

A consumer of the juice products, Lisa Pontrelli, filed suit against MonaVie, alleging violations of the New Jersey Consumer Fraud Act, among other claims. MonaVie moved to dismiss the class action.

Liability. The first issue, according to the court, was whether MonaVie can be vicariously liable for the alleged misrepresentations made by its distributors based on an agency relationship. The court noted that an agency relationship is created “when one person (a principal) manifests assent to another person (agent) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.” It concluded that MonaVie could be liable on an agency theory, as (1) distributors are required to pay for the use of MonaVie’s trademark and to sell the juices, demonstrating MonaVie’s consent and authorization to have the distributors act on its behalf; and (2) the existence of clear policies and procedures for distributors to follow demonstrates the juice maker can control and direct the acts of its distributors.

Heightened pleading standard. The second issue the court decided was whether Pontrelli satisfied the heightened pleading requirement of Fed. R. Civ. Proc. 9(b) for her fraud claims. The court concluded that Pontrelli met the heightened pleading standard, as the allegations placed MonaVie on sufficient notice of the charges. Specifically, it found that the juice maker sufficiently alleged: (1) “who,” by identifying MonaVie; (2) “what” and “when,” by listing the company’s juice products during 2005 through the present; (3) “where,” by specifying the advertising and marketing of the products in New Jersey; and (4) “how,” by presenting its claims regarding the allegedly false health benefits of the açai berry and other fruits contained within the juices. The motion to dismiss was thus denied.

The case number is 13-cv-4649-WJM-MF.

Attorneys: Donald A. Beshada (Beshada Farnese LLP) for Lisa Pontrelli. Kurt H. Dzugay (Lewis Brisbois Bisgaard & Smith LLP) for MonaVie, Inc. and MonaVie, LLC.

Companies: MonaVie, Inc.; MonaVie, LLC

Cases: Advertising NewJerseyNews