Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Cal.: Consumers lacked standing to bring false advertising claims against manufacturer, endorser of prostate treatment, (Feb 5, 2014)

By John W. Arden, J.D., LL.M.

Consumers alleging false advertising against the manufacturer and endorser of Super Beta Prostate, a treatment for symptoms of benign prostate hyperplasia (BPH), lacked standing to pursue monetary or injunctive relief under the California False Advertising Law, Unfair Competition Law, or Consumer Legal Remedies Act, according to the federal district court in Sacramento (Luman v. Theismann, February 3, 2014, Mueller, K.). The claims for monetary relief were moot, since the manufacturer provided refunds prior to the filing of the complaint. The claims for injunctive relief were also moot because the consumers did not allege that they intended to purchase Super Beta Prostate in the future.

Floyd Luman and Joel Amkraut were purchasers of Super Beta Prostate (SBP), which was manufactured and marketed by NAC Marketing Co. and endorsed by former NFL quarterback Joe Theismann in online, radio, and television advertisements. Luman and Amkraut alleged that they purchased SBP for personal use in late 2012. In deciding to purchase the treatment, they allegedly relied on the advertisements featuring Theismann and a doctor, both of whom endorsed the product for treatment of BPH. Luman and Amkraut further alleged that they would not have purchased SBP if they knew “the true facts concerning its safety, efficacy, and failure to comply with FDA regulations.”

The two consumers sought to represent a putative class of purchasers of SBP. As required by the California Consumer Legal Remedies Act (CLRA), they sent NAC pre-suit letters, charging that NAC and Theismann were violating the CLRA and demanding that NAC correct, repair, replace, or rectify the goods alleged to violate the Act. Both parties received refunds for their SBP orders, including the purchase price and shipping costs.

The consumers’ first amended complaint asserted claims for (1) violation of the federal Magnuson Moss Act, (2) breach of express warranty, (3) breach of the implied warranty of merchantability, (4) breach of the implied warranty of fitness for a particular purpose, (5) unjust enrichment, (6) violation of the CLRA, (7) violation of the Unfair Competition Law, and (8) violation of the California False Advertising Law. NAC and Theismann filed a motion to dismiss under Rule12 (b)(6), maintaining that the court lacked subject matter jurisdiction because the consumers did not have standing to pursue either monetary or injunctive relief.

Monetary and punitive relief. NAC argued that the consumers lacked standing to seek monetary relief because their injuries were already redressed through refunds. Therefore, their claims were moot. The Ninth Circuit has found that a claim becomes moot when “an opposing party has agreed to everything the other party has demanded.” As a threshold matter, the district court found that the individual claims for monetary relief were moot because the consumers had received refunds in the full amounts alleged.

The court next addressed whether the claims, despite their mootness, were transitory, permitting the class action to continue because class certification could relate back to the date of the original filing of the complaint. Luman’s claims could not relate back, since his claims were moot when he filed his complaint. Amkraut’s claims were not transitory because they did not involve claims that would expire before the court could rule on class certification.

Contrary to the consumers’ contentions, the defendants’ litigation strategy was not to “pick off” lead plaintiffs in class actions. Luman received his refund before he filed a complaint. “Nothing suggests defendants could have known at the time that he would seek to become a putative class representative,” the court found. Amkraut received his refund only three days after joining Luman’s complaint. “Nothing in the record suggests that defendant NAC issued Amkraut’s refund for reasons distinct from those motivating the refund sent to plaintiff Luman before this action began.”

Luman and Amkraut’s monetary claims were therefore moot and could not relate back to the filing of their complaints. Because they did not have standing to seek compensatory damages, they could not seek punitive damages, the court concluded.

Injunctive relief. NAC further argued that Luman and Amkraut lacked standing to seek injunctive relief because they did not allege that they intended to purchase SBP in the future. Luman and Amkraut countered that courts permit class action plaintiffs to pursue injunctive relief, despite having no intention of purchasing a product in the future. The district court held that Luman and Amkraut did not have individual Article III standing to seek injunctive relief. They did not plead that they continue to be misled by defendants’ advertisements and did not plead that they were likely to be misled again.

The inherently transitory exception to mootness could not resurrect this class action because plaintiffs’ claims for injunctive relief were moot by the time they filed their complaints, in the court’s view. The court was not persuaded by district court decisions that have permitted consumer class action plaintiffs to pursue injunctive relief despite the lack of a realistic threat of repeated harm. “Federal courts are, and always have been, courts of limited jurisdiction. California courts are available to provide the injunctive relief plaintiffs here seek.”

The case is No. 2:13-cv-00656-KJM-AC.

Attorneys: Annick Marie Persinger (Bursor & Fisher, PA) for Floyd Luman. Michael C. Spillner (Orrick, Herrington & Sutcliffe LLP) for Joe Theismann. Brad William Seiling (Manatt, Phelps & Phillips, LLP) for NAC Marketing Co., LLC.

Companies: NAC Marketing Co., LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews