Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Cal.: Marketing of Banana Boat sunscreen products could have violated California statutes, (Aug 5, 2013)

By Peter Reap, J.D., LL.M.

Aida Corra, on behalf of herself and a putative class, adequately alleged in her first amended class action complaint (FAC) that the manufacturers of Banana Boat sunscreen products violated the California Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) by promoting the superior UVB protection of their Banana Boat SPF 85-110 collection products in a manner that was false, misleading, and deceptive, the federal district court in Fresno, California, has determined (Corra v. Energizer Holdings, Inc., August 1, 2013, Ishii, A.). However, Corra failed to state a claim for breach of express warranty. Thus, the manufacturers’ (Energizer Holdings, Inc., Playtex Products, LLC, and Sun Pharmaceuticals, LLC, the “Defendants”), motion to dismiss the FAC was granted in part and denied in part.

Background. According to the suit, the Defendants continue to claim that the Banana Boat SPF 85-110 collection provides superior UVB protection and sells the products for a price premium over comparable lower value SPF products, including the Banana Boat SPF 50 Products, despite scientific evidence that SPF values higher than 50 provide no additional clinical benefit. Corra and the other class members (collectively, the “Plaintiffs”) have been and will continue to be deceived or misled by the Defendants’ deceptive superior UVB protection claims, the suit alleged.

Preemption. The Defendants contended that the Plaintiffs’ claims were preempted in their entirety by federal law, both expressly by the provisions of the FDA’s Final Rule, Labeling and Effectiveness Testing, Sunscreen Drug Products for Over-the-Counter Human Use, 76 Fed. Reg. 35,620, and impliedly because they conflicted with the statutory scheme governing the labeling of sunscreen products, and must therefore be dismissed. Essentially, the Defendants argued that the Plaintiffs sought to impose a different state requirement than the federal requirement. The claims were not preempted, the court determined.

The Plaintiffs were not attempting to enforce any sort of state labeling requirement by seeking to prohibit the use of SPF ratings above 50, as the Defendants contended, because the Plaintiffs’ position was not that the SPF 85-110 ratings on Defendants’ products were themselves per se false or misleading, according to the court. Rather, the Plaintiffs alleged that the way the Defendants marketed their sunscreen products beyond simply providing an SPF rating—in effect, combining the use of SPF ratings with price differentials and claims of proportionally greater protection—misled consumers into purchasing more expensive, higher SPF-rated products even though, according to the Plaintiffs, these products did not provide proportionally greater protection than less expensive, lower SPF-rated products. If Plaintiffs were to prevail under the UCL and CLRA, the Defendants’ SPF labeling duties would remain unchanged.

Moreover, to the extent the Defendants intended to argue that 21 C.F.R. § 201.327, which codified the FDA’s Final Rule, encompasses the general duty not to engage in false or misleading advertising—and preempts the UCL and CLRA on this issue—in that the regulation. accounts for all claims by a sunscreen purveyor that could conceivably be deemed false or misleading, the argument was likewise without merit, the court held.

The Defendants further contended that conflict (implied) preemption precluded the claims. Conflict preemption occurred when it is impossible for a private party to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Here, it would not be impossible for the Defendants to simultaneously comply with their FDA labeling duties and their duty not to engage in false or misleading advertising under the UCL and CLRA. Furthermore, the claims were not based on (and did not require interpretation of) the Final Rule, but only required the court to determine whether the advertising claims made by the Defendants were false or misleading. Accordingly, the claims were not impliedly preempted.

Primary jurisdiction. Defendants contended that the claims must be dismissed on the ground of primary jurisdiction. The primary jurisdiction doctrine is a prudential doctrine under which courts may, under appropriate circumstances, determine that the initial decisionmaking responsibility should be performed by the relevant agency rather than the courts. There was no basis to apply the doctrine here, the court ruled.

The gravamen of the claims was that the Defendants violated California’s consumer protection statutes by marketing their sunscreen products in a false and/or misleading manner so as to induce consumers to purchase those products. Whether the Defendants did so was the type of factual question that was routinely committed to the courts, the court observed. Further, nowhere did the Plaintiffs seek to enjoin the Defendants from complying with the Final Rule; the Plaintiffs simply sought to enjoin the Defendants from further engaging in a course of conduct that violates the UCL and CLRA.

Standing. The Defendants contended that Corra lacked Article III standing to pursue claims pertaining to products she did not purchase. In the FAC, Corra alleged she purchased the Sport Performance® Sunscreen SPF 100 Lotion based on the Defendants’ alleged misrepresentations. However, the UCL and CLRA claims alleged that the Defendants’ misrepresentations extended to nine products in the Defendants’ SPF 85-110 Collection that appeared not to have been purchased by Corra.

District courts in California appeared to be split on the issue of whether a consumer had standing to assert claims only as to products she actually purchased, the court noted. In Anderson v. Jamba Juice Co., 888 F.Supp.2d 1000 (N.D.Cal. 2012), a UCL/CLRA class action involving alleged misrepresentations on at-home smoothie kit labels, the defendant argued the plaintiff did not have standing to bring claims on behalf of purchasers of smoothie kit flavors he did not buy because he could not have suffered any injury from them. The court disagreed, finding the plaintiff had standing to bring claims on behalf of consumers who had purchased similar, but not identical, products. The reasoning of the Anderson court was persuasive, the court held.

For the purpose of the Defendants’ motion, the product Corra purchased was sufficiently similar to the nine products she did not purchase in that she alleged (1) they all contained virtually identical active ingredients and (2) the Defendants marketed them in virtually the same manner. Accordingly, Corra had standing to bring claims concerning all ten products on behalf of herself and the putative class members, the court held.

Breach of express warranty. California courts use a three-step approach to express warranty issues. First, the court determines whether the seller’s statement amounts to an affirmation of fact or promise relating to the goods sold. Second, the court determines if the affirmation or promise was part of the basis of the bargain. Finally, if the seller made a promise relating to the goods and that promise was part of the basis of the bargain, the court must determine if the seller breached the warranty. Here, the Plaintiffs failed to allege facts sufficient to state a breach of express warranty claim, the court ruled.

Corra alleged that by representing their products were rated at SPF 85, 110, etc., charging a premium for higher SPF-rated products, and claiming higher SPF-rated products provided proportionally greater protection, the Defendants “warranted” higher SPF-rated products had greater efficacy, thereby inducing her and her putative class members to those products when they would otherwise have purchased less expensive, lower SPF-rated products with equivalent protection. Problematically for the Plaintiffs, even assuming that the Defendants’ SPF ratings constituted a warranty, nothing suggested that each of the Defendants’ products failed to function in accordance with its rating or claimed level of protection. Consequently, the Defendants’ motion to dismiss the cause of action for breach of express warranty had to be granted.

CLRA pre-litigation notice. Lastly, the Defendants contended that the CLRA cause of action had to be dismissed because Corra failed to provide the Defendants with the requisite pre-suit notice. The CLRA includes a prefiling notice requirement on actions seeking damages.

The pre-suit notice letters Corra allegedly mailed to the Defendants, copies of which were attached as exhibits to the complaint, were dated October 24, 2012, the same day the complaint was filed, the court noted. If the original complaint were the operative complaint, and the Defendants were moving to dismiss that complaint (as opposed to the FAC), the court might be inclined to grant the motion or at least strike the request for CLRA restitution and disgorgement.

However, Corra filed the operative pleading, the FAC, on November 26, 2012, more than 30 days (the requisite notice period) after the October 24, 2012 letters were mailed. Because the Defendants had not identified anything technically non-compliant about the notice letters, and the notice letters predated the FAC by more than thirty days, Corra was entitled to request damages in the FAC, regardless of whether she could have done so in the complaint, the court ruled.

The Defendants’ argument that the claim for damages and other non-equitable CLRA relief should nonetheless be dismissed with prejudice for Corra’s failure to comply with the notice requirement prior to filing the original complaint was rejected.

The case is No. 1:12-cv-01736-AWI-SKO.

Attorneys: Elaine A. Ryan (Bonnett Fairbourn Freidman and Balint) for Aida Corra. Daniel Scott Schecter (Latham and Watkins) for Energizer Holdings Inc.

Companies: Energizer Holdings, Inc.; Playtex Products, LLC; Sun Pharmaceuticals, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews