Antitrust Law Daily Wrap Up, ADVERTISING—E.D. N.Y.: Some consumer claims regarding Revlon’s “Age Defying with DNA Advantage” cosmetics tossed, (May 15, 2015)

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

Claims brought by consumers Anne Elkind and Sharon Rosen as part of a putative class action against Revlon Consumer Products Corporation for deceptive advertising in relation to Revlon’s use of the phrase “Age Defying with DNA Advantage” were not preempted by the federal Food, Drug, and Cosmetic Act (“FDCA”) and could proceed, the federal district court in Central Islip, New York, has decided (Elkind v. Revlon Consumer Products Corporation, May 14, 2015, Seybert, J.). However, claims based on the mislabeling of cosmetic foundation and concealer products by Revlon were preempted by the FDCA and were dismissed. In addition, the plaintiffs lacked standing to assert a claim for injunctive relief and claims based on the marketing and labeling of cosmetic powder because they did not purchase the powder. Certain other claims brought by the plaintiffs were dismissed for failure to state valid claims.

Background

Revlon markets, advertises, and sells three types of cosmetics under the brand name “Revlon Age Defying with DNA Advantage,” the court noted. The three types of cosmetics are a cream makeup (“Foundation”), a powder (“Powder”), and a concealer (“Concealer” and together with the Foundation and the Powder, the “Products”). The phrase “Age Defying with DNA Advantage” is prominently featured on the Products and their packaging. The Products’ dress also contain a silhouetted “double-helix” shape often associated with the structure of DNA. In-store displays of the Products state that the Products “[h]elp[ ] protect the skin’s DNA to fight signs of aging.”

According to the plaintiffs, the phrase “Age Defying with DNA Advantage,” together with the invocation of the double-helix silhouette and the in-store claim that the Products “[h]elp[ ] protect the skin’s DNA to fight signs of aging” suggest that the Products work to retard aging by manipulating the DNA in skin cells. Specifically, the plaintiffs allege that these statements led them (and would lead a reasonable consumer) to believe that the Products would “interact with the skin’s DNA, perhaps on a cellular or molecular level, to provide scientifically-enhanced therapeutic benefits that reverse, minimize, slow, or otherwise ‘defy’ the process of aging.”

The plaintiffs further allege that the Products are incapable of functioning in the manner that their labeling suggests. Each of the Products, the plaintiffs allege, is composed of at least some the following ingredients: niacinamide, sodium hyaluronate, ceramide complex, cottonbloom extract, and acerola extract. The Foundation also contains the additional sunscreen ingredients octinoxate and titanium dioxide. According to the plaintiffs “none of the[se] ingredients . . . is capable of stimulating, interacting with, or otherwise affecting the DNA in human skin cells, as Revlon’s advertising suggests.”

The plaintiffs assert 15 causes of action: (1) false advertising in violation of New York General Business Law § 349; (2) false advertising in violation of New York General Business § 350; (3) negligent misrepresentation; (4) intentional misrepresentation; (5) unfair competition in violation of the California Business and Professional Code § 17200 et seq.; (6) false advertising in violation of the California Business and Professional Code § 17500 et seq.; (7) violation of the California Civil Code § 1750 et seq.; (8) breach of express warranty under New York law; (9) breach of implied warranty of merchantability under New York law; (10) breach of implied warranty of fitness under New York law; (11) breach of express warranty in violation of the California Commercial Code; (12) breach of implied warranty of merchantability in violation of the California Commercial Code; (13) breach of implied warranty of fitness in violation of California Commercial Code; (14) unjust enrichment; and (15) restitution.

The claims fall along two general lines of argument, the court observed. First, the plaintiffs allege that Revlon’s using the phrase “Age Defying with DNA Advantage” on the Products’ labels and in other marketing duped them into believing that the product would favorably interact with their DNA on a molecular level. These allegations form the basis of the plaintiffs’ second, third, fourth, sixth, and seventh through thirteenth causes of action. Second, because the phrase “Age Defying with DNA Advantage,” manifests an intent that the Products be used to manipulate the cells, the Products are over-the-counter drugs, as defined by the FDCA. And as such, the Powder and Concealer are mislabeled because they do not comply with the FDCA’s drug labeling requirement that all of a drug’s ingredients be listed, and they therefore violate New York and California laws prohibiting the unlawful sale of products. These allegations form the basis of the plaintiffs’ first and fifth causes of action. For simplicity’s sake, the court would refer to those of the plaintiffs’ claims that fell along the former line of argument as the plaintiffs’ “Deceptive Advertising Claims” and those adopting the latter argument as the plaintiffs’ “Mislabeling Claims.”

Before the court was Revlon’s motion to dismiss.

Standing

Because standing is a jurisdictional matter, the court considered Revlon’s arguments that the plaintiffs lacked standing to bring some of their claims before considering the merits of Revlon’s motion to dismiss.

Injunctive relief. In addition to monetary damages, the plaintiffs requested an order enjoining Revlon from selling the Products. Because they have not alleged any likelihood of continuing or future harm, however, the plaintiffs lacked standing to seek this form of equitable relief, the court ruled.

That the plaintiffs have been injured by their prior purchase of the Products was insufficient for standing, as past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief. Moreover, the plaintiffs were now aware of the alleged misrepresentations that they challenged, so there was no danger that they would again be deceived by them. Thus, the request for an injunction was dismissed.

Products not purchased. Though they alleged to have purchased only the Foundation and the Concealer, the plaintiffs asserted claims arising from Revlon’s advertising of the Powder as well. The plaintiffs lacked standing to bring those claims related to the Powder, the court held. Because they have not purchased the Powder, the plaintiffs have not been injured in the “personal and individual way” required by Article III. Because the plaintiffs did not have Article III standing to assert claims arising from the marketing of the Powder, the court did not need to determine whether they had class standing to do so.

Motion to Dismiss

Preemption. The FDCA pre-empts any state requirement that “(1) relates to the regulation of a [non-prescription drug] and (2) that is different from or in addition to, or that is otherwise not identical with [federal law].” 21 U.S.C. § 379r. The plaintiffs’ Deceptive Advertising Claims were not preempted because they failed at the first element. The FDCA did not endeavor to regulate—and therefore did not purport to pre-empt—whether certain phrases on the branding of non-prescription drugs are misleading. Indeed, “advertising issues relating to . . . misleading or deceptive claims are outside the scope of pre-emption.” See H.R. Rep. No. 105-399, at 103 (1997), 1997 U.S.C.C.A.N. 2880, 2893 (Conf. Rep.).

Put another way, the Deceptive Advertising claims were independent of the FDCA, and would exist even in its absence, the court explained. Determining whether the phrase “Age Defying with DNA Advantage” is misleading under New York and California law did not require the court to interpret, apply, add to, or work through FDCA regulations, and pre-emption therefore did not apply.

The plaintiffs’ Mislabeling Claims, however, did not escape preemption, the court held. These claims arose because the plaintiffs alleged that the Powder and the Concealer violated the FDCA, and prosecuting that violation lied squarely within the province of the FDA, according to the court. Thus, the plaintiffs’ Mislabeling Claims (counts one and five) were dismissed with prejudice.

Primary jurisdiction. Revlon next argued that the court should refrain from entertaining the plaintiffs’ claims as a matter of deference to the FDA, pursuant to the doctrine of primary jurisdiction. Primary jurisdiction is a matter of judicial prudence which provides that the courts should not mettle in claims where the enforcement requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.

Based on its analysis of the relevant factors, the court declined to apply the doctrine of primary jurisdiction to the plaintiffs’ Deceptive Advertising Claims. The ultimate question was one of consumer confusion rather than anything of the technical or scientific nature better suited to the FDA and the danger of inconsistent rulings was low because there parties did not suggest that any FDA ruling or guidance was imminent.

New York General Business Law § 350. New York General Business Law § 350 states, “[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state is hereby declared unlawful.” N.Y. GEN. BUS. LAW § 350. To state a claim for violation of section 350, a plaintiff must plead: “(1) that the act, practice or advertisement was consumer-oriented; (2) that the act, practice or advertisement was misleading in a material respect, and (3) that the plaintiff was injured as a result of the deceptive practice, act or advertisement.” Pelman v. McDonald’s Corp., 237 F. Supp. 2d 512, 525 (S.D.N.Y. 2003). Additionally, a plaintiff must plead reliance on the misleading advertising at the time of purchase.

Revlon disputed whether the plaintiffs pleaded an injury cognizable under Section 350. The plaintiffs alleged that they paid a premium for the product based on Revlon’s alleged misrepresentations. This was a sufficient allegation of injury. Accordingly, because the plaintiffs adequately pleaded injury under Section 350, Revlon’s motion to dismiss that claim (count two) was denied.

Negligent misrepresentation. The court agreed with Revlon that the plaintiffs’ claims for negligent misrepresentation must be dismissed pursuant to the economic loss doctrine.

Intentional misrepresentation/fraud. The economic loss doctrine did not apply, however, to the plaintiffs’ intentional misrepresentation claim, the court held. Further, the plaintiffs adequately pleaded their fraud claim. They alleged a material false misrepresentation: the statements of the Products’ efficacy suggested by “use of the terms ‘DNA,’ ‘DNA Advantage,’ ‘with DNA Advantage,’ and ‘Age Defying with DNA Advantage.’” They pleaded when and where Revlon was alleged to have made those representations. By pleading that Revlon knew the phrase did not have the effects suggested, the plaintiffs likewise pleaded sufficient facts to support an inference that Revlon intended to defraud its customers. Finally, they appropriately pleaded that they relied on the labels and in-store advertisements, and that they suffered economic injury as a result. Accordingly, the motion to dismiss the plaintiffs’ fraud claim (count 4) was denied.

Express warranty claims. The plaintiffs stated claims for breach of express warranty under New York and California law, the court reasoned. “Age Defying with DNA Advantage” could be plausibly inferred to suggest that the product would combat or reverse aging by interacting with one’s DNA. At this early pleading stage, such a statement of fact regarding the Products’ efficacy was sufficient to constitute an express warranty. Thus, Revlon’s motion to dismiss the plaintiffs’ express warranty claims (counts eight and eleven) was denied.

Implied warranty claims. The plaintiffs did not allege any contractual privity with Revlon, so their implied warranty claims (counts nine, ten, twelve, and thirteen) were dismissed.

Unjust enrichment and restitution. The plaintiffs failed to show how their claims for unjust enrichment and restitution were in any way distinct from their contract and tort claims, the court determined. Therefore, those claims (counts fourteen and fifteen) were dismissed as duplicative.

The case is No. 14-CV-2484 (JS) (AKT).

Attorneys: John Joseph Fitzgeral IV (Law Office of Jack Fitzgeral, PC) for Anne Elkind. Patricia Glaser (Glaser Weil) for Revlon Consumer Products Corporation

Companies: Revlon Consumer Products Corporation

Cases: Advertising StateUnfairTradePractices NewYorkNews