Antitrust Law Daily Wrap Up, ADVERTISING—EDNY: Vitamin Purchasers’ Suit Over Health Benefit Claims Proceeds, (Mar 18, 2013)

By Jody Coultas, J.D.

Vitamin purchasers stated claims against The Ester C Company for marketing its vitamin products as having health benefits they did not have, according to the federal district court in Central Islip, New York (Hughes v. The Ester C Company, March 15, 2013, Bianco, J.).

Ester C sells products containing large dosages of vitamins, including products with very high dosages of Vitamin C. Vitamin purchasers in California, Missouri, and New York alleged that statements made by Ester C on packaging and on its website as to the purpose and performance of its products were false and misleading. The purchasers alleged that Ester C and retailers of Ester C had no credible evidence that the products would perform as claimed.

Standing. The purchasers had standing to assert their claims, according to the court. To have standing, a party must allege an injury in fact, a fairly traceable connection between the injury and the complained-of conduct, and a likelihood that the requested relief will redress the alleged injury. Each purchaser alleged that they bought Ester C based on its representations as to immune support, and that they would not have purchased Ester C or paid the premium price had they known the statements were false or deceptive. The economic injury alleged was sufficient to establish an injury in fact. The injury was also fairly traceable to Ester C’s allegedly deceptive conduct and could be redressed by the court.

Lack of Substantiation. Because the purchasers alleged more than a lack of substantiation of packaging and advertising claims, the court declined to dismiss the consumer protection claims. Ester C argued that the purchasers’ consumer protection claims were actually lack of substantiation claims, which cannot support false or misleading advertising claims. A number of California courts have held that consumer protection law claims asserting fraudulent misrepresentation based on a lack of substantiation must also allege facts from which a court may infer deception.

The court determined that the purchasers were not bringing a stand-alone lack of substantiation claim. Instead, the purchasers referenced scientific evidence which they asserted established the fraudulent nature of the alleged representations. Accepting the allegations as true, and drawing all reasonable inferences in purchasers’ favor, the court concluded that the purchasers articulated a plausible claim that a reasonable consumer could be misled into believing that Ester-C’s products may help in preventing or shortening the duration of colds or flu.

California law. The purchasers stated California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) claims against Ester C, according to the court. The CLRA prohibits specified unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer, including representing goods as having qualities or benefits they do not have. The FAL prohibits disseminating in any advertising medium any statement which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading. Unfair competition under the UCL includes unlawful, unfair, or fraudulent business acts.

Missouri law. The court also declined to dismiss the Missouri Merchandising Practices Act (MMPA) claims. To state a MMPA claim, a party must allege that they (1) purchased a product sold or advertised by defendants; (2) for personal, family, or household purposes; and (3) suffered an ascertainable loss of money or property; (4) as a result of an act declared unlawful by Mo. Rev. Stat. §407.020. The plaintiffs alleged that they purchased Ester C for personal use, that they suffered ascertainable losses by paying more than they would have if the product had not been misrepresented, and that the labeling and marketing was deceptive.

New York law. The purchasers stated claims of intentional and negligent misrepresentation under New York common law, according to the court. Ester C allegedly made a material false representation and promoted its products as having qualities they did not in fact possess with the intent to defraud consumers. The purchasers alleged that they reasonably relied on these false statements to their detriment, that Ester C was careless in making statements upon which consumers were expected to rely, and that Ester C had a duty to act with care vis-à-vis consumers.

The case is No. 12-CV-0041 (JFB) (ETB).

Attorneys: Kim Richman (Reese Richman LLP) for Patrick Hughes. James D. Arden (Sidley Austin LLP) for The Ester C Company.

Companies: The Ester C Company; NBTY, Inc.; NatureSmart LLC

Cases: Advertising StateUnfairTradePractices NewYorkNews