Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: California claims could not be based on lack of substantiation, (Feb 26, 2015)

By Dan Selcke, J.D.

A consumer’s continued insistence that there were no studies supporting a drug manufacturer’s advertising representations about its over-the-counter supplement was not enough to state a claim for false or misleading advertising under California consumer protection law, absent evidence that the representations were untrue, the federal district court in San Francisco held (Kwan v. SanMedica International LLC, February 25, 2015, James, M).

Marketing statements. Serena Kwan alleged that SanMedica International manufactured, marketed, and sold SeroVital, an over-the-counter supplement that purportedly could boost human growth hormone (HGH). In its marketing materials, SanMedica claimed that it was “clear” that HGH has been associated with wrinkle reduction, decreased body fat, increased lean muscle mass, stronger bones, improved mood, heightened sex drive, and making users look and feel decades younger. The marketing materials also claimed that “peak” HGH levels were associated with youthful skin integrity, lean musculature, elevated energy production, and adipose tissue distribution. Finally, SanMedica claimed that SeroVital was “clinically tested” to boost HGH by a mean of 682%. All of these representations also appeared on the label for SeroVital. Kwan, who purchased a box of SeroVital after reading these representations in a magazine and on SanMedica’s website, contended that they were all false, misleading, or deceptive.

Kwan filed suit on behalf of herself and others who had relied on SanMedica’s claims before purchasing SeroVital, alleging that SanMedica’s claims violated California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA). Later, she filed her first amended complaint, but the court dismissed it because she did could not show that SanMedica’s claims regarding SeroVital were false. She brought a second amended complaint, and SanMedica filed a motion to dismiss.

Substantiation claims. In support of her claims, Kwan argued that the study on which SanMedica relied, a summary of which was available on the company’s website, was “riddled with flaws.” Further, she had performed a comprehensive search of the published literature on the ingredients contained in SeroVital and had found no study that supported any of SanMedica’s marketing representations.

Kwan’s arguments failed for the same reason they failed when the court considered her first amended complaint: she alleged that SanMedica’s representations lacked substantiation, but did not show the representations were actually false or misleading. To do that, Kwan would have had to find studies showing that the formula contained in SeroVital did not, for example, boost HGH levels by a mean of 682%, or studies showing that such a boost was impossible in an over-the-counter supplement. Kwan could also have presented evidence showing that she herself had not experienced such a boost after using the product. Instead, she had brought a substantiation claim for which no private right of action existed.

FTC and FDA statements. Kwan did not help her case by pointing out that the Federal Trade Commission had stated that “no reliable evidence” supported the idea that non-prescription products have the same effect as prescription HGH, or that the Food & Drug Administration had stated that it was “unaware of any reliable evidence to support anti-aging claims for over-the-counter pills and sprays that supposedly contain HGH.” Again, these statements did not prove that SanMedica’s representations were false or misleading, which is what Kwan had to show to prevail on her claims.

“Clear.” Next, Kwan took issue with SanMedica’s advertising claim that it was “clear” that HGH was associated with a variety of health benefits, when in fact no studies supported this claim. Her argument failed because, as before, she did not cite any studies showing that such benefits were categorically impossible to achieve or that the formula contained in SeroVital did not produce such results.

“Clinically tested.” Kwan also argued that a reasonable consumer would understand SanMedica’s claim that the drug was “clinically tested” to mean that all of the representations on the label had been “clinically proven” as true. Kwan argued that this contention took her claims out of the realm of substantiation cases, but the court disagreed. It suggested that Kwan was trying to make an end run around the bar against private substantiation claims by simply alleging that SanMedica’s reference to the substantiation itself was misleading. Kwan still had not submitted any evidence showing that the advertising claims themselves were false or misleading.

Misleading and deceptive advertising. The court then shot down Kwan’s argument that requiring plaintiffs to establish falsity in order to prove that an advertising representation was false, misleading, or deceptive under the CLRA was wrong, as that barrier did not give enough weight to the “misleading” or “deceptive” parts of the cause of action. All the same, that well-settled rule had been firmly established by Nat’l Council Against Health Fraud, Inc. v. King Bio Pharm., Inc., 107 Cal. App. 4th 1336 (2003). The court elected not to overturn that case, the resulting body of law, or the laws enacted by the California State Legislature on the subject.

UCL claim. Finally, the court refuted Kwan’s argument that she had stated a valid claim under the UCL because SanMedica’s decision to sell SeroVital without the prerequisite competent and reliable scientific evidence or substantiation was unlawful. One again and for the last time, this argument missed the point. Unsubstantiated representations in advertising were unlawful by nature, but private individuals like Kwan could not bring causes of action challenging them unless they could prove that the representations were false. Kwan could not do this. The court granted SanMedica’s motion, and dismissed the case with prejudice.

The case number is: 14-cv-03287

Attorneys: Manfred Patrick Muecke (Bonnett, Fairbourn, Friedman, & Balint, PC) for Serena Kwan. Christopher B. Sullivan (Basic Research, LLC), and Rollin Bernard Chippey, II (Morgan Lewis & Bockius) for SanMedica International, LLC.

Companies: SanMedica International, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews