Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Calif.: Hand sanitizer labeling suit dismissed on procedural grounds, (Mar 25, 2024)

By Jody Coultas, J.D.

The suit was dismissed for failure to adhere to the California Consumers Legal Remedies Act pre-suit notice and venue affidavit requirements.

Despite several sufficiently pleaded claims, a federal district court in California dismissed a consumers’ false labeling suit against hand sanitizer manufacturer Vi-Jon, Inc. for failure to comply with the California Consumers Legal Remedies Act (CLRA) notice requirement. Two consumers alleged that Vi-Jon knowingly overreported the alcohol content of its Germ-X® moisturizing original hand sanitizer and deceptively advertised that the product “kills 99.99% of germs” and “kills germs in 15 seconds.” The court found that the consumers could not show that a reasonable consumer would be misled by the labeling statements, nor that the statements were false. While the consumers adequately stated claims for breach of express warranty and negligent misrepresentation, the court dismissed the entire complaint for failure to comply with the notice requirement of the CLRA (Steiner v. Vi-Jon, Inc., March 18, 2024, Martínez-Olguín, A.).

The consumers alleged that Germ-X’s alcohol concentration fell below its advertised level of “62% ethyl alcohol” and that this concentration was tested using two quantitative techniques. Vi-Jon argued that the consumers failed to disclose what product was tested, who conducted the testing, when and where the testing was conducted, or the methodology used to ultimately determine the alcohol concentration.

Express warranty. Vi-Jon argued that the breach of warranty claim failed because the consumer failed to give notice in accordance with Section 2-607(3) of the California Commercial Code. Absent any representation that the statutory notice was provided or that an exception to the notice requirement applied, the claim failed. The court therefore dismissed the express warranty cause of action.

Negligent misrepresentations. The court held that the negligent misrepresentation claim did not need to be dismissed on the basis of the economic loss rule. Though the negligent misrepresentation claim cannot form the basis of a claim premised on purely economic loss, the negligent misrepresentation claim stemmed from the alleged falsity of Vi-Jon’s advertising representations. The negligent misrepresentation claim thus did not parallel a contractual loss and instead sounded in fraud. Therefore, the economic loss rule did not apply.

False advertising. The consumer failed to adequately plead the falsity of the representations, according to the court. There was no evidence concerning which germs were not killed by the product, nor did the consumers provide any context for their contention that it does not kill germs within 15 seconds. The complaint was devoid of any allegations that Germ-X, even with the tested alcohol concentration of 53.56% or 59.1%, failed to kill 99.99% of the germs commonly found on hands or that the actual alcohol concentrations were too low to eradicate any germs within 15 seconds.

The court also held that a reasonable consumer would not be misled by the Germ-X labeling that it “kills 99.99% of germs.” The consumers ignored information on the back label, which states that the product is “*[e]ffective at eliminating 99.99% of many common harmful germs and bacteria in as little as 15 seconds.” The disclaimer provided a meaningful qualifier that diminished consumer expectation regarding the efficacy against common germs on hands. Thus, when read as a whole, the label was not false or misleading.

However, the consumers adequately alleged that the Germ-X label representations of 62% ethyl alcohol content were false based on their testing. This falsity could not be saved by other statements on the label.

CLRA. The court granted Vi-Jon’s motion to dismiss the entire complaint with leave to amend in accordance with Civil Code Section 1780(d). The California Civil Code requires a plaintiff to submit a pre-suit demand at least 30 days prior to initiating a lawsuit alleging violation of the CLRA. Section 1780(d) requires that a venue affidavit must be filed “concurrently with the filing of the complaint” and that a complaint filed without such an affidavit “shall” be dismissed without prejudice. Several California district courts have required submission of the CLRA affidavit and granted dismissal in its absence. Here, the court granted Vi-Jon dismissal of the CLRA claim and entire suit for failure to submit the venue affidavit concurrent with the complaint. Additionally, the court dismissed the claim for damages under the CLRA because the consumer did not submit a pre-suit demand in accordance with Section 1780(a).

The case is No. 23-cv-00473-AMO.

Attorneys: Shalini Dogra (Dogra Law Group) for Danielle Steiner and Amnery Castaneda. Carol Brophy (Steptoe LLP) for Vi-Jon Inc.

Companies: Vi-Jon Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews