Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: Claims regarding GNC’s Staminol product lacked stamina and were dismissed, (May 15, 2015)

By Michael Menzhuber, J.D., LL.M.

Health supplement distributor GNC’s motion to dismiss claims brought by an individual purchaser of certain men’s health product that it marketed and distributed was granted with leave to amend by a federal district court in San Diego (Vigil v. General Nutrition Corporation, May 13, 2015, Miller, J.).

Background. General Nutrition Corporation (GNC) marketed and distributed Staminol, an over-the-counter men’s health product. The labeling and marketing for Staminol represented that it supported male vitality and sexual health, urinary flow and prostate health. In reliance on this labeling, Ryan Vigil, an individual, purchased a bottle of Staminol at a GNC store for the purpose of enhancing his sexual experience and enjoyment.

After using the product and not receiving the desired benefits, Vigil filed a complaint against GNC, on behalf of himself and certain other purchasers of Staminol, which asserted causes of action for: (1) violation of California’s Unfair Competition Law (UCL); (2) violation of California’s Consumer Legal Remedies Act (CLRA); and (3) breach of express warranty.

GNC moved to dismiss the complaint for failure to state a claim under Federal Rules of Civil Procedure 8, 9(b) and 12(b)(6).

Standing. The court noted that the basis for Vigil’s class action complaint was that Staminol falsely represented to: (1) increase vitality and sexual performance; (2) treat prostate issues; and (3) treat urinary flow. However, the court also noted that Vigil’s reason for purchasing the product was only to enhance his sexual experience and enjoyment. Consequently, the court determined that he was trying to represent three potential distinct classes of purchasers even though he did not qualify as a member of two of them. Therefore, the court granted GNC’s motion to dismiss all claims as they related to prostate and urinary issues.

California’s Unfair Competition Law (UCL)

False advertising claims under the UCL are governed by the “reasonable consumer” standard which requires a showing that members of the public are likely to be deceived. Vigil alleged that GNC’s advertising claims with respect to its labeling and marketing of Staminol were likely to deceive the consuming public. The basis for Vigil’s allegation was that the representations that GNC made regarding Staminol were “unlawful”, “unfair”, and “fraudulent” and, therefore, violated all three prongs of the UCL.

“Fraudulent” Prong – UCL. GNC argued that Vigil’s claims that the Staminol representations violated the UCL should be dismissed because: (1) the basis for the claims was a lack of substantiation; (2) its “maximum potency” statement with respect to the product was non-actionable puffery under California’s consumer protection laws; (3) there was no affirmative duty to disclose; (4) the allegations did not satisfy the heightened pleading requirements for fraud; and (5) the “fraudulent” UCL claim was not plausible.

The court rejected GNC’s argument the Vigil’s claim was based on a lacked of substantiation because Vigil alleged that studies actually refuted GNC’s representations. It also rejected GNC’s claim that its “maximum potency” statement about Staminol was non-actionable puffery because whether an alleged misrepresentation is puffer is a question of law that turns on whether Vigil would be capable of proving that Staminal is totally incapable of delivering “maximum potency”.

Vigil asserted that he sufficiently alleged an affirmative duty to disclose under the third and fourth factors of the test for determining, under California law, whether there is a duty to disclose, with those factors being: (3) GNC actively concealed a material fact from him; and (4) GNC made a partial representation but suppressed some material fact. The court disregarded GNC’s argument that using this approach would convert every misrepresentation into a non-disclosure claim and determined that Vigil had alleged a non-disclosure claim but only to the extent that he alleged an affirmative misrepresentation.

GNC’s contended that Vigil’s allegation did not satisfy the heightened pleading requirements for fraud under Federal Rules of Civil Procedure 9(b) because the reports that he relied on did not demonstrate that the statements on the Staminol label were false. However, the court found that Vigil’s allegations were sufficiently particular to give GNC note of the specific basis of the claim and to allow GNC to defend itself. The court further determined that Vigil identified the representations that he alleged to be false and specifically stated why he believed the claims were false.

The court, however, did agree that Vigil’s “fraudulent” claim was not plausible and, therefore, dismissed his UCL claim under the “fraudulent” prong. The court noted that the essential determinative inquiry depended upon a comparison of the match between the product representations and the evidence that debunked those representations. The court then determined that there was a mismatch because the articles Vigil presented in support of his claim only addressed erectile function and not vitality or male sexuality, as represented on the Staminol product.

“Unlawful” Prong – UCL. GNC asserted that Vigil’s claim under this prong should be dismissed because he only conclusorily alleged that it violated this prong. The court agreed and dismissed Vigil’s claim under this prong. It dismissed the claim because it found that the section of the complaint cited by Vigil in support of his claim only concerned his claims for violation of the CLRA and breach of express warranty and they were not plausible as pleaded.

“Unfair” Prong – UCL. The court also dismissed Vigil’s claim under the “unfair” prong after finding that Vigil’s allegations did not make it plausible that GNC was advertising benefits Staminol did not have.

California’s Consumer Legal Remedies Act (CLRA)

The court determined that there was no need to address this claim separately because the “reasonable consumer” standard that applies to “fraudulent” UCL claims applies equally to misrepresentation-based claims under the CLRA. Therefore, it dismissed Vigil’s CLRA claim for the same reasons that it dismissed his claim that GNC violated the “fraudulent” prong of the UCL.

Breach of Express Warranty

The court noted that a requirement for pleading a cause of action for breach of express warranty is to also plead that the defendant was provided with notice of the breach within a reasonable time. Both parties agreed that Vigil’s claim must be dismissed because he did not allege that he ever gave GNC pre-suit notice of the breach.

The case is No. 15-cv-0079 JM (DBH)

Attorneys: James Richard Patterson (Patterson Law Group, APC) for Ryan Vigil. A. Brooks Gresham, II (McGuireWoods LLP) for General Nutrition Corp.

Companies: General Nutrition Corp.

Cases: Advertising StateUnfairTradePractices CaliforniaNews