Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: Consumer may proceed with false, misleading aphrodisiac claims, (Nov 9, 2015)

By Greg Hammond, J.D.

A consumer that purchased IntenseX—an over-the-counter herbal product that purportedly has powerful aphrodisiac qualities—has adequately alleged claims under California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA). The product maker’s motion to dismiss was consequently denied by the federal district court in San Diego (Kanfer v. Pharmacare US, Inc., November 4, 2015, Huff, M.).

The consumer made three core claims, including: (1) IntenseX is misbranded because the product label and website make impermissible “disease” claims; (2) the product is misbranded because it is marketed for use as an aphrodisiac, but does not have new-drug approval; and (3) the product’s labeling and advertising is false and misleading because IntenseX is incapable of delivering the aphrodisiac and sexual-health benefits it promises. Pharmacare US, Inc. moved to dismiss.

Preemption. The court first determined that the claims were not expressly or impliedly preempted by the Food, Drug and Cosmetic Act (FDC Act). The misbranding allegation based on disease claims was not expressly preempted by the FDC Act because the California Sherman Food, Drug, and Cosmetic Law incorporates and parallels federal law. Second, the FDC Act does not expressly preempt the second theory—that the product is misbranded because it is marketed as an aphrodisiac, rendering it a “new drug” that is subject to the premarket approval process—because the consumer alleges a violation of Federal Drug Administration regulations, a parallel violation of the Sherman Law, and a resulting violation of the unlawful prong of the UCL. The third theory—that the IntenseX label is false and misleading because the supplement does not and cannot provide the promised benefits—was not preempted because state false-advertising laws are consistent with the FDC Act’s prohibition on false and misleading labeling and they are unrelated to the labeling requirements of § 343(r)(6).

Sufficiency of allegations. Pharmacare’s claims that the consumer alleged only a lack of substantiation, rather than provable falsehood, and that no reasonable consumer could be deceived by the representations on the IntenseX label were also rejected. The court found that these issues would be better addressed at the summary judgment stage of litigation. The court, however, concluded that the consumer pleaded his claims with sufficient particularity, given the defendants’ “ample and pointed defense,” demonstrating it had notice of the particular misconduct, could defend against the charge, and not just deny that it has done anything wrong.

UCL claim. Pharmacare also could not obtain dismissal of the UCL claims. The consumer alleged that the IntenseX labeling offends public policy by seeking to profit from consumers’ vulnerability to false or deceptive virility or aphrodisiac claims, and the utility of the conduct, if any, does not outweigh the gravity of the harm. Pharmacare, according to the court, failed to demonstrate that the consumer’s allegations are insufficient to state an unfair-prong claim under the UCL.

CLRA claim. The motion to dismiss the CLRA claim was also denied. Pharmacare had argued that dismissal of the CLRA claim for damages was appropriate with prejudice because he did not provide the required notice before he filed suit. In rejecting this argument, the court found that the California Court of Appeal determined that the purpose of the notice requirement is to allow a defendant to avoid liability for damages if it corrects the alleged wrongs within 30 days after notice, or indicates within that 30-day period that it will correct those wrongs within a reasonable amount of time. Nothing would be gained by dismissal in this case, the court found, because the consumer filed his first amended complaint in June 2015, over five months after he gave notice, and there is no sign that Pharmacare has attempted to remedy the alleged violations since that time.

Injunctive relief. Lastly, the court denied Pharmacare’s motion to dismiss the injunctive relief claim. Although district courts are split on whether plaintiffs in product-labeling actions have standing to seek injunctive relief, because consumers who know the truth cannot claim any future reliance on allegedly misleading labeling, the court concluded that the consumer has standing to pursue his injunctive relief claim. It reasoned that injunctive relief is a remedy, not a cause of action subject to a motion to dismiss.

The case number is 15-cv-0120-H-JLB.

Attorneys: Ronald Marron for Jonathan Kanfer. Lawrence E. Butler (Seyfarth Shaw LLP) for Pharmacare US, Inc.

Companies: Pharmacare US, Inc.

Cases: Advertising CaliforniaNews