Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: Dietary supplement manufacturer may be liable for allegedly false labeling, (Jan 17, 2014)

By Jody Coultas, J.D.

A dietary supplement purchaser’s California consumer protection law claims survived a motion to dismiss filed by dietary supplement manufacturer Iovate Health Sciences, Inc., the federal district court in San Diego has determined (Hesano v. Iovate Health Sciences, Inc., January 15, 2014, Hayes, W.).

Iovate allegedly falsely claimed that its supplement, Six Star Pro Nutrition N.O. Fury, provided “increased formation of Nitric Oxide in the blood, increase[d] circulation of oxygen and nutrients, enhance[d] athletic performance, increase[d] lean muscle mass, and provide[d] muscle ‘pumps.’”

Iovate’s motion to dismiss, based on the purchaser’s lack of substantiation theory, was denied by the court. A substantiation theory is not cognizable under California law. However, the purchaser did not rely on that theory to state the California law claims. The purchaser alleged multiple specific claims and alleged that each of the statements were false. There was also evidence of specific scientific studies that contradicted the advertising claims. Therefore, the complaint adequately alleged that Iovate’s claims were objectively false.

The purchaser had standing to assert the claims, according to the court. In order to have standing to assert the California consumer protection law claims, the purchaser was required to plead reliance on the alleged misrepresentations. The purchaser alleged that he read the labeling and website where the supplement was purchased prior to buying the supplement, and relied on the statements in making his purchasing decision.

There was no requirement that the purchaser allege that he ingested the supplement, according to the court. To allege an economic injury sufficient to establish standing under California law, it is sufficient if a plaintiff alleges that he or she would not have purchased the goods in question absent the misrepresentations at issue. Iovate argued that the purchaser should be required to amend the complaint in order to address explicitly whether or not the purchaser ingested the supplement, and what effect, if any, he detected regarding his athletic performance. However, the fact of ingestion was not relevant to the economic injuries that were allegedly caused by the purchase.

Iovate argued that the purchaser’s claim under the California Unfair Competition Law (UCL) was preempted by the federal Food, Drug and Cosmetic Act (FDCA). Any unlawful business practice, including violations of the Sherman Law, may be redressed by a private action charging unfair competition in violation of the UCL. The purchaser alleged that Iovate’s conduct violated the FDCA, as well as the Sherman Law. The FDCA does not preclude states from adopting their own parallel laws and adopting a different mechanism for enforcing those laws. California chose to exercise this right by enacting the Sherman Law and allowing private plaintiffs to enforce that law through the UCL. Iovate failed to show that suits brought exclusively under state law were preempted.

The case is No. 13cv1960-WQH-JMA.

Attorneys: Brian Tomina (Oliver Law Group) for Patrick Hesano. Scott J. Ferrell (Newport Trial Group) for Iovate Health Sciences, Inc., Iovate Health Sciences USA, Inc., and Iovate Health Sciences Group, Inc.

Companies: Iovate Health Sciences, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews