Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—N.D. Cal.: FTC granted summary judgment on false advertising claims against nutritional supplement marketer, (Feb 21, 2014)

By Linda O’Brien, J.D., LL.M.

The FTC was entitled to summary judgment in its false advertising action against a marketer claiming that its nutritional supplements assisted in the management of diabetes, the federal district court in San Francisco has decided (FTC v. Wellness Support Network, Inc., February 19, 2014, Spero, J.).

Wellness Support Network, Inc. (WSN), a marketer of nutritional supplements, began selling its Diabetic Pack and Insulin Resistance Pack products in 2004. The products were advertised as assisting in the dietary or nutritional management of diabetes. The company advertised the products primarily on its website—describing them as “Completely Natural,” a “Diabetes Breakthrough” and an “Insulin Resistance Breakthrough”—and relied heavily on consumer testimonials. The company did not conduct any scientific studies to establish the effectiveness of the products. Following an investigation into phony disease treatment claims, the FTC filed suit against WSN and its two principals, Robert Held and Robyn Held, alleging that the company engaged in false advertising and deceptive practices in connection with the sale of its Diabetic Pack and Insulin Resistance Pack dietary supplements, in violation of Sections 5(a) and 12 of the FTC Act.

The FTC moved for summary judgment against all defendants, contending the undisputed facts established that (1) the misleading product claims were made by the defendants; (2) the claims were likely to mislead consumers; (3) the defendants lacked reasonable basis for making the claims; and (4) the claims were material. To establish that the claims were unsubstantiated, the FTC offered expert testimony.

Liability. The FTC established that the defendants made the advertising product claims, the claims were likely to mislead consumers, and the claims were material, the court determined. To prevail under the FTC Act, the Commission had to show that there was a representation, omission, or practice that was likely to mislead reasonably acting consumers, and the representation, omission, or practice was material. The defendants’ advertising gave the “net impression” that the products were effective treatments for diabetes, according to the court. The advertisements made repeated claims that the products would lower blood sugar, take the place of medications, and were scientifically proven. These claims would give a reasonable consumer the impression that the products were effective treatments for diabetes. The impression was further reinforced by testimonials, which suggested that the products, rather than diet and exercise, reduced blood sugar levels.

Additionally, the defendants’ advertising claims were misleading because they lacked a reasonable basis, according to the court. The FTC’s expert explained that a high level of scientific support was required of claims such as ones made by the defendants because they are disease-specific treatment or prevention claims. Further, the defendants made claims about treatment of a serious health condition where the consequences of adopting a particular course of treatment may be significant. Thus, the FTC demonstrated, based on undisputed facts, that all of the defendants’ claims were misleading and material.

Expert testimony. Finally, the court admitted the expert testimony offered by the FTC. The FTC’s expert had extensive qualifications in the science and treatment of diabetes and insulin resistance. His report explained that well-conducted studies by diabetes experts were required to substantiate the product claims made by the defendants. Moreover, his opinions were supported by sufficient facts to be reliable.

The case is No. 10-cv-04879-JCS.

Attorneys: Laura Fremont for the Federal Trade Commission. Leslie Holmes (Holmes & Usoz LLP) for Wellness Support Network, Inc.

Companies: Wellness Support Network, Inc.

Cases: Advertising ConsumerProtection FederalTradeCommissionNews