Health Law Daily Wrap Up, DIETARY SUPPLEMENTS—E.D. Cal.: Consumer states claims that failure to inform of kratom’s addictive nature violates California False Advertising Law, consumer statutes, (Jul 25, 2025)

By Robert Margolis, J.D.

Court finds allegations plausible that kratom manufacturer knew or should have known about the product’s addictive nature, had exclusive knowledge of facts despite some publicly available information, and thus had a duty to disclose.

A purchaser of kratom, an herbal medicine allegedly with addictive properties, stated claims against kratom manufacturer and distributor Happy Hippo LLC (HHL) under California’s Unfair Competitions Law (UCL), False Advertising Law (FAL), Consumer Legal Remedies Act (CLRA), and common law theories, the federal district court in California held. L.S., who sued on his own behalf and on behalf of classes of California and nationwide kratom purchasers, alleged HHL had a duty to disclose to consumers the addictive nature of kratom but failed to do so. The court denied HHL’s motion to dismiss as to the above-described claims, finding that L.S. sufficiently alleged fraud by omission under those statutes, and that HHL was unjustly enriched. The court granted HHL’s motion to dismiss (without prejudice) as to L.S.’s breach of implied warranty claim, because he did not allege he purchased kratom directly from HHL. The court also granted L.S. leave to proceed in the case under a pseudonym (L.S. v. Happy Hippo LLC, No. 2:24-cv-02849-DAD-SCR (E.D. Cal. July 17, 2025)).

L.S. alleged kratom is marketed in the United States as a safe substitute for painkillers, creates a pleasurable high such that users can take it daily without realizing they are developing an addiction, and that its addictive properties have been studied and documented for years. He further alleged HHL, through its interactions with foreign growers and distributors of kratom who on information and belief have disclosed information to it, had superior knowledge of kratom’s addictive qualities than consumers, and failed to disclose or warn of this material fact to purchasers, either on packaging or in advertising. HHL moved to dismiss his claims, and L.S. moved to proceed under a pseudonym.

Fraud by omission. The court addressed L.S.’s claims under the CLRA, FAL, and UCL together, since all statutes share similar attributes and L.S.’s claims under each statute was based on the same theory: that HHL omitted material facts it had a duty to disclose, and L.S. relied on the nondisclosure in purchasing kratom. HHL raised three arguments for dismissal: (1) claims under the FAL cannot be based on an omission; (2) L.S. failed to plausibly allege HHL had a duty to disclose; and (3) L.S. failed to specifically allege reliance. The court rejected all three arguments and denied the motion to dismiss these claims (and the common law claim for fraudulent omission).

First, the court followed Ninth Circuit precedent in holding that omissions can support a claim under the FAL, so long as the omitted fact is one that the defendant has a duty to disclose. It found distinguishable and thus inapplicable cases HHL had cited where a defendant had made partial representations about their products but had concealed defects in the products. This case, in contrast, was about a “pure omission” of a fact that the court found L.S. plausibly alleged the defendant had a duty to disclose.

As to HHL’s duty to disclose, the court found unavailing HHL’s argument that L.S. did not properly allege that kratom constitutes an unreasonable safety hazard. It noted that L.S. alleged that kratom is “extremely addictive” and operates on “the same opioid receptors in the human brain as morphine, heroin, and other opioids …” He further alleged kratom’s users are usually unaware of its addictive potential, and that early withdrawal symptoms (headaches, soreness, restless leg syndrome, cold sweats, trouble sleeping) are often misinterpreted and lead users to take more kratom. Documents of which the court took judicial notice provided enough support for these allegations for it to reject HHL’s argument that L.S.’s allegations are simply untrue.

Another component of the duty to disclose an omitted fact is that the defendant have exclusive knowledge of that fact. Here, HHL argued that publicly available information about kratom (such as government studies and medical reports) was equally available to L.S. However, L.S.’s allegations that HHL “has interacted with growers and distributors in Southeast Asia who have disclosed the addictive nature of kratom to it,” sufficed for the court to find it plausible that HHL had exclusive knowledge about kratom above and beyond the publicly available information. The court noted that a reasonable consumer is not expected to “search for, reach, and understand current medical literature” that may be publicly available.

Finally, L.S. alleged that he would not have purchased kratom had he known of its addictive qualities, which the court deemed a sufficient basis to allege reliance on an omission under the California statutes.

Implied warranty. The court granted HHL’s motion to dismiss L.S.’s breach of implied warranty claim. Such a claim requires “vertical privity” between the plaintiff asserting the claim and the seller of the product, i.e., that the buyer bought the product directly from the defendant. Here, L.S. did not purchase kratom directly from HHL, but bought it from a smoke shop. The court gave L.S. leave to replead this claim.

Unjust enrichment. The court held that L.S. plausibly alleged an unjust enrichment claim, based on allegations that HHL has been unjustly enriched by L.S. and the other class members who paid for HHL’s products when it failed to disclose the products were addictive, and that allowing HHL to retain the benefit would be unjust.

Pseudonym. The court granted L.S. leave to proceed in the case under a pseudonym, finding that he established he would face social stigma and embarrassment were he required to proceed under his own identity. Courts permit a party to proceed under a pseudonym when special circumstances justify secrecy, and have held that drug addiction creates the type of stigma that can support the need for secrecy. While kratom is not a controlled substance in the United States, the court noted that HHL did not oppose the motion, so the court found the fear of social stigma supported granting the motion. Further, the court found HHL would not suffer prejudice from L.S. proceeding pseudonymously, as indicated by it not opposing the motion. Finally, the public interest is served by allowing L.S. to proceed pseudonymously, as public disclosure of his identity could disincentivize similar future lawsuits, which would be contrary to the public interest, the court held.

The case is No. 2:24-cv-02849-DAD-SCR.

Judge: Drozd, D.

Attorneys: Luke Sironski-White (Bursor & Fisher P.A.) for L.S. Marisol C. Mork (Squire Patton Boggs) for Happy Hippo, LLC.

Companies: Happy Hippo, LLC

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