Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—C.D. Cal.: Homeopathic cold remedy class plaintiffs presented triable question of fact, (Jan 14, 2015)

By Edward L. Puzzo, J.D.

In a class action challenging the use of the terms “effective and fast-acting” for children’s homeopathic cold and flu remedies, plaintiffs presented a triable question of fact by basing their claims on their own evidence and experts rather than placing the burden on the defendants to prove efficacy, the federal district court in Los Angeles has ruled (Forcellati v. Hyland’s, Inc., January 12, 2015, King, G.).

Plaintiffs were a class of purchasers of certain children’s over-the-counter homeopathic cold and flu remedies. They alleged that the label claims that the products were “effective and fast-acting” were false and misleading. On April 9, 2014, the court certified a nationwide class of individuals who had purchased these products from Hyland’s on or after March 8, 2008. Defendants Hyland’s, Standard Homeopathic Laboratories, and Standard Homeopathic Co. moved for summary judgment, but the court denied the motion.

Preemption. The defendants first argued that plaintiffs’ state-law claims were preempted by federal FDA regulations. The court noted that the legislative history of the FDA labeling regulations explicitly indicated that they were not intended to preempt state laws prohibiting unsubstantiated claims for nonprescription drugs. In arguing that the use of the word “effective” on product labeling was false and misleading, the plaintiffs were not basing their claim on defendants’ failure to conduct FDA-prescribed testing to substantiate their claim. Instead, plaintiffs’ claim that the word “effective” was misbranding was based solely on the allegation that the products were ineffective. Plaintiffs were not imposing a requirement in addition to, or otherwise not identical to, FDA requirements, the court found. Thus, the claims are not preempted.

State law claims. Plaintiffs alleged that the “effective and fast-acting” labeling for these homeopathic products violated California’s Consumer Legal Remedies Act (CLRA), False Advertising Law (FAL), and California’s Unfair Competition Law (UCL). All three laws use a “reasonable consumer” standard to determine whether a product claim is misleading or deceptive.

In a 2003 California case, also involving a class action against a seller of homeopathic remedies, National Council Against Health Fraud, Inc. v. King Bio Pharmaceutical, Inc. (107 Cal. App. 4th 1336), plaintiffs’ efforts to hold these products to the efficacy standards for prescription drugs failed. The court ruled that the “reasonable consumer” standard could not be met by requiring the defendant to substantiate their advertising claims for homeopathic products.

Here, however, the allegations were not the same as in King Bio. Plaintiffs did not argue that defendants had the burden to prove that their products were effective or that they must conduct tests showing their products are effective. Instead, plaintiffs argued that, using their own studies and expert evidence, they can affirmatively prove that the products in question do nothing. This creates a triable issue of fact as to whether the products were misrepresented as effective and fast-acting. If the products had no more effect than a placebo, then the products could not be found effective under the reasonable consumer standard, the court stated.

The case is Civil Action No. 2:12-cv-01983-GHK-MRW.

Attorneys: Annick Marie Persinger (Bursor and Fischer PA) for Enzo Forcellati. Jeffrey B. Margulies (Fulbright and Jaworski LLP) for Hyland’s Inc., Standard Homeopathic Laboratories Inc., and Standard Homeopathic Company.

Companies: Hyland’s Inc.; Standard Homeopathic Laboratories Inc.; Standard Homeopathic Company.

Cases: Advertising StateUnfairTradePractices CaliforniaNews