Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—NDIll: Supplement Manufacturer Did Not Fail to Disclose Health Risks of Products , (Feb 26, 2013)

By Jody Coultas, J.D.

A supplement purchaser could not bring class actions against a supplement manufacturer under state consumer protection laws for allegedly failing to disclose health risks associated with its supplements, according to the federal district court in Chicago (Ibarolla v. Nutrex Research, Inc., February 25, 2013, Aspen, M.). A warning letter sent by the FDA did not inform the manufacturer that the supplements were dangerous; it only said that little was known about an ingredient in the supplements, the court found.

Nutrex Research, Inc. manufactures and distributes dietary supplements designed to enhance weight loss, strength training, and athletic performance to nutritional products and sports supplement retailers. The purchaser sought to represent a nationwide and Illinois classes of consumers who purchased one or more of six products named in a Warning Letter sent by the FDA to Nutrex concerning products containing DMAA. The purchaser alleged that Nutrex fraudulently concealed the potential dangers of the products by omitting any warnings or information about possible health risks on labels or promotional materials in violation of numerous state consumer protection laws, including the Illinois Consumer Fraud and Deceptive Business Practices Act (CFA).

Fraudulent concealment. The purchaser failed to state a CFA claim for fraudulent concealment based on the alleged dangers of DMAA, according to the court. Under the CFA, a party claiming consumer fraud on the premise that the defendant concealed or omitted material facts from potential buyers with the intent that the buyers rely on such a concealment or omission must allege that the fact omitted or concealed was known to the defendant at the time of the concealment.

The Warning Letter stated that to there was no history of use or other evidence of safety establishing that DMAA was a safe dietary ingredient. However, the letter did not confer knowledge to Nutrex that DMAA was dangerous, only that there was little information available about the ingredient. The letter was received after the purchaser bought the products. At most, the court could infer that Nutrex failed to adequately investigate the safety of DMAA before including it in the product. However, releasing a product to the public without adequately investigating its safety does not violate the CFA.

There was no evidence to support the purchaser’s allegations that ingredients other than DMAA posed a danger to consumers, according to the court. The purchaser, therefore, failed to state a CFA based on a failure to warn about those ingredients.

Finally, the court held that the purchaser failed to show that Nutrex marketed its products as a dietary supplement while omitting any warning that it contained a synthetic ingredient. DMAA is a non-naturally occurring, synthetic compound. However, Nutrex never made any representations that the products were all-natural or contained only naturally occurring ingredients. The mere fact that the products were labeled as dietary supplements would not mislead a reasonable consumer to believe that the products contained only natural ingredients.

The case is No. 12 C 4848.

Attorneys: Joseph J. Siprut (Siprut PC) for Rochelle Ibarolla. Stephen H. Luther (Allen, Dyer, Doppelt, Milbrath & Gilchrist, P.A.) for Nutrex Research, Inc.

Companies: Nutrex Research, Inc.

Cases: StateUnfairTradePractices IllinoisNews