Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Fla.: Class action against maker of “fat burner” supplement melts away, (Mar 5, 2014)

By Jody Coultas, J.D.

A dietary supplement purchaser’s Florida Deceptive and Unfair Trade Practices Act (DUTPA) class action claim against dietary supplement manufacturer Vital Pharmaceuticals, Inc. (VPX) was too unmanageable to be certified, according to the federal district court in Fort Lauderdale (Karhu v. Vital Pharmaceuticals, Inc., March 3, 2014, Cohn, J.).

VPX manufactures a dietary supplement called VPX Meltdown Fat Incinerator as a product that can help customers “burn fat” and achieve rapid fat loss.

Ascertainable class. The purchaser failed to propose a realistic method of identifying the individuals who purchased Meltdown, according to the court. A class is ascertainable if the court can determine whether a given person is a class member through administratively feasible methods. VPX sold Meltdown mostly to distributors and retailers, rather than directly to consumers, which meant that VPX would not have records indicating the names of potential class members. Because a bottle of Meltdown is a relatively small purchase, purchasers were unlikely to have retained receipts that would prove they were part of the class. The court declined to trust individuals to identify themselves as class members through the submission of affidavits as it would deny VPX of its due process rights to challenge the claims of each putative class member.

Rule 23(a). The proposed class action met the certification requirements of Federal Rule of Civil Procedure 23(a), according to the court. The class was sufficiently numerous. The claims of the purchaser and the proposed class shared many common factual questions, such as the nature and extent of VPX’s advertisement of Meltdown as a “fat burner” and whether Meltdown was effective for that purpose. The class representative’s claims were typical of the class as each claim arose from the same event and was based on the same legal theory. The purchase of an ineffective product was uniform to the purchaser’s claims and the claims of the proposed class. Differences in the amount of damages between the class representative and other class members, such as the amount paid for Meltdown, did not affect typicality. Details of the purchaser’s post-purchase use of Meltdown, such as whether he purchaser lost weight, also did not impact whether his claims for point-of-purchase injury were reasonably co-extensive with those of other class members. The class representative and his attorney would adequately represent the interests of the class.

Rule 23(b)(3). Because the laws of each class member’s home state governed their claims, the court held that the purchaser could not show that common issues predominated. In a prior order granting VPX’s motion to dismiss, the court recognized that the DUTPA applied to the claims of non-Florida purchaser if the offending conduct occurred predominantly or exclusively in Florida. The alleged injury occurred where each class member purchased Meltdown, while the harmful conduct occurred where VPX generated its advertisements and at the point of purchase. Most class members purchased Meltdown from intermediaries throughout the country, so there was no particular location where the parties’ relationships were centered. Therefore, the state with the most significant relationship to each class member’s claim was the state where the individual purchased Meltdown. The number of issues presented by the claims of the Nationwide Class under the many applicable state laws would produce an unmanageable number of individualized trials, making a class action unmanageable.

Common issues predominate with respect to the New York General Business Law claim of the New York Subclass, according to the court. Whether VPX’s representations were ultimately true was a common issue, and whether each class member was harmed by paying money for an ineffective product was susceptible to common proof. However, as the court noted, there was no clear way to determine who belonged in the subclass. Thus, a class action was not the superior method of adjudicating the claims.

Rule 23(b)(2). The court also denied certification under Rule 23(b)(2). Rule 23(b)(2) allows for certification of a class seeking declaratory or injunctive relief that would be generally applicable to the class as a whole. A Rule 23(b)(2) class is only appropriate if the monetary relief is merely incidental to the other relief. The proposed classes did not share a significant preexisting relationship beyond the purchase of Meltdown. Also, the recovery of damages was more important that injunctive relief. The court concluded that proposed classes “lack the class cohesiveness that distinguishes (b)(2) from (b)(3) actions.”

The case is No. 13-60768-CIV-COHN/SELTZER.

Attorneys: Yitzchak Kopel (Bursor & Fisher, P.A.) for Adam Karhu. Victoria Nicole Godwin for Vital Pharmaceuticals, Inc.

Companies: Vital Pharmaceuticals, Inc.

Cases: StateUnfairTradePractices FloridaNews