Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Fla.: Florida and New York deceptive practices claims over weight loss supplement advertising dismissed as “shotgun pleading”, (Aug 12, 2013)

By Tobias J. Gillett, J.D., LL.M.

A complaint filed by a purchaser of a weight loss supplement against its manufacturer, asserting that the manufacturer’s advertising violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), New York General Business Law § 349, and the Magnuson-Moss Warranty Act (MMWA), represented a “shotgun pleading” that had to be dismissed, the federal district court in Ft. Lauderdale has ruled (Karhu v. Vital Pharmaceuticals, Inc., August 9, 2013, Cohn, J.). However, the court dismissed the purchaser’s claims without prejudice, rejecting the manufacturer’s other argument for dismissal of those claims.

The purchaser alleged that Vital Pharmaceuticals, Inc., d/b/a VPX Sports, falsely advertised that its VPX Meltdown Fat Incinerator dietary supplement “burn[ed] fat” for six hours, and that this result was “backed by 5 university studies.”

In support, the purchaser cited a report by the National Advertising Division of the Council of Better Business Bureaus (NAD) that allegedly urged Vital to cease claiming that Meltdown was a “Fat Burner,” because it did not burn fat; to stop falsely claiming that Meltdown “Burn[ed] Fat for 6+ hours” and “Increase[d] Fat Utilization by 56%”; to stop making claims such as that Meltdown was “273% more potent than ephedrine-caffeine” and “972% more powerful than epinephrine,” since no reliable basis for comparison to ephedrine or epinephrine existed; and to stop making claims about Meltdown’s long-term effects, including before and after photographic comparisons, since no evidence supported those claims. In addition, the purchaser alleged that Vital’s own scientist stated that “Synephrine DOES NOT WORK,” and that it was “as useless as a screen door on a submarine.” Vital’s own experiments with Meltdown’s ingredients also allegedly failed to support its claims that Meltdown “provide[d] a thermogenic increase.”

The purchaser filed suit, asserting that Vital’s advertising constituted violations of the FDUTPA; New York General Business Law § 349, prohibiting deceptive trade practices; and the MMWA, among other claims. Vital filed a motion to dismiss.

Shotgun pleading. The court dismissed the purchaser’s complaint, concluding that it represented a “shotgun pleading,” that “fail[ed] to adequately link a cause of action to its factual predicates.” The complaint included a section containing facts common to all claims, but failed to “link particular facts to the individual causes of action.”

Falsity of pleadings. However, the court would not have dismissed the claims as “false and unsupportable,” despite Vital’s citation to five university studies that allegedly substantiated its advertising, because the court accepted the purchaser’s allegations as true at the motion to dismiss stage.

Factual support for claims. The court also rejected Vital’s argument that the complaint contained insufficient factual content to support any of its claims because it relied exclusively on the NAD’s findings. The court observed that the purchaser also cited to Vital’s own studies. Moreover, Vital did not provide a reason why the purchaser could not use the NAD’s findings to support his claims.

Primary jurisdiction. The court also declined to follow Vital’s argument that the court should dismiss the complaint because it would require the court to regulate the formulation, labeling, and advertisement of a dietary supplement, functions specifically assigned by Congress to the FTC and the Food and Drug Administration, and within those agencies’ particular expertise. The court explained that “[d]etermining whether a manufacturer has misled consumers is squarely within the judicial function, and does not require the special expertise of the FDA or the FTC.” Moreover, the court noted that neither the FTC nor the FDA had “actually taken an interest in investigating the product.” Therefore, resolving the purchaser’s claims “would not interfere with the FDA or FTC’s regulatory scheme,” in the court’s view.

Florida Deceptive and Unfair Trade Practices Act. The purchaser could assert a claim under the FDUTPA even though he purchased and consumed the product in New York, the court concluded. Although certain Florida courts had found the FDUTPA only applied to claims brought by in-state consumers, the court found that more recent decisions had “expanded coverage to claims of out-of-state consumers if the offending conduct occurred predominantly or exclusively in Florida.” The court chose to follow the more recent decisions, noting that nothing in the language of the statute suggested that it was limited to transactions involving Florida consumers.

Here, Vital was a Florida corporation with its principal place of business in Davie, Florida, and therefore it was “reasonable to infer that all of [Vital’s] alleged misconduct took place in Florida.” The court noted that “the place of injury is less significant in the case of fraudulent misrepresentations,” and that the court “should give greater weight to the defendant’s location as opposed to the place of injury” where the alleged misrepresentations were “made on a centralized website.”

New York General Business Law § 349. The court rejected Vital’s argument that the court had “a powerful reason to choose not to exercise jurisdiction” over the purchaser’s New York General Business Law claim under the Supreme Court’s 1988 decision in Carnegie-Mellon University v. Cohill, 484 U.S. 343. Carnegie-Mellon University “concerned a district court’s discretion in exercising pendent jurisdiction over state-law claims,” while present case concerned claims brought pursuant to the federal Class Action Fairness Act.

Moreover, the purchaser could proceed under § 349 even though he only alleged $35.97 in damages. Section 349(h) stated that a plaintiff could “recover his actual damages or fifty dollars, whichever is greater,” and did not establish any “minimum threshold amount” for bringing a claim under the statute.

Further, monetary harm was sufficient to bring a claim under § 349, and the purchaser did not have to plead physical harm.

Finally, § 349 did not provide a primary jurisdiction defense to the purchaser’s claim, even though § 349(d) stated that “it shall be a complete defense that the act or practice is, or in interstate commerce would be, subject to and complies with the rules and regulations of, and the statutes administered by, the federal trade commission or any official department, division, commission or agency of the United States.” The court observed that Vital had not “provided any evidence that it has complied with applicable federal regulations.”

Magnuson-Moss Warranty Act. The court also rejected Vital’s argument that the court should dismiss the purchaser’s claim under the MMWA because he failed to allege privity of contract, as required under Florida law. The court noted some disagreement among the courts regarding whether the MMWA incorporated state law causes of action as to both express and implied warranties, or only incorporated state law as to implied warranties.

Even if the MMWA did incorporate Florida law with respect to express warranty claims, however, the purchaser would not be required to plead privity of contract, the court concluded. Although privity was generally required under Florida law to breach of express warranty claims, the court noted that “courts have relaxed the requirement where the express warranty was clearly intended to cover subsequent purchasers.” Here, the product was a dietary supplement sold online, and nothing indicated that the purchaser “could expect to receive relevant scientific evidence about Meltdown’s ingredients from the retailer.” Moreover, Vital made the challenged representations in its advertising and packaging, “both clearly directed toward the end-purchaser.”

However, the court found that the purchaser’s claim for breach of an implied warranty of merchantability failed for lack of privity between the parties, and dismissed the claim with prejudice. The court dismissed all other claims without prejudice.

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

Attorneys: Daniel R. Lever (Thornton Davis & Fein) for Adam Karhu. Victoria Nicole Godwin for Vital Pharmaceuticals, Inc.

Companies: Vital Pharmaceuticals, Inc.

Cases: StateUnfairTradePractices Advertising FloridaNews