Lance Armstrong has a rare good day: consumer protection claims dismissed

Martin v. FRS Company, No. CV-13-01456 (C.D. Cal. Feb. 25, 2014)

FRS makes energy and sports drinks and related goods. Lance Armstrong was an equity owner and brand ambassador for FRS who participated in FRS’s marketing and ad strategy. Martin and other plaintiffs brought the usual California claims, including warranty claims, based on ads starring Armstrong (who at the time had yet to admit his use of performance enhancing drugs and had yet to be stripped of his titles).

An allegedly representative ad asked “What is Lance Armstrong’s Secret What is Lance Armstrong’s Secret . . .” over images of him training. Armstrong finished the question by looking into the camera and stating “Weapon?” The ad continued: “FRS with Quercetin,” “Keep it Real” while showing images of FRS energy drinks. The three key deceptions identified by plaintiffs were: (1) Armstrong was the only 7-time Tour de France champ; (2) FRS products were closely associated with his abilities and achievements; and (3) FRS products – and not illegal performance-enhancing substances – were the “secret weapon” that enabled those achievements and abilities.

Breach of warranty: plaintiffs didn’t comply with California’s pre-suit notification requirement. Regardless, the claims at issue were mere puffery (of which more below) and thus couldn’t form the basis of a warranty claim.

Consumer protection claims: puffery can often be resolved at the motion to dismiss stage. Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008), is not to the contrary. In Williams, the plaintiffs got the benefit of the doubt because they alleged that the products weren’t “nutritious” and didn’t contain juice from the fruits displayed on the packaging, thus the products didn’t provide the advertised results. But plaintiffs didn’t allege that the products here didn’t provide the advertised benefits of fighting fatigue and supporting the immune system.

The phrase “secret weapon” was unquantifiable. Plaintiffs argued that in this circumstance it was quantifiable: Armstrong was actually using drugs as his secret weapon. The court was unconvinced; “secret weapon” was more like “high-quality,” “more innovative,” “of superb quality” and “packed with power,” all found to be non-actionable puffery. The phrase said nothing about the specific characteristics or components of FRS products. (Query: if the ads weren’t about linking Armstrong’s performance with his use of FRS products, what were they about? The opinion references an NAD decision finding that Armstrong’s appearance was as an endorser, and thus found an implied claim that his endorsement is that he drinks the product because it enhances his performance capability as an elite athlete, but the court here said that wasn’t enough to make it not puffery.)

Plus, the allegations required an unreasonable inference: that defendants’ products were the source of his success, rather than illegal performance enhancing drug use. But Armstrong didn’t make specific representations about the products. And plaintiffs didn’t allege that the products didn’t work or that Armstrong didn’t actually use the products. (Note: I can’t see why that matters, if the claim is that Armstrong’s “secret weapon” claim and not the other claims triggered a purchase.)

Plaintiffs argued that defendants were capitalizing on the controversy surrounding his wins and the rumors of illegal drug use—and they apparently did so with enough of a wink and a nudge to escape liability. “[T]he reasonable consumer would not make the inference that a healthy energy drink could be the proprietary reason a decorated cyclist achieves success. Such an inference requires the reasonable consumer to discount extensive training, natural ability or even illegal PEDs use.” Plus, Armstrong didn’t endorse the products until two years after his last Tour de France win. This was like the statement in TYR Sport, Inc. v. Warnaco Swimwear, Inc., 709 F. Supp. 2d 821, 830 (C.D. Cal 2010), that “athletes [should] wear Speedo equipment if they wanted to compete at the highest level”: classic puffery. 

Also, taking the ads this literally, the ads would reveal the “secret,” showing that a “secret weapon” advertisement is a self-defeating concept. (Okay, I understand this decision, but that’s going way too far. The plaintiffs’ arguments don’t entail that kind of interpretation.)

Plaintiffs also tried actionable omission, which requires some kind of duty to disclose. A duty occurs (1) when the defendant is the plaintiff’s fiduciary; (2) when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; or (4) when the defendant makes partial representations that are misleading because some other material fact has not been disclosed. They argued that the “7 Time Tour de France Winner” was deceptive, but though Armstrong knew he won them illegally, he still won them, and there was no allegation that he knew he’d be stripped of his title; the allegations didn’t say that the ads ran after he was stripped of his titles. Fraud by hindsight isn’t fraud. Nor was “secret weapon.”

Plaintiffs argued that Armstrong knew about his own doping activities, but, even imputing that knowledge to FRS, that wasn’t enough, because the cases discuss omissions about products, not about their endorsers. Because “secret weapon” was puffery, Armstrong’s use of performance enhancing drugs wasn’t material.

Separately, plaintiffs failed to meet Rule 9(b)’s heightened pleading standard. They alleged exposure to the ads only in conclusory fashion (e.g., a plaintiff was “generally aware” of the Armstrong-FRS association). They didn’t identify the specific products they purchased, or specify the time and place of the alleged misrepresentations (note that other courts hold that identifying the relevant ads does that without specifying when they were broadcast/where they were seen). They also didn’t specifically allege reliance.

Finally, the court understandably disapproved of quotes of the ads with inserted bracketed language that changed the essence of the ad. One ad said: “if it’s good enough for Lance, it is good enough for me!” The complaint alleged: “if it’s good enough for Lance [to win 7 Tour de France world titles], it is good enough for me!” (You know, I would think that’s enough to allege that Armstrong was representing that the product helped his performance, even without the alterations.) Nor did plaintiffs sufficiently plead enough to satisfy even the vague unfairness prong of the UCL, since they didn’t specify why the FTC’s guidelines for unfairness (assuming they applied) had been violated.

This entry was posted in california, consumer protection, http://schemas.google.com/blogger/2008/kind#post, warranties. Bookmark the permalink.

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