Fourth Circuit destroys literal falsity

In re GNC Corp., — F.3d –, 2015 WL 3798174 (4th
Cir. June 19, 2015)
Well, this is a terrible opinion that makes no sense.  In the Fourth Circuit, if reasonable experts
disagree, it’s now impossible for one to be wrong, and therefore impossible for
there to be literal falsity.  No more
preponderance of the evidence. Perhaps worse, this standard is stated as being
the standard for the Lanham Act in a state law consumer protection case, with
citation of but no apparent comprehension of the difference between literal
falsity and literal truth that is nonetheless misleading.  Of course class action jurisprudence of late
represents a general hostility to consumer protection, but that’s mostly done
procedurally—this is a deep substantive wound.
Appellants bought joint health supplements produced and sold
by GNC and Rite Aid. The accused products all contain glucosamine and
chondroitin, and most contain additional purportedly active ingredients.  Appellants alleged violations of various state
consumer protection laws because, they alleged, many scientific studies have
shown that glucosamine and chondroitin are no more effective than a placebo in
treating the symptoms of osteoarthritis, contradicting the labels’ health
claims. Those claims include that various products will, e.g.: “promote[ ]
joint mobility & flexibility,” “protect[ ] joints from wear and tear of
exercise,” “rebuild[ ] cartilage and lubricate[ ] joints,” and provide
“[m]aximum strength joint comfort.” The product label for TriFlex Fast–Acting represents
that the product was “[c]linically studied” by means of a “12–week
multi-center, randomized, double-blind, placebo controlled study of 60 adults
… taking 250 mg/day of the GNC TriFlex Fast–Acting Blend” and was “shown to
improve joint comfort and function,” and also promises 20% improvement in joint
function and 25-30% improvement in joint flexibility.
The court of appeals affirmed the dismissal of the complaint
because “marketing statements that accurately describe the findings of duly
qualified and reasonable scientific experts are not literally false.”

I’m going to go Scalia one better and insert some reaction gifs here.

Plaintiffs alleged that “the vast weight of competent and
reliable scientific evidence” indicated that glucosamine and chondroitin do not
provide the promised health benefits. They cited a number of peer-reviewed
studies to this effect, which experts in the field allegedly deemed to be
appropriate proxies for users. However, the complaint didn’t contain any
allegations about the ineffectiveness of herbal compounds found in some of the
“[T]he district court held
that a manufacturer cannot be liable for false advertising so long as at least
one qualified expert opines that the representations made are truthful, even if
the overwhelming weight of scientific evidence is to the contrary.”
Procedural wrangling omitted. 
The court of appeals found the district court’s ruling
accurate “while incorrect in its specific formulation.”  The complaint’s reference to specific studies
didn’t matter, since a plaintiff doesn’t need to “forecast” evidence sufficient
to prove its case.  Studies cited in the
complaint may be statements of fact that make a claim plausible, but don’t
comprise the full body of evidence that would ultimately be coinsulted. “[T]he
question of falsity hinges on the existence (or not) of scientific consensus
and not on the conclusions that hypothetical scientists might draw from those
studies referenced in the [complaint].”
Though the Lanham Act didn’t control here, Lanham Act
precedent was “instructive” in construing the state laws here.  (This is not so, for a variety of historical
and drafting reasons; state UDAP/UCL acts have different purposes—specifically and
most notably consumer protection directly, with consumer standing to sue and
often to receive statutory/enhanced damages—and state consumer protection cases
have essentially never used the Lanham Act explicit/implicit falsity division
except when cases are brought by competitors asserting both state and federal
claims and the parties don’t dispute that the state test ought to be the same
for competitor plaintiffs.)  Lanham Act
false advertising cases divide into literally false claims and literally true
but misleading claims, the latter of which require extrinsic evidence of actual
consumer confusion.  So too here.  “Every statute at issue here imposes
liability for misleading representations. Although each state supplies its own
test for determining whether true statements are misleading, statements that
are literally false are necessarily misleading within the meaning of all of the
statutes.” Plaintiffs consistently argued literal falsity, not misleadingness.
Plaintiffs’ theory of the case was a syllogism: “(i) the
Companies represent that the products improve joint health; (ii) scientific
evidence will show that glucosamine and chondroitin do not improve joint health
more than a placebo would; (iii) therefore, the representations must be false
because the products do not and cannot improve joint health.”  But that’s not enough, because the complaint
failed to allege that “all scientists
that glucosamine and chondroitin are ineffective at providing the
promised joint health benefits” (emphasis added).  Instead, it alleged that the “vast weight”
and the “overwhelming weight” of the evidence favored plaintiffs.  This necessarily concedes that some reasonable
experts believe that glucosamine and chondroitin can provide the promised
symptom relief. This means that the scientific evidence of efficacy is
equivocal.  And that means that plaintiffs failed to allege literal falsity. 
Plaintiffs said, quite reasonably, that the court shouldn’t
resolve a battle of the experts on the pleadings.  But the court rejoined that it didn’t have
to: having determined that there was
a battle, the court was confident that the complaint therefore failed to plead
literal falsity:
When litigants concede that some
reasonable and duly qualified scientific experts agree with a scientific
proposition, they cannot also argue that the proposition is “literally false.” Either
the experts supporting the Companies are unreasonable and unqualified (in which
case, there is no real battle of the experts to begin with) or they reflect a
reasonable difference of scientific opinion (in which case the challenged
representations cannot be said to be literally false).

False advertising cases could still survive if plaintiffs
can, after due diligence, plead that no reasonable scientist would agree with
the challenged representations. “Moreover, plaintiffs remain protected from
dubious experts by the Federal Rules of Evidence, which ‘ensure that any and
all scientific testimony … is not only relevant, but reliable.’”
And the court promised that it wasn’t insulating supplement
makers from liability.  “A manufacturer
may not hold out the opinion of a minority of scientists as if it reflected
broad scientific consensus.” (But what does it mean to “hold out the opinion of
a minority of scientists as if it reflected broad scientific consensus”?  Apparently it can’t be false to state that
minority’s opinion as if it were established fact.)  Anyway, the court need not decide whether the
claims could be misleading, because plaintiffs never pled misleadingness. 

“In sum, we hold that in order to state a false advertising
claim on a theory that representations have been proven to be false, plaintiffs
must allege that all reasonable experts in the field agree that the
representations are false.”

[That’s not what “proof” means.] Also, the complaint failed to allege that the other herbal ingredients,
present in almost all the products, didn’t work. This failure was independently
fatal, since most of the challenged representations referred to the products as
a whole.
The court did reject some grounds for affirmance: defendants
argued that the studies cited in the complaint weren’t specific enough to the
challenged products to raise any plausible inferences about their efficacy.
This argument was “unpersuasive and inconsistent with notice pleading.”  Defendants argued that the studies only
looked at people with arthritis, not people who only experience joint pain and
stiffness, but the court had to take as true the complaint’s allegation that
experts in the field deemed such studies to be appropriate proxies for
non-arthritic people as well.  “It may
well be that glucosamine and chondroitin work differently in people with
arthritis than in people without arthritis, but such a factual dispute is not
susceptible to resolution at the motion-to-dismiss stage.”
Plus, the defendants argued that the scientific studies
weren’t sufficient evidence of falsity because they didn’t assess “the specific
formulations used in the products or the synergistic effects between the products’
ingredients.” But that wasn’t an appropriate inquiry at the motion to dismiss
Okay, deep breaths.

The court of appeals made a category error: reasonability
and correctness are not the same, and deliberately so in most of the legal
system.  We recognize that reasonable and
scientifically accepted methods are sometimes applied wrongly, or sometimes simply
produce wrong results—that’s what it means to have an error rate.  Having at least one admissible expert opinion
in your defense means that you should be able to fight the charge of falsity in
front of a jury, not that you should be able to get the claim dismissed before
anyone evaluates the competing expert opinions. 
If a reasonable expert is nonetheless wrong in a particular case, the claim that the expert supports is
not misleading, it is untrue, that is, false.
Compare: based on intelligence that meets ordinary standards
for action, a drone strike hits a building that turns out not to have the
target inside it.  Was the statement “our
target is inside this building” merely misleading, or was it false?  If you don’t like “false” because of its
implication of intent, you’ve already lost that battle in the consumer
protection context, but would you accept “that statement was not true, though
we reasonably thought it was at the time we said it”?  By contrast, misleadingness relies on
inference to complete or extend a claim that is true on its face.  Suppose the claim on the supplement at issue
here was “Tired?  Iron can remedy anemia
that causes tiredness.”  Surely most if
not all reasonable scientists would agree that this is true.  Now suppose that most tiredness does not come
from anemia.  Is the claim “iron can
remedy anemia that causes tiredness” misleading on a product marketed to
consumers in general?  Of course it is, because of implicature,
specifically the rule of relevance: connecting it with the nonfactual question
“tired?” implies that iron will treat tiredness in general. 
The difference between falsity and misleadingness is not
whether reasonable experts can disagree—in the drone/falsity example, they might
have disagreed, given how the relevant evidence is interpreted, whereas in the
iron example, they are unlikely to disagree at all.  The difference is whether the statement
requires consumers who accept that the
statement is true
to make further inferential leaps to reach the conclusion
that benefits the advertiser.  In some
cases, those inferential leaps may be so likely that we say that a claim is
false by necessary implication. 
(Relatedly, the court of appeals’ new standard makes an unintelligible
hash of falsity by necessary implication, recognized in every circuit to
consider it.  Under the new standard, if
lots of experts disagree with a challenged claim but one agrees with it, is
that falsity by necessary implication? 
Is it a percentage standard now? 
This is one reason that (a) Lanham Act cases shouldn’t have a rigid
falsity/misleadingness divide, and (b) one ought to be careful before importing
Lanham Act doctrines into consumer protection cases, given the different
considerations regularly at issue.)

At a minimum, this holding on literal falsity puts the 4th
Circuit in conflict with everyone else’s definition of literal falsity, where
juries are routinely allowed to resolve battles of the experts in finding
literal falsity. E.g., Hot Wax, Inc. v. S/S Car Care, 1999 WL 966094 (N.D. Ill.
1999) (where a product containing mineral seal oil was sold as “wax” for cars,
a jury found the claim literally false, rejecting several experts’ testimony
that “wax” could be defined broadly, in favor of the plaintiff’s expert
testimony that mineral seal oil was plainly not “wax” because it lacked the basic
characteristics of wax); Eastman Chemical Co. v. Plastipure, Inc., 775 F.3d 230
(5th Cir. 2014) (taking one side in a scientific debate can be literally false
when the ads are directed to the general public, not to experts to whom the
details and limitations of a study are disclosed); Kraft General Foods, Inc. v.
Del Monte Corp., 28 U.S.P.Q.2d 1457 (S.D.N.Y. 1993) (featuring competing expert
definitions of the word “gelatin”). 
Literal falsity should be determined by a two step process: (1) what
unambiguous message does the ad convey, if any? (2) is that unambiguous message
false?   E.g. United Indus. Corp. v.
Clorox Co., 140 F.3d 1175 (8th Cir. 1998) (ambiguity is the key divide between
explicit and implicit falsity). That has nothing to do with the presence of
scientific debate. 
Indeed, the very case that the GNC court here cites to explain literal falsity holds exactly that:
Castrol presented affirmative
evidence to prove the literal falsity of Pennzoil’s claims and … [the district
judge] did not find Pennzoil’s evidence to rebut Castrol’s proof persuasive.
The dissent asserts, however, that a defendant need only establish a reasonable
basis to support its claims to render the advertisement literally true. We
disagree. Rather, the test for literal falsity is simpler; if a defendant’s
claim is untrue, it must be deemed literally false.
Castrol v. Pennzoil Co. 987 F.2d 939, 944 (3rd Cir.1993). GNC cites Castrol to define literal falsity, but neglects its explanation of
what literal falsity is; Design Resources, Inc. v. Leather Industries of
America, — F.3d —-, *7 (4th Cir. June 18, 2015), also relies on Castrol for falsity by necessary
Other consumer protection cases as well have easily
recognized that falsity means wrongness, not global consensus on wrongness.  For a sampling of cases where a consumer
plaintiff’s allegations sufficed by alleging falsity, not total scientific
consensus: Zakaria v. Gerber Products Co., No. 15–00200, 2015 WL 3827654 (C.D.
Cal. June 18, 2015) (affirmative misrepresentation is actionable when its
falsity is properly alleged, as opposed to lack of substantiation for the
claim); Bezdek v. Vibram USA Inc., 2013 WL 639145, No. 12–10513 (D. Mass. Feb.
20, 2013); In re Clorox Consumer Litigation, 894 F. Supp. 2d 1224 (N.D. Cal.
2012); Cardenas v. NBTY, Inc., 870 F. Supp. 2d 984 (E.D. Cal. 2012); Prohias v.
Pfizer, Inc., 490 F. Supp. 2d 1228 (S.D. Fla. 2007).
Oh, and—what exactly would the extrinsic evidence of
confusion be directed to?  The logic of
the ruling implies that it would have to be “consumers are confused into
thinking there’s a scientific consensus about this claim,” but that doesn’t
make sense. (Consider what the court of appeals could want the survey to show:
the reception of the explicit messages on the packages, that the supplements
improve joint health etc.?  But that’s
just a reading test: those are the explicit messages on the packages.  The reason that explicitly false claims don’t
require further evidence of consumer reception is that it’s pointless and
wasteful to require a survey to see if consumers can read.)  The thing that consumers are deceived by, and
likely to think about, is the underlying truth of the claim, not the degree of consensus
about it. Those two perceptions are probably reasonably close together to the
extent that consumers consider consensus at all, but consensus is a proxy for
the fact of interest: truth or falsity of the health claim. The only way this
holding can be coherent (if still wrong) is if it is no longer false or misleading to make any claim against
which there is no “consensus,” no matter what message consumers receive.
To put it another way: under this rule, what is the
remaining place of a battle of the experts in a false advertising case? We
regularly expect that some experts are wrong and some are right.  But that’s a matter of evaluating the
evidence presented by the experts. 
Evidence of consumer perception, collected via a survey, would not help
us evaluate the evidence presented by the experts in any way.  But it’s the survey requirement that divides
explicit from implicit falsity.  Is the court’s idea that we should do
a pointless survey so we can then have the actual battle of the experts?

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