Flagging supplement case revived

ThermoLife Intern., LLC v. Gaspari Nutrition Inc., —
Fed.Appx. —-, 2016 WL 1460171, No. 14–15180 (9th Cir.  Apr. 14, 2016)

 

ThermoLife sued Gaspari (GNI) false advertising under the
Lanham Act and unfair competition under Arizona common law, based on GNI’s
allegedly false advertising of its testosterone boosters as “safe,” “natural,”
“legal” and compliant with the FDCA.  The
court of appeals vacated the long-suffering
district court
’s grant of summary judgment and remanded, given that its
preemption analysis was based on now-overturned 9th Circuit
precedent. 
 
The court of appeals first reversed the exclusion of two experts’ opinions, and upheld the exclusion of two others.  The first wrongly excluded expert opined that the dietary supplement industry would not have deemed GNI’s products “safe,” which was relevant even if it didn’t offer a definitive opinion on safety, and also provided a usable standard for determining “safety”—the industry standard.  The expert’s “presumption that GNI’s ingredients were not safe was sufficiently valid in light of the industry’s strict reliance on establishing safety through certain procedures GNI had not used.” 

 

Another expert’s survey, which asked consumers of testosterone boosters whether they would have continued using GNI’s products (or switched to another testosterone booster) after learning GNI’s advertisements were false, was relevant to materiality.  “Although the district court faulted the survey’s biased questions and unrepresentative sample, neither defect was so serious as to preclude the survey’s admissibility.”  The sample at least included consumers both of GNI’s products and of other testosterone boosters. “Nor was the survey unreliable simply because it was not validated. Berger reasonably explained why the survey could not be validated and concluded it was nevertheless a ‘good survey’ based on respondents’ ‘consistent, across-the-board answers.’”
 
With that out of the way: “Pom Wonderful established that the FDCA generally does not preclude
Lanham Act claims for false labeling of food.” 
And its rationale applied to ThermoLife’s claim as well: neither the
FDCA nor the Lanham Act expressly barred ThermoLife’s claims, and the FDCA’s public
health-protective aim was not inconsistent with the Lanham Act’s protection of commercial
interests “by relying on the market expertise of competitors.”

 

GNI argued that Pom
Wonderful
could be distinguished because ThermoLife’s claims “require
litigation of the alleged underlying FDCA violation … where the FDA has not
itself concluded that there was such a violation.” But ThermoLife’s claims that
GNI falsely advertised its products as “safe” and “natural” required no
interpretation of the FDCA, nor did ThermoLife need to demonstrate a FDCA
violation to prevail on its claims that GNI falsely advertised its products as
“legal” or “DSHEA-compliant.”  

 

Usually, claims about legality are generally inactionable
opinion because they “purport to interpret the meaning of a statute or
regulation.” But there is a “well-established exception” that an opinion “by a
speaker who lacks a good faith belief in the truth of the statement” is
actionable. Because every opinion “explicitly affirms … that the speaker
actually holds the stated belief,” a CEO’s statement about legal compliance
“would falsely describe her own state of mind if she thought her company was
breaking the law.” ThermoLife pointed to numerous emails indicating GNI was
aware its products were not DSHEA-compliant, creating a triable issue of
falsity about legality.

 

Safety statements were also factual claims.  GNI argued that its products were presumed
safe until the FDA proved otherwise. But the statutory provision on which GNI
relied didn’t mention a presumption of safety. 
It defined when a supplement is safe enough that it wouldn’t be an
“adulterated food.” A reasonable jury could find GNI’s products were not safe,
based on the evidence about recalls and the expert’s report. There was also a
triable issue of falsity on GNI’s claim that a product was “natural” and that its
ingredients were “naturally occurring and are found in natural foodstuffs,”
which were factual claims.

 

The district court also erred in its analysis of
materiality.  Survey results and internet
message board posts “indicated that the safety, legality and natural
ingredients of GNI’s products were—to varying degrees—important factors in
consumer purchasing decisions.”  

 

And there was also a triable issue on injury.  There is a presumption of commercial injury
when the parties directly compete and the defendant’s ad tends to mislead: when
competitors vie for the same customers, “a misleading ad can upset their
relative competitive positions” and thereby cause injury. There needs to be
evidence of causality, but evidence of direct competition provides a causal
link between likely deception and injury. 
 

 

There was also no preemption of the state unfair competition
law claim.  Although the FDCA expressly
preempts state-law requirements that conflict with certain FDCA provisions,
that didn’t include § 343(a), which governs the misbranding of food through
false or misleading labeling. Moreover, there was a general “presumption
against pre-emption,” and there was no preemption given that “the state-law
duty ‘parallels’ the federal-law duty.”

 

 

from Blogger http://ift.tt/26jFYTc

Advertisements
This entry was posted in Uncategorized and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s