Migration of false/misleading divide into consumer protection claims continues in infant formula class action

Hasemann v. Gerber Prods. Co., 2016 WL 5477595, No. 15-CV-2995
(E.D.N.Y. Sept. 28, 2016)
In this putative class action, the plaintiffs alleged that Gerber’s
advertising and marketing misrepresented that its Good Start infant formula
reduces the risk that infants will develop allergies, and also misrepresented
that the Infant Formula was the first and only infant formula that the FDA
endorsed to reduce the risk of infants developing allergies.
In 2009, Gerber asked the FDA to approve a qualified health
claim that “emerging clinical research shows that, in healthy infants with
family history of allergy, feeding a 100% Whey-Protein Partially Hydrolyzed
infant formula instead of a formula containing intact cow’s milk proteins may
reduce the risk of developing the most common allergic disease of infancy —
atopic dermatitis — throughout the 1st year of life and up to 3 years of age.”  The FDA found that this claim was misleading,
but proposed four alternative qualified health claims, including a qualifying
statement: “Partially hydrolyzed formulas should not be fed to infants who are
allergic to milk or to infants with existing milk allergy symptoms. If you
suspect your baby is already allergic to milk, or if your baby is on a special
formula for the treatment of allergy, your baby’s care and feeding choices
should be under a doctor’s supervision.”
The statements plaintiffs challenged were: “1st & only
routine formula to reduce the risk of developing allergies,” “the first and
only formula brand made from 100% whey protein hydrolyzed, and that meets the
criteria for a FDA Qualified Health Claim for atopic dermatitis,” and similar
claims.  Plaintiffs alleged two
misrepresentations: (1) that the formula reduced allergy risk, and (2) that the
formula met the criteria for an FDA qualified health claim for atopic
dermatitis. Plaintiffs alleged that several scientific studies have concluded
that partially hydrolyzed whey protein does not lower the risk that infants
will develop allergies.  Further, they
alleged that Gerber’s actual statements weren’t one of the four qualified
health claims that the FDA approved and, in addition, didn’t include the
required qualifying statement.
The FDA sent a warning letter to Gerber about the formula’s
advertising, noting that it found the labeling misleading and that it had
“previously considered and denied” the statement on the label that it was the
“1st & only routine formula to reduce risk of developing allergies.” Consistent
with the FDA’s four proposed qualified health claims, Defendant’s labeling and
website both stated that there was “limited evidence” that partially hydrolyzed
whey protein can reduce the risk of infants developing atopic dermatitis, but the
warning letter concluded that by failing to include the qualifying statement
required by the FDA, Gerber failed to provide “essential information necessary
to ensure the safety of consumers,” and so the labeling was misleading.  The FTC sued Gerber, alleging that the two
claims at issue here were false, misleading, and, for (1), unsubstantiated.
The court first declined to wait for the FTC under the
primary jurisdiction doctrine.  Plaintiffs’
false advertising claims didn’t involve technical considerations within the
particular expertise of either the FDA or the FTC.   There was no need to wait for an
investigation to conclude, because the FTC had already sued.
However, plaintiffs lacked Article III standing to seek
injunctive relief because they didn’t allege any intent to buy the formula in
the future.  (Hey, with respect to
formula in particular, why isn’t this “capable of repetition, yet evading
review,” given its close connection to infant development and the fact that all
consumers will age out of the product fairly quickly?  If there was standing in Roe v. Wade, it would
seem also justified here.)
The court then ruled that, given state precedent, Wisconsin
Deceptive Trade Practices Act § 100.18, which “generally prohibits false,
deceptive, or misleading representations or statements of fact in public
advertisements or sales announcements,” didn’t cover food, but only “real
estate, merchandise, securities, service or employment”; an intermediate state
court previously held that “merchandise” doesn’t mean “food” here because a
different section of the law specifically mentions food and doesn’t provide for
a private right of action.
However, § 100.20(2)(a) authorizes the Wisconsin Department
of Agriculture, Trade and Consumer Protection “to ‘issue general orders
forbidding methods of competition in business or trade practices in business
which are determined by the department to be unfair.’ ” “Section 100.20 also
authorizes a private right of action,” permitting “[a]ny person suffering
pecuniary loss because of a violation by any other person of any order issued
under this section [to] sue for damages ….” And, pursuant to this authority,
the department has issued a general order requiring food sold in Wisconsin to
be labeled in compliance with FDA rules. 
Here, the FDA has found that the labeling at issue was misleading.
Gerber argued that the FDA had closed its investigation,
making the warning letter irrelevant. 
Gerber relied on a 2015 letter stating that the FDA has completed “an
evaluation” of Defendant’s “corrective actions in response to [the FDA Warning
Letter]” and that it “appears that [Defendant] addressed the violations
contained in [the FDA Warning Letter].”  The court wouldn’t consider this letter on a
motion to dismiss.
Gerber also argued that plaintiffs were bringing a mere lack
of substantiation claim, not a misleadingness/falsity claim, which they
couldn’t do as private plaintiffs. Gerber contended that its qualified health
claim wasn’t literally false because the FDA determined that its
representations regarding atopic dermatitis were “generally consistent” with
the qualified health claims proposed by the FDA, and that the FDA found that
there was some scientific support for its qualified health claim.  But plaintiffs were claiming misleadingness,
not literal falsity, because of the absence of the qualifying statement
required by the FDA.
Plaintiffs also alleged that the allergy risk reduction
claim was false because the FDA determined in 2006 that there was no scientific
evidence to support the claim and because a 2011 scientific study contradicted
Gerber’s claim. That was sufficient to allege falsity.
Likewise, the misleadingness of the FDA endorsement claim
was sufficiently alleged, which was enough under Florida law—but it wasn’t
enough for Wisconsin law, which the court found to require literal falsity.
(This seems like an extreme overreading of Wisconsin law’s reference to
“falsity” to me—a falsehood can be express or implied, and Wisconsin doesn’t
explicitly limit its coverage to “explicitly false” claims, nor is there a good
policy reason for it to have chosen to do so.) 
Gerber also invoked the awful In re GNC Corp. case, where the Fourth Circuit held 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.” The court here distinguished GNC because, in GNC, “there was some credible scientific evidence supporting the
allegedly deceptive representations,” but plaintiffs alleged that there was no
credible scientific evidence supporting Gerber’s allergy risk reduction claim.
“[F]actual disputes about whether the scientific evidence actually disproves
the qualifying health claim, or whether there is mere scientific debate
regarding the qualifying health claim, cannot be resolved by the Court on a
motion to dismiss.” Anyway, whether there was some scientific support was
relevant to explicit falsity, but not to misleadingness.
Finally, this was not a lack of substantiation claim.  “Under Florida law, a claim that a
representation is false or misleading because it has been disproven or
contradicted by scientific evidence is not a lack-of-substantiation claim.”  Plaintiffs alleged that Gerber’s qualified
health claim was misleading without the qualifying statement, and that the
allergy risk reduction claim was literally false because it was contradicted by
all of the credible scientific evidence: that was more than lack of
Plaintiffs also properly alleged causation under Florida’s
Deceptive & Unfair Trade Practices Act, which didn’t require actual reliance
but only that an objective reasonable person would have been deceived.  For other Florida and Wisconsin claims,
plaintiffs needed to allege justifiable reliance, which they did—reliance is
unreasonable if they had notice of facts which would have told them the truth,
but that didn’t appear from the pleadings.

Plaintiffs’ price premium theory also sufficiently alleged
damages.  Plaintiffs don’t have to plead
the price of comparable products to allege that they paid more than the product
was worth. 

from Blogger http://ift.tt/2dU08AE

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