Another consumer protection case survives despite invocation of In re GNC

Racies v. Quincy Bioscience, LLC, No. 15-cv-00292, 2017 WL
6418910  (N.D. Cal. Dec. 15, 2017)
The court granted Racies’ motion for certification of a
California class against the makers of Prevagen, a supposed brain health
supplement, covering the usual California claims. Racies alleged that,
“contrary to the product’s labeling, Prevagen does not improve memory or brain
function because its only active ingredient is digested and transformed into
amino acids before it can measurably affect the brain.” Although individuals
can’t bring lack of substantiation claims, and allegations that Quincy
misrepresented Prevagen as “clinically tested” were impermissibly based on a
lack of substantiation theory, the body chemistry allegations were sufficient
to proceed.
Quincy tried to turn the original allegations into a reason
that Racies’ claims weren’t typical, because he relied on non-actionable
representations that Prevagen was “clinically tested” rather than on
representations about Prevagen’s potential brain health benefits, and also
because he didn’t take the product as directed. The court disagreed.  The evidence suggested that Racies bought
Prevagen, at least in part, because of what its ingredients were advertised to
deliver.  (Clinical testing could only
ever be support for that basic claim.)  It was enough for a misrepresentation to play
a substantial part, and so be a substantial factor, in influencing his decision.  “Because Prevagen is not marketed for uses
other than improving brain health and memory, it follows that representations
about these purported benefits were a ‘substantial factor’ in Plaintiff’s — and
all consumers’ — purchasing decision.” 
Also, the manner in which Racies took the product wasn’t at issue,
because the relevant inquiry and related injury under the CLRA/UCL occurs at
the time the consumer purchased the product based on the product label.
Racies also showed predominance by showing that a key
question was the objective one of whether the advertising was either false or
misleading.  Quincy argued that hat some
putative class members may have purchased Prevagen because the product was
clinically tested and not simply for its purported brain health benefits. Even
if that was something other than a completely “artificial” distinction, “California’s
consumer protection laws evaluate materiality under a reasonable person
standard, not on an individualized basis.”  Reliance was also no barrier to certification
because a plaintiff is entitled to a presumption of reliance if material
representations were made to class members.
Quincy then argued that proving falsity would entail
individual questions rather than common evidence about the scientific
literature. Although “[t]he falsity of the advertising claims may be
established by testing, scientific literature, or anecdotal evidence,” Quincy
argued that the scientific literature about Prevagen was “equivocal,” and
therefore incapable of establishing falsity under In re GNC. Thus, Racies would supposedly have to rely on anecdotal
evidence about class members’ individual experiences.
The court was unpersuaded by In re GNC and a subsequent California federal district court case
applying it, and didn’t believe that the California Supreme Court would agree
either.  Unfortunately, the court still used
In re GNC’s redefinition of literal
falsity as a situation where “all reasonable scientists agree” that the
explicit claims are false, whereas misleadingness comes when “the vast weight
of competent evidence establishes that those health claims are false.”  A jury could determine whether either was the
case.  [Pause to reiterate: if you were
using the Lanham Act, that wouldn’t actually be the test, despite what In re GNC said.  Literal falsity/misleadingness is a
distinction made about how a message
is conveyed.  Literal falsity is …
literal.  “This car gets 40 miles to the
gallon,” when it doesn’t.  Implied
falsity is where an ambiguous statement deceives a significant number of
reasonable consumers, e.g., “No product is better at preserving memory,” when
nobody else can do the job either.  The
truth or falsity of what message is conveyed to consumers is then
established in the ordinary course of proof, traditionally by the usual
preponderance standard.  There is zero
basis in federal or California law for the new standard invented by In re GNC, so the court should have
stayed even further away.]
Regardless, while “a plaintiff may fail to carry his burden
to prove falsity if the scientific evidence is ultimately inconclusive, the
mere existence of an expert or experts who support the defendant’s
representations should not insulate a defendant from false advertising claims
or foreclose class certification.” The court couldn’t substitute itself as
factfinder on a motion for class certification simply because both parties have
proffered scientific evidence.  

Superiority: Quincy argued that identifying class members
would be difficult because “Prevagen is primarily sold by third-party
retailers,” some individuals could be satisfied with the product, and any who
are dissatisfied could seek a refund. None of that mattered; “the Ninth Circuit
recently rejected a similar argument that plaintiffs must identify an
administratively feasible way to determine who is in the class in order to
satisfy the requirements of Rule 23.” That some individuals might like the
product was irrelevant; under Racies’ theory, the products were worthless and
any benefit was attributable to the placebo effect.  Refunds were also not superior alternatives to
adjudicating class members’ claims. 

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