Allegedly rigged “review” site was commercial speech, but falsity still not pled

GOLO, LLC v. Higher Health Network, LLC, No. 18-cv-2434-GPC-MSB,
2019 WL 446251 (S.D. Cal. Feb. 5, 2019)
GOLO sells a weight loss program and a proprietary
supplement to help promote weight loss. HHN defendants published a review of this
supplement, allegedly with inaccuracies, misleading statements, and blatant
falsehoods, which led to this lawsuit. HHN moved to dismiss and moved to strike
the state law trade libel claim under California’s anti-SLAPP law. The court
granted the motion to dismiss but denied the special motion to strike because
HHN make a prima facie showing that GOLO’s claim arose from an act in
furtherance of HHN’s right of petition or free speech in connection with a
public issue.
HHN (and its founder Shanks) allegedly compete with GOLO in
the diet and weight-loss industry. Shanks specializes in SEO, and he and HHN
allegedly bought and created dozens of information websites that generate
revenue exclusively through advertising sales. One such website, SupplementPolice.com,
claims to be a “product review website” aiming to introduce “honesty and
transparency to the world of online reviews” through “detailed reviews of
popular products.” Supplement Police states that it “doesn’t currently accept
affiliate income from any company in exchange for favorable reviews – instead,
it makes it money exclusively from [Google] AdSense revenue.”
GOLO alleged that the reviews were “predominantly bogus,”
not based on any testing or analysis conducted by Supplement Police, biased,
and designed solely to benefit HHN rather than the public. Supplement Police
allegedly promotes and links to products the defendants are affiliated with,
manufacture, and/or sell. Specifically, Supplement Police positively reviewed SilaLive
Silica, giving it “an overall score of 4.6 out of 5” and said that it is “clearly
a product that works for a lot of people.” 
SP provided multiple links to the SilaLive website, which offers the
product for sale, but doesn’t disclose that Shanks and HHN are affiliated with,
and manufacture, distribute, and/or sell SilaLive, and own and/or operate the
SilaLive website. Further, the review allegedly contains false statements,
including that SilaLive is “formulated with the greatest quartz crystals” and
that its main ingredient will help fight common health problems “from the
inside,” giving a healthier more permanent solution that artificial cures
cannot promise.
SP’s GOLO review allegedly inaccurately describes how GOLO
was created, as well as what GOLO “promises,” and allegedly falsely states that
the supplement should be taken “30 minutes before a meal” in order to “enjoy
health benefits while also purportedly normalizing your insulin levels.” It
further says: “Out of all of the ingredients listed [in the Release Supplement],
only Salacia bark has been linked to reduced diabetes symptoms…Meanwhile,
none of the other ingredients in Release have been linked to weight loss or
normalized insulin levels.” And its bolded headlines allegedly “pose misleading
questions which would cause readers to doubt GOLO’s effectiveness and/or decide
not to purchase GOLO.”
Lanham Act claims: The specific falsities alleged were as
above—non-obviously, GOLO alleged that it was false to say GOLO made any “promises”
to consumers.  The court found that Rule
9(b) applied and that GOLO failed to plead why these statements were false and
misleading. GOLO didn’t explain how GOLO was actually created or why it was
false to say they made “promises,” nor about why it was false to make the
statements about recommended intake time or about the ingredients.  As for the bolded headlines, “GOLO – Insulin
Resistance for Weight Loss?” and “How Does GOLO Claim to Work?” the court found
it unlikely that a question could be an actionable “statement,” but even if it
could be, the complaint didn’t plead how those specific questions would mislead
or confuse consumers, rather than simply framing the review.
As for the SilaLive review, GOLO likewise didn’t adequately
allege the falsity of  “formulated with
the greatest quartz crystals” or “will help you fight [common health] problems
from the inside and thus give you a healthier, more permanent solution that
artificial cures cannot promise you.”
Standing: Under Lexmark,
“a plaintiff must allege an injury to a commercial interest in reputation or
sales” proximately caused by violations of the Lanham Act. HHN argued that this
claim failed because SilaLive is not a weight-loss product and does not compete
with GOLO; nor does the GOLO review mention SilaLive. But Lexmark makes direct competition unnecessary. The complaint alleged
competition between the parties in the diet & weight loss industry
generally, and alleged that SilaLive was promoted as a supplement that could “help
detox or kickstart[ ] a diet.” It also sufficiently alleged “economic or
reputational injury flowing directly from the deception wrought by the
defendant’s advertising” including foregone sales. Although the GOLO review, in
fact, called the GOLO diet a “cost-effective” program, the court nonetheless
accepted GOLO’s allegations of lost sales as factual for purposes of the motion
to dismiss—which is a take on plausibility that not every judge would have.
Was the GOLO review commercial speech?  HHN argued that the review didn’t mention
SilaLive or direct readers to the page hosting the SilaLive review.  So was it a consumer review or an ad? GOLO
alleged that the review was “surrounded by advertisements and links to products
and websites unrelated to but, in many cases, in direct competition with GOLO,”
and that Supplement Police was affiliated with and/or received compensation
from sales of “some or all” of the linked products.  Moreover, the positive review of SilaLive
also allegedly generated sales/diverted sales from GOLO.  Thus, GOLO successfully alleged that defendants’
speech was an ad for competing products, and that the review was meant to
discourage use of GOLO products and use products defendants promoted instead.
GOLO, LLC v. HighYa, LLC, 310 F. Supp. 3d 499 (E.D. Pa.
2018), dismissed a claim that GOLO reviews were commercial speech, but the
court here found HighYa
distinguishable. First, in that case, when the plaintiff objected to the
review, the defendants amended the review and advised its readers that changes
to the review were made based on additional information provided by GOLO. Under
those circumstances, the facts didn’t plausibly support an inference that the
review was meant to create an economic advantage for competing products.  Here, however, defendants removed the GOLO
review after receiving a C&D, without attempting to correct the alleged
misrepresentations. [Ugh. Talk about creating seriously bad incentives. Plus, I
just don’t see how this connects to commerciality. Why isn’t “wanted to avoid
the hassle of litigation”/ “had its speech chilled” at least as plausible as “wanted
not to say anything nice about the competition,” especially given that the
review doesn’t seem to have been particularly harsh in the first place?]
Also, “defendants disclosed a commercial relationship with
another fitness product negating any indication that it was engaged in covert
competition.”  But covertness has never been an element of the commercial speech
test.  A clear ad should not deceive
about whether it is an ad, and that’s
important (and indeed where the only alleged falsity is the appearance of lack
of financial interest, disclosure may be all that’s needed to avoid liability),
but we still need to know whether it is
an ad
.  Anyway, the court also found
it important that Supplement Police allegedly doesn’t disclose the identity of
its owners and actively hides its association with SilaLive. HighYa said that “liability can arise
under the Lanham Act if websites purporting to offer reviews are in reality
stealth operations intended to disparage a competitor’s product while posing as
a neutral third party.” This was sufficiently alleged.
The trade libel claim failed for want of sufficient
allegations of special damages, which usually requires identification of
specific lost sales/customers or (in Pennsylvania, whose law GOLO sought to use)
really clear evidence of a sales decline traceable only to the disparagement,
including allegations about sales for a substantial period before the
challenged publication and sales after. The same falsity problems as with the
Lanham Act claim also justified dismissal of this claim as well.
The anti-SLAPP laws of California differ from those of
Pennsylvania (transferring district) and Delaware (another potentially
interested state).  California’s law is
broader, and California has a strong interest in protecting its speakers. “ ‘California
would appear to object strongly to the absence of a robust anti-SLAPP regime.’ On
the other hand, Pennsylvania’s or Delaware’s interests would be less harmed by
the use of California law.” So the court applied California’s law, but it still
didn’t help HHN.
An “act in furtherance of a person’s right of petition or
free speech under the United States or California Constitution in connection
with a public issue” triggering anti-SLAPP protection includes “any written or
oral statement or writing made in a place open to the public or a public forum
in connection with an issue of public interest.” HHN argued that the reviews
were a matter of public interest because GOLO itself described its product as a
“leading weight loss and wellness program,” “the top-searched diet on Google in
2016,” and “endorsed, and even used by, multiple doctors.” In Wong v. Jing, 189
Cal. App. 4th 1354 (2010), the court reasoned that a negative review of a
dentist’s services on the rating website Yelp.com constituted an issue of
public interest because “consumer information that goes beyond a particular
interaction between the parties and implicates matters of public concern that
can affect many people is generally deemed to involve an issue of public
interest for purposes of the anti-SLAPP statute.”
The court distinguished Wong
because “it dealt with the more general issue of the effects of dentists’ use
of certain products, not just a highly critical opinion of a particular
dentist.” It implicitly dealt with the more general issues of whether it was ok
to use nitrous oxide and mercury in dental treatments for children, and wasn’t
just about one dentist.  Also, “[i]t is
well established that commercial speech that does nothing but promote a
commercial product or service is not speech protected under the anti-SLAPP
statute.” Consumer Justice Ctr. v. Trimedica Int’l, Inc., 107 Cal. App. 4th 595
(2003) concluded that “speech about a specific product was not a matter of
public interest because the speech was not about herbal dietary supplements in
general, but about the specific properties and efficacy of a particular
product.” So too here. Even if GOLO was popular, it’s not true that “simply
because a lawsuit affects a large number of consumers and involves a
life-threatening illness, it will satisfy the public interest requirement of
the statute.” Scott v. Metabolife Int’l, Inc., 115 Cal. App. 4th 404 (2004). HHN
thus failed to make a prima facie case that the GOLO’s suit arose from an act in
furtherance of its rights of petition or free speech.

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