Plaintiffs brought a putative class action against Ester-C,alleging that it misled consumers into thinking that Ester-C products were aform of immune system defense, misrepresented that Ester-C was a superiorsource of Vitamin C, and made its claims without credible scientific support.They alleged violatoins violations of Missouri's Merchandising Practices Act(on behalf of a Missouri class); violations of the CLRA, FAL, and UCL (onbehalf of a California class); and violations under New York common law,including unjust enrichment, intentional misrepresentation, and negligentmisrepresentation as to all class members (the court noted that there didn’tappear to be a conflict of laws as to these claims).
Ester-C’s products contain 500 mg of Vitamin C, more thaneight times the recommended daily allowance, or 1000 mg (17x the RDA). They also say that they contain Calcium,“C–Sorb Citrus Vioflavonoids Complex,” and “Naturally Occurring Vitamin CMetabolites.” There are tablets,gummies, and a beverage mix. They’reavailable at major drugstores.
The labels describe Ester-C as “The Better Vitamin C”; sayit’s the “# 1 Pharmacist Recommended Brand”; and state “Immune Support,” “Ester-Cprovides your body with the immune and antioxidant support it needs to helpkeep you healthy and strong during times of seasonal change and the stresses ofdaily living,” “Antioxidant Support,” “Enhanced Absorption,” and “Make Ester-Cpart of your daily routine for optimal health ... no matter what time of yearit is!” Many of these or similarrepresentations also appear on Ester-C’s website, on which an “expert” “claimshe maintains a healthy and active lifestyle in part through the consumption of Ester-C,”and which claims that Ester-C increases absorption of vitamin C molecules,“making it easier for the body to transport [the vitamins] from cell to cellfor numerous health benefits.” Plaintiffs claimed that they relied on this language and that theywouldn’t otherwise have bought the products.
Retailers’ marketing is allegedly similar: Amazon advertisesan Ester-C product as “24 hour immune protection. [E]ster-C gives you powerfulimmune system support. [E]ster-C provides your body with the antioxidantprotection it needs to help keep you healthy and strong....” Wal-mart claims,“[s]tay healthy with the Ester-C The Better Vitamin C Supplement Tablets,” and“[t]he Ester-C vitamin C 1000mg tablets also offer 24 hour immunity from day today ailments like flu and fever.” Defendants’ counsel noted that Ester-C isn’t responsible for othercompanies’ statements in marketing it (but see: vicarious/contributoryliability) and that it has in the past reached out to ask other companies toremove language going beyond its own marketing and labeling representations.
Plaintiffs pled that the false claims increased sales andprices; a box of 90 Ester-C 500mg tablets costs about $8.44, while a comparablesupplement typically costs about $7.00. Moreover, they pled that defendants lacked credible evidence thatEster-C would work as claimed, and cited a publication by Oregon State University'sLinus Pauling Institute that allegedly shows that it doesn’t work. Plaintiffs also referred to various FTCactions against several of Ester-C’s competitors regarding claims to boostimmunity/protect against illness.
The court found that plaintiffs had adequately pled theirclaims, despite Ester-C’s argument that they were merely alleging lack ofsubstantiation, which isn’t privately actionable.
First, of course, we give a nod to standing. The economic injury pled was sufficientinjury in fact. Plaintiffs pled reliance, making their injuries fairlytraceable to the alleged misrepresentations, and redressability would come fromending the allegedly deceptive marketing and from monetary relief. Ester-Cargued that there was no standing because the plaintiffs didn’t say whichproducts they bought or what representations they relied on, the expresslanguage of the complaint was to the contrary: they said they bought Ester-C,they noted the different types of Ester-C products, and they listed severalexamples of the representations upon which they allegedly relied. These were Rule 9(b) arguments, not standingarguments.
The key issue was whether plaintiffs were really justpleading lack of substantiation with statements such as “[e]vidence ...indicates that Ester-C is not any better than other Vitamin C supplements atproviding Vitamin C to the body,” and that “[d]efendants have no credibleevidence that taking Ester-C will provide immune support or keep one fromgetting sick.” The court agreed thatlack of substantiation wasn’t privately actionable under the relevant laws, butfound that plaintiffs had adequately pled falsity. The court distinguished between unproven (notactionable) and disproven (actionable) advertising claims. Studies that debunk the purported benefits ofan ingredient can disproveadvertising claims. However, claimssounding in fraud must pass Rule 9(b), so the studies have to be specificenough.
The court also pointed to Bober v. Glaxco Wellcome PLC, 246F.3d 934 (7th Cir. 2001), which held that, for a lack of substantiation claimto be a deceptiveness claim, the challenged advertising needed to implysubstantiation. (Note that thisstandard, which is that used by the Lanham Act, is potentially much broader: itrecognizes the possibility that an ad claim might imply substantiation without coming out and saying “tests prove”X—especially in the health field, where consumers are likely to believe thatscientific evidence is behind any given health claim.)
Here, plaintiffs did more than allege lack of substantiationby citing the Linus Pauling institute study, which was specific to the ingredientstouted by Ester-C and “found no difference between Ester-C and commerciallyavailable ascorbic acid tablets with respect to the absorption and urinaryexcretion of vitamin C.” “Given that Ester-Cmarkets itself as ‘the Better Vitamin C’ and the ‘# 1 Pharmacist RecommendedBrand,’ a study suggesting that Ester-C is not a superior source of vitamin Csupplementation to the body than other market brands would, indeed, call intoquestion defendants' representations.” The study’s conclusion about Ester-C’s lack of superior bioavailabilitycontradicts several statements on Ester-C’s website, which explicitly claimsthat Ester-C has “a unique and patented form of vitamin C” and that the productcontains metabolites that “activate the vitamin C molecules making it easierfor the body to transport them from cell to cell for numerous health benefits.”Plaintiffs alleged that these claims were false.
In addition, plaintiffs’ allegations that defendants lackedcredible scientific evidence challenged Ester-C’s express claims that clinicalresearch supported its products. Forexample, the website “expert” stated that he takes Ester-C “because it isgentler on the stomach and because of all the clinical research that supportsthe use of this product.” Because Ester-Cexpresssly claimed substantiation, plaintiffs’ use of the Linus PaulingInstitute study was sufficient to state a plausible claim of affirmativemisrepresentation. Lack ofsubstantiation is deceptive when a claim implies (or here, outright states) thatsubstantiation exists. Here, Ester-C made numerous claims of superiority toother products and superior bioavailability.
Ester-C challenged the merits of the study, which wasn’tappropriate on a motion to dismiss. Andthe study related to the claims on which the plaintiffs allegedly relied;defendants’ argument that the study only related to “absorption and urinaryexcretion,” not efficacy, was unpersuasive. Ester-C’s label specifically claimed enhanced absorption and thelike.
Ester-C also argued that the references to FTC settlementsfor other products weren’t relevant because they were just settlements andbecause they targeted disease prevention claims. Plaintiffs responded that, though Ester-C’slabel didn’t expressly make cold/flu prevention claims, it implied them: itused a clock with circling arrows to imply “around-the-clock” immune supportand stated: “Ester-C provides your body with the immune and antioxidant supportit needs to help keep you healthy and strong during times of seasonal changeand the stresses of daily living.” Theyargued that a reasonable consumer reading that language, on a label alreadyemphasizing Ester-C’s “better” vitamin C formula offering antioxidant andimmune system support, could fairly interpret that as a cold/flu preventionmessage, since those illnesses are typically associated with seasonal changes.Again, this couldn’t be resolved on a motion to dismiss, even setting aside theFTC settlements as irrelevant.
Defendants argued that no reasonable consumer could receivea disease prevention claim because of the disclaimer, which stated: “Thisproduct is not intended to diagnose, cure, treat or prevent any disease.” This disclaimer was indeed on the label,preceded by an asterisk, and several of the relevant statements on the labelwere followed by an asterisk. But disclaimers have to be examined in contextwith the allegedly misleading statements. Similar to Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008),the presence of the disclaimer didn’t mean that a reasonable consumer couldn’tbe misled. Reasonable consumersshouldn’t be expected to look beyond misleading representations on the front ofthe box to discover the truth in small print. Again, a motion to dismiss wasthe wrong place to resolve this, especially given other allegations about howthe product was marketed. For example,Walmart’s website allegedly promised “Stay healthy with the Ester-C The BetterVitamin C Supplement Tablets…. The Ester-C vitamin C 1000mg tablets also offer24 hour immunity from day to day ailments like flu and fever.” Even though those aren’t claims made byEster-C, plaintiffs argued that they showed that even retailers interpreted theproduct as a cold and flu prevention product. Thus, plaintiffs plausibly pled that a reasonable consumer could bemisled into believing that Ester-C’s products could prevent or shorten theduration of colds or flu.
After that, the court turned to Rule 9(b), and found itsatisfied: the complaint adequately provided the “who, what, when, where, andhow” of the alleged fraud. Theyidentified the products at issue, the specific alleged misrepresentations,where the misrepresentations were made (particular retail stores and on certainpages of the website), the time period at issue including specific purchases,the nature of the deception, and the reasons that the claims were allegedlyfraudulent. This was enough for theCalifornia CLRA, FAL, and UCL claims (the court found that plaintiffs hadsuccessfully pleaded violations of all three prongs of the UCL: unlawful,fraudulent, and unfair).
Similar results obtained with Missouri’s MerchandisingPractices Act, which requires an ascertainable loss of money or property (and aproduct bought for personal, family, or household purposes). Likewise with the NY claims for unjustenrichment, which doesn’t require a direct relationship between the parties,and intentional misrepresentation. Plaintiffs adequately pled that Ester-C knewthe claims were false when made by pointing to the lack of substantiation, theLinus Pauling Institute’s study, and the FTC settlements. The parties disputed whether the court couldconsider whether reliance was justified on a motion to dismiss. In this case, the court couldn’t conclude asa matter of law that consumers couldn’t reasonably rely on the citedstatements.
As for the NY negligent misrepresentation claim, thisrequires that the defendant have been careless “‘in imparting words upon whichothers were expected to rely and upon which they did or failed to act to theirdamage,’ and where the author of the statement has ‘some relationship or duty... to act with care’ vis-Ã -vis the party at whom the statement is directed.” This requires a special or privity-likerelationship as well as justifiable reliance, which the court found to berelated issues: a court considering reliance under NY must consider “whetherthe person making the representation held or appeared to hold unique or specialexpertise; whether a special relationship of trust or confidence existedbetween the parties; and whether the speaker was aware of the use to which theinformation would be put and supplied it for that purpose.”
Here, the court found that it could infer a specialrelationship between the parties, because Ester-C’s marketing allegedly held itout as having a special expertise on the products’ purported health benefits,including the “Ask an Expert” section of the website. That page also stated that Ester-C “has goodclinical research and is the easiest form of vitamin C to take in my opinionbecause it is non-acidic. The company is also completely committed to clinicalstudies.” The label also at leastsuggests “some level of medical or scientific backing for its claims.” Thus, it was plausible that Ester-Cunderstood that its marketing would “would be used by consumers for the purposeof evaluating Ester-C in comparison to the numerous other brands of vitaminsupplements on the market,” and that it knew that it was “targeting individualswho generally lacked the scientific or medical background necessary tocarefully assess and truly evaluate Ester-C's assertions before purchase, andwho would have to trust the representations as stated in Ester-C's marketing.”This was sufficient to infer a special relationship under NY law.
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