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From Health Law Daily, March 18, 2013

Allegations that Vitamin C products contained false representations survived a motion to dismiss

By Geri Szuberla, JD, LLM

A motion to dismiss the First Amended Complaint (FAC) of a class action against The Ester-C Company (a subsidiary of NBTY, Inc.), NBTY, Inc., and NatureSmart LLC (collectively, Ester-C) was denied because the FAC affirmatively claimed that false representations were made for Ester-C vitamin products, and the heightened pleading standards for claims of fraud were met (Hughes v The Ester C Company, March 15, 2013, Bianco, J). Patrick Hughes and Nafise Nina Hodjat brought the class action on behalf of themselves and others similarly situated (collectively, Hughes) against Ester-C, alleging that Ester-C deceptively marketed its products in violation of Missouri, New York and California state law.

Under Federal Rule of Civil Procedure 9(b), claims of fraud must be pled with the requisite particularity to give a defendant such as Ester-C notice of the particular misconduct alleged to constitute fraud so that they can defend against the charge. The court held that Hughes met this pleading standard for all the violations the FAC alleged under Missouri's Merchandising Practices Act, Mo. Rev. Stat. sec. 407.010 (on behalf of Missouri class members); violations of California's Consumers Legal Remedies Act, Cal. Civ. Code sec. 1750, et seq., California's False Advertising Law, Cal. Bus. & Prof. Code § 17500, et seq., and California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. (on behalf of California class members); and violations under New York common law, including unjust enrichment, intentional misrepresentation, and negligent misrepresentation as to all class members.

Allegation of false representation. The pleadings in the FAC focus on three states' laws concerning false product representations: California, Missouri, and New York. According to the court, all three states (whether under their common or statutory law) broadly prohibit false advertising or merchandising, unfair and deceptive business practices, and fraudulent misrepresentations. The court considered whether plaintiffs, in pleading their claims of misrepresentation under these state consumer protection laws, in fact plead a lack of substantiation claim. The court noted that lack-of-substantiation arguments have been found by many courts, including California courts, to be insufficient, on their own, to support a false or misleading advertising claim.

The court found that the FAC goes beyond asserting a simple lack of substantiation claim because the FAC alleges that defendants made representations that are affirmatively false. Specifically, the pleadings cite to a study conducted by the Linus Pauling Institute at Oregon State University, which allegedly suggests that Ester-C is not any better at providing vitamin C to the body than other vitamin C supplements on the market. Given that Ester-C markets itself as “the Better Vitamin C” and the “#1 Pharmacist Recommended Brand,” the court said, a study suggesting that Ester-C is not a superior source of vitamin C supplementation to the body than other market brands would, indeed, call into question defendants' representations.

Moreover, the study's cited conclusion that Ester-C is no better at increasing the bioavailability of vitamin C in humans than other commercially available tablets, the court found, disputes several marketing statements present on Ester-C's website, as alleged by the FAC. Thus, the court said, the plaintiffs are not simply stating that defendants have no credible science backing up their claims. Instead, they are affirmatively claiming that defendants' representations are positively false.

Hughes' asserted scientific study is sufficient to state a plausible claim of affirmative misrepresentation, the court held.

FTC settlements. Ester C argued that the pleadings in this case improperly referred to settlements between the Federal Trade Commission (FTC) and other companies that produce products claimed to enhance immunity. The FTC decrees cited in the pleadings involve such products as Airborne Health Inc., Rite-Aid's “Germ Defense,” CVS's “AirShield,” and Walgreens' “Wal-Born.” The FTC's decrees for the respective products required retailers to cease making misleading claims that their dietary supplements could prevent colds, fight germs, and boost immune systems, the court commented. Although Ester-C may not have claimed specifically that its product prevents colds or the flu, the court said, the probative value of the FTC settlements could not be resolved at the motion to dismiss stage of this case.

Even assuming that the FTC decrees do not have such probative value, plaintiffs have articulated a plausible claim based upon the other allegations in the FAC, the court held, that survives a motion to dismiss.

The case number is 12-CV-0041 (JFB) (ETB).

Attorneys: James D. Arden (Sidley Austin LLP) for The Ester C Company, NBTY, Inc., and Naturesmart, LLC.

Companies: The Ester C Company; NBTY, Inc.; Naturesmart, LLC

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