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From Health Law Daily, August 7, 2014

Homeopathic class action ‘naturally’ the best way of adjudication

By Harold M. Bishop, JD

A class action has been certified in California district court against the producers and marketers of 10 homeopathic products purchased since February 9, 2008. The putative Plaintiffs claimed the active ingredients in 12 products were so diluted as to be ineffective and that the labeling claims of “100% Natural,” “All Natural,” and “Natural” were untrue. The court certified the class as to 10 of the 12 products, finding that questions of law or fact common to class members predominated over any questions affecting only individual members; and that a class action was superior to the other available methods for fairly and efficiently adjudicating the controversy. Plaintiffs were also certified to represent the class, except for one Plaintiff who was excluded as to one of the products (Allen v Hyland’s, Inc., August 1, 2014, Gee, D).

Background. Hyland’s Inc. and Standard Homeopathic Company (collectively “Defendants”) produce, market, and sell homeopathic products throughout the United States. The Defendants market their products as natural, safe, and effective alternatives to prescription and non-homeopathic over-the-counter (OTC) drugs. The FDA does not review homeopathic drugs and their packaging and the agency has stated that it is not aware of any scientific evidence that homeopathic drugs are effective. Unlike dietary supplements, homeopathic drugs are subject to the Food, Drug, and Cosmetic Act and regulations issued by FDA. However, instead of the new drug approval process, premarket approval for homeopathic drugs is done by way of monograph approval by the Homeopathic Pharmacopoeia Convention of the United States (HPCUS).

The following 12 homeopathic products were at issue: Calms Forté, Teething Tablets, Migraine Headache Relief, ClearAc, Poison Ivy/Oak Tablets, Colic Tablets, Leg Cramps with Quinine, Leg Cramps, Defend Cold & Cough, Defend Cold & Cough Night, Hyland’s Cough, and Seasonal Allergy Relief. Each product’s packaging describes the product’s medical uses and makes claims about its effectiveness. Most of products’ packaging asserts that the respective product is “100% Natural.” While other products’ packaging asserts that the product is “All Natural” or “Natural.”

The Plaintiffs are Kim Allen, Daniele Xenos, Sherrell Smith, Nancy Rodriguez, Yuanke Xu, Diana Sisti, and Melissa Nigh. Most of the Plaintiffs purchased one or more of Defendants’12 products in 2008 or thereafter because they sought a more natural alternative to traditional OTC remedies. Plaintiffs allege that the active ingredients in these twelve products are so diluted that the ingredients are “effectively non-existent” and the products are therefore not effective for their intended uses. They also allege that the products did not work as advertised, were not 100 percent or all natural, and some contained dangerous ingredients.

Claims. The Plaintiffs assert the following claims against Defendants: (1) violation of California’s Consumer Legal Remedies Act (CLRA); (2) violation of California’s Unfair Competition Law (UCL); (3) violation of California’s False Advertising Law (FAL); (4) breach of express warranty; (5) breach of implied warranty of merchantability; and (6) violation of the federal Magnusson-Moss Act. Plaintiffs sought to certify the nationwide class for all purchasers of the 12 products in the United States from February 9, 2008, to the present. The Plaintiffs also asked that they be appointed representatives of the class.

Class certification under Rule 23(a). Certification of a class action under Federal Rule of Civil Procedure 23 has two sets of requirements. First, under Rule 23(a) the plaintiffs must meet the requirements of numerosity, commonality, typicality, and adequacy or representation. Second, and at issue here, under Rule 23(b)(3), the plaintiffs must show “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”

  • Numerosity. The defendants did not challenge the numerosity requirement and the court found that the Plaintiffs easily satisfied the requirement because the putative class includes the consumers of 12 products sold nationwide for several years.

  • Commonality. The court found commonality existed. Defendants’ claims that Plaintiffs’ claims required an analysis of each putative class member’s symptoms and the active ingredients of each product, and that Defendants’ products are effective for at least some people was unpersuasive. The court found that this argument went to the merits of the case, but failed to demonstrate that Plaintiffs’ claims were not subject to common proof.

  • Typicality. Typicality requires a showing that the claims or defenses of the representative parties are typical of the claims or defenses of the class. With respect to Plaintiff Xenos, evidence indicated that she could not recall if she saw labels of ClearAc or Poison Ivy/Oak Tablets before purchasing them. Therefore, the court denied class certification to the extent that no named Plaintiff typical of the class purchased these two products. They typicality requirement was otherwise met.

  • Adequacy. The court found that the Plaintiffs’ counsel and the named plaintiffs, with the exception of Xenos, were adequate to represent the class.

Class certification under Rule 23(b)(3). Rule 23(b)(3) requires two different inquiries, whether: (1) questions of law or fact common to class memberspredominate over any questions affecting only individual members; and (2) a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

Predominance. To determine whether questions of law or fact common to the class members predominated, the court analyzed each of Plaintiffs’ claims separately.

  • UCL and FAL claims. The court found that Plaintiffs UCL and FAL claims were subject to class-wide proof.The Plaintiffs provided evidence that the Defendants used similar types of representations on the packaging of each of the 12 products, and the packaging of each individual product remained uniform during the class period. Thus, the record supported a finding that all class members were exposed to the same alleged misleading statements by defendants.

  • CLRA claim. To bring a CLRA claim, a plaintiff must show not only that a defendant’s conduct was deceptive but that the deception was relied on and caused harm. Thus, the CLRA requires that each class member have an actual injury caused by the practice declared to be unlawful by the CLRA. But, according to the court, causation, on a class-wide basis, may be established by materiality. The court found that the Paintiffs sufficiently demonstrated that the Defendants’ alleged misrepresentations about the uses and effectiveness of the 12 products are material, and thus, causation can be established on a class-wide basis.

  • Breach of express warranty claim. Under California law, a plaintiff asserting a breach of express warranty claim must stand in vertical contractual privity with the defendant. This means that buyer and seller must be directly linked in the distribution chain. The one exception to this general rule is where the purchaser of a product relied on representations made by the manufacturer in labels or advertising material. Here, according to the court, the Plaintiffs did not need to demonstrate vertical privity because the exception applied.

  • Breach of implied warranty of merchantability. Under California law, an action for a breach of an implied warranty also requires that the plaintiff be in vertical privity with the defendant, but the exception to privity based on purchaser reliance on labeling and advertising material does not apply. The court found that the Plaintiffs did not adequately demonstrate that common issues of fact and law predominate with respect to this claim, given that each class member would be required to demonstrate that he or she is in vertical privity with defendants. The allegations in the complaint suggest that class members bought the products in retail stores, and thus, they were not in vertical privity with Defendants. The court concluded that Plaintiffs did not meet the predominance requirement with respect to their breach of implied warranty claim.

  • Magnuson Moss Act claim. The Magnuson-Moss Warranty Act (MMWA) regulates warranties on consumer goods and directly applies to written warranties which relate to the nature of the material or workmanship and certify products as defect-free or meeting a specific level of performance over a specific period of time. The court found that the Plaintiffs alleged specific statements that they contend constitute warranties under the MMWA and to the extent that these statements contend that the products are not effective for anyone, the question of MMWA violation is subject to common proof and common questions predominate.

  • Damages. In class actions, the amount of damages is invariably an individual question and does not defeat class action treatment. The court found that the Plaintiffs sought restitution of the purchase price of the products. This restitution could be readily calculated using defendants’ sales numbers and an average retail price.

The court found that the Plaintiffs met the class predominance requirement with respect to their theory that the products are worthless because they are ineffective.

Superiority. The purpose of the superiority requirement is to assure that the class action is the most efficient and effective means of resolving the controversy. Here, according to the court, each class member’s claim for restitution involves a small sum of money, and the litigation costs would render individual prosecution of claims prohibitive. The Defendants’ contention that their comprehensive customer service system is the most efficient and effective means to resolves these individual controversies was unavailing to the court because the plain text of Rule 23(b)(3) requires the court to determine whether “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Customer service is not adjudication.

Conclusion. The court certified the requested class as to the CLRA, UCL, FAL, MMWA, and breach of express warranty claims as to all products except Poison Ivy/Oak Tablets and ClearAc. Individuals who had fraud-based UCL claims with respect to Colic Tablets and Leg Cramps with Quinine were excluded from the class. The court certified the Plaintiffs as the representatives of the class, but Plaintiff Daniele Xenos as to the Leg Cramps product only.

The case number is CV-12-01150 (DMG) (MANx).

Attorneys: Alexis M. Wood (Law Offices of Ronald A. Marron) for Kim Allen. Jeffrey B. Margulies (Fulbright and Jaworski LLP) for Hylands Inc., and Standard Homeopathic Co.

Companies: Hylands Inc.; Standard Homeopathic Co.

MainStory: TopStory CaseDecisions LabelingNews FDCActNews AdulterationNews MisbrandingNews SafetyNews

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