What’s the issue?

Although it exempts protein powders, protein drinks and other protein foods unless they contain ingredients promoted for weight loss or muscle building specifically, the language is otherwise very broad, making compliance a challenge. Here are just some of the friction points:

• Age-Gating, Including At Delivery: Retailers must verify the age of individuals purchasing covered products. Valid verification documents include an individuals’ driver’s license, state ID or passport. For sales that are delivered, retailers are tasked with implementing age verification processes at the point of delivery. Most common carriers have processes to age-gate at age 21; however, age-gating at 18 is not broadly offered or will cost extra. Neither the law nor guidance offer direction for sales completed via direct selling companies or through delivery services such as Doordash or similar.
• “Covered Products” Effectively Includes Every Possible Means of Labeling, Categorizing, or Promoting the Products – Including Those Outside the Manufacturer’s Control: The law explicitly states that covered products containing certain ingredients, such as steroids, green tea extract, garcinia cambogia, or creatine, cannot be sold to minors. Moreover, products whose labeling includes statements or imagery that imply health benefits related to weight loss or muscle enhancements are also subject to this new law - targeting not just ingredients, but how products are presented to consumers. As such, even if the manufacturer does not include an express weight loss claim on the label, if a retail platform categorizes it under “weight loss” on its website, this could cause the product to be covered.
• Enforcement and Penalties: The law allows the New York Attorney General to bring an action to stop a violation and impose civil penalties of up to $500 per violation. While the law does not expressly provide for a private right of action, impacted stakeholders should anticipate that interested parties may conduct “secret shopping” campaigns and provide any relevant findings to the AG’s office.

Legal Challenges

In December 2023, the Natural Products Association filed suit seeking to stop implementation of the law on constitutional grounds. More recently, another dietary supplement trade association, the Council for Responsible Nutrition (CRN),also filed suit. Highlights of CRN’s complaint include the following:

• Constitutional Challenge: CRN contends that the law infringes on constitutional principles by imposing restrictions that infringe on lawful commercial speech. CRN claims that the law unduly restricts lawful commercial speech by targeting “all representations concerning covered products, regardless of their accuracy.”

• Lack of Scientific Basis: The complaint challenges the legislative intent behind the law which aims to prevent eating disorders among minors. CRN argues that while it is a “noble and worthwhile goal,” there is “absolutely no evidence” demonstrating a causal link between covered products and eating disorders, citing the state’s lack of substantiation for its claims. For example, CRN cites studies that support the safety of prebiotic fiber supplements (which would be subject to the law) for combating childhood obesity.
• Economic and Practical Burdens: CRN further argues that the law’s overly broad definitions and the lack of specificity could post significant economic challenges for the industry. CRN notes that “[w]ithout any guidance from the State, but substantial financial penalties for violations, the act compels retailers and marketers to err on the side of restricting sales of products with lawful claims.”

Looking forward:

While New York leads the charge as the first state to enact this type of legislation, there are indicators that other states may be considering similar paths. At present, California, Massachusetts, New Jersey and Rhode Island all have bills pending at various stages. These bills all have varying and inconsistent language, which could further increase the complexities of selling these products nationwide.

“Clean at Sephora” Motion to Dismiss A Test for the Reasonable Consumer Standard

Clean claims on foods, supplements, OTC drugs and cosmetics have surged in popularity as have retailers’ efforts to curate product selections and ingredients to eliminate disfavored ingredients, such as synthetic dyes, preservatives, fragrances, parabens, phthalates, etc. “Clean” is not defined in regulations, which means that each brand or retailer must explain to shoppers how it’s defined within that brand. In fact, many popular lifestyle-related terms – vegetarian, vegan, keto, cruelty-free, etc. – also are not defined by regulation.

To the delight of advertising lawyers and the chagrin of marketers, the answer to the question of how to deal with potentially vague terms is through clear and conspicuous disclosures. It is just this scenario that is at issue in a pending false advertising lawsuit, Finster v. Sephora USA Inc.

On November 11, 2022, Lindsey Finster and a purported class of consumers filed a lawsuit against Sephora USA Inc. in the U.S. District Court for the Northern District of New York, alleging that Sephora’s “Clean” cosmetics—sold under its “Clean At Sephora” program—are deceptively advertised as “clean,” where the products “contain ingredients inconsistent with how consumers understand” the word “clean.” Finster alleges that consumers were therefore misled into believing that the products being sold were neither synthetic nor “connected to causing physical harm and irritation.” Plaintiffs allegedly purchased “Clean At Sephora” believing that the products were not harmful or synthetic. In support of her allegations, Finster lists several allegedly synthetic and potentially harmful ingredients in the products designated “Clean At Sephora.” As a result, Finster asserts claims for violations of state consumer fraud acts, deceptive acts and unlawful practices pursuant to NY GBL §§ 349, 350, fraud, unjust enrichment, breach of implied and express warranties, and violations of the Magnuson Moss Warranty Act.

On February 2, 2023, Sephora moved to dismiss these claims, claiming that Finster “transform[s] the phrase ‘Clean at Sephora’ into something completely different,” that is to say, “Natural at Sephora,” and ignores the fact that “Sephora prominently explains, in plain terms, exactly what it means by the phrase.” Given Sephora’s transparency as to what “Clean At Sephora” means, Sephora claims that consumers could not plausibly be confused by the phrase. Finster, according to Sephora, makes no allegations that Sephora’s “Clean At Sephora” definition “is not prominently displayed or is not, in any sense, being met.” Sephora goes on to defend that the “Clean At Sephora” seal means “formulated without parabens, sulfates SLS and SLES, phthalates, mineral oils, formaldehyde, and more,” and the label does not say that these “products contain only natural ingredients.”

We have no connection to this case but it’s one we’re watching closely, and here’s why: This case is a litmus test for the “reasonable consumer” standard. Based on the sample above, Sephora took reasonable steps to clearly and conspicuously disclose what “Clean at Sephora” means in close proximity to the claim. Sephora makes clear that “clean” is associated only with a list of excluded ingredients. It is not reasonable for consumers to assume that it means anything else. If the court finds that Sephora’s disclosure was not sufficient, the litigation risks could ripple across “clean” brands everywhere.

Further, given that “clean” is not defined in regulations, is used differently across brands and retailers, and is a term that is not specific to cosmetics or even consumer products, it seems a stretch to believe that any class of consumers could have a common understanding of “clean” sufficient to form a class. Finster may survive a motion to dismiss, but we’re holding out hope that Sephora comes out clean in the end.

NAD + FTC

Whitens…without the harm? NAD also reviewed the use of an undefined term – “harm” – in the context of teeth whitening products. P&G challenged Oral Essentials, Inc., (“OEI”) maker of Lumineux Whitening Strips relative to the following claim: Clinically proven to whiten as well as the leading brand…without the harm.

Setting aside the product efficacy review, NAD was concerned that “harm” conveys a safety-related message that P&G’s product could damage teeth. OEI’s declaration supported that tooth sensitivity and gum irritation are associated with peroxide bleach, as used in P&G’s product. However, because these symptoms are generally mild and self-resolving, and because the American Dental Association has determined that P&G’s Crest whitening strips are safe for consumer use, NAD determined that “without the harm” conveyed a safety message for which OEI did not provide substantiation.

Net Zero by 2040? Tell me how. NAD also doubled-down on parsing environmental claims to discern whether advertisers actually have plans to achieve their lofty environmental goals or whether these are merely lofty ESG-themed aspirations. JBS – the second-largest food company in the world – made several aspirational claims about its commitment “to be net zero by 2040” on its website, social media, newspapers, YouTube, and publicly accessible corporate reports. Those claims were challenged by the Institute for Agriculture & Trade Policy (“IATP”), who argued that the claims convey an unsupported message that “JBS has an operational plan in place to achieve its net zero goals and is implementing such a plan.” NAD acknowledged that JBS had made a “significant preliminary investment” toward reducing emissions, that it had “undertaken steps to begin learning” how to address the operational and scientific challenges it will face, and that these steps “may be helpful towards achieving net-zero by 2040.” Nevertheless, NAD found that these steps were not enough to “support the message conveyed by the claim.” NAD thinks the message is “that JBS has a plan it is implementing today to achieve net zero operational impact by 2040.” Check out our group’s full post here. Relatedly, as part of its Green Guides update, the FTC is conducting a public hearing regarding “recyclable” claims on May 23^rd.

Light Beer Should Taste Like Beer…And finally, NAD considered a Molson Coors ad in which athletes are celebrating the completion of a difficult workout by opening a can labeled “Extremely Light Beer” and pouring the liquid over their heads while an announcer says “Light beer shouldn’t taste like water. It should taste like beer.”

Anheuser-Busch filed a challenge using NAD’s Fast-Track SWIFT process, arguing that the videos falsely disparage Michelob Ultra and other light beers by claiming that consumers find them to taste like water. Molson Coors pointed out that no competitors were named and the tagline was simply “a subjective opinion about what beer should and should not taste like, which cannot be objectively proved or disproved.” In other words, mere puffery “because it is not sufficiently specific and material enough to create expectations in consumers.” But NAD didn’t agree. It deemed Coors’ claim measurable and objective and found it to be unsupported by evidence.

Really? Crack open a beverage of choice and check out our group’s concerns about what this says about the line between puffery and objectively provable claims here.

FDA + USDA

• USDA announced a final rule intended to strengthen enforcement on production, handling, and sale of organic agricultural products, which is effective March 20, 2023. As food producers and retailers know, “organic” production may involve multiple links in a supply chain. The new rule is intended to close gaps in prior regulations by requiring National Organic Program (“NOP”) import certificates for imported products, clarifying NOP’s oversight role, and reduce the types of entities that operate in the organic supply chain without USDA oversight. While the final rule focuses on supply chain and enforcement, labeling is also impacted. The final rule includes provisions intended to clarify calculation of organic content in a multi-ingredient product.
• FDA announced that the agency intends to exercise enforcement discretion for certain qualified health claims involving high flavanol cocoa and reduced risk of cardiovascular disease.
• FDA also released its “Labeling of Plant-Based Milk Alternatives and Voluntary Nutrient Statements” draft guidance. The draft guidance leans heavily on consumer understanding of plant-based products being different from dairy milk and allows for plant-based products to be labeled as “milk” and recommends that those plant-based products that feature “milk” in their names also include a voluntary nutritional comparison statement. The comment period is open until April 24, 2023.
• Related to the plant-based milk draft guidance, FDA also released its list of guidance topics it plans to issue in the upcoming year here.

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Check out all of our advertising, privacy, and consumer protection content here.

The Food Court – Vanilla Cases Melt Away But Other Ingredient Theories Rise

With courts expressing continued skepticism about vanilla bean false advertising theories, plaintiffs are targeting a slew of other ingredient-based false advertising angles. For example, in Patoni et al. v. Spindrift Beverage Co., the plaintiff claims that Spindrift’s “clean” branding and messaging trumpeting that the drinks contain only water and fruit are false and misleading because the products also contain citric acid, which is plainly disclosed on the ingredient declaration. Because many courts do not expect consumers to look beyond a product’s front panel to read ingredient declarations, those three words – yup, that’s it – which are pervasive in Spindrift’s branding, are likely to be highly significant because they expressly tell the consumer that there is nothing else in the products.

Where consumers are basing their lawsuits on assumptions rather than express claims, courts are more likely to view them as… half-baked. An Illinois court dismissed a claim that Bimbo Bakery’s brown bread was falsely advertised because the bread's dark color, visible flecks of grain and "brown bread" name caused consumers to believe it has a higher grain content, when it is actually made with enriched flour and has only 4% of the daily fiber value. The court found that the plaintiff’s assumptions about the bread content were unreasonable. Even if the bread’s color and obvious presence of grain suggested that the product had whole grains, it was no guarantee of the product’s precise grain content. The court stated: No reasonable consumer could conclude what percentage of whole wheat the bread contains merely by these toppings.

What’s the lesson: Lawsuits based on consumer assumptions about what is in a product may lean in favor of a motion to dismiss; however, where the seller has expressly limited consumer understanding with front panel language, courts may be unlikely to find that a reasonable consumer should look any further. Yup, that’s it.

State AG – GrubHub Deceptive Fee Settlement Sets Standards for Price Disclosures

Wait….how much was that takeout? If you, too, questioned how hungry you really were when you saw the final cost of a takeout order on one of the popular delivery apps, you’re not alone. While food prices generally have increased, regulators have also been concerned about whether platforms are adequately disclosing fees tacked on to the orders.

The DC Attorney General announced a $3.5 Million settlement with GrubHub relating to the platform’s alleged use of false and misleading marketing tactics and deceptive fees. In addition to monetary relief, the settlement requires GrubHub to make the following changes:

• Prominently disclose to consumers when it presents search results that additional fees may apply at checkout;
• List the name and amount of each fee as a separate line item at checkout;
• Stop its practice of combining taxes and fees into one line item;
• Stop advertising that Grubhub+ subscribers receive “free delivery” and instead specify that the $0 delivery fee only applies to eligible orders and that other fees may apply;
• Stop charging menu prices higher than those available at the restaurant itself unless it clearly discloses, both on the menu and at checkout, that prices may be higher on Grubhub; and
• Shut down all microsites for restaurants located in the District or transfer ownership to the restaurant.

These injunctive measures are intended to set best practices for pricing disclosures and follows similar suits against DoorDash and Instacart. Check out our related posts on “dark patterns” here and State AG insights here to get up to speed on the latest enforcement priorities.

National Advertising Division – Medical Marketing 101 and More Green Claims

NAD parsed Novartis’s advertising for breast cancer drug, Kisqali. As NAD followers know, it’s unusual to see challenges involving prescription drugs. However, the challenge involved questions that aren’t unusual for those who regularly review medical marketing materials: which claims are appropriate for health care professionals (HCPs) and which claims are appropriate for consumers.

As the decision notes, NAD has long recognized that health care providers and specialists are a sophisticated audience and are better equipped to decipher the advertised results of clinical data than the general consumer, especially when provided with appropriate context and detail. In this instance, NAD concluded that clinical experience and the context provided in the advertiser’s HCP-directed brochures would both inform the physician’s takeaway of the claim and limit it to the recited facts, and that this audience would interpret the challenged comparative claim narrowly.

However, NAD did not think that consumers would have the necessary experience and context to understand similar claims relating to Kisqali’s effectiveness and could reasonably understand messages that were not supported.

So what do we do with this? The lesson here is that advertisers can and should take into account the intended audience when determining the suitability of marketing claims. A more sophisticated audience can be expected to understand more complex claims than the general public.

Green, green, it’s green they say….Also, not to be missed, NAD notched another “green claims” challenge by issuing a decision involving Dyper, a diaper and baby wipes manufacturer. Dyper agreed to discontinue 15 different comparative and environmental claims, which NAD did not review on the merits. However, NAD found that Dyper provided a reasonable basis for claims that certain components of its bamboo viscose diapers are biodegradable but recommended that the claim be qualified to make clear the circumstances in which the diaper components would actually degrade, specifically when disposed of via the REDYPER service or a composting facility. This follows a decision in December 2022 in which NAD took a strict view of recycling claims made by the American Beverage Association. For more on recent green claims lawsuits and FTC updates to the Green Guides check out our coverage here.

FDA Still Doesn’t Think CBD Is A Dietary Supplement + Model Food Code Changes Regarding Allergens

Although the Wall Street Journal stoked momentary optimism that FDA would release a framework for how CBD could be governed, no one who has watched this space for very long was truly surprised when the agency instead said that existing regulatory frameworks are not appropriate for the sale of CBD as a food or a supplement. FDA pledged to work with Congress to find a new path forward. Expect industry to finally address this regulatory uncertainty in the next iteration of the 2023 Farm Bill.

FDA also released an updated version of the Model Food Code, which is a set of food safety best practices for food retailers and restaurants. A detailed summary of the changes versus the 2017 version is here. The changes that stood out most to us were those related to allergen disclosures and training. Specifically, the updated Model Food Code calls for employee training on elements associated with food allergy awareness and what topics food establishments can consider including when developing operational- specific allergen training programs for employees. In addition, the updated Code adds sesame as the ninth major food allergen (consistent with changes to federal law) and calls for express allergen disclosures relative to consumer-dispensed foods and unpackaged foods.

FTC – Updated Health Claims Guidance Seeks To Impose Inflexible Substantiation Standards

Misguided: Just as December wound down, the FTC’s Bureau of Consumer Protection released its Health Products Compliance Guidance—a sweeping overhaul of the 1998 Guidance, Dietary Supplements: An Advertising Guide for Industry. Unlike the recently announced effort to review its Green Guides, the FTC did not seek public comment.

According to an FTC blog post that accompanied its release, the new Guidance purports to “correct misunderstandings” and “urban myths” that have circulated about FTC substantiation standards. In actuality, however, the new Guidance represents a recitation of some of the positions the agency has taken in health-related enforcement matters over the last decade, continuing a stark departure from the prior “flexible” approach to substantiation set forth in the 1998 Guidance. Check out our blog post here.

Check out our regular coverage of all things advertising, privacy, and consumer protection on our Ad Law Access blog.

According to an FTC blog post that accompanied its release, the new Guidance purports to “correct misunderstandings” and “urban myths” that have circulated about FTC substantiation standards. In actuality, however, the new Guidance represents a recitation of some of the positions the agency has taken in health-related enforcement matters over the last decade, continuing a stark departure from the prior “flexible” approach to substantiation set forth in the 1998 Guidance.

While FTC guidance does not have the force and effect of law, if a person or company fails to comply with a guide, the Commission might bring an enforcement action alleging an unfair or deceptive practice in violation of the FTC Act. This makes the new Guidance a must-read for any company operating in the food, supplement, personal care, health equipment or app, or related industries.

While there is quite a bit of material to digest in this new Guidance, including a new definition of what constitutes a clear and conspicuous disclosure and an entirely new section addressing advertisers’ mischaracterization of FDA approval, here are two main takeaways:

First, the 2022 Guidance encompasses a far wider industry scope than its predecessor. While the 1998 Guidance was, by title and content, focused on dietary supplement products, the 2022 Guidance purports to guide advertising practices for “any health-related product,” including dietary supplements, foods, over-the-counter (OTC) drugs, homeopathic products, devices, health equipment, diagnostic tests, and health-related apps.”

The agency is also expanding the types of claims that fall within its scope. While the 1998 Guidance was issued to answer questions that arose from the passage of the Dietary Supplements Health and Education Act of 1994 (“DSHEA”), specifically its allowance of “structure/function” claims without prior FDA approval, the 2022 Guidance purports to apply regardless of whether the claim would be considered a health claim, a structure/function claim, or a drug claim under FDA law.

While FTC enforcement over the last decade has involved all of the industries referenced in the updated Guidance, this updated Guidance synthesizes the agency’s approach and seeks to put broad swaths of the health and personal care industries on notice that FTC staff is attempting to raise the bar for substantiation, even though prior attempts to do so through litigation have been rejected by various courts.

Second, the 2022 Guidance departs from the FTC’s prior, “flexible” interpretation of the “competent and reliable scientific evidence” standard. By its own terms, the 1998 Guidance sought to be both “sufficiently flexible” and “sufficiently rigorous” to ensure that consumers have access to information about emerging areas of science, while protecting them from inaccurate or misleading information. Accordingly, the 1998 Guidance did not apply a fixed formula for either the number or type of studies required to substantiate advertising claims. Rather, the agency focused on the totality of the evidence and considered all kinds of evidence, including animal, in vitro, and epidemiological evidence, while recognizing that well-controlled human clinical studies are the “most reliable”—but not the only—form of acceptable substantiation.

Those who have been following the FTC’s enforcement efforts relating to health claims over the last decade know that, since approximately 2010, the agency has been skeptical about certain health claims and has attempted to apply a drug level substantiation standard to a range of non-drug products. This is echoed throughout the 2022 Guidance with obvious references to prior enforcement (and pending litigation) matters in the advertising examples. This march toward a more stringent “competent and reliable scientific evidence” standard continued through the POM Wonderful litigation to the present day.

Indeed, the previously “flexible” definition of competent and reliable scientific evidence is completely absent from the 2022 Guidance.

• Instead of simply recognizing that RCTs may be the “most reliable” form of evidence, as set forth in the 1998 Guidance, the new Guidance provides that RCTs are the only form of evidence that will suffice, regardless of whether the claim would be considered a health claim, a structure-function claim, or a drug claim under FDA law: “[a]s a general matter, substantiation of health-related benefits will need to be in the form of randomized, controlled human clinical testing to meet the competent and reliable scientific evidence standard.”
• Additionally, while the 1998 Guidance stated that the FTC would accept epidemiologic evidence when supported by other evidence, such as research explaining the biological mechanism underlying the claimed effect, the updated Guidance states that the FTC will now only accept “high-quality” epidemiologic evidence in “limited cases where (1) it is considered an acceptable substitute for RCTs by experts in the field; and (2) RCTs aren’t otherwise feasible.”
• Finally, where the 1998 Guidance specifically provided for consideration of animal and in vitro studies, those are now off-limits because, according to the FTC, they have “limited value” in predicting benefits in humans.

With echoes of POM Wonderful ringing through the paragraphs, the 2022 Guidance explains the FTC’s views on how RCTs should be designed and conducted. Specifically, a study is “unlikely to yield reliable results, and generally won’t meet the FTC’s competent and reliable scientific evidence standard” unless it utilizes a control group, randomization, and double-blinding, and unless it returns results that are both statistically significant and clinically meaningful.

The 2022 Guidance then goes a step further, identifying “other factors” the FTC will consider in assessing the quality of research, including the existence of “a clear and detailed protocol,” submission of the protocol to an Institutional Review Board, registration of the clinical trial in a public database, performance of an “intent to treat” analysis, evidence of a dose-response relationship, and a rigorous, and unbiased peer-review process (including a warning that research that has not been through peer-review “will be subject to greater scrutiny”). But without further explanation of how these elements will be factored into the FTC’s substantiation determination, companies are left with more uncertainty about how to design their research in a manner that will be acceptable to the FTC.

Finally, in addition to imposing requirements regarding the design and conduct of the now-mandatory RCTs, the FTC has also weighed in on how RCT data should be analyzed. Specifically, the 2022 Guidance warns against “post hoc”analyses of data, particularly ones that depart from the original study protocol. According to the FTC, post hoc analyses suggest that the researchers are engaged in data mining or p-hacking and do not “generally” provide reliable evidence to substantiate an advertising claim.

In practice, this new prohibition on post hoc analysis ignores that significant scientific discoveries (such as penicillin and Viagra) have been made based upon incidental findings. This blanket statement may have the unintended consequences of discouraging data analysis that is not specifically laid out in a study’s protocol and squelching future, unintended discoveries. Moreover, the FTC’s equivocation on this point—that post hoc analyses “generally” do not provide reliable evidence to support a claim—injects further uncertainty as to whether a post hoc analysis could ever substantiate an advertising claim, either on its own or with an appropriate disclaimer.

How Should Companies React To The Updated Guidance? As a starting point, it’s important for companies to understand the context in which the updated Guidance was issued. The updated Guidance is a synthesized recitation of the agency’s positions over the past decade and much of what is included was already imposed on individual companies subject to FTC consent orders or litigation. The 2022 Guidance is not law, but rather provides insight into staff’s increasingly restrictive views on competent and reliable scientific evidence and disclosure practices.

Further, staff’s positions are subject to challenge and there is existing law that directly calls into question the validity of the staff’s restrictive interpretation of competent and reliable scientific evidence. The Bayer case, in which the court found that Bayer’s practice of regular review and analysis of clinical studies involving specific probiotic strains in conjunction with digestive health claims, remains good law. The FTC attempts to dismiss the importance of the holding in Bayer as an order violation case, but cannot ignore that because of the company’s FTC order, the company was subject to the same definition of “competent and reliable scientific evidence” referenced in the updated Guidance.

It is also worth noting that the staff’s positions continue to be subject to legal challenge, including in a case that will likely go to trial in the Southern District of New York in 2023 involving Quincy Bioscience, for whom Kelley Drye serves as counsel.

In the meantime, as marketers generate new content for the new year, we have two suggestions:

• First, review claim substantiation and disclosure practices with an understanding that the FTC staff is continuing its efforts to impose a less-flexible substantiation standard and more stringent disclosure practices. Closing substantiation gaps can be tricky and may be a longer term investment, but disclosure practices are frequently easier to address.
• Second, to echo the FTC’s blog post, put down your phone, get a cup of cocoa, and watch this space. In the coming weeks, we will provide further insight on the gaps between the 1998 Guidance and the updated Guidance, and the daylight between the law and FTC staff’s positions.

The Proof Is In the Testing (NAD Case No. 7067): NAD recommended that Dakota Nutrition, Inc., discontinue a broad range of claims relating to the presence of elderberry in the company’s Elderberry Capsules and Elderberry Gummies products, including claims that the products even contain elderberry or provide benefits commonly associated with elderberry. NAD also recommended that Dakota Nutrition discontinue use of the term “elderberry” in the product name given that Dakota Nutrition was unable to provide a reasonable basis that its products contain elderberry, based on HPLC and HPTLC testing provided by the advertiser. This case is a reminder of the importance of robust ingredient and finished product testing, particularly as many companies have shifted to alternate suppliers during the pandemic to meet consumer demands.

Mmmm…Chicle (NAD Case No. 7077): NAD also went deep into ingredient testing in a challenge filed by global confectioner Perfetti Van Melle USA, Inc., against Mazee, LLC, maker of Glee Gum. Mazee advertised Glee Gum as, among other things, an all-natural, eco-friendly chewing gum made from chicle, a tree sap that Mazee claimed is sustainably harvested from the rainforests of Central America. To support its claims that Glee Gum contained chicle, Mazee provided information from its supplier stating that the gum base is 94% chicle tree sap (the other 6% consists of candelilla wax and natural citrus acid), along with the results of Carbon-14 testing by Beta Analytic.

Perfetti rebutted that the supplier information did not show that chicle is an ingredient because the CAS Registry Number it listed to identify “Chicle Tree Sap” is not the CAS Registry Number of chicle or any other known chemical substance. Further, the challenger argued that the results of Mazee’s Carbon-14 tests do not provide any information as to whether the gum base in Glee Gum contains chicle, but only purport to provide information regarding whether the carbon in Glee Gum is plant or fossil-based. Perfetti further attacked Mazee’s claims with analysis from two experts who concluded that Glee Gum did not exhibit typical chicle-related characteristics and, instead, their analysis suggested the presence of synthetic materials. Based on this, NAD recommended that the advertiser discontinue claims that the gum base of Glee Gum is “made with chicle.”

Lack of Blinding and Placebo Doom Establishment and Efficacy Claims for IBS Medical Food (NAD Case No. 7080): NAD recommended that i-Health discontinue “clinically shown” claims as well as efficacy claims relating to treatment of IBS symptoms on the company’s Culturelle IBS Complete Support product. Despite i-Health supporting the claims with the first large-scale trial to show that adult patients with IBS (irritable bowel syndrome) can achieve an improvement of IBS symptoms with supplementation of HMOs (human milk oligosaccharides) – a 317-person multicenter, open-label, single-arm clinical trial involving IBS patients from 17 sites across the United States – NAD found that the failure to blind the product and the lack of placebo caused the study to fall short of meeting the “competent and reliable scientific evidence” standard. Given these weaknesses and the emerging nature of the evidence supporting use of HMOs to manage IBS symptoms, NAD recommended that i-Health discontinue the challenged establishment (“clinically shown”) claims, the product efficacy claims, and the use of “Complete Support” in the product name. Further, NAD declined to issue a recommendation on whether the product was properly categorized as a medical food but recommended discontinuation of medical food-related claims that addressed product efficacy. In addition to being a thorough discussion of the “competent and reliable scientific evidence” standard, this opinion is a cautionary tale both of the importance of placebo and blinding as well as the need to consider qualified claims for emerging evidence.

Good Goli (NAD Case No. 7059): NAD also flexed its clinical study analysis muscles in a challenge filed by Church & Dwight against Goli Nutrition regarding weight loss and sexual health claims that Goli was making on its Goli Ashwagandha Gummies. In that matter, despite producing blinded, placebo-controlled ingredient (not finished product) studies to support its claims, NAD found the studies to be unreliable because of small sample sizes, sample populations that either did not represent the U.S. population or did not represent a healthy population, inadequate directions to study participants, lack of statistical significance, or lack of consumer relevance.

One issue with particular relevance given the products gaining popularity as we emerge from the pandemic, with regard to claims that KSM-66 Ashwagandha could help promote weight loss and weight management, NAD rejected research based solely on overweight or obese individuals experiencing chronic stress to support the weight management claims because the products were not targeted solely to those populations and testimonials did not reflect those specific populations. It is always a challenge to square the reality that much dietary supplement research is conducted on a diseased population while the products are marketed primarily to a healthy population but, as NAD points out, this can be addressed in how the product is marketed to help ensure a solid fit between the substantiation and the claim.

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The FTC warned that the claims do not appear to be supported by competent and reliable scientific evidence, in violation of the FTC Act. The FDA warned that the products are being marketed as drugs that could cure, treat, mitigate, or prevent disease, but are not generally recognized as safe and effective for the marketed uses and not approved by the FDA. As such, the products are misbranded and illegal under the Food Drug and Cosmetic Act (FD&C Act). The letters demanded that the companies cease and desist from making unsubstantiated claims within 15 days.

Deceptive Claims under the FTC Act

To be sure, these letters are noteworthy for companies making diabetes-related claims, but their importance is not necessarily limited to that. Advertisers should pay attention more broadly to the FTC section of the letters, as it may signal the FTC testing its authority to seek penalties under Section 5(m)(1)(B).

In particular, in describing how and why the claims violate the FTC Act, the letters cite to cases holding that unsubstantiated disease claims of various types are unlawful, and appear to be styled as so-called Section (5)(m)(1)(b) letters laying the groundwork for civil penalties – similar to letters the FTC has sent companies making allegedly unsubstantiated claims that their products are made from bamboo. In general, the FTC has limited authority to obtain civil penalties. However, Section (5)(m)(1)(b) of the FTC Act authorizes the agency to seek penalties when the FTC has (1) previously determined in a litigated administrative proceeding that a practice is unfair or deceptive (2) issued a final cease and desist order with respect to such practice, and (3) put a company on notice of this fact (such that it has “actual knowledge) via warning letter.

It’s not clear yet whether the FTC will actually seek civil penalties based on these letters. But if it does, it would be testing the limit of its authority under Section 5(m)(1)(b). That’s because the law arguably contemplates that the “final cease and desist order” cited in a Section 5(m)(1)(b) letter be more specific to the practice being warned about than the potpourri of health cases cited in these current letters. Put another way, to confer “actual knowledge” on the companies, the cited cases should address unsubstantiated diabetes claims, not wholly different health claims about heart disease, cancer, erectile dysfunction, etc. Indeed, the language of Section (5)(m)(1)(m) and precedent from the bamboo cases support this narrower reading. Top FTC officials have called for more frequent and aggressive use of the FTC’s Section 5(m)(1)(b) authority, and this appears to be a move in that direction.

Misbranding Under the FD&C Act

The FDA section of the letters doesn’t break new ground, but it does provide a helpful gauge for risk and a reminder about the importance of context.

Companies marketing supplements and foods to people with diabetes or pre-diabetes should review the claims cited in the letters to help assess risk of their current marketing. For example, some letters cite to claims that clearly exceed the bounds of structure function claims, e.g., claiming that the ingredients or products produced quantifiable improvements in fasting blood sugar, A1C levels, and reduced blood pressure as well as risk of heart attacks. However, other letters cite to claims that many marketers may think fall more squarely on the structure-function side of the line, e.g., “promote healthy glycemic response” and “supports healthy glucose tolerance.” In addition to product labels and websites, the letters also cite to claims on social media – including testimonials dating as far back as 2018 – and to Amazon store fronts.

As is standard, the letters cite to specific claims, but it’s important to also consider the broader context. When marketing diabetes-related products, it’s risky to position any product as the fix for a condition that likely requires medication along with constant dietary discipline and monitoring. Even if the product claims are substantiated and within structure-function limitations, the context of positioning the product as one part of an overall diabetes management plan is key to managing risk.

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We will closely monitor developments in these matters, as well as the agencies’ future use of warning letters and sources of legal authority, and post updates as they occur.

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LITIGATION

Personal Care Products

In a blow to the trending “pink tax” theory of liability in consumer class actions, in May, the Eighth Circuit ruled that various personal care product manufacturers and retailers did not violate Missouri’s anti-discrimination laws by charging more for products marketed towards women as compared to allegedly identical products that were either marketed towards men or utilized gender-neutral marketing. The Court found that the plaintiff “mistakes gender-based marketing for gender discrimination” and, in the process, ignores numerous differences between the products that account for the higher price tag. There has been a handful of similar “pink tax” cases filed over the last year or two, but this is the first appellate court to rule on the issue.

In another victory for industry, the Southern District of California dismissed a putative class action complaint filed against Edgewell Personal Care Company alleging that its Wet Ones wipes don’t kill 99.99% of germs as advertised. The complaint pointed to the products’ active ingredient, benzalkonium chloride, and alleged that it was not able to destroy a number of disease-causing microbes, including bacteria spores and certain viruses, that make up far more than 0.01% of germs. The court ruled that many of the germs identified in the complaint are sexually transmitted, food-borne, or otherwise not expected to be found on people’s hands and, therefore, reasonable consumers would not expect the wipes to be effective against those diseases. The court also dismissed claims challenging the products’ “hypoallergenic” and “gentle” marketing claims. While the plaintiff alleged that the product contained some ingredients that are “known allergens or skin irritants,” the court ruled that a reasonable consumer would not interpret “hypoallergenic” and “gentle” to mean that the hand wipes were entirely free of allergens or skin irritants.

In terms of new class action filings, May and June saw a continuation of previously-reported trends:

• Gum Repair: One class action was filed against The Proctor & Gamble Co. challenging gum repair claims made in connection with certain toothpaste products.
• Sunscreen: Two class actions were filed challenging “mineral-based” sunscreen marketing claims on the grounds that the products (Blue Lizard and CVS brand) actually contain less desirable chemical ingredients that can cause skin irritation and allergic reactions. Two other class actions were filed alleging that Banana Boat and Neutrogena sunscreen products contain benzene, a human carcinogen, and therefore are unfit for their intended purpose.
• Oil Free: Two new class actions were filed challenging “oil free” representations relating to Sun Silk Crème and Clinique’s skincare products.
• Natural: Six new class actions were filed challenging “natural” and “organic” marketing claims relating to various hair products, dietary supplements, pet shampoos, and reusable menstrual hygiene products.
• Lidocaine: One new class action was filed against Sanofi US Corp. alleging that its aspercreme patches are deceptively marketed as providing “fast acting” and “max strength” pain relief when other patch products deliver more lidocaine to the affected areas, are more effective, and are approved by FDA for more purposes.
• Hand Sanitizer: Two new actions were filed alleging that certain hand sanitizer products are falsely marketed as killing 99.99% of germs when, in fact, alcohol-based sanitizers do not kill many types of viruses (one against Goja Industries re Purell hand sanitizer products and one against Target Corporation regarding its “up&up” sanitizer products).

Dietary Supplements

We previously reported that a number of CBD class actions have been stayed over the past year under the primary jurisdiction doctrine while the FDA considered potential new CBD regulations. (See posts dated January 10, 2020, June 5, 2020, June 20, 2020 and March 2021.) Breaking from this trend in May, the Central District of California ruled that a proposed class action alleging that Just Brands USA Inc. and other companies overstated the amount of CBD contained in their products could proceed without waiting for the FDA to promulgate new regulations. The court ruled that the proposed regulations were likely to involve the legality and safety of CBD products sold as medicine or dietary supplements, and that it was unlikely that the guidelines were unlikely to address the labeling issues raised in this action. Accordingly, the court found that it was competent to resolve the matter without waiting for the FDA to weigh in.

June also saw a number of new putative class action complaints filed involving allegedly misbranded dietary supplement products. Two such actions were filed in California federal court alleging that St. John's Wort products could treat depression, anxiety and other issues without side effects. These filings occurred a few months after the FDA sent a warning letter that the products were making unauthorized drug claims. Another putative class action was filed in the Eastern District of New York against Pure Nootropic LLC, alleging that its nootropics were advertised as boosting mental energy, but contained unapproved ingredients and did not deliver the promised benefits. A third action was filed in New Jersey state court against Trimark Holdings LLC, alleging that its Trizene product was falsely advertised as curing erectile dysfunction.

NAD

We highlight two recent cases in which NAD focused on details of claim substantiation.

NerveRenew

NAD recommended the discontinuation of three express claims made by Neuropathy Treatment Group (NTG) about its NerveRenew dietary supplement.

• “These special forms of vitamin B are effective, but 100% Stabilized R-Alpha Lipoic Acid (R-ALA) is our most important ingredient.”
• “It contains the most powerful and clinically studied forms of B vitamins, Stabilized R Alpha Lipoic Acid, anti-oxidants and herbal extracts. All the ingredients have been included in clinical studies and provide a synergistic effect when taken together.”
• “3X Greater Bioavailability.”

Two clinical studies assessed ALA’s (not R-ALA’s impact) impact on diabetic neuropathy, but a study for ALA cannot be used to support a claim for a product containing R-ALA—there is no evidence in the record that ALA and RALA are interchangeable. And these studies tested ALA in amounts greater than the amount found in NerveRenew. Even if the ALA is interchangeable with R-ALA in the product, studies which assess an ingredient dose in excess of what is found in the product will not be sufficiently reliable to support an efficacy claim for that product.

NAD recommended that the claim “It contains the most powerful and clinically studied forms of B vitamins, Stabilized R Alpha Lipoic Acid, anti-oxidants and herbal extracts” be discontinued because the advertiser did not provide evidence demonstrating that any of the product’s ingredients are the most powerful or clinically studied of their ingredient forms. Moreover, NTG provided clinical studies of only some ingredients in the product. For studies on an ingredient to support qualified claims, the studies must test the ingredient in amounts that are contained in the product and the test must involve the correct study population. The study must also include relevant endpoints, and elicit statistically significant and clinically meaningful results. Therefore, even though it is true that the ingredients have been included in clinical studies, if the studies are flawed, the claim could be misleading. Here, none of studies submitted on individual ingredients or a combination of ingredients assessed non-diabetic neuropathy or other types of nerve pain. Therefore, the studies do not support the challenged claim.

NAD recommended that the claim “All the ingredients have been included in clinical studies and provide a synergistic effect when taken together” be discontinued because there is no evidence in the record properly assessing all of the ingredients to determine they all confer the claimed nerve health benefits. Two studies assessed more than one of the ingredients found in the product, but neither was conducted with the appropriate population. They instead assessed individuals with diabetic neuropathy, and thus do not support claims directed to a different target audience.

Lastly, NAD also recommended that NTG discontinue the “3X Greater Bioavailability” claim. Bioavailability in dietary supplements concerns the proportion of the administered substance capable of being absorbed and available for cellular uptake, use, or storage. Superior absorption claims are health-related claims that must be supported by competent and reliable scientific evidence. NTG provided three clinical studies on the bioavailability of benfotiamine and other thiamin derivatives, but only one compared the bioavailability of benfotiamine and thiamin hydrochloride. That one study, however, only included Chinese male subjects—too narrow a population to relate to NerveRenew’s broader target population.

Crest Whitening Emulsion

NAD assessed Smile Direct Club LLC’s (SDC’s) challenge to claims made by The Procter & Gamble Company (P&G) about its Crest Whitening Emulsions. NAD found the following claims to be substantiated: (1) Crest Whitening Emulsions provides “better” or “100% whiter” results and “whitens better” than the ARC Pen; and (2) Emulsions whitens with “virtually no sensitivity.”

However, NAD cautioned P&G’s use of or recommended P&G discontinue the following claims: (1) Whitens “Faster”; (2) “Best In Class Results”; (3) “Virtually No Sensitivity”; (4) Stays on teeth “10x longer”; (5) “Starts working instantly” and “whiter smile in seconds”; (6) “stop stains before they set in”; and (7) “Unlike toothpastes and paint-on gels which dilute and wash away quickly, Crest Whitening Emulsions includes 5X active peroxide droplets suspended in a hydrating base to whiten teeth.”

In support of its “100% Whiter” and “Better” claims, P&G submitted an executive summary of a clinical trial that sought to assess tooth color changes with the use of Emulsions as compared to the ARC Pen. SDC argued that statistically significant changes in the study’s technical measurements may not actually correlate to visible differences in tooth whitening. However, NAD concluded P&G provided statistically significant evidence that evaluated the whitening benefits over the ARC Pen, and further demonstrated that the Emulsions’ whitening measurement translated to “noticeability.” Conversely, SDC failed to demonstrate that P&G’s measurements were flawed or that other bleaching shade guides were superior for measuring whitening. Thus P&G provided a reasonable basis for claims that Crest Whitening Emulsions provides “better” or “100% whiter” results and “whitens better,” than the ARC Pen.

NAD analyzed the “Faster” claim, determining that Emulsions achieves a whitening benefit at 15 days, while the ARC pen does not. Therefore Emulsions necessarily achieves “Faster” whitening. NAD also found that in context (“Better…Faster…100% Whiter”), consumers would not reasonably understand it as a message about the application and wear time of the product. However, it might convey such a message in other contexts. Because that message is not supported by evidence in the record, P&G should avoid conveying it to consumers. P&G’s “virtually no sensitivity” claim was sufficiently reliable because, through some subjects using Emulsions reported “oral irritation” or “treatment related tooth sensitivity,” P&G makes no claims regarding “oral irritation”—only tooth “sensitivity.” In so finding, NAD was mindful that P&G’s claim regarding tooth sensitivity is not absolute but, rather, qualified by the word, “virtually.”

NAD concluded that P&G should discontinue or modify its other claims for insufficient evidence. NAD recommended P&G discontinue its “Best in Class Results” claim because it found no evidence of a comparative measured “win” over P&G’s competitors with respect to a particular attribute. P&G provided no testing against any whitening products other than the ARC Whitening pen, and there is no evidence that the Emulsions are a “class unto themselves” consistent with consumers understanding of the “class” of tooth whitening applications. Neither the underlying clinical study results nor the fact that the product employs a new patented technology provides a reasonable basis for the superior whitening results message reasonably conveyed by a “Best in Class Results” claim. NAD deemed P&G’s basic, undated summary of a “substantivity” study to be insufficiently reliable to provide a reasonable basis for P&G’s “stays on 10x longer,” claim and recommended that this claim be discontinued. P&G summarized a study conducted on a hydrogen peroxide test strip to show its Emulsions’ instant impact to support its claims that Emulsions “starts working instantly,” and that consumers can achieve a noticeably “whiter smile in seconds.” But because there is no evidence that P&G’s demonstration replicates conditions in the human mouth or that the strip replicates tooth enamel surface, it does not establish that Emulsions “starts working instantly” or achieves “white smile[s] in seconds.”

NAD determined that consumers will reasonably interpret the “stops stains before they set in” claim not as a statement about Emulsions ability to remove existing staining, but as a claim that it can prevent future stains. P&G did not demonstrate that Emulsions acts as a barrier to stop or prevent new “stains” from setting in, as will be reasonably understood by consumers. Therefore, NAD recommended that P&G discontinue or modify its “stops stains before they set in” claim to more accurately reflect that Emulsions reverses existing staining and avoid any implication that Emulsions prevents “stains” from common teeth staining compounds from “setting in.”

Despite P&G’s claims that Emulsions “delivers 5x more active hydrogen peroxide compared to other whitening gels and pens,” both Emulsions and the ARC Pen appear to contain the same 3% hydrogen peroxide, with the hydrogen peroxide in Emulsions redistributed into “droplets” of higher concentration compared to the ARC Pen gel. Even if it is technically true that Emulsions contains five times more “active hydrogen peroxide,” NAD determined that consumers are likely to understand P&G’s claims to mean that Emulsions contains five times more overall hydrogen peroxide than competing products. Therefore, NAD recommended that P&G discontinue those claims. If the above claim is modified to make clear that this comparison is to the ARC Pen, then the “5x active peroxide droplets suspended in a hydrating base to whiten teeth,” claim would be supported.

FTC

Federal Trade Commission

The FTC announced a law enforcement action to halt deceptive health and efficacy claims in the growing market for cannabidiol (CBD) products. In the action, Arizona-based Kushly Industries LLC (Kushly) and the company’s sole officer, Cody Alt, agreed not to make false or unsupported claims or falsely claim that scientific evidence exists to back them up. The FTC alleges Kushly and Alt made false or unsubstantiated claims that their CBD products could effectively treat or cure conditions ranging from acne and psoriasis to more serious diseases, like cancer and multiple sclerosis. Respondents will pay the FTC more than $30,000 in consumer redress.

This is the seventh case the FTC has brought against CBD sellers for making unsupported health claims. According to the FTC’s complaint, the respondents have used these false or unsubstantiated claims to market or sell a range of products containing CBD, including gummies, softgel capsules, and topical ointments. They promoted their products on their website, kushly.com, and social media. The complaint alleges that Alt participated directly in promoting and advertising Kushly’s CBD products and has been featured in articles about the company and its CBD products.

The proposed administrative order covers any dietary supplement, drug, or food product that the respondents sell, including CBD products. It prohibits Kushly and Alt from making any representations about the health benefits, efficacy, safety or side effect of such products, unless the representations are true when they are made, are not misleading, and rely on competent scientific evidence. The order requires respondents to secure and keep any human clinical tests or studies used to substantiate their claims. The order also prohibits Kushly and Alt from misrepresenting that a covered product is clinically proven to treat, alleviate, or cure: chronic pain, multiple sclerosis, anxiety, depression, cancer, sleep disorders, hypertension, Parkinson’s disease, Alzheimer’s disease, acne, psoriasis, and eczema. Respondents may not misrepresent that scientific evidence exists to back up these claims. Finally, the order requires the respondents to pay the FTC $30,583.14—the amount consumers paid Kushly for products sold using deceptive marketing. The FTC finalized the settlement earlier this month.

Fertile Ground

The FTC joined the U.S. Food and Drug Administration (FDA) in sending warning letters to five companies that may be making false or unsubstantiated claims that their products can cure, treat, mitigate, or prevent infertility and other reproductive disorders in violation of the FTC Act, and that are unapproved and misbranded.

Continuing with the enforcement on allegedly fraudulent products, the FTC also announced a settlement with Dr. Steven Meis, the medical director of Golden Sunrise Nutraceutical involving allegations that he took part in deceptively advertising a $23,000 treatment plan as a scientifically proven way to treat COVID-19. Dr. Stephen Meis will be barred from making similar unsupported health claims in the future and will pay $103,420 to provide refunds to defrauded consumers.

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Thanks for reading. See you in August!

Summer Associate Elizabeth Hamner contributed to this update.

Let’s take a look….

NAD

NAD determined that certain advertising claims made by Zarbee’s, Inc. for its cough products sufficiently identify that honey is the source of the cough soothing benefit and would not reasonably mislead consumers as to the reason for the product’s cough soothing efficacy. However, NAD found that other claims, which could reasonably suggest that the cough soothing benefit was attributable to multiple ingredients, and recommended modification to clarify that the cough soothing benefit is attributable to the honey and not the combination of main ingredients. The efficacy of honey to soothe coughs was not at issue.

Supplement maker First Day Life, Inc., voluntarily discontinued a number of claims relating to its Daily Enrichment Vitamin, which were challenged by the Council for Responsible Nutrition. The challenged claims focused on nutritional deficiencies as the cause of a broad range of childhood behavior, including picky eating, distraction, tantrums, and hyperactivity. In addition to being a good reminder of the health claims substantiation requirements, i.e., competent and reliable scientific evidence, this case is notable because several of the claimed benefits were also tied to specific timeframes, e.g., improvement in 30 days or 45 days, which also requires substantiation.

Side-stepping from products used on the body to consumer health products used in the home, NAD examined claims made by NuWave, LLC, relative to its OxyPure Air Purifier product. Claims included:

• The claim on the advertiser’s website, “Remove airborne coronavirus by 99.999%*” with a bottom-of-the page disclaimer stating “*The University of Minnesota tested the OxyPure’s removal of the porcine respiratory coronavirus, a surrogate for SARS-CoV-2, the coronavirus that causes COVID-19”; and
• A YouTube video advertisement which touts the product as removing “virtually all indoor air pollutants” and notes, in relevant part, that “[a]sthma and allergies are at an all-time high. Sleeping problems are epidemic and carry their own health risks. Airborne pathogens, viruses, bacteria and mold are not far behind” (simultaneously showing a map of the world with the words “AIRBORNE VIRUSES” and lines originating from China to various cities around the world showing the spread of “airborne viruses”).

The advertiser agreed to modify its website advertising to state: “OxyPure is Calculated to Remove 99.999% of Coronavirus Surrogate from the Air in Areas up to 1,200 Square Feet in 6 Hours!* which is qualified by a clear and conspicuous disclosure directly underneath the claim, stating that “SARS-COV-2 was not used in the study conducted by the University of Minnesota for the efficacy of NuWave OxyPure.” The advertiser also agreed to reach out to its affiliate to modify the YouTube video to remove the frame that features the aforementioned map and the onscreen and audio reference to "airborne viruses" to avoid conveying the unsupported message that OxyPure Air Purifier is effective in killing 99.999% of COVID-19.

Also of interest was NAD’s challenge against New York Presbyterian Hospital relative to the Hospital’s pre-COVID advertising campaign. NAD challenged claims such as “Best survival rates of any U.S. hospital” and the use of testimonials that NAD was concerned conveyed that patients facing a serious prognosis will achieve a better outcome at New York Presbyterian than at other hospitals. The Hospital modified the campaign in response to the challenge and NAD ultimately administratively closed the matter given the pandemic-related extenuating circumstances. The case serves as an important reminder about the unique relationship between healthcare providers and patients and the power that such claims may have in the market, particularly in the context of a pandemic.

FTC

April was a very busy and gut-wrenching month for the FTC.

In a stunning blow to the FTC’s enforcement authority, the Supreme Court unanimously ruled in AMG Capital Management v. FTC that Section 13(b) of the FTC Act does not allow for the recovery of restitution, disgorgement, or any form of equitable monetary relief. Despite decades of final orders awarding, and settlements in which defendants agreed to pay, substantial monetary relief, Justice Breyer explained that the statute’s emphasis on whether a defendant “is violating, or is about to violate, any provision of law enforced by the” FTC reflects a focus on “relief that is prospective, not retrospective.” Accordingly, the Court found that Section 13(b) was designed to “stop[] seemingly unfair practices from taking place while the Commission determines their lawfulness,” not to compensate consumers for alleged economic harm. Courts and litigants across the country quickly reacted to the decision, with the Ninth Circuit vacating a preliminary injunction that had previously been entered to preserve the defendant’s assets to satisfy a potential award of monetary relief and defendants filings motions for judgment on the pleadings to dismiss the FTC’s claims for monetary relief. AMG is not the final word on the issue, though, and a number of legislative efforts are underway to restore the agency’s enforcement authority. While there appears to be support for legislative action on both sides of the aisle, Republicans are advocating for a more measured statute that would restore the FTC’s ability to obtain monetary relief while ensuring the due process rights of those affected, including the imposition of a statute of limitations and a specific direction that the statute only be applied to cases filed after its enactment instead of being applied retroactively to past and pending cases. We will continue to report on the judicial and legislative developments resulting from the AMG decision.

Despite all the turmoil, the FTC did take some action in other areas in April. As we reported earlier this month, the FTC filed its first case under the COVID-19 Consumer Protection Act, which gives the agency authority to seek civil penalties for deceptive COVID-related acts and practices. The new complaint alleges that, despite prior receipt of a letter warning of unsubstantiated COVID-19 efficacy claims, chiropractor Eric Anthony Nepute and his company Quickwork LLC deceptively marketed vitamin D and zinc products under the “Wellness Warrior” brand for the treatment, prevention, and cure of COVID-19.

The FTC also sent out 30 warning letters to companies regarding concerns about their COVID-related advertising claims. These letters were sent after the effective date of the COVID-19 Consumer Protection Act, and thus warn advertisers that anyone who makes deceptive claims about the treatment, cure, prevention or mitigation of COVID-19 is subject to civil penalties of up to $43,792 per violation. In response to these letters, it appears that all 30 companies have removed the claims that were identified as questionable. It is also important to note than in these letters a number of platforms including Facebook and Youtube were mentioned in the cc: field, indicating that some of the recipients’ deceptive claims had run on these platforms at some point. Despite the fact that these letters were sent to 30 companies directly, all advertisers should take note of this loud and clear warning from the FTC.

Shifting gears from COVID-related matters, the FTC’s settlement with BASF and DIEM Labs suggests that the FTC is holding firm to its position that post hoc analysis of clinical studies is not sufficient claim substantiation. The settlement concerns Hepaxa and Hepaxa PD, fish oil products marketed to treat Non-Alcoholic Fatty Liver Disease (NAFLD). The FTC alleged that BASF, the maker of the Hepaxa products; DIEM Labs, the exclusive US distributor of the products; and two DIEM Labs executives claimed without substantiation that Hepaxa reduces liver fat.

In general, advertisers must possess competent and reliable scientific evidence to substantiate health claims. With respect to Hepaxa, the FTC did not dispute that the defendants had conducted a “randomized, double-blind human clinical trial designed to evaluate whether Hepaxa . . . reduces liver fat in adults with NAFLD” or that they based their claims on results from the trial. The problem, according to the FTC, was that the clinical trial as constructed was unsuccessful. During the trial, 81 participants took Hepaxa and another 86 took an olive oil placebo. At the trial’s end, MRI data did not show a statistically significant reduction in liver fat for Hepaxa patients as compared to placebo patients. The FTC alleged that the defendants then engaged in a post hoc analysis to salvage the trial by identifying a subset of participants with some type of positive result. Ultimately, the defendants moved away from MRIs, grouped participants based on their Fatty Liver Index scores, and identified a statistically significant effect among participants with scores above 40—a subset containing five Hepaxa patients.

Because this case resulted in a settlement, it does not modify or create law. However, settlements are important markers of the FTC’s thinking, and the FTC’s four commissioners all voted to approve this settlement. It is notable, then, that the complaint contains the categorical assertion that results from post hoc analyses are “exploratory, at best” – an assertion that is notably absent from the FTC’s own Advertising Guide for the Dietary Supplement Industry. As this statement shows, the FTC expects claims based on trial results to reflect the scope and design of the study as initially planned as opposed to statistically significant data identified after the trial has ended.

Finally, while the FTC’s desire to hold individuals accountable for corporate violations of the FTC Act is no longer news, the allegations included in a complaint shed light on what conduct the FTC believes supports liability—and whom it is willing to hold liable. Here, the FTC sued DIEM Labs’ co-owner/CEO, but it also sued DIEM Labs’ Director of Sales, alleging that he was directly involved in identifying alternative analyses of the clinical trial, helped create advertising for Hepaxa, and claimed at conferences that Hepaxa successfully treats NAFLD. Individual liability can rest on control or authority to control corporate acts, as is commonly seen in allegations against owners or CEOs. But it can also rest on direct participation, and this settlement demonstrates the FTC’s willingness to sue key actors—not just CEOs or owners—for corporate violations of the FTC Act.

Class Action Decisions and Settlements

A class of California consumers alleging that CVS brand hand sanitizer failed to live up to its promise of killing 99.99% of germs was certified by a judge in the Central District of California. The plaintiff’s motion referenced the deposition of a purported microbial expert, who testified that the sanitizer does not kill 99.99% of the germs, and a purported marketing expert, who testified that consumer would find the claim material when deciding whether to purchase the product. The Court found that all of the requirements of Rule 23 had been met, and that the survey proposed by plaintiff’s damages expert was adequate for purposes of class certification. See Mier v. CVS Health. Ironically, this decision came nearly two months after a judge in the Southern District of California dismissed a similar complaint in Moreno v. Vi-Jon, Inc., which alleged that Vi-Jon’s hand sanitizer products did not kill 99.99% of germs.

A proposed settlement we reported on last month involving Bayer Healthcare and Beiersdorf’s Coppertone “mineral based” sunscreen products was denied preliminary approval by a judge in the Northern District of California. The Court found that the settlement, which provided for a $2.50 refund per unit purchased and injunctive relief, contained a number of flaws. First, the Court was concerned about the scope of the release provision. Contrary to Ninth Circuit precedent, which requires releases in a class action settlement to be limited to claims based on the identical factual predicate of the litigation, the proposed release extended to all claims that “were or could have been asserted in the Litigation.” The Court also found that the settlement inappropriately released unnamed subsidiaries, successors, and other parties that class members would not be able to identify. Second, the Court wanted to know more about the parties’ relationship with the cy pres beneficiary, Look Good Feel Better, and asked them to explain why there was no collusion or conflict of interest. Third, the Court questioned the parties’ request for $530,000 in class administration expenses and the plaintiffs’ request for attorneys’ fees in an amount equaling one-third of the total settlement fund. The Court required that any subsequent motion for preliminary approval explain why the Court should depart from the Ninth’s Circuit’s 25% benchmark for attorneys’ fees. Finally, the Court found that the proposed class notice and claim form were insufficient insofar as they failed to comply with the Northern District’s class action settlement guidelines. The Court denied the motion for preliminary approval without prejudice, and set a case management conference for the end of May.

New Class Action Filings/Trends

We saw a number of new “natural” filings in April. One such complaint was filed in the Western District of Pennsylvania alleging that JM Brands LLC’s Purezero “natural” shampoo products contained a number of components derived from synthetic means (such as emulsifiers and fragrances). The other complaints were all filed in New York State Court and include allegations that: (1) Raw Elements USA’s “natural” sunscreen and moisturizing products contain synthetic ingredients (including zinc oxide, tocopheryl acetate and sodium chloride); (2) Force Factor, LLC’s Somnapure Natural Sleep Aid contains non-natural synthetic ingredients; (3) Plant Health Inc.’s Highland Farms “natural” or “all natural” CBD gummies, moringa capsules and bath bombs contain synthetic ingredients (including citric acid, sodium citrate, potassium citrate, and sodium bicarbonate); and (4) The Country Butcher and Jones Natural Chews (dog snacks and bones) contain synthetic ingredients.

Following up on last month's trends, there were two new cases filed against The Proctor and Gamble Company in April challenging “activated charcoal” and “gum repair” claims with respect to its toothpaste products, and seven new complaints involving Elanco Animal Health Inc.’s Seresto flea and tick products.

See you next month

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National Advertising Division

NAD addressed some unique superiority and comparative claims in the OTC drug space in finding that Hisamitsu America, Inc., supported its duration claims that Salonpas Pain Relief Patch Large “works for up to 12 hours” and “provides relief for up to 12 hours.” However, NAD found that comparative claims such as “All OTC pain relievers, including Voltaren, have one thing in common. None are proven stronger or more effective against pain than Salonpas Pain Relief Patch Large” and “only pain reliever labeled to relieve mild to tougher, moderate pain” and “the strongest labeled OTC topical pain reliever” were not substantiated and recommended that they be discontinued. This is an interesting discussion of comparative advertising for two products approved by FDA where the claims at issue were outside of the FDA approvals. Anyone looking to understand how NAD navigates that jurisdictional issue will want to check out this decision.

NAD extended its already robust body of precedent involving teeth whitening claims with a decision finding that Colgate-Palmolive Company supported advertising claims that its Optic White Renewal Toothpaste has “unprecedented whitening power,” “contains 3% hydrogen peroxide,” and has “the most hydrogen peroxide in a whitening toothpaste.” However, NAD recommended that Colgate discontinue the claim that its product “removes 10 years of yellow stains.” Colgate is appealing that recommendation.

Colgate’s ad campaign for Optic White Renewal Toothpaste cleverly highlights several dubious fads from the last decade (jeggings and shake weights, anyone?). However, NAD’s concerns about Colgate’s substantiation for the “removes 10 years of yellow stains” claims included that Colgate failed to consider the results of the negative control as to two studies that NAD agreed were otherwise reliable. As to a third study, NAD expressed concern about its reliability relative to converting to a years of yellow staining calculation. Many companies in the beauty and personal care space are interested in making claims relating to years of impact for their products. This case provides insights on what to consider for those types of claims.

On the dietary supplement front, NAD revisited the issue of energy claims relative to Vitamin B12 in recommending that Goli Nutrition modify its “Vitamin B12 to help support energy production” claim to make it clear that Goli is referring to cellular energy and to avoid conveying the impression that consumers taking its apple cider vinegar gummies will feel a noticeable increase in energy or become more energetic.” NAD also recommended that Goli discontinue claims that folic acid supports skin health as unsubstantiated.

FDA

FDA announced two warning letters issued to makers of topical CBD products labeled as OTC drugs. Amidst a backdrop of facility inspections that revealed significant good manufacturing compliance concerns, the most important takeaways in this round of CBD enforcement are as follows: FDA does not think that CBD is an appropriate inactive ingredient in OTC drugs, a position that we do not believe the agency has previously articulated publicly. In addition, reaffirming a position that the agency has previously asserted, FDA really frowns on companies using terms such as “FDA registered” to implicitly suggest agency approval. Check out our blog post on these warning letters.

Litigation Developments

Staying with CBD, another CBD class action was stayed pending FDA action. This complaint in Dasilva v. Infinite Product Co. LLC (C.D. Cal.) alleges that the FDA had previously sent a letter to the defendant advising that a variety of its CBD products were “unapproved new drugs” and “misbranded drugs” in violation of the Food, Drug, and Cosmetics Act, and that consumers would not have purchased the defendant’s products if they were aware of the misleading labeling. The court joined a number of previous courts in granting the defendant’s motion to stay pursuant to the primary jurisdiction doctrine, finding that the FDA and Congress have separately expressed interest in regulating CBD and that it was unclear how the court could adjudicate the plaintiffs’ claims given the lack of clarity as to whether the products are drugs, dietary supplements or food products. Specifically, the court noted that any forthcoming legislation or regulation may apply retroactively and inform the court’s consideration of the merits of the dispute.

A judge in the Eastern District of New York granted in part and denied in part a motion to dismiss claims asserted against Bactolac Pharmaceutical, which manufactures the “All Day Energy Greens” supplement marketed and sold by co-defendant NaturMed, Inc. The complaint alleges that the supplement was not safe for human consumption because Bactolac failed to follow NaturMed’s contractual instructions by adding inferior ingredients. The court dismissed six breach of warranty and consumer protection claims, but ruled that the 15 remaining claims must proceed into discovery. The court also denied Bactolac’s motion to strike the plaintiffs’ request for punitive damages

Class Action Settlements

Reckitt Bensicker LLC agreed to settle two parallel class actions (one in California and one in Illinois) alleging that that it falsely advertised joint health benefits of its glucosamine dietary supplement “Move Free Advanced.” After four years of litigation, including a grant of class certification in June 2019 and denial of the defendant’s motion for summary judgment in March 2020, the defendant agreed to pay $53 million to a nationwide class of purchasers, which the plaintiffs characterized as “the largest dietary supplement class action settlement ever reached.” The settlement provides for a cash refund for up to three purchases for a total of $66 ($22 per purchase) or for up to $225 worth of a variety of consumer products of the class member’s choosing ($75 per purchase). Any funds that remain after all claims are processed will be distributed to the Orthopaedic Research Society in accordance with the cy pres doctrine. The settlement further provides that the named plaintiffs will receive up to $7,500 for their participation and that the defendant would not oppose class counsel’s application for attorneys’ fees so long as the application did not exceed $12.5 million. The plaintiffs’ motion for preliminary approval is pending.

Bayer Healthcare and Beiersdorf agreed to pay $2.25 million to settle a federal California class action alleging that their Coppertone “mineral based” sunscreen products deceived consumers into believing that the products contained only mineral active ingredients when, in fact, they contained chemical active ingredients. Class members who submit proof of purchase may receive $2.50 per unit purchased with no limitations. Consumers who do not submit proof of purchase may receive $2.50 per unit purchased up to a maximum of four units per household. The settlement further provides that the named plaintiffs can apply for service awards up to $5,000 each to be paid out of the settlement fund, that class counsel can apply for an award of attorneys’ fees not to exceed one-third of the total fund, and that the cost of notice and administration will also be paid from the fund at a maximum of $530,000 plus postage. Any remaining funds will be disbursed cy pres to the charitable organization Look Good Feel Better. The defendants also agreed to discontinue the “mineral based” labeling and other injunctive relief. A preliminary approval hearing is scheduled for April 21, 2020.

New Class Action Filings/Trends

One new putative class action was filed in California state court challenging “oil free” claims made with respect to various Smashbox cosmetics products. This filing follows a series of similar cases.

A number of new class actions were filed in the Southern District of New York against Tom’s of Maine and Colgate Palmolive involving their charcoal activating toothpaste products. The complaints allege that defendants’ products are marketed as contributing to “healthy gums” and providing “enamel safe whitening” and “gentle cleaning” when, in fact, they are abrasive to enamel and the gums, and pose other safety hazards. A similar action was also filed against Proctor & Gamble in Missouri state court.

Five new class actions were filed in the Northern District of California alleging that “Max Strength” or “Maximum Strength” Lidocaine products contained 4% lidocaine when, in fact, most similar prescription patches contain 5% lidocaine. Three actions were filed against Sanofi-Aventis US LCC and two were filed against Hisamitsu America Inc.

There was also an uptick in pet product class action filings in March. Three actions were filed in California against Elanco Animal Health Inc. alleging that its Seresto flea and tick product contained pesticides and other ingredients that cause seizures, thyroid gland damage, and death to the dogs and cats for which the products were marketed, as well as other harm to humans. These filings followed a March report discussing the EPA’s failure to issue warnings about the Seresto products.

(some links from Law360, subscr. req’d.)

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Thanks for joining us again this month. See you in May!

NAD

Health claim substantiation was front and center before NAD in a monitoring case involving Pendulum Therapeutics and a “medical probiotic” product featuring claims such as “The only medical probiotic clinically shown to lower A1C & blood glucose spikes for the dietary management of T2D*” (*Consult your physician as part of your total diabetes management plan. Results may vary from person to person.”)

The advertiser submitted a 12-week multi-center, randomized, double-blind, placebo-controlled study (the “Perraudeau Study”) to assess Pendulum Glucose Control’s safety and effectiveness in improving glycemic control in Type 2 diabetics and, ultimately, their dietary management of the disease – specifically, the role of certain probiotic strains found in prior research to be associated with the promotion of a healthy gut microbiome through the production of short-chain fatty acids (SCFAs).

The advertiser also provided clinical studies and research articles demonstrating the roles of A1C, fasting glucose and postprandial glucose levels in managing Type 2 diabetes. The advertiser also referred to the FDA’s Guidance document (Diabetes Mellitus: Developing Drugs and Therapeutic Biologics for Treatment and Prevention) to demonstrate what level of reduction in HbA1c was clinically meaningful.

While NAD expressed some concerns about the evidence, ultimately, NAD determined that the Perraudeau Study was a good fit for the challenged claim “The only medical probiotic clinically shown to lower A1C & blood glucose spikes for the dietary management of T2D*” (*Consult your physician as part of your total diabetes management plan. Results may vary from person to person.”) but recommended the following modifications: (1) limiting the claim to individuals who are taking metformin; (2) modifying the claim to clarify that the product can be used as part of the dietary management of type 2 diabetes; and (3) removing the references to percent reductions in blood glucose spikes in the absence of evidence in the record demonstrating that the reductions were clinically relevant.

This decision is a helpful discussion of the competent and reliable scientific evidence standard. Anyone seeking to understand health claims substantiation better should check it out.

FTC

Continuing with the diabetes management theme, the FTC announced a settlement with Agora Financial, LLC, a Baltimore-based company that the FTC charged tricked seniors into buying pamphlets, newsletters, and other publications that falsely promised a cure for type 2 diabetes or promoted a phony plan to help them cash in on a government-affiliated check program. In addition to the monetary judgment, which will be used to provide refunds to defrauded consumers, the proposed settlement also bars Agora and the other defendants from making such false or unsupported claims.

FDA

FDA’s pandemic-related enforcement took a new turn in February, with the issuance of warning letters to 10 companies selling dietary supplements that feature depression, anxiety, and mood-related claims. Examples of claims identified in the warning letters include the following:

• A treatment for depression, anxiety and stress
• Reduces anxiety
• Effective for mild to moderate depression
• the ONLY prebiotic that's been proven to help with anxiety
• "Constantly struggling with symptoms of anxiety and depression can have an incredibly detrimental impact on your life. . . . Our vision for the future of mental health is that we reach for probiotics as a first line of defense and even prevention for mental health issues.”
• A new natural supplement is providing relief to people across America suffering with severe anxiety and stress!’”
• “Enlifta is the only natural remedy depression supplement designed & created by a Psychiatrist.”
• For the relief of temporary depression or occasional feelings of sadness and melancholy.
• Reduce Anxiety by Affecting Serotonin

The pandemic has changed many things, but it has not changed the rules around marketing dietary supplements. If anything, companies selling in this space will want to be extra mindful of the pandemic context when crafting marketing copy.

In addition to that enforcement, FDA continued its prior COVID-related enforcement with warning letters related to subpotent and adulterated hand santizer primarily from Mexico.

Prop 65

Related to the need to kill germs, our sister blog, Kelley Green Law, featured two articles relating to EPA enforcement on disinfectant claims. One of the few areas of EPA policy continuity between the Biden and Trump eras is the aggressive enforcement attention being paid to products that claim to fight the SARS-CoV-2 coronavirus. EPA has issued “stop sale” orders to Amazon directing the company to take steps to prevent the continued sale “of potentially dangerous or ineffective unregistered pesticides and pesticide devices making illegal and misleading claims, including multiple products that claimed to protect against viruses.”

Class Action Litigation

A California federal judge tossed a proposed class action alleging the label on Walgreens' Infants' Pain & Fever Acetaminophen is false and misleading and violates California consumer protection statutes, ruling that the product's "undisputed" labeling would not be likely to confuse reasonable consumers. The plaintiff alleged that the labeling was misleading because the packaging and marketing on the infants' product misleads consumers into thinking it is specially formulated and therefore deceives them into paying more than the cost of the children's version, even though they have the exact same level of the active ingredient. In dismissing the case, the judge noted that the packaging was clearly labeled with the milligrams contained and also included a special dosing cup and syringe for use with children and infants.

Just as marketers are exploring immune system claims as of late, the plaintiffs’ bar is as well, with elderberry and immunity being challenged in California.

Dandruff brand Selsun Blue is the subject of an ingredient-related attack in the Northern District of Illinois relating to allegations that its active ingredient, selenium sulfide, causes scalp irritation and hair loss and another ingredient, preservative DMDM hydantoin, is known to slowly release formaldehyde.

Online cosmetics company Dermaset allegedly engaged in false advertising for failing to adequately disclose that consumers who pay $4.95 for shipping and handling for a 30-day free trial of cosmetics and a two-ounce free trial of cream will be enrolled in an automatic renewal offer resulting in consumers being charged recurring fees without their consent.

And if that isn’t enough for you…..

State Legislation

A California legislator introduced a bill that would restrict sale of certain weight loss supplements to anyone under age 18. Similar legislation has been considered in New York and Massachusetts.

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NAD

NAD tackled substantiation for “#1 Dermatologist Recommended” claims in a challenge involving L’Oreal’s CeraVe moisturizer and use of syndicated survey data to support related claims.

Health claim substantiation was front and center in a Council for Responsible Nutrition-led challenge involving glutathione and the level of evidence required to support claims relating to low-glutathione levels.

FTC

Indirectly related to dietary supplements and consumer care, the FTC announced a settlement with app-maker Flo regarding allegations that the company shared the health information of users with outside data analytics providers after promising that such information would be kept private.

As we noted here, the FTC has new civil penalty authority relative to false COVID-related advertising claims and practices.

FDA

As it has since relaxing the regulatory standards relative to manufacturing of hand sanitizers in March 2020, FDA continued issuing warning letters related to hand sanitizer products that contain active ingredients other than those allowed per the hand sanitizer tentative final monograph, primarily methanol, and relative to hand sanitizers that are allegedly sub-potent.

The agency also continued its enforcement relative to COVID-related claims with warning letters issued to AusarHerbs and Allimax US (joint warning letter with the FTC), as well as non-COVID-related letters to companies whose products featured claims relating to joint health, hair loss, and inflammation, which caused the products to be considered unapproved new drugs. The letters rely heavily on evidence from social media posts, blog posts, and product websites.

Prop 65

Our sister blog, Kelley Green Law, featured two Prop 65 developments that may impact certain products, including Prop 65 warnings required on products that may expose consumers to THC and a proposal to minimize use of the short form warning format. Also, although not directly in the personal care space, given the proliferation of many products that feature disinfectant claims, companies may want to note this post regarding EPA enforcement on unregistered disinfectants.

Class Action Litigation

In a significant win for the dietary supplement industry, the Ninth Circuit Court of Appeals upheld the Northern District of California’s grant of summary judgment to Target Corp., ruling that state law false advertising challenges to permissible structure/function claims are preempted by the Federal Food, Drug and Cosmetic Act. See our blog post discussing the case here.

Other highlights from courtrooms around the country include…

Southern California skincare company Yes To Inc. agreed to pay $775,000 to a proposed class of consumers to resolve allegations it misrepresented the dangers of its Grapefruit Vitamin C Glow-Boosting Unicorn Paper Mask, which was recalled after a flood of consumers reported facial skin irritation and burning. (Law360 subs. req’d.)

A California federal judge has thrown out for the last time a proposed class action alleging that Johnson & Johnson Consumer Inc. and Bausch Health US LLC misled customers about the safety of their talc products, saying even after five chances to amend the complaint, the pleadings still fall short. (Law360 subs. req’d.)

Skincare company Murad LLC was hit with a proposed class action claiming the company deceived buyers by wrongly representing its moisturizer as "oil-free" when the product actually contains oils. (Law360 subs. req’d.)

A woman suing Charlotte's Web Holdings Inc. argued that the CBD company shouldn't be able to pause or escape her proposed class action over its labeling of products as dietary supplements, saying that identifying them as such violates state and federal laws. (Law360 subs. req’d.) There are several cases involving this issue. See a recent post on this issue on Cannabis Law Update.

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To File or Not File is No Longer the Question

On December 19, 2019, the FTC filed a petition for writ of certiorari following the 7^th Circuit decision in FTC v. Credit Bureau Center. The Solicitor General (who had first dibs) chose not to file. By our count, this FTC filing marks only the fourth time that the agency has represented itself before the Supreme Court over the past 45 years.

That makes three petitions for review on this issue presently before the Supreme Court. In addition to the FTC’s petition in Credit Bureau Center, petitions are pending in two 9^th Circuit cases: Publishers Business Services v. FTC and AMG Captial Management v. FTC. Whether the Supreme Court will grant certiorari in any of these cases remains to be seen. While the Circuit split certainly appears to justify review, the numbers are the numbers: the Court hears only 100-150 of the 7,000 to 8,000 cases that it is asked to review each year.

As expected, the FTC petition argued that the 7^th Circuit’s ruling upset long-standing and well-grounded precedent: “a district court’s authority to grant a permanent injunction under Section 13(b) includes the authority to require wrongdoers to return money that they illegally obtained.” The petition focused on the plain meaning of the word “injunction,” as well as other authority in support of its contention that Section 13(b) should be understood to include restitution and other forms of monetary relief.

The FTC also argued that its position is consistent with legislative intent, asserting that Congress understood how the Supreme Court interpreted the law under Porter v. Warner Holding Co. and Mitchell v. Robert DeMario Jewelry, Inc. when Section 13(b) became law. Finally, the FTC argued Congress has since reviewed Section 13(b) more than once, without revision, after several circuits ordered defendants in FTC cases to repay consumers.

Where was Solicitor General Noel Francisco in all of this and why did his office decide to sit this one out? The answer lies with another case that will be heard by the Supreme Court this term: Liu v. SEC. In Liu, the petitioners have asked the Court to consider “whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as ‘equitable relief’ for a securities law violation even though [the Supreme] Court has determined that such disgorgement is a penalty.”

The petitioners in Liu rely on the Supreme Court’s decision in Kokesh v. SEC, and more specifically, a footnote in the opinion where the Court stated that it was not addressing “whether courts have properly applied disgorgement principles in this context” or “whether courts possess authority to order disgorgement in SEC enforcement proceedings.” The opinion in Liu, which is expected in June, will answer these questions. As the Liu petitioners have pointed out, following Kokesh, a number of Courts of Appeals have considered whether disgorgement is a legally permissible equitable remedy in SEC cases, and have concluded that it was not. For example, Justice Kavanaugh, while on the D.C. Circuit, noted in a concurrence (Saad v. SEC) that Kokesh “overturned a line of cases from [the D.C. Circuit] . . . that had concluded that disgorgement was remedial and not punitive.”

The importance of the outcome in Liu extends beyond the SEC to the FTC. Like the SEC, the FTC has relied on disgorgement of ill-gotten gains as one of its primary remedial tools. If the Court rules in favor of the Liu petitioners, and determines that disgorgement is not within the SEC’s statutory authority, the FTC will be forced to distinguish restitution to consumers under 13(b) from “disgorgement” in securities laws or arguably find itself in a position where it will have to rethink its fraud program entirely.

The Solicitor General, in his request for an extension of time to petition for a writ of certiorari, questioned whether the Court might benefit if it decided Liu before it considered the 13(b) issue: “The additional time sought in this application is needed to complete consultation with interested agencies and components of the government and to assess the legal and practical impact of the court of appeals’ ruling, including the relationship between the question presented here and the question presented in Liu v. SEC.” Those consultations apparently led the Solicitor General to conclude that Liu would have an impact on the 13(b) issue, which could not have been welcome news to the FTC.

In its petition, the FTC disagrees with the Solicitor General, arguing that these cases do not pose overlapping questions (a position also advanced by the FTC’s 9^th Circuit adversaries in filings by petitioners in Publishers Business Services and AMG Capital Management). All of this explains why FTC General Counsel Alden Abbott is counsel of record on the FTC petition and not the Solicitor General.

Needless to say, eyes are on Liu. Twelve amici curiae briefs have been filed since December 16, 2019, with the general sentiment that Congress has not expressly authorized the SEC to obtain monetary relief through disgorgement.

Interested parties are also lining up on the 13(b) issue. Cause of Action Institute and Washington Legal Foundation filed amici curiae briefs in support of both the AMG and Publishers Business Services petition. These amici briefs argue that (1) the plain meaning of 13(b) does not allow for courts to order monetary relief, (2) an expansive interpretation of 13(b) violates the separation of powers and constitutional rights, and (3) district courts should not be allowed to continue using “equity of the statute” (judicial discretion/judicial rulemaking) to order monetary relief.

Meanwhile, the Battles Rage On

The continuing questions over the extent of the FTC’s enforcement authority to obtain monetary relief under Section 13(b) did not stop the Commission from filing a lawsuit on November 1, 2019 against multi-level marketer Neora, LLC and its CEO Jeffrey Olson for purportedly operating an illegal pyramid scheme that used deceptive marketing to sell supplements, skin creams, and other products. All indications are that it is business as usual at the FTC.

Pursuant to Section 13(b), the FTC seeks an injunction to stop Neora’s alleged pyramid scheme and an award of restitution to return money to consumers. The lawsuit, filed in the District of New Jersey, alleges that Neora (formerly known as Nerium International) and its CEO offered false promises that potential distributors could earn financial independence if they joined the company’s pyramid scheme – while, in reality, most recruits would end up losing money.

Believing that the best defense is a good offense, Neora beat the FTC to the punch and filed a lawsuit in the Northern District of Illinois against the FTC, asking the court to declare that the company did not operate a pyramid scheme. The company’s complaint also asserted that the FTC is not authorized to seek restitution or disgorgement under Section 13(b).

The FTC will appear in the Northern District of Illinois on January 7, 2020 to present its Motion to Dismiss or, in the Alternative, Failure to State a Claim. The FTC will argue that Neora filed this suit in an attempt to preempt the FTC’s enforcement action in New Jersey, which seems obvious, particularly when you consider timing and Neora’s forum choice (7^th Circuit). The FTC will further argue that Neora has only one possible cause of action under the Administrative Procedure Act but fails the requirements for judicial review. As a result, the claims are not ripe for judicial consideration or, alternatively, the court should decline to exercise its discretionary jurisdiction to hear the case.

December also saw the 10^th Circuit joining the 13(b) debate with its holding in FTC v. Nudge. There, the FTC alleged that the defendants engaged in a real-estate investment seminar fraud. The court found that because one of the named parties, Buy PD, was part of a common enterprise and continued to provide services to further the fraud, it is “about to violate” the law. Buy PD argued it had stopped marketing real-estate investment seminars directly to consumers in 2016. In an opinion that must have provided a measure of relief to the FTC, Judge Robert J. Shelby concluded that, because Buy PD continued to provide services related to the fraud and was a part of the common enterprise, it was enough for liability under Shire (“the Complaint alleges facts sufficient to reasonably infer the common enterprise is violating or is about to violate the law.”).

As predicted, the dispute over the scope of the FTC’s 13(b) authority has resulted in a steady flow of motions in federal court. These include, among many others, FTC v. Hoyal & Assocs., FTC v. Abbvie, Inc., FTC v. Dorfman, and Complete Merchant Solutions v. FTC. Indeed, given the Circuit split, one might argue that it would almost be malpractice not to raise the issue in litigation at this point.

And one can only wonder how this is all playing out during the investigational phase, under Part 2 of the FTC’s Rules of Practice, as respondents become more emboldened during settlement discussions related to redress. After all, there is a very real prospect that litigation might lead to a payment of $0. It is not hard to understand why respondents might stand their ground in negotiations and prefer to roll the dice in litigation, as opposed to agreeing to voluntarily pay tens or hundreds of millions of dollars to the U.S. Government.

Eyes on Congress

With the judicial outcome uncertain, the FTC has turned to Congress, floating proposed legislation that seeks (1) clear authority to seek permanent injunctions without the requirement that a defendant “is violating, or is about to violate” the law, (2) express permission to seek monetary relief, including restitution and disgorgement, and (3) a 10-year statute of limitations.

This effort mirrors the effort in Congress to minimize the impact of any decision in Liu. In March 2019, Senator Mark Warner (D-VA) introduced the Securities Fraud Enforcement and Investor Compensation Act, which would authorize the SEC to seek and courts to award disgorgement and restitution (Senator Warner has included similar language in a bipartisan anti-money laundering bill, S. 2563, the ILLICIT CASH Act). Related legislation also has been introduced: the Investor Protection and Capital Markets Fairness Act (H.R. 4344), the Stronger Enforcement of Civil Penalties Act of 2019 (S. 1854 / H.R. 3641), and the Strengthening Fraud Protection Provisions for SEC Enforcement Act of 2019 (H.R. 3701).

Of these bills, H.R. 4344 is furthest along. On November 18, 2019, by a vote of 314-95, the House passed H.R. 4344, authored by Reps. Ben McAdams (D-UT) and Bill Huizenga (R-MI). The legislation – endorsed by SEC Chairman Clayton – would authorize disgorgement as a remedy that the SEC can seek. It would also establish a 14-year statute of limitations.

In remarks on the House floor, Rep. McAdams stated: “The SEC estimates that, in the two years since the Kokesh decision, they have had to forgo over $1.1 billion of ill-gotten gains that bad actors can now keep that don’t get returned to investors. . . . In addition to $1.1 billion in forgone funds, the SEC is increasingly spending time and staff resources fighting new legal challenges from bad actors claiming that the SEC shouldn’t be able to seek disgorgement at all.”

The strong (and unusual, in this day and age) bi-partisan support for the bill suggests that prospects in the Senate are probably pretty good. If this legislation becomes law, the Court’s holding in Liu would be a non-issue and prospects for legislation on the Section 13(b) issue would improve.

To date, we have not seen a stand-alone bill that would expressly provide the authorization that the FTC contends it already possesses, but one is likely in the making and there are other ways to achieve the same result. Revisions to Section 13(b) could be included in an appropriations bill or as part of comprehensive privacy legislation. We will have to wait and see.

When it comes to this issue, it is going to be an eventful year.

Stay tuned for more installments of the “Section 13 (b)log.”

• California Consumer Privacy Act (CCPA) CCPA was far and away the most popular topic of 2019 and, as mentioned in one of our last posts of the year, “businesses and privacy professionals would do well to catch their breath over the holiday season. Next year is going to need focus and investment to reach the [CCPA] finish line (which, yes, will continue to move because this is privacy law, after all).​” Here are a few CCPA related posts you may want to read if you haven’t already:
  • Broad Range of Implementation Worries Surfaces at CCPA Rulemaking Hearing in LA December 5

• • Be Careful What You Say About the CCPA November 12

• • CCPA Update: California Attorney General Issues Draft Privacy Rules October 11

• • CCPA Update: Legislature Amends the CCPA to Exclude Employee Data, B2B Communications for One Year September 15

• The FTC’s Powers Under Section 13(b) The continuing questions over the extent of the FTC’s enforcement authority to obtain monetary relief under Section 13(b) were a popular topic with Ad Law Access readers. So popular that we created a Section 13(b) sub-blog:
  • Direct Seller Stands Its Ground: Neora Seeks Declaratory Judgment Against the FTC, Challenging the Agency’s Section 13(b) Authority November 5
  • Business As Usual? FTC Practice in the Wake of Shire ViroPharma and Credit Bureau Center October 22
  • A Potential New Fight Over FTC’s 13(b) Authority May 19

Other posts that resonated with readers:

• FTC Releases New Guide for Influencers November 9
• CBD and False Advertising: Lessons Learned From The Food Court August 9
• Nevada and Maine Advance Legislation Addressing the “Sale” of Personal Data June 4
• FDA and FTC Issue Joint Warning Letters to Three Online CBD Marketers April 2
• FTC to Use 6(b) Authority to Examine Tech Companies’ Data Practices March 22
• Taking Stock of the TCPA in 2019: What is an “Autodialer”? March 4
• The Direct Selling Self-Regulatory Council: What it Means for Multi-Level Marketers January 10

AD LAW ACCESS PODCAST

2019 also saw the launch of the Ad Law Access podcast. Top episodes included:

• CCPA Update: Legislature Amends the CCPA to Exclude Employee Data, B2B Communications for One Year
• Privacy Update: The Terms of the Facebook Settlement; CCPA Amendments Advance in Calif. Senate
• Cause Marketing - Commercial Co-Ventures: What You Need to Know Before Getting Started (12:30)
• CCPA Update (Amendments, Draft Regulations, and Classification issues) (12:00)
• Texting 101 - The Hot Button Issues to Consider When Running a Texting Campaign (11:25)
• Challenging Competitors' Claims
• Making it in the USA – When Product Origin and Origin Marketing Claims Matter (13:00)
• Influencers Gone Wrong (10:30)
• Influencers and Endorsers: Understanding the Upfront Legal Requirements (9:10)

Since the 1980s, the FTC has filed most of its cases challenging deceptive or unfair practices under Section 5 of the FTC act in federal court, instead of administratively. The FTC’s authority to file these types of cases in federal court is found in Section 13(b) of the act, added to the act in 1973, which permits the FTC to seek an injunction in federal court “[w]henever the Commission has reason to believe . . . that any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the [FTC].” While in cases of pending acquisitions or ongoing fraud it may be clear that the FTC has reason to believe someone “is violating” or “is about to violate” the law, the FTC has also brought cases under Section 13(b) for claims arising from abandoned conduct. The Shire decision addressed the FTC’s authority to bring an action in federal court under Section 13(b) in these circumstances.

In Shire, the FTC alleged that Shire abused the U.S. Food and Drug Administration’s citizen petition process to maintain its monopoly on a drug it manufactured. The complaint alleged that Shire filed forty-six citizen petitions between 2006 and 2012. In 2017, the Commission filed its complaint, which alleged, inter alia, that “[a]bsent an injunction, there is a cognizable danger that Shire will engage in similar conduct” and “[Shire] has the incentive and opportunity to continue to engage in similar conduct in the future. At all relevant times, [Shire] marketed and developed drug products for commercial sale in the United States, and it could do so in the future.”

Shire filed a motion to dismiss, arguing that Section 13(b) only allowed the Commission to pursue injunctive relief where the violation is occurring or is about to occur. After considering the text of the statute and the legislative history, the court agreed. Because the FTC failed to “plausibly suggest [Shire] is ‘about to violate’ any law enforced by the FTC, particularly when the alleged misconduct ceased almost five years before filing of the complaint,” the court dismissed the case.

On appeal, the FTC argued that a “likelihood of recurrence” standard, borrowed from the common law standard for injunctive relief, should govern when the FTC may bring an action in federal court under Section 13(b). The FTC also advanced a “parade of horribles” argument that crafty defendants could flaunt the FTC’s authority by swiftly shutting down their operations at the outset of an FTC investigation to immunize themselves from a federal court action.

The Third Circuit rejected these arguments. It concluded that the statutory text under Section 13(b) requiring that the FTC have reason to believe a wrongdoer “is violating” or “is about to violate” the law unambiguously prohibits only existing or impending conduct. The Court also rejected the FTC’s arguments that its decision would hamper its law enforcement efforts, noting that Section 5 of the FTC Act would continue to allow the FTC to bring administrative actions based on past conduct. The Court further noted that if the FTC determined during the pendency of an administrative action that a respondent was violating or about to violate the law, it could then seek injunctive relief in federal court under Section 13(b). Having determined the appropriate legal standard, the Court of Appeals upheld the district court’s holding that the FTC failed to allege in its complaint that the defendant “is violating” or “is about to violate” the law.

The FTC is likely to appeal the decision in Shire, but there is no guarantee that the Supreme Court will grant certiorari given the plain language of the statute and the lack of any contrary circuit authority. In the meantime, the same issue in the context of a consumer protection action is likely headed to the Eleventh Circuit Court of Appeals in FTC v. Hornbeam Special Situations, LLC, No. 1:17-cv-3094 (N.D. Ga.). where the FTC sued a variety of defendants, including the estates of deceased individuals, for allegedly billing consumers without their authorization.

While the FTC continues to have the option to bring cases against past violations administratively under Section 5, including to seek a cease and desist order, it may decide to exercise more restraint in bringing cases involving abandoned conduct. This is especially true for claims subject to statutes of limitations. Where the FTC does decide to pursue conduct that has ceased, it may seek tolling agreements during the investigational phase.

The FTC may consider bringing more administrative actions under its Part 3 authority. As former Commissioner Maureen Ohlhausen has observed, “[t]he FTC’s Part 3 authority is a powerful tool for developing or clarifying the law.” Yet, over time, the FTC has brought far fewer Part 3 cases – 94 cases during the period 1977 to 1986 compared to 12 during the period 2007 to 2016. Shire, and quite possibly Hornbeam, should cause the Commission to assess the reasons behind this trend and to take steps to ensure the Part 3 process fulfills the role intended by Congress when it was created. That could very well mean that cases that would have been brought in federal court may find their way to hearing being brought before administrative law judges.

In his statement, FDA Commissioner Scott Gottlieb stated an intent to step up FDA efforts to improve product safety and police deceptive claims. Amongst other initiatives, Mr. Gottlieb stated that the Agency is developing a new “rapid response tool” to alert the public if a supplement contains an illegal ingredient or poses a health risk. While supplement manufacturers should be pleased that efforts are being made to weed out bad actors, they should also be concerned about unintended consequences that might result from use of such a rapid response tool. The damage to a brand from an FDA alert could be significant.

Gottlieb also indicated that FDA is working to “develop [new] guidance for preparing [new dietary ingredient] NDI notifications” to help ensure that the regulatory framework is both sufficiently flexible and adequately protects public safety. As part of its work to modernize the NDI process, FDA is also planning to update its compliance policy regarding NDIs. Mr. Gottlieb also weighed in on the idea of creating an FDA registry, whereby supplement manufacturers would be required to list products and ingredients. The registry, presumably, would allow FDA to concentrate enforcement efforts, but before it could be created, Congress almost certainly would need to act. Gottlieb’s statement seemed to acknowledge this, and he cited the possibility of “dietary supplement exclusivity” similar to the exclusivity presently enjoyed by drug manufacturers as another potential issue ripe for congressional consideration.

In order to concentrate on these issues and others affecting industry and consumers, Mr. Gottlieb reported that he has established a Dietary Supplement Working Group at the FDA, “comprised of representatives from multiple centers and offices across the agency.” The Working Group will report directly to the Commissioner and will review “organizational structures, processes, procedures and practices in order to identify opportunities to modernize our oversight of dietary supplements.” In addition to these steps, FDA will conduct a public meeting this spring that will focus on “responsible innovation and safety.” All stakeholders are invited to provide comment on “how the FDA should strengthen the dietary supplement program for the future.”

Much of the justification for increased oversight is centered on what FDA has characterized as a startling increase in the number of dietary supplements generally, and adulterated and misbranded supplements specifically. Whether the framework that FDA will put in place is narrowly conceived to address this problem, without creating unnecessary and burdensome requirements on reputable companies, remains to be seen. Stakeholders should monitor these developments closely and consider engagement through public comments or participation at the public meeting given Gottlieb has made clear that the Agency wants to hear both from industry and consumers as it assesses how best to move forward.

As to issues under the FDCA, the warning letters allege that the identified products are unapproved new drugs because they are intended to diagnose, cure, mitigate, treat, or prevent disease. The warning letters identify representative claims that render the products “drugs” under the FDCA, including:

• “For temporary relief of cravings, irritability, and inability to concentrate related to the use and over-use of. . . alcohol and narcotics”;
• “Support withdrawal relief, effective detox, and lasting recovery from addiction”; and
• “Opiate withdrawal aid supplement.”

Two warning letters targeted products labeled as “homeopathic” under FDA enforcement policies set forth in FDA’s Compliance Policy Guide (CPG), “Conditions Under Which Homeopathic Drugs May be Marketed.” While that policy suggests that FDA will exercise enforcement discretion as to certain drug products labeled as “homeopathic” and marketed without FDA approval, the letters state that the CPG acknowledges that special circumstances may apply that supersede that policy. According to the warning letters, the nationwide public health emergency relating to opioid addiction is one such circumstance and thus the enforcement policy does not apply to drugs marketed for opiate addiction. In December 2017, FDA released a draft guidance that proposed a new risk-based enforcement approach to homeopathic drug products marketed without FDA approval that would prioritize regulation and enforcement for products that pose the greatest risk to patients.

As to the FTC Act violations, the warning letters note that health-related claims must be supported by competent and reliable scientific evidence at the time the claims are made. The warning letters point to previous FTC enforcement actions challenging unsupported claims for the treatment of opiate addiction and withdrawal symptoms as evidence that such claims are likely unsubstantiated under the FTC Act.

The warning letters request unique responses to both FTC and FDA within 15 working days and direct the marketers and distributors to explain the steps they are taking to address both FDA and FTC-related concerns.

Kwan has been accepted as standing for two propositions. The first, which should be non-controversial and unsurprising, is that in private suits brought under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA), a plaintiff must allege and ultimately prove that the offending advertising claim is false, not merely unsubstantiated. There has been no serious dispute about this since the California Court of Appeal (Second District) decision in National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc., 107 Cal. App. 4^th 1336, 133 Cal. Rptr. 2d 207 (2003). What made Kwan news was that the court also rejected plaintiff’s allegations that defendant’s dietary supplements were “clinically tested to boost [human growth hormone] by a mean of 682%,” is provably false, and in so doing refused to “incorporate Lanham Act provisions into California's unfair competition and consumer protection law by distinguishing between ‘establishment’ and ‘non-establishment’ claims.” 854 F.3d at 1097.

Setting aside that there are no establishment claim “provisions” and the concept is not confined to the Lanham Act, having been acknowledged also by the FTC, NAD and other courts, the Ninth Circuit’s discussion treated establishment claims as if they were a doctrine that whenever an advertiser cites some level of evidence for the efficacy or other traits of its product, this shifts the burden of proof as to the underlying traits, such that the advertiser must now substantiate them rather than requiring a plaintiff to prove them false. There is plenty of dictum in court decisions and secondary writings that suggests this is how establishment claims work, but it really is not – or at least, should not be.

The establishment claim “standard” is really no standard at all. It is the observation that an advertising claim about the level of support for some other claim about a product can potentially be false, just like any other advertising claim. There is no shifting of burdens, and really no need to distinguish between establishment and non-establishment claims. It’s just a matter of noticing that claims about the testing or evidence supporting a product are also claims. Like any other claim, an establishment claim can be puffery. A claim of “proven to be the most reliable” might be so vague as to the type of proof that it is empty of meaning. Or, an establishment claim can be non-material. Adding “tests prove” to a product claim does not necessarily have a material impact, over and above the underlying claim, on consumers’ purchase decisions.

So what happens when a plaintiff successfully challenges an establishment claim by proving that the indicated level of evidence for the product’s qualities does not exist? Obviously this does not necessarily disprove the underlying product qualities. It simply invalidates the establishment portion of the claim. Under Lanham Act or state false-advertising laws, the advertiser should be able to delete the “tests prove” language from its claims and continue touting the benefits of its product, even without substantiation. And what of the injury and damages to the plaintiff? Whether the plaintiff is a competing advertiser or a consumer class, it should only be entitled to the incremental damages resulting from the “tests prove” language, parsed from whatever product qualities supposedly were proven. That difference – effectively the difference in persuasiveness or materiality of adding “tests prove” to a claim – may not be much at all, and would be plaintiff’s burden to prove.

In the Kwan case, the district court should have allowed the lawsuit to proceed against the “clinically tested to boost [human growth hormone] by a mean of 682%,” but it should have ruled that the underlying claim, “boosts human growth hormone by 682%,” was a separate claim whose impact, if not disproven separately, would have to be deducted from any injury caused by the “clinically tested” claim. What would then be left of potential damages in the class action? Likely not enough to bother pursuing. This approach would knock out actions, like Kwan’s, that seek to bootstrap an establishment claim into an end-run around the burden to disprove the underlying product benefits, while still permitting suits in the instances where the establishment claim language is a powerful driver of the product’s sales. My intuition is that these latter cases will be rare.

Instead, the Kwan decision could be read to immunize “tests prove” claims from any legal challenge, effectively doing what the Ninth Circuit said it is not doing: distinguishing between establishment and non-establishment claims, but to confer immunity on the former. Establishment claims should still be open to challenge, but only for what they are worth.

On Thursday, a federal court in New York dismissed an FTC and New York Attorney General action against Quincy Bioscience, which sells the dietary supplement, Prevagen. Quincy bases claims for its product on research that includes a randomized, controlled clinical study. The court observed that the parties agreed that this “gold standard” study followed “normal well-accepted procedures” and showed statistically significant results in a subgroup of healthy, aging adults, although not the experimental group overall.

The court acknowledged the regulators’ arguments that data analyses revealing the subgroup results were subject to an increased risk of false positives. The court, however, concluded that the regulators failed to allege that “any actual errors occurred” or that “that reliance on the subgroup data ‘is likely to mislead consumers acting reasonably under the circumstances.’” The court observed that “the subgroup concept” is “widely used in the interpretation of data in the dietary supplement field.”

Kelley Drye represented Quincy Bioscience in the matter.