Editor’s note: This article is the third of a three-part series on energy drink regulation, which covers the regulatory framework and outlook for this sector in the United States and Europe, as well as the potential legal vulnerabilities that exist. Part three will focus on recent litigations within the energy drink sector.

Energy drinks have been an enormous economic success. This class of products did not exist 20 years ago, but has grown into a multibillion dollar industry. Nothing of that magnitude for which there is any controversy will avoid litigation in the United States. Energy drinks have not been an exception. How these lawsuits will turn out is not yet certain. However, this wave of litigation is likely to dictate the future of this product, even in the absence of any further government regulation.

The Controversy

A number of organizations and individuals across a broad spectrum condemn energy drinks as posing a serious health hazard. The industry has also come under attack for its marketing practices. The indictment has come from medical organizations, public interest groups, Congress members and other governmental officials, and a large number of plaintiffs’ lawyers. The principal, though not sole concern, is that energy drinks contain too much caffeine. Consumption of these drinks is alleged to cause:

·         Any number of cardiac and cardiovascular issues, potentially leading to heart attacks and death;

·         Neurologic dysfunction;

·         Addiction and psychological trauma;

·         Decreased bone density;

·         Miscarriage and stillbirth;

·         A constellation of non-specific symptoms, including abdominal pain, increased urination, stomach problems, sleeplessness, irritability, nervousness, etc.; and even

·         Cancer, purportedly from overexposure to associated folic acid.

The allegation of cardiac toxicity appears to be the most serious of these claims. It is also stated that children, adolescents and pregnant and nursing mothers are particularly susceptible. The marketing of energy drinks has come under equally vociferous attack. The allegations here include:

·         Deliberate failure to warn of significant dangers;

·         Misleading and incorrect assertions as to product benefits;

·         Insufficient labeling as to contents; and

·         Targeting children and adolescents in marketing campaigns.

This barrage of criticism has not gone unnoticed or un-responded to by manufacturers. Perhaps the most effective reply has been the simple truth that the main alleged culprit, i.e., caffeine, is a “chemical" that most of us consume with regularity in the form of coffee, soft drinks and other products, and that this has been the case for a long time without any apparent health epidemic. It is said that the majority of energy drinks consumed in the United States have similar if not lower levels of caffeine than home-brewed coffee, and usually a lesser amount than similarly sized coffee house drinks. For example, the American Beverage Association (ABA) stated, “A 16-fluid ounce energy drink typically contains between 160 and 240 mg of caffeine, while the same size coffee house coffee contains around 300 to 330 mg. Moreover, caffeine has been safely consumed around the world for hundreds of years."

Another response from manufacturers has been to accept a level of self-imposed, voluntary regulation. Many energy drink manufacturers belong to ABA. This organization has issued an “ABA Guidance for the Responsible Labeling and Marketing of Energy Drinks." Included in this guidance are the following:

·         Caffeine content should be delineated on the beverage container;

·         Use of energy drinks as a mixer with alcohol should be affirmatively discouraged;

·         Consumption by children (under 12) and pregnant and nursing women should be affirmatively discouraged; and

·         There should be no marketing to children.

More generally, the point has also been made that there should be some limit on the government’s powers to define what is good for us, at least in the absence of a clearly demonstrated threat to health, and that all notion of individual and parental responsibility should not be abandoned.

Litigation

To date, the many lawsuits implicating energy drinks are harmful have fallen into two general categories. There have been a number of personal injury actions, where it is claimed that consumption has caused serious injury in an individual, including death. The greater number of lawsuits however, has been under state and some federal “consumer protection laws," alleging more general harm to the public by virtue of misleading or false advertising.

Personal Injury Actions—Most often, the allegation made in the personal injury cases has been that an adolescent or young adult has suffered a heart attack or similar cardiac issue, often with fatal results. The first such case was filed in 2012 in California, Crossland and Fournier vs. Monster Beverage Corp. In this action, the parents of a 14-year-old girl sued after her death due to heart arrhythmia, claiming that it had been caused by her consumption of a 24-ounce can of Monster beverage on each of the two days preceding her death. She had a genetic syndrome that is associated with heart issues, but her parents claim that her cardiac arrhythmia was due to caffeine toxicity, and that this exacerbated the pre-existing condition.

Additional suits with similar facts making similar claims have been filed. The primary liability allegation is that the potential danger from cardiac toxicity from ingesting caffeine was not adequately described by the manufacturer, leading to the deaths. Millions of dollars in compensatory and punitive damages are at stake here.

None of these cases has gone to trial. The defense, however, is likely to be that caffeine in the levels found in these drinks is not dangerous, as evidenced by regular ingestion by millions of people; that the plaintiffs’ deaths were caused by medical conditions that existed prior to and independent of any caffeine ingestion; and to some extent at least, that the presence of the chemical in the drink was known to the consumer and that they or their families were in the best position to control their behavior and determine appropriate limits.

“Consumer Protection" Lawsuits—There are a number of laws in federal and state codes that provide a cause of action for individuals to sue manufacturers of products when the manufacturer engages in “unfair" or “misleading" conduct. Many state versions of these laws allow claims, even in the absence of real or apparent damages.

A number of suits have been filed against energy drink manufacturers by private individuals under these laws. Often, the complaints will also allege breach of express and implied warranties and other claims under common law, such as “unjust enrichment." These cases will often be proposed as class actions, whereby the decision reached in a single case involving only one or a small number of plaintiffs will be binding to hundreds, if not thousands, of claims.

The factual bases underlying these cases involve many of the allegations discussed above, e.g., that claims as to the benefits of energy drinks are false or had no substantiation and, prominently, that there were no or inadequate warnings as to the potential dangers. Suits under these consumer protection laws can and have also been brought by government authorities “on behalf of the public." The City of San Francisco led the way in filing the first complaint here. The states of Oregon, Washington and Vermont have also recently filed suit against one maker of an energy drink for allegedly making claims that were “false, misleading and/or unsubstantiated by competent, reliable scientific evidence." These later suits resulted from a joint investigation by a number of states, so additional filings by other states are likely.

The relief sought in these cases is significant. In one or more actions, the following have been requested:

·         Declarations as to the illegality of the manufacturers’ conduct, and injunctions against further similar actions;

·         More detailed warnings and labels;

·         A ban on marketing to children and adolescents;

·         A mandatory minimum age of 18 for purchase;

·         Mandatory reduction of caffeine content;

·         Studies as to the toxic effects of both caffeine, and the total formulation of the products;

·         Disgorgement of profits; and

·         Civil penalties.

As in the case of the personal injury actions, there has been no decision in any of the “consumer" lawsuits. The energy drink company defendants have offered a spirited defense. First, they strongly deny the assertions of toxicity and marketing targeted at children. These will be factual decisions in the hands of the experts, judges and juries.

Defendants have also asserted a number of “legal" and “procedural" defenses, with somewhat mixed results. In federal court in particular, it has become more difficult to certify cases to proceed as class actions. Some of the energy drink actions proposed as classes have not been certified.

The law also generally requires that plaintiffs allege with particularity how they relied on purported misrepresentations and what their damages due to this reliance actually were. Some plaintiffs, including, e.g., in the Fisher case discussed above, have failed in the view of the trial court to meet this standard.

The legal defenses of “preemption" and “primary jurisdiction" have also been asserted in energy drink litigation. The U.S. Constitution contains a “Supremacy Clause." When there is a conflict between state and federal law, including common law (i.e., cases under state tort and contract theories, in addition to promulgated statutes), the federal law will overrule and displace the state law. Defendants have argued that some of the consumer actions seek to impose labeling and warning requirements beyond and in conflict with those mandated by FDA. The plaintiff response has been that before a state rule or law will be preempted, the conflict must be real, i.e., the state rule must affirmatively interfere with the federal rule, and that stricter state regulation of energy drinks does not pose such a problem. Moreover, there are provisions in federal labeling law that say that a state can insist on a more specific warning where it concerns health effects. Decisions in energy drink litigation have come down on both sides of this issue. For example, the Fisher case found some of the plaintiffs’ allegations and requested relief to conflict with federal law. A ruling by the judge in the San Francisco v. Monster Beverage case, however, went in the opposite direction.

Primary jurisdiction is a doctrine that holds that a court should defer to an administrative agency when a case presents an issue under the jurisdiction of the agency. In particular, since FDA has specifically announced that it is considering whether to take action with regard to energy drinks, defendants have argued that courts should dismiss the consumer cases and let FDA decide, or at a minimum, hold the lawsuits in abeyance until the FDA has determined its policy. Again, there are decisions on both sides of this issue. The judge in the San Francisco case ruled against the assertion of primary jurisdiction despite FDA’s specific announcement that energy drinks were under review. By contrast, the Fisher case found the primary jurisdiction argument meritorious and did dismiss.

What Lies Ahead in the Litigations?

What will eventually happen cannot be answered with certainty. None of the cases has gone to trial. The preliminary trial court decisions on various legal defenses are or will be appealed. Still, other suits could be brought that could also have an impact, e.g., the new potential wave of state government actions discussed above. Certainly, FDA could come out with a policy before any of these suits is concluded. Whatever it decides will then likely be challenged in court, however. FDA not deciding anything, or not doing so within some particular time frame, may also become the subject of litigation. The petition to FDA from the Center for Science in the Public Interest (CSPI) and another by a group of doctors claiming that energy drinks cannot be considered GRAS (generally recognized as safe) under FDA procedures, seem designed to set up lawsuits claiming FDA is not performing its required duties, in the event no policy is forthcoming. It is also possible that a shareholder of one of the publicly traded energy drink companies will use that status to sue and seek a change in corporate policy. A few such suits have been filed, but abandoned for reasons that are not completely clear.

Whatever the ultimate outcome, this fight promises to be a long and hard one. As in many facets of American life, the courts are likely destined to be the battlefield upon which the future of energy drinks will be decided.

For help with understanding laws regulating the dietary supplement and functional foods industry, visit INSIDER’s Regulatory Content Library.

Craig Simpson is a senior European legal advisor (Brussels office), Mark Fitzsimmons is a partner (Washington office) and Mitch Cheeseman is managing director, regulatory and industry affairs department (Washington office) at Steptoe & Johnson LLP. The authors acknowledge the valuable assistance and ideas of Blandine Gayral, paralegal in the Brussels office of Steptoe & Johnson, in preparing this article.