Dietary supplement class actions: Common theories

The growing trend of class action lawsuits in the food and beverage industry in the last three years is well known. In 2008, 19 consumer class actions were brought against food and beverage companies in federal courts, according to a 2017 report from U.S. Chamber Institute for Legal Reform. Four years later, that number reached 102. In 2017 alone, more than 140 new food class actions were filed in state and federal courts, as reported in the 2018 Perkin Coie Food Litigation Index. Similarly, in recent years, class actions brought against dietary supplements have gained steam in the jurisdictions where most food and beverage cases have been brought: California, Florida, New York and Illinois.

While the products challenged in dietary supplement class actions are as diverse as the marketplace itself, the class action bar appears to be pursuing a few key case theories.

Class Theories Against Dietary Supplements

First, as with food class action claims, false labeling claims constitute the lion’s share of dietary supplement class allegations. Generally, though not exclusively, federal district courts have ruled the Federal Food, Drug & Cosmetic Act (FD&C) preempts allegations in a class action that a dietary supplement makes an impermissible “disease” claim, but allegations that a “structure/function” claim is false and misleading and contrary to scientific studies are allowable in federal court (Gallagher v. Bayer AG). However, due to a recent decision in the U.S. Ninth Circuit Court of Appeals in May 2018, dietary supplement makers should expect an increase in class action litigation arising from structure/function or “disease” label claims.

In Bradach v. Pharmavite LLC, the proposed class plaintiff alleged he and other consumers purchased vitamin E dietary supplements in reliance on the statement “Helps Maintain a Healthy Heart”—an undisputed “structure/function” claim. The district court ruled Bradach believed this statement constituted a disease claim, thus preempting his state law allegations. The Ninth Circuit reversed, holding Bradach’s claims are not solely premised on preempted disease claims, and the “mixed motive” claims can move forward.

The Ninth Circuit’s perceived tolerance of “mixed understanding” claims may cause class action attorneys to pursue more dietary supplement labeling cases that prior case law may have discouraged.

A typical “Made in USA” class action brought against a supplement maker alleges that, contrary to state laws interpreting FTC guidance, the defendant’s product ingredients are not “all or virtually all” made in the United States, and that some or many of the product’s ingredients are sourced from outside the United States (McDonnell v. Nature’s Way Prods. LLC). Similar “Made in USA” cases are popping up even outside of California, as reported by Drinker Biddle, a national law firm.

While class action lawyers pursue other theories, causes of action related to label statements and the source of ingredients constitute the most common class action attacks against dietary supplements and natural products.

Typical Sequence of Events

In many states, a class action plaintiff must send a notice letter to the defendant before filing suit under certain consumer protection statutes. Under the California Legal Remedies Act, Cal. Civil Code § 1782(a), a consumer who seeks to recover damages must send a written demand letter and wait 30 days before filing an action, and the letter must provide notice of the alleged wrongdoing and demand the company correct, repair, replace or otherwise rectify the alleged violation. During this period, the prospective class plaintiff and defendant often negotiates an early settlement on an individual basis. Class action lawyers want to know from the outset whether the sales figures of the challenged product make their case lucrative, or if they should cut their losses and move onto another case.

Upon the filing of a suit, a defendant’s next task is to weigh with his or her counsel the effectiveness of a possible motion to dismiss all or part of the claims. Common legal bases for seeking to dismiss a class complaint include preemption of the claims by the Dietary Supplement Health and Education Act (DSHEA) or the FD&C, the plaintiff’s lack of standing for not having purchased some or all of the challenged products, or other failures to properly plead class allegations.

If a complaint is not completely dismissed, after the initial motions stage comes the most expensive and time-consuming aspect of any class action: pre-certification discovery. The defendant company often responds to substantial document production requests, takes and defends numerous depositions, and may deal with discovery motions along the way. Experts may be hired, and the battle culminates in a motion for class certification. Along the way, the parties may discuss the possibility of a settlement. The progress, or lack thereof, of a plaintiff’s ability to possibly certify a class weighs most heavily into settlement discussions.

If a class is certified—meaning the proposed class plaintiff has won the motion for certification at least in part by satisfying the requirements of Rule 23 of the Federal Rules of Civil Procedure—a settlement may soon follow, or the defendant company may seek to win at trial.

A Defensive Plan

Dietary supplement and natural products companies should develop a plan for minimizing (to the extent possible) the probability of a class action lawsuit. First, an ounce of prevention is in order. Companies should seek the guidance of legal counsel with regulatory expertise to ensure their products’ claims are substantiated and their label statements are not misleading. Companies should understand the sourcing of their product ingredients and confer with counsel about any “Made in USA” representations. Company-wide policies regarding data, email and artwork retention should be instituted.

Second, companies should seek the advice of class action defense counsel upon receiving a demand letter or lawsuit. Effective counsel will work with a client company to understand its product, the FDA or FTC regulations at issue, and seek a swift and effective resolution—or have the capability to go the distance.

Dietary supplements and natural products are a rapidly growing industry. With such growth comes the headaches of class action litigation. Understanding the most typical class actions and working year-round on a defensive game plan will go a long way toward heading off class litigation and protecting a business and the industry as a whole.

Sanjay S. Karnik is senior counsel, business litigation and class actions, Amin Talati Upadhye LLP  in Chicago.

Interested in learning how the supplement industry fought back against certain state legislation, or want an update on state attorneys general investigations, lawsuits and priorities? Join us for the "Responding to State Legislators & Attorneys General" workshop on Friday, Nov. 9, at SupplySide West 2018.