Dietary supplement trade groups ask federal appeals court to rehear false advertising case

A controversy before the U.S. Court of Appeals for the Ninth Circuit raises questions as to how judges should apply a fundamental legal principle—"summary judgment”—in false advertising cases.

Josh Long, Associate editorial director, Natural Products Insider

February 4, 2019

7 Min Read
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The outcome of a legal quarrel in California could have far-reaching consequences for marketers of dietary supplements and other products who have support for their advertising claims but are nonetheless sued for making false or misleading statements.

The controversy before the U.S. Court of Appeals for the Ninth Circuit raises questions as to how judges should apply a fundamental legal principle—"summary judgment”—in false advertising cases.

Currently before the Ninth Circuit: a petition seeking a rehearing “en banc” in a lawsuit involving Nature’s Way Products LLC and its parent company, Schwabe North America Inc. (collectively referred to as “Schwabe”). If the petition is granted, 11 judges will decide the fate of the false advertising lawsuit—not the typical three-judge panel in a federal appeals court.

Schwabe argued in its Jan. 9 petition that an earlier ruling by a three-judge panel of the Ninth Circuit, “presents an issue of exceptional importance because it will virtually eliminate summary judgment in false advertising cases involving scientific studies.” Under the federal rules governing summary judgment, a party to a lawsuit can prevail on certain claims, or an entire case, before a trial if a court determines “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Battle of experts

The fight commenced in 2015, when Kathleen Sonner sued Schwabe in a proposed class action lawsuit for false advertising over dietary supplements marketed for “mental sharpness,” “memory” and “concentration.” Two years ago, a federal judge granted Schwabe’s motion for summary judgment to dismiss Sonner’s lawsuit, including claims brought under the California Unfair Competition Law (UCL) and California Consumers Legal Remedies Act (CLRA).

Both parties to the lawsuit produced experts who referenced meta-analysis and individual clinical studies to support or undermine Schwabe’s advertising claims for its Ginkgo biloba-containing dietary supplements.

Schwabe retained Alan Schatzberg, M.D., a professor of Psychiatry and Behavioral Sciences at Stanford University School of Medicine. He concluded “credible scientific evidence … exists to support the statement that Ginkgo biloba is ‘for mental sharpness, memory & concentration’ and available scientific literature has shown that consuming Ginkgo biloba supports ‘mental activity’ and ‘cognitive function.’”

By contrast, after analyzing several clinical studies and meta-analyses, the plaintiff’s expert concluded “Ginkgo biloba is no more effective than [a] placebo for improving cognitive functioning or preventing cognitive decline.”

Ultimately, the district court granted Schwabe’s motion for summary judgment to dismiss the complaint.

The plaintiff failed to challenge “the methodology, structure or independence” of studies referenced by Schwabe’s expert, wrote Virginia A. Phillips, Chief U.S. District Judge in the U.S. District Court for the Central District of California in Los Angeles, in her decision dismissing the lawsuit.

“As a result, plaintiff’s criticisms of the meta-analysis and studied relied upon by Schatzberg are insufficient to allow a reasonable juror [to] conclude that there is no scientific support for defendants’ claims,” Phillips reasoned. “Put differently, plaintiff’s criticisms are insufficient to meet her burden to prove falsity.’”

Ninth Circuit ruling

In December, a three-judge panel with the Ninth Circuit reversed Phillips’ decision, sending the false advertising case back to the trial court. The appeals court determined the usual rules governing summary judgment apply.

“If the plaintiff’s evidence suggest that the products do not work as advertised, and the defendant’s evidence suggests the opposite, there is a genuine dispute of material fact for the fact-finder to decide,” the panel held in its opinion. “We see no reason to diverge from the usual summary judgment rules for UCL and CLRA claims.”

Proving falsity of adverting claims

Trade groups representing the dietary supplement industry supported Schwabe’s request for the Ninth Circuit to rehear the case en banc.

In briefs filed with the appeals court, the Council for Responsible Nutrition (CRN) and Natural Products Association (NPA) requested that the Ninth Circuit grant the petition for rehearing en banc and affirm the district court’s 2017 ruling dismissing the lawsuit. Nature’s Way is a member of CRN and NPA, and it has a representative on the board of directors of both trade groups.

The 2018 decision by the three-judge panel of the Ninth Circuit has “thrown into doubt an issue of national application—the burden of proof in false advertising claims at the substantive stage—for which national uniformity should be the rule,” NPA proclaimed in its legal brief.

In a lawsuit brought under the UCL or CLRA, a plaintiff must prove the falsity of the advertising claims, according to the trade association. Schwabe noted several district court decisions in California are consistent with a ruling in a separate federal appeals court: the Fourth Circuit.

“A plethora of decisions under the CLRA and UCL have recognized that an advertising claim is not false—and the plaintiff thus cannot meet its burden of proof—where the defendant has scientific evidence supporting the claim, even if the evidence is ‘equivocal,’” NPA wrote.

GNC Decision in Fourth Circuit

According to Schwabe’s petition, the recent ruling creates a split in how the law is applied in the Ninth Circuit and the Fourth Circuit and “is necessary for uniformity of Ninth Circuit decisions.”

The Ninth Circuit covers a vast geography on the West Coast, including in Alaska, Guam and Hawaii, while the Fourth Circuit hears appeals from federal district courts in Maryland, North Carolina, South Carolina, Virginia and West Virginia.

In 2015, the Fourth Circuit affirmed the dismissal of a class action suit against drugstore chain Rite Aid and GNC Corp.; the Pittsburgh, Pennsylvania-based dietary supplement maker whose joint health supplement containing glucosamine was under fire.

“[I]n order to state a false advertising claim on a theory that representations have been proven to be false, plaintiffs must allege that all reasonable experts in the field agree that the representations are false,” Circuit Judge Henry F. Floyd wrote on behalf of the three-judge panel of the Fourth Circuit. “If plaintiffs cannot do so because the scientific evidence is equivocal, they have failed to plead that the representations based on this disputed scientific evidence are false.”

The decision means “when a defendant presents scientific studies supporting its advertising claim, a plaintiff cannot survive summary judgment simply by presenting other alternative studies demonstrating that the science on the subject is equivocal,” Schwabe asserted it its petition. “Instead, a plaintiff must prove that there is no credible scientific evidence supporting the advertising claims; they must be literally false.”

Substantiation standard

According to NPA, the Ninth Circuit’s decision “ignores the regulatory framework for dietary supplement claims.”

“If a seller has the requisite ‘competent and reliable scientific evidence’ for regulatory purposes, more should not be required to obtain summary judgment in a civil false advertising case brought by a private plaintiff against the seller,” the trade association asserted in its brief.

CRN argued the Ninth Circuit’s decision, if allowed to stand, could gut a legal principle rooted in a 2003 case from the California Court of Appeal that only regulators may base false advertising cases on an alleged absence of substantiation. The result, the trade group warned, would enable “a patchwork of substantiation decisions driven by private litigants.”

“Dietary supplement companies—and consumers who rely on their products—stand to be harmed,” CRN’s legal brief added.

Although the federal district court in 2017 dismissed Sonner’s lawsuit, it rejected Schwabe’s argument that the lawsuit was barred by California law because it was based on a lack of substantiation.

“Here, plaintiffs do more than merely claim that defendants lack substantiation for their advertising claims,” Phillips wrote in her decision. “[T]hey provide affirmative evidence of scientific reports concluding that Ginkgo biloba does not appear to provide cognitive health benefits.”

The Ninth Circuit agreed with the district court’s substantiation analysis.

“Sonner has the burden of proof as to her claims,” the three-judge panel concluded, “unlike a substantiation claim where the onus is on the defendant to substantiate the assertions in its advertisements.”

Sonner hasn’t yet filed a response to Schwabe’s petition, and attorneys for her did not respond to requests for comment.

Gordon & Rees LLP is representing Nature’s Way and Schwabe North America. Porzio, Bromberg & Newman P.C. filed a brief with the Ninth Circuit on behalf of NPA, while CRN is represented by Amin Talati Upadhye LLP. Both trade groups have requested permission to become “amicus curiae,” which means “friend of the court.”



About the Author(s)

Josh Long

Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition

Josh Long directs the online news, feature and op-ed coverage at Natural Products Insider, which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.

He has moderated and/or presented at industry trade shows, including SupplySide East, SupplySide West, Natural Products Expo West, NBJ Summit and the annual Dietary Supplement Regulatory Summit.

Connect with Josh on LinkedIn and ping him with story ideas at [email protected]

Education and previous experience

Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.

Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).

Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.

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