Wednesday, June 15, 2011

Lack of substantiation doesn't give rise to private cause of action

Chavez v. Nestle USA, Inc., 2011 WL 2150128 (C.D. Cal.)

This was a tentative ruling on Nestle’s motion to dismiss this putative class action complaint under the California UCL and FAL based on Nestle’s marketing of its Juicy Juice Immunity and Brain Development beverages. The amended complaint basically alleged that Nestle’s claims were deceptive because they were unsubstantiated. The court stated that, on the papers, this didn’t state a claim.

The Brain Development package, along with the name, stated “DHA—A Building Block for Brain Development.” The packages/ads also stated that babies’ brains tripled in size by age two, and the ad said, “Introducing new Nestle Juicy Juice Brain Development with DHA. An essential building block for her brain to develop … So she can shine a little more every day.” The website made similar but more detailed claims that DHA “may help support early-age brain and eye development” and that the beverage was “a smart choice for parents who are ready to introduce juice beverages into their baby's diet.” Chavez alleged reliance on these statements.

Similarly, the complaint alleges that the Immunity package’s claims, “Helps support immunity” and “Vitamin C & Zinc for Immunity …” were false and misleading. Chavez also specifically alleged reliance on these statements, as well as on TV ads claiming, “She'll be exposed to over a billion germs this year…. Introducing Nestle Juicy Juice Immunity With Vitamin C, Zinc, and Prebiotic Fiber. So they shine a little more every day.” The website also claimed the beverage “contains Vitamin C and Zinc which are essential for a healthy immune system, and Prebiotic Fiber to help maintain a healthy digestive system.”

However, the court concluded that Chavez failed to explain why the identified statements were false or misleading. Plaintiffs didn’t allege facts challenging the relationship of DHA and brain development, the role of Vitamin C and zinc in immune function, or of prebiotic fiber in digestion. There were no allegations that consumers were misled regarding the actual amounts of these components. The focus of the complaint was on the alleged lack of substantiation for the ads.

The court held that lack of substantiation can’t support a UCL or FAL cause of action, nor did Nestle have a duty to disclose its lack of substantiation. Unlike the FTC, private plaintiffs can’t sue on this theory; they offered no support for the contention that lack of substantiation renders claims misleading. (But the FTC’s ability to do so is predicated on the theory that consumers reasonably expect, and are entitled to expect, an appropriate amount of substantiation for specific factual claims, making lack of substantiation misleading.)

The court also thought that the claims would be subject to dismissal based on the primary jurisdiction doctrine, though it rejected the now-standard but ludicrous standing argument that plaintiffs’ current knowledge of defendants’ alleged misconduct would bar them from seeking an injunctive remedy.

1 comment:

Aaron Reese said...

If a business makes unsubstantiated claims, they only need fear consumer protection agencies, not consumers themselves? Odd.