Joel B. Rothman

I have an article published in this month’s Nutritional Outlook that discusses our recent big win for energy drink maker Celsius in a class action filed against it in California state court.

My article discusses class actions challenging advertising and labeling claims for dietary supplements and food products in which companies are accused of making product claims that are unfair or misleading to a large group of consumers.  I note that in these cases consumer experiences with a product and its claims may differ greatly and, as a result, individual lawsuits, instead of class actions, may be more appropriate.

I argue in favor of an individualized approach to cases over deceptive claims.  In Celsius, the court recognized that this plaintiff could never prove whether the Celsius supplement product’s performance claims are true or not. Since this was an essential element of his claim, he lacked standing to show how he was damaged, and the class action case was dismissed.

As I have said elsewhere, I believe that we are seeing the beginning of a trend toward more individualized treatment of cases involving deceptive claims, and away from class actions.  The defense strategy companies adopt is critical and must focus the court on the plaintiff’s proof.

To read the decision in Fletcher v. Celsius, click here.

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Irwin Naturals, one of the nation’s leading suppliers of natural dietary and herbal supplements, announces that it has reached a settlement with a California task force that named seven of its hundreds of products as being mislabeled or falsely advertised according to California law. The company has resolved all issues raised in the investigation.

The task force alleged that several Irwin products did not carry the proper lead warning label as required by California’s unique Proposition 65 law, but not that any of them contained an unsafe amount of lead. No product recall was or will be instituted as a result of the settlement, and no products were reformulated in response.

Proposition 65 requires a warning label for any product that contains an identifiable amount of a chemical or heavy metal on a daily dose basis. However, according to Prop. 65, the level of lead at which a product is considered unsafe is about 28 times greater than the level at which a warning on a label is required. As a result, Prop. 65 warnings have become ubiquitous throughout California on everything from wine bottles to Disneyland.

“We stand by our products, as we have for 15 years, and this settlement acknowledges that our products are safe and that we are in compliance with California laws,” said company spokesperson Rebecca Pearman. “As a trusted name in the nutritional supplement business, we are committed to best industry practices in manufacturing, quality assurance and labeling to ensure the quality and safety of our products and our continued leadership position in the industry.”

The task force also alleged that their tests failed to find Hoodia in some of the company’s products labeled as containing the herb. However, the company could not confirm these findings because no validated test method exists for identifying Hoodia in the softgel product form used by the company. The company relied instead on the industry standard method of confirming the input of Hoodia, and all manufacturing records confirmed that Hoodia had been put in to the products. The investigation did not result in either a product recall or reformulation.

Pearman said that while the company does not agree that it intentionally mislabeled or falsely advertised its products, it has no dispute with the task force’s fundamental objective to bring greater oversight to the nutritional supplement industry.

“For more than 15 years, we have staunchly supported the evolving standards under which our industry operates,” said Pearman. “California has some of the most stringent labeling laws in the nation, and in complying with those, we will continue to strive to meet or exceed all national requirements for our industry.”

Unrelated to the labeling claims was an allegation that the company failed to refund consumers who met the company’s refund policy. The task force did not identify specific complaints or consumers, but the company has set up a limited restitution fund. Consumers with questions about eligibility for refunds under the settlement can call the company at (800) 941-9098.

For the official announcement and more contact info on Irwin Naturals please visit 24-7 press release.

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David Vladeck - FTC Director of Consumer Protection

David Vladeck, Director of the Federal Trade Commission Bureau of Consumer Protection spoke at the Council for Responsible Nutrition Conference on the FTC’s “active” dietary supplement enforcement agenda.

Dir. Vladeck began by highlighting recent FTC enforcement actions against bogus cancer cures, Airborne generics,  fake hoodia, and peddlers of H1N1 flu cures.  Vladeck noted that FTC has begun sending joint warning letters with FDA to marketers of bogus H1N1 flu products.

Vladeck had good words to say about the NAD as well. Though Vladeck observed that FTC did not always agree with NAD, which is a departure from the attitude taken by prior Consumer Protection Division directors.

Then Vladeck turned to the new FTC Endorsement Guides.  Everyone held their breath.

Before I go further it is important to remember that Vladeck comes from a consumer protection background.   He led the Public Citizen Litigation Group for 20+ years.

On the endorsement guides Vladeck’s message was clear:

1. Disclaimers like “results not typical” are useless and will be attacked by FTC.

2. Advertisers who make claims “will be held responsible for their claims.”

3. If your promotion relies only on testimonials “you will have a problem with us.”

Vladeck described this area for the FTC as a “target rich enviornment” in which they intend to pursue violators using all the resources at their disposal.  And when the 1000+ enforcement personnel at the FTC run out, FTC plans to call on the state attorneys’ general.  When the AG’s are too busy, Vladeck says that they will do as the FDA does and publish warning letters on the internet in order to “bully companies into compliance.”

Despite the backpeddling FTC has done in the media recently, Vladeck made it clear that he will enforce Section 5 of the Federal Trade Commission Act and the endorsement guides.  It was as if Vladeck was drawing imaginary targets on foreheads around the room…

I spoke to several attorneys and CEOs at the reception that evening about the regulatory problem the enforcement guides present and everyone agreed that the problem is very serious.  One observed, candidly, that the problem was that “you never know what marketing is doing until it is too late.”

After all, lawyers and regulatory execs are considered “sales killers.”  We are never consulted by marketing in advance of a promotion for fear we will put the kibosh on the latest profitable social media marketing strategy.

So what’s next from the FTC?  Who knows.  After all, it’s a “target rich environment.”

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Jonathan W. Emord, Esq.

This is Part II of the Post that began here in which we discuss the three important suits filed this summer by supplement lawyer Jonathan Emord challenging FDA administrative action on first amendment grounds.

The cGMP Challenge – FDA Overreaching?

The FDA supplement cGMP regulations were anticipated from the time that DSHEA was passed in 1994 since the statute delegated authority to the Secretary of Health and Human Services to prescribe good manufacturing practices for dietary supplements.¹ The FDA’s dietary supplement GMPs were to “be modeled after current good manufacturing practice regulations for food and may not impose standards for which there is no current and generally available analytical methodology.”²

Of course, any regulation the FDA would promulgate under DSHEA would need to be consistent with the statute. DSHEA created a system of regulation where dietary supplements are deemed safe unless the FDA proves that a particular supplement presents a significant or unreasonable risk of illness or injury. As the cGMP Challenge Complaint correctly notes, “the express purpose of DSHEA was to ensure that ‘the Federal Government erects no regulatory barriers that impede the ability of consumers to improve their nutrition through the free choice of dietary supplements.’”³. Therefore, Congress placed “the burden of proof . . . on the Food and Drug Administration to prove that a product is unsafe before it can be removed from the marketplace.”⁴

FDA dragged its feet on the cGMP regulations until finally in 2003 the FDA published its Proposed Rule for dietary supplement GMPs.⁵ FDA published the Final Rule on June 22, 2007.⁶

The cGMP Challenge takes on the Final cGMP Rules on three separate fronts. First it argues that the cGMP Rules are contrary to DSHEA because under the regulations no longer is the burden on the FDA to prove a supplement is dangerous before it can be yanked from the market. Second it argues that the cGMP Rules create excessive burdens on small business and society. Third it argues that the cGMP Rules are unconstitutionally vague.

All these arguments appear sound. Emord argues convincingly that FDA has granted itself wide discretion to declare a dietary supplement adulterated for any violation of the Final Rule, without proof that a dietary supplement was prepared, packed, or held under conditions that violate the GMPs.

FDA concludes that it has no duty to prove a finished product to present a risk of illness or injury before deeming it adulterated and pulling it from the market for cGMP Rule violations. This is because under the GMPs, FDA can declare inadequate any record required to be kept and to deem on that basis alone a dietary supplement adulterated without meeting the statutory requirements of DSHEA.

The decisions that emerge from these cases could determine whether the courts will stand by the principles in DSHEA and protect the public’s access to supplement products in the future.

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1. See 21 U.S.C. § 342(g
2. Id.
3. See 140 Cong. Rec. S11705-06, at S11706 (Aug. 13, 1994
4. Id.
5. See Current Good Manufacturing Practice in Manufacturing, Packing, or Holding Dietary Ingredients and Dietary Supplements; Proposed Rule, 68 Fed. Reg. 12158 (Mar. 13, 2003
6. See Final Rule, 72 Fed. Reg. 34752 (June 25, 2007

Jonathan W. Emord, Esq.

Supplement lawyer Jonathan Emord has filed three important suits this summer challenging FDA administrative action on first amendment grounds.  The suits were all filed on behalf of long-time Emord clients Durk Pearson, Sandy Shaw, the Alliance for Natural Health, and the Coalition to End FDA and FTC Censorship.

The complaints in all three cases were filed in federal district court for the District of Columbia and are captioned identically.  The first suit challenges the FDA’s rejection of qualified health claims for supplements containing the powerful antioxidant and anti-carcinogenic selenium (the “Selenium Challenge”).¹  A second suit challenges the FDA’s rejection of qualified health claims for antioxidant vitamins C and E (the “C and E Challenge”).² The third suit challenges the FDA’s dietary supplement current Good Manufacturing Practice regulations (the “cGMP Challenge”).³

These plaintiffs and their lawyer are well known for making law in the Pearson/Whitaker Cases that has benefitted the supplement industry significantly over the past ten years.⁴. Since the court decisions that may emerge from the new Selenium Challenge, C and E Challenge, and cGMP Challenge cases could have a significant impact on the law regulating supplement formulators, manufacturers, and marketers, and the FDA’s interpretations of that law, we are providing more expanded coverage here of these potentially important cases.  Part I will address the Selenium Challenge and the Vitamins C and E Challenge, and Part II will follow in a separate blog post to address the cGMP Challenge.

The Selenium Challenge and the Vitamin C and E Challenge – Does the FDA disregard the law and Supreme Court precedent by suppressing commercial speech about supplements?

For anyone not acquainted with the herculean legal struggle undertaken by Emord and his clients in the Pearson/Whitaker series of cases, the Complaint in the Selenium Challenge is a worthwhile read and I commend you to it.  The point of all the billable hours invested in this struggle may seem elusive but is actually quite simple: force the government to limit its censorship of claims about supplements to the “least restrictive means” test articulated again and again by the US Supreme Court in commercial speech cases.⁵

What does this mean from a practical standpoint for supplement companies?  It means that if you have a claim to make about your ingredient or formulation, and that claim is supported by competent and substantial scientific evidence, you should be allowed to make that claim as long as the claim is not deceptive or misleading. Sounds simple, right?  Sounds like the good practice you are already following for structure-function claims, right?

Well, what if that claim is a disease claim, like a claim that says “take this supplement and you may be able to prevent yourself from cancer.”   That’s not a DSHEA structure-function claim.  On the contrary, that’s the holy grail of supplement marketing, a claim that the FDA would say makes your product an unapproved drug and subjects you to prosecution for violation of the Food, Drug and Cosmetics Act.

Emord’s victories in the Pearson/Whitaker Cases paved the way for such claims, and required the FDA to create a new category of claims called “Qualified Health Claims.”  Qualified Health Claims are claims with disclaimers that provide a balanced view of the scientific evidence available to support a particular supplement’s impact on a specific disease state by incorporating a disclaimer that makes it clear to the consumer that the “jury is still out” on the ultimate conclusion suggested by the claim, but at the same time gives the consumer solid information to make critical purchase decisions.⁶

Fast forward several years to the emerging body of evidence developing around the powerful anti-carcinogenic effects of selenium.

Selenomethionine - an amino acid containing selenium.

This body of evidence shows significant correlation between selenium intake and the reduction in risk for certain cancers including cancers of the prostate, lung, respiratory tract, colon, and digestive tract.  Is the evidence conclusive?  No.  But is it powerful and supported by valid studies using recognized methods and conducted by reputable scientists?  Yes.

In reliance upon the body of evidence developed, Pearson and Shaw petitioned the FDA for approval of five qualified claims for selenium.⁷  Four out of the five claims were rejected outright.  A fifth claim, for prevention of prostate cancer, was saddled with disclaimers that were so onerous it was almost not worth making since the disclaimer was so long you could barely even fit it on the box or bottle with the supplement.

Some perspective is valuable here: FDA reviewed 233 studies in the course of its review of the challenged claims.  Pearson and Shaw submitted 77 studies as supportive of their claims.  According to the Selenium Challenge complaint, almost all the evidence submitted was ignored by FDA.  To their credit, Pearson and Shaw acknowledge that the evidence is not conclusive, but they do seem to have the weight of the credible scientific evidence on their side, much of which is detailed in the Selenium Challenge complaint complete with citations to the literature.

Pearson and Shaw also petitioned the FDA for approval of qualified claims for the antioxidant effects of Vitamins C and E.⁸  The claims consisted of ten Vitamin C qualified health claims and 7 Vitamin E qualified health claims involving the relationship between Vitamins C and E and the reduction in the risk for cancer. In support Pearson and Shaw submitted over 200 scientific publications demonstrating a nutrient-disease relationship between vitamins C and E and site-specific cancers.

Pearson and Shaw had hope that at least some of their claims might be approved.   However, in the interim, the FDA issued its guidance document, “Evidence-Based Review System for the Scientific Evaluation of Health Claims.” In this guidance document, according to the C and E Challenge, the FDA mucked up the analysis required for qualified claims by conflating it with the higher standard set for FDA Approved Claims. Once again, FDA rejected most of the proposed qualified claims, and for the ones that it accepted it rewrote them and included so much negatively laden verbiage as to make the claims unusable.

Both these challenges seek to reorient FDA thinking (to put it mildly) as it pertains to the qualified claims review system.  Emord clearly hopes that the D.C. Circuit will take FDA to task for its failure to comply with past decisions requiring it to lift excessive burdens on the free speech rights of supplement marketers so that consumers can be fully informed about developing science behind powerful dietary therapies available to treat and prevent disease.  We will see in Part II of this post how the new cGMP system also places burdens on the commercial speech rights of supplement makers, so stay tuned…

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1. Alliance for Natural Health US, Durk Pearson, Sandy Shaw, and the Coalition to End FDA and FTC Censorship v. Kathleen Sebelius, US Dept. of Health and Human Srvcs., Margaret M. Hamburg, M.D., FDA and USA, 1:09-cv-01470-ESH, Aug. 4, 2009, Huvelle, J.
2. Alliance for Natural Health US, Durk Pearson, Sandy Shaw, and the Coalition to End FDA and FTC Censorship v. Kathleen Sebelius, US Dept. of Health and Human Srvcs., Margaret M. Hamburg, M.D., FDA and USA, 1:09-cv-01546-RJL, Aug. 14, 2009, Leon, J.
3. Alliance for Natural Health US, Durk Pearson, Sandy Shaw, and the Coalition to End FDA and FTC Censorship v. Kathleen Sebelius, US Dept. of Health and Human Srvcs., Margaret M. Hamburg, M.D., FDA and USA, 1:09-cv-01523-CKK, Aug. 12, 2009, Kollar-Kotelly, J.
4. See, e.g., Pearson v. Shalala, 98-5043 (D.C. Cir. Jan. 15, 1999) and Whitaker v. Thompson, 03-5020 (D.C. Cir. Jan. 9, 2004)
5. See, Central Hudson Gas & Elec. v. Public Svc. Comm’n, 447 U.S. 557 (1980)
6. See Guidance for Industry: FDA’s Implementation of “Qualified Health Claims”: Questions and Answers; Final Guidance  (29 August 2009)
7. Selenium and a Reduced Risk of Site-specific Cancers, FDA-2008-Q-0323
8. Petition for Qualified Health Claims: Antioxidant Vitamins C and E and Reduction in the Risk of Site-Specific Cancers, FDA-2008-Q-0299

According to attorney Ted Anderson of Kilgore & Kilgore, trial counsel for the Badgett family, the Badgetts were active and profitable marketers of AdvoCare products for more than 12 years before their distributorship was suddenly canceled by the company in 2006.

“The Badgetts perhaps were victims of their success, leading to a vendetta against them by AdvoCare officials. The company refused to make the changes in its marketing and business structures that would meet the accountability demands of my clients and ultimately benefit every AdvoCare distributor and customer.”

We previously reported on Advocare’s other woes earlier this year that resulted in a finding that the company provided a contaminated supplement to world-class swimmer Jessica Hardy, costing her a spot on the U.S. Olympic team.

To read the press release regarding the Babbit’s victory against Advocare, click here.

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Last year, Oz praised the anti-aging properties of the acai berry on Oprah’s show.  Soon, marketers began selling acai products claiming they had been endorsed by Winfrey or Oz. We previously advised about a rash of BBB reports on deceptive acai supplement marketing practices.

Oprah and Oz are represented by Marc Rachman of Davis & Gilbert in New York. The Chicago Tribune reports about a phenomenon where the health benefits of a substance is discussed on the show and then the scams start.  According to Rachman, Winfrey’s Web site has fielded more than 2,000 complaints related to acai-berry-related products.

Also joining in is the Illinois Attorney General who has filed consumer fraud lawsuits against three suppliers and a local marketer of acai berry products.  The suits allege that the companies lure customers with free trial offers, and then charge consumers’ credit cards prematurely, do not always supply the product as promised and make it challenging to cancel the orders.

The Illinios AG filed three suits, the Crush LLC Complaint , the Advanced Wellness Complaint , and the Amirouch Complaint .

To read the Oprah and Oz complaint, click here.

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While no one admitted any wrong, two former officers of Nature’s Sunshine Products Inc. and the company have agreed to pay a total of $650,000 in civil penalties in connection with a Securities & Exchange Commission investigation of NSP’s Brazilian subsidiary. The Utah-based maker of nutritional supplements still faces a class-action lawsuit regarding the filing of financial statements with the SEC and the delisting of the company’s stock.

NSF said in a statement issued July 31 that its former COO and CFO “failed to adequately supervise Nature’s Sunshine management and other personnel who were directly responsible for the company’s books and records and internal controls.” The company neither admitted nor denied the SEC’s allegations.

From all accounts, NSP’s troubles related to its operations and regulatory filings, not the quality of its products. Nasdaq dropped the company in April 2006 because, according to the company, it had not timely filed its quarterly report on Form 10-Q for the quarter ended Sept. 30, 2005, nor its annual report on Form 10-K for the fiscal year ended Dec. 31, 2005. NSP’s accountants also resigned on March 31, 2006. The interaction between the company and accountants is captured in a behind-the-scenes article by Ethisphere.

The story goes back further, according to an SEC civil complaint filed in federal court. The SEC claimed that NSP operated a Brazilian subsidiary that paid Brazilian custom agents in that country to import unregistered NSP products during 2000 and 2001. That occurred after the Brazilian government reclassified some products as medicines. NSP was unable to re-register many of  its products and sales declined dramatically.

To circumvent the new regulations, the NSP subsidiary made cash payments to Brazilian customs brokers, according to the complaint. The brokers handed some of the money over to Brazilian officials.  The subsidiary then falsified its records to hide the nature of the payments.

The complaint was filed in federal court on July 31 of this year, the same day that the SEC announced the agreement with NSP and former officers Douglas Faggioli and Craig Huff. Faggioli was COO in 2000 and 2001, and was promoted to president and CEO in November 2003.  The same and following year, the company  was named to the list of 100 Best Corporate Citizens by Business Ethics Magazine. Neither Faggioli nor Huff no longer work for NSP, according to the company.

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Some of us remember when parents would chase their children out to play in the sun, with no protection other than play clothes.  Today, the Federal Trade Commission tells us

overexposure to the sun’s invisible rays – ultraviolet A (UVA) and ultraviolet B (UVB) – can cause skin damage. The damage can be immediate and long-term, with effects ranging from sunburn, rashes, and cell and tissue damage to premature wrinkling and skin cancer. Indeed, many skin changes that often are identified with aging actually result from damage by too much sun. . .To help reduce your risk of skin damage from sunlight, try to minimize your exposure to the sun between 10 a.m. and 3 p.m., when the sun’s rays are strongest. Even casual exposure to sunlight – driving a car, walking to the store, taking an outdoor lunch break – contributes to cumulative lifetime exposure. If you’re out during the peak hours, wear a hat and tightly-woven clothing that covers your body, and use maximum protection sunscreens.  It’s important to understand the labeling information on sun protection products and shop carefully before heading to the beach, tennis court or park. The FTC carefully monitors advertising claims in this area and offers this information to help you make wise purchasing decisions.

Consumers have taken this advice to heart, driving a highly competitive market in sun protection products.

A battle between Schering-Plough and Neutrogena over their respective advertising claims for sunscreens is heating up.  A few months ago,    Schering-Plough, maker of Coppertone  Sport sunscreens, sued major competitor Neutrogena, maker of  Ultimate Sport sunscreens, for alleged false advertising claims favorably comparing the benefits of Neutrogena’s Helioplex sunscreen formula to Coppertone’s formula.  The alleged false claim is that a sunscreen must have Helioplex to provide UVA and/or UVB protection.  Schering-Plough also complained that Neutrogena was falsely claiming that its ULTIMATE SPORT product was the “Best line of sport sun protection.”

Neutrogena fought back with counterclaims that Schering-Plough’s Coppertone Sport ads were falsely claiming that only Coppertone NutraShield with Dual Defense provides both UVA/UVB protection and antioxidants that promote skin repair, that Schering-Plough’s TV commercials falsely claim that 28% of the Ultimate Sport product sprayed on a body is chemical propellant, that Coppertone Sport sprays provide “better protective coverage” than Neutrogena’s sport sprays and that the Coppertone sprays provide better sun protection than the Neutrogena Ultimate Sport sprays.

In this Lanham Act case in the federal district court in Delaware, Schering-Plough is currently trying to obtain a preliminary injunction against Neutrogena’s sunscreen advertising claims that, if issued,  would include corrective advertising obligations.    Neutrogena is also asking the court for an injunction against Schering-Plough’s advertising claims.  It will be a long hot summer for these combatants.

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A recent study by LegalMetrics, a litigation analysis firm, named the Southern and Middle Districts of Florida among the top five districts for speed to resolution in patent infringement cases.   Since Florida has not been known as a “rocket docket” in the past, these results may seem surprising.  However, for intellectual property litigation attorneys, the recognition that Florida offers a favorable forum for facilitating the resolution of cases in a timely manner is nothing new.

The Southern District (in yellow) and the Middle District (in green) cover all Florida’s major population centers.  A survey we performed of filings of intellectual property cases in popular federal districts including these Florida Districts reveals that, with the exception of the Eastern District of Virginia, filings of IP cases have trended downward in the last several years.  Of course, fewer cases filed mean more attention for filed cases from the federal judges assigned to those cases.

Decisions in IP cases issued in early 2009 further suggest IP owners receive favorable treatment from Florida district court judges.  Among these decisions were the following:

• In a trademark infringement case filed in the Southern District of Florida, district judge Daniel T. K. Hurley denied the defendant’s motion to dismiss finding that the plaintiff trademark licensee had standing to prosecute infringements even though it was not the trademark owner.  In the process, the court adopted a liberal interpretation of standing for Lanham Act claims favorable to plaintiffs. See Trump Plaza of the Palm Beaches v. Rosenthal, Case No. 08-80408 (Jun. 24, 2009) .
• In a patent infringement case filed in the Middle District of Florida, district judge Steven D. Merryday dismissed counterclaims for unjust enrichment as preempted by federal patent law. See Mayo Clinic of Jacksonville v. Alzheimer’s Institute of America, Inc., Case No. 8:05-cv-839 (Jun. 26, 2009).
• In a patent infringement case filed in the Southern District of Florida, district judge James I. Cohn denied the defendant’s motion to dismiss and held that the plaintiff had standing to sue for infringement based upon an agreement with the original inventor in England signed before the patents were ever filed in the United States. See Flexiteek Americas, Inc. v. Plasteak, Inc., Case No. 08-60996 (Jun. 14, 2009).

Other cases demonstrate a willingness among Florida district judges to find personal jurisdiction over defendants based upon very minimal contacts including activities on the Internet.  Recent decisions have indicated that Florida courts will follow liberal standards for jurisdiction where simply maintaining an interactive website accessible on the Internet from Florida will subject a defendant to personal jurisdiction in the Sunshine State.

The moral of this story: when considering where to file an infringement action, intellectual property owners, including owners of trademarks, copyrights and patents, as well as counsel for these owners, would be wise to consider filing in the Southern or Middle Districts of Florida.  Of course, IMHO, my firm Arnstein & Lehr LLP, with its vast Florida litigation resources and experience prosecuting infringements would be an excellent choice to partner with as knowledgeable counsel for such cases.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

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