The United States Court of Appeals for the District of Columbia recently affirmed a Federal Trade Commission (FTC) opinion that POM Wonderful, LLC’s (POM Wonderful’s or the company’s) advertisements regarding the ability of its pomegranate-based products to treat, prevent, or reduce the risk of certain diseases were false, misleading, and unsubstantiated because they were not backed by “competent and reliable scientific evidence.” The D.C. Circuit similarly upheld the FTC’s holding that, for purposes of POM Wonderful’s disease-related claims, “competent and reliable scientific evidence” requires statistically significant results from a randomized, and well-controlled clinical trial (RCT). The D.C. Circuit, however, rejected the FTC’s holding that two RCTs were required to substantiate the disease-related claims at issue, and further rejected the necessity of RCTs for non-disease-related claims, or “health claims.”
While the D.C. Circuit’s opinion pertains to the enforcement of FTC regulations, rather than a lawsuit brought by private plaintiffs, it nonetheless may impact consumer class actions in which plaintiffs likewise allege that companies’ advertisements are false and misleading because the advertised claims are not supported by the requisite type or number of studies. In particular, the opinion provides guidance on the type of substantiation the FTC may require for disease-related and health claims, which should provide guidance to courts in private litigation involving substantiation as well.
This update offers an overview of the above-referenced FTC and D.C. Circuit opinions, and discusses the impact they may have for companies in private consumer class action litigation.
1. Administrative Opinions
POM Wonderful “produces, markets, and sells a number of pomegranate-based products,” including POM Wonderful 100% Pomegranate Juice, POMx Pills, and POMx Liquid. POM Wonderful, LLC v. FTC, No. 13-1060 (D.C. Cir. Jan. 30, 2015) (“Op.”) at 2, 4. In its advertisements from 2003 to 2010, POM “touted medical studies ostensibly showing that daily consumption of its products could treat, prevent, or reduce the risk of . . . heart disease, prostate cancer, and erectile dysfunction.” Id. at 2.
In 2010, the FTC filed an administrative complaint against POM Wonderful and related parties, asserting that certain of these advertisements were “false, misleading, and unsubstantiated . . . in violation of the Federal Trade Commission Act.” Id. In May 2012, an administrative law judge determined that (1) nineteen such advertisements and promotional materials implied that the “products treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction,” (2) POM Wonderful “lacked sufficient evidence to substantiate those claims,” and (3) “the claims were material to consumers,” such that the company had violated the FTC Act. Id. at 12. The judge therefore ordered the company “to cease and desist from making further claims about the health benefits of any food, drug, or dietary supplement unless the claims were non-misleading and supported by competent and reliable scientific evidence.” Op. at 12.
On appeal from the administrative law judge’s decision, the full FTC affirmed the determination that the company’s advertisements and materials were false, misleading, and unsubstantiated. The FTC further held, for purposes of POM Wonderful’s disease-related claims (i.e., claims that the products are “effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease”), that “competent and reliable scientific evidence shall consist of at least two randomized and controlled human clinical trials (RCTs),” and that “[s]uch studies shall also yield statistically significant results, and shall be double-blinded unless [the company and related defendants] can demonstrate that blinding cannot be effectively implemented given the nature of the intervention.” Id. at 13-14; POM Wonderful LLC, No. 9344, Final Order (Fed. Trade Comm’n Jan. 10, 2013) at 2. The Commission based this holding on a finding that “experts in the relevant fields would require RCTs . . . to establish a causal relationship between a food and the treatment, prevention, or reduction of risk of the serious diseases at issue in this case.” Pom Wonderful LLC, No. 9344, Op. of the Comm’n (Fed. Trade Comm’n Jan. 10, 2013) (FTC Op.) at 22.
The FTC also held that claims about “health benefits,” like disease-related claims, must be substantiated by “competent and reliable scientific evidence.” However, for health benefit claims, unlike for disease-related claims, there is “no requirement that” such evidence take the form of “randomized, controlled, human clinical trials.” Op. at 14; see also id. at 36 (the “baseline requirement for all health claims does not require RCT substantiation”).
Because the FTC found the studies utilized by POM Wonderful in its advertisements and promotional materials did not meet these standards for substantiation with regard to either the disease-related claims or the health claims, the FTC found that the company’s materials were deceptive and in violation of the FTC Act. See id. at 23.
2. D.C. Circuit Opinion
On further appeal, the D.C. Circuit Court affirmed “the Commission’s factual finding that experts in the relevant fields require RCTs to support claims about the disease-related benefits of POM’s products,” determining that the “finding is supported by substantial record evidence.” Id. at 24-25. The court rejected the argument that “RCTs may be costly,” recognizing that “if the cost of an RCT proves prohibitive, petitioners can choose to specify a lower level of substantiation for their claims. . . . ‘[T]he need for RCTs is driven by the claims [petitioners] have chosen to make.’” Id. at 28-29 (quoting FTC Op. at 25). Because “POM nonetheless claimed a scientifically established, causal link between its products and various disease-related benefits on the basis of studies that were not randomized or placebo-controlled,” id. at 26, its claims were in violation of the FTC Act.
The Court, however, determined that “the Commission fails adequately to justify a categorical floor oftwo RCTs for any and all disease claims.” Id. at 38 (emphasis added). The court reasoned that “[r]equiring additional RCTs without adequate justification exacts considerable costs . . . If there is a categorical bar against claims about the disease-related benefits of a food product or dietary supplement in the absence of two RCTs, consumers may be denied useful, truthful information about products with a demonstrated capacity to treat or prevent serious disease.” Id. at 39. The Court further found the Commission’s reliance on prior consent decrees requiring two RCTs unavailing: consent orders are “entered without litigation or explanation of the Commission’s reasoning – providing little insight into why two RCTs would be required to prevent a claim from being misleading,” and “two-RCT remedial provisions [have] only [been] selectively imposed in specific circumstances based on particular concerns.” Id. at 42-43.
Accordingly, the court held “that the Commission’s order is valid to the extent it requires disease claims to be substantiated by at least one RCT,” but reversed the Commission’s order “insofar as it categorically requires two RCTs for all disease-related claims.” Id. at 45 (emphasis added).
3. Ramifications For Private Consumer Class Actions
Private plaintiffs cannot enforce the FTC Act, and, accordingly, courts have recognized that private plaintiffs – unlike the FTC – cannot state a cause of action based on an alleged failure to substantiate advertising claims. Instead, private plaintiffs in consumer fraud class actions must affirmatively plead and prove that a company’s statements are false and misleading. See, e.g., Franulovic v. Coca Cola Co., 390 F. App’x 125, 128 (3d Cir. 2010); Stanley v. Bayer HealthCare LLC, No. 11 cv 862, 2012 WL 1132920, at *3 (S.D. Cal. Apr. 3, 2012). However, where a company makes “establishment claims,” (i.e., a claim that “suggests that a product’s effectiveness or superiority has been scientifically established”) (Op. at 16), the company’s lack of adequate scientific proof for its claim may render it false or misleading, in violation of consumer fraud statutes and other state laws. See, e.g., Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 939 n.2 (7th Cir. 2001).
The D.C. Circuit Court’s opinion in POM Wonderful, therefore, may have a significant impact for companies defending against consumer class actions. Although the decision in POM Wonderful was based on the particular representations made by the company, and the particular evidence submitted to the Court regarding the beliefs of experts in the relevant fields, the decision nevertheless provides guidance on the type of substantiation required for companies to truthfully make disease-related establishment claims about their food and dietary supplements.
Moreover, plaintiffs often allege that companies’ health claims regarding food and dietary supplements are rendered false and misleading by the lack of RCTs – the “gold standard” of scientific substantiation. In such cases, POM Wonderful may be helpful to refute those contentions, in light of the court’s recognition that the “baseline requirement for all health claims does not require RCT substantiation.” Op. at 36. While the court does not specify the type of substantiation required for health claims, it is clear that something less than RCTs may suffice to support such claims.