Recently GNC Holdings, Inc. (“GNC”) was hit with a proposed nationwide class action alleging that GNC deceptively labeled its own brand of ginko biloba supplements. See Wright v. GNC Holdings, Inc., Case No. 2:15-cv-00566-WB (E.D. Penn. February 5, 2015). The complaint was filed just three days after the New York Attorney General’s office sent GNC a cease and desist letter demanding GNC immediately stop the sale of five “Herbal Plus” dietary supplements, after tests conducted by the AG’s office determined that no plant DNA was identified in the products. See id., Exhibit A. Several other retailers have been hit with similar lawsuits following similar investigation by the New York Attorney General’s Office. These lawsuits were filed in the U.S. District Court for the Northern District of California, and allege claims for unfair competition and false advertising under California’s unfair competition laws, Cal. Bus. & Prof. Codes §§ 17200 et seq., and 17500 et seq., and the California Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (among other state law claims).
Plaintiff Stacey Wright alleges she purchased GNC’s ginko biloba supplement on various dates since 2009. She alleges each bottle of the supplement stated that it contained “Ginko biloba Leaf Extract” on the “Supplemental Facts” section of the label. The complaint goes on to allege that the product in fact contains “no Gingko Biloba whatever” (based on the New York AG’s tests), which constitutes “false, written affirmative statements on the product label[.]”
The lawsuit asserts three causes of action for (1) declaratory relief, (2) violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-2(4)(xxi), and (3) breach of express and/or implied warranty. The plaintiff seeks certification of a nationwide class of all United States citizens who purchased GNC’s ginko biloba store-brand supplement between February 6, 2009 and the present, as well as a Pennsylvania sub-class of individuals who purchased the product at one of GNC’s Pennsylvania locations. In addition to class certification, the complaint prays for injunctive and declaratory relief, damages and attorneys’ fees.
As typical in the class action world, these lawsuits tag along to the actions of a governmental agency related to the advertising and/or marketing efforts of companies. As such, the cases will inevitably rise and fall on the soundness of the investigation and the veracity of the underlying claims. Businesses should take note of these cases, for several reasons. First, this may be only the initial wave of ongoing investigation within the New York Attorney General’s office. Second, similar investigations may be inspired across the country. Finally, these investigations may not only expose businesses to potential liability through consumer actions, but may also result in FTC enforcement actions.
Notably, the FTC frequently brings enforcement actions against the makers of dietary supplements for asserting false, misleading or deceptive claims about their products’ efficacy. The FTC’s publication, Dietary Supplements: An Advertising Guide For Industry, provides insight into how the FTC views such claims. It is important to remember that the FTC requires “competent and reliable scientific evidence” to support weight loss and other health claims. This can be a high bar: some recent FTC consent orders have required defendants substantiate such claims with at least two “well-controlled” or “double-blind” human clinical studies. Generally, products related to consumer health and safety require a higher level of substantiation than other types of products. Bottom line: businesses should take care to understand the relevant laws and regulatory obligations, and undertake necessary preliminary efforts to ensure that any labeling complies with all requirements.