A Washington state court judge ordered the makers of 5-Hour Energy to pay about $4.3 million for charges related to false advertising, the state's Attorney General announced.
AG Bob Ferguson filed suit against Living Essentials LLC and Innovative Ventures LLC in 2014 for allegedly violating Washington's Consumer Protection Act. According to the complaint, the defendants engaged in deceptive advertising, claiming that their flavored energy shots are "superior to coffee," recommended by doctors, and even that 5-Hour Energy's decaffeinated formula provides energy, alertness and focus lasting "for hours."
The false claims appeared in thousands of print and broadcast ads, the AG said, as well as on the Internet and in press releases. During a three-week trial held last September, Judge Beth M. Andrus ruled in favor of the AG's Office, holding that the claims violated state law because they were false and therefore deceptive.
Now the judge has ordered the defendants to pay a total of $4.3 million: almost $2.2 million in civil penalties for violations of the Consumer Protection Act, plus an additional $2.1 million in costs and fees owed to the Attorney General.
"Defendants spent more time trying to justify the science behind their ads after-the-fact than they did before marketing the products in Washington," the court wrote in the order. "The Court was struck by the fact that Defendants presented no testimony from a single scientist actually involved in developing the contents of this product."
The judge included $64,000 in sanctions against the defendants for willful discovery violations prior to the trial. Living Essentials and Innovation Ventures "cherry-picked" documents to produce to the AG's office, the court found.
In addition to the monetary portion of the order, Judge Andrus tacked on injunctive relief. Absent competent and reliable scientific evidence as support, the defendants are prohibited from making claims about the biochemical or physiological effects of their products or their "synergistic" interactions with other ingredients, including caffeine. The companies are also banned from using survey data in their marketing or advertising unless the surveys are "created, conducted, and evaluated in an objective manner" by qualified professionals and the data is not presented in a deceptive manner.
To read the order in State v. Living Essentials, LLC, click here.
Why it matters: "The makers of 5-Hour Energy broke the law in pursuit of profit, and now they are paying for it," Washington AG Ferguson said in a statement. How did the court determine how much the defendants should pay? Based on the total number of violations for the deceptive ads and sales of the products. For example, the "Construction Site Cowboy" ad aired in Washington 975 times during the relevant period while an ad titled "Choose Wisely" played 1,040 times. Since both ads were deemed deceptive, Judge Andrus ordered payment of $100 for each airing. The court also emphasized the "scant evidence" the companies had to support their claims. "Marketers and lawyers seemed to be driving the Defendants' advertising decisions, and most of the science presented at trial was compiled by experts retained for this litigation, rather than information gathered by the Defendants while investigating the effectiveness of their own products," the court wrote.