Litigation Trends Affecting Supplement Companies and What to Do About Them

Dietary supplements are again in the headlines, and not all of the news is positive. First, television personality Dr. Mehmet Oz touted the weight-loss effects of supplements such as garcinia cambogia and green coffee extract, and then was called before Congress to defend his statements. Next, New York Attorney General Eric Schneiderman announced that his office sent subpoenas to four major retailers for selling store-brand herbal supplement products without the labeled active ingredients. Meanwhile, lawsuits by consumers against supplement manufacturers are stacking up.

Regulators and plaintiffs’ class action attorneys see a new target. As a result of this increased scrutiny, supplement manufacturers and sellers should assess the legal risks of how they advertise, label and sell products.

Ingredient Identification Litigation

New York’s probe raised questions about whether some dietary supplements accurately describe their contents. Though industry critics argue that the investigation evidences lax regulation of supplement manufacturers, trade groups have questioned whether reliance on DNA barcode testing is appropriate for herbal extracts, because the genetic material is destroyed during the extraction process. Regardless of who is right, supplement retailers and manufacturers will spend significant resources battling the pending litigation. More than two dozen lawsuits already have been filed against the retailers targeted by the investigation, with more being filed daily.

And this may only be the beginning. “Protein-spiking" or “nitrogen-spiking" lawsuits also are on the rise. It has been alleged that, in an effort to reduce protein manufacturing costs, supplement companies add cheaper free-form amino acids and non-protein ingredients to increase the protein content of nutritional supplements and powders, a practice discussed in an April 2014 edition of Natural Products INSIDER. Plaintiffs’ lawyers have now seized on this theory and claim that the labeled protein count of these supplements is false and misleading.

Companies should take stock of manufacturing practices and assess potential discrepancies between labeled claims and the amount of an ingredient actually found in a product. Retailers also need to be alert to potential problems, as the recent lawsuits indicate they cannot escape scrutiny for the products they stock on their shelves. Taking a preventative approach and thinking strategically about labeling language now may help avoid the costs of defending a class action down the road.

Advertising Claims

Lawsuits against supplement manufacturers and sellers for false advertising also are on the rise. In many cases, plaintiffs alleged that the manufacturer or retailer lacks support for its advertising claims. But individuals cannot sue for lack of substantiation. Only the regulatory agencies have that authority. Individual plaintiffs must prove that advertising claims are actually false, and a lack of substantiation does not necessarily equate to falsity. For example, in January, a New Jersey court dismissed false advertising claims against Vitamin Shoppe [Hodges v. Vitamin Shoppe Inc., No. 13-3381, 2014 WL 200270 (D.N.J. Jan. 15, 2014)] because the plaintiff alleged only a lack of prior substantiation, not falsity. A similar case (which followed an FDA warning letter) against the manufacturers of Anatabloc was dismissed in January because, although the plaintiff alleged that Anatabloc was falsely advertised to treat several ailments, the defendants did not represent that the product “was proven to treat or cure particular diseases or illnesses." [Baldwin v. Star Scientific, Inc., 2015 WL 170407, F. Supp. 3d. (N.D. Ill. Jan. 13, 2015)]

Plaintiffs attempt to circumvent this case law in a few ways. One is to argue that a lack of substantiation can support a lawsuit if the representation at issue makes affirmative claims such as “clinically proven" or “shown in studies." And there is some support for this position. Yet, companies have arguments in response. For example, where companies have studies that back up such claims, arguments can be made that criticisms of the quality of the studies or differences of opinion do not make the representation false. Defendants have won on this theory, although it can be difficult to do so without having to first engage in costly discovery. Plaintiffs also try to claim falsity by pointing to studies that allegedly contradict advertising claims, as in a recent case against i-Health Inc., where the plaintiff was allowed to proceed because she alleged that three studies contradicted the representation that BrainStrong dietary supplements “support[] brain health and function in children and adults." [Jovel v. i-Health Inc., No. 12-cv-5614, 2013 WL 5437065 (E.D.N.Y Sept. 27, 2013)]. Arguments for dismissal can be made, however, based on what the contradictory studies actually show. If they are not studies of the challenged product, or the formulation of the challenged product, or use a different dosage, for example, the studies have nothing to say about the truthfulness of claims about the challenged product.

The plaintiffs’ bar closely watches government regulatory activity, and companies should take heed to anticipate and defend against copycat claims. Manufacturers and retailers can confront bare lack of substantiation claims by arguing plaintiffs have failed to allege falsity, but as plaintiffs continue to become savvy to recent court decisions, companies can expect plaintiffs increasingly to proffer studies purporting to contradict manufacturers’ advertising claims. Manufacturers and retailers also need to evaluate the types of representations made in their advertisements to assess the type of substantiation, if any, needed to support their claims and the defenses available when a consumer class action arrives unwelcome on the doorstep.

Products Liability Litigation

Energy and caffeine supplements have long been targets of plaintiffs’ counsel and regulators, and that activity may again be on the rise. Much of the attention started when two soldiers died after using the workout booster Jack3d (pronounced Jacked). Federal health regulators issued a warning that the stimulant in Jack3d and other fat-burning products, called dimethylamylamine, or DMAA, frequently raises blood pressure and heart rate, and could cause heart attacks. Following the warning, a lawsuit was then filed against USPlabs, the developer and marketer of Jack3d, and against GNC, the store where he bought the product.

Similarly, a wrongful death lawsuit was recently filed by the estate of a young man who died after taking “pure caffeine powder" manufactured by Hard Rhino and sold on Amazon.com. The plaintiffs alleged the product labeling should have warned that the Hard Rhino pure caffeine presented “a substantive danger" when misused, and that the defendants intentionally withheld, suppressed and concealed information relating to the risks of adverse health effects upon consumption or ingestion of the product. These latest lawsuits come on the heels of several product liability claims against the makers of popular energy drinks including Monster Energy Drinks, 5-Hour Energy Shots and Rockstar Energy Drinks, which were all linked to FDA adverse event reports and lawsuits in recent years concerning the alleged health risks associated with the products.

As consumer advocacy groups and class action attorneys continue to warn about allegedly hazardous ingredients and health risks associated with dietary supplements, manufacturers and retailers should conduct assessments of their dietary supplement products in order to determine potential areas of concern or to provide support for the safety of the ingredients found in their products. Being proactive in substantiating marketing and labeling claims with competent and reliable scientific evidence is also a key defense to regulatory or class action threats.     

Manufacturing/Packaging Litigation

Another recent trend is litigation about nonfunctional “slack fill." Slack fill is the difference between the actual container capacity and the product volume contained within. Manufacturers of supplements (and other consumer products) have been targeted for marketing products that give an impression that the packaging might contain more product than it actually does. Certain jurisdictions have rules that allow functional, but not non-functional, slack fill. Problems arise because what is “functional" may be subject to debate. Companies should assess any products that are not filled to capacity and be prepared to defend why they are not. There may be plenty of reasons supporting companies’ decisions, including the requirements of the machines used to manufacture the products, unavoidable product settling, protecting contents, extra space for mandatory labeling, necessary space for mixing or scooping product, requirements of the delivery device and avoidance of theft. Having an understanding of the reason for the existence of any slack fill will be critical to shaping any defense strategy.

In recent months the supplement industry has come under fire from regulators and the plaintiffs’ class action bar. Supplement manufacturers should review their legal justifications for product identification, advertising claims, and packaging to ensure they are prepared to defend against litigation that may be just around the corner.

The views expressed in this article are exclusively those of the authors and do not necessarily reflect those of Sidley Austin LLP and its partners.

Richard Raskin is co-leader of Sidley Austin LLP’s global health care practice team and head of the Chicago health care group. His practice focuses on complex litigation including antitrust, class actions, and false claims act cases.

Elizabeth M. Chiarello is a partner in Sidley Austin LLP’s products liability practice in Chicago, focusing on the defense of companies in class action, products liability, and other complex litigation matters. Most recently, her practice has focused on the defense of food, nutritional supplement, and cosmetic companies in class action litigation arising out of alleged mislabeling or other deceptive trade practices.

Leslie Kuhn-Thayer is an associate in Sidley Austin LLP’s products liability practice in Chicago. Her practice focuses on complex litigation matters, including defending companies in products liability cases, mass tort litigation and consumer class actions.