Monster Energy Loses Round One in San Francisco Lawsuit

SAN FRANCISCO—Monster Beverage Corp. has failed to persuade a state judge that a lawsuit attacking its energy drinks falls squarely within FDA's expertise and must be dismissed.

The March 5 ruling keeps alive a complaint that was filed by San Francisco City Attorney Dennis Herrera against the largest U.S. energy-drink maker, whose annual gross sales last year totaled $2.6 billion.  

"This is a big win that we're very pleased with," said Gabriel Zitrin, a spokesman for the office of the city attorney. "Monster is trying to run from their own marketing practices, but the ruling means the people will have our day in court. Eventually they will have to answer for their behavior and for the consequences to their customers, and they'll have to do it publicly."

Monster pointed out the ruling did not address any factual issues.

"Millions of Monster Energy Drinks are safely consumed every day and we remain confident in the safety of our products, which, ounce-per-ounce, contain less than half of the caffeine as a Starbucks coffee," the company said today in a statement. "Monster is confident that it will prevail on the merits."

Herrera has accused Monster of mislabeling its energy drinks as dietary supplements, selling unsafe beverages and engaging in misleading business practices by marketing to children and teens. The May 6, 2013 lawsuit also claimed Monster fails to warn consumers about the health consequences of drinking its beverages, promotes unsafe consumption, encourages individuals to take its products with alcohol and makes misleading claims about the benefits of its drinks.

Monster last year sought to preempt San Francisco from regulating its energy drinks, but a federal judge dismissed that case.

Caffeine Claims

The current suit, alleging violations of the California Sherman Food, Drug and Cosmetic Law and Unfair Competition Law, partly concerns whether Monster's energy drinks—and the caffeine in them—are safe for consumption. Monster argued four claims related to caffeine fall within FDA's "primary jurisdiction." Although FDA is investigating the safety of caffeine, "not all the issues in this case appear to be the subject of FDA interest," stated Kurtis E.A. Karnow, a Superior Court Judge in San Francisco County.

"My greater concern here is that awaiting a determination from the agency will result in an unreasonable delay," Karnow wrote in the 20-page order.

Last year, FDA announced plans to investigate the safety of energy drinks but it did not give a timeline for completing its investigation.

Failure to Warn

Monster argued the Nutritional Labeling and Education Act (NLEA) preempted Herrera's claim that the company fails to warn consumers about health risks of its energy drinks. In a separate lawsuit filed against the energy-drink maker, a California federal judge ruled federal law barred the imposition of an additional state requirement mandating the display of caffeine content on the label. 

But Karnow noted the NLEA doesn't affect a statement on a food label that provides for a warning relating to the food's safety.

"The NLEA does not preempt the People from establishing that a caffeine warning is required under state law," he ruled, adding federal law also does not preempt Herrera's allegation that Monster encourages overconsumption of its energy drinks.

Dietary Supplement Misbranding

The ruling was not a total loss for Monster. The judge struck Herrera's claim that Monster's beverages are misbranded as dietary supplements, finding the lawsuit failed to allege facts showing Monster had violated federal law. Herrera was granted permission to amend the complaint.

Karnow, however, rejected Monster's argument that FDA has primary jurisdiction over such a claim. FDA has issued non-binding guidance distinguishing conventional beverages from liquid dietary supplements. Monster previously sold its energy drinks as dietary supplements, which are subject to different regulations than conventional foods.

"The primary jurisdiction doctrine should not be invoked here, for it is improper to invoke the doctrine where further proceedings before the agency would be futile. That the FDA has chosen not to issue binding regulations only serves to suggest futility," Karnow wrote.