Supplement lawsuits piling up in wake of NY AG investigation

From Arkansas to California and Florida, an escalating number of proposed class-action lawsuits have been filed against marketers of botanical supplements following an investigation by New York Attorney General Eric Schneiderman.

Four national retailers—GNC, Target, Walgreens and Walmart—face accusations that the products failed to contain the labeled botanicals such as echinacea, ginseng and St. John’s wort. The complaints cite Schneiderman’s investigation, which divulged on Feb. 3, that the majority of supplements tested didn’t contain the labeled herbs or were contaminated.

According to court information provided by Law360, at least three lawsuits are pending in Arkansas. Another three complaints have been filed in the Northern District of California—otherwise known as the “Food Court" because it is a haven for food-labeling litigation. Cases also are pending in Ohio and Florida.

A 17-page lawsuit filed on Feb. 9 against GNC is typical of the allegations in the various lawsuits. Kelly Reyes, the named plaintiff, alleged the sports nutrition retailer sold products that failed to contain the active ingredients that are represented on the labels.

“When products are not what they purport to be, the producer and seller deserve to be held accountable," said John Quaranta, a lawyer in Miami whose firm Weil Quaranta, P.A. filed the complaint in the Southern District of Florida.

“The New York report," Quaranta added in a statement accompanying a Feb. 10 press release, “suggests a possible spreading infection in the $6-billion herbal industry."

A separate lawsuit that names as defendants all four retailers and detailed the Attorney General’s findings alleged violations of laws in numerous states from Alaska to Arkansas where Walmart is based. In the 61-page complaint filed by Hagens Berman Sobol Shapiro LLP, a consumer-rights class-action law firm, the two named plaintiffs from Iowa seek to represent a class of consumers who purchased the retailers’ brand supplements since Feb. 2, 2009.

“Not only did the defendants’ herbal supplements fail to contain the ingredients they were represented to contain, they contained a variety of other materials that were not disclosed by the defendants, thus, putting the health of their customers at risk," according to the complaint, which asserted 32 separate counts or causes of action in the U.S. District Court for the Northern District of Illinois, Eastern Division.

The retailers’ exposure to the lawsuits remains to be seen, largely because much of the evidence—including their own testing records—hasn’t been disclosed.

“It’s going to depend on what the ultimate proof is, and obviously we don’t know that until the New York State Attorney General releases his test results and his methodology, and the retailers release their test results and their methodologies," said attorney Steven Shapiro of New York-based Ullman, Shapiro & Ullman LLP, which represents dietary supplement firms, but is not involved in the litigation. “If the cases proceed, it will be up to the juries to decide. Even if these cases are totally without merit, the legal fees involved in defending class-action lawsuits are onerous."

At least one of the four retailers has challenged Schneiderman’s findings. GNC insists its products were tested and manufactured in accordance with FDA regulations.

“All GNC products are submitted to rigorous and generally accepted testing and are pure, properly labeled and in full compliance with all regulatory requirements," a spokesperson for the company said in an emailed statement. “These lawsuits are without merit, and we will vigorously defend against them."

Randy Hargrove, a Walmart spokesman, said the company was aware of the complaints and “looking into the allegations." James Graham, a Walgreen spokesman, and Evan Lapiska, a Target spokesman, both declined to comment on the litigation.

The evidence

Supplement experts around the country including Mark Blumenthal of the American Botanical Council (ABC) have questioned the reliability of DNA testing in Schneiderman’s investigation because they assert the technology may fail to identify botanical extracts.

“The industry clearly believes the testing methods that were used by the Attorney General—DNA barcode testing—while possibly valid for testing raw materials and other things was not valid for testing extracts," added Shapiro, who has decades of experience in food and drug regulatory matters, in a phone interview. “And it seems all or most of the products in question were extracts."

Did the plaintiffs’ lawyers jump the gun?

“In my opinion, I would have to assume all of these complaints have been filed prematurely, if they should be filed at all, because all we have right now is a press release from the New York State Attorney General’s Office," Shapiro said. “We do not have any information on the actual testing and the industry trade associations have been demanding the New York Attorney General release the testing reports, which so far, they have refused to do."

Shapiro said it is doubtful plaintiffs’ lawyers have already conducted their own tests to corroborate the Attorney General’s findings, and two complaints he reviewed “simply regurgitate the New York Attorney General’s allegations."

Two plaintiffs’ law firms who filed putative class-action complaints—Weil Quaranta and Hagens Berman Sobol Shapiro—didn’t immediately respond Monday to requests for comment on the evidence they have gathered or challenges to the reliability of the Attorney General’s testing methodology.

Ted Craig, a GrayRobinson, P.A. lawyer in Miami who defends class-action lawsuits, noted attorneys who file a lawsuit are bound by ethical obligations.

“Those requirements demand the attorney have verifiable information supporting the claims," said Craig, chair of the firm’s Class Action Defense Team, in a phone interview. “To the extent the attorneys are relying on the New York Attorney General’s information, I would hope they have at least examined the findings and given them some scrutiny before filing the lawsuits."

A number of attorneys including Anthony Young with the Washington-based law firm Kleinfeld, Kaplan and Becker LLP weren’t surprised by the lawsuits. Young noted complaints are often filed after information is revealed by government agencies including the FTC and related entities such as the National Advertising Division (NAD) of the Better Business Bureau.

“I can’t imagine that lawyers who would file such a thing are relying on anything other than what they see in the New York AG press release," said Young, whose firm largely concentrates on advising clients in products subject to FDA regulation, in a phone interview.

Class certification

Even if the plaintiffs can show the botanical supplements were mislabeled, other issues remain that would affect the cases, such as whether consumers relied on the labeled representations and whether the fraudulent products had any worth, Craig said.

The retailers’ total exposure largely rests on whether the cases can be certified as class-action lawsuits. If a judge certified a class, it might bring within the scope of a lawsuit millions of consumers who purchased the products that were tested by the Attorney General’s office.

On the other hand, denial of class certification could render a case essentially worthless because the damages are largely tied to what the few named plaintiffs paid for the products. While certain federal jurisdictions including the Northern District of California have a reputation for being friendly to class-action litigation, others have issued rulings that create hurdles to class certification.

Meantime, the retailers will be seeking to produce test results that contradict or refute Schneiderman’s findings.

“If there is evidence presented that conceivably the sampling done by the New York Attorney General is not representative of every product, class certification would look like it would be doomed," Craig said.