Hunton Retail Law Resource

This past week, the following regulatory and consumer actions made headlines:

U.S. Supreme Court Rejects Procter & Gamble’s Challenge on “Snake Oil” Claim

Procter & Gamble’s (“P&G’s”) efforts to get the U.S. Supreme Court to review an Ohio federal judge’s class certification finding ended when the high court denied certiorari in The Procter & Gamble Co. v. Dino Rikos, thereby upholding the Sixth Circuit’s 2-1 decision.

In a lawsuit alleging P&G’s Align probiotic supplements are ineffective “snake oil,” the issue was whether or not the Sixth Circuit improperly permitted the district court to postpone proof of class-wide harm until after class certification.

P&G argued that the consumers had not shown they suffered a common injury, and had only presented “anecdotal” claims that they didn't find the product effective. The Sixth Circuit disagreed and found that at the class certification stage, plaintiffs only have to show that a common injury can be proved.

5-Hour Energy Wins Counterfeit Suit

Innovation Ventures, the makers of 5-Hour Energy Drink, won a $20 million judgment in a New York federal court against a number of companies that allegedly engaged in a scheme to manufacture and sell more than 4 million counterfeit bottles of the energy drink.

In the case, Innovation Ventures, LLC v. Ultimate One Distributing Corp., the court granted Innovation Ventures’ summary judgment motion on claims that a number of distributors and manufacturers worked together in a counterfeit scam and violated U.S. copyright law. The court awarded plaintiffs $20 million in damages, plus attorneys’ fees and costs.

A number of the senior executives for the defendants were also indicted last June over the manufacturing and production of these counterfeit bottles.

FTC and Pure Green Coffee Settle False Advertising Claim

A federal court in Florida approved a settlement between the FTC and NPB Advertising over the marketers’ claims that their Pure Green Coffee helped consumers lose weight.

In Federal Trade Commission v. NPB Advertising Inc., the government alleged that NPB created nearly a dozen websites to promote and sell Pure Green Coffee at $48 per bottle plus shipping, with total sales of more than 500,000 bottles since May 2012.

According to the FTC’s suit, NPB and associated companies paid individuals $200 and offered a free supply of Pure Green Coffee pills in exchange for video testimonials about the product without disclosing their compensation. NPB also allegedly made false and unsubstantiated claims about the product’s ability to help consumers lose weight through deceptive websites promoting Pure Green Coffee for fake news organizations such as “Women’s Health Journal,” “Healthy Living Reviewed,” and “Consumer Lifestyles,” and even included the logos of actual news organizations such as CNN and MSNBC. The FTC also alleged NPB represented that a 2012 study proved the efficacy of Pure Green Coffee for weight loss, but the study in question was unreliable and did not support the company’s claims.

As part of the settlement, NPB agreed not to make representations that a website or a publication is an objective news report or that objective news reporters have independently tested any product. NPB also agreed to a $30 million judgment, though all but $160,800 is suspended.

FTC Opposes POM’s Bid for the Supreme Court to Review Ad Dispute

The FTC filed a brief in POM Wonderful v. Federal Trade Commission, urging the Supreme Court to deny POM’s request for certiorari in a dispute where the FTC found over three dozen advertisements misleading.

Central to POM’s request for Supreme Court review is a dispute over whether or not the D.C. Circuit was required to review all 36 alleged misleading ads de novo, or if only reviewing a majority of the ads de novo was sufficient.

POM argues that because the ads are protected by the First Amendment, de novo review is required for all 36 ads, as any ad that references a valid scientific study should not be part of the FTC ban. The FTC countered, arguing that even if the D.C. Circuit had reviewed all the ads de novo and found some were not misleading, the ultimate outcome of the case would be the same, and thus the Circuit Court’s approach met constitutional requirements.