- From LexisNexis® Mealey’s™ Daily Legal News.
A Sixth Circuit U.S. Court of Appeals panel on Feb. 22 reversed dismissal of a New Jersey consumer law action against Procter & Gamble Co. (P&G) for falsely advertising that vitamin C in two nonprescription cold remedies will “blunt” the effects of a cold (Richard Loreto, et al. v. The Procter & Gamble Company, No. 10-4274, 6th Cir.; 2013 U.S. App. LEXIS 3813).
In 2009, Richard Loreto and Larry Buffa sued P&G in the U.S. District Court for the Southern District of Ohio, alleging that the company violated the consumer protection laws of all 50 states and became unjustly enriched when it sold two new products in 2009: DayQuil Plus Vitamin C and NyQuil Plus Vitamin C. They allege that there is no scientific evidence that supports the defendant’s claim that vitamin C can alleviate cold symptoms and that but for the defendant’s misleading statements, they would have purchased a lower-priced competing product.
Loreto and Buffa sought certification of a nationwide class action of all purchasers of the two products and a refund of their purchase price. Exercising its jurisdiction under the federal Class Action Fairness Act, the District Court dismissed all of the plaintiffs’ claims.
Loreto and Buffa appealed.
New Jersey Law, Not Ohio’s, Applies
The Sixth Circuit panel agreed with the District Court that under Ohio’s choice-of-law rules, New Jersey’s law applies, not Ohio’s. The panel said the plaintiffs live in New Jersey, so that is where the alleged injury occurred.
The panel rejected the plaintiffs’ argument that Ohio law applies because the vitamin C advertising campaign emanated from P&G’s Ohio headquarters.
Applying New Jersey’s Consumer Fraud Act, the District Court dismissed the plaintiffs’ claims under Federal Rule of Civil Procedure 12(b)(6). It found that the claims were preempted under the Food, Drug and Cosmetic Act (FDCA) and that the claims were not cognizable under New Jersey law.
P&G argued that under the theory of implied preemption, the plaintiffs’ claims are barred by the U.S. Supreme Court’s ruling in Buckman Co. v. Plaintiffs’ Legal Committee (531 U.S. 341, 349 n.4). The high court held that private litigants could not bring state law claims against a defendant for violations of the FDCA because only the Food and Drug Administration can enforce such violations.
The appellate panel said the plaintiffs also claim that P&G omitted telling consumers that its two vitamin C-containing cold remedies were “illegal” because they did not comply with FDCA requirements. “This theory of liability depends entirely upon an FDCA violation – i.e., the only reason Procter & Gamble’s products were allegedly ‘illegal’ was because they failed to comply with FDCA labeling requirements,” the panel wrote.
“The theory is impliedly preempted by federal law,” it added.
Vitamin Effectiveness Claims
However, the plaintiffs also allege that P&G violated state laws when it represented that taking vitamin C can blunt the effects of a cold, a statement they claim is false or misleading.
“These statements allegedly induced plaintiffs to purchase the advertised products instead of a lower-priced competitor’s product not containing Vitamin C,” the panel wrote. “This theory relies solely on traditional state tort law predating the FDCA, and would exist in the absence of the Act. . . . This claim is not preempted.”
The panel noted that the complaint includes extensive reference to an FDA warning letter to P&G about its products “which might suggest plaintiffs’ second theory also depends upon the FDCA.” The letter states that FDA regulations don’t permit combining vitamin C with DayQuil and NyQuil because there is insufficient evidence to classify vitamin C as safe and effective for over-the-counter use.
“Even though the FDA has apparently concluded that Vitamin C has not been proven effective in cold treatment, plaintiffs’ claim does not depend upon this determination and would logically exist even in its absence,” the panel wrote.
The District Court also found that the plaintiffs failed to state a claim under the New Jersey Consumer Fraud Act because they did not plausibly allege an “ascertainable loss.” It found that the claim of an out-of-pocket loss from buying DayQuil or NyQuil as opposed to a cheaper cold remedy was insufficient as a matter of law.
The lower court found that the plaintiffs didn’t argue that DayQuil and NyQuil didn’t treat their colds and that they got precisely what they paid for, an effective cold remedy.
The appellate panel said the District Court “erred by ignoring the allegation that plaintiffs would have purchased a lower-priced cold remedy (thus saving money) were it not for Procter & Gamble’s alleged misrepresentations. The ‘quantifiable or measurable’ loss in this case is the difference in price between Procter & Gamble’s product and a lower-priced competing product.”
“The product’s overall effectiveness in treating plaintiffs’ cold symptoms does not undercut a showing of ascertainable loss,” the panel said.
Purchase Price Refund In Doubt
In a footnote, the panel said, “Although plaintiffs seek a refund of the full purchase price, even if they prevail, they are not entitled to one. Their claim is that they would have purchased a lower-priced product not containing Vitamin C but for the misrepresentation, not that they would have foregone purchasing any product.”
The panel rejected P&G’s argument that the plaintiffs lack standing under Article III of the U.S. Constitution because they demonstrate no “injury in fact.” The panel said that is a “repackaging” of the defendant’s ascertainable loss argument.
“Plaintiffs’ allegation that they suffered a monetary loss by paying more for a cold remedy because of the company’s misrepresentation establishes a cognizable injury,” the panel continued.
1 Of 4 Statements Actionable
P&G also argued that the four statements on which the plaintiffs’ complaint is based are neither false nor plausibly misleading. The panel agreed with one exception – the claim “Vitamin C: It won’t cure a cold, but vitamin C can help blunt its effects.”
“It is plausible that plaintiffs could prove that Vitamin C either has no effect on cold symptoms or has such a marginal effect that advertising its ability to blunt cold symptoms creates a ‘capacity to mislead’ the average consumer,” the panel said.
P&G argued that the entire statement disclaims the usefulness of vitamin C as a cure for colds. “True enough,” the panel wrote, “but the statement goes beyond disclaiming the vitamin’s ability to cure a cold; it claims that vitamin C can blunt the effects of a cold, a claim plaintiffs have plausibly alleged is false and misleading.”
No Nationwide Class Possible
Finally, citing its own recent decision regarding a nationwide consumer protection class, the panel said that a court applying Ohio law could not certify such a class and affirmed dismissal of Loreto and Buffa’s class claims.
The opinion was written by Circuit Judge Richard Allen Griffin. The other panel members were Circuit Judge Raymond M. Kethledge and U.S. Judge Amul R. Thapar of the Eastern District of Kentucky, sitting by designation.
Loreto and Buffa are represented by Scott A. Bursor of the Law Offices of Scott A. Bursor and Jamie R. Mogil of Faruqi & Faruqi, both in New York. P&G is represented by Mark A. Vander Laan of Dinsmore & Shohl in Cincinnati.