Consumer Fraud Case Moves Forward Against Non-Purchased Product
The federal district court of the Southern District of California recently added to the growing body of case law on class action claims based on false advertising, breach of warranty and consumer protection statutes. In Dorfman v. Nutramax, the plaintiff sought to be the putative class member and alleged that Nutramax’s statement that its’ Cosamin DS and Cosamin ASU (glucosamine hydrochloride with chondroitin sulfate) was: “the ONLY brand proven effective in controlled, published U.S. clinical studies to reduce joint pain,” was false and misleading. Plaintiff also challenged several other statements on the packaging and alleged that the statements were not supported by competent scientific evidence.
Plaintiff sought to bring the action based on both the DS and ASU products, but had only personally purchased the DS product. Defendants moved to dismiss the claims based on ASU for lack of standing because plaintiff did not purchase it. Defendants also moved to dismiss the claims against the retailers of the products as well as all claims for failure to state a claim upon which relief can be granted.
The court cited several non-binding opinions of district courts in other districts in reaching its conclusion that plaintiff had standing to bring its claims on behalf of others for the similar product, ASU, because the products and alleged misrepresentations were substantially similar. The court found that it was better to analyze the claims based on typicality and adequacy of representation rather than strict standing. The court punted a final determination of plaintiff’s ability to bring claims on a similar product that he did not purchase because the court felt that that issue was best reserved for the class certification stage.
The court denied the motion to dismiss for failure to state a claim based on the numerous scientific studies plaintiff referenced in his complaint that purportedly found that the Cosamin products have no efficacy. The court also denied the retailer’s motion to dismiss because it found that plaintiff had sufficiently pled that the retailers entered into sales agreements to promote the false and deceptive statements and frequently repeated those statements in online and in-store advertising.
This case presents two areas of serious concern for manufacturers and retailers. First, this court required a manufacturer to defend claims, at least until the class certification or summary judgment stage, for products that the plaintiff did not actually purchase and/or use. This significantly increases the potential exposure to a defendant manufacturer/retailer while reducing plaintiff’s burden to meet the bare minimum pre-requisites for the consumer protection class actions. Second, this case expands retailers’ potential liability for the statements and advertisements of the companies whose products they are selling. While the retailer has no control over or knowledge of the veracity of the packaging and statements on a product, this court found that at least at the pleadings stage, a retailer may be held liable for those statements if it puts the product on its shelves. This only serves to deepen the pockets for plaintiffs to pursue. Manufacturers and retailers alike should continue to monitor developments in cases such as this one so that they can proactively take measures to be better protect against more liberal construction of consumer protection allegations.