Ninth Circuit Affirms No Private Right of Action to Enforce Lack of Substantiation Claims in SeroVital False Advertising Class Action Case

The Ninth Circuit recently affirmed a district court’s dismissal of plaintiff’s unfair competition law and consumer legal remedies claims, finding that neither claim provided plaintiff with a private cause of action to enforce the substantiation provisions of California’s unfair competition and consumer protection law.  See Kwan v. SanMedica International, No. 15-15496.

Background of the Case.  Plaintiff alleged that SanMedica International LLC made false representations regarding its product, SeroVital, including stating that the product provided a 682% mean increase in human growth hormone levels and that it was clinically tested.  SanMedica moved to dismiss.  The district court granted the motion, finding that plaintiff failed to specifically allege facts to support a finding that defendant’s claims regarding its product were actually false.  Instead, plaintiff merely alleged lack of substantiation—that the health benefits were not clinically proven—a claim unavailable to private plaintiffs.

Private Right of Action for Substantiation Claims.  The Ninth Circuit confirmed that California law does not provide a cause of action for private citizens alleging that marketing claims lack proper scientific substantiation.  The Ninth Circuit cited National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc., (“King Bio”), where the California Court of Appeal for the Second District found that only prosecuting authorities, and not private plaintiffs, had the power to request that advertisers substantiate advertising claims.  The Ninth Circuit also noted that several federal and state courts have cited to King Bio as requiring that private citizens who bring suit under the UCL or CLRA properly allege proof that plaintiffs sustained injury from relying on marketing statements that were actually false.  Under these cases, a plaintiff bears the burden of proving that the marketing claims are false or misleading.  Accordingly, the district court rightfully concluded that neither the UCL nor CLRA provided plaintiff with a private cause of action to enforce the substantiation provisions of California’s unfair competition or consumer protection laws.

Failure to Allege Claims Were False.  The Ninth Circuit also confirmed that the district court properly concluded that the second amended complaint failed to allege facts that would support a finding that defendant’s marketing claims were actually false.  Plaintiff had argued that her second amended complaint sufficiently alleged false misrepresentations in at least two ways.  First, she claimed that she adequately pled falsity by alleging that the “clinically tested” representation falsely implied that the marketing claims of SeroVital’s health benefits were clinically proven by credible scientific proof.  Second, she argued that the claims that growth hormone levels are associated with health benefits falsely implied that defendant’s product claims were based on credible scientific proof.  The Ninth Circuit found that these allegations were conclusory and failed to support or prove the falsehood of the claims.  Thus, plaintiff failed to meet her burden of alleging specific facts pointing to actual falsehood.  This constituted a fatal flaw.

Takeaways

Kwan confirms that there is no private right of action for lack of substantiation claims.  Although it is unclear how far the ruling in Kwan will go when consumer deception claims are pled, it can be used to defend cases where a lack of substantiation claim is camouflaged as a false representation claim.  In these cases, Plaintiff bears the burden of alleging non-conclusory facts showing that the statements are false.