Dueling surveys don't defeat class certification in supplement suit

Corbett v.PharmaCare U.S., Inc., 2024 WL 1356220, No. 21cv137-JES (AHG) (S.D. Cal. Mar.29, 2024)

The court partiallygrants class certification and rejects motions to exclude experts. Plaintiffsallege consumer protection and breach of warranty claims based on PharmaCare’sSambucol product, a dietary supplement that is advertised to “support immunity”and contain a proprietary extract of black elderberry. Sambucol comes invarious forms, including syrup, tablets, capsules, and gummies. The challengedlabels include some combination of the following statements: “SupportsImmunity”; “Scientifically Tested” (xkcd is,as always, excellent on this); “Supports the immunesystem”; “Virologist Developed”; “provides strong immune system support to helpyou and your family stay healthy throughout the year. … conveniently arms youwith some of the best protection nature has to offer”; “only Sambucol® canguarantee consistent, immune supporting properties in every serving”; “Developedby a world renowned virologist, Sambucol®’s unique manufacturing processpreserves and maximizes the naturally occurring health benefits of the BlackElderberry”; “used in published scientific studies. No other elderberry brandcan make the same claim”; “Developed by a world renowned virologist, Sambucol®has been trusted by millions worldwide. Sambucol can be taken every day forcontinuous immune support.”

Plaintiffs had twotheories: first, the products contain a new unreported dietary ingredient andtherefore, were illegal to sell as dietary supplements. Second, the productswere labeled and marketed in a way that claims that they mitigate or preventdisease.

The court allowedthe parties’ experts and their dueling consumer perception surveys, plaintiffs’materiality survey, and dueling conjoint analysis/damages opinions.

One of theplaintiffs was a fine representative; he testified that he wouldn’t have boughtthe products if he’d known of the illegality, which didn’t make him atypical.The other testified that he only bought products that didn’t make the allegedmisrepresentations at the core of the disease claim, so wasn’t a typicalrepresentative for the disease claims. On the other hand, it didn’t matter thathe didn’t recall seeing the “dietary supplement” label because the crux of theargument was that plaintiffs wouldn’t have bought the products if they’d knownthey were illegal, which didn’t depend on reading the phrase “dietarysupplement.”

Because of state-lawdifferences, a nationwide class couldn’t be certified, but a California onecould be. The court declined to find the drug theory preempted at this time,noting that California’s Sherman Law adopts the FDCA’s provisions; this isn’tobviously an attempt to directly enforce the FDCA.

Predominance for thedrug claims was satisfied based on the theory that an illegal unapprovedingredient would render the products illegal for sale, and that a jury couldfind that illegality would be material to a reasonable consumer. “Plaintiffs’unfair or deceptive business practice NDI claim may rest upon a theory thateven putting the products for sale on the marketplace is an implicitrepresentation that they are being legally sold and comply with the FDA.”Further, this finding could be supported at the certification stage “based onevidence such as the perception of the named representatives and does notrequire survey evidence.”

Predominance for thedisease claims: PharmaCare argued that the labels varied between products, andwhile the majority of packaging contains the statements “support immunity” and“scientifically tested” on the front of the package, the statement “virologistdeveloped” varies in its location, including on other sides of the package andin varying font sizes. Courts don’t require uniformity, only “sufficientlysimilar representations.” The question was whether differences were “materiallydifferent.”

There was no disputethat the phrases “scientifically tested” and “supports immunity” appeared onthe front of the packaging of all products and in largely the same format andprominence. As for “virologist developed,” it appeared variously on the back,side, and top panels, which the court didn’t find materially different from oneanother (as front placement might have been).  The text also differed, in that mostly“virologist developed” appeared as part of a bulleted list, but for several ofthe products, it appeared in a paragraph on the package. Still, the text wasn’t in a smaller orfiner print; “this difference in how this one phrase appears on packaging isnot ‘materially’ different to preclude class certification, particularly inlight of the other statements that do appear consistently amongst all thepackaging for the products.”

variants of "virologist developed"

PharmaCare arguedthat disclaimers on the packaging precluded a disease claim: “[t]his product isnot intended to diagnose, treat, cure or prevent any disease” on the back orthe side, but not on the front. Whether disclaimers avoid deception istypically a question of fact.

Plaintiffs’ consumerperception survey showed people products with and without the challengedrepresentations, modified to be “brand neutral”—that is, removing mentions ofPharmacare and Sambucol, botanical imagery, and modified the background colorso that participants could not use that to determine the brand.

The results showedthat test group respondents shown the challenged representations were 2.2 timesmore likely to perceive the surveyed health benefits (51.9% versus 24.2%, or 27.7%net deception).  Defendants’ expertcriticized the survey universe as overbroad—nearly half hadn’t purchased any ofthe products at issue in the past. He also argued that the survey didn’t testthe theory of liability, and that the survey should have tested individualrepresentations individually; used open-ended rather than closed-endedquestions; and used actual packaging instead of modified packaging.

Defendants’ expert’ssurvey used respondents that shopped at supermarkets and drugstores who’d madea recent purchase in the product category of nutritional supplements/vitamins.

After being shown oneof defendants’ products, respondents were asked open-ended questions, including1) “please list all the reasons that you would or would not purchase thisproduct;” and 2) “if you were to purchase [the product], would you have anyexpectations about specific benefits it would provide” and if answered yes,asked to explain their beliefs. Respondents were also asked a close-endedquestion on how likely it was that the product would deliver these specificbenefits, being able to choose between “very likely,” “somewhat likely,”“neither likely nor unlikely,” “somewhat unlikely,” “very unlikely,” and “don’tknow/no opinion.”

Then respondentswere shown actual labels and asked to select any of 24 options of statements onthe packaging that appealed to them, which included the challenged representations.If they did, they got a follow-up: 

In this survey, only39.8% of respondents identified health-related reasons for why they would purchasethe product, and only 21.2% identified immunity support. Only 71.2% ofrespondents answered that they would expect the product to provide benefits; 49.2%reported some health-related benefit, with 33.9% identifying immunesupport/boost immune system. Id. Dr. Keegan’s survey further tested attributesthat consumers found appealing, including the following:

Further questions found that consumers varied in their certainty:

Defendants’ surveyorconcluded that consumers provide a wide range of reasons for purchasing theproducts, without a unified or predominant reason driving their decision, thatthey had wide expectations of the benefits the product would provide, thatthere was wide variation in what consumers found appealing based on thestatements on the packaging, and that consumers did not uniformly understandthe statements to mean what plaintiffs assert they mean.

Plaintiffs’ experthad his own criticisms, mostly about use of open-ended questions for most ofthe survey, and a close-ended question with a ton of options. He contended thatusing such questions in a self-administered online survey tends tounderestimate phenomena, and that survey experts believe that close-endedquestions are “more appropriate for scientifically rigorous, quantitativesurvey research.” In his view, the survey encouraged respondents to answer “Idon’t know” to his open ended questions, while providing 24 options for theclose-ended question encouraged “under selection” of options.

Moreover, to plaintiffs’expert, the responses actually supported the claim: “5 of the 7 most“appealing” claims were related to the Plaintiffs’ challenged claims: ‘Supportsyour immune system’ (62.7 % of respondents); ‘Supports immunity’ (59.0%);‘Strong immune system support to help you and your family stay healthythroughout the year’ (48.9%); ‘Immune supporting properties’ (48.9%); and‘Scientifically tested’ (41.0%).”

The dispute didn’tdefeat predominance, because it could be resolved classwide.

So too with thedispute over plaintiffs’ materiality survey (and defendants’ expert’s modifiedversion thereof). The materiality survey was a referendum: it tested consumers’preference for buying the products with or without the challenged representations.Consumers were 11 times more likely to choose the product with therepresentations (8.1% versus 91.9%).

Defendants’ expert argued that this wasdumb, because the format drew attention to the only difference between theproducts, and the product packaging in the control left open space that, in thereal world, would be filled with other product benefit claims. He conducted a surveyshowing only Sambucol with the claims to one group and Sambucol without to theother, and found “no statistically significant difference between respondents’likelihood of purchasing products with and without the ConsideredRepresentations.” 

Again, this “amounts to a disagreement on survey methodology,rather than suggestions that a survey could not be designed to test materialityin the first place.”

Damages: Plaintiffsfirst argued that a full refund model could be used to measure damages where aplaintiff’s theory of liability is that the product is valueless (which anillegal or useless product would be). The court disagreed on uselessness,because plaintiffs didn’t show that the products had no other benefits at all. Plaintiffsalso argued that a product might actually be worthless if it was illegal to besold as it was, but the cited cases involved a greater degree of illegality (illegalnicotine sales to youth, or poison sold as food, or a Schedule III controlledsubstance).

But a price premiummodel could work, and it was enough at this stage to propose, in detail, howthat would be done.