Korolshteyn v. Costco Wholesale Corporation

Filing 247

ORDER (1) Granting Motion for Summary Judgment; (2) Denying Motion to Decertify the Class and Daubert Motions as Moot [Doc. Nos. 237 , 238 , 241 , 242 , 243 ]. Signed by Judge Cathy Ann Bencivengo on 6/25/2019. (anh)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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TATIANA KOROLSHTEYN, on behalf
of herself and all others similarly situated,

ORDER

Plaintiff,

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Case No.: 3:15-cv-709-CAB-RBB

v.

(1) GRANTING MOTION FOR
SUMMARY JUDGMENT

COSTCO WHOLESALE
CORPORATION and NBTY, INC.,

(2) DENYING MOTION TO
DECERTIFY THE CLASS AND
DAUBERT MOTIONS AS MOOT

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Defendants.

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[Doc. Nos. 237, 238, 241, 242, 243]

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This matter comes before the Court on Defendants’ motion to decertify the class and

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motion for summary judgment. [Doc. No. 238.] The Court finds them suitable for

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determination on the papers submitted and without oral argument. See S.D. Cal. CivLR

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7.1(d)(1). For the reasons set forth below, Defendants’ motion for summary judgment

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[Doc. No. 238] is granted. Defendants’ motion to decertify the class and both parties’

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Daubert motions are denied as moot.

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I.

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This case arises out of alleged false statements on the labels of TruNature Gingko

BACKGROUND

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Biloba with Vinpocetine (“TruNature Gingko”), which is manufactured by Defendant

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NBTY, Inc. (“NBTY”) and sold at the stores of Defendant Costco Wholesale Corporation

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(“Costco”). The labels of TruNature Gingko represent that the product “supports alertness

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& memory,” that “Gingko biloba can help with mental clarity and memory,” and that “[i]t

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also helps maintain healthy blood flow to the brain to assist mental clarity and memory,

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especially occasional mild memory problems associated with aging” (collectively, the

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“Label Claims”). [Doc. No. 100 at ¶ 1.1] According to the third amended complaint (the

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“TAC”), these representations are false because studies show that Gingko biloba and

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vinpocetine do not provide any mental clarity, memory or mental alertness benefits. [Id.

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at ¶ 2.]

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Lead Plaintiff Tatiana Korolshteyn alleges she bought a bottle of TruNature Gingko

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based on the allegedly false representations on the product label and filed this lawsuit on

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behalf of herself and a class of consumers who purchased TruNature Gingko in California.

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The TAC asserts two claims: (1) violation of California’s unfair competition law (the

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“UCL”), California Business & Professions Code § 17200 et seq.; and (2) violation of

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California’s Consumer Legal Remedies Act (“CLRA”), California Civil Code § 1750 et

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seq. The prayer for relief asks for restitution and disgorgement of Defendants’ revenues,

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actual, statutory and punitive damages, and attorneys’ fees and costs. [Id. at 15.]

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On March 16, 2017, the Court granted Plaintiff’s motion to certify a class consisting

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of “all California consumers who, within the applicable statute of limitations, purchased

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TruNature Gingko Biloba with Vinpocetine until the date notice is disseminated.” [Doc.

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No. 158 at 14.] On August 23, 2017, the Court granted Defendants’ motion for summary

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judgment [Doc. No. 220], and Plaintiff timely appealed. On March 29, 2019, the Ninth

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Circuit remanded this case for further proceedings, reversing the grant of summary

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judgment and affirming the denial of the Daubert motions. [Doc. No. 235.] Defendants

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Document numbers and page references are to those assigned by CM/ECF for the docket entry.
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now move to decertify the class and renew their motion for summary judgment. [Doc. No.

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238.] Also pending before the Court are renewed motions by both parties to exclude

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evidence and testimony from their respective experts. Among other arguments, Defendants

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contend in their renewed motion for summary judgment that Plaintiff’s state false

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advertising claims are preempted under the Federal Food, Drug, and Cosmetic Act

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(“FDCA”), 21 U.S.C. § 301 et seq., as amended by the Nutrition Labeling and Education

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Act (“NLEA”), 21 U.S.C. § 343 et seq. [Doc. No. 238-1 at 25–27.] The Court is persuaded

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and grants Defendants’ motion for summary judgment on preemption grounds. The motion

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to decertify the class and Daubert motions are therefore moot.

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II.

LEGAL STANDARD
A. Summary Judgment

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A party is entitled to summary judgment “if the pleadings, depositions, answers to

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interrogatories, and admissions on file, together with the affidavits, if any, show that there

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is no genuine issue as to any material fact and that the moving party is entitled to a judgment

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as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To avoid summary

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judgment, disputes must be both 1) material, meaning concerning facts that are relevant

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and necessary and that might affect the outcome of the action under governing law, and 2)

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genuine, meaning the evidence must be such that a reasonable jury could return a verdict

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for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Cline

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v. Indus. Maint. Eng’g & Contracting Co., 200 F.3d 1223, 1229 (9th Cir. 2000).

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The initial burden of establishing the absence of a genuine issue of material fact falls

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on the moving party. See Celotex Corp., 477 U.S. at 323. If the moving party can

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demonstrate that its opponent has not made a sufficient showing on an essential element of

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his case, the burden shifts to the opposing party to set forth facts showing that a genuine

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issue of disputed fact remains. Id. at 324. When ruling on a summary judgment motion,

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the court must view all inferences drawn from the underlying facts in the light most

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favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

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U.S. 574, 587 (1986). However, “[t]he district court need not examine the entire file for
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evidence establishing a genuine issue of fact, where the evidence is not set forth in the

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opposing papers with adequate references so that it could conveniently be found.” Carmen

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v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001).

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B. Express Preemption under the NLEA

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Federal preemption can be either express or implied. See Fid. Fed. Sav. & Loan

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Ass’n v. de la Cuesta, 458 U.S. 141, 152–53 (1982). Express preemption exists when a

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statute explicitly addresses preemption. See Chicanos Por La Causa, Inc. v. Napolitano,

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558 F.3d 856, 863 (9th Cir. 2009). The NLEA expressly preempts any state law that

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establishes “any requirement respecting any claim of the type described in section 343(r)(1)

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of this title made in the label or labeling of food that is not identical to the requirement of

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section 343(r) of this title.” 21 U.S.C. § 343-1(a)(5). The NLEA classifies dietary

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supplements as food; indeed, § 343-1 (“National uniform nutrition labeling”) and § 343

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(“Misbranded food”) fall under the NLEA’s “Food” subchapter.

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structure/function claim also constitutes a claim ‘made in the label or labeling of food.’”

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Dachauer v. NBTY, Inc., 913 F.3d. 844, 847 (9th Cir. 2019) (citing § 343-1(a)(5)). The

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NLEA provides that no state may “directly or indirectly establish . . . any requirement for

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the labeling of food that is not identical” to the federal requirements. 21 U.S.C. § 343-

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1(a)(5). The phrase “not identical to” means “that the State requirement directly or

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indirectly imposes obligations or contains provisions concerning the composition or

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labeling of food [that] . . . [a]re not imposed by or contained in the applicable [federal

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regulation] . . . or [d]iffer from those specifically imposed by or contained in the applicable

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[federal regulation].” 21 C.F.R. § 100.1(c)(4).

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“Thus, a

C. Structure/Function Claims under the NLEA

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The NLEA distinguishes between “structure/function claims” and “disease claims”

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that manufacturers make about their products. A structure/function claim “describes the

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role of a nutrient or dietary ingredient intended to affect the structure or function in

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humans” or “characterizes the documented mechanism by which a nutrient or dietary

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ingredient acts to maintain such structure or function,” but “may not claim to diagnose,
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mitigate, treat, cure, or prevent a specific disease or class of diseases.” 21 U.S.C. §

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343(r)(6). A disease claim, conversely, “claims to diagnose, mitigate, treat, cure, or

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prevent disease,” either explicitly or implicitly (such as by claiming that a product treats a

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disease’s “characteristic signs or symptoms”). 21 C.F.R. §

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Structure/function claims must meet three requirements: (1) the manufacturer has

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substantiation that the statement is truthful and not misleading; (2) the statement contains

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a prominent disclaimer that the Food and Drug Administration (“FDA”) has not evaluated

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the statement and that the product “is not intended to diagnose, treat, cure, or prevent any

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disease”; and (3) the statement itself does not “claim to diagnose, mitigate, treat, cure, or

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101.93(g)(2)(ii).

prevent” disease. 21 U.S.C. § 343(r)(6).

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Although the FDCA requires manufacturers to have substantiation for their

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structure/function claims, California law does not allow private plaintiffs to demand

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substantiation for advertising claims. Dachauer, 913 F.3d. at 847 (9th Cir. 2019) (citing

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Nat’l Council Against Health Fraud, Inc. v. King Bio Pharm., Inc., 107 Cal.App.4th 1336,

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1344 (2003)). The FDCA does not define the term “substantiation,” but FDA guidance

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advances a common sense interpretation of “substantiation,” as meaning “competent and

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reliable scientific evidence.” See Kaufman v. CVS Caremark Corp., 836 F.3d 88, 93 (1st

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Cir. 2016). The FDA has published guidance in the Federal Register discussing, among

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other things, acceptable structure/function claims. Regulations on Statements Made for

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Dietary Supplements Concerning the Effect of the Product on the Structure or Function of

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the Body, 65 Fed. Reg. 1000–01 (Jan. 6, 2000).

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structure/function claims may use general terms such as ‘strengthen,’ ‘improve,’ and

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‘protect,’ as long as the claims ‘do not suggest disease prevention or treatment.’”

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Dachauer, 913 F.3d. at 847 (citing 65 Fed. Reg. at 1028.)

“The guidance recognizes that

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III.

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Here, the NLEA preempts Plaintiff’s state false advertising claims. Defendants’

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Label Claims are permissible structure/function claims pursuant to the FDA’s guidance

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and meet all the federal labeling requirements. Defendants’ Label Claims do not suggest

ANALYSIS

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disease prevention or treatment and use acceptable general terms to represent that the

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product “supports alertness & memory,” that “Gingko biloba can help with mental clarity

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and memory,” and that “[i]t also helps maintain healthy blood flow to the brain to assist

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mental clarity and memory, especially occasional mild memory problems associated with

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aging.” [Doc. No. 100 at ¶ 1.]

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Plaintiff’s opposition to Defendants’ preemption argument is sparse. Plaintiff

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contends that her claims are not preempted because although she agrees that such

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statements are permissible structure/function claims, it is still incumbent upon the

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manufacturer to ensure that such statements are not false and misleading. Plaintiff states

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that under Defendants’ logic, they could sell anything, falsely claim that it helps memory

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function, and any falsity claim would be preempted. The Court is not persuaded by

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Plaintiff’s mischaracterization of the federal requirements. As stated above, the first

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requirement for structure/function claims under the NLEA is that the manufacturer has

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substantiation that the statement is truthful and not misleading. While not defined, a

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common-sense interpretation of substantiation involves competent and reliable scientific

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evidence. The federal labeling requirements prevent a manufacturer from circumventing

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the substantiation requirements and making improbable representations where no

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competent and reliable scientific evidence would exist. As was discussed in this Court’s

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previous order on summary judgment both parties offered scientific evidence supporting

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and contradicting Defendants’ Label Claims. [Doc. No. 220.] Although the Ninth Circuit

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reversed this Court’s finding of summary judgment, it affirmed the denial of motions to

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exclude expert reliance on such evidence.

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The Ninth Circuit has also held that an existence of conflicting scientific evidence

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creates a genuine dispute of material fact for the fact-finder. See Sonner v. Schwabe N.

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Am., Inc., 911 F.3d 989, 992 (9th Cir. 2018). However, this does not foreclose a finding

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that Plaintiff’s claims are preempted under the NLEA and the Court must first address the

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issue of preemption. In Dachauer, the Ninth Circuit held that the NLEA preempted

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plaintiff’s state law claims that structure/function claims for vitamin E supplements are
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false and misleading because the supplements do not prevent cardiovascular disease or

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reduce all-cause mortality. Dachauer, 913 F.3d. at 844. The only claim that was not

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preempted was that the statements were false and misleading because the supplements

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increased the risk of all-cause mortality. Id. at 849. This is because the federal regulations

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state that a food label “shall be deemed to be misleading if it fails to reveal facts” that are

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“[m]aterial with respect to consequences which may result from use of the article” under

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normal conditions of use or the conditions of use that the label prescribes. 21 C.F.R. §

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1.21(a)(2). In other words, if a supplement’s label recommends taking one capsule per

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day, and that dose actually causes an increased risk of death—a material fact “with respect

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to consequences which may result from use of the article”—the FDCA would deem it

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misleading not to reveal that fact on the label. Id. Here, Plaintiff makes no such claim that

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Defendants failed to reveal material facts with respect to consequences which may result

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from the use of Defendants’ products. If so, such a claim would not be preempted because

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any requirement to reveal such material facts would be identical to the federal labeling

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requirements. Plaintiff does not claim that Defendants’ products are harmful as opposed

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to useless, which would have survived preemption.

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The federal regulatory framework in place distinguishes structure/function claims

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from disease claims that claim to diagnose, mitigate, treat, cure, or prevent disease. The

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latter of which would fall under the classification of a drug that rightfully necessitates more

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rigorous federal requirements for approval. “[S]ection 403(r)(6)(B) of the act already

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requires dietary supplement manufacturers to have substantiation that their statements are

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truthful and non-misleading. [A] ‘truthful and non-misleading’ standard, unlike the final

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rule, would not provide any criteria for differentiating between structure/function claims

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and disease claims.” 65 Fed. Reg. at 1003.

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Plaintiff’s claims would seek to impose requirements under California law that either

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alters or adds to the requirement that the manufacturer has substantiation that the

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structure/function claims are truthful and not misleading. Such requirements would

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directly or indirectly impose obligations or contain provisions not identical to the federal
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requirements and mimic a lack of substantiation claim. Here, Defendants’ products meet

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all the requirements for permissible structure/function claims under the NLEA. Plaintiff

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appears to disagree with the federal statutory scheme for dietary supplements, but the Court

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cannot accept her invitation to upend it. Dachauer, 913 F.3d. at 848. Accordingly,

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Plaintiff’s state false advertising claims are preempted.

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IV.

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For the reasons set forth above, Defendants’ motion for summary judgment is

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GRANTED. Defendants’ motion to decertify the class and both parties’ Daubert motions

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are DENIED as moot.

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CONCLUSION

It is SO ORDERED.
Dated: June 25, 2019

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