Federal Trade Commission et al v. Quincy Bioscience Holding Company, Inc. et al

Filing 481

ORDER RE: RECONSIDERATION: denying 449 Motion for Judgment as a Matter of Law; denying 460 Motion for Reconsideration re 449 MOTION for Judgment as a Matter of Law [Renewed]: Defendants' applications for a retroactive alteration of this Court's denial of summary judgment, and entry now of judgment NOV for the defendants, are denied. (Signed by Judge Louis L. Stanton on 7/10/2024) (ml)

ORIGINAL
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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FEDERAL TRADE COMMISSION and
THE PEOPLE OF THE STATE OF NEW YORK,
by LETITIA JAMES, Attorney General of the
State ofNew York,

17 Civ. 124 (LLS)
ORDER
RE: RECONSIDERATION

Plaintiffs,
- against QUINCY BIOSCIENCE HOLDING
COMPANY, INC. , a corporation;
QUINCY BIOSCIENCE, LLC, a limited
liability company;
PREVAGEN, INC., a corporation
d/b/a SUGAR RIVER SUPPLEMENTS ;
QUINCY BIOSCIENCE MANUFACTURING, LLC,
a limited liability company; and
MARK UNDERWOOD, individually and as an
officer of QUINCY BIOSCIENCE HOLDING
COMPANY, INC. , QUINCY BIOSCIENCE,' LLC,
and PREV AGEN, INC.,
Defendants.
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Defendants move for reconsideration of much that has gone before, including the trial
and verdict in this case, arguing that it is required by a recent decision of the Second Circuit,
Bustamante v. KIND, LLC, 100 F.4th 419 (2d Cir. 2024), which they claim is "controlling law
and is an intervening change in the law that warrants reconsideration." They say that
Resolving a split among district courts, the Second Circuit
clarified that, under the General Business Law ("GBL") and
other similar consumer-protection statutes that use the
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"reasonable consumer" standard, a plaintiff must come
forward with admissible evidence of what consumers
expected after viewing a challenged advertising claim
to establish deception and defeat summary judgment.
Defis' June 5, 2024 Reply Memo., p. 1 (emphasis is defis'.)
In fact, Bustamante offers nothing so Olympian.' The facts involved in Bustamante are
very different from the facts in this case. The holdings in both Bustamante and this case are
mundane, routine applications of familiar law to the facts in each case.
Bustamante was a consumer class action against KIND, LLC who distributed snack
foods with the label "All Natural", which plaintiffs claimed to be deceptive and misleading
under State False Advertising Laws. Pretrial procedures led to the disqualification of plaintiffs'
experts, and there was no admissible evidence defining just what "All Natural" meant. This
Court (Pauley and Buchwald, JJ.) dismissed it for lack of a useful, clear definition
"demonstrating what a reasonable consumer would expect of a KIND product bearing the "All
Natural" label." As stated by the Court of Appeals (100 F.4th at 434):
Without evidence of a reasonable consumer's understanding
of "All Natural," plaintiffs cannot succeed on their claims at
summary judgment. Indeed, a jury could hardly render a
unanimous verdict when multiple, shifting, definitions of the
key term have been offered by the party with the burden of
proof."

Because plaintiffs failed to produce admissible evidence
demonstrating what a reasonable consumer, acting
reasonably, would expect of KIND products bearing the
"All Natural" label, we hold that the District Court did
not err in granting summary judgment in favor of KIND.

'Bustamante affirmed the district court' s dismissal of a claim presenting a dozen different
meanings possibly applicable to the word "natural" in the marketing of a snack food as "All
Natural."
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In this case, the jury found that out of eight statements made by the defendants two of the
statements were materially misleading with respect to Quincy's product Prevagen and its
claimed abilities to improve memory, particularly with respect to the aging, and none of the
statements were supported by reliable scientific evidence needed under New York General
Business Law Sections 349 and 350. It found that all eight of the statements had the capacity or
tendency to deceive in violation of New York Executive Law Section 63 (12) .
The bases for the different outcomes in these two cases, one a pretrial dismissal on the
merits and the other a comprehensive jury verdict subjecting eight short statements to judgments
under each of three applicable statutes, are moored in the facts of each case. There was no
dispute about the meanings of the words in the statements in this case.
The word "Natural" in Bustamante had so many possible meanings that it could not be
used as a standard in litigation.
As Second Circuit Judge Merriam summarized it (100 F.4th at 424) :
For the reasons set forth below, we hold that the District
Court did not abuse its discretion in precluding the opinions
of plaintiffs' experts. We also hold that because plaintiffs
failed to present admissible evidence of what a reasonable
consumer would expect of KIND products labeled
"All Natural," the District Court did not err in concluding
that there was no triable issue of fact as to whether
reasonable consumers would be misled by the "All Natural"
claim.
The statements in Quincy, about each of whose meanings there was never any doubt,
were readily assessed under the standard each statute applied to them.
Disregarding the factual differences between the two cases, defendants urge that because
Bustamante was dismissed for lack of definition of what a reasonable consumer would expect,
this case should be dismissed for the same reason.
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But the two cases are different from the start.
Bustamante was brought by a group of private litigants on behalf of themselves and
others similarly situated, claiming that when they purchased the KIND snack food products they
discovered that the products had been deceptively labeled, and were not "All Natural." Their
reasonable expectations of all natural products were disappointed because the "All Natural"
labels were false and misleading, in violation of common law and state consumer protection and
false advertising laws.
Of course, in Bustamante there were the essential questions: What did "Natural" really
mean? What were the consumers' reasonable expectations from the labels? Without admissible
evidence on those points, the case collapsed. It was dismissed by Judge Buchwald, affirmed on
appeal.
This Quincy case is not brought by a disappointed consumer. It is brought by the
Attorney General of the State of New York and by the Federal Trade Commission, governmental
officers charged with prevention of "deceptive acts or practices in the conduct of any business,
trade or commerce or in the furnishing of any service"(§ 349 of the New York General Business
Law) and empowered to sue on behalf of New York State to enjoin such practices and obtain
restitution (id. § 349 (b)). For present purposes, the FTC has equivalent duties and powers, on a
national scale.
In resolving the quite different issues presented by this enforcement action (Are the
statements supported by accepted scientific authority? Are they materially misleading? Even if
not flatly false, do they tend to deceive? etc.) the jury was not asked to appraise consumer
reactions. It is the act or practice which imposes liability, and which has a complete defense if
the statement conforms to~' FTC or similar agency rules, GBL § 349 (d), without consulting
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consumer reactions.
As shown by the jury's verdict, by their very nature Quincy's statements called for
scientific support, but they had substantially none. Without that validation their mere tendency
to deceive is enough to violate New York Executive Law§ 63 (12).
Defendants' applications for a retroactive alteration of this Court's denial of summary
judgment, and entry now of judgment NOV for the defendants, are denied.
So Ordered.
Dated: New York, New York
July 10, 2024

LOUIS L. STANTON
U.S.D.J.

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