Engel v. Novex Biotech LLC

JULIAN ENGEL, Plaintiff, v. NOVEX BIOTECH LLC, et al., Defendants.

Case No. 14-cv-03457-MEJ

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

February 25, 2015

ORDER RE: MOTION TO DISMISS

Re: Dkt. No. 53

INTRODUCTION

This is an action in diversity for damages and equitable relief by Plaintiff Julian Engel ("Plaintiff"), as an individual and on behalf of all others similarly situated, against Defendants Novex Biotech, LLC and GNC Corporation ("Defendants"), the manufacturers of Growth Factor-9, an over-the-counter supplement. Plaintiff alleges two claims for relief: violation of California's Unfair Competition law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq.; and violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq. Pending before the Court is Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 53. Plaintiff filed an Opposition (Dkt. No. 57) and Defendants filed a Reply (Dkt. No. 62). The Court finds this motion suitable for disposition without oral argument and VACATES the March 12, 2015 hearing. Civil L.R. 7-1(b). Having considered the parties' positions, relevant legal authority, and the record in this case, the Court GRANTS Defendants' Motion for the reasons set forth below.

BACKGROUND

The following allegations are drawn from Plaintiff's Second Amended Complaint ("SAC"). Dkt. No. 48. Defendants manufacture, market, sell, and distribute Growth Factor-9, anover-the-counter amino acid supplement marketed to boost human growth hormone ("HGH"). SAC ¶ 1. In their nationwide marketing campaign, including representations on Growth Factor-9's label, Defendants stated that Growth Factor-9 is "clinically tested" to provide a "682% mean increase in serum growth hormone levels." Id. ¶¶ 1, 22. Plaintiff contends that these representations are either false, misleading, deceptive, or all three. Id. ¶ 2.

Plaintiff alleges that he saw these advertisements for Growth Factor-9 in at least one magazine and on websites such as GNC.com. Id. ¶ 22. After reading the advertisements, he went to GNC to purchase Growth Factor-9 on October 13, 2013. Id. While there, he read the product label and in-store advertisements, which reaffirmed the claims he saw in the magazine and online advertisements. Id. Relying on these claims, Plaintiff purchased three boxes. Id. If he had known that Growth Factor-9 was being unlawfully sold and that it was not proven to provide the represented benefits, he would not have purchased it. Id. ¶¶ 22, 51.

Plaintiff represents a class of individuals who, in reliance upon Defendants' claims, purchased Growth Factor-9 and were allegedly thereby damaged. On July 30, 2014, Plaintiff filed suit in this matter. Dkt. No. 1. On August 29, 2014, Plaintiff filed a First Amended Complaint ("FAC"), in which he alleged two causes of action: (1) violation of the UCL; and (2) violation of the CLRA. Dkt. No. 15. Defendants moved to dismiss the FAC, arguing that Plaintiff brought only substantiation claims, for which there exists no available private right of action, and that even if Plaintiff's claims were construed to be something other than substantiation claims, he failed to demonstrate that Defendants' claims regarding Growth Factor-9 were false. Dkt. No. 34-1. The Court agreed and granted Defendants' motion on November 6, 2014. Order re: Mot. to Dismiss, Dkt. No. 47. The Court granted Plaintiff leave to amend, but only if he could allege facts from which the Court could conclude that Defendants' advertising representations were false. Id. at 7. The Court warned Plaintiff that it would not be enough to attack the methodology of Defendants' study; "instead, he must allege facts affirmatively disproving Defendants' claims." Id. The Court identified three ways he could accomplish this:

Plaintiff could allege that one or more of the authorities alluded to actually studied or tested the formula Growth Factor-9 contains and found that it does not produce a 682% mean increase in HGH levels,or that Plaintiff himself did not experience such an increase when using the product, or that a study exists somewhere demonstrating that a 682% increase is categorically impossible to achieve in an over-the-counter pill.

Id.

Plaintiff filed his SAC on December 8, 2014. In addition to his previous claims, Plaintiff adds allegations regarding Defendants' use of the phrase "Clinically Tested" on Growth Factor-9's label. SAC ¶¶ 3-4. He alleges that a reasonable consumer reading this would interpret "clinically tested" to mean "clinically proven," and that Defendants have clinically tested Growth Factor-9 and have adequate scientific substantiation for their claims. Id. Plaintiff contends that "when a manufacturer, like Defendants here, makes representations about a product purporting to provide health benefits, the reasonable consumer rightfully believes that the manufacturer, being in a greater position of knowledge, has the scientific substantiation to back up its health claims." Id. ¶ 5.

The SAC also includes allegations regarding the study on which the Growth Factor-9 advertising claims rely. Plaintiff alleges that it "is not a study report but a summary that would not be accepted by any credible, peer-reviewed scientific journal," that "[t]here are no authors identified with regard to the study summarized on the Growth Factor-9 label, another indicator to experts in the field that the study is not to be relied upon," and "the summary of the study's results reveal numerous flaws that would lead experts in the area to conclude that this study is not credible and cannot be relied upon to base efficacy conclusions." Id. ¶¶ 34-36.

Defendants now move to dismiss the SAC, arguing that it "is again based entirely on allegations for which there is simply no private right of action—allegations concerning a purported lack of scientific substantiation for the advertising claims related to [Growth Factor-9]."¹ Mem. at 4, Dkt. No. 50. Defendants argue that the SAC is fatally deficient because it doesnot contain allegations based on testing, scientific literature, or anecdotal evidence claiming that the advertisements are false or misleading. Id. at 5. While the SAC contains allegations that Defendants' advertising claims are based on an underlying study that is flawed, Defendants contend that these allegations cannot form the basis for actions under the UCL or CLRA because they "are lack of substantiation claims—they all attack the scientific support for [Growth Factor-9's] claims without citing to or alleging that there are studies or other scientific evidence that contradict the scientific support on which Defendant[s] substantiates the advertising claims." Id. at 6. Even if Plaintiff could bring his claims, Defendants argue they fail as a matter of law because the SAC fails to demonstrate that Defendants' claims regarding Growth Factor-9 are false. Id. at 11.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss based on the failure to state a claim upon which relief may be granted. A Rule 12(b)(6) motion challenges the sufficiency of a complaint as failing to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A facial plausibility standard is not a "probability requirement" but mandates "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). For purposes of ruling on a Rule 12(b)(6) motion, the court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). "[D]ismissal may be based on either a lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008) (internal quotations and citations omitted); see also Neitzke v. Williams, 490 U.S. 319, 326 (1989) ("Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law.").

Even under the liberal pleading standard of Rule 8(a)(2), under which a party is onlyrequired to make "a short and plain statement of the claim showing that the pleader is entitled to relief," a "pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). "[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) ("[A]llegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively."). The court must be able to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663. "Determining whether a complaint states a plausible claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 663-64.

If a Rule 12(b)(6) motion is granted, the "court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotations and citations omitted).

DISCUSSION

As in their previous motion, Defendants argue that Plaintiff's claims must be dismissed because they are based...