Sharifan v. Neogenis Labs, Inc.

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ABDEE SHARIFAN on behalf of himself and for all others similarly situated, Plaintiff. v. NEOGENIS LABS, INC. D/B/A HUMANN, Defendant.

Civil Action No. 4:21-cv-01940

United States District Court, S.D. Texas, Houston Division

August 2, 2022

MEMORANDUM AND RECOMMENDATION

ANDREW M. EDISON, UNITED STATES MAGISTRATE JUDGE

Before me is Defendant's Motion to Dismiss Plaintiff's First Amended Complaint. See Dkt. 11. After considering the motion, the parties' briefing, oral argument, and the applicable law, I recommend the motion be GRANTED.

INTRODUCTION

Defendant Human Power of N Company (“HumanN”), formerly known as NeoGenis Labs, Inc., markets functional foods and dietary supplements that incorporate beetroot power and other ingredients under the brand name “SuperBeets®.” HumanN's product line includes its original SuperBeets Powder- containing beetroot and fermented beetroot powder that is mixed with water-and SuperBeets Soft Chews, a dietary supplement containing beetroot powder and grape seed extract in a chewable form.

In June 2021, Plaintiff Abdee Sharifan (“Sharifan”) sued HumanN, on behalf of himself and other similarly situated individuals, for violations of the Texas Deceptive Trade Practices Act (“DTPA”) and common-law fraud. The general thrust of Sharifan's lawsuit is that HumanN falsely and deceptively marketed its Soft Chews as if they contained the same formula as its SuperBeets Powder. More specifically, Sharifan alleges HumanN advertised that its “Soft Chews had the exact same health benefits as the original Super[B]eets products” and that “[t]his advertising convinced [him] to purchase the Super[B]eets Soft Chews.” Dkt. 7 at 9. In support of his claims that HumanN deceptively marketed its Soft Chews, Sharifan's Amended Complaint includes images of HumanN's purportedly misleading advertisements and social media posts.

HumanN has moved to dismiss Sharifan's Amended Complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). HumanN's chief argument is that the advertisements or communications Sharifan cites in his Amended Complaint objectively demonstrate that no reasonable consumer would believe its Soft Chews “contained the exact same formula and ingredients” as its SuperBeets Powder. See Dkt. 11 at 9-10. Subsumed within this argument is HumanN's claim that Sharifan's pleadings fail to satisfy Rule 9(b)'s heightened pleading standard for claims grounded in fraud. HumanN also argues Sharifan has failed to allege facts that demonstrate his reliance on HumanN's alleged misrepresentations was reasonable-an essential element for both DTPA and fraud claims. See id. at 13-14.

In response, Sharifan argues that he is not required to identify the specific advertisement(s) he relied upon or articulate exactly when or where he saw the advertisement(s) to survive the motion-to-dismiss stage. Rather, under Rule 12(b)(6)'s deferential standard, Sharifan maintains it is sufficient that he has alleged that “HumanN launched an extensive television and print advertising campaign in which HumanN marketed the Super[B]eets Soft Chews as containing the same formula as Super[B]eets [Powder]” and that he relied on those advertisements. Dkt. 19 at 11. But even if he were required to specify the advertisements upon which he relied, Sharifan insists that he has done so. See Id. at 13.

SHARIFAN'S OPERATIVE PLEADINGS

To contextualize my decision, it is important to understand how Sharifan has framed his Amended Complaint. Sharifan essentially divides his allegations into three parts. He begins by describing, generally HumanN's development of its SuperBeets products. See Dkt. 7 at 4-6. The second section concerns HumanN's marketing campaign for its new product line which includes Soft Chews, and its purported misrepresentations about those products. See id. at 6-9. Finally, in the third section, Sharifan cursorily explains how HumanN supposedly duped him into purchasing its Soft Chews. See id. at 9-10.

A. HumanN's Product Development

According to Sharifan, HumanN was at the forefront of the “beet root juice” movement, beginning in 2009. See id. at 4. More specifically, Sharifan claims HumanN “develop[ed] a specific fermentation process which allowed the use of [beets] to deliver HumanN's patented composition of matter containing both nitrite and nitrate to deliver nitric oxide.” Id. Enhanced nitric oxide production, Sharifan argues, can decrease muscle soreness, boost exercise performance, and lower blood pressure. See id. at 5.

In 2013, HumanN launched Beet Elite, which targeted the “sports performance market.” Id. After achieving some success, HumanN then developed its SuperBeets Powder-which Sharifan intermittently refers to as the “original” SuperBeets or simply “SuperBeets”-a product intended for the general public.^[1] To promote its SuperBeets Powder, Sharifan claims that HumanN “heavily marketed the fact that Super[B]eets used a special fermentation process to preserve nitric oxide activity.” Id.

At some unspecified time thereafter, HumanN got into a royalty dispute with the University of Texas Health Science Center over a licensing agreement concerning Beet Elite and SuperBeets Powder.^[2] See id. at 5-6. To avoid paying - royalties, Sharifan claims that HumanN launched a new product line “that did not contain [S]uper[B]eets or the patented nitric oxide technology.” Id. at 6. This new product line included SuperBeets Soft Chews. See id.

B. HumanN's Advertising Campaign for its Soft Chews

According to Sharifan, HumanN named and marketed its new products “as if they contained the exact same formula as the original Super[B]eets [Powder]” and “enhanced nitric oxide” production. Id. Immediately following this allegation, Sharifan includes examples of HumanN's supposedly misleading advertisements and social media posts. But, as explained below, the advertisements and posts severely undermine Sharifan's allegations.

Beginning with the advertisements, Sharifan uses an apples-to-oranges comparison, juxtaposing an advertisement for the Original SuperBeets Crystals (i.e., SuperBeets Powder) next to an advertisement announcing HumanN's rebranding of its Soft Chews as “Heart Chews”:^[3]

(Image Omitted)

Id. at 7. To the left is the advertisement for SuperBeets Powder, while the rebranding advertisement is to the right. Sharifan asserts that “HumanN markets the new products as if they contained the exact same [S]uper[B]eets and used the exact same nitric oxide boosting formula as the original Super[B]eets.” Id. at 6. Below is an enlarged image of the latter:

(Image Omitted)

When viewed in isolation, it's plain as day that the tagline “New Look, Same Amazing Benefits” does not so much as hint that HumanN claimed its Soft Chews offered the same benefits as its SuperBeets Powder.^[4] See id. Rather, the advertisement only proves that HumanN promoted its Heart Chews as having the “Same Amazing Benefits” as its Soft Chews. Moreover, the Soft Chew's packaging's left-hand corner prominently advertises its “Clinically Researched Grape Seed Extract,” an ingredient not found in SuperBeets Powder. See id.

As for the social media posts-both of which are not dated-the first is from an unidentified platform (presumably Facebook) where someone operating HumanN's social media account wrote:

(Image Omitted)

Id. Even the most generous reading of this post does not imply that the two products “are identical.” See id. (“HumanN tells consumers these new products are identical to the original Super[B]eets formula.”). Instead, as demonstrated by the products' nutrition labels-which I discuss momentarily-the statement that both products contain beetroot powder is not misleading.

Immediately following the message discussed above, Sharifan doubles down, alleging that HumanN used its official Facebook page to tell consumers that its “new products contain the exact same formula as the original Super[B]eets.” Id. (emphasis added). Sharifan accompanies this allegation with an image of a conversation over Facebook messenger that reads:

(Image Omitted)

Id. at 8.

The person operating HumanN's Facebook account then sent images of the products' respective nutrition labels:

(Image Omitted)

See id. The top two nutrition labels are for SuperBeets Powder (original and black cherry flavor), while the bottom nutrition label is for SuperBeets Soft Chews. Because the ingredient lists are likely indecipherable, I've included a breakdown below:

Product

Ingredients

SuperBeets Powder

Non-GMO Beetroot Powder, Non-GMO Beetroot

Powder (fermented), Natural Apple Flavor (or

Natural Black Cherry Flavor), Malic Acid,

Magnesium Ascorbate, Stevia Leaf Extract

SuperBeets Soft

Chews

Beet Root Powder, Enovita Grape Seed Extract (Vitis

vinifera), Tapioca Syrup, Raw Cane Sugar, Rice

Bran, Natural Flavors, Sunflower Lecithin,

Sunflower Oil, Malic Acid, Glycerin, Citric Acid,

Rebaudioside A (Stevia rebaudiana Leaf)

As you can see, both products include beetroot powder, and the nutrition labels plainly demonstrate that the products do not contain “the exact same formula” and ingredients. Id. at 7.

C. Sharifan's Reliance on HumanN's Advertisements

According to Sharifan, “[f]or years . . . [he] saw HumanN's advertising for its [S]uper[B]eets [Powder],” but “it was not until HumanN began heavily advertising Super[B]eets Soft Chews in 2020 that [he] actually began purchasing HumanN's products.” Id. at 9. Specifically, advertisements claiming that HumanN's “Soft Chews had the exact same health benefits” and “contained the exact same formula and ingredients as the original [S]uper[B]eets products” “convinced Sharifan to purchase the Super[B]eets Soft Chews .... in late 2020 and early 2021.”^[5] Id. at 9-10. See also id....