Congressional Testimony Transcript

Transcription

/.
KSS1UJES RJEILATHNG TO .El?HEDRA-CONTAllNiNG
I
DIETARY SUPPLEMENTS
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS .
A}l'D THE
SUBCOMMITTEE ON
COMMEROE, TRADE, AND CONSUMER PROTECTION
I
' .. OF THE
·. .
. .
COMMITTEE ON ENERGY AND
I.
COMMERCE
. ·.
HquSE GJi' REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
I ..
FIRST SESSION
.
.
---·. ·JULY 23 and !!4, 2003
· Printe '' for the use of the Committee on Energy and Commerce ·
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/
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I
· COlWMlTTEE Oi.\T ENERGY AND COMMERCE
W.J. "BILLY" TAUZIN, Louisiana, Chairman
JOHN
DINGE;LL, Michigan
MICHAEL BILIRAKIS, Florida
Rankini Member ·.
JOE BARTON, Te1cas
HENRY A. W/\XMAN, California
FRED UPTON, Michiga!l
EDWARD J. MARJ{EY, Massachusetts
CLD.i'F STEARNS, Florida
RALPH M. HALL, Telcas
PAUL E . GILLMOR, Ohio
RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania
EDOLPHUS TOWNS, New York
CIUUSTOPHER COX, California
FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia
SHERROD BROWN, Ohio
RICHARD BURR, North Carolina
BART GORDON, Tennessee
Vice Chairman
PETER DEUTSCH, Florida
ED WHITFillLD, Kentucky
BOBBY L. RUSH, lllinois
CHARLill NORWOOD, Georgia
ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming
BART STUPAK, Michigan
JOHN SHIMKUS,.lllino,is. .
.
ELIOT L. ENGEL;.New York
HEATHER WILSON, New Me1dco
ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona
·GENE GREEN, Texas
CHARLES W. "CHIP" PICKERING,
KAREN McCARTHY, Missouri
Mississippi ·
TED STRICKLAND, Ohio
VITO FOSSELLA, New York
DIANA DEGETTE, Colorado .
ROY BLUNT, Missouri
.
LOIS CAPPS, California
STEVE BUYER, Indiana
J.I4IOHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California
CHRISTOPHER JOHN, Louisiana
CHARLES F . BASS, New Hampshire
TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania
JIM DAVIS, ·Florida
MARY BONO, California
JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon
HILPA L. SOLIS, California
LEE TERRY, Nebraska
\
ERNill FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. "BUTCH" OTTER, Idaho
DAN R. BROUILLE'ITE, Staff Director
CONTENTS
n.
JAMES D. BARNE'ITE, Gen~ral Counsel
REID P.F.
STUNTZ,
Minority Staff Director and Chief Counsel
SUBCOMMITI'EE ON OVERSIGHT AND INVESTIGATIONS
JAMES C. GREENWOOD, Pennsylvania, Chairman
MICHAEL BILIRAKIS, Florida
CLIFF STEARNS, Florida
RICHARD BURR, North Carolina
CHARLES F. BASS, New Hampshire
GREG WALDEN, Oregon
Vice Chairman
MIKE ROGERS, Michigan
W.J. "BILLY" TAUZIN, Louisiana
(Ex Officio)
Ranking Member
Dl:ANA DEGETTE, Colorado
.)1M DAVIS, Florida
HENRY A. WAXMAN, California
BOBBY L. RUSH, Illinois
JOHN D. DINGELL, Michigan,
(Ex Officio)
SUBCOMMITI'EE ON COMMERCE, TRADE, AND CONSUMER PROTECTION
CLIFF STEARNS, Florida, Chairman
FRED UPTON, Michigan
BARBARA CUBIN, Wyoming
JOHN SHIMKUS, Illinois
,TOHN B. SHADEGG, Arizona
Vice Chairman
GEORGE RADANOVICH, California
CHAIU.,ES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
LEE TERRY, Nebraska
'E RNill FLETCHER, Kentucky
DARRELL E. ISSA, California
C.L. "BUTCH"
OTl'ER, Idaho
. - . ----·- ..
Ranking Member
HILDA L. SOLIS, California
EDWARD J. MARKEY, Massachusetts
EDOLPHUS TOWNS, New York
SHERROD BROWN, Ohio
JIM DAVIS, Florida
BART STUPAK, Michigan
GENE GREEN, Texas
KAREN McCARTHY, Missouri
TED STRICKLAND, Ohio
. DIANA DEGETTE, Colorado
JOHN D. DINGELL, Michigan,·
........
,....,....
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Page
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Hearings held:
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~4y ~3, 2003!···················"················································································
'1
173
Bechle:. ~~~~~~~~.. :::::::::::::::::::::::::::::::::::::::::::::~··········································
Birch, Adolplil.o A., III, Counsel for Labor Rel~ti~~~···N~ti~~~i··F~·~;;b;ll
League ..... }........................................................... ..
'
Boozer, Car?ll Obesity Res~arch Center, St. Luk;'s..R~~~~~~it'fi~~~it;;i··:::::
Brown, DaVId, former President of Metabolife ·
Chin
'
··········································· ····
ery, R ob~rt,
Presid~nt, Cytodyne Technologies ..................................... .
Colker, Carlqn M., Chief Executive Officer and Medical Director Peak
238
13
u y 4, 2003,...................................................... .
'.Pestimony
of:
.. ·············..... ························· ·
Be~:d' J. How!lr~, III, Director, Bureau of Consumer Protection, Federal
r-··
c =e~, J~c
c. . . d························:······ ..····..····················:..................:..........
1
c~osse, 'Ma~cl~. fcfu:n;:~:;, ':e~tb:'c~~~:p~j;ii~··n:~~ith··~d··s~i~;:;~~
cJf!~~~~~~fo=:~~:~~~e~!~e~~rt~~~;;·~r·Ii~;;ith:·:::::::::::::::::::::
Ellis, Michael, Founder and Director ofMetabolife International .............. .
Fox, Roseann!, Customer ~eryice Representative, NVE Pharmaceuticals .. .
Garber, D?na:ld P.,.Comrmss10ner, Major League Soccer ............................. .
Helton, Mike) Pres1~ent, National Association for Stock Car Auto Racing .
Hermann, Hobert, V1ce President, Metabolife International
Hymsfield, S~even B., ~eputy Director of Obesity Resear~h··c-~;:;t~~ ·· st·
M~~:J. R~~~~~lt~~ss~~~ lri~~~~ti~~ .. vi~~···p;~~ia~~i:··'L~b~~··li~i~ii~~~~
uman Re~ources, Major League Baseball .............................................. .
M?C1e11an, Hpn. Mark B., Commissioner, Food and Drug Administration·.
Mitte~, ~atthew J., Associate Dean for Academic Affairs, Marquette
Umyersity ILa~ Schoo~ Director, National Sports Law Institute The
N~~o~al ~p~eg~.a~ A~d etic Association ............................................'........ .
0 cc En o, ~ eDrt, es1 ~nt, NVE Pharmaceuticals ............................. :.... .
0 rza, ugenf . ·•. AssoCiate General Counsel, Major League Baseball
ru;::~k~~.c~!~C:Iiiggb;.~.F"~~d~ti~~·r~;·s-;;b~t~~~·~~p;;~~·s~h.~~i~·········
RSohrdrigukezR, Drniel, ~ead Nurse, Metabolife ........................................... ::::::::
c ec , us sell, Chief Executive Officer Metabolife International
···········
Vasquez; Michael, Law Offices of Fred G: Cohen
WoSo~ley, Ra:0nond, Vice President for Health s~i~·~~~~·· Arl~~;:;~··H~~ith
Ciences Center
'
Zipes, Do~gl~s P.,··:ni·~ti~~~h~d··:p;~i~~·~~~··~r· ·M:~di~~~···:ph~~~~i~g;;
~~a;'tll~l~o~':.: ..~~.~~~~~·...~.~~si~n
of Cardiology, Kr;nnert In~titute
materj.al submitted for the·;~~~~;i;" ..................................................... .
Amfncan Corege of Obstetricians and Gynecologists, prepared statement
Addition~
0 •·••••••••••••••••···••••·••••
B(1e(¥
Mic~ael M., M:n::· ·i~i;;~;··'d~t~a··17 .. Jcl:;;··2ooa· ·· ;;;;··li~~··J~~~~
Met.ab~~:~~~~:o~~~~·;;~··~~~iii~~···~~~ti~~······················: ........................... .
.
q
(III)
8 ............................................. ..
193
103
92
106
115
113
44
41
. 92
121
199
196
101
18
185
228
203
119
189
14
92
99
17
32
35
170
166
169
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Mr . VASQUEZ. When I was no longer employed in the company
[ inquired about this specific nurse and they said that she was let
:ro beca:ttse she was very vocal about the product, whether you
b:tow,,itw-as doing more harm than good.
.
Mr. GREENWOOD. Were you warned or persuaded .bY you_r superllisor at Metabolife not direct complainants to descnbe their symptoms but instead to just take their name and phone number and
rive that to your supervisor?
.·
" Mr. VASQUEZ. It would depend on the severity of the call. Some
lf it is minor like abdominal cramps, then you know.you would docllment that. We documented all calls. But if it was moderate to setrere, you had a proc~dure wh~re 'Ye would take as much information as we can get Without bemg Judgmental and I would fo:ryard
lt to my supervisor Mr. Daniel Rodriguez. And we were basically
left in the dark and we would not know what happened to that spe~ific case. Mr. Rodriguez was the one who was basically the key
person that would follow up on specific case.
· ·
·
Mr. GREENWOOD. Did anyone at Metabolife including your supertrisor at the Health Information Line, Mr. Rodriguez, monitor your
responses to ·customers who were co~plaining of .adverse events or
o.egative side effects as a result of taking Metabohfe?
Mr. VASQUEZ. Like I said earlier, there ~ere 1~ registered nu:r:ses
m staff and Mr. Rodriguez and the medical director; _Dr .. Srmth,
b.ad the ability to listen to all the calls that were cormng m. And
lf they heard something, specifically Dan R?driguez, heard something. that one of the nurses would say, nght after the call he
would critique, for example, myself and say probably you should
b.ave answered that call that way.
·
Mr. GREENWOOD. Did you feel under any pressure to conduct
vourself in those phone calls in any way other than you would
~ven what you said earlier in your testimony that you wanted to
just do no harm,?
.
.
.
Mr. VASQUEZ. At times, yes. Because as a nurse It ~eemed hke
the telemarketer script the kind of answer you woUld give out a~d,
vou know, I was trained as a nurse, I went to scho?l, nursmg
;;chool. You know, basically you had to really be more Impersonal
than you cared.
.
, ·
.
While I was working there there was no nurse/pa~Ient/consumer
relationship that would, you know, you would be looking out for the
Jest interest of the caller rather than th~
Mr. GREENWOOD. Did you feel that yoti were functioning more as
1 marketer of the drug than as an advocate for the patient?
Mr. VASQUEZ. Definitely I wouldn't say marketer, because t~ey
n.ad a lot of advertisement. So not as a marketer. But. more like,
yOU know, less of an advocate from a medical professional, I would
>ay so.
·
·
·
Mr. GREENWOOD. Thank you, sir. My time has expired.
The gentlelady from Colorado is recognized for 5 minutes.
Ms. DEGETI'E. Thank you, Mr. Chairman.
.
My first question is for the Bechlers an? for Mr. Rig~s, because
~here are a lot of dietary supplements bemg sold now m the stores
md you know, all my middle aged friends and I sit around and
;alk about what we should be taking to make ourselves feel better.
!\nd listening to all the testimony.today,. it kind of makes me real-
65
ize people probably think that these products are safe because they
are no~ prescription drugs or a doctor's order is not required. Do
you think that that's probably true, Mrs. Bechler?
·
· Ms. BECHLER. I do. In fact, my son as I hear it from his wifeMs. DEGETI'E. Just move that a little closer. That helps. Yes;
Ms. BECHLER. As I hear it from his wife, she got it at workout
place that she worked out at. And so you-Ms. DEGETI'E. So they were giving it out at the gym?
Ms. BECHLER. Yes. In fact, my other son and I worked out at. a
gym .a~d th.ey have it there. So why would not you natural think
that It IS gomg to be as natural and it is herbal, and it is safe.
Ms. DEGETI'E. And, Mr. Riggins, what is your view on that?
Mr. RIG9INS. In .our discuss~ons with kids, and when. I say kids
I am not JUst talking about high school students. We are talking
about college athletes as well, college students that are looking to
lose weight and with the general public. We have found that when
you start bringing the awareness out, when you tell them that the
FpA does n?t ~ave-only has minimal control over these compa,
rues, the maJonty of the people are appalled at that. They just cannot understand how come a law will allow a company just to run
as one individual put it, helter skelter. ·
'
Ms. DEGE'ITE. But up until they know that information, they just
assume tha:t the product is safe because it is being allowed to just
be sold helter skelter to th.e consumers, would you not agree?
Mr. RIGGINS. That is exactly right. Exactly right.
Iv.ls. DEGETTE. Thank you.
Dr. He:ymsfield, I was intrigued by your testimony where you
were talking about ~he product labeling and you were tal,king apout
when. you began domg .your research there was no product labeling
as to the dangers, and m fact some of the labels said clinical tested.
Is that correct?
·
,
Mr. HEYMSFIELD. Well, some of the bottles had statements for
example, "independently laboratory tested for safety."
'
Ms. DEGETI'E. Have you looked at bottle of Metabolife recently?
Mr. HEYMSFIELD. I have not looked at a recent bottle, no.
Ms. DEGETI'E. Okay: I have got one here in my hands.
Mr. HEYMSFIELD. Yes.
.
Ms. DEGETI'E. And there this big warning on the side of the label
here. Are you familiar with that warning?
·
Mr. HEYMSFIELD. Yes. Yes.
Ms. D:EGETI'E. Do you know when they started putting that
warning on these bottles?
·
Mr. HEYMSFIELD. I am not aware of the date of when that appeared.
. ·
·
Ms. DEGETI'E. Does anyone else know roughly when this warning
started appearing?
. Mr. FRANCE. Jim France here, attorney for the B.echlers. I oelieve
It was early 2001.
.
.
Mr. GREENWOOD. Excuse me. I have to quickly. swear you in if
you are going to actually speak.
[Witness sworn.]
· Mr. GREENWOOD. Okay. You are under oath now.
·.
Ms. DEGETI'E. Mr. France, proceed.
66
67
Mr. FRANCE. Yes. n 1999 they were using another label that had
'independently laboratory tested for safety" where that silver decal
cS on the front.
Ms. DEGETI'E. This right here?
Mr. FRANCE. Yes. And then there was a class action lawsuit
~ailed Gasperoni v. Metabolife that occurred in the year 2000. And
:ts a part of that settlement it is my understanding that they could
11ot advertise that their product was independently laboratory test~d for safety anymore and they put that little decal on the front.
!\nd then they started selling the product-Ms. DEGETTE. It is a butterfly.
Mr. FRANCE. Yes. It is a silver decal-Ms. DEGETI'E. It is a butterfly.
Mr. FRANCE. It is a butterfly. They put the butterfly over the
safety claim in 2001, ][believe.
Ms. DEGETI'E. And that is when they put the safety warnings
on?
.
.
Mr. FRANCE. And they added additionalsafety warning information, but they failed to include the fact that they had received thousands of AERs.
Ms. DEGETI'E. Okay. Thank you.
Going back to Dr. Heymsfield. Thank you for helping us, sir.
You said that the studies were flawed that were done by the
c:ompanies. ][ am wondering if you can tell me quickly some of the
reasons why you feel those studies were flawed?
Mr. HEYMSFIELD. Well, this is my opinion, but some of the published papers, for example, would report ·that effects were statistically significant. And that has very specific meaning to a scientist. But actually when you investigate the raw data in the actual statistics, they did not achieve specific significance. That was
never revealed in the papers. They were misrepresented. And I
could give you many examples like that of where- Ms. DEGETTE. And ][ think in addition, Dr. Woosley and others
said that the studies were not scientifically controlled because IRB
would. ever approve that kind of a study?
Mr. HEYMSFIELD. Well, no longer. I mean, at the time the adverse events were not as clearly recognized. But I today I agree
with them.
Ms. DEGETTE. Okay. Thank you.
Mr. GREENWOOD. The tinie of the gentlelady has expired. The
gentleman from New Hampshire is recognized to inquire for 5 minutes.
Mr. BASs. Thank you, Mr. Chairman. ][ have one qu.estion. Do
any of the doctors here see any medicinal value to ephedra? Is
there any reason-Okay. That is the only question I have.
][will yield the rest of my time to my friend Mr. Walden.
Mr. WALDEN. Thank you very much.
][ would like to address my first question to the Bechlers, and I
know this is a difficult one, but how did you·feel when the Broward
County Coroner concluded that ephedra was "a significant factor"
in your son's death?
..
M:r. BECHLER. When they told us about it, we knew it had to be
something. It just was not heatstroke because he was in perfect
condition. I mean, there was nothing wrong with our son. Nothing.
Mr. WALDEN. There have been reports that I have read in the
press that ,said he was terribly overweight. How overweight was he
went he went into camp?
Ms. BECHLER. Ten pounds.
Mr. BECHLER. Ten pounds.
Mr. WALDEN. Ten pounds?
Mr. BECHLER. Hi~ body fat. was less than it was a year before.
Ms. BECHLER. Which the Onoles was impressed about.
Mr. WALDEN. You need to turn on your mike.
Ms. BECHLER.. Which the Orioles were impressed about with just
the 10 pounds, but his body fat had gone down. .
Mr. WALDEN. Okay. And I guess I want to ask Mr. France this
ques~ion, because I was rea«ii.ng the testimony. last night of the
Pr~s1dent. of Nutr~quest, Inc.,. f~rmer Xenadrine Technologies, Mr.
Chinery, IS that nght? And m 1t he says we sold over 20 million
bottles of Xenadrine RFA-1, which is what I think what your son
took. About 1.2 billion servings. And I understand the comment of
our other witness· on that. And received 450 complaints during the
5 years we s?ld the pro~uct. The great majority .of our complaints
were from nuld or transitory effects. Based on all the available scientific information we did not have any reason to believe that
Xenadrine RFA-1 cause!i anything but mild transitory effects. We
relied upon studies not only on Xenadrine RFA-1 but also on studi~s o~ other. ephedra dietary supple.ments and on Xenadrine's plinCiple mgredients, ephedra and caffeme.
Studies including the Cantox Report show. that ephedra based
products are effective and safe when used properly.
·
Mr. France, fir st of all, are you familiar with any studies that
would confirm that? Would what I h ave r easoned indicate to the
contrary?
·
And ·. s~cond, are you aware of any court documents relating to
how others have perceived the credibility of these witnesses?
Mr: JfR.AJ:'TCE. yes, I am.. First of :Ul, there was a trial against
Xenadnne m which Mr. Chinery testified about a month and a half
ago. And during that trial several of the alleged clinical studies
that took place on Xenadrine RFA-1 were discussed by expert witnesses on both. sides,. And to reiterate what Dr. Hymsfield said,
there was marupulabon of research data found and disclosed durin.g that trial. The trial judge found there were significant problems
With several of the studies that Xenadrine was holding to prove efficacy and/or safety.
·
And more importantly, the trial judge found in its verdict· a written verdict, that Mr. Chinery, Mr. Conklin, who is. here today Dr.
Colker had no credibility. And the judge sat through alm~st 7
weeks-·
Mr. WALDEN.. The judge said that?
M:r. FRANCE. The judge said that in a written opinion. All I
have it here today.
.
Mr. WALDEN. Mr. Chairman, would it be possible to have that
written opinion entered into the record?
Mr. GREENWOOD. Witho\lt objection, it will be incorporated into
the record.
[The information referred to follows:]
Verdict Obtained by James P. Frantz and Co-Counsel (6 week Superior Court Trial)
68
69
Slip Copy
·
(CUe as: 2U03 WL 21263814 (Coi.Supcrior))
,..
Only the Westlow ci~1tion is currently available.
California Superior Court, County,
Jlrison A, pARK, on behalf oi himself and nil
othern Glmilarly Ditunted,
l'lolntiiT,
v.
C'h'TOD'i!NE rnCHNOtOGi:ES, JNC., a New
.l'erJey corporndon; nnd Does 1 througb 100,
inclusive, Defendants.
·No. GIC 768364.
Mny 30, 2003.
TENTATIVE DECISION
STYN,J.
Slip Copy
(Cite as: 2003 WL 21283814, •2 (Cai.Superior))
forth below· in the discussion of plaintiffs cl.aims
linder·Business lind Professions Code sections 17200
and 17500 ~t seq.
Phiintill's second "COUSe of action alleges false and
misleading advertisements in ~iolotion of Btisiness
IUld Professions Code sections 17200 et ~eq. 'I}'•
third eo~e of action alleges fals~ and _nusle~dmg
advertisenients in violation of Busmess. and
Professions .Code sections 17500 et seq. Pl~intifl's
factual allegations in tltese tWQ .causes o~ acmon are
identicat: Plni,J)tiff does not allege any vaolat10ns of
sections 17200 et seq. other than dte alleged fats~ and
misleading advertising that would also vtolate
sections 17~00 et seq. Further, cases nddreasing fa!se
advertisitig clainJS imder both sta\'Jles have applted
d1e snme legal standllrd t9 both. See Day v. AT & T
O>rp. (1998) 63 Cai.App.41h 3_25. For these reasons,
the ·causes of action under:sections 17200 et seq. and
seclio~ 17500 et seq. wt11 be discussed together.
INTRODUCTION
''!! Plaintiff·Jasqn A. Parle, on behalf of .hirns~lf ?"d
~U others simllilrly situated, filed a complaint ngntDSt
defendant Cy1odync Technologies, Inc., a New Jersey ·
corporation. The complaint · was certified as a class
action.
Cytodyne mnrlcets and sells Xenadrine RFA~l: .0
dietary supplement commonly ~sed ~s "an atd. m
weiglll loss. 11Je active ingredients m Xenadrine
RPA-l include ephedra wtd caffeine. Cytodync
advertises;: Xenadrine RFA-1 · tbrough magazine,
television, and radio advertisements.
PLAINTIFFS CAUSES qF ACTION
Plaintiffs complaint alleges three causes of action.
Tile fllSt clnim alleges violations of t~e ~!JS~':'
Legal Remedies Act ("ci.RA"), ~h~onu~ Ctvtl
Code sections 1750 et seq. Plamtifl's C~
allegations couch plaintiffs false . adverttsm.g
allegations in the context of a CLRA clallll. There JS
very little relevant case law addr~ing a!leged
violations of .the CLRA. One .court has c.onstdered
clainJS of false advertising alleged to ~tO!ate the
.CLRA as well as Business wtd Pro.fessmns Code
sections 17200. and . 17500 ~t seq .. and ?eld that
statements found to be not false ot rrusleadmg under
sections 17200 and 17500 et seq. ore also not false
representation• .under the CLRA. Fre.eman . v•. Time, .
Ind., 66 F.3d. ·265, 290 (9th Cir.l995). Tlms, the
relevant legal standard and the burden of proof are set
.
5. Nature oftlte Proof.
2. Plaintiff Must Prove Public Is "Likely To Be
Deceived."
T O>rp. ( 1998) .63 Cai.App.4th 325, 331-32:
.A plaintiff musi prove that the public is "likely to be
·deceived" by the statements at issue in. an
advertisement.
"Likely to deceive" implies mo;e than a mere
possibility thot the advertisement might
conceivably be misunderstood by some few
conswners viewing it iq au unreasonable manner.
Rather, the phrase indicates that tbe ad .is such
that it is probable that a significant. portion of the
general consuming public or of targeted
consumers,
acting
reasonably
in.
the
circwnstanccs, could be misled.
Lavie v. Proctor & Gamble 0>. (2003) 105
Cai.App. 4th 496, 508.
BURDEN OF PROOF
I. Plaiti~ff Mll5t Prove Statements ·were ·False .or
Misleading ·and Made Without Reasonable Care. :
. Sections 17500 et . seq. prohibit negligent . or
· intentio~al dissemiitation of false or misleading
advertising. Natinnal. Council Against Health Fraud,
Inc. v. King Bio Pharnuicl!utlcals, Inc. (2003) _
Cai.App. 4th_; 133 Cal.Rptr.2d 207.
Spe~ifi,aily, these statutes pr_os~rihe ~e n:"ldog or
dissemination before tho pub he tn Califomaa of ·any
sratement concerning the product that lljs. untru~ or
misleading, and which is !mown, or which. by the
exercise of reasonable care should be koifWD, to be
untrue or misleading." Cal. Bus. & Prof.Code §
17500.
Thus, io maintain ~ claim of false or mistead~g .
advertising, a plaintiftmust pro\'e; (I) ~tatements an
the advertising. arc untrue or rruslcadmg, IUld (2)
defendmtS J<i,ew, or by the ..exe_r9ise of reas?nabic
care should have lcnoWn, that the statements were
untrue or. misleading. People v. Lynam, (1967) · 253.
eat.App.2d 959, 965.
.
r
••i The platntiff musi- carry both the burden of
producing evidence and tho burden of proving that
each challenged advertising clniro is false .. or
misleading. Nation~[ Council Against Health Fr~~d,
Inc. v. King ~io Plutnnaceutlca/s, Inc., supra; cttang .
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South Bay Chevrolet v. General Motors Acceptance
Corp. (1999) 72 Cal.App. 4th 861, 878).
3. Advertisers Are Not Required to Produce
Substantiation for their Advertising C!ninJS.
Advertisers arc not n:quired to produce
substantiation for their advertising cloinJS in actions
bro~ght by private plaintiffs under Business and
Professions Code sections 17200 ct seq. and 17500 et
seq. In National CQuncil Againsl H~alth Fraud, Inc.
v. King Blo Pharmaceuticals, Tnc., supi:a, the plaintiff
argued that private plaintiffs are in the sante position
as the Attorney Gcneral .lllld that the court should th)lS
sb.ift tho burden of production and require advertisers
to produce evidence substantiating the truth of their
advertising claims. The Court of Appeal rejected that
argument. The court lteld that private plaititiffs have
the burden of producing evidence to prove tbeir
allegations that challenged advertising is false or
misleading:
4. Statements Must Be Material To Be Actionable.
In order for ·. lUI alleged false or misleading
representation to be actionable, the statement at issue
must be, nmong otber .things, l!Jlltcrilil. Mate.rilility is
part of the "reasonable conswner" standard applied
under the California WJ[air competition and false
advertising statutes, in that re;JSonable conswners llfc
not deceived by immatc.rilil claims. A general
discussion of the "reasonaple consumer" standard,
with citations to nwnerous relevant cases, is found in
Lavie v. Proctor & Gamble 0>., I 05 .Cal.App. 4tlt
496, 504-512 (2003).
The law in Utis area was summarized in Day ·v. A r &
Sections . 17200 and. 17500 ato conswner
protection statutes designed, in part, to proll:ct the
public by prohibiting false, unfair, misleading or
deceptive advertising. (Ccmmittee on Chi/dre11's
Television, Inc. v. General Foods Corp. (1983)
35 Cal.3d 197, 211 [197Cai.Rptr. 783, 673 P.2d
660] (Committee ).) "To state a cause of action
under Uacse statutes for injunctive relief, it is
necessary only to show that 'members of. the
public arc likely to be deceived.' [Citations.]" (
Ibid.) Actual deception or confusion caused by
misleading statements is not required. (People v.
Dollar Rcmt·A- Car Systems, Inc. (1989) 211
C;!I.App.3d 119, 129 [259 Cal.Rptr. 191].) An
"un.fair" practice under section 17200 is one
"whose harm to the victim outweighs its
bonefits." (Saunders v. Superior Court (1994) 27
Cai.App. 4th 832, 839 [33 Cai.Rptr.2d 438). (
Saunders ).) In a similar veiti, the term
"fraudulent" as used in the section "does not refer
to ti)e common law tort of fraud but only requires
• showing members of the .public • 'are likely to
be. deceived." ' [Citation.]" (fbi<!.) No proof of
direct harm from defondant's unfair business
practice need be shown, such that "[a]Uegations
of actual deception, reasonable reliance, and
damage are unoecessary." (Committee, supra, at
p. 211.) Section 17200 .)lOS been interpreted
broadly to bar all ongoing wrongful business
activity,._ including misleading advertising, in
whatever context it presents itself. (People v.
Dollar' Rent-A-Car Systems, Inc., supra, 211
Cai.App.3d atp.l29.)
·
•3 Thus, the statutes are meant to protect the
public from a wide spectrum of itnpropcr conduct
in advertising. They may be invoked where the
advertising complained of is not actually false,
but thought likely to mislead or deceive, ·or is in
fact false. lly their brcadUt, .the statutes
encompass not only those advertisements which
have deceived or misled beca11se they arc w>true,
but also those which may be acc\lfate on some
level, but will nonetheless tend to mislead or
deceive. We reiterate th~ point~ in Saunders,
that the concept cncomp;assed in U>c p.hraso
"likely to be deccjved" has oo rci.ationship to the
concept of common Jaw fu:aud, which io also
sometirnC.'l referred to "-$ deceptiorL A fraudulent
deception m~t .be actually false, !mown to 'be
false by the perpetrator and reasonably relied
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upon by n victim who incurs damages. None of
lhcsc elements ore required to state a cloim for
injunctive relief under section 17200 or 17500. A
perfectly true statement couched in such o manner
Uwt it is likely to mislead or deceive the
consumer, such :is by failure to disclose other
relevant iriforrrllltion, i9 actionable under the9C
sections.
the judge to determine, hosed solely upon his or her
own intuitive renction, whether the ndverti~emcnt is
deceptive." Rather,, tho Court held that the question
is: "Wiult docs the person to whom the advertisement
is addressed find to be the message?" According to
the Second Circuit, the success of a plaintifl's implied
falsity claim usually toms on the persuasiveness of a
consumer .survey. ·
·.
G. Wb:lt Type of Evidence is Required to Establish
*4 In HaslccU v. 1Yme, Inc: (t;:.D.Cal.t997) 965
F.Supp. 1398; the Court held that anecdotal evidence
·alone is insufficient to prove that the .public is likely
to be misled. Relying on Johnson &: Johnson, the
Court held lhot to prevail, plairitiff musi demonslnlte
by extrinsic evidence, such os ·consum<T survey
evidence, that the cliaUcng~d smtemcnts tend to
mislead consumer::. In Haskell, plaintiff pres~ted
evidence of "deception" regarding n sweepstakes in
the form of declarations of :1 few swcepstalces
customern and dtc declarotion of one professor of
rhetoric. After reviewing .the alleged sweepstake
statement ond fmding that plaintifl's interpretation
WliS patently unreasonable, tho ·court held the
testimony of only o few customers and the expert wos
insufficient Tile court reasoned thnt plointiff needed
consumer survey evidence indicating thot a
·signific~~nt portion of the population has been misted
by defendants' bulletins. "Indeed, plaintiff does ·not
dispute that o majority of recipients neither respond to
defendants bulletins nor purchose ony of defendants'
products. Plaintiff hos therefore ·failed to prove that
defendanrs statements mislead the reasonable
consumer. • Id. ot 1408.
th~ Advertisemenls Are
MislcodinJ:.
·
Defendants orgue lluit claims brought under Business
Md Professions Code sectiooo 17200 end 17500 ond
the CollSUIIlel' Legol Renu:diC!I Act, Civil Code
ooction 1750, .Rquirc plaintiff to demonstrnte through
conswner survey evidence tho! each challenged
advertising claim did in fact mislead consumero.
Cosc low is cleor that the proper standard to
determine whether o claim is misleading is the
"reasonable co~r test." Lav/e v. Procter &
Gamble Co. (2003) 105 Coi.App. 4th 496; Bank of
the West v. Superior Court (1992) .2 Col.4th 1254,
1267. Tite Lav/e court rejected o brooder "least
oophisticated constim.er" · test proposed by the
Attorney ~ern!. In so holding; the court did not
specifically indicate what evidence was required in
order to establish Umt on odvertisemcnt was
misleading under tlte "reasonable conswiler test." Tbe
isoue framed for review wao whether the trlol court
hod "employed the wrong methodology in
determining whftt messoges were ·conveYed by the
commercial, relying ·upon its own intuition nther than
viewing the ods from the vantage point of o
reasonable consumer." In upholding the trial court's
conclusion that the commercials for Aleve were not
lilrely to mislead, the Court ~f Appcol seemingly
approved ·the trial court's intuition. Lavie is not
dispositive ns to whot 1ype of evidence is necess:uy to
show that nn advertioement wns misleading because
the portion of the opinion discussing the particular
eVidence before tho trial court was not certified for
publication.
Defendont relics on federol court opinions that
require 11 c·onsumer surveytl evidence. In Johnson &:
Johnson - Merclc Consumer Pharinaceut/cals Co. v.
SmithK/irie Beecham Corp. (2nd Cir.1992) 960 F.2d
294, the Second Circuit held tbat' where n plointifl's
tlleory of recovery is premised upon n clnim of
implied fulschood, n plainriff must 'demonstrnte, by
extrimic evidence, tbot the challenged ndvertisemeots
tend to mislead or confil!lc cons11111lirs. "It io not for
71
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Neither of these cases require the use of consumer
surveys, nor hove defendanb cited o cosc with that
proposition. Johnson & Johnson held lhot consum.."T
surveys ore n "usuol" means of showing consumer
deception. Haskell only held that "extrinsic evidence~
was required.
The recent case, Drockey v. Moore (2003) 107
Cai.App. 4th 86, spccifieolly disapproved of the
methodology in Haskell ond Johnson & Johnson.
Like Haskell, the court in· 11rockey hod "anecdotal
evidence" cif deception in 'the form of testimony from
plaintiffs who were deceived. ·However, Brockey
distiiig\lishcd Haskell lind other federal cases on the
grounds that those cnscs involve "a very few persons
claiming- to be misled and do not hold that
· "oneedotal" evldeitce can never suffice. • The court in
Brockey found no California · cose required · o
conswner survey to establish nn ·ndvertisement was
misleading.
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Tile court reasoned that the primary evidence in a
false advertising case is tho advertising itself. Drockey
analogized tho
unlawful advertising claims .to
federal cases. involving the Federal Trude
C9!1llilission's regUlation of deceptive advertising.
"Tbe United States Supreme Court has rejected a
claim that survey cvid~nce '>':.IS rcquir~d ... [in)
regulation of deceptive advertising." ·citing Fed~ral
Trade Com. v.. Colgate-Palmolive Co. (1965) 380
U.S. 374, 391-392 [13 L.Ed.2d 904, 918, 8.5 S.CL
1035) and Resort Cor Re11tal Syslem, Inc. v. Federal
7i'ade .Com. (9th Cir.I975) 518 F.2d 962, 964. Tile
court in Resort Car ltcld there was no ·need to
consider objcctions.to cons~er tcstim0.ny because it
"merely supported the inferences which can logically
be drawn by scrutinizing the advertising alone."
*te
Tile Brockey court also found an analogy with trade
name disputes and cases construing California's prior
unfair competition law (former Civil Code section
3369). In thos~. cases, the courts acknowledged the
"likelihood of confusion" between names was a
factual question and "the comparison of the two
names themselves may be odequate to establish the
likelihood . of confusion." Citing . Ball v. American
Tr!al Lawyers Assn. (1971) 14 Cai.App.3d 289, 309;
Hair v. McGuire (1961) 188 Cal.App.2d 348,353.
*5 Determining reasonableness is something the trier
of fact-in tltis case, the judge-does in all types of
cases. , As Indicated in Drockey, if "a person of
orP!nary intelligence could reasonably be deceived or
confused, that is all that is required." Tito judge
should not have to exclude himself or bc~elf as a
pe~on of ordinary intelligence and a reasonable
consumer.
Further, requiring consunter-survey-type evidence
would seemingly contradict opinions which hold tltat
proof of direct harm from a defendan(s unfair
business practice is not necessary for recovery. "The
court may also order restitution without
individualized proof of deception, reliance, and
injury." Committee on Children's Television v.
General Foods Corp. (1983) 35 Cal.3d 197, 211;
Day v. AT & T Corp. (1998) 63 C.I.App. 4th 325,
332.
Based on the above, to oslablish Utat advertising is
misleading under a reosonable conswner test should
not roquiro the usc of consumer surveys. Considering
that the advc:rli.!cment speaks for.itscu; the judge is in
a position to determine whether it is misleading, i.e.
likely to deceive, under o "reasonable consumer"
.Pago4
standard.
Thcrefore, .thls Court will analyze d1c advertiseme~ts
opply tbe reasonable consumer. test. If the Cqurt
finds a claim to be misleading, it means member. of
the public arc likely to be.deceivcd, People v. Dollar
Rent-A-Car Systems. Inc., 211 C.I.App .3d 119, 129
( 1989), !hot the claim is material, in that it is likely to
influence t11a purchasing decision, Borden It1c. 11.
Krafllnc. (N.J:?.lll1989) 224 U.S.P.Q. 811, 819, ~nd
the. defendant knew or should have !mown, t;lus. &
Prof.Code § 17500. Before addressing Ute 9pecific
advertisements, the Court will discuss some of the
of contention which bear on the specilic claims
in the.advertisements.
~nd
=
lliE PEAK WELLNE~S STUDY
In May of 1999, defendant retained Peak Wcllncss
Inc. to conducl o study on the effectiveness of
Xcnadrinc RFA-1. Prior to tltis time, there bod been
no elinicnl tests of the Xenodrine.RFA-1 product, and
all of the studies in Ute advertisements referred to
gene.ric studies, i.e., studies of either ephedrine or
ephedrine in combination wiUt other compounds such
ns ca!Tcine, aspirin or L-tyrosi.nc.
The Peak Well ness study. was co~ducted prinwily by
Douglas Kolmau under the supervision of Dr. Carlon
Calker. The study began with 30 overweight subjects.
Sixteen were in the control group and 14 were in the
placebo group. 1b.is was a double blind study.
By dte end ofU1e study, four in the control group had
dropped out and one in the placebo group, leaving a
total of25 subjects who completed the test: 12 in the
control group and 13 in the placebo group.
Dr. Qiubu Shi did n biostatistica1 analysis of the
results. The use of Dr. Shi's information and .the
results of the siudy were Ute subject of a great deal of
tes timony during the trial.
An abstract of the study, summarizing the results,
was published in the Obesity Research Journal in
Junuary 2000. When the research paper wns
submitted, this journal refused to publish the paper,
but it was published in the current Therapeutic
Research Joumal in April 2000.
"6 The results of the study were that the
cxperimen1al group lost 3:14 kilogrorns of weight
versus n 2.05 kilogram loss for the plocebo group.
This was n nwrginally statistically significant
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difference according to Dr. Shi. These numbel'$ were
reached by compnring the 12 who completed tlte
study in the control group with the 13 who completed
the study in the placebo group. Using this ·same group
comporison, Dr. Slii concluded thnt the study group
lost 1.93 percent of body fut compared to 0.05
percent loss of body fut in the placebo group.
Table II in the Peale Wellness study used 1he
beginning weight ofnll 30 subjects (including lhe five
dropouts) to show a nine percent weight loss and a 16
percent body fat losa in the ·control group and a body
fot loss of +I percent by all 14 ·or the people·"who
began the placebo group. Comparing -16 and +I is
the basis of the claim of 1700 percent greater fat loss.
Dr. SlLi's conclusion of 1.93 percent versus 0.05
percent is the basis of the claim of 3860 percent
greater fat loss.
The fallacy of Ute percentages is cllernplilied by
comparing -1 6"percent with +1 percent. There is no
way those percentages can equal n 1700 percent
difference, no matter what mathematical calculation
one does. It is impossible to compare plus and minus
and get a multiple: Thin fallacy is illustrated by the
absurdity of theso comp:trisons. Tite - t 6 percent is
based on o fat loss of approximately 4 percent, or
approximltely 0 pounds. The 3860 percent is based
upon a loss of approximately 4 1/4 pounds. Inasmuch
as the loss of -16 percent of fat was o greater weight
amount, it should not result· in o lower percentage
differential. This illustrates the misleading natUre of
the 1700 percent claim.
Defendant also niis1tates the placebo group in
Ex!Libit 39.3, Tab S, by stating that Ute subjects who
took o placebo followed the sam~ exercise program
ond actually gained body fat. This is not true since thegain in body fat is obtained only by using all 14
:rubjects. There is no infonmtiori on tl1e dropout from
tlte placebo group. The subjects who completed !be
trial presumably continued to exercise, and that group
bad minimal fat loss.
The text correctly pointed otit the relatively low
weight losse~:" when comparing the people who had
fnLishcd the study. Tobie 2, which is the basis for the
claim in the advertisements, compared oll of the
people who started. This in=sed the weight loss
from about four percent to nine percent ond also
substantially increased the fat loss percentages.
Both sides imve presented testimony regarding the
"intcnt-to-trcat11 onalysin. Defendant argues that the
73
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(Cite ~s: 2003 WL 21203014, "6 (CnLSuperlor))
intentto treat means that you usc lill of tho subjects in
the baseline; i.e., all30 subjects in ·tbe Peak Welbtess
test who begnn. This does· not make sense to tile
Court. The intent-to-~t ·atllllys·is would seem to
require tlic mearchers to attempt to follow up ori the
four dropouts ond then use the data from all16 in"dte
original group. This
·not done and there is no
evidence that the Peak Wellness protocol WlL! intent
to ireat. Since the dalll Was not available from the four
wb,o dropped out, there is no justification for using all
16 when comparing to the placebo grilup. Similarly,
using ail 14 who started in the placebo group is not
justified. Therefore, tlic claim of 1700 percent fai'loss
difference and the nine percent weight loss diffcn:nce
ore misle~ding.
=
''7 Dr. Shi did not compare the 16 to th~ 14, but
rather compared the 12 who fuLished ·to the 13 who
finished. He-had data"ori all 30, but did not attempt to
compare them. It nppcors that Mr. Kalman went
tlirough and picked ond chose the data which would
give the mest favorable results. Mr. Kl.!mon adinitted
it would have been more accurate to have compared
the 12 to 13, which ·gives a significantly lower
reduction in weight for the study group and ·n
significantly lower differential between the two
groups.
The Court con only conclude that the ·money being
paid to Dr. Colleer caused him to influence Mr.
Kalman and to try to cr<ate a study-which justified the
money being spent by defendant and which would
ensure further work from defendant
The question is whether defendant !mew of tllls
manipulation of the data. The defendant claims it
relied on the information in the abstract, which it used
in the advertlseDll:nts. Only if the defendant did not
ask any questions and blindly accepted the
information_ in the abstract could 1he .defendant justifY
using the percentages from the abstract However, the
defendant was the sponsor of 1he study. There were
coinmunications between Mr. Kalman and the
defendant. The defendant should have, at n minimwn,
aslced'\vb:tt.lhe actual weight losses were, what the
actual fat percent decreases were, and should have
had sufficient infonn:ttion to know the mislending
nature of tho percentages shown in the abstract.
Failure - to investigate when the infonnation was
within the control of defendant satisfies the test of
P~op/e v. Forest E. 0/sori, Inc. (1982) 137
Cai.App.3d -137. Even if the defendant did not have
the infonnatio"n to !mow !be abstract was misleading,
the defendant certainly became · aware · of this
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infonnation when·the article was published and even
before when tl1e criticisms of the article · were
discussed with Mr. Kalman. Nevertheless, the
defendant did not change the representations in the
advertisements.
Since the TV-ad disclaimers said the average weight
loss was _6.9 poilhds, defendant had octual knowledge
that the nine percent weight loss claim was a
· distortion of the ~esuits of the Peak Wellness study.
Therefore, the statemepts of the nine percent decrease
in weight are false and nLislcading and were !mown or
should have been known by defendant to be so. ..
Dcfcndal!t's position with respect to the 3860 perce~t
or 38.6 times is that in _addition to it being literally
accurate, it was blessed by the judge in the Utah case
brought by Bnsic Research. While the judge may
have indicated that 1he math was accurate, the judge
did not say it was appropriate !O make this claim in
advertisements, pilrlicularly in the context in which
defendant used tl1ese nwnbcrs. If anything WltS
blessed by Judge Kimball in Utah, it was the intentto-treat analysis using the subjects including the
dropouts. The defendant was well aware -ofthe actual
weight loss and actual fat loss -and !mew that 3860
percent was based on oxtremely low weight and fat
losses. TI1ereforc lho defendant knew the misleading
nature of the advertisements using 3860 percent or
·
38._6 times.
•n
Defendant was nware that percentages can be
.misleading, especially,when based on small amounts,
from the comments .on the article which ·were
conveyed by Mr. Kalman to defendant and from Dr.
Ziegenfuss in an e-mnil, .Exhibit 1311, discussing the
EMU study which showed a loss of 3 .19. pounds in
the control group versus n half-pound gain in the
placebo gr,oup. These 11umbers arc comparable to the
fo.ur nnd one-quarter P?und fat loss that was the basis
for the 3860 per~cnt claim. Thus,. defendant was
advised thnt the small numbers were _miSleading yet
continued 1o use the 3860 percent claim
The use of the _I700 percent is sini)larly misl~ading
in that weight Joss of those who completed tltc study
is 6.9 pounds in eight weeks compared to a four and
one-half pound loss in the placebo group. Since the
body fat of_ all 16 who began the study only went
down by approximately four percent, actual body fat
loss would bo comparable to the weight loss. What "is
misleading is that the actual poWlds of either weigbt
or fat lost arc. substantially smaller than the claima for
the beforo-and-after subjects or the amounts people .
Page6
are expected to lose as set forth in some or the
advertisements. Therefore, both the 17 times and the
38.6 times clnilps are misleading because of the
expectaiions raised in the minds of n reasonable
conswner that these pcreenlages apply to highet
weight losses and fat losses than were dcmonstnited
iu the Peale Wellness study. ..
The Peale Wellness study does not justifY any oftl>e
perccntase comparison- between-group claims made
in the advertisements. Any reasonable consumer
reading these percentages would be misled.
TilE EASTERN MICffiGAN UNIVERSITY (EMU)
STUDY AND XENA DR!NE XTREME MAGAZINE.
The only reference to the EMU study is on page 31
of the Xenadrina Xtreme magazine which was mailed
toward the end of the class period. It says the "safety
nnd efficacy" of Xenadrine RFA-1 was examined.
11Lis is false, as safety was not the purpose of tltc
study. The only specific claim related to the study is
"the results showed that the subjects ingesting
Xenadrine RFA-1 lost significantly more weight
(759%) and fat than tl10se using the piaccbo·with.out
eating fewer calo~ies or changing tl1cir carb-to-protcin
ratio. In addition, no negative effects were. found on
resting electrocardiograms or blood lipid profiles."
The 759 percent calculation is bused on a comparison
of the weight lost in the Xenadrine RF A-1 group
(minus 3.1 pounds) as compared to tlw placebo group
(plus 0.44 pounds). The small total loss of weight in
eight. wee~ con;bined with the fallacy of comparing
plus and minus numbers, makes the 759 percent claim
·
misleading.
This Claim appears in _a magazine which is 50 pages
long and Uris reference to the EMU study consists of
two sentences on page 31. Further, the preceding
paragraph refers to the Peale Wellness study and the
38.6 times greater fat _loss claimed to have been
achicv,cd in the Peak Weilncss study. The phrase 38,6
times or 3860 percent greater total fat loss appears at
least five times in the Xenadrine Xtreme magazine.
ThC$e claims, in !be context of before-and-after
testimonials of losing 63 powtds of ·body fat, 46
pounds of fat, and weight losses of 25 pounds and 45
pounds, along with letlcrs indicating equally
substantial if. not greater weight losses, e.g•. 100
pounds (twice), 9G pounds, and "90 pounds of pure
fa~" make the rnagazine mislead4Jg witltout the
reference to Ute EMU study, ns the· render would
believe the 38.6 times relates ·to a weight loss or fat
loss much greater than four pounds.
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,
(Cite os: 2003 WL 21 Z93914, •n(Cai.Superior))
• 9 There wns testimony regarding a press conference
ond a news releose in which claims were made about
the EMU study. There was no evidence that either the
press conference or the news release wns seen or
heard by California consumers.
Therefore notwithstanding the substantial nmount of
time nnd ~!fort spent on the ·EMU study during the
course of the trial; there is no need to discuss it
further.
THE UTAH CASE
The parties hove in!Jo.duccd into evidence opinions
from the bosic rcleurch case in Utah.· The Court has
reviewed those opinions, but neither of these rulings ·
is binding on this Court. The Court notes tlmt while
there wns some evidence received in the Utah case,
the Utah court did not have the b~nefit of a six-week
trial.
PUFFING
Defendant orgues that the general claims · arc
"puffery." "Puffery"· is o wgue or general stntement
on which no reasonable person would rely. To be
actionable, there needs to ·be a "specific estnblislunent
claim." Thompson Medical Co., l11c. v. Cibq-Geigy
Corp. (S.D.N.Y.J986) 643.F.Supp, 1190.
TI1c Court fmds that the generalized claims in the
advertiscm.ents ;ucn as
"revolutionlll}' ·new fat
burning technology a.Stounds the bodybuilding world"
(Tab I); "The most effective fat burning c.ompound
available" (Tab 4); and "The state of the art m fat loss
technology" (Tab 8) are o.ll puffmg. Therefore, these
claims and the mal)y similar claims are not, by
tlJcmselves, false or misleading.
siffiiio.rly, t!Je claim of "pharmaceutical grade" ~r
pha.rmnceutical qunlity" made on the 1abcls m
puffing. Most of the experts coul.d not even defe~e
what this claim me:~nr, and while Dr. Belch, m h1s
~urvey, was able to obtain reactions from consumers,
thi~ claim does not appear to be false or misleading.
Further, the testimony of Mel Rich supports thi~
claim.
11
THE BEFORE-AND-AFTER ADVERTISEMENTS
Defendnnt cloims to rely upon the offida~ts of ihe
individtiols in the before- and-after tidv¢isements to
support the before-and.:ai\er cloirns. In the cnse of
Mil<e Piacentino, this position makes no sense. :
Defendant WIIS in possession of Ex!u"bit 222.2, the
"Candidate Progress Chart" for Michael Piacentino.
This showed that on hio stoi1ing tho program, ·· he
weighed 229 pounds and had 21 percent body fat.
That would give him a total of 48 pounds ofbody.fat
as represented. At week 10, which is the time penod
referred to in the advertisemeJ!t, Mi. Piacentino
weighed 195 pounds nnd had 8 percent body fat. That
would give him 15 1/2· pounds of body fat. That
meant that during this period, he would have lost 32
112 pounds of body fat, not 46 pounds of body fat as
represented. Since the . total weight loss was. 34
pounds, he would have lost muscle mosa, no.t gamed
it, to make up the difference in the total we1ght Joss
between Uie fat Joss· of 32 1/2 pounds and the. total
weight loss of 34 pounds. Even using the week 12
reduction to 7 percent body fat, would give a total of
about 13 1/2 pounds of body fni which would account
for· about 34 112 pounds of body fat loss which
means at most, Mi. Piacentino would have gained II
2 poW:d of muscle, not tho 12 pounds as indicated in
the advertisement.
•to There is no way to reconcile the affidavit
indi9atiog 46 pounds of weight loss with either the
caleulations in Ex!ubit 1289.1 tluough 1289.13 (the
documents from Physical Addiction) or Exhibit
222.2. Even the ·weight loss of 34 pounds is
misleading because of the additional supplements
being taken by Mr. Piacentino.
Since both Mr. Chinery and Mr. Conldin were aware
of the inconsistent 'information, the claims in the
a<!vertisement regarding.Mr: Pincmtino's fat loss and
muscle mass gain BrC evidence of defendant's
willingness to stretch the truth to make its product
appear to be more effective than.it actually was. Both
Mr. Chinery and Mr. Conldin used the identical
wording t!iai they were "confused" by the chart of the
weight loss which showed only c 34-pound weight
loss end the· affidavit which showed n 46-pound
weight loss. Yet the advertisements cl~im a fat loss of
46 pounds plus ·a 12-poimd gain of nmscle.
Therefore, the defendant could not be relying on the
affidavit whiclr sa·ys a weight loss of 46 pounds. lfthe
public does not liliow the. difference between fa.t loss
and weight .loss 110 argued by the defendnnt, it would
think from the odvertisement that there had been a
46-pound weight loss. Sinee the defen":mt knew there
had only been a 34-poWid lo•s, the defendant !mew
this cloim was flllse.
Evidence was introduced in ihe fonn of testimony
from Mike Piacentino ond documents from Physical
Copr: CO West 2003 No Claim to Orig. U.S. Govt. W!!rl<.~
.Slip Copy
(Cite as: 2003 WL 21283814, ~to (Cai.Superior))
Addiction that the weight losses attributable to Karen
Curtis, Remy Feniello and Maria Korsgaard were not
.accurate. There is po evidence that defendant had this
information. For each of these individuals defendant
produced an affidavit. atte&ting to accuracy (Ex!)ibits
2118, 2120. and 596), There is no evidence that
defendant knew. that the affidavits were innccurate.
While thcrc is solllC qw;stlon obout the notaHZaqon of
the affidav:;ts, as they are all noWized by the same
notacy, and none of the affidavits .ha1 a date by the
notarization, this by itself is not enough to invalidate
the affidavits. More importantly, since the beforeand-after ads are misleading in the context of the
exaggerate<!. claims of fat !oss, whe!her the.·beforeand-afttr ads arc accurate is not .signHicant The
advcrtisernt;n.IG arc misleading in. Uiat .tho· typical
consumer. would expect dramatic weight losS()s bllScd
not only on the befo~-and-ofter ad but on the
pcrcen!llge fat loss claim, which n re.asonable
conswncr would think beru:s some rclotionship to the
amount of weight lost llS shown in tl1c before-andafter ads. Since the actual amount of fat Joss, which
fonns the basis for . the percentage claims was so
small, the advertisements are misleading.
In the case of Randy Martin his letter says his
ttansformation was five months (Exhibit 1070) rather
than the tluec months claimed in the advertisements.
Defendant says Mr. Martin clarified the time later and
said the weight was lost in three months. Since the
weight loss by Mr. Martin is so great, there would be
little reason to c>Uiggerate the time It took, and
therefore, the Court docs not..fmd the claims of weight
loss by Randy Martin to be misleading. Compare,
Christjoe Muller "45 pounds in 16 weeks" (Tab 13,
Exhibit 19) with television 'Clip S, Christine. Muller
"45 pounds in 12 weeks" with Clip 6, Christine
Muller "41 pounds in 12 weeks."
CREDIBILITY
*11 Before discussing the specific advertisements, it
Is necessary to discuss the credibility of the
defendant's most impommt witnessi·Robcrt Chinery,
the president of defendant He worked for Pro Source
and thl'll left and started Cytodyne. He developed
Xcnadrinc RFA-1. The Court does not find Mr.
Chinery io be credible. similarly the witnesses on
.defendant's payroll or retainer, e.g., Kelly. Conklin,
J:)r. Ziegenfius. and Dr. Colker, were not credible.
This finding is particularly important in ·evaluating
what the defendant knew about the claims it was
making. The Court finds the defendant was well
Page II
aware that the claims made .in the early ads were not ·
accurate, as Mr, Chinery knew Xcnadrinc RFA-1 had
not been the subject of the studies, lmew only
portions of the ingredients bud been studied. and
knew of the different dosages. Since Mr. Cbinery wos
drafting the advertisements, it was his language that
WllS designed to mislead consumers reading the
odvci1isements by malcing · n .. reader think that
Xenadrine RFA-1 had been tested.
With respect to tl1e Peak Wellness study, the Court
finds Mr, Chinery was well informed of what WllS
going on, and that he understood ·the actual ornounts
of weight and fat lOSS()3 .in the study, It appears thnt he
probably encouragedMr. I<alnum to use the numbers
that exaggerated the results.
·
With respect to the before-and·after studies, tl1erc is
no.specifie evidence tl1at Mr. Chincry was aware that
the weight losses might have been exaggerated, other
than Mike Pillcentino. However, given his experience
in the field, he probably knew that tl1e affidavits were
not necurate. ~Ie !mew about Mike Piacentino because
he !mew about the candidate weight-loss chart, and he
should have known , tbat. Mr. Piacentino bad
previously posed for an advertisement for Pro Source
ns n well-conditioned body builder before he
underwent his "tinnsfonnation". using Xenadrine
RFA-1 (See Exhibit 93.48).
Mr. Chinel}"s lack of condor can be seen throughout
..
the tri.U.
Cytodyne has consistently failed to produce
documents that could ·have. explained things, pushed
researchers to make s.tudiea come out favorable to
them and paid money to the key people involved in
providing infonnatio11 to them to ensure U1e
infof11)ation was favorable to them.
The discovery responses on the s.Ues in Ollifornia
seem' to have ·boen designed to mislead the·plaintiff.
The defendant did not have any product complaints
before 2000. TI1ere were no ccnificatcs of ;malysis.
There were no assays. E- mails were deleted. Peak
Wellness did not have its underlying documents. Mel
Rich did ·not bring documents. Mr. Schiff did not
bring docwncnl!:, and some affidavits appeor to be
missing from the before-and-after subjects.
In addition, there are a series or' mistakes, ·011ch
favorable to defendant. There ore mistakes in the pvalues in the Peak Wellness study. TI1ere is a mistake
on the website. tbc{e was a mistake in citing the
Copr. C West 2003 No Claim to Orig. U.S. Govt Works
76
77
Page?
Slip Copy
(CUe ru;: 2003 WL 21283814, ~11 (Coi.Superlor))
wrong · jo=l as support In one of the
advertioem::nto. There was o mistake in the weigbtlosn claims. There .won not n patent pending.
• 12 Defcndanro entire approach to marketing
Xenadrinc RFA-I is epitottdu:d by Dr. Arms1rong nt
page 133, line 8 of his deposition when he s:~id that
whnt he was signing wos "not n lie, per se."
SAFETY
A subst:mtial omounf of the trial was spent with
eJq)erts on both sides testirY;ng reg~~rding the s:~fet)' of
'icnadrine RF A- I or the safety of ephedrine and
ephedrine caffeine productS. Tho issue of Safety is
relcv:mt to ~•e cxpreso and implied claims of safety. ·
Tite Court first notes that while there should be
substantial additional investigation into any adverse
event reports and whether odvet'Se reoctioru~ may be
caused ·by Xenadrine RFA-1 or the other ephedra
products on the ·innrket, it is not the role of this Court
to determine whether or n~t this product should· be
banned. The plaintiffs do not·seelc to ban Xenodrine
RFA-1 from mnrke~ nor would it bo within the power
of lhis Court pursuant to the provisions of California
Business and Professions Code sCction 17200 to
mn!ce ouch ·an order. Any regulation is wirhin the
purview of U1e regulatory agencies and the·legislature.
The Court is ruling on the issue before it in this
action: whether defendants have engaged in false and
misleading advertising.
There have been numerous complaints submitted to
de fendan~ to competitors of defendant, ond to the
Food & Drug 'Administration from consumers who
cloin1 they have ·suffered everything from tmnsient
events, such as palpilations or high blood pressure to
strolces and l1eart attack•, some resulting iii dc~th. The
Court allowed U1ese adverse events into evidence, but
orily for the -purpose of showing that the complaints
hod been IllJlde. l11ere was no evidi:nce that the
complaints were truthful, i.e. that the events had in
fact occurred, and no proof of any causal connection
between taking Xcnndrine RFA-1 or other ephedra
products and the adverse event, allhough some of
plaintiff's eJCperts testified to . a connection and
pointed out the nnture of ephedrine ond caffeine is ·to
constrict blood vessels Dnd raise he.rt rate, which
refiults in higher blood pressure, higher body .
tetripcrriturc which, when ~<?.mbined with exercise, em
result in stroke ond heart attacks;
Even t110uglt t11erc have been hWldreds and n\aybe
thousands of.comploints reg~~rding ephedra prod\u:ts,
no evideru:e wns introduced of the number ·of
complaints including strokes and heart attacks that
occur in the general popUlation.nor of the nlllllbor of
ephedra users. Thus, the l'lltio of complainl!l among
eplleilra users could not be compared to !he general
population. Recently, the Rand Report was published.
While it Was referred to bY so!M of the experts, it Vr.as
not allowed into c:videilce and the Court ·did 'not
consider its conclusions.
11 appearo that defendllnt has gone out of its wo.y to
ininirnize the existence of any health risks !hot might
exist. An example' of this i• iri'thc XenadriM Xtrcme
rruigazine. Thc'thermogenics llrticlo by Dr. Ziegenfuss
originally contained language on the last page under
the beading, "Take H~me Messages" that
recommended usinc the'ploduct for only four to eight
weeks nnd poinied out that one could expect certain
si~e effects such <14 trembling, jitters; ·and elevated
·heart l'llte. These health Wlirnings were edited.ounwd
do not appear in the article that was published irl the
Xe11adri11e Xtreme mag:tzine, (Exhibit 281 .7, Exhibit
2033, p.13).
.
*13 ln light of the questions as to the safety of
ephedra. products and the lack of safety studies, the
Court firlds that Tabs I, 3, 4 and 8 are misleading
because of the implied safety claims. The testimonials
from doctot'S in Tabs I, 3, 4 and 8 imply Xenaclrine
RFA-1 is safe, as does the reference in Tabs I' lind 3
. to "outperforming dangerous prescription products."
This fwding is in addition to the reasons discussed
below that these advertisements are misleading. The
safety statements In the Xenadrine Xtteme magazine
are· false in that the safety of Xenadrine RFA,l ·had
not been studied.
THE GENERlC STUDIES
The·generic studies referred to In Tabs 1-6 and labels
1-3 do not support tl1e claims made in the
advertisements or the labels. References to these
studies are misleading in ihat Xenadrinc RFA-t was
not tested; the Xenadrine RFA-1 fonnula wns not
tested;· the dosoges in som.e sttidies are different;
scimc studied ral:i, not humans; and the ingredients ore
not identical, e.g., some include nspirin (not salicin),
some include only L-tyrosinc, some tested only
ephedrine; some tested ephedrine and caffeine, ond
some ntudied synthetic rather than botanical
ephedrine. None of these differences are elcplained.
Therefore, it is misleading· to make it' appear· that
Xenadrino RFA-1 was test<d.
Copr. (1) West 2003'No Claim to Orig. U.S. Govt. Works
Slip Copy
(Cile u: 2003 WL 21283814, *13 (Cai.Superlor))
THE PRINT ADVERTISEMENTS
The Court Will now discuss the effectiveness claims
in individual advertisements.
TAB 1 [FNI]
FNI. Thi: Court l1os admitted the notebook
cOrituining the adVertisements with Tabs
1-15 .. Exhibit2393.
The very fll'St ad, Tab I, Exhibit No. 94.3, has
several false and.mislcading statcmentsJI'ho nd Gays:
"Shown in studies to ·increase the rate of fat loss by
up to 300 percent!" Dr. Krieger; who did the study,
testified this claim was false because the study did not
measure ·falloss but only weighlloss. Moreover, tho
clear implication is that this weight loss relates to the
product being advertised, Xenadrine RFA-1,
particularly since·it says, ''New. Available wilhout a
prescription" In the comer above this phrase. The
amounts of weight loss of the two models ~~re 68
poWlcls in IO·wecks and 57 pounds in 9"\Veei<S. The
footnote in very' small print says, "Joseph lsnardi (sic)
ond N:tncy Lo.tarroco achieved their extmordinnry
results using Xe'nadrine· RFA-1 as their exClusive
dietai}' supplement ta their tmihing program.• A
reasonable consumer would assume, even though
these were ClCtraordin!lry results, that he·or she might
achieve results at least In the ballp~rk of the weight
lost by these two models.
The phrase, ''Patent Pending pharmaceutical grade
formula," Is false in that therc·wns no p~tent pending.
Whether this is n 'mistalc:e ·or riot, it certainly is a
mistake' in favor of 'defendont and given defendant's
tendency throughout to exnggerote and always use lhe
claim most · favorable to it irre~pective of ·the
contraindications, the Court fmds U~at phrase ·is false
nild misleading. · It further odds to the
misrepresentation as Iii whelhcr Xenadrine RFA-1
wa$ being 'tested. Why lirould this formula have a
patent pending on it if· it were not the fonnula that
wasbeing tested?
· ·
'
;. ,·
*14 On the rigl•t-hand side of the advertisement,
there are statements ·from doctors juxtnposed with
statements such as "S!iown in clinical srudies to be
29% more effective.... " Without any otl1er reference,
it appears that it was Xenadrine RFA-1 that was
shown to be more effective. The next statement is:
"Urililce other weight loss products, Xenadrine
RFA-I's thennogcnic octivity. is 'not decreased the
longer you use it To the contrary, Xenadrine RFA-l's
potent thermogenic fat burning effectn ~c!lm lly
increase,.. followed by 0 citation 't o Astrup. nus
refers· to Xcnadrifle RFA-1 's thermogenic octivity, not
the ingredients in Xenadrine RFA-1 ond siw::e Astrup
tested only generic compounds, this slatement is
misleading. The next quote is "Xenadrine RFA·I's
advanced thennogenic formulo has been shown to
actually spare lean muscle tiisue.... " Tite citntion
ogoin io misleading beeliiise it appears that Xenadrine
RFA-'1 was tested. Finliuy, the quote, ''has been
shown . to actually prevent regaining of body fat
normally associated with extreme weight loss," with o
citation to Astrup must meoil Xeimdrine RFA-1
because there is no other reference. Tbtw,' the rust
advertisement is misleading.
TAB2
The second print 'advertisement, ·Tab 2, E1chlbit 94.2,
"Revolutionary new fat burning technology astounds
the bodybuilding world," has quotes from
bodybuilders which were not challenged during the
litigation. In the right·hru\d.colurnii, the ad sa,Ys:
Since its introduction 'to the body building scene,
Xenodrine RFA-1 has already esrnblisbed itself·as
tl1e most effective of this cmergiilg generation of
sophisticated · scientific · weight · loss tools!
Xenadrino
RFA-1's
potent
thermogenic
combination has been ·proven In niore scientific
studies tl1an virtually any olher fonnula
(prescription or non-prescription). But Xenodrine
RFA-l's powerful ·effects don't stop there-in a
ground breaking study published in the
prestigious International Journal of Obesity this
potent thcnnogenic compoWld was actually
shown to spare Jean muscle tissue during intense
weight loss cycles•, making Xenadrine RFA-1 the
ultinJate pl1ysique tnlnsfonoation tool!
·.'
·· ' Pasquali R; · et al. Cbronip beta receptot'S
stinrulntion 'prevents nitrogen Joss during scmistatvation in obcse ·subjccts.' International Journal
of Obesity 13 (supplenu:nt 1): (abstract).
The second advertisement ·is mlsleoding in that a
reasonable consumer would think Xenodrine RFA-1
Was the product tested·. ·
TAB3
The third print advertisement, Tab 3, Exhibit 58, is
virtually identical ·to · the flrst ad except tl~nt the
before-nnd-cfler substitutes Farah .. Fnbri~toro for
Chris Sorrentino. Ms. Fnbricatore lost 3'9 pounds in
28 days. Tbis ·advertisement adds the phr:!Se, "Lose
up to 30 pounds in 30 dhys \\>ith the most powerful fat
Copr. \C West 2003 No Claim to Orig. U.S. Govl Worl<S
79
78
Slip Copy.
(Cite ao: 200.3 W L 21283614, • 14 (Cai.Superlor))
burning compound ever developed." It has all of the
fnlse and misle~ding claims of the flrst·advertisement,
but by adding the phrase, "30 poWJds in 30 days," it is
even more misleading.
TAB4
"JS .In Tab 4, EJthibit 97, the trutb·ofthe portion of
the advertisement with q~,0,tes from the doctors is
unchallenged by the plaintiffs; Other !han safety, the
only portion which could be deemed misleading is tho
portion that. laDes about the scientific refereiJCOS. It
SiiYG that .the fonnula "is centercd.around a highly
advilnced,
tcscarch
proven
thermogenic
compound.... " It then snyil, "Xt;nadrine RFA-l's
revolutionary tl1crmogenic compound has been
proven effective through a vast series of scientific
studies which offer irrefutable proof to the
CKtmordinary fat-burning/muscle· sparing effects that
arc possible. No ot!Jer thermogenic formula is backed
by tllis nwnbcr ofpublishl:d scientific stUdies!"
The clear implication ofthe se~.ond portion is that
J>cnadrine RFA, l has been proven effective in
scientific tests because no other thermogenic formula
is backed by this number ·of tests. Further, since
Xcnadrinc RFA-1 "is a revolutionary new ~pproach
to weight loss ... based on the latest scientific
research," any reasonable. consumer would believe
Xenadrine RFA-1 is the subject of the research .
mentioned in the list of scientific references.
Therefore, TAB 4 is misleading.
TABS
The fifth advertisemen4 Tab 5., Exhibit 98.2
"Ciinicai studies confumXcnadrine RFA-tic amazing
fat-bw:nJni'muscl.e-sparing effects" is a two-page
advertisement The first page consists of beforc-nndaftcr picturen of Randall Hanson stating !hot. he lost
"illl ei<tmordinary 63 pounds of ~ody fat. • The
plaintiffs have ·not challenged ~ny of the claims
attributed to Mr. Hanson. . ·
The next page, Exhibit 98.3, has four pictures on the
top of bodybuilders with quotes attributed to them.
The plaintiffs do not challenge this portion of tho
advcrtiscmen~ The fight·hand side comists of quotes
from mticles praising Xe!llldrine RFA·l that ore not
.challenged by plaintiff. Plaintiff challenges the
portion on the left-hand column of the second p,age
which states,
Clinically Proven To ''Bwn Fat ~nd Spare
Muscle" Xcnadrine RFA-l's. advance . "FJC"
ll'a ge l2
Slip Copy
(Cite as: 2003 WL 21283314, • 16 (Cni.Superior))
Pag~ 11
thermogenic combination has been the subject of
nwnerous published clinical studies which offer
.undeniable proof of the extraordinary fat·
burning/muscle sparing effeclll that are possible.
In n recent study published in the prestigious
International Journal of Obesity, this poll:nt
compound was shown to increase the metabolic
rqte by over an asto~nding 600%! This same
journal als~o. published n siudy showing the
synthetic equivalent of this compound to Increase
the total rate offat-loss by over 300%1 And in yet
another groundbrealdng . study, . this potent
compound was shown t() help prevent regaining
of badyfot that is typically associated with
extrerm: weight los.s. This remarkable feat is
actually made possible by way of Xenadrine
RFA-t's amazing muscle sparing effects. In other
words, preserving lean muscle tissue which is
the body is
more 'metabolically active' than
lcfi with a permanently increased metabolism
which in effect burns more calories and prevents
new fa~ stores from forming.
•16 Another study published in the Journal of
Phaflllllcology ond Experimental Therapeutics
found !hot by adding o specific thermogenic
synergist, this combina.t ion may become over
.54% mare effective than virtually nny other
thennogenic fonuula on the market" (All
emphasis in original.)
No other thermogenic combination is backed by
this number of published clinical studies!
Tbe beading "Clinically Proven," followed by
references to clinical studies, Is misleading in thai the
reader would think !hot it.was Xcnadrine RFA·l !hot
had been clinically .proven, not merely. some
ingrcdicn~ Since none of the studie~ relate to
Xenadrine RFA-1, all of !he claims eKcept for the 300
petcent attributed ;o "tl)e synthetic equivalent" arc
misleading (and Dr. Kreiger said only weight loss.~
studied.) There is a claim that by adding n specific
thermogenic ~ynergis4 the "coJ11bination may become
over 45% more effective !han virtually any other
thennogerlic formula on the market." The Maher
study does not appear to support this claim. Further,
Dr. Maher testified that his study did not support this
conclusion. Even though Dr. Maher is probably
bias~ against tile defrndan~ .the Court concludes that
this portion relating to the Maher study ill misleading.
r.,
OTIIER ADVERTISERS
Before ditlcuss.ing · the rest of defendant's
advertisements, the Court will address the dcfendanrs
argument that its claims are·not misleading in light of
Copr. 0 West 2003 No Claim 19 Orig. U.S. Oovt. Works
competitors' claims. Defendant has introduced two
magazines for the Court to review to see· the context
in which readers see the Xehadrine RFA·l ads.
Exhibit 2376 is Flex Magazine from March 1998 and
Exhibit 2377 is Musclemag International for
February 2000.lloth magazines consist of articles on
bodybuilding and bodybuilding contests with
seemingly nn equal amount of advertising, pririlarily
for supplements designed to ildd muscle or lose fat
The supplement business appearo to be highly
competitive. Tbe defendant is correct in that
consumers
are
bombarded
with
numerous
advertisements :md many claims of benefit for these
products. A careful review of the advertisements,
however, shows tl~at the advertisements for Xenadrine
RFA-1 make more specific chums than all but o
couple of the other adycrtisements.
Even those advertisements with specific claims are
far moro candid than defendant's advertisements. For
example, Hycfroxycut makes a claim !hot you can
bum 613 percent more fat, but in the tex4 it refers to
"the highly touted ECA (Ephedrine, caffeine and
aspirin) stack. This very stack is found in Hydroxycut
and has been shown in recent clinical study to elicit a
613 pen:ent greater rate of fat Ieos., .. " (Exhibit 2377,
p.3). The advertisement makes it clear that they are
referilng to the ingredients in Hydroxycut and not
Hydroxycut itsdf. Tlie Hydroxycut ad goes on to
discuss the other ingredients in Hydroxycut nnd their
added benefits, thus making it clear that Hydroxycut
was not the subject of the study. Further,. the
advertisement refers to body fat loss· in pounds nnd
shows ·Group I, tl1e control group, lost 1.5 pounds
whereas Group 2 "ECA stack· as found in
Hydroxycut" lost 9.2 pounds. Titus, the reader is able
to ace the nctual weight loss being claimed.
"17 By contras~ the advertisements for Xenadrine
RFA·l say, "Xenadrine RFA-l's revolutionary
thermogenic compound has been proven effective
through a vast series of scientific studies ... ·no other
th~nnogenic formuln is ·badred ·by this number of
published scientific studies." Other claims arc that
Xenadrinc RFA·I's adVll!lced "FJC thermogenic
i:ombiriation has been the subject of numerous
published clinical studies ... in a tecent study
published in the prestigious International Journal of
Obesity, this potent compound was shown to increase
tm:tabolic rate by over nn astounding 600 percent"
As a resul4 any rcosonable consumer would believe
that Xenadrino RFA·l has been tested in the scientific
journals cited in the advertisements, Notwilhstlnding
tho word, 11 new," there is no way fo r o reasonable
coilSlUDCr to know that the product did not exist in the
early '90s when some of the Journal articles were
published. While a skilled grammarian or n skilled
lawyer might find ambiguities in the language to
show that it does not specifically say that Xelllldrioe
RFA: t waa "testcd, !hot fg not a reasonable conclusion
for a reasonable coiiswncr. Defendan~s ada· are
writton to leave the render with the impression that it
was Xe!llldrine RF A-l 'that was tested. As is shown in
the Hydroxycut ads, it is very simple to stnte that it is
the ingredients,
ot lens! some of the ingredients,
that were tested in these studies. [FN2]
or
FN2. Tite Court is not finding the
Hydroxycut cdvertisement to be nccurnte. It
is only being used to show thnt the
competitors are giving consumers more
infonnation nbout the studies.
Contained in Exhibi t 2377 is an advertisement for
another Cytodyne product called CytopleJ~" This
advertisement says that Cytoplex contains a
revolutionary compound called "Glucostatin-RFS"
which is lll!lde up of a. unique blend of substrates
clinically prove11 to stimulate rapid and dramatic
weight loss tesults, even without dieting." (Emphasis
in original.) It also refers to an article in the
International Journal of Obesity that found
Glucostatin substmte number one actually increased
the rate of weight loss by over 600 pen:ent
Tho Court finds this advertisement significant in two
respects. First, it shows that de(endant is capable of
writing an advertisement that makes it clear that only
the ingredients have been tested in scientific journals
nnd not tho product itself. Second, this appears to be
one of the products that Randall Hanson provided to
Milce Piacentino and possibly some of the other
before-and· after subjects. Since this product is
designed to · increase weight loss, it would be
extremely significant to a before-and-after subject
who claims to have lost weight due to Xenadrine
RFA-1. There is no way of knowing whether the
weight Joss was due 'to Xenadrine RFA-1, to
Cytoplex, to the other supplem..-nts, or to the
incredible workouts done by Mr. Piacentino. The
failure to disclose the consumption of other
supplemen!s is another reason the Milce Pincentino
before-and-after · odvertisementt; are misleoding.
Therefore, the Court does not need to resolve the
factual disputes regarding the pbotographo ot the
instructions iivcn to Mr. Piaccntino .
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(Cite 11: 2003 WL ll28J814, *18 (Cai.Superior))
•18 Since the supplements cam: from Cytodync lo
Mr. Hanson, defcndont cannot claim it did not know
tlut tbeso supplemeotJ were being provided to the
before..and-ailer subj ects. Defenda nt argues that Mr.
Hl115on wa.s do ing before- and-oiler studies on ronny
ditrcreol produc ts Mel, therefore, defendant would not
know lh.>! subject WM gelling which supplements that
defendant provided to Mr, ijanson. Tho defendant
should have known that Mr.. Hanson was pr<~viding
Mr. Piacenlino with additional supplements,
including supplements that were used as meal
substitute.!l and tl)ercfore were used in losing weight.
Had defendant done any investigation, such as simply
aslcing Mr. Hanson (who wns being paid by defendant
as a consultant) who was receiving which
supplements, it would havo discovered this fact See
People v. Forest E. Olsen (1982) 137 Cai.App.3d
137.
TAB 6 and TAB 7
Exllibit 40, Tab 6, and Exhibit 237 1, Tab 7, "Take
Control," feature Nancy Lntarocca losing 57 pounds
in nine weci<S. Tab 6 says, "It is no wonder Xcnadrine
RFA-1 is America's hottest new diet product This
revolutionary fonnula is centered aroW!d an advanced
thennogcnic compound shown in clinical studies to
increase the metabolism and the total rate of fat loss
by over 600 percent."
.
Tab 7, after an identical first sentence says, "In a
groundbrealcing double blind clinical trial, Xcnadrine
RFA-t's revolutionary thennogenic formula was
shown to increase the rate offat loss by a phenomenal
1700%!'' (Emphasis in original.) Defendant used
virtually tho identical language in Tab 7 to refer to a
study on Xenadrine RFA-t.·as it used in Tab 6 to
describe generic studies. This illustrates how the
reference in Tab 6 is mlslcnding, ns anyone reading
Tab 6 would tllialc it was Xenadrine ·RFA-1 that was
tested.
Tab 7 bas a disclaimer, "While Nancy's results were
extraordinary and go beyond wbat .the average person
may achieve, Xenadrine RFA·I guarantees Vi.sible
weight results in just 30 days or your .money back."
However, there is no indication that Nancy's results
are silt or seven times greater than the results
achieved in the Peak Wellness study. The 1700
percent claim is misleading and it is not saved by the
disclaimer.
ll'age14
Slip Copy
(Cite c•: 2003 WL 21283014, •t 9 (CaJ.Superlor))
Pugo 13
With respect to Tab. 6,- Exhibit 39, the middle page
appears to be the fu~! print ad to state in bold letters,
ns a headline, "Clinically proven to increase fat loss
by an unprecedented 17.00 percent" This
advertisement contains both the 1700 percent greater
fat-loss cloim and the claim tliat the subjects reduced
their total body weight by a remarkable nine percent
Both of these claims arc ·misleading for the reasons
discussed in the discussion of the Penlc Wcllness
sltldy.
The 1700-percent andninc-percent claims arc also
misleading in the context of the advertisement
showing Mike Piaccnrino with a 46-pound loss,
which is substantially greater than the weight loss .in
d1c Peak Wellness study. Further, as previously
discussed, Mr. Piacenrino's weight loss was not 46
pounds, nor did he drop 46 poW!ds of fat while
"packing on o phenomenal 12 pounds.ofle.an muscle
mass." Further, any bcforc-and-afler advertisement
with Mr. Piacentino is misleading because it does not
disclose d1c uso of qther s~pplements and, in
particular, meal-substitute supplements. .
TAB9
•19 Tab 9, Exhibit 41, ".You can see the difference"
says Lisa Debonis lost 48 pounda in 12 weeks and
although "Lisa's results arc not typical," the statement
that Xenadriae RFA-1 is "clinically proven . to
increase fat loss by an 'astounding seventeen rimes
more than diet and exercise alone" (38.6 times in later
ads) would indicotc that the c.lini~al proof should
have been moro substantial than the four pound fat
loss in eight weeks that was basis of the 38 .6 tirncs
claim or the 6.9 pound actual weight loss. Therefore,
the advertisement is misleading.
TAB 10
Tab 10, Exhibit 52.5, featUres Maria Korsgaard.and
claims she lost an extraordinary 25 pounds in just
three weeks. Even though her results are "not
typic a~" the claim that Xenadrine RFA-1 is
'!cliilically shown to increase fat loss by an astounding
38.6. times more than diet and ex.ercise alone" is
misleading in this contel<t since 25 pow1ds in three
weel01 is so dramatically higher than the 6.9 pounds in
eight weeks that was shown in ihe Peak Wellncss
study.
TAB 11
pounds in three weeks), Dave Muller (30 pounds in
four weeks), :md Maria Korsga~rd (25 ponnda in
three weeks) refers lo Xcnadrine RFA- 1 having been
"clinically proven to increase fat loss by a
phenomenal 17 times more than diet and eliercise
nlonel"
claim of is followed irmnodintely by,
"Whether you neOd. ·to Jose 15 poUnds or 100." nins,
anyono reading thiS nd would think that the 17-times
loss bears some relation to weight losses of I 5
pounds to I00 pounds or to the weighi losSes of thee
models. Therefore, Tab 11 is misleading.
nus
Tab3 9, 10; 11, 13, and 14 refer to weight/ass in the
before-and-oiler pictures and thon make claims nbout
fat loss. Tbio nppenis to be nn inter1tionnl attempt to
exagger:>te the claims. Tho weight loss percentage
differences in · the Peale Welliless test were
substantially lower than the fat loss percentage
differences between groups. T he defendant bas
argued, and from these advertisements it appe:u. the
defendant believes, the public confuses fat loss with
weight loss. Yet the advertisements usc percentage fat
loss claims . to make it npp,ear dllit wcighi loss also
will be dramatically higher for those using Xenadrine
RFA-1 compared to those using diet and cxetcise
alone. This is one more ·example of how these
advertisements are misleading.
TAB12
The advertisement witl1 Mars!Iall Faulk, Tab· 12,
Exhibit 21, contains Dclaim of 3860 percent greater
total fat loss which is misleading. However, the small
amount of space devoted to this cloim compored to
the two pages of quotes, statistics nnd pictures of
football stan makes this claim, in contlix~ immateriaL
It is doubtful if n reasonable consumer would be
persuaded by the fat loss claim when there is no
mention of any of the nthletes losing specific amounts
of weight or fat The thrust of the advertisement is
that Xenadriae RFA-1 will improve perfonnancc and
make you look better, not thnt you Will lose a specific
lllllOUnt of weighi or fat. Therefore, the fat JOSS cJDim
is not material and d1is nd is·not misleading.
even more misleading. It is not saved by tim phrase,
"These result!l not typical" because the typical results
ore not shown.
Tire oniy time the actual results were Ghown was in
the television commerciills. There was ll statement on
the screen tlut the average weight loss was 6.9
po~ds in 8 weeks. The Court is W!able to fmd such a
disclaimer in any of the print ods: The defendant wns
aware of tl1e nctual weight loss and !mew it should be
letting people IO]OW the average wciglat loss, yet the
defendont did not use the actual nverngo weight loss
in any of the print ads where it would be more likely
to be read than in the teleVision ads.
TABI4
The last advertisement, Tab No. 14, Exlubit 20,
"What a difference," suffers from lhe same distortion
as the other advertisements with the 3 8.6 times claim
in the same advertisement witl1 n claim of
extraordinary weight losses, in this case, Remy
Feniello's claim of losing 35 pounds in four weeks.
TI1erefore this advertisement is also misleading.
TELEVISION COMMERCIALS
Each side has submitted transcriptions of the
television advertisements that ran during the class
·period for Sp~ts or Clips 2, 3, 4, 5, 6, 7, 10, II nod
12. TI1e plaintiff bas illso irisertcd clip B. As the Court
is nol certain when clip Bran, it is not included in this
analysis. Spot or· Clip 2 and Spot or Clip 12 are in
Spanish.
As to Clips 3, 4, 5, 6, 7 10 and 11, each contains the
claim of "Clinically proven to incretiSe fat loss 38
ti!ms more than diet and · eJ<ercise alone." fu
discussed in U1e analysis of the Peale Welln~ss study
and the priDt ads, this claim by itself is misleading.
This claim is even more mlslending in tllese television
ndvertisemcnts, each of whicl• contained n claim of
substantial weight loss by tlte before-nnd-after
models. TI1erefore, I find each of the English
television commercials to be misleading.
TAB 13
•zo Tab 13, Exlu'bit 67 contnlns tho phrase,
"Clinically proven to increase fat loss by · a
phenomeoal 38.6 times more than diet and exercise
lilonc" Claim. (Emphasis in original) As previously
'discussed, the 38.6 ti!ms by itself is rills!Cllding ond
in the context of before-ond-aller claims <>flosses of
54 pounds and 4S pounds, the 38.6 times claim is
In virtually uruenaahle small print on the boltom of
the picture in the television ndvertisements, there is n
statement d>at nppeais for o very brief time that the
avcrnge weight Joss wns 6.9 pounds in 8 weeks.
Further, anyone watching the television screen is so
distracted by the men :md women moving nround,
there is very little likelihood thllt any reasonable
consumer would read the disclaimer. The defendan(s
TABU
Tab II, Exhibit 51, featuring IC:lrcn Curtis (24
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commencement of the action and n Firs! Amended
Complaint was never filed.
not carried this burden.
REMEDY
statements that it wus attempting to have visible
disclaimers in the television ads arc disingenuous. and
U1c disclaimers do not cure the misleading nature of
the ads.
With respect to tho Spanish version (Clip 2), tho
before-and-after claims arc the same, but there arc no
disclaimers. Clip 2 contains a claim of 1700 percent
·greater loss of weight This Is misleading for the
rcosons discussed in 'tlie analysis. of. the Peak
Welln,ess study and particularly in the conte><t of the
substantial weight lasses in tl1o before-and-after
claims. Further, the 1700 percent, if it wns accurate,
only applies to fat loss, not weight loss.
"ll Clips 2 and 3 use Mike Piacentino and are also
misleading · for the rensons discussed in the beforeand-after section.
·
The final television clip or spot, Number 12, merely
contains before-and-after claims, which nre not be
themselves mislending. Sincothere does nat appear to
be a specific percentage claim in this cotiUilOfcial, jt
is not misleading.
·
THE LABELS
The frrst Xenadrine RF A· I label says "Xcnadrine
RFA-l's advanced new thermogenic . foiJll\lla
represents tho most sophisticate.d natural weight loss
t~hnology available. Its powerful thermogenic
combination has been proven effective in numerous
scientific studies." El<hibit 2006. Various articlen arc
cited to support this. Clearly the import is that
Xcnadrine RFA-1 was tested. TI1c second label,
El<hibit 2007, made a slight change by adding "EIC"
so the second sentence read, ·"Its powerful E/C
thermogenic combination ha!J been. proven effective
in numerous scientific studies." The· listing of the
generic studies has been del~ted, but that docs not
cure the implication that Xcnadrino ·RFA· I had been
tested. The same language is contained iU label
nwnbcr 3, El<hibit 2004.
·
In nnalyzing the effect of the claims on the labels that
it was Xenadrine RFA· I that had been tested rather
than merely n component, the ~ey done by Dr. Belch is helpful. I fwd that the Belch survey b o. valid
ourvcy and the Court is not persuaded the criticisms
.o f Dr. Sirnnd.
In response to a question ~~~ iabcls I, 2 and 3, the
Belch ~urvcy showed that 5\S percent of the people
responding felt tlmt Xeruidrinc RFA·l had been
proven effective in scientific studies (Exhibit 1305).
A. The Consumer Legal Remedies Act
After the Peak Wellness study, the label was changed
in the full of 1999, to read, ·~xcnadrine RFA-I's
adyanced new thcrinogcnic formula represents the
most sophisticated natural weight loss technology
available, Its powerful fat loss/muscle sparing effcc!G
have been documented. throuib published clinical
research." El<hibit · 2005. Anyone comparmg the
language in the first three labels and:thc language in
EXhibits 2005, 2009 :ind 10.5, the last three labels
from fall 1999 U1r0ugh the end of the class period,
would not be nble to tell the difference. The language
is virtually the sa= in the way it refers to what has
been studied and tested and with reference back to ·
Xenadrine RFA-1. While the last three labels nrc
correct insofar as X.enadrine RFA·l itself had been
tested, the first three labels are not, and are
misleading.
As set forth in Civil Code section 1782, the
Consumer Legal Remedies Act (CLRA) requires that
"thirty days or more" prior to filing a CLRA nction
"for damages" the consumer "shnll" notify the
potential defendant "of the particular alleged
violations of Section 1770" and demand that he or
she· "correct, repair, replace or otherwise rectify" the
goods or services nlleged to be in violation or Section
1770.
The last three labels arc accurate in that Xenadrinc
JtfA·I wus studied and fat loss and muscle sparing
results wore documented·. No specific claims arc
made as to the results. Therefore, only the frrst three
labels are misleading. The phrase "cliniCll!ly proven"
by itself is not misleading, nor io "thermogenic."
WARNINGS
The label hilS warnings for people with high blood
pressure, and various. other conditions. Even though
consumers may not !mow tl1ey h;ove the conditions,
tl1e warnin& advises them to consult a doctor if they
are at risk or have a family history of the listed
conditions in the wurning. The Court fmds that the
warning on tbe last label is not misleading and no
injunctive relief will· be gcimted with respect to the
label.
CLAIMS REGARDING TilE CONTENT
*22 Plaintiff has challenged the amount of the
ingredients; their purity and specifically challenge the
amount of salacin. Defendant produced Mr. Rich, the
owner of Phoenix Laboratories who was a very
persuasive witness, even though he did not bring
documents. They also produced Mr. Schiff regarding
t11e methods of verifying the amounts of the
ingredicnlll.
Plaintifl's experts c11mc up with different results
hnsed on testing very small lll11ounts of the product.
Since plaintiff has the burden of proof of proving the
claims to be false, the Court fmds that plaintiff has
Copr. <C West 2003 No Claim to Orig. U.S. Govt. Works
The pmpose of this notice is to provide nnd facilitate
settlements of conswner · nctions
wherever possible and to establish the limited period
during which such settlement may be accomplished.
Outboard Marine Corp. v. Superior Court (1975) 52
CnlApp.3d 30, 41.
pr~complaint
A party cnn amend a complaint for injunctive retief
to allege damages. Subsection (d) provides: "Not less
than 30 days after the conuncncement of"') oction for
injunctive relief, and ofter complinnce · with
subdivision (a), the consumer may amend his or her
compl;)int without leave of court to include n request
for dlimages." Under this sectioO, the amendment
must be filed ,;not less than 30 daY,. nfter
commencen1crit oi'the action for injunctive relief."
The notice requiremenl!l .under the CLRA are to be
"literally npplied.~ Outboard Marine Corp. nt 41 . In
Outboard, plnintiff argued "substantial compliance",
in part, because of a· letter sent several moritllS after
the complaint was filed. The court held ·that literal
interpretation was the only means to comply with the
purpose of facilitating pre-settlement negotiations.
However, the court upheld the trial court's ·order
overruling t11e · demurrer. The court found that
defendant effectively waived the notice provisions in
n responsive letter whereby defendant indicated they
construed the letter ••;,. o prelirniriirry notice and
demand under California Civil Code 1782(a)." The
co uri held thai this statement constituted n waiver· of n
lrnbWn righL
Defendant did not waive the notice requirem~nt. The
stipulation n«ached at El<hiblt 7 merely indicates that
plaintiff is seeldng damages contained in Plaintiffs
Statement of Damages dated October 29, 2001. TI1ere
is no statement that plaintiff and defendant agree that
any' damages are allowable under the CLRA cause of
action or tbat ·lhe damages in the stipulotion nre
sought under the CLRA.
0 23 A demurrer wru1 filed based, in part, on the
failure to provide notice of tl1e CLRA. However, the
fuct that Judge Hayes overruled the demurrer does not
mean that the cause of action is proper. Judge Hayes
made· no fmding that the riotice WIIS ·given or WllS not
~uircd. He only overruled the demurrer. The· failure
to staten cause of actiorl is never waived. (Code Civ.
Proc., fi 430.80(a)J.
Based on tl1e above, plaintiff did not properly
comply with the requirements in tl1e CLRA for
damages. Thus, damages nee not awardable under the
CLRA.
Even if the requirements of the CLRA had been met,
the only evidence regarding damages is the nmmmt
the members Of the class paid for the producL There
is no evidence of the value of what the class members
received. In oider to award damages, tlw Court would
have to compare the difference between what the
·ctass members paid for the product nnd the value of
the product they received. ·(Civ.Code, § 3343). The
Court bas no eVidence upon which to mai<e such a
finding. Since there is no evidence that the product
has no vnlue, the plaintiff would not be entitled to
damnges under the CLRA.
B. Monetary Remedy
In fashioning n remedy' under tl1e unfaif competition
law, section 17203 does riot mnndate restitutio nary or
injunctive relief, rather it provides that the court "may
rnal<e such orders · or judgments ... as may be
necessary to prevent the use or employment ... of nny'
practice which constitutes unfuir competition ... or os
may be necesSary to restore to any perSon in interest
In the case nt bar, the Complaint was filed on June 4,
2001. Poraglilph 62 includes nn allegation f~r
damages. l!owever, the letter giving notiee was not
sent until August 29,-2001. The letter giving notice
did not comply with Civil Code section 1782, which
~uires the letter to· be sent 30 doys prior ·to the
uny money or property ... which mny hove been
acquired by means of such unfair competition ."
Thus, the court has broad equitable power to create a
remedy. CiJitez v. Pui-olalor Airfl/tratioll Products
Co. (2000) 23 Ca1.4th 163, 179.
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WiQt tltis in mind, t)lo Court will fust discuss
monetary remedies. Plaintiff argues tltat the class
should recover the entire purchase price of Xcnadrine
RFA·I from Cytodyne. Defendant W"gues tltat, at
most, the plaintiff should . only recover tile "net
profi~ •
·
Tite "'\Sea onaly.:ing the ·Unfair Gompetition law
(UCL) u,se the . term •restitution• · as well as
"disgorgemept" to descri\lc the rcmi:dy available. A
precise definition of terms is necessary.
Restitution has been defined as "compelling the UCL
defendant to return mone~ obtained ihrough an unfair
.business practice to those persons in interest from
whom the property was taken, that is, to .persons who
had an ownership interest. in the property." Korea
Supply Company v. Lo,ckheed Martin Corporation
(2003) 29 Cal.4th 1134, 1144-1145; citing Kraus v.
Trinity Management Services, Inc. (20QO) 23 Cal.4tli
116, 126-127. True restitution recaptures the direct
gain obtained by defendant in order to prevent WJjust
enrichment
Disgorgemcnt is a remedy that is. .broader than
restitution. Disgorgement may be a synonym for
restitution, . but more ol\en titan not, disgorgement
refers to a remedy for those who were not direct
victims of an Wlfair practice. In tbjs nonrestitutiottary
sense, disgorgcment requires the surrender of all
profits earned as a result of an unlawful practice
regardless of whether those profits represent money
taken directly from persons who were victims of the
Wlfair practice. Korea Supply at 1145. After Korea
Supply, there is an issue as to whether disg~rgem~nt
in this "nonrestitutionary" sense . is allowabic Wlder
theUCL.
•24 Whetltcr one is talking "true restitution" or
"disgorgemcnt," the measure is . based npon
defendanrs benefit and not plaintiffs losses. The
language of Business and Professions Code section
17203 contemplates that. the money or ·interest was
acquired by means of the. practice. Both restitution
lllld disgorgemcnt involve a return of what dcfend;mt
gained in the tr;msaction. A party seeldng restitution
"must generally return any , benefit" tltat it has received. Rest2d, Contracts, § 376, com. a, § 384,
com. o.) California Federal Bank v. Matreyek (1992)
8 Cal.App. 4th 125.
Tite purpose .behind Busin!'SS nod Professions Code
section 17200 is dctcmnce and not pWJishment The
purpose is "to deter future violations of the unfair
li'aue 18
•zs (Cai.Superlor))
trade practice statute and to foreclose retention by the
violator of its ill-gotten gains." 'i<tetcher v. Security
Pacific National Bank (1979) 23 Cnl.3d 442. The
court in Korea Supply discussed the purposes of the
statute in terms of deterrence:
TI1e language of section 17203 is clear that tho
equitable powers of a. court are to be used to
"prcvcDI" . pJ:l!ptices that. constitute unfair
competition . ~nd to "restore to any person in
interest" any iJ,oney or prop<;r!Y acquired rhro)!gh
unfair practices. (§ 17203.) W)Jile the "pr0vcnt"
prong of section 17203 · suggests that the
Legislature considered deterrence of unfair
practices to be an important goal, the fact that
attorney fees and ·dantagcs, including punitive
dantages, are not nvajlablc Wider tho UCL is clear
evidence that deterrence by means of monetary
penalties is not the act's sole objective. A court
cannot, under the equitable powers of section
17203, ·~ard whatever form of monetary relief it
believes might deter unfair practices. The fact
that the "restore" prong of section 17203 is tho
only reference to monetary penalties in this
section indicates that. the Legislature intended to
limit the available monclliry remedies under the
act.
1:here is no case cited by plaintiff where the
ConsUmer was entiiled in restitution io more tlinn the
beqeflt to defendant TI1e recent case ofKorca Supply
emphasized that the conunon law understanding of
restitution applies to Business and Professions Code
section 17200. The issue in Korea Supply is different
from this case because Korea Supply did not deal
with the ~~~~:asuremcnt of restitution per sc. The court
!lealt with the issue of. whether disgorgement was a
proper remedy for an individual.action, not a class
action.
· ·
The court found that lhruting the remedy to
.restitution was consistent with the policies behind the
UCL to prevent practi.ces tl>at constituto Wlfair
competition and to restore to. ony .person in iqtercst
money . or property acquired. us a result of those
. practices. The court found no case tltat approved of
noruestitutionary disgorgemen! of profits llS a remedy
Wider the UCL and clW"ificd lhe semantic confusion
in these terms: "While prior cases discussing the UCL
may .have characterized some of the rclicfavailnblc as
'disgorgemeni•, we wea: refcrnns to the restitution'ary
form of dlsgorgcment and not tO tho nonrestitutionary
type.•
.
•25 !hough limiting its holding to individual actions,
Copr. C West 2003 No ClaiJ!t to Orig. U.S. Govt. Works
the reasoning of the cnse suggests a broader holding
tltat in any case under tho UCL, nonrestitutionary
disgorgemcnt is unavailable. The Court implies tliat
the only remedy available is restitution in the
traditional sense. RestitutiOn fn lhe cornmon law
sense implies restoring only tl1at which lhe defendant
gained in the transaction.
Other casco cited by plaintiff do not. challenge this
proposition. At least two C4SCS relied. .upon are
inapposite because they affirm civil penalties in favor
of tbe state (People .. .v. Cappuccio (1988) 204
Cai.App.3d 750; People v. Morse (1993) 21
CaLApp.4th 259). In lbese cases, restitution was not
even an issue.
The case People ex reL Bill Lockyer v. Fremont Life
Insurance Company (2003) 104 Cal.App.4th 508,
532 also dcolt with a civil penalty. However, the court
also evaluated the restitution order under Business
and Professions Code section 17203. In that C4SO, the
court found lhat an annuity policy was misleading,
based in part on its fmdings tltat the "premium
chnrge" was "unusual" nnd "not conspicuously set
forth" in the policy or in the sales brochures. In a
restitution order, the court ordered defendant to make
an offer of restitution to each nonsettling California
consumer (or beneficiary Wider lhe tcnns of the
policy), to restore the premiwn charge. Appellant
argued that the order d.id not restore lhe status quo but
altered lhc "lawful terms of lhe annuity contract"
because the premium charge itself was lawful. The
court ·rejected tiJ.is assertion, reasoning that while tl1e
premium charge was lawful in itself, tl1e annuity
policy was misleading as n whole because of the
premium charge term. Thus, the court fow1d that the
premium charge was unlawful under the UCL. The
court foWJd tltat the restoration of the premium
charge thus restored the status quo. This case is not
· helpful to plaintiff because nothing indicates that
defendant had to pay more than what it unlawfully
gained (except the civil penalty).
Finally, plaintiff relies on Rosales v. Clliban/c,
Bank
(N.D.Cal.200l) 133
F.Supp.2d 1177. In Rosales, lhe plaintiff claimed that
he lost money from his bank account due to an
WJautltorized withdrawn! by someone else. Citibank
argned tltat they did not have to restore anything to
plaintiff because Citibank did not take onything from
plaintiff. However, Citibank did not reimburse
plaintiff as required by law. The court foWJd that
Citibank thus withheld money belonging to plaintiff
and this could be "restored" to plaintiff.
In conclwion, either under n theory of restitution or
the plaintiff class i~ entitled to "all
IJUlney"obtained" by means of the. unlawful practice.
The money "obtained" here is received by the
defendant from the retailers lesil the amoWlt paid by
defendant to the n:llinufacturcr. Anything more would
constitute an award of darrulges (i.e., malcing tl1c
plaintiff"wbole.")
"disgorgcm."D~"
•26 The testilnony.9f.both dam:lge experts is tltat the
defend<!nt received ·• $16,538,328 from retailers or
direct sOles. Dr. Kennedy computed the cost of goods
ot $4,001 ,508, leaving n net to defendant' of
$12,536,820. (Exlu'bit 2279.)
There was .testimony ..that the salen to GNC were
understated by is,ooo,'Wi;ts which would increase the
doilars received by approximately $400,000. TI1ere
was also testimony that defendant paid rebates of
approximately one dollar per bottl~ to salespeople at
GNC and there were other expenses. None of tltis is
documented and the Court is not allowing any of
these items. Sec Evidence Code section 412.
Tite largest deduction claimed by defendant is tlte
three to five million dollar> of advertising that
defendant estimates it spent in California. lt would be
inequitable to aliow the defendant to reduce tl1e
amount of restitution by the amount spent on the
misleading advertisements. Therefore, the Court is
exercising its broad equitable power and is not going
to allow the rest itutionary amoWJt to be reduced by
lhe advertising expenses.
Finally, since the Court has found virtually all of the
advertisements to be misleading, in addition to the
first three labels, !here should be no reduction for
proportionality," assuming there was authority to
support a proportionate reduction. The purchasers of
Xcnadrine RF A-1 were misled throughout the class
period and tltere is no .justification to reduce the
amount of restitution from the total amoWlt received
by defendant of$12,536,820.
11
Federal Savings
Therefore, defendant is ordered to pay TWELVE
MTLUON FIVE HUNDRED THIRTY-SIX
TI10USAND EIGHT HUNDRED TWENTY and 00/
100 DOLLARS ($12,536,820.00) into n fund to be
distributed as ordered by this Court.
C. Injunctive Relief
Defendant argues that since it is no longer selling
Copr. <0 W~t 2003No.Clairn to Orig. U.S, O~vt. Works
87
86
Puge 19
Slip Copy
(Cite ns: 2003 WL 21283814, •26 (Cai.Superior))
Xenodrine RFA-1 in California, !hero cannot be any
injunctive relief. This argument is not supported by
the atatute, Busi.Qe:~s und l,'rofcs.sions Code section
17203, which say:;: "llllJI person who engages, has
ongaged, or proposes to engage in unfair
competition" may 1xl enjoined. (Emphasis Added.)
See Stop Youth Addiction, Inc. v. Lucky Stores, Inc.
(1998) 17 Cal.4th 553, 570.
Therefore, Cytodyne, its officers, principals, agents,
servants, employees, succcssoro, ~lgns, nnd all !hose
in active concert or pnrticipalioll. with ~em are
enjoined and restreined . from disseminating or
causing to be disseminated, lbrough IIDJI
advcrtiscmeo~
label, commercial . or other
promotional activity, any advertising claim which
includes representations identical or similar to those
claims foWld to be false oi misleading, either directly
or by necessary implication, whether material or not.
ATIORNEY'S FEES
Plaintiffs coWJsel may apply for attomey's.fecs.
PRODCEDURE
If a Statement of Decision is requested, the Court
will prepare such Statement. This Tentative Decision
shall become the StatetrnOnt of Decision unless within
10 day:; eithci" party specifies contJ:overted issues or
makes proposals not covered by tllis Tentative
·oc:cision. The Court also requests each side to submit
proposals on how lhe restitution fund . is to be
disll:ibuted.
2003 WL 21283814 (Cal.Superior)
END OF DOCUMENT
Copr. @ West 2003 No Claim to Orig. U.S. Govt. Works
Mr. WALDEN. Thank you.
Mr. FRANCE. So, if you :want to follow up, m. terms of assessing
what Mr. Chinery says, in view of the fact tliat I was at the trial
and I prosecuted that case, and also observed Mr. Chinery, Mr.
Conklin, Dr. Colker whO·· performed these alleged studies on
Xenadrine RFA-1, at least one of them, the Peak Wellness, I question highly what Mr. Chinery had to say.
Mr. WALDEN. All right.
.
Dr. Woosley, is Xenadrine considered a stimulate?
Mr. WOOSLEY. Yes.
Mr. WALDEN. And what is it and what is its purpose as a dietary
supplement for weight loss?
Mr. WoosLEY. Well, it contains ephedra and ephedrine; which is
the major stimulant.
·
Mr. WALDEN. Okay. Arid as we understand it, there may be other
ingredients contained in these ephedra caffeine dietary supplements .including the one I just referenced, so that is why I am asking your opinion on this. It is Tyrosine?
Mr. WOOSLEY. Tyrosine.
Mr. WALDEN. Considered a stimulant?
Mr. WoosLEY. No. It's ail amino acid which in high doses might
have pharmacologic effect, but not in the doses likely to be used in
these products.
Mr. WALDEN. Is L-carnatine considered a stimulate?
Mr. WoosLEY. Carnatine, no.
Mr. WALDEN. Okay. What is its purpose?
Mr. WoosLEY. It is argued. People would not agree about its purpose. It is taken by many people to stimulate muscle growth, but
there is no scientific evidence that I am aware of, except in
carnatine deficiency.
There are inherited disorders where people do not have enough
carnatine, but it is very rare.
· Mr. WALDEN. What properties does salicine have, that is white
oak bark or something? ·
Mr. WOOSLEY. It is-probably, and I wotild have to say that
whether the product that is put in there is exactly what the pharmacopeia would say is often not the same. But Salicine is thought
to thought to be a salicylic acid base. It is like aspirin.
Mr. WALDEN. Can it cause bleeding?
Mr. WOOSLEY. Yes in high doses. In the doses that are there, we
do not know.
Most of these products have never been studied scientifically.
Mr. WALDEN. Because some of these say you should not take aspirin with them.
.
Mr. WoosLEY. That is theoretically correct. But, again
Mr. WALDEN. Is salicine similar to aspirin in that respect, the
way it may interact?
Mr. WooSLEY. It is chemically similar to aspirin, but frankly we
have no idea what those drugs could do in those products because
they have never been tested.
Mr. WALDEN. No idea?
Mr. WoosLEY. No idea.
Mr. WALDEN. Thank you, Mr. Chairman.
Mr. GREENWOOD. The Chair thanks the gentleman.

Congressional Testimony Transcript

Transcription

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