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Tablets & Capsules July 2014 32C regulation The supplement industry's latest threat: Class-action lawsuits Justin Prochnow Greenberg Traurig Historically, dietary supplement companies faced legal enforce- ment actions only from federal agencies. Now, the threat of con- sumer-based, attorney-driven class-action lawsuits has emerged. This article explains why and tells you how to avoid such liti- gation. plement companies are facing a new threat: class-action litigation over labeling and advertising claims. Class-action litigation has exploded in scope and fre- quency in the past decade, with businesses of all sorts scrambling to avoid becoming the next target. Dietary supplement companies are no exception. Historically, the FDA and the Federal Trade Commission (FTC) handled legal action against supplement companies. But now the industry is being hit with civil litigation. Owing chiefly to some plaintiffs' receipt of quick settlements from com- panies wishing to avoid protracted litigation, class-action lawyers have taken the reins and have, in effect, begun to "regulate" labeling claims in the courtroom. California: Class-action epicenter As actions have been filed across the country during this boom in civil litigation, no place has been hit harder than California, the veritable epicenter of class-action lawsuits over advertising and labeling claims. Why? Primarily because of three state statutes (details below), designed to address unfair, deceptive, and fraudulent acts. Class-action suits are often filed under at least one—and more often two—if not all three of these laws, which are extremely broad and provide a range of remedies for con- sumer plaintiffs and their attorneys. California Consumers Legal Remedies Act. CLRA sets forth specific unlawful methods of competition and unfair or deceptive acts or practices undertaken in con- nection with the sale or lease of goods or services to con- sumers [1]. Such forbidden practices include representing goods as having characteristics, ingredients, uses, bene- fits, or qualities which they do not [2] or using deceptive representations or designations of geographic origin [3]. The CLRA is especially attractive because it allows con- sumers to obtain actual monetary damages, restitution of property, punitive damages, court costs and attorney's fees, and any other relief deemed appropriate. Unfair Competition Law. UCL is broadly written and includes five definitions of unfair competition, including: 1) an unlawful business act or practice; 2) an unfair busi- ness act or practice; 3) a fraudulent business act or prac- tice; 4) unfair, deceptive, untrue, or misleading advertis- ing; or 5) any act prohibited by Sections 17500-17577.5 of the California Business and Professions Code [4]. To I n October 1994, Congress passed the Dietary Supplement Health and Education Act (DSHEA). Since then, the supplement industry has faced its share of scrutiny. The FDA—which enforces DSHEA and the rest of the Federal Food, Drug and Cosmetic Act (FFDCA)— wields authority over issues ranging from foreign-sourced products adulterated with tainted ingredients to compli- ance with current Good Manufacturing Practices (cGMP) required of all companies as of June 2010. Congressional critics of the dietary supplement indus- try continue to introduce legislation to dilute DSHEA and impose stricter regulations. Meanwhile, dietary sup- NUTRA_32A-32L_Nutra 7/2/14 11:15 AM Page 32C