UNITED STATES – Consumer class actions are often brought in the federal courts sitting in California, and in other states, based on alleged false advertising in violation of one or more California consumer protection statutes, including the Consumers Legal Remedies Act (Cal. Civ. Code §§ 1750, et seq.), the Unfair Competition Law (Cal. Bus. & Prof. Code §17200) and the False Advertising Law (Cal. Bus. & Prof. Code §§ 17500, et seq.). The defendants in such actions produce and market a wide range of products — automobiles, drugs, food products and other types of consumer products, to name a few. Many times such actions are not based on a knowingly false statement or representation by the defendant about the attributes, performance or quality of its product; rather, plaintiffs often base their claims on the grounds that the defendant cannot substantiate representations or statements that it has made about the product. Unfortunately for the plaintiffs in such cases, the courts hold that private class actions brought under California’s consumer statutes cannot be based on allegations of lack of substantiation; rather, the plaintiff must allege and prove that a defendant’s advertising is “positively false”. The following considerations may prove helpful if you are faced with such a claim.
Alleged violations of California’s consumer protection statutes can be pursued in two ways — by California prosecuting authorities such as the state Attorney General, a district attorney or city attorney; or, by private plaintiffs (including class action plaintiffs). And while prosecuting authorities can bring an action under these laws based on lack of substantiation, private plaintiffs cannot. That is, as far as private class action plaintiffs are concerned, an alleged lack of substantiation does not render an advertisement or representation false or misleading under the California consumer protection laws. Instead, a private plaintiff must allege facts — such as studies — showing that an advertisement is false.
In this regard, the following points should be kept in mind:
- Courts will examine the complaint as a whole to determine if a plaintiff has merely alleged a lack of substantiation claim.
- It is not sufficient for a plaintiff to allege that a defendant’s representations lack support or scientific evidence, or that such is inconclusive — rather, the plaintiff must allege and prove that existing scientific evidence is contradictory to the defendant’s representations or that such representation has been disproved.
- If a defendant represents that the product’s attributes are proven or supported, a plaintiff must allege and prove a lack of such support, and may not merely question the conclusiveness or sufficiency of such alleged support.
- In seeking to satisfy his or her burden, a plaintiff must comply with Rule 9(b) of the Federal Rules of Civil Procedure. That Rule requires the plaintiff to allege the basis on which the statements are purportedly false with specific facts — mere conclusory allegations of falsity are not sufficient. That is, a plaintiff must allege specific facts as to the evidence that is contradictory to defendant’s representations or as to evidence that defendant had no support for its statements.
- In the U.S. federal courts a plaintiff may make allegations on “information and belief”, that is, that a plaintiff is “informed and believes” that an allegation is true. However, under Rule 9(b) allegations of fraud (including false advertising) made upon “information and belief” must state the specific factual basis for the belief.
Any company that is faced with a class action alleging false advertising in violation of California’s consumer protection laws should review it carefully to determine if the plaintiff is alleging the company’s advertising is “positively false” or merely cannot be substantiated. If the latter, a motion to dismiss should be considered as a strategy to eliminate the case at an early stage.
This post is one of several addressing issues that companies face in defending consumer class actions. If you have any questions about this post, or any issue relating to class actions, feel free to contact the author of any of Baker & McKenzie’s other class action specialists listed on this webpage. Further posts on relevant class action issues will be appearing in the future.
