Consumer Justice Center v. Olympian Labs

• Decision Date: 27 June 2002
• Docket Number: No. G027973.,G027973.
• Citation: 121 Cal.Rptr.2d 749,99 Cal.App.4th 1056
• Court: California Court of Appeals Court of Appeals
• Parties: CONSUMER JUSTICE CENTER, Plaintiff and Appellant, v. OLYMPIAN LABS, INC., et al., Defendants and Respondents.

121 Cal.Rptr.2d 749

99 Cal.App.4th 1056

CONSUMER JUSTICE CENTER, Plaintiff and Appellant, v. OLYMPIAN LABS, INC., et al., Defendants and Respondents.

No. G027973.

Court of Appeal, Fourth District, Division 3.

June 27, 2002.

Mark Boling for Plaintiff and Appellant.

Bill Lockyer, Attorney General, Richard M. Frank and Herschel T. Elkins, Assistant Attorneys General, Ronald Reiter and Ian K. Sweedler, Deputy

Attorneys General, as Amicus Curiae on behalf of Plaintiff and Appellant.

Ropers, Majeski, Kohn & Bentley, Mark G. Bonino, Allan E. Anderson, Los Angeles, and Rachael A. Campbell for Defendants and Respondents.

OPINION

SILLS, P.J.

I. Introduction

Consumer Justice Center, a non-profit entity, has filed a complaint under the California's unfair competition law (Bus. & Prof.Code, § 17200 et seq.) against the makers and distributors of two over-the-counter dietary supplements. Consumer Justice seeks injunctions to remove the products from the market altogether, alternatively to change the advertising of the products, and to have all the profits made from the products disgorged.

One of the supplements is "Medi-Phen," which is a combination of green tea extract, garcinia cambogia, ginger, mustard seed, cayenne, astragalus, white willow bark, uva ursi, Siberian ginseng, and gotu kola. Allegedly, Medi-Phen has been advertised as a "natural alternative for weight loss." The other supplement is "Herp-Eeze," which is made from the chaparral bush. Allegedly, Herp-Eeze has been advertised for "the relief of Herpes simplex viruses." According to the complaint, neither product is safe, or effective for its advertised purpose.

The trial court ruled that federal law preempted the lawsuit, and so sustained a demurrer to the complaint without leave to amend. This appeal is limited to that single issue. We conclude that federal law does not preempt the lawsuit.

II. Express Preemption

At the outset, we must note that there is no express preemption of cases involving the false advertising of dietary supplements in federal law under the Federal Trade Commission Act, the Federal Food, Drug, and Cosmetic Act, or the Dietary Supplement Health and Education Act.¹ The defendants do not cite a single federal statute or regulation which says, in words or substance, that the field of allegedly false advertising of dietary supplements is exclusively the province of federal law.

In fact, one pro-supplement commentator has lamented the absence of an express preemption provision for dietary supplements as regards the Dietary Supplement Heath and Education Act. (See Note, Dietary Supplements and Their Discontents: FDA Regulation and the Dietary Supplement Health and Education Act of 1944 (2000), 31 Rutgers L.J. 511, 549 ["The DSHEA should be amended to explicitly establish that it preempts state regulation of dietary supplements. The advances brought about by the DSHEA could be adversely affected by intrusive state regulation of dietary supplements, and some states have already enacted legislation concerning dietary supplements such as ephedra and GHB"].)

It bears remarking at this point that Congress knows how to write a preemption clause if it wanted to. One of the most famous is found in the federal retirement and pension laws (ERISA²). (See 29 U.S.C. section 1144(a) ["the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan"].) Because courts should not find federal preemption unless the purpose of Congress to preempt was "`clear and manifest'" (Medtronic v. Lohr (1996) 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700; Greater New York Metropolitan Food Council v. Giuliani (2d Cir.1999) 195 F.3d 100, 105), we go into the balance of our analysis, as do federal courts, with a presumption against preemption. (See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. (1995) 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695; Greater New York Metropolitan Food Council v. Giuliani, supra, 195 F.3d at p. 105.)

III. Implied Preemption Under the Federal Trade Commission Act

Rather, the case for preemption argument is based on "implied" preemption. Implied preemption is subdivided into two subtopics: either (a) an intent to occupy a given field, or (b) the impossibility of relief in the state court without a conflict with federal law. (Spielholz v. Superior Court (2001) 86 Cal.App.4th 1366, 1371, 104 Cal. Rptr.2d 197.)³

A. Occupation of the Field

It is true that the Federal Trade Commission has the power to obtain injunctive relief regulating the advertising of dietary supplements. (E.g., Federal Trade Commission v. Pharmtech Research, Inc. (D.D.C.1983) 576 F.Supp. 294 [order that producer of "Daily Greens," a tablet of several vitamins, selenium, beta carotene and dehydrated vegetables, could not claim that the product reduced risk of cancer⁴].)

But it is also clear (indeed, as stressed by defendants here) that there is no private right of action under the Federal Trade Commission Act. In Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 132, 96 Cal.Rptr.2d 485, 999 P.2d 718, our Supreme Court specifically noted that, while the Federal Trade Commission Act and California's unfair competition law both prohibit a wide range of unfair practices,⁵ the federal law "has no private enforcement provision comparable" to California's.

The obvious conclusion to be drawn from the absence of a private cause of action is that Congress did not intend the Federal Trade Commission to "occupy the field" of redressing false advertising claims. As ERISA illustrates again, there is no doubt that when Congress really does choose to occupy a field it knows how to provide for a private federal cause of action. (E.g., 29 U.S.C. § 1132(a) [providing for civil actions to be brought by participants in ERISA plans].)

Moreover, a theme of the federal cases construing the Federal Trade Commission's analogous powers under the Lanham Act (involving false advertising in the context of trademarks) has been that the federal courts should not be swamped with consumer claims. (See Colligan v. Activities Club of N.Y., Ltd. (2d Cir.1971) 442 F.2d 686, 693 [consumer standing would lead to "a veritable flood of claims" in federal courts]; see also authorities collected at Note, Letting Consumers Stand On Their Own: An Argument for Congressional Action Regarding Consumer Standing for False Advertising Under Lanham Act Section 4.3(a), supra, 2A Sw. L.Rev. at p. 214, fn. 3. [compiling cases that have refused consumers access to federal courts under false advertising prong of Lanham Act].)

The theory is that such claims can be adequately handled by state courts. (See Colligan v. Activities Club of N. Y., Ltd., supra, 442 F.2d at p. 693 ["adequate private remedies for consumer protection, which to date have been left almost exclusively to the states, are readily at hand"].)

The usual formula is that preemption applies "where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress `left no room' for supplementary state regulation." (Hillsborough County v. Automated Medical Labs. (1985) 471 U.S. 707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714.) Here, however, the absence of a private cause of action means that Congress has obviously left plenty of room for the states to "supplement" the Federal Trade Act by providing for private causes of action. (See Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407, quoting Fidelity Fed. Sav. & Loan Assn. v. de la Cuesta (1982) 458 U.S. 141, 153, 102 S.Ct. 3014, 73 L.Ed.2d 664, quoting Rice v. Santa Fe Elevator Corp. (1947) 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447.) One can hardly "occupy a field" while shunning vast acres of it.⁶

B. Conflict

The question of conflict preemption is just a little trickier. On the one hand, there is a provision in the Federal Trade Commission Act that makes it clear the Act doesn't preempt state law. Title 15 U.S.C. section 57b(e) provides: "Remedies provided in this section are in addition to, and not in lieu of, any other remedy or right of action provided by State or Federal law." (Emphasis added.)

One would think the provision would be enough, but the defendants posit that even such a blanket "savings" clause as 15 U.S.C. section 57(b)(e) does not mean there is no preemption if there is actual conflict. (See, e.g., Geier v. American Honda Motor Co., Inc. (2000) 529 U.S. 861, 120 S.Ct. 1913, 146 L.Ed.2d 914.) In Geier, the federal Supreme Court concluded there was a conflict between a state tort action for failing to equip a car with a driver's side airbag. To allow the suit would defeat the purpose of federal regulations which were specifically intended to permit several different kinds of safety measures without requiring airbags. (See Geier, supra, 529 U.S. at p. 881, 120 S.Ct. 1913.)

The problem is tricky because the Federal Trade Commission Act certainly does give the Commission the power to prevent persons "from using ... unfair or deceptive acts or practices in or affecting commerce." (15 U.S.C. § 45(a)(2).) Theoretically at least, the Commission might seek to enforce a uniform label (or disclaimer) on dietary supplements claiming to aid weight loss (or alleviate herpes infections, or whatever), and those uniform labeling requirements might conflict with injunctive relief granted by a California trial court in the case before us.⁷

However, the rule is that for "conflict" preemption to exist, it must be impossible to comply with both the federal and state laws. (E.g., Spielholz v. Superior Court, supra, 86 Cal.App.4th at p. 1371, 104 Cal.Rptr.2d 197.) Accordingly, preemption cannot be based on a belief in phantoms, i.e., speculation. Since the Federal Trade Commission has not now made any regulations (or taken any action with which...