Ncahf v. King Bio Pharmaceuticals, Inc.
| Decision Date | 22 April 2003 |
| Docket Number | No. B156585.,B156585. |
| Citation | 107 Cal.App.4th 1336,133 Cal.Rptr.2d 207 |
| Court | California Court of Appeals Court of Appeals |
| Parties | NATIONAL COUNCIL AGAINST HEALTH FRAUD, INC., Plaintiff and Appellant, v. KING BIO PHARMACEUTICALS, INC. et al., Defendants and Respondents. |
Mark Boling, Danville, for Consumer Justice Center, Inc. as Amicus Curiae on behalf of Plaintiff and Appellant.
Law Offices of Carlos F. Negrete and Carlos F. Negrete, San Juan Capistrano, for Defendants and Respondents.
A private plaintiff brought a representative action for unlawful competition (Bus. & Prof.Code, § 17200 et seq.) and false advertising (Bus. & Prof.Code, § 17500 et seq.) against a seller of homeopathic remedies. After the close of plaintiffs case-in-chief in a court trial, judgment was entered in favor of the seller. The trial court imposed the burden of proving the advertising claims were false or misleading on plaintiff. On appeal, plaintiff acknowledges the trial court correctly imposed the burden of proof under current California law, but contends the law should be changed to impose the burden of proof on a defendant in a false advertising action. In the published portion of this opinion, we conclude the burden of proof properly rests with the plaintiff in such actions. In the unpublished portion of this opinion, we discuss plaintiffs contentions concerning discovery and the contentions of amicus curiae. We affirm.
Plaintiff and appellant National Council Against Health Fraud, Inc. (NCAHF) brought a representative action against defendants and respondents King Bio Pharmaceuticals, Inc. and its president Frank J. King, Jr. (collectively "King Bio") for unfair competition (Bus. & Prof.Code, §§ 17200, 17203, 17204) and false advertising (Bus. & Prof.Code, §§ 17500, 17535). NCAHF alleged that King Bio's advertising claims for 50 of its homeopathic remedies were false and misleading, in that the products were not effective as claimed. The case proceeded to court trial. At the conclusion of NCAHF's case-in-chief, King Bio moved for judgment under Code of Civil Procedure section 631.8. The trial court granted the motion on the ground NCAHF had failed to prove the advertising claims were false or misleading. Judgment was entered in favor of King Bio. NCAHF appealed. We gave the Consumer Justice Center, Inc. (CJC) permission to file a brief as amicus curiae in support of NCAHF.
King Bio sells homeopathic remedies. According to its product labels and website, King Bio's products relieve a variety of symptoms and ills, including: stress, colds, flu, eating disorders, learning disorders, menstrual irregularities, snoring, and tobacco and alcohol cravings.
Homeopathy is a form of alternative medicine. Homeopathic remedies are manufactured using extremely small quantities of various ingredients. Recognized homeopathic remedies are listed in the Homeopathic Pharmacopoeia, which is updated by the Homeopathic Pharmacopoeia Convention, a group of homeopathic practitioners. The Convention will not accept a new remedy for inclusion in the Homeopathic Pharmacopoeia without evidence of its safety and efficacy.2 The federal Food, Drug, and Cosmetic Act (the Act) recognizes as official the remedies and standards in the Homeopathic Pharmacopoeia. The federal Food and Drug Administration (FDA) has issued guidelines under which homeopathic remedies may be marketed. The FDA guidelines permit a homeopathic remedy meeting the standards for strength, quality, and purity set forth in the Homeopathic Pharmacopoeia to be marketed. With the exception of certain labeling and registration requirements not at issue, the FDA does not require homeopathic remedies to satisfy other requirements of the Act. All of the homeopathic remedies marketed by King Bio are listed in the Homeopathic Pharmacopoeia and comply with FDA guidelines.
At trial, NCAHF proceeded on the theory that there is no scientific basis for the advertised efficacy of King Bio's products. NCAHF performed no tests to determine the efficacy of King Bio's products and presented no anecdotal evidence. NCAHF instead argued that King Bio's products were drugs, and the scientific community required representations regarding the efficacy of drugs to be supported by acceptable scientific evidence. NCAHF asserted that the burden of proof should be shifted to King Bio to prove its products' efficacy. On appeal, NCAHF acknowledges that, under current California law, a false advertising plaintiff bears the burden of proving the defendant's advertising claim is false or misleading. NCAHF contends, however, that we should shift the burden of proof to the defendant to facilitate the campaign against health fraud. NCAHF argues that federal law shifts the burden to the defendant in false advertising actions.
We conclude there is no basis in California law to shift the burden of proof to a defendant in a representative false advertising and unlawful competition action. We conclude further that the Legislature has indicated an intent to place the burden of proof on the plaintiff in such cases. Finally, we conclude federal authority is not apposite.
False advertising is unlawful. Business and Professions Code section 17500 makes it unlawful "with intent directly or indirectly to dispose of real or personal property ... to make or disseminate ... before the public in this state ... [by any] means whatever, ... any statement, concerning that real or personal property ... which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading." A violation of Business and Professions Code section 17500 is a misdemeanor. Civil actions to enjoin false advertising under Business and Professions Code section 17500 may be brought "by the Attorney General or any district attorney, county counsel, city attorney, or city prosecutor in this state in the name of the people of the State of California upon their own complaint or upon the complaint of any board, officer, person, corporation or association or by any person acting for the interests of itself, its members or the general public." (Bus. & Prof.Code, § 17535.) False advertising actions under Business and Professions Code section 17535 may also seek restitution.
A violation of Business and Professions Code section 17500 also constitutes unfair competition. (Bus. & Prof.Code, § 17200.) As with false advertising actions, actions to enjoin unfair competition may be brought by a prosecuting authority or private persons acting for themselves or the general public. (Bus. & Prof.Code, § 17204.) Actions under Business and Professions Code section 17204 may also seek restitution. (Bus. & Prof.Code, § 17203.) In such an action, the plaintiff bears the burden of proving the defendant's advertising claim is false or misleading. (People v. Superior Court (Kaufman) (1974) 12 Cal.3d 421, 431, fn. 9, 115 Cal. Rptr. 812, 525 P.2d 716; South Bay Chevrolet v. General Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 878, 85 Cal. Rptr.2d 301.)
Business and Professions Code section 17508 establishes an administrative procedure whereby prosecuting authorities may require an advertiser to substantiate advertising claims. This procedure is limited to prosecuting authorities and may not be utilized by private persons. Business and Professions Code section 17508, subdivision (a) prohibits advertisers from making "any false or misleading advertising claim, including claims that (1) purport to be based on factual, objective, or clinical evidence, that (2) compare the product's effectiveness or safety to that of other brands or products, or that (3) purport to be based on any fact."3
Business and Professions Code section 17508, subdivision (b) provides in pertinent part: "Upon written request of the Director of Consumer Affairs, the Attorney General, any city attorney, or any district attorney[,] any person doing business in California and in whose behalf advertising claims are made to consumers in California, including claims that (1) purport to be based on factual, objective, or clinical evidence, that (2) compare the product's effectiveness or safety to that of other brands or products, or that (3) purport to be based on any fact, shall provide to the department or official making the request evidence of the facts on which such advertising claims are based." If the advertiser does not respond "by adequately substantiating the claim within a reasonable time, or if the [prosecuting authority] shall have reason to believe that any such advertising claim is false or misleading," the prosecuting authority may "do either or both of the following: (1) seek an immediate termination or modification of the claim by the person in accordance with ection 17535, (2) disseminate information, taking due care to protect legitimate trade secrets, concerning the veracity of such claims, or why such claims are misleading, to the consumers of this state." (Bus. & Prof.Code, § 17508, subd. (c).)
Business and Professions Code section 17508, subdivision (f) expressly provides, "The plaintiff shall have the burden of proof in establishing any violation of this section."
In sum, both private persons and prosecuting authorities may sue to enjoin false advertising and obtain restitution. When they bring such actions, both private persons and prosecuting authorities bear the burden of proving the advertising claims to be false or misleading. Prosecuting authorities, but not private plaintiffs, have the administrative power to request advertisers to substantiate...
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