State ex rel Rosenblum v. Living Essentials, LLC
| Citation | 371 Or. 23 |
| Decision Date | 04 May 2023 |
| Docket Number | SC S068857 |
| Parties | STATE ex rel Ellen F. ROSENBLUM, in her offcial capacity as Attorney General for the State of Oregon, Petitioner on Review, v. LIVING ESSENTIALS, LLC, a Michigan limited liability company; and Innovation Ventures, LLC, a Michigan limited liability company,Respondents on Review. |
| Court | Supreme Court of Oregon |
Argued and submitted May 5, 2022
On review from the Court of Appeals (CC 14CV09149) (CA A163980) [*]
Carson L. Whitehead, Assistant Attorney General, Salem, argued the cause and fled the briefs for petitioner on review. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.
Michael J. Sandmire, Buchalter Ater Wynne, Portland, argued the cause and fled the brief for respondents on review. Also on the brief was Rachel C. Lee, Stoel Rives LLP, Portland. Chris Mertens, Mertens Law, LLC, Portland, fled the brief for amicus curiae Oregon Consumer Justice.
Nadia H. Dahab, Sugerman Dahab, Portland, and John W. Stephens Esler Stephens & Buckley, Portland, fled the brief for amicus curiae Oregon Trial Lawyers Association.
Paloma Sparks, Oregon Business & Industry, Salem, fled the brief for amicus curiae Oregon Business & Industry Association.
Before Flynn, Chief Justice, Duncan, Garrett, and DeHoog, Justices, and Balmer and Walters, Senior Judges Justices pro tempore. [**]
This case arises under the Unlawful Trade Practices Act (UTPA) ORS 646.605 to 646.656.[1] The UTPA sets out an extensive list of unlawful business practices that the legislature has deemed harmful to Oregon consumers, and it provides for public and private enforcement actions.
The Attorney General brought this action against defendants alleging that they had made representations about their products that violated two different provisions of the UTPA. The trial court ruled for defendants, explaining that the relevant provisions of the UTPA required the state to prove that the misrepresentations were "material to consumer purchasing decisions," and that the state had not done so. The Court of Appeals affirmed that decision. State ex rel Rosenblum v. Living Essentials, LLC, 313 Or.App. 176, 497 P.3d 730 (2021). We allowed the state's petition for review to consider whether the lower courts correctly construed the statute. As explained below, we conclude, contrary to the trial court and the Court of Appeals, that the UTPA provisions at issue contain no "material to consumer purchasing decisions" requirement. We also reject defendants' argument that, without such a requirement, the provisions facially violate the free speech provisions of the state and federal constitutions. Accordingly, we reverse the decision of the Court of Appeals and remand to that court for further proceedings.
We begin with a brief overview of the statute, including procedural requirements relevant to the issues on review. The UTPA is a comprehensive statute that protects consumers from unlawful trade practices. State ex rel Redden v. Discount Fabrics, 289 Or. 375, 382, 615 P.2d 1034 (1980). The UTPA includes an extensive list of trade practices that are unlawful. ORS 646.607, ORS 646.608(1).
The UTPA is enforceable by private parties and by public prosecuting attorneys, including the Attorney General and local district attorneys. ORS 646.632 (public enforcement); ORS 646.638 (private civil actions); Discount Fabrics, 289 Or at 384-86 (). Public officials may bring an action in the name of the state to enjoin violations, seek restitution for individuals deprived of money or property, and seek civil penalties for willful violations of an injunction, voluntary compliance agreement, or the UTPAs listed practices. ORS 646.642; Discount Fabrics, 289 Or at 382 n 6.
In a public action, the prosecuting attorney must have probable cause to believe that a person "is engaging in, has engaged in, or is about to engage in" an unlawful trade practice. ORS 646.632(1). Before filing suit, the prosecuting attorney must provide notice to the person to be charged. ORS 646.632(2). Notice must include the alleged unlawful practice and the relief sought. Id. After receiving notice, the person to be charged has 10 days to respond to the prosecuting attorney with an "assurance of voluntary compliance" (AVC). Id. The AVC must describe the actions, if any, that the person to be charged will take to ameliorate the alleged unlawful practice. Id. The AVC is not an admission of a violation. Id. The prosecuting attorney, if satisfied with the AVC, can submit it to the court for approval and filing with the clerk of the court, if approved. Id. An AVC constitutes a judgment in favor of the state. Id. Once approved by and filed with the court, a violation of the AVC constitutes contempt of court. ORS 646.632(4).
The prosecuting attorney may reject an AVC as unsatisfactory if the AVC "does not contain a promise to make restitution in specific amounts or through arbitration," or if the AVC "does not contain any provision * * * which the prosecuting attorney reasonably believes to be necessary to ensure the continued cessation of the alleged unlawful trade practice, if such provision was included in a proposed assurance attached to the notice." ORS 646.632(3). If the AVC is rejected as unsatisfactory, the prosecuting attorney may initiate a civil action. See ORS 646.632 ().
We take the following undisputed facts from the opinion of the Court of Appeals and from our own review of the record.
Defendants manufacture, market, and sell 5-hour ENERGY, a beverage sold at retail in two-ounce bottles throughout the United States. Defendants advertise 5-hour ENERGY to consumers, including in Oregon, through radio, television, internet, and print media. The drink is available in "Original," "Extra-Strength," and "Decaf versions. The Original formula contains 200 milligrams of caffeine per bottle, Extra-Strength has 230 milligrams of caffeine, and Decaf has 6 milligrams of caffeine. Each version also contains a proprietary blend of noncaffeine ingredients, including B-vitamins, amino acids, and other ingredients.
This action concerns certain representations that defendants made in Oregon about the characteristics of 5-hour ENERGY. Advertisements stated that the noncaffeine ingredients in the Original and Extra-Strength formulas provide extra energy, alertness, and focus. Specifically, the advertisements stated that 5-hour ENERGY "contains a powerful blend of B-vitamins for energy, and amino acids for focus"; that it "is packed with B-vitamins for energy, and amino acids for a sharp, focused mind"; and that it "contains a healthy powerful blend of B-vitamins for energy, amino acids for focus and better mood, and enzymes to help you feel it fast." Advertisements also stated that the Original and Extra-Strength formulas provide more energy than an equivalent amount of caffeine. Specifically, advertisements stated that 5-hour ENERGY products have "less caffeine than some Starbucks coffees, plus it has vitamins and nutrients." Defendants advertised the Decaf formula as providing alertness and focus, attributing those benefits to the noncaffeine ingredients. Specifically, defendants' website advertised the Decaf formula as "contain[ing] B-vitamins for energy and amino acids for focus, plus Choline," and stated that choline "is vital to the production of neurotransmitters in the brain that affect memory, intelligence and mood." Throughout this opinion, we will refer to the foregoing representations regarding the noncaffeine ingredients as the "NCI representations."
Defendants also ran an "Ask Your Doctor" advertising campaign, with statements that 5-hour ENERGY had "asked over 3,000 doctors" to review the product. Those advertisements claimed that "over 73%" of the doctors who reviewed the product would recommend it to their "healthy patients who use energy supplements." Throughout this opinion, we will refer to those representations as the "Ask Your Doctor campaign."
ORS 646.608(1). The state alleged that defendants violated paragraph (1)(e) by representing that the noncaffeine ingredients in 5-hour ENERGY provide energy and alertness, when those ingredients do not have those effects. The state further alleged that defendants' "Ask Your Doctor" campaign violated both paragraphs (1)(b) and (1)(e) by falsely implying that doctors approved of 5-hour ENERGY. The state sought equitable relief and civil penalties.
Before filing suit, the state notified defendants of the alleged violations, as required by ORS 646.632(2), and defendants submitted an AVC in response. The AVC promised,...
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