State v. Living Essentials, LLC, 76463-2-I

• Citation: 436 P.3d 857,8 Wash.App.2d 1
• Decision Date: 18 March 2019
• Docket Number: No. 76463-2-I,76463-2-I
• Parties: STATE of Washington, Respondent, v. LIVING ESSENTIALS, LLC, a Michigan limited liability company, and Innovation Ventures, LLC, a Michigan limited liability company, Appellants.
• Court: Court of Appeals of Washington

8 Wash.App.2d 1

436 P.3d 857

STATE of Washington, Respondent,

v.LIVING ESSENTIALS, LLC, a Michigan limited liability company, and Innovation Ventures, LLC, a Michigan limited liability company, Appellants.

No. 76463-2-I

Court of Appeals of Washington, Division 1.

FILED: March 18, 2019

Michael Barr King, Jason Wayne Anderson, James Elliot Lobsenz, Emilia L. Sweeney, Rory Drew Cosgrove, Carney Badley Spellman PS, 701 5th Ave., Ste. 3600, Seattle, WA, 98104-7010, Jill Diane Bowman, Stoel Rives LLP, 600 University St., Ste. 3600, Seattle, WA, 98101-3197, Reilley Michelle Dunne Keating, Joel Mullin, Stoel Rives LLP, 760 SW 9th Ave., Ste. 3000, Portland, OR, 97205-2584, for Appellant.

Trisha L. Mcardle, Attorney at Law, 3808 NE 88th St., Seattle, WA, 98115-3737, Daniel T. Davies, Washington Attorney General's Office, 800 Fifth Ave., Ste. 2000, Seattle, WA, 98104-3188, for Respondent.

Kang Woo Lee, Said Saba, Raqiyyah Pippins, Arnold & Porter Kaye Scholer LLP, 601 Massachusetts Ave. NW, Washington, DC, 20001-3743, Trenton Norris, Arnold & Porter Kaye Scholer, Three Embarcadero Center, 10th Floor, San Francisco, CA, 94111, for Amicus Curiae on behalf of Responsible Nutrition.

PUBLISHED OPINION

Mann, A.C.J.¶ 1 The State of Washington sued Living Essentials, LLP, and Innovative Ventures, LLP (collectively, Living Essentials) under the Washington Consumer Protection Act (CPA), chapter 19.86 RCW, alleging that Living Essentials violated the CPA by making deceptive advertising claims about its product, 5-Hour ENERGY®. After a bench trial, the trial court agreed that three of Living Essentials’ advertising campaigns violated the CPA. The trial court assessed a civil penalty against Living Essentials and awarded the State its attorney fees and costs.

¶ 2 Living Essentials argues on appeal that the trial court (1) erred by adopting the Federal Trade Commission’s (FTC) prior-substantiation doctrine, (2) that the prior-substantiation doctrine violates article I, section 5 of the Washington State Constitution, (3) that Living Essentials’ claims were mere puffery which did not require substantiation, (4) the trial court applied the wrong standard for necessary substantiation, and (5) the trial court erred in concluding that Living Essentials’ Ask Your Doctor claim was deceptive. Living Essentials also challenges the trial court’s penalty and award of attorney fees. We affirm.¹

I.

¶ 3 Living Essentials produces and markets the energy drink 5-Hour ENERGY®. During its advertising campaign, Living Essentials made numerous claims about the efficacy of 5-Hour ENERGY®. Three of those claims are relevant to this appeal.

¶ 4 First, Living Essentials claimed that 5-Hour ENERGY® was "Superior to Coffee" (Superior to Coffee claim). Specifically, Living Essentials claimed that "the key vitamins and nutrients [in 5-Hour ENERGY®] work synergistically with caffeine to make the biochemical or physiological effects last longer than caffeine alone." Second, Living Essentials claimed that the decaf variety of 5-Hour ENERGY® provided energy, alertness, and focus "for hours." (Decaf claim). Living Essentials provided the basic message, if you do not like caffeine then "Decaf 5-Hour ENERGY®... can provide the alertness you want without the ‘caffeine feeling’ you don’t." Third, Living Essentials implied that 73 percent of doctors would recommend 5-Hour ENERGY® (Ask Your Doctor claim). In an ad that ran on national television, a spokesperson said

We asked over 3,000 doctors to review 5-hour Energy®, and what they said is amazing. Over 73% who reviewed 5-hour Energy® said they would recommend a low calorie energy supplement to their healthy patients who use energy supplements. 73%. 5-hour Energy has 4 calories and is used over nine million times a week. Is 5-hour Energy right for you? Ask your doctor. We already asked 3,000.

¶ 5 After an 11-day bench trial involving testimony and transcripts of testimony from 20 lay and expert witnesses and the admission of approximately 500 exhibits, the trial court issued a 57-page decision including detailed findings of fact and conclusions of law. Following FTC guidance, the trial court concluded that Living Essentials Superior to Coffee, Decaf, and Ask Your Doctor claims were deceptive and violated the CPA.

¶ 6 With respect to the Superior to Coffee claim the trial court found that the real takeaway was "that the combination of caffeine, B vitamins and amino acids would provide energy that would last longer than consumers would experience from a cup of premium coffee (and in some of the ads, longer than 3 or 4 cups of coffee)." The court further found that "[t]he studies [Living Essentials presented] do not clearly establish that 5-Hour ENERGY®’s vitamins and nutrients work synergistically with caffeine to make these benefits last longer than they would last with caffeine alone." Living Essentials’ claim that "5-Hour ENERGY® works better than caffeine alone ... is certainly plausible, given the science presented to the Court, but it remains a hypothesis, not an established scientific fact." The court concluded that "Living Essentials violated the [CPA] when it aired or published ads that represented that the energy, alertness and from 5-hour ENERGY® lasts longer than a cup of coffee because of the synergistic effects of caffeine, B vitamins and nutrients in the product."

¶ 7 The trial court also found that "Living Essentials lacks competent and reliable scientific evidence to claim that decaf 5-Hour ENERGY® will generate energy and alertness that ‘lasts for hours.’ " The trial court concluded that "Living Essentials violated the [CPA] when it claimed in a press release and on its web site that Decaf 5-hour ENERGY® will provide energy, alertness and focus that lasts for hours."

¶ 8 Finally, the trial court determined that the "Ask-Your-Doctors" claim was deceptive. The court found that the "net impression" from the ad was that "a substantial majority of doctors believe 5-Hour ENERGY® is a safe and effective nutritional supplement

that doctors would recommend to their patients." The court noted that "while the statistics displayed ... were literally true, the impression left by the ads was not."

¶ 9 Based on the number of times the ads aired or the number of bottles of product sold, the trial court imposed a $ 2,183,747 civil penalty and awarded the State its attorney fees and costs. Living Essentials appeals.

II.

¶ 10 Living Essentials first raises multiple challenges to the trial court’s findings and conclusions that Living Essentials’ Superior to Coffee, Decaf, and Ask Your Doctor claims were deceptive and violated the CPA.

¶ 11 "[W]hether a particular action gives rise to a Consumer Protection Act violation is reviewable as a question of law." Leingang v. Pierce County. Med. Bureau, 131 Wash.2d 133, 150, 930 P.2d 288 (1997). Whether a party committed the particular violation, however, is reviewed under the substantial evidence test. Leingang, 131 Wash.2d at 150, 930 P.2d 288. "Substantial evidence is evidence in sufficient quantum to persuade a fair-minded person of the truth of the declared premise." Holland v. Boeing Co., 90 Wash.2d 384, 390, 583 P.2d 621 (1978). "The substantial evidence standard is deferential and requires the court to view the evidence and reasonable inferences in the light most favorable to the party who prevailed" below. Mansour v. King County, 131 Wash. App. 255, 263, 128 P.3d 1241 (2006).

¶ 12 Unchallenged findings of fact are verities on appeal. State v. Reader’s Digest Ass’n, Inc., 81 Wash.2d 259, 263-64, 501 P.2d 290 (1972).² Further, mere assertions of error are not enough. When a challenged finding is unsupported by argument on appeal, this court need not consider the assignment of error. Bryant v. Palmer Coking Coal Co., 86 Wash. App. 204, 216, 936 P.2d 1163 (1997).³ Even where the evidence conflicts, the appellate court need only determine "whether the evidence most favorable to the prevailing party supports the challenged findings." Prostov v. State, Dept. of Licensing, 186 Wash. App. 795, 820, 349 P.3d 874 (2015). Finally, the reviewing court "defer[s] to the trier of fact regarding witness credibility or conflicting testimony."

Weyerhaeuser v. Tacoma-Pierce County Health Dep’t, 123 Wash. App. 59, 65, 96 P.3d 460 (2004). Reviewing courts will not reweigh the evidence or the credibility of witnesses on appeal. Washington Belt & Drive Sys., Inc. v. Active Erectors, 54 Wash. App. 612, 616, 774 P.2d 1250 (1989).⁴

A.

¶ 13 Living Essentials’ primary contention is that the trial court erred by relying on the FTC’s "prior substantiation doctrine" because it has not been adopted in Washington, cannot be judicially adopted, and is inconsistent with Washington CPA law. We disagree. A brief review of the CPA and FTC’s prior substantiation doctrine is helpful.

1.

¶ 14 The CPA prohibits "unfair or deceptive acts or practices in the conduct of any trade or commerce." RCW 19.86.020. The purpose of the CPA is "to protect the public and foster fair and honest competition." RCW 19.86.920. The CPA is meant to be liberally construed to serve this purpose. Short v. Demopolis, 103 Wash.2d 52, 60-61, 691 P.2d 163 (1984).

¶ 15 The Washington Attorney General may bring an enforcement action under the CPA. The State must prove three elements: "(1) an unfair or deceptive act or practice, (2) occurring in trade or commerce, and (3) a public interest impact." State v. Kaiser, 161 Wash. App. 705, 719, 254 P.3d 850 (2011). The State is not required to prove that the unfair or deceptive advertisements actually injured consumers or that consumers relied on deceptive ads when deciding whether to purchase or consume the advertised products. Kaiser, 161 Wash. App. at 719, 254 P.3d 850. A CPA claim "does not require a finding of an intent to deceive or defraud and therefore good faith on the part of the seller is immaterial." Wine v. Theodoratus, 19 Wash. App. 700, 706, 577 P.2d 612 (1978).

¶ 16 The CPA does not define "unfair or...