Magpayo v. Walmart Inc.

Background

Pearl Magpayo brought a proposed class action challenging advertising and label disclosures for Walmart’s Spring Valley Fish Oil Omega-3 dietary supplements. She alleged that statements such as “Fish Oil is a source of Omega-3 fatty acids that support heart health,” “Heart Health,” and a heart symbol led reasonable consumers to believe the products reduce the risk of heart disease. She also relied on an online advertisement stating that the products “REDUCE THE RISK OF CORONARY HEART DISEASE,” although she did not show that Walmart was responsible for that advertisement.

Magpayo asserted claims under California’s Consumers Legal Remedies Act, False Advertising Law, and Unfair Competition Law, along with claims for breach of express warranty, breach of implied warranty, and quasi-contract, unjust enrichment, and restitution. She cited Food and Drug Administration regulations and guidance concerning health claims, but stated that she was not seeking to enforce those federal regulations.

Preemption

The court distinguished between a “structure/function claim,” which describes a nutrient’s or dietary ingredient’s role in maintaining a bodily structure or function, and an implied health claim, which links a substance to a disease or health-related condition. The court concluded that the challenged label statements were structure/function claims. Although the FDA guidance indicated that a heart symbol ordinarily may imply heart-disease prevention, the product label also contained an asterisk directing consumers to a disclaimer stating that the product had not been evaluated by the FDA and was not intended to diagnose, treat, cure, or prevent any disease.

The court held that the heart symbol, even together with the “heart health” and “support heart health” statements, did not create an implied health claim in this context. The single Amazon advertisement was insufficient to change that conclusion because Magpayo did not allege that Walmart was responsible for it or provide facts showing a widespread or consistent Walmart advertising campaign.

Because the First Amended Complaint’s theory treated the structure/function statements as misleading for failing to show that the products prevent heart disease, the court held that the theory was preempted by federal law. The court noted that preemption would not necessarily bar claims alleging that the statements were factually false, lacked substantiation, or failed to disclose a harmful aspect of the nutrient. The court found that the complaint did not clearly plead a lack-of-substantiation theory and did not connect the alleged potential harms from some fish-oil supplements to Walmart’s products.

Primary Jurisdiction

Walmart asked the court to dismiss or stay the case under the primary-jurisdiction doctrine, which allows a court to defer to an administrative agency on certain technical or policy issues. The court denied that request. It reasoned that the FDA had already issued substantial guidance about the types of claims at issue and that neither side identified an ongoing FDA proceeding or pending request for guidance that would affect the case. The court found no efficiency benefit from pausing the litigation.

Disposition

The court granted Walmart’s motion to dismiss the First Amended Complaint because Magpayo’s currently pleaded deception theory and state-law claims were preempted. The court gave Magpayo leave to amend within 20 days to attempt to plead a non-preempted deception or harm theory, including a lack-of-substantiation or causes-harm theory supported by facts concerning Walmart’s products. Walmart may renew its failure-to-state-a-claim arguments if Magpayo files an amended complaint.

The court denied Walmart’s request to dismiss or stay the case based on primary jurisdiction. It also stated that a further amended complaint should not repeat a California Unfair Competition Law claim based on violation of federal law or a claim for equitable restitution, because Magpayo had said in her opposition that she was no longer pursuing those claims.