Arora v. GNC Holdings, Inc.

Background

Richa Arora, Randy Clinton, and Walter Johnson bought GNC-branded dietary supplements. Arora and Clinton reside in California, and Johnson resides in New York. They alleged that GNC’s supplement labels made structure/function claims—claims describing how a nutrient or ingredient affects the body—without the disclaimer required by the Federal Food, Drug, and Cosmetic Act and related regulations. The required disclaimer states that the Food and Drug Administration has not evaluated the statements and that the product is not intended to diagnose, treat, cure, or prevent disease.

The plaintiffs also alleged that GNC’s marketing increased the deception by using phrases such as “clinically studied,” “scientifically designed,” “physician formulated,” and “physician endorsed,” along with medical symbols and references to diseases. They asserted seven state-law claims: three California Unfair Competition Law claims, a California False Advertising Law claim, a California Consumers Legal Remedies Act claim, two New York consumer-protection claims, and an unjust-enrichment claim. They brought the claims for themselves and proposed California, New York, and nationwide consumer classes.

GNC’s Motion

GNC moved to dismiss under Rules 12(b)(1) and 12(b)(6). Rule 12(b)(1) addresses challenges to subject-matter jurisdiction, including standing. Rule 12(b)(6) tests whether a complaint states a legally plausible claim. GNC also argued that the fraud-based claims failed Rule 9(b), which requires fraud allegations to identify the basic details of the alleged misconduct, including who made the statement, what was said, when and where it was said, and how it was misleading.

GNC argued that:

Analysis

Standing for the California Unfair Competition Law claim. The court held that the plaintiffs plausibly alleged standing. For a California Unfair Competition Law claim based on a misrepresentation, a plaintiff must allege an economic injury caused by reliance on the alleged misrepresentation. The plaintiffs alleged that they read GNC’s labels, believed the supplements had therapeutic value and had undergone government review or approval, paid more than they otherwise would have, and would have acted differently if the labels had included the required disclaimer. The court found these allegations sufficient at the pleading stage and rejected GNC’s argument that the claim improperly imposed strict liability based only on the omitted disclaimer.

California deception claims. The court also held that the plaintiffs adequately pleaded fraud under Rule 9(b). Although some allegations were general, the complaint identified examples of labels that allegedly made therapeutic claims without the required disclaimer. One example described a GNC diabetic-support supplement as supporting glucose metabolism, glucose utilization, insulin production, and circulatory, heart, and eye health. The side label allegedly described the product as scientifically designed for people with diabetes and as helping maintain healthy blood sugar levels and improve circulation and eye health.

The court concluded that the plaintiffs linked these therapeutic claims to the missing or noncompliant disclaimer and adequately alleged that reasonable consumers could be misled. The court distinguished a case in which the plaintiff had not explained how a defective disclaimer made other advertising claims misleading. Here, the plaintiffs alleged that the absence of a disclaimer on the same panel, or the alleged lack of prominence of a back-panel disclaimer, changed the context of the therapeutic claims.

New York claims. The court denied dismissal of the New York consumer-protection claims for the same reasons. The court noted that the parties did not dispute that New York law required the ordinary pleading standard rather than Rule 9(b)’s heightened fraud standard.

Equitable relief. The court denied GNC’s request to dismiss the California Unfair Competition Law and False Advertising Law claims for equitable relief. It followed decisions holding that plaintiffs may pursue alternative legal and equitable remedies at the pleading stage, even when they also assert a Consumers Legal Remedies Act claim.

Unjust enrichment. Because the court found that the plaintiffs’ misrepresentation claims could proceed, it also denied dismissal of the unjust-enrichment claim, which GNC argued depended on actionable misrepresentations or omissions.

Injunctive-relief standing. The court held that the plaintiffs plausibly alleged standing to seek an injunction. They alleged that they would buy GNC supplements in the future if the labels and marketing were truthful and nonmisleading, but could not currently rely on them. Applying Ninth Circuit precedent, the court reasoned that a previously deceived consumer may face a real risk of future harm when the consumer wants to buy the product but cannot determine whether its future labeling will be reliable.

Products the plaintiffs did not purchase. The court also rejected GNC’s argument that the plaintiffs lacked standing to challenge unpurchased products. At the pleading stage, the plaintiffs alleged uniform misleading representations across GNC’s product lines and claimed that the products lacked the required disclaimer. The court stated that the specific products at issue would have to be identified in connection with class certification for case-management purposes.

Disposition

Judge Laurel Beeler denied GNC’s motion to dismiss the complaint. The order disposed of ECF No. 18. The court did not decide the ultimate truth of the plaintiffs’ allegations, GNC’s liability, or whether the proposed classes would be certified.