Prescott v. Ricola USA, Inc.

Background

Steven Prescott alleged that he bought Ricola cough suppressant and oral anesthetic lozenges between July 2020 and May 2023. He claimed that the front label’s references to and illustrations of Swiss Alpine Herbs led consumers to believe that the herbs provided the product’s therapeutic functions. The back label identified menthol as the product’s only active ingredient and listed the herbs as inactive ingredients.

Prescott asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act, along with claims for breach of express and implied warranties and unjust enrichment. He brought the claims on his own behalf and on behalf of a proposed class. In opposing Ricola’s motion, Prescott withdrew the warranty and unjust-enrichment claims.

Ricola’s Motion

Ricola moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The court explained that this motion uses the same standard as a motion to dismiss for failure to state a claim: the complaint must contain enough factual material to make a claim for relief plausible. The court generally accepts material allegations as true and views them favorably to the nonmoving party, but it does not accept legal conclusions presented as facts.

Federal Preemption

Ricola argued that the Food, Drug, and Cosmetic Act (FDCA) preempted Prescott’s state-law claims. The court considered both express and implied preemption.

The court rejected Ricola’s express-preemption argument at this stage. Prescott argued that federal regulations required an over-the-counter drug’s principal display panel to identify the drug by its established name and state its general pharmacological category or intended action. He relied on the United States Pharmacopoeia designation “menthol lozenges.” The court agreed with Prescott’s reading of the federal labeling requirements, and Ricola did not argue otherwise at this stage. Because Prescott was seeking to enforce what he claimed was a federal labeling requirement rather than impose a different requirement, the court did not find express preemption.

The court also found no implied preemption. Implied preemption would apply if the claims existed only because the FDCA prohibited the conduct. The court concluded that Prescott’s alleged harm did not arise solely from violating the FDCA because the alleged misleading-label conduct could support state-law claims even without the federal statute.

Consumer Confusion

The court then applied the reasonable-consumer test. Under that test, a plaintiff must show that a significant portion of ordinary consumers, acting reasonably, could be misled by the label.

The court found that the front label did not say whether the herbs were active or inactive ingredients. The references to and images of the herbs could therefore be understood in more than one way. The court determined that the label was, at most, ambiguous rather than unambiguously deceptive. Because the back label identified menthol as the sole active ingredient and provided additional ingredient information, the back label could clarify the front label’s ambiguity.

Based on that analysis, the court held that Prescott’s claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act were subject to dismissal. The court did not reach the parties’ arguments about whether Prescott had standing to seek an injunction.

Disposition

The court granted Ricola’s motion for judgment on the pleadings. Because Ricola had not shown that amendment would necessarily be futile, the court gave Prescott leave to amend. Any First Amended Complaint was due by May 22, 2024.