Health Law Daily Failure to allege economic injury-in-fact tanks class action against GNC
Monday, September 11, 2017

Failure to allege economic injury-in-fact tanks class action against GNC

By Sheryl Allenson, J.D.

A class alleging that certain General Nutrition Corporation (GNC) weight-loss and sports nutrition dietary supplements contained certain ingredients that were unsafe did not meet the threshold to establish an injury-in-fact sufficient to withstand GNC’s motion to dismiss in a Pennsylvania district court (Hubert v General Nutrition Corp., September 8, 2017, Hornak, M.).

Background. GNC is a large specialty retailer of nutritional supplements, which in some cases are manufactured by third-party vendors. The class alleged that GNC marketed and sold weight loss and sports nutrition dietary supplements that contained picamilon, BMPEA or acacia rigidula. According to the plaintiff’s amended complaint, the FDA found that picamilon did not qualify as a dietary ingredient, and that for years prior to that finding, GNC was aware that it was not a dietary ingredient.

The class also claimed that GNC had known since the 2013 that some of the dietary supplements that were labelled as containing acacia rigidula in fact contained BMPEA, and that the company was informed soon after that there are no tests demonstrating that BMPEA is safe for humans. Notwithstanding, GNC allegedly continued to sell products containing acacia radula without doing independent testing to determine whether the products contained BMPEA. Once the FDA ruled that BMOEA was not a dietary ingredient, GNC stopped selling products containing it.

Third-party vendors. Although the dietary supplements were manufactured by third-party vendors, the class claimed that GNC governed "significant control" over the labeling and formulas. In the amended complaint, the class alleged that as a result of that control, GNC misrepresented on its labeling that the supplements containing those non-dietary ingredients were safe for consumers. The class took the position that but for those misrepresentations, they would not have purchased the supplements.

Injury-in-fact. To establish standing, the party must have suffered an injury-in-fact traceable to the challenged conduct that is likely to be redressed by a favorable decision. At the outset, the court acknowledged the class could establish an injury-in-fact by showing economic injury; however, allegations of possible future injury are insufficient. The court found that the complaint’s argument that the consumers failed to receive the "benefit of the bargain" did not establish economic injury, because the purchases were not made under a contract.

The court also rejected the argument that GNC sold products with false and misleading labels and did not disclose material facts. The complaint did not allege what those material facts allegedly were or even whether GNC had an obligation to so disclose. It did not allege that the consumers were induced to purchase the dietary supplements based on any specific misrepresentation. Nor did it allege that GNC identified its product as superior or identify comparable less expensive products to support an argument that an economic injury existed in the form of premium prices paid for the GNC supplements.

The case is No. 2: 15-cv-01391.

Attorneys: D. Aaron Rihn (Robert Peirce & Associates, PC) for Daniel Hubert. Amy B. Alderfer (Cozen O'Connor PC) for General Nutrition Corp.

Companies: General Nutrition Corp.

MainStory: TopStory CaseDecisions FDCActNews SupplementNews LabelingNews SafetyNews

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