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Spence v. Basic Research

United States District Court, D. Utah

May 31, 2017

ADELAIDE SPENCE, Plaintiff,
v.
BASIC RESEARCH; BREMENN RESEARCH LABS; MITCHELL K. FRIEDLANDER; DENNIS GAY; and TIFFANY STROBEL, Defendants.

          MEMORANDUM DECISION AND ORDER

          Clark Waddoups United States District Judge

         Before the court are Defendants' motions to dismiss pursuant to Federal Rules of Procedure 9(b), 12(b)(1), and 12(b)(6) (Dkt. Nos. 68, 69, & 70), and Plaintiff's motion to strike or exclude evidence improperly submitted in Defendants' motions (Dkt. No. 80). Defendants' motions assert that the court lacks subject matter jurisdiction over each of the individual defendants and over the warranty claims, except as to Bremenn Research Labs; that Plaintiff has not pled a claim upon which relief can be granted because she failed to plead the fraud-based claims with particularity; and that Plaintiff has not pled facts that, when accepted as true, satisfy the elements of each of her claims. The court held oral argument on the motions on May 18, 2017. Regarding Defendants' motions, after careful consideration of the arguments the parties set forth in their briefs and oral argument and for the reasons set forth below, the court now GRANTS in part and DENIES in part the standing motion and GRANTS Defendants' other motions. Regarding Plaintiff's motion, the court has taken it under advisement and excluded improper evidence in reaching the conclusions herein.

         BACKGROUND[1]

         Plaintiff Adelaide Spence brings this purported class-action lawsuit to compensate damages she and other members of the purported class suffered because of false and fraudulent advertising of the dietary supplement Vysera-CLS. (Dkt. No. 64.) Plaintiff contends that Defendants advertised a pill that would promote significant weight loss through the malabsorption of calories when Defendants knew that was scientifically impossible.

         Plaintiff purchased Vysera-CLS on March 19, 2015 for $84.99 from a GNC in New York after having reviewed advertisements on the internet for the supplement. The advertisements she reviewed claimed Vysera-CLS is a “miracle pill” and “the amazing Cupcake Diet.” They further stated that Vysera-CLS could help “reshape your entire body in 30 days” and promised that results would be achieved “without requiring anybody to follow a low-calorie diet or work out for hours every day!” She also contends that the advertisements claimed the results are supported by “groundbreaking research” published in the British Journal of Nutrition, but that no such study has been published. After taking Vysera-CLS as directed on the product label, Plaintiff failed to lose any weight. She relied upon the advertisements she saw and would not have purchased the supplement if she had known that it was not effective and “would not cause her to lose weight without modifying her diet and without exercise.” Plaintiff does not point to a specific advertisement that she relied upon, but she does quote other print and web advertisements for Vysera-CLS that claim the supplement can reshape one's body within thirty days when the person consumes 2000 to 2200 calories per day and without requiring hours daily of exercise.

         Vysera-CLS is produced and marketed by Bremenn Research Labs, LLC, a subsidiary of Basic Research, LLC. Basic Research is a multimillion-dollar nutraceutical company that “develops, manufactures, promotes, markets, distributes, and sells scores of cosmetics, nutritional supplements, and dietary supplements” based in Salt Lake City, Utah. The individual defendants were employees of Basic Research and were involved in its subsidiary LLCs, including Bremenn. Specifically, defendants Gay and Friedlander directed the marketing of Basic Research's products, including “labeling, advertising, and media placement for Vysera-CLS and other dietary supplements.” Defendant Strobel maintained a blog, MyFreeDiet.com, where she posted advertising content for Vysera-CLS. She also wrote advertisements that were published in other locations.

         Basic Research, Gay, and Friedlander are subject to a permanent injunction and Consent Decree with the Federal Trade Commission, which prohibits them from marketing and selling dietary supplements unless the claims regarding the supplements are supported by “competent and reliable scientific evidence.” On December 17, 2013, the National Advertising Division of the Council of Better Business Bureaus referred Vysera-CLS advertisements to the FTC in light of the permanent injunction. Plaintiff makes no claims that the FTC ever took any action against Defendants related to Vysera-CLS.

         Plaintiff supports her conclusion that the Vysera-CLS advertisements were fraudulent by citing a 2003 study by the FTC that concluded malabsorption of calories can only account for approximately one-third of a pound of weight loss each week. She also cites several studies discrediting the effectiveness of P. vulgaris, which is listed as one of Vysera-CLS's “proprietary weight control component[s].” The studies date from 1982, 2004, 2011, and 2014. Plaintiff does not contend that P. vulgaris is the active ingredient or provide studies discrediting other compounds at work in Vysera-CLS.

         Upon these and other representations, Plaintiff alleges Defendants' conduct violated the Racketeer Influenced and Corrupt Organizations Act, the Utah Pattern of Unlawful Activity Act, the Magnuson-Moss Warranty Act, and the Utah Consumer Sales Practices Act and constituted a breach of express warranty and unjust enrichment. Defendants now seek to have each claim dismissed.

         ANALYSIS

         I. Standing 12(b)(1)[2]

         a. Individual Defendants

         Defendants first seek dismissal of each Individual Defendant from the action under Federal Rule of Civil Procedure 12(b)(1), claiming that the court lacks subject matter jurisdiction over the Individual Defendants. (Dkt. No. 69.) Defendants argue the court does not have jurisdiction because Plaintiff lacks standing to pursue her claims when the Individual Defendants did not cause her alleged injuries. The jurisdiction of the federal courts extends only to such actions that present a justiciable case or controversy. U.S. Const. art. III, § 2; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). For an action to present a justiciable case or controversy, the plaintiff must have standing to pursue it. Id. A plaintiff has standing if she demonstrates (1) that she “suffered an ‘injury in fact'”; (2) that “a causal connection [exists] between the injury and the conduct complained of”; and (3) that it is “‘likely, ' as opposed to merely ‘speculative, ' that the injury will be redressed by a favorable decision.'” Id. at 560-61 (citations and internal quotation marks omitted). This burden is not diminished here by the fact that Plaintiff purports to bring a class action suit; she must show that she was personally injured by these defendants and not simply that some other, unidentified class members were injured. Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n.20 (1976).

         “[T]he party invoking federal jurisdiction bears the burden of establishing its existence.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 104 (1998). Because the elements of standing “are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof.” Lujan, 504 U.S. at 561. “At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we ‘presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'” Id. (quoting Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990)) (alteration in the original); see also Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1273 (11th Cir. 2003) (concluding that “the existence of record evidence of” the defendant's “direct involvement” in the conduct from which the plaintiff's injury arose was sufficient to show causation for standing purposes). The Tenth Circuit Court of Appeals has determined this amounts to a “considerably” reduced burden. Petrella v. Brownback, 697 F.3d 1285, 1292 (10th Cir. 2012); see also Rothstein v. UBS AG, ...


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