Truth and TriFlex: The Fourth Circuit’s Ruling Regarding “Literally False” Advertising Claims

This blog post discusses the Fourth Circuit’s ruling regarding “literally false” advertising claims. The case is In re GNC Corp., 789 F.3d 505 (2015).

I. Factual Background

GNC, a national nutritional products retailer, has manufactured and sold a line of joint health supplements for years. These products, which contain glucosamine and chondroitin compounds, are marketed collectively under the “TriFlex” brand. The TriFlex product label represents that the supplements “promote[] joint mobility & flexibility,” “protect[] joints from wear and tear of exercise,” and provide “[m]aximum strength joint comfort.”

Although the supplements have been on the market for years, there has been a recent medical controversy regarding their efficacy and whether they offered the advertised joint health benefits. Consumer protection lawsuits against GNC popped up across the United States and were ultimately consolidated in federal court in Maryland. Plaintiffs alleged that the overwhelming evidence indicated that the supplements were worthless, but in so alleging, they admitted that there is at least some scientific evidence indicating that the products work.

The lack of scientific consensus played a pivotal role in the case. Since some experts believed that the products offered joint health benefits, GNC’s claims were not deemed to be “literally false.” As a result, the District Court for the District of Maryland granted GNC’s motion to dismiss. On appeal, the Fourth Circuit accepted the District Court’s reasoning and affirmed its judgment. The Fourth Circuit indicated that, for a claim to be false, plaintiffs must show that not one reasonable expert would agree with the manufacturer’s statements. Furthermore, this question could be resolved at the pleadings stage and was not a question of fact for jury determination.

Two matters are particularly salient to understanding the Fourth Circuit’s ruling. First, although the case was brought under various consumer protection statutes, the Fourth Circuit’s ruling is stated to be the standard for the Lanham Act. Consumers cannot invoke protections of the Lanham Act directly, as determined in Lexmark Int’l, Inc. v. Static Control Components, Inc. However, the Fourth Circuit stated that the “considerable body of federal common law” construing the Act was instructive in understanding the state statutes. Second, Plaintiffs consistently alleged that the advertised claims amounted to literal falsities, rather than misleading representations. The latter requires evidence of consumer confusion, while the former is assessed on the basis of scientific consensus. In the future, to prevail on a claim of literal falsity in the Fourth Circuit, the complaint must allege that all reasonable and duly qualified experts agree that the challenged product does not provide the promised benefits.

II. Criticism of the Fourth Circuit’s Ruling

This case outraged the academic community. Sixteen prominent law professors, including Barton Beebe (NYU), Mark Lemley (Stanford), and Rebecca Tushnet (Georgetown), submitted an amicus brief in support of a petition for rehearing. Amici stated that the new standard for proving “literal falsity” did not foster consumer protection and fair competition. The motion for reconsideration was ultimately denied, but discussion of the case did not end there.

In a June 2015 blog post, Professor Tushnet called the GNC decision “a deep substantive wound,” extending hostility in the consumer protection context beyond procedural matters. She stated that the so-called “battle of the experts” should not be resolved at the pleadings stage, based in part on other courts’ conception of the legal standard. Seller Beware, a consumer protection blog maintained by Arnold & Porter, said that the ruling amounted to “an industry victory.” These sentiments were widely shared by practitioners and academics alike.

Amici in the GNC case summarily disregard the merits of the Fourth Circuit’s ruling. My Note (publication forthcoming) will (i) respond to criticism presented in the professors’ amicus brief, instead arguing that the new standard serves both industry and consumer interests, (ii) explore policy implications of the Fourth Circuit’s newly articulated standard, within the context of other measures that protect consumers, and (iii) assess the impact that the ruling has had in other cases since it was articulated more than a year ago. This blog post will briefly address some of the merits of the Fourth Circuit’s decision.

III. Merits of the Fourth Circuit’s Decision

The Fourth Circuit’s decision is fertile ground for identifying the underlying policy rationales. Judge Floyd aptly noted three things:

• It is unfair to consumers who wish to gamble that glucosamine and chondroitin may be effective if lay juries can effectively ban the sale of glucosamine and chondroitin simply because the evidence of their effectiveness is inconclusive;
• Plaintiffs remain protected from dubious experts by the Federal Rules of Evidence, which “ensure that any and all scientific testimony…is not only relevant, but reliable;” and
• Plaintiffs who cannot meet the burden of proving literal falsity may avail themselves of a claim regarding misleading representations.

The main point is that scientific evidence is not static and, indeed, the minority view may end up being right. When there is reasonable evidence on both sides of a scientific controversy, why should six jurors decide if a product cannot be sold or advertised? An alternate rule that reserves judgment beyond the pleading stage would overassert juries’ abilities to handle highly technical scientific evidence. Banning the product’s sale simply robs consumers of the choice to research and purchase products that may, in the long-term, be beneficial, even if the short-term prospects seem minimal based on the research du jour.

Second, the continued availability of questionably effective products may incentivize more research into their health benefits. Scientific consensus should emerge around their utility or uselessness in due course.

Third, the standard in this case is consistent with other consumer protection measures. For example, the FTC’s Pfizer standard, known commonly as the “prior substantiation rule,” states that an advertiser must have a “reasonable basis” for making objective claims and must “possess substantiation, prior to running the ad, for affirmative product claims.” 81 F.T.C. 23, 29 (1972). Under the FTC standard, there would be no issue with the GNC ad.

Finally, both the industry and its consumers benefit from consistent interpretations of state consumer protection statutes, particularly in the class action context. Both parties are better able to develop legal strategies and make informed decisions about lawsuits and settlements. While we would not want the Fourth Circuit’s decision extended beyond the advertising area, there are certainly good reasons to extend its application to other consumer deception cases.

Gia M. Wakil is a J.D. candidate, 2018, at NYU School of Law.