Unintentional Drug Claims on Cosmetics Not Actionable

Last month, a long running case against Beiersdorf, Inc., makers of Nivea, was dismissed.  I would normally prepare a summary myself, but in this case, the first 3 paragraphs of the court’s opinion provides a great summary:

Five years ago, Ashley Franz purchased a $10 bottle of Nivea’s Skin Firming Hydration Body Lotion from a CVS in San Diego. She spent an extra $4 on this Lotion because she believed the claim on the bottle: “Improves Skin’s Firmness in as little as 2 weeks.” When the Lotion didn’t firm her skin as advertised, she filed a class action against Beiersdorf, Inc. (“Nivea”) for false advertising and for selling an unapproved drug.

About a year ago, the Court dismissed Franz’s false advertising claim, and found the FDA had primary jurisdiction to decide if the Lotion was a drug. The Court stayed the case to allow Franz to petition the FDA to take enforcement action against Nivea for making skin-firming claims that Franz maintains makes the Lotion a drug that requires FDA approval. The FDA declined to take any action.

Franz filed a second amended complaint based on a single claim: Nivea is engaged in unfair competition because it’s selling the Lotion as an unapproved drug. Nivea moved to dismiss. Because the Court lacks jurisdiction, it dismisses the complaint.

In the last 8 months, cosmetic companies have seen a number of litigation threats lofted about challenging the products’ ability to reduce wrinkles, firm skin, improve or support collagen, etc.  In many instances, the companies’ claims refer to improving the appearance of skin and in others, perhaps, the marketing claims could have used some clean up.  In either case, however, the allegations are the same… the products are drugs because they are intended to affect the structure or function of the skin, i.e., reduce wrinkles, firm skin, etc., the companies violated federal law because they failed to submit a new drug application, and in turn violated state law (mini-FDC Acts). Accordingly, the plaintiffs threaten class action suits under state consumer protection laws unless the companies agree to pay hefty demands for attorneys’ fees.

The Beiersdorf case, however, provides companies a potential ray of light.

At first, Franz’s basis for standing made sense. The Lotion didn’t firm her skin, so Nivea injured her because she “would not have purchased the Product had she known that Defendants’ skin firming representations were false and misleading.”

In her second amended complaint, Franz alleged “she was injured because the Lotion claims it’s ‘proven’ to firm skin, ‘when, in fact, it is not proven to firm or tighten skin.’ ”  The basis of her argument was that under the FDCA, the product was a drug because it was intended to firm skin, but it hasn’t been approved as a new drug. Thus, the Lotion was illegally sold as an unapproved drug.

The court, however, denied Franz’s reasoning, finding Franz hadn’t plausibly pled causation necessary to establish standing reasoning there’s no a plausible “causal connection” between “Franz’s decision to buy and the ‘conduct complained of’—namely, Nivea’s decision to sell the Lotion as a cosmetic, rather than obtaining approval to sell it as a drug.”  Second, the court denied Franz’s allegation that she lost money on the “product that, but for Defendant’s illegal conduct, would not have been on the market.”  The court reasoned Franz’s theory suggested that had Beiersdorf consulted the FDA, the agency would have found the Lotion was a drug, and, would have refused to allow Beiersdorf to sell it.

Take away…  I mention this one regularly– audit label and marketing claims to avoid unintentional drug claims in the first instance.  Second, know your defenses before agreeing to settle litigation threats.

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