Federal Trade Commission v. Coorga Nutraceuticals Corp.

201 F. Supp. 3d 1300, 101 Fed. R. Serv. 190, 2016 WL 4472994, 2016 U.S. Dist. LEXIS 118308
CourtDistrict Court, D. Wyoming
DecidedAugust 15, 2016
DocketCase No. 2:15-CV-0072-SWS
StatusPublished
Cited by1 cases

This text of 201 F. Supp. 3d 1300 (Federal Trade Commission v. Coorga Nutraceuticals Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Wyoming primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Trade Commission v. Coorga Nutraceuticals Corp., 201 F. Supp. 3d 1300, 101 Fed. R. Serv. 190, 2016 WL 4472994, 2016 U.S. Dist. LEXIS 118308 (D. Wyo. 2016).

Opinion

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

Scott W. Skavdahl, United States District Judge

This matter comes before the Court on the parties’ cross motions for summary judgment (ECF Nos. 44, 46). The Court, having carefully considered the briefs and materials submitted in support of the respective motions and the oppositions thereto, and being otherwise fully advised, FINDS and ORDERS as follows:

Background

Plaintiff Federal Trade Commission (“FTC”) brought this action under § 13(b) of the FTC Act, 15 U.S.C. § 53(b), for alleged violations of §§ 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, in connection with the labeling, advertising, marketing, distribution, and sale of the Grey Defence dietary supplement that purportedly reverses or prevents the formation of gray hair. (Compl. ¶ 1.) Specifically, the FTC alleges Defendants’ representation that Grey Defence reverses or prevents the formation of gray hair is false or misleading, or was not substantiated at the time the representation was made (Count I — False or Unsubstantiated Efficacy), and Defendants’ representation that Grey Defence is scientifically proven to reverse or prevent the formation of gray hair is false (Count II — False Proof). Id. ¶¶ 17-22.

Defendant COORGA Nutraceuticals Corporation (“COORGA”) is a Wyoming corporation. Defendant Garfield Coore owns 65% of COORGA and is its Executive Vice President and sole employee.1 (Coore 30(b)(6) Dep. 18:8-17; PL’s Ex. 6, ¶¶ 1, 3.) Since 2011, Defendants have advertised, marketed, and- sold the Grey Defence dietary supplement (and several successive formulations thereof) to consumers throughout the United States. According to the product label, Grey Defence contains a blend of vitamins and minerals, as well as the enzyme catalase.

Coore, a self-described “applied scientist,” 2 developed the Grey Defence formu[1306]*1306la over a 9-month period by conducting “comparative scientific research” of various journal articles, studies related to Viti-ligo (a disease that causes the loss of skin color),3 and various “therapeutic compounds.” (Coore Aff. Ex. 1, Summary of Scientific Investigation Leading to the Basic Formulation of Grey Defence) (EOF No. 45-1). “To make the product bullet proof,” Coore conducted further comparative research on the issue of absorption and bioavailability (to “ensure that ingredients in the formulation actually get[ ] into the body in sufficient quantity to do work”), spoke with scientists about their laboratory work unrelated to Grey De-fence specifically, and tested the product on himself (“seeing re-pigmentation of some of my own hair follicles after 8 months in the range of around 3%”). Id. at 4-5. Coore states additional, unspecified experiments were also conducted, and Defendants ultimately received a US patent for the product. Id. at 5. Coore believes his dietary supplement can stop, reverse, and prevent the natural graying of human hair and admits that his product is marketed and advertised on that premise. (Coore Aff. ¶ 8.) Defendants further admit they have represented to consumers that Grey Defence is scientifically proven to reverse or prevent the formation of gray hair. (Compl. ¶ 20; Answer ¶ 20.)

Coore obtained undergraduate and graduate degrees in economics; he does not have a medical degree and has not taken any courses in dermatology or pharmacology or, since high school, in chemistry or biology. Id. 11:5-8, 12:1-2, 14:22-15:24, 16:6-12. Coore is COORGA’s only employee and fills all roles for the company as needed. (Coore 30(b)(6) Dep. 18:8-25.) Coore participates in and controls COORGA’s business activities, including product development, manufacturing, advertising, marketing, sales, customer relations, and financial management. Coore created, developed, approved, and disseminated Grey Defence ads, including the websites as well as radio, television, print, and outdoor ads. Coore decided how much to spend and where to disseminate Grey Defence ads. Coore further created, edited, and approved telemarketing scripts for Grey Defence and selected, trained, monitored, and rewarded through sales incentives COORGA’s telemarketers for Grey Defence.

Defendants have disseminated ads for Grey Defence products via radio (including Sirius XM satellite radio and local radio stations throughout the U.S.), television, and the internet. Defendants pm-chased keywords in Google AdWords like “hair graying prevention,” “cure for grey hair,” and “how to reverse gray hair.” Defendants have further disseminated print and email ads, as well as ads through their product website and social media pages. Consumers purchased the products directly from Defendants through the product website, mobile website, and telephone numbers listed in Grey Defence ads. COORGA has sold Grey Defence for $69.99 per bottle, with discounts given for multi-bottle purchases. From 2011 to June 10, 2016, COORGA had $433,848.93 in gross sales to U.S. consumers. The FTC calculates that COORGA has refunded $29,608.26 to U.S. consumer through June 10, 2016. From 2011 to 2013, COORGA spent $184,599.01 on advertising and marketing of Grey Defence products.

Coore has developed and intends to sell a new product, Grey Defence Xtreme 3.0 (apparently approved by Health Canada), as soon as this case concludes and he has [1307]*1307the financial resources to commercialize it. (Coore 80(b)(6) Dep. 86:17-87:6.) Defendants have also developed other products, including brain JOLT!, TumorDefence, FatBLOKKER! (now known as mealBUD-DYZ!), Endura, and Sodhalose-C. Defendants have promoted TumorDefence to fight cancer metastasis and tumor growth, including on the website www.indiegogo. com. In advertising TumorDefence, Coore purchased words in Google AdWords like “cure for cancer” and “anti cancer treatments.” Defendants have promoted brain-JOLT! to boost working memory, including on the website mybrainjolt.com and www. indiegogo.com. COORGA is developing a health product to fight neurodegenerative diseases, such as Alzheimer’s disease, ALS, multiple sclerosis, and Parkinson’s disease. One such produce is Sodhalose-C (which Coore asserts is approved by Health Canada). Id. 102:26-104:4. As with the Grey Defence .products, Coore developed TumorDefence and Sodhalose-C through his own research and review of journal articles and discussions with ingredient suppliers without consulting any medical professionals or scientists. (Coore Dep. 78:15-79:4, 80:14-25.)

The FTC contends Defendants have deceptively advertised that their Grey De-fence dietary supplements (“Grey De-fence”) reverse or prevent the formation of gray hair in humans and are scientifically proven to do so because Defendants had no reliable or relevant scientific evidence to support such claims. Just the opposite, Defendants contend their advertising materials for Grey Defence are neither false nor misleading, and Defendants had a reasonable basis for their claims. The Plaintiff and Defendants have each moved for summary judgment in their respective favor. Because the material facts are largely undisputed, the Court, finds summary disposition appropriate in this case.

Standard op Review

Summary judgment is appropriate where a movant shows “there is no

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Bluebook (online)
201 F. Supp. 3d 1300, 101 Fed. R. Serv. 190, 2016 WL 4472994, 2016 U.S. Dist. LEXIS 118308, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-trade-commission-v-coorga-nutraceuticals-corp-wyd-2016.