Prescott v. Abbott Laboratories

• Court: District Court, N.D. California
• Decided: June 5, 2024
• Docket: 5:23-cv-04348
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 STEVEN PRESCOTT, et al., Case No. 23-cv-04348-PCP

8 Plaintiffs, ORDER GRANTING IN PART 9 v. MOTION TO DISMISS

10 ABBOTT LABORATORIES, Re: Dkt. No. 29 Defendant. 11

12 13 In this putative consumer fraud class action, plaintiffs challenge the labeling of defendant 14 Abbott Laboratories’s Glucerna line of powders and shakes, which are marketed as scientifically 15 designed for people with diabetes to help manage blood sugar. Plaintiffs allege that because the 16 products contain sucralose and other additives, the products do not provide the promised health 17 benefits. For the reasons set forth in more detail below, Abbott’s motion to dismiss these claims is 18 denied except as to plaintiffs’ claims for injunctive relief. 19 I. Background 20 The following facts from the complaint are taken as true in resolving this motion. 21 Abbott sells a line of “Glucerna” branded shakes and powders that are marketed to 22 diabetic, prediabetic, and health-conscious consumers for personal consumption. These products 23 are represented to be specifically formulated for people with diabetes. As the example below 24 illustrates, the front labels on Glucerna products state that the products are made “to help manage 25 blood sugar,” are the “#1 doctor recommended brand,” and are “scientifically designed for people 26 with diabetes.” In addition, the side label (on the shakes at least) states that the beverages are 27 “designed to help minimize blood sugar spikes in people with diabetes compared to high glycemic 1

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£OP\ made with —= 132 \ CARBsTEAD PROTEIN / WAnilE Qa 16 ————— Penge ans a CG SS MANE gays. —_ Z 18 19 || Complaint, Dkt. No. 24, at 10 (“Exhibit 3: Glucerna Protein Smart Shakes”) (red labels added). 20 Diabetes is characterized by high blood sugar that results from inability to produce insulin 21 (a hormone that allows sugar to be removed from blood and is used by cells in the pancreas). Type 22 2 diabetes (the most common form) results from pancreatic cells that are resistant to insulin, 23 usually as a result of diet and lifestyle. All treatments for diabetes generally aim to manage blood 24 sugar levels. Although medications are available, people with type 2 diabetes generally manage 25 the disease through diet and exercise, seeking foods that can help manage their blood sugar. 26 Online and in stores, Glucerna shakes and powders are placed with health and nutritional 27 supplements near diabetes diagnostic equipment and blood glucose tests. One retailer specifically 28 || categorizes Glucerna products as “Diabetes Management” on its website.

1 Glucerna shakes and powders are made with sucralose, an artificial sweetener. Some of the 2 products also contain carrageenan and maltodextrin. According to the plaintiffs, although 3 sucralose is approved by the FDA as a general-purpose food sweetener, more recent scientific 4 studies have identified potential health risks associated with sucralose and other Glucerna 5 ingredients. For example, studies have suggested that sucralose is associated with obesity, type 2 6 diabetes (as well as its precursor condition, metabolic syndrome), hypertension, and 7 cardiovascular disease; that sucralose can deregulate blood sugar by disrupting the gut microbiome 8 and killing pancreatic cells that release insulin; and that sucralose can cause cells to become 9 resistant to insulin, which can lead to type 2 diabetes or obesity. In addition, several organizations, 10 including the World Health Organization, have advised against consuming sucralose and other 11 artificial sweeteners. Plaintiffs also cite similar scientific findings for maltodextrin and 12 carrageenan. 13 Plaintiffs allege that they were misled by the Glucerna labels. They say they understood 14 the claim that Glucerna is the “#1 doctor recommended brand” and is “scientifically designed for 15 people with diabetes” to mean that Glucerna products “aid in managing blood sugar generally” 16 and are “scientifically capable of the treatment of diabetes or other health conditions.” They also 17 say they understood these claims to mean that Glucerna products are “uniquely healthy.” Plaintiffs 18 assert that they understood “scientifically designed for people with diabetes” to mean that 19 Glucerna products “have some mechanism of action that provides a therapeutic benefit regarding 20 diabetes/prediabetes and blood sugar regulation generally.” Plaintiffs assert that the claims on the 21 Glucerna labels are false and deceptive because the products do not provide the advertised 22 benefits. They also assert that they relied on the identified claims in deciding to purchase Glucerna 23 products, that they would not have purchased the products at the listed prices (which plaintiffs 24 argue included an unjustified premium) if they had known the labels were false or misleading, and 25 that they lack an adequate remedy at law to address the harm they suffered. 26 Plaintiffs assert five claims under California consumer fraud statutes and common law on 27 behalf of putative nationwide and California classes of people who purchased Glucerna products 1 II. Legal Standard 2 Under Rule 8, a complaint must include a “short and plain statement of the claim showing 3 that the pleader is entitled to relief” with allegations that are “simple, concise, and direct.” Rule 4 9(b) sets a higher standard for certain claims: A party “alleging fraud or mistake … must state 5 with particularity the circumstances constituting fraud or mistake,” although “[m]alice, intent, 6 knowledge, and other conditions of a person's mind may be alleged generally.” The pleading must 7 be “specific enough to give defendants notice of the particular misconduct ... so that they can 8 defend against the charge and not just deny that they have done anything wrong.” Vess v. Ciba- 9 Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). 10 Rule 12(b)(6) governs dismissal for “failure to state a claim upon which relief can be 11 granted.” A complaint must “plausibly suggest” that the plaintiff is entitled to relief, meaning the 12 pleaded “factual content … allows the court to draw the reasonable inference that the defendant is 13 liable.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 681 (2009). The Court must “accept all factual 14 allegations in the complaint as true and construe the pleadings in the light most favorable to the 15 nonmoving party.” Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1029–30 (9th Cir. 2009). 16 There are two exceptions to the general rule that “courts may not consider material outside the 17 pleadings when assessing the sufficiency of a complaint.” Khoja v. Orexigen Therapeutics, Inc., 899 18 F.3d 988, 998 (9th Cir. 2018). First, Federal Rule of Evidence 201 permits judicial notice of “a fact 19 that is not subject to reasonable dispute” because the fact is “generally known” or “can be accurately 20 and readily determined from sources whose accuracy cannot reasonably be questioned.” Second, the 21 doctrine of incorporation by reference permits a court to treat an extrinsic document as if it were part 22 of the complaint if the pleading “refers extensively to the document” or if “the document forms the 23 basis” of a claim. Khoja, 899 F.3d at 1002. This can be proper “when assessing the sufficiency of a 24 claim requires that the document at issue be reviewed,” but is not warranted when “the document 25 merely creates a defense to the well-ple[aded] allegations.” Id. 26 27 1 III. Analysis 2 A. Statutory Claims 3 Plaintiffs assert claims under California’s Consumer Legal Remedies Act (CLRA), False 4 Advertising Law (FAL), and Unfair Competition Law (UCL). 5 The FAL broadly prohibits knowingly or negligently making “untrue or misleading” 6 statements in conjunction with the intentional sale of goods or services. Cal. Bus. & Prof. Code 7 § 17500. The UCL similarly prohibits “unfair, deceptive, untrue or misleading advertising,” as 8 well as any other “unlawful, unfair or fraudulent business act or practice.” Id. § 17200. The UCL 9 also specifically incorporates the FAL, meaning that “any violation of the [FAL] necessarily 10 violates the UCL.” Kasky v. Nike, Inc., 27 Cal. 4th 939, 950 (2002) (cleaned up). Finally, the 11 CLRA prohibits a wide range of “unfair methods of competition and unfair or deceptive acts or 12 practices,” including: “Representing that goods .. have … characteristics …, uses, [or] benefits… 13 that they do not have”; “Representing that goods . are of a particular standard, quality, or grade … 14 if they are of another”; and “Advertising goods or services with intent not to sell them as 15 advertised.” Cal. Civ. Code § 1770(a)(5), (a)(7), (a)(9). As its name suggests, the CLRA 16 authorizes consumers to bring an action for damages and injunctive relief, provided they comply 17 with certain notice requirements when seeking damages. Id. §§ 1780, 1782. 18 The UCL, FAL, and CLRA “prohibit not only advertising which is false, but also 19 advertising which, although true, is either actually misleading or which has a capacity, likelihood 20 or tendency to deceive or confuse the public.” Kasky, 27 Cal. 4th at 951. Plaintiffs’ claims under 21 all three statutes “are governed by the ‘reasonable consumer’ standard.” McGinity v. Procter & 22 Gamble Co., 69 F.4th 1093, 1097 (9th Cir. 2023). To ultimately prevail under the reasonable 23 consumer standard, plaintiffs must show not just the “mere possibility that the label might 24 conceivably be misunderstood by … consumers viewing it in an unreasonable manner,” but “a 25 probability that a significant portion of the general consuming public or of targeted consumers, 26 acting reasonably in the circumstances, could be misled.” McGinity, 69 F.4th at 1097. Whether an 27 ad is deceptive is a “question of fact” that is “not appropriate” for resolution at the pleading stage 1 On a motion to dismiss, the question is whether a plaintiff “could plausibly prove that a reasonable 2 consumer would be deceived.” Id. at 940. Only if “no reasonable consumer” could plausibly be 3 misled based on the allegations in the complaint can reasonable-consumer-test claims be 4 dismissed at the pleading stage as a matter of law. Becerra v. Dr Pepper/Seven Up, Inc., 945 F.3d 5 1225, 1229 (9th Cir. 2019). Plaintiffs do not dispute that their FAL, UCL, and CLRA claims must 6 meet the Rule 9(b) pleading standard. 7 With these standards in mind, the Court considers the factual allegations in the complaint 8 to determine whether they suggest that plaintiffs could plausibly prove that a reasonable consumer 9 would be deceived or misled by the labels on Glucerna products—labels which state that the 10 products are the “#1 doctor recommended brand,” are “scientifically designed for people with 11 diabetes,” and are formulated “to help manage blood sugar.” 12 Plaintiffs’ claims raise three questions: First, what might reasonable consumers interpret 13 Glucerna labels to suggest about how the products work? Second, what do the products actually 14 do? And third, is there any disparity between what the labels could be understood to promise and 15 what the products actually do, such that the labels are false, misleading, confusing, or deceptive? 16 Plaintiffs’ answers are, first, that Glucerna’s labels suggest that the products are suitable for 17 diabetics and can help generally manage blood sugar; second, that Glucerna products in fact 18 contain ingredients that can deregulate blood sugar and pose other health harms to diabetics; and 19 third, that this disparity between Glucerna products’ promised and actual effects renders the labels 20 misleading. At this stage, the Court must determine whether these assertions are plausibly pleaded. 21 With respect to the first question—how reasonable consumers might interpret Glucerna 22 labels—the scope of the labels’ claims is important because it determines the baseline against 23 which the products’ actual effects must be measured. Plaintiffs argue that the labels’ claims are 24 broad: They allege that they understood the labels to represent that Glucerna products “are healthy 25 sugar-alternative drinks and powders that are suitable for, or can aid in, the management of blood 26 sugar generally and for those with diabetes specifically.” Compl. ¶ 10. They claim that the labels 27 suggest that Glucerna products “are over-the-counter aids to help manage diabetes and blood sugar 1 levels.” Compl. ¶ 67 (cleaned up). Abbott counters that the Glucerna labels suggest that the 2 products’ benefits are more limited: The drinks are intended as a “snack or meal replacement” 3 formulated “to help minimize blood sugar spikes in people with diabetes compared to high 4 glycemic carbohydrates.” Compl. Ex. 1 & ¶ 63. In other words, Glucerna products will manage 5 short-term blood sugar changes only as compared to food with high glycemic carbohydrates. 6 The reasonable consumer standard assumes that consumers read labels in context. If a 7 “front label is ambiguous, the ambiguity can be resolved by reference to the back label.” 8 McGinity, 69 F.4th at 1099. Consumers are also expected to draw “contextual inferences regarding 9 the product itself and its packaging.” Moore v. Trader Joe’s Co., 4 F.4th 874, 882 (9th Cir. 2021). 10 Whether a reasonable consumer would interpret the labels as plaintiffs or as Abbott 11 suggest is ultimately a factual question. At the pleading stage, the Court must take plaintiffs’ 12 factual assertions as true and draw every reasonable inference in their favor. Abbott’s main 13 argument for its narrower interpretation is that there is an explanation on the side label that 14 Glucerna products are “[d]esigned to help minimize blood sugar spikes in people with diabetes 15 compared to high glycemic carbohydrates.” A symbol next to the “help manage blood sugar” 16 claim on the front label refers consumers to this side-label clarification. But even assuming 17 consumers read this clarification, the Court cannot conclude at this stage that a reasonable 18 consumer would necessarily understand the side-label clarification to limit the scope of the front 19 label’s blood sugar claims in the way that Abbott suggests. And regardless of the scope of the 20 front-label “helps manage blood sugar” claims, plaintiffs have also plausibly alleged that the other 21 claims on the front label—that Glucerna products are recommended by doctors and scientifically 22 designed for diabetics—make more sweeping representations about how the products work. 23 The Ninth Circuit cases on which Abbott relies do not suggest a different result. Both 24 McGinity and Moore involved potentially ambiguous front-label representations about a product’s 25 ingredients—ambiguities that could be easily cleared up by looking at the ingredients list on the 26 back. Here, by contrast, plaintiffs allege that they understood the front labels to be making claims 27 about the overall health effects of Glucerna products, not just the specific ingredients they contain. 1 Accordingly, plaintiffs have plausibly alleged that a reasonable consumer might 2 understand Glucerna labels in full context to claim that the products can help manage blood sugar 3 and diabetes generally, not just in comparison to foods with high glycemic carbohydrates. 4 The second question is what Glucerna shakes and powders actually do. Glucerna products 5 are made with sucralose and other additives, including maltodextrin and carrageenan. The parties 6 do not dispute the actual contents of Glucerna products, and plaintiffs recognize that these 7 ingredients (and the others) are disclosed in the labels’ ingredients list.1 Instead, this dispute 8 centers on whether sucralose or the other additives cause health harms that contradict the labels’ 9 claims. Plaintiffs cite several scientific studies that they claim show that sucralose can deregulate 10 blood sugar and worsen or even cause diabetes, among other harms. Abbott counters that sucralose 11 is safe, not only in its view but also in the FDA’s. Abbott disagrees with plaintiffs’ interpretation 12 of the scientific literature, arguing that plaintiffs’ “lay interpretation” of the science requires a 13 series of inferences to suggest that sucralose negatively affects blood sugar management. 14 This is again a factual dispute. Abbott asks the Court to incorporate by reference the full 15 studies that plaintiffs cite. This request is granted. The complaint refers extensively to these 16 studies, which are central to plaintiffs’ claims. Even incorporating these studies, though, the Court 17 cannot substitute its own interpretation of the studies for the allegations in the complaint. Abbott 18 argues that plaintiffs have layered their own inferences on top of the cited studies, which Abbott 19 claims do not establish a causal link between sucralose and long-term health effects. Maybe so. 20 But even if plaintiffs’ allegations go beyond the cited studies, at this stage the allegations must be 21 taken as true. (If the allegations directly contradicted the cited studies plaintiffs’ allegations might 22 fairly be deemed implausible, but that is not the case here.) Plaintiffs allege that the additives in 23 Glucerna products cause a range of health harms, including blood sugar spikes, metabolic 24 syndrome, and even type 2 diabetes. They cite studies that are plausibly consistent with these 25 26 1 At Abbott’s request, the Court takes judicial notice of the fact that Abbott’s webpage for each of 27 its Glucerna products includes an ingredients list. See, e.g., perma.cc/7GX9-FPTU. Although the 1 claims, even if the studies do not definitively reach those conclusions. At this stage the Court must 2 assume plaintiffs are correct. 3 Abbott also argues that plaintiffs do not specifically allege that they ever consumed the 4 products they purchased, nor do they identify how the products impacted their blood sugar or 5 otherwise affected their health. But such allegations are not required. If Glucerna products’ labels 6 are misleading, plaintiffs can be harmed simply by having a purchased a product that was not what 7 it purported to be. Here, the complaint asserts that each named plaintiff either has or is worried 8 about developing diabetes, that each plaintiff purchased a Glucerna product and believed the 9 product would either be suitable for people with diabetes or could help prevent diabetes, and that 10 the purchased products did not work as promised. While plaintiffs could also certainly be harmed 11 if they actually experienced harmful health effects, they need not have actually suffered health 12 harms in order to plead that the labels were misleading with respect to the alleged effects. 13 That leaves the third question: whether Glucerna products’ labels are false, deceptive, 14 misleading, or confusing in light of the way the products are alleged to work. At this stage the 15 answer is simple. Plaintiffs plausibly allege that a reasonable consumer would understand 16 Glucerna’s labels to suggest that the shakes and powders can help manage blood sugar and 17 diabetes generally. Plaintiffs also allege that the sucralose and other ingredients in Glucerna 18 products lead to negative health effects (including that sucralose can lead to blood sugar spikes 19 and insulin resistance syndrome), at least some of which seem to directly contradict these claims. 20 Plaintiffs have therefore plausibly asserted that a reasonable consumer could be deceived by the 21 labels on Glucerna products. This is sufficient to state a claim under the UCL, FAL, and CLRA. 22 Abbott also challenges plaintiffs’ claims for injunctive relief. Plaintiffs allege that they 23 would like to and intend to purchase Glucerna products again in the future if they can be sure the 24 products will provide the promised benefits. Abbott argues that plaintiffs have not established that 25 they need an injunction to prevent future harm because they can easily determine based on the 26 ingredients list whether Glucerna has been reformulated without the ingredients at issue here. 27 “[A] previously deceived consumer may have standing to seek an injunction against false 1 false at the time of the original purchase,” because knowing “that the advertisement or label was 2 false in the past does not equate to knowledge that it will remain false in the future.” Davidson v. 3 Kimberly-Clark Corp., 889 F.3d 956, 969–70 (9th Cir. 2018). The Ninth Circuit has suggested two 4 kinds of future harm that could warrant injunctions in product labeling cases: first, that consumers 5 will be unable to rely on the product’s labeling in the future and therefore will not purchase the 6 product even if they would like to, and second, that consumers will reasonably but wrongly 7 assume that the product has been improved and will therefore purchase the product again in the 8 future, suffering the same injury as before. Id. 9 In this case, however, plaintiffs’ allegations do not suggest that they face a risk of either of 10 these forms of future harm. Plaintiffs’ allegations are all premised on specific ingredients in 11 Glucerna products. Plaintiffs clearly know that these ingredients are currently included in 12 Glucerna products, and the complaint demonstrates that plaintiffs are now aware of the alleged 13 health risks that are associated with those ingredients. This is therefore not the kind of labeling 14 case where plaintiffs must rely in the future on the manufacturer’s ongoing representations about 15 the product. Instead, they can simply check the ingredients list do determine whether Glucerna 16 continues to include sucralose and the other ingredients at issue. For this reason, Plaintiffs have 17 failed to allege any “real and immediate threat of repeated injury” that can be prevented only 18 through an injunction. See Davidson, 889 F.3d at 967. They therefore lack standing to pursue this 19 form of relief. 20 Abbott’s motion to dismiss the claims for an injunction under the CLRA and UCL is 21 therefore granted with leave to amend. Abbott’s motion to dismiss the CLRA, FAL, and UCL 22 claims is otherwise denied. 23 B. Common Law Claims 24 Abbott argues that plaintiffs’ warranty breach claim should be analyzed under the same 25 reasonable consumer standard as the statutory claims and dismissed for the same reasons. Abbott 26 also argues that the unjust enrichment claim is merely derivative of the statutory claims and should 27 be dismissed for identical reasons. Because the Court has rejected Abbott’s arguments against the 1 || IV. Conclusion 2 For the reasons set forth above, Abbott’s motion to dismiss is granted as to the claims for 3 injunctive relief but otherwise denied. Any amended complaint will be due June 27, 2024. If 4 || plaintiffs do not file an amended complaint, Abbott’s response will be due July 11, 2024. 5 6 IT IS SO ORDERED. 7 Dated: June 5, 2024 leo~ 9 □ P. Casey Pitts 10 United States District Judge 11 a 12

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