Ninth Circuit Follows King Bio Decision in Confirming Private Plaintiffs May Not Challenge “Lack of Substantiation” Under California Law
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When it comes to prosecuting false advertising, what is the appropriate division of labor between government authorities acting on behalf of the public, on the one hand, and members of the public themselves?
Most states have answered this question by enacting consumer protection laws that allow private plaintiffs to step into the shoes of government prosecutors to challenge allegedly false advertising. These private enforcement mechanisms supplement the roles played not only by state agencies and prosecutors but also by the Federal Trade Commission and Food and Drug Administration at the federal level. At the same time, most of these states have reserved exclusively to government actors the power to demand that advertisers produce evidentiary support, or “substantiation,” for their advertising claims—especially when they are not definitively “false,” but rather relate to new technologies undergoing testing, or to areas of scientific controversy.
Even in California—which has an especially robust statutory scheme allowing consumer “attorneys general” to bring suit for false advertising—courts have long held that the state legislature deliberately entrusted the power to demand substantiation only to “prosecuting authorities,” not private plaintiffs. As one California Court of Appeal explained in the seminal decision in National Council Against Health Fraud v. King Bio Pharmaceuticals, the policy rationale is that this division of labor is “the least burdensome method of obtaining substantiation for advertising claims” and limits “undue harassment of advertisers.” Yet that has not stopped the plaintiffs’ bar from filing suit after suit—often class actions—alleging that companies lack sufficient scientific support for their advertising claims.
On April 21, 2017, the Ninth Circuit weighed in with a published opinion firmly upholding the division of labor under California law that King Bio articulated. That decision, Kwan v. SanMedica International, affirmed that “King Bio’s holding is firmly established law in California”: “Private plaintiffs, unlike prosecuting authorities, do not have the power to require defendants to substantiate their advertising claims” under California’s consumer-protection statutes. In so ruling, the Court issued a warning to the cottage industry of class actions challenging only a “lack of substantiation”: immediate dismissal is appropriate if a plaintiff cannot in good faith allege “facts that would support a finding that [an advertiser’s] claims regarding its product . . . were actually false.”