King County Judge Awards $4.3 Million award for Misleading Advertisements
A King County Judge found that the makers of 5-Hour Energy violated Washington’s Consumer Protection Act in their advertisements of the product’s health effects. After a three-week trial in August of 2016, on February 8, 2017, Judge Beth Andrus ordered Defendants, Living Essential, LLC and Innovation Ventures, LLC, to pay almost $4.2 million in penalties and attorneys’ fees for these violations.
The Washington State Attorney General brought this suit against the makers of 5-Hour Energy, alleging they violated Washington’s Consumer Protection Act (“CPA”) by making misleading claims in five different ads or press releases. In a detailed 59-page written opinion, Judge Andrus explained why she found violations occurred in three of the five questioned ads, with copy stating: “superior to coffee,” “decaf provides energy and alertness,” and “ask your doctor.” The Judge found FTC dietary supplement guidelines must be followed because the ads related to consumer health. The FTC guidelines require that claimed benefits be substantiated by relevant scientific studies. After reviewing the studies that Defendants claimed supported the statements in its advertisements, the Court found they were not “sufficiently relevant” to support the purported health benefits. In analyzing the studies, the Court looked at whether the studies were reliable and whether they examined the specific benefit claimed.
Either an individual injured by a violation of the consumer protection action or the State of Washington may initiate a civil action based upon the violation and may seek to recover actual damages, civil penalties and reasonable attorneys’ fees and costs under that statute. The Court must impose a civil penalty for each CPA violation, but it is within the Court’s discretion to determine the amount of the civil penalty up to $2,000. In the 5-Hour Energy case, Judge Andrus determined that each time a misleading advertisement was aired in Washington and each time a product containing a misleading packaging was sold, this constituted a CPA violation. She issued a civil penalty of $4.29 per bottle (the product purchase price) sold with misleading packaging. Judge Andrus issued a higher civil penalty of $100 per violation for the misleading advertisements aired in Washington. In determining this amount, she took into account the “substantial amount of sales revenue in Washington in a short period of time,” the fact that the product was designed for consumption, and the lack of scientific studies completed prior to the advertisements. Judge Andrus specifically stated a higher CPA penalty was warranted because the advertisements were made in relation to consumable products that present more of a risk to the public than non-consumable products. The evidence showed the misleading ads were aired a total of 21,731 times in Washington and 2,482 bottles were sold. In total, the civil penalties assessed were over $2.1 million. Judge Andrus also awarded $2.1 million in attorneys’ fees and costs.
As this order was issued by the trial court, the Court’s analysis of the claims will not have binding precedential value on future cases for other manufacturers. The Defendants will have 30 days to appeal the decision, and if they do, the Appellate Court’s analysis of the claims will have precedential value—stay tuned for updates in this regard. But even though the current decision is not binding on any other manufacturers, this decision, and the significant award, may embolden other potential claimants to assert claims under the Consumer Protection Act for misleading labeling claims.
- Christopher HowardShareholder
- Allison KrashanShareholder