state v. living essentials

SUPERIOR COURT Ow ay A DY CIVIL DIVISION
Washington Unit ais FEB 2% Docket No. 443-7-14 Wnev

STATE OF VERMONT
Plaintiff

y.

LIVING ESSENTIALS, LLC, AND
INNOVATION VENTURES, LLC,
Defendants

DECISION
Defendants’ Motion to Dismiss and to Strike (MPR #1)
and the State’s Motion to Strike (MPR #3)

Defendants Living Essentials, LLC, and Innovation Ventures, LLC, market and sell a
beverage, in various formulations, known as “5-hour ENERGY®.” The State alleges that the
manner in which Defendants have done so violates Vermont’s Consumer Protection Act, 9
V.S.A. §§ 2451-2481x. Specifically, the State alleges that Defendants have made the following
misleading and unsubstantiated representations in violation of 9 V.S.A. § 2453(a): that the
products have various benefits, such as helping one “focus” (Count 1); that the high energy
levels that the products cause are not followed by a “crash” (Count 2); that a large survey of
doctors shows that the vast majority recommend the products (Count 3); and that the products
are “suitable” for adolescents to consume (Count 4). The State seeks an injunction against
further violations of the Act, restitution for certain consumers, disgorgement of profits, civil
penalties, and investigation and litigation costs and fees.

Defendants have filed a Rule 12(b)(6) motion to dismiss. They argue that all claims
relying on an alleged lack of substantiation should be dismissed because that theory is not
cognizable under the Vermont Act. They argue that Count 4 should be dismissed because (1) the
EDA has primary jurisdiction to determine the safety of the product; (2) adolescents may
lawfully consume caffeinated products such as 5-hour ENERGY®; (3) the representation is
implied and implied representations are not subject to the Act; and (4) Vermont’s attorney
general has no lawful authority to regulate who may consume 5-hour ENERGY®. Defendants
argue that Count 1 should be dismissed because the alleged misrepresentations are non-
actionable puffery. Finally, Defendants ask the court to strike paragraphs 99 and 100 of the
complaint as impertinent and scandalous. V.R.C,P. 12(f).

The State opposes dismissal and asks the court to strike two studies submitted into the
record by Defendants or to convert the motion to dismiss into one for summary judgment and
give it a fair chance to respond accordingly.
Defendants’ dismissal arguments are out of step with the standard for dismissal under
Rule 12(b)(6). In Vermont, motions to dismiss are ““not favored and rarely granted.’ This is
especially true ‘when the asserted theory of liability is novel or extreme,’ as such cases ‘should
be explored in the light of facts as developed by the evidence, and, generally, not dismissed
before trial because of mere novelty of the allegations.’” Alger v. Dep't of Labor & Indus., 

, 

 (citations omitted); see also Colby v. Umbrella, Inc., 

, 

 (“The complaint is a bare bones statement that merely provides the defendant with
notice of the claims against it.”); Bock v. Gold, 

, 

 (“the threshold a
plaintiff must cross in order to meet our notice-pleading standard is ‘exceedingly low’”).

The State alleges several counts of deception consisting of claims made in advertisements
that Defendants are unable to substantiate. The advertising substantiation doctrine has a long
history before the Federal Trade Commission. See Dee Pridgen and Richard M. Alderman,
Consumer Protection and the Law §§ 11:3 (WL updated Noy. 2014) (describing the origins of
the doctrine). The issue presented by this case is whether the doctrine is available to demonstrate
violations of the Vermont Act. There is no binding authority and the issue is not so
straightforward that the court is inclined to consider it absent an exploration “in the light of facts
as developed by the evidence.”

Defendants’ other dismissal arguments are similarly predicated on issues that will be
better evaluated in evidentiary context once the facts have a chance to unfold, whether on
summary judgment or at trial. These arguments rely on nuances drawn from statements alleged
to appear in advertisements and regulatory motivations attributed to the attorney general by
Defendants. The court declines to evaluate these sorts of arguments based on the allegations of
the complaint alone.

Defendants ask the court to strike two paragraphs of the complaint that refer to publicly
available articles by third parties that have provocative titles implying that some people might
believe that energy drinks may kill the consumers who drink them. The State does not allege
that 5-hour ENERGY® is deadly. It cites the articles in support of allegations the drink’s health
effects are not known and have prompted investigations. Because these are not impertinent and
scandalous allegations and there is no prejudice, the court declines to strike them.

The State’s motion to strike is denied as well. The court ignored Defendants’ extra-
pleading materials and the record is not amenable to summary judgment.

ORDER

For the foregoing reasons, Defendants’ motion to dismiss and to strike is denied; the
State’s motion to strike is denied.

Dated at Montpelier, Vermont this 26th day of February 2015.

UVipe, Vib hac best
Mary Miles Teachout,
Superior Judge