11th Circuit Rules for Plaintiffs in Class Action Lawsuit Based on Economic Loss From Purchase of ‘Worthless’ Supplements Containing DMBA – an Impermissible NDI
We previously reported on a flurry of FDA enforcement actions in 2015 based on adulteration per se, which followed years of relative inaction in the dietary supplement marketing arena outside of enforcement against products with specific health or safety concerns. FDA’s enforcement actions included warning letters to 14 companies regarding the marketing of products that identify the presence of 1,3-dimethylbutylamine or “DMBA” on the product label. Dietary supplements containing DMBA are presumed by law to be unsafe (adulterated per se) because DMBA does not satisfy either of two statutory exceptions for automatically classifying a product containing a new dietary ingredient (NDI) as adulterated. Specifically, DMBA has not “been present in the food supply as an article used for food in a form in which the food has not been chemically altered,” and no manufacturer or distributor has notified FDA of the basis on which such NDI will reasonably be expected to be safe when used as recommended or suggested by its labeling. Such notification (called a NDI Notification or NDIN) must be submitted to FDA at least 75 days before marketing.
In addition to a risk of FDA enforcement action, products containing a NDI that is not the subject of a NDIN may now also be susceptible to consumer protection class action lawsuits after the 11th Circuit concluded in a November 14, 2019 opinion that the plaintiffs plausibly alleged that they suffered an economic loss when they purchased dietary supplements containing DMBA that were “worthless” because the law prohibits sale of the supplements. The Court of Appeals vacated the dismissal of the DMBA lawsuit by the district court which found the plaintiffs did not suffer economic loss because they received the benefit of their bargain where there was no allegation that the supplements failed to perform as advertised, that the supplements caused any adverse health effects, or that the plaintiffs paid a premium for the supplements. The plaintiffs will now have the opportunity to have their arguments considered by the district court.
Dietary supplements that contain other impermissible NDIs besides DMBA could also be susceptible to lawsuits based on an identical theory of economic loss. For example, products containing CBD could be at a heightened risk of consumer class action lawsuits under this theory because, as we have reported, FDA has recently taken enforcement action against numerous CBD-containing products. FDA’s current position is that CBD is not a permitted ingredient in conventional foods or dietary supplements, although there is significant pressure on the Agency to develop a regulatory framework that would allow such products to contain CBD.