Court Rules in Favor of the FTC, Says Lane Labs Violated Deceptive Health Claims Court Order

A federal judge has ruled that dietary supplement marketer Lane Labs USA LLC and its president Andrew Lane acted in contempt of a 2000 court order that barred the company from making deceptive health claims. This ruling favors the FTC.

The initial June 2000 consent decree was reached between Lane Labs and the FTC to settle FTC charges that the company had made unsupported and false claims for its BeneFin shark cartilage product and SkinAnswer skin cream. According to the FTC, Lane Labs had claimed that the products could prevent, treat, or cure cancer-and, moreover, that the products were clinically proven to do so. Per the consent decree, Lane Labs agreed not to make any fraudulent, unsupported health or disease claims about any food, drug, or dietary supplement in the future. Moreover, the order stipulated that support for any future health claims had to be based on “competent and reliable scientific evidence.”

In January 2007, the FTC filed charges against Lane Labs for violating this agreement. The agency stated that the company had continued making deceptive, unsubstantiated product claims, this time for its AdvaCAL calcium supplement and Fertil Male male-fertility supplement. For AdvaCAL, the company made claims of being more absorbable than other types of calcium, being superior to other calcium or prescription drug products at building bone mineral density, and being superior to other calcium products in reducing risk of fractures. The FTC stated that these claims were based on misrepresented test results that did not substantiate the claims. For Fertil Male, the FTC said that claims of improving male fertility were based on flawed scientific studies.

In August 2010, the New Jersey district court where the charges were filed ruled in favor of Lane Labs and against the FTC, stating that Lane Labs had met the provisions stated by the consent decree. (The court also criticized the FTC’s delay in bringing the charges of consent decree violation against Lane Labs, during which time it said Lane Labs may have assumed it was in compliance with the consent decree.)

In October 2010, however, the Third Circuit Court of Appeals overturned the district court’s decision, stating that the district court had failed to consider the specific marketing claims for Fertil Male and AdvaCAL and whether those claims were actually substantiated.

In its written opinion, the appeals court stated: “The District Court’s failure to provide us with a reasoned basis for concluding that Lane Labs did not violate Section IV prevents us from exercising meaningful review. Many of the challenged representations appear misleading on their face, and the District Court provides no rationale for its conclusion that they are not.”

The appeals court stated that based on the evidence of the case, Lane Labs had made unsupported claims. As such, the appeals court remanded the case back to the district court to reconsider whether Lane Labs had in fact violated the 2000 consent decree.

This November, the district court sided with the FTC, finding Lane Labs in contempt of the consent decree. The court had asked both parties to submit evidence addressing the following points and, in its written opinion, ruled on the new evidence.

The court found that based on the evidence, Lane Labs had promoted the unsubstantiated claim that AdvaCAL was three to four times more absorbable than other calcium supplements, for a broad range of consumers. Addressing the FTC’s claims that such absorption levels are moreover not achievable in any population, the court agreed with the FTC’s contention that Lane Labs “promised results that were not attainable in any population, which shows that Defendants did not possess competent and reliable scientific evidence for their claims, in violation of Section III of the Final Order.”

Regarding Lane Labs’ contention that it had aimed the high-absorbability claims primarily to older women at risk of achlorhydria, a condition that can hinder calcium absorption, the court stated: “The record does not indicate that Defendants consistently, and expressly, limited the three or four times more absorbable claim to any particular segment of their market.”

The court also ruled that Lane Labs had misrepresented research, tests, and studies in graphs and charts featured prominently in product advertisements. Instances included substituting radial bone density changes for spinal bone density changes on a study titled “Two Year Spinal Bone Density Changes Graph” and manipulating a bar graph whose data represented the results of individual women and instead labeling the graph’s bars as representing “groups.”

The court also examined whether any violations of the consent decree were “technical” or “inadvertent,” which would allow the company to still be in compliance with the consent decree. The court stated: “Defendants chose to make the claims at issue, and chose to widely distribute those claims. The Court cannot find a violation under those circumstances to be either ‘technical’ or ‘inadvertent.’”

Notably, the court opinion also chastised FTC for taking too long, from 2000 to 2007, to file charges against Lane Labs for violating the consent decree. “The Court remains highly concerned with the FTC’s delay in bringing this suit….The FTC’s failure to act on these statements until January of 2007 is bewildering. This extensive delay understandably led Defendants to believe that they were in compliance with the Final Order, and for the FTC to bring its motion after six years seems to the Court to be fundamentally unfair. This is not, however, the relevant inquiry at this time.”

The district court will rule later on monetary damages.

More on the FTC Lane Labs case and prior court rulings.