Take Two Pills and Call Your Lawyer in The Morning: Consumers Allege They Were Misled by The Makers of COLD-FX

The makers of COLD-FX might be feeling a little under the weather after appearing in the BC Superior Court to further respond to allegations that untrue representations and omissions induced consumers to purchase the drug product that was ineffective at providing “immediate relief” and therefore “worthless” if taken in accordance with the representations.   The case is the latest class action involving misleading advertising allegations to make Canadian headlines.

The claim against Valeant Pharmaceuticals, and its subsidiary, Afexa Life Sciences, was started in 2012 by a Vancouver Island resident Don Harrison over advertising saying that COLD-FX provided “immediate relief of cold and flu” if taken over a three-day period at the first sign of cold or flu symptoms.  A study showed that the product provides no such short term relief.  Rather, patients experienced a therapeutic effect only after taking the product daily for at least two months, and six months in the case of seniors.  Harrison alleges that the companies continued to “knowingly or recklessly” promote COLD-FX as a short term remedy despite evidence to the contrary. A similar action has been commenced in Saskatchewan.

COLD-FX is a top-selling natural health product in Canada, with sales topping nearly $120-million as recently as 2011, according to a November 15, 2015 Globe and Mail article, “Why COLD-FX is too good to be true”.   As part of one COLD-FX natural health product license, Health Canada has approved a number of claims for COLD-FX, including that the product:

Helps reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system. …Provides further reduction of cold and flu symptoms when taken with a flu shot… Clinically proven to reduce the frequency, severity and duration of cold and flu symptoms in individuals over 65 by boosting the immune system. … helps reduce overall symptoms of sore throat, runny nose, sneezing, nasal congestion, malaise, fever, headache, hoarseness, ear-aches and cough.

The plaintiff in the BC action is seeking class certification so that anyone who bought COLD-FX for the short-term relief of cold and flu symptoms will be able to apply for a refund. The companies have denied the allegations and are contesting the application for class-action certification.

The BC Supreme Court has previously refused to certify a proposed consumer class action concerning misleading advertising.  In Clark v Energy Brands Inc., 2014 BCSC 1891, the plaintiff alleged that Energy Brands Inc. and Coca-Cola Ltd., systemically misrepresented bottled beverages beginning with the trademark VITAMINWATER, and the description that the beverages are “nutrient enhanced water beverage”, and misled consumers to believe the products were healthy beverages with a minimal amount of sugar.  The Court refused to certify a class stating that the plaintiff had not met the requirements of the BC Class Proceedings Act, namely, whether “the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members”. The Court stated:

However, in my view whether the labelling and marketing of the product has actually misled a consumer is an inherently individualistic and fact-based question.

There is of course, no evidence that all consumers were misled, at all times, in respect of each and every consumer transaction in question. No such evidence would be possible. Yet the relief sought by the plaintiff in the context of the plaintiff’s arguments for potential remedies would practically amount to such a conclusion. Otherwise there would be no utility in the declaration sought.

The COLD-FX class action also follows other recent class actions launched against Boiron Inc. on behalf of consumers who purchased Oscillococcinum or Oscillo, a homeopathic product marketed to treat the flu.  The petitioner for the Quebec class action claimed  that consumers were misled into purchasing a product that was no more effective than a placebo sugar pill, with ingredients that are not medically effective, and diluted to the degree of being not present in the final product.  The class was not certified by the Superior Court of Quebec.  The decision has been appealed and a motion to dismiss the appeal was denied.

The Superior Court denied certification on the basis that the facts alleged by the petitioner did not justify the conclusions sought, and also that the petitioner is not in a position to adequately represent members of the class.  On the first point, the Superior Court found that the petitioner did not demonstrate a prima facie case of false representations.  The Court found that Boiron represents that the product relieves flu symptoms, and not that it prevents, cures or fights the flu, or even that it does so with an active ingredient.  Further, the evidence did not demonstrate the product is nothing more than a placebo.  In fact, the expert opinion filed by the petitioner acknowledged an ability of the product to relieve flu-like symptoms “slightly better” than a placebo. Further, evidence filed with the Natural Health Products Directorate of Health Canada in the process of obtaining a license for the product included a randomized placebo-controlled study. However, the petitioner seemed to suggest that the efficacy of the product should be assessed not solely on statistical evidence, “which seems to satisfy Health Canada”, but a higher standard.  The Court commented:

While the merits of homeopathy and the nature of the evidence required by Health Canada to issue a licence for a homeopathy product may be challenging subjects, the Court has to be concerned with the Petitioner’s allegations and whether she has an “arguable case” to present.

The COLD-FX and Oscillo cases raise the question of how to reconcile allegations of false and misleading representations against the fact that the products were licensed by the Natural Health Products Directorate.   Will a product license serve as a shield to absolve the license holder from liability for false and misleading representations in relation to licensed claims? Will the following comments by the Supreme Court of Canada in another class action case be applied to licensed products?

[C]ompliance with statutory obligations is not always determinative of the issue of civil fault … [C]are must be taken . . .  not to conflate the notion of civil fault and the violation of a statutory norm, whether in a commercial setting or elsewhere … [J]ust because a failure to discharge a statutory obligation leads to a demonstration of fault in all but the most exceptional cases, it does not follow that a civil fault is absolved where there is no such failure.

The claimed misrepresentations in the COLD-FX case relate largely to how quickly COLD-FX takes effect (“immediate relief …”, “at the first sign of symptoms for optimal results”, “stops colds & flu in their tracks”).  The plaintiff claims “at no time has COLD-FX been permitted by Health Canada to make (such) representations.”  Interestingly, several COLD-FX licensed products are branded “COLD-FX First Signs”, with approved recommended use including “Take at first signs of cold to help reduce the frequency of colds and flus.”  These products contain additional ingredients to ginseng (panax quinquefolius).

In the VITAMINWATER case, the defendants also raised arguments concerning the effects of federal legislation and the federal regulatory scheme.  For example, the defendants argued that the regulation of the product as a natural health product specifically precluded listing the quantity of non-medicinal ingredients, such as sugar, on the label of the product.  In response, the plaintiff argued that authorization of the sale of the product as a natural health product did not provide relief from the responsibility to not mislead the public, and cited a letter from Health Canada, that stated “…you are responsible for ensuring that advertising claims on the label do not contravene s. 9 of the FDA.”  That section prohibits the labelling, sale or advertising of drugs in a manner that is “false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety.”  The plaintiff further argued that the deceptive practices of the defendants start with the name of the product itself, VITAMINWATER, which was not mandated by Health Canada. Although the Court ultimately did not certify the class, it stated the issues arising from the federal licensing regime “could potentially go to the merits of the claim … (but) do not preclude certification.”

The Boiron decision in Quebec also casts doubt on certifying a class where the representative fails to show that he or she has taken steps that illustrate his or her interest to play the role of representative.   In finding the petitioner failed to demonstrate that she was in a position to represent the members of the proposed class adequately, the Court noted:

What seems, prima facie, to be the real trigger of the recourse is the lawyer-induced opportunity to obtain a settlement in Canada, because one was achieved in the U.S. against Boiron U.S.A., based, prima facie, on different circumstances, including the representations by Boiron U.S.A. on the presence of an “active ingredient”.  The sequence of events … suggests to the Court that the Petitioner made no reasonable research on Oscillo Products and that she made no reasonable attempt to find other potential group members.

The COLD-FX and the Oscillo Boiron cases are also interesting to Canadians given that our punishing winters mean these products are likely found on the shelves of many medicine cabinets.  Beyond that, the cases are noteworthy given the attempt at class certification to address advertising claims that consumers believe are misleading.  For a few years now, we have heard from our US counterparts that that risk of misleading advertising is not just regulator or competitor action, but by consumers acting as a class. Although class actions have not been prevalent in Canada, this may mark the beginning of a trend, and a significant change to the risk to companies when they make product claims.  A quick search of the Canadian Bar Association’s class action database identifies several class actions related to misleading advertising with products ranging from Sketchers shoes to Red Bull energy drinks.

Jennifer Mckenzie

Jennifer Mckenzie

Email: [email protected]
Tel: +1 416 957 1628

Jennifer is experienced in regulatory matters and privacy law. She reviews advertising and labels for clients in a wide-range of industry sectors from prepackaged consumer goods to regulated products such as drugs, cosmetics and food. Jennifer has represented clients in competitive trade disputes before Advertising Standards Canada, and provides advice to clients on federal and provincial privacy legislation for the private sector and consumer protection legislation. Jennifer is also experienced in trademark prosecution and enforcement.

Catherine Lovrics

Catherine Lovrics

Email: [email protected]
Tel: +1 416 957 1163

Catherine’s practice focuses on trademarks, copyright, personality and publicity rights, as well as marketing and advertising law, consumer protection and privacy law. She advises on legal issues related to the Internet and digital media, including social media and apps.

Catherine helps clients protect, exploit and enforce their IP, and advises on licensing, rights acquisition and clearance. She helps clients develop privacy compliance and data management programs; devises policies, terms of use, notices and disclaimers, and also helps clients manage their domain name portfolios, and any domain name disputes. Catherine is experienced in marketing and advertising legal matters, including in relation to promotion and contest design, advertising review, claim substantiation, and advertising disputes.

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About Jennifer Mckenzie

Email: [email protected]
Tel: +1 416 957 1628
Jennifer is experienced in regulatory matters and privacy law. She reviews advertising and labels for clients in a wide-range of industry sectors from prepackaged consumer goods to regulated products such as drugs, cosmetics and food. Jennifer has represented clients in competitive trade disputes before Advertising Standards Canada, and provides advice to clients on federal and provincial privacy legislation for the private sector and consumer protection legislation. Jennifer is also experienced in trademark prosecution and enforcement.