Years Later, FTC Wins Case Against Roca Labs For Its Bogus Non-Disparagement Clause

Legal Issues

from the not-to-mention-junk-weight-loss-claims dept

Remember Roca Labs? A few years back we wrote about them extensively. The company (along with Don Juravin, who ran it), had cooked up quite a scheme. They were selling what they claimed was a “weight loss” product, which involved ingesting something that one doctor summarized as “consist[ing] primarily of industrial food thickening agents.” If that wasn’t already sketchy enough, the company more or less required purchasers to agree to a non-disparagement contract in order to order the stuff. Roca claimed that you were just getting a “discount” if you agreed to the non-disaparagement clause, but it was unclear if there was any other way to order. Roca had a “doctor” vouching for its product, but it turned out it was a doctor who had lost his medical license. The company came to our attention when it sued Pissedconsumer because some of its many unhappy customers had ignored the non-disparagement clause and complained about Roca Labs on that site.

The company then trotted out nearly every sketchy trick in the book — including threatening legal action against us, actually suing PissedConsumer’s lawyer, Marc Randazza (over something that we had written on Techdirt), and filing bogus DMCA notices to try to delete negative reviews — before the FTC finally went after the company in September of 2015.

That case has continued for years (during which PissedConsumer won its case against Roca) and now the FTC has finally prevailed against Roca and Juravin as well. Eric Goldman has a good write-up on the ruling as well.

Roca lost on basically every point. The key one is that its anti-disparagement clause was considered an “unfair” practice by the FTC. Roca tried to argue that this clause was legal because it was a clickwrap contract, and clickwrap contracts have been found to be legal. The court points out hat that’s not even the issue here at all. It’s a question of whether or not what’s in that contract is an “unfair practice.” And here it’s pretty clearly established First, the FTC clearly showed the harm of suppressing critical reviews:

Because Defendants admittedly suppressed negative information about the products and because Dr. Pavlou testified that the absence of negative information could make a consumer more inclined to purchase Roca Labs products, the Court finds that Defendants? practices have caused or were likely to cause substantial injury to consumers. The record demonstrates that some consumers paid hundreds of dollars for the Roca Labs products and unsuccessfully sought refunds because of Defendants? practice of issuing threats under the guise of enforcing the gag clause. Thus, the Court finds that there is no genuine issue of fact on this basis that would preclude summary judgment in favor of the FTC.

The court is not impressed by the argument that potential purchasers should have just read the terms and used a different weight loss program if they didn’t like Roca Labs’ nonsense:

Defendants offer no evidence that their practices did not prohibit the availability of negative reviews or that their practices were reasonably avoidable by the prospective consumer. Rather, Defendants argue that prospective customers could have reasonably avoided any injury by reading the contract that contained the gag clause or joining another weight loss program. (Dkt. 212 at 17?18) Defendants? argument misses the mark. Under this prong of the FTC Act, the FTC alleges that Defendants? practices relating to the gag clause, not the gag clause itself, were unfair. Further, because Defendants offer no facts to support a claim that prospective customers could reasonably avoid a dearth of negative reviews, which the Defendants assiduously prevented from being available, there is no genuine issue of a material fact in dispute on this issue.

Roca also tried to argue that the gag clause was okay because (get this) losing weight makes people feel good, and that’s a benefit. But, as the court notes, this was in response to questions about the gag clause, not the product itself:

Defendants? recitation of the benefits they claim consumers received from using the products ignores the issue presented in this claim, which is whether Defendants? gag clause practices, not their products and services, presented a countervailing benefit.

Roca also gets in trouble for claiming that the price everyone got was “discounted,” but only if they agreed to the non-disparagement clause. As the court points out, Roca advertised the “discounted” price all over the place as if it were the actual price, and only put in the fine print that you had to pay a lot more if you didn’t want to be gagged:

Defendants created an overall net impression that the price of the product was $480 without reference to a discount or any concessions as to publishing negative comments. Defendants advertised that the basic package of Roca Labs products costs $480 for purchasers with a ?valid health insurance.?… In multiple online advertisements, including those that appeared on Google, Bing, and Facebook, Defendants advertised the cost as simply $480, at least for a basic package of Roca Labs products…. At the top of the ?Roca Labs Procedure Cost? page of Defendants? Websites, Defendants state ?Only $480 and NO surgery to gastric bypass cost of $8,000 + health insurance payments. Save yourself from surgery that can cost your life. Save 90%.? … Farther down on that page, in smaller print, Defendants state that the ?Roca Labs Formula is available for as low as $480? and display a chart showing the various packages, from the basic package for $480 to the customized package for $1,080…. The price differences in the packages reflect the quantity of products ordered and the level of customer service provided…. Several of the banner ads that appear online typically have five words: ?GASTRIC BYPASS NO SURGERY $480.?… Scores of search advertisements also convey the price as $480, stating, for example, ?Mini Gastric Bypass $480? followed by ?Official Site: No Surgery Solution! Reduce Stomach Size & Lose Weight.? … The advertisements did not contain any disclaimers that the price was discounted or subsidized in exchange for a customer?s agreement to refrain from publishing negative comments. As such, Defendants created an overall net impression that the price was $480, with no exceptions or limitations.

And, thus, it’s a deceptive practice to make people think they could pay $480 and still criticize the product, when the terms of the deal were quite different:

Defendants? misrepresentation is material and deceptive because it is an express claim that involves important information to customers: the price of the product and limitations on what customers could say about the products or Defendants. A customer would likely be misled to believe that he or she had the option to purchase the product at ?full? price and maintain the ability to post negative but truthful comments. Customers also would likely to be misled to believe that they had actually agreed to refrain from posting negative comments, when they had not agreed to do so, by paying the purportedly discounted price.

The court also takes on a bunch of issues regarding Roca Labs’ products, and agrees (surprise surprise) that Roca Labs’ claims about weight loss from its products were unfair and deceptive:

The FTC has established that Defendants? claims are false in that they were material and likely to mislead consumers. As discussed above, Defendants made express claims regarding weight loss. Those express claims, which significantly involve health, are inherently material… Defendants disseminated their claims online?through the Roca Labs Websites and online advertisements?to direct consumers to the Roca Labs Websites to purchase the products. The ads intentionally contained medical images and terminology to bolster the credibility of Defendants? claims and induce customers to believe that the claims were scientifically validated by the medical community. Thus, the Court concludes that the claims were likely to mislead consumers acting reasonably under the circumstances.

The FTC also has established that Defendants had no reasonable basis to assert the claims because they lack competent and reliable scientific evidence. For healthrelated claims, including weight-loss claims, an advertiser must demonstrate that it has competent and reliable scientific evidence to support any claimed reasonable basis to assert that the claims are true…. Additionally, the FTC?s expert, Dr. Steven Heymsfield (?Dr. Heymsfield?), a medical doctor at the Pennington Biomedical Research Center at Louisiana State University and an expert in obesity treatment and weight loss, opined that no competent and reliable scientific evidence for Defendants? claims existed…. To prove a weight-loss claim, ?experts in the field of obesity treatment and weight loss would require well-designed and properly conducted clinical trials.? … Dr. Heymsfield explained that a trial should be doubleblind and placebo-controlled so that the testers and participants are unaware of who is assigned to a particular group…. Dr. Heymsfield also explained that a valid clinical trial would have at least eighty participants and last at least three months…. He stated that a clinical trial should test the substance, not the individual ingredients, for which the claims are made because it is well established in the scientific community that the efficacy of individual ingredients is insufficient to establish the efficacy of those ingredients combined.

Not surprisingly, Roca Labs did none of that. Ridiculously, Roca Labs’ defense was to say that a randomized controlled test wasn’t necessary after completely misreading a different case, involving Bayer, in which Bayer was accused of violating a consent decree, whereas the court ruled that the consent decree did not require a randomized controlled test. But, that’s got nothing to do with this case, as there was no consent decree at issue. But, even beyond that, the court notes that Roca Labs’ offering certainly appears to be snake oil:

Defendants failed to produce any competent and reliable scientific evidence to substantiate their claims. In September 2015, the same month that the FTC filed this Complaint, Defendants? products were studied by the Center for Applied Health Sciences, which issued a report after a clinical trial on the Roca Labs products…. Dr. Heymsfield reviewed the study, which Defendants provided to the FTC…. The study tested thirty-one overweight adults, including seventeen adults who used the Roca Labs products for twenty-eight days…. The results showed that the participants did not lose weight after taking the Roca Labs products and that there was a ?slight but statistically insignificant ?trend? that active users reported feeling less hungry three hours after taking the product.? … He noted the study reflected that there was no ?lasting reduction in gastric capacity.? … Dr. Heymsfield determined that the trial did not provide any competent or reliable scientific evidence because the trial design was flawed….

Additionally, Dr. Heymsfield opined that the scientific articles on weight loss and individual dietary fibers, the specific articles posted on Roca Labs Websites, and other materials provided by Roca Labs do not offer any competent and reliable scientific evidence in support of Defendants? claims.

In a footnote, it also points out that one of the articles on Roca’s site supporting its claims for weight loss was… authored by Don Juravin himself “who has not been identified as an expert.”

The court further notes that Roca’s claim on its website of a “ninety-percent success rate” is, shall we say… a problem:

the FTC also has demonstrated that Defendants? claim that the use of Formula and Anti-Cravings is scientifically proven to have a ninety-percent success rate in forcing users to eat half their usual food intake and cause substantial weight loss is false. This representation of success is an establishment claim because the claim purports to be supported by scientific evidence. By law, an establishment claim is required to have a certain level of scientific proof to support of the claim…. The advertiser must have sufficient evidence to satisfy the relevant scientific community of the claim?s truth…. Defendants have advertised the ?scientifically proven? claim online, but they have not produced any evidence to support the claim…. As discussed above, Defendants have failed to provide any evidence of a valid clinical study on the Roca Labs products. Hence, the unsubstantiated claim is false and likely to mislead consumers into believing that it was supported when it was not.

Roca also gets in trouble for running a related site that pretended to be independent and paying people for testimonials about Roca on this supposedly independent third party website. As you can imagine, that’s not an acceptable way to market a product.

Material misrepresentations or omissions on which a consumer would likely rely to decide whether to make a purchase constitute deceptive advertising… Juravin testified that he created Gastricbypass.me to ?educate and scare people about? gastric bypass surgery…. Only Roca Labs products were discussed favorably on the site, although there was no disclosure of the affiliation with Defendants…. Juravin stated that Gastricbypass.me was controlled by Roca Labs and that he was responsible for the content, but he did not see any value in letting consumers know ?[h]ey we are Roca Labs.?

Oh, it gets worse:

Purportedly satisfied customers??Carla? and ?Roxie??depicted in the videos posted on RocaLabs.com were actually Defendants? employees…. Defendants directed their employees to create blogs or fictitious posts. For example, Roca Labs General Manager Sharon King (?King?) testified that she wrote a Roca Labs product review under the name of ?Fran,? which was a fictitious name, and that Juravin edited the review…. Juravin also directed King to instruct ?the Customer Service people? to write posts or reviews and comment on Roca Labs Facebook advertisements…. Defendants did not instruct the employees to disclose their affiliation with Defendants… Roca Labs employee Sharon Hensley (?Hensley?), who appeared on video as ?Roxie,? testified that she was asked to post positive comments monthly on Facebook about Roca Labs monthly and did not state her association with Defendants.

Amusingly, Roca Labs tried to defend some of their employees’ posts saying that they really did lose weight using the product. As the court points out, this argument “misses the point.” It’s not the weight loss that’s the issue. It’s failing to disclose the relationship with the company.

So, if you’re keeping score at home: the company posted a ton of fake reviews, pretending they were from satisfied customers, selling a product that promoted weight loss with no scientific basis, and barred actual customers from posting any negative reviews. And, let’s not forget they threatened to sue us for reporting all of that originally.

And that doesn’t even touch on the fact that Roca Labs didn’t keep its customers private health information secret (despite promising to do so). Roca’s defense on that one is even worse: it claims that the health info was public (it was not) and that it needed to share the info in response to customers breaching the contract…

What does this all mean for Roca and Juravin? The court agrees to a permanent injunction, and notes that while Juravin has dropped the Roca name, he’s still playing the same game:

Juravin testified that he has moved away from using the Roca Labs brand and is now using ?gastric.care,? but ?[t]he formula is the same formula.?… Juravin also stated that he is marketing the products on Facebook, a ?Lost 100? Website, and online videos and chat…. In his deposition, Juravin also said he told his Facebook boot camp customers: ?I?m allowed to tell you anything I want; to do anything I want with you that would lead you to a healthy weight . . .? … He also testified that he will show the customers ?any images I want. I will do anything I want for them for as long as I lead them to achieve a healthy weight.? … Based on Defendants? extended history of deceptive and unfair practices and Defendants? continued promotion of their products and comparisons to gastric bypass surgery, the FTC has proven that a cognizable danger of recurrent violation exists. Thus, a permanent injunction prohibiting Defendants? deceptive and unfair practices is justified.

Then there’s how much money Juravin needs to pay for all of this. The FTC asked the court to make Juravin hand over the net revenue earned in selling all this junk, while Juravin attempted a sillier formula, saying that he should only have to pay back $350 for each Better Business Bureau complaint there was, as those were the only dissatisfied customers. It takes quite a lot of guts to make such a claim, considering the bullshit contract he used barred customers from complaining to the BBB. The FTC showed that Juravin made an astounding $26 million from this scam, but because he failed to accurately document how much Roca had to pay back in refunds, the court asks him to provide some more info — but it certainly appears that Juravin is going to be facing a hefty invoice from the US government before long.

Incredibly, so much attention was driven in the direction of Roca because it first sued PissedConsumer. It is entirely possible that the FTC would have cracked down on Roca and Juravin eventually no matter what, but it certainly appears that getting aggressive and suing others helped bring about Roca’s and Juravin’s downfall.

Filed Under: deceptive, don juravin, ftc, unfair
Companies: roca labs