As readers of this blog know, I have been following the progression of events relating to contentions and investigations of Monster beverages. Not to tout my own prescient abilities, but I predicted a few months ago that news stories and regulatory investigations would result in a serious consumer class action lawsuit against the company. I was not surprised when reviewing new case filings a few weeks ago to see a new lawsuit filed in the U.S. District Court for Central District of California. I promptly ordered a copy of the Complaint and have analyzed the claims and allegations here.
As an initial matter, this is a very serious and well-drafted Complaint. While many consumer advocates err on the side of failing to articulate their theory of liability or rely on “plug and play” pleadings from a prior case, Azra Mehdi, counsel of record at The Medhi Firm, has undertaken a serious effort at approaching this lawsuit from a variety of vantage points, pressing some important themes. The end result is a 55-page Complaint that will be very difficult to knock out on a motion to dismiss.
Here are a few highlights.
- The Complaint summarizes the gravamen of the action as follows: “The Company does not disclose the caffeine content in its drinks and has chosen to categorize the Monster Energy Drinks as a “dietary supplement,” rather than as a beverage or as a conventional food item. The Company’s own public filings, however, do not describe the Monster Energy Drinks as a dietary supplement, but rather indicate that it is a “carbonated energy drink.” As detailed further below, such labeling, marketing and advertising is an attempt to circumvent the safety standards applicable to food and beverage additives and creates a false perception by the consumer that these products are safe.” (Paragraph 3.);
- To underscore the deep pockets that exist and the financial status of the defendant should a jury reach punitive damages, the Complaint notes the following: “As a result of the false and misleading labeling, marketing and advertising, and failure to warn of risks, the Company has profited immensely from its Monster Energy Drinks’ sales, capturing almost 35% of the market share and generating sales of almost $2 billion annually in 2011.” (Paragraph .);
- I found it of great interest that the Plaintiff is a resident of Baltimore who has been purchasing Monster Energy Drinks for the past five (5) years since he was about 16 years old. “The Company was parked outside his high school in trucks handing out free cans of Monster Energy Drinks to everyone. Mr. Fisher believed that Monster Energy Drinks were safe for consumption by persons of all ages since the guys in the Monster Energy Drink truck were not asking kids how old they were prior to handing out the Monster Energy Drinks.” (Paragraph 14.);
- The Complaint focuses not merely on FDA classifications of food and beverages and other legal technicalities but proceeds with some very important sub-themes that any person, particularly a parent of teenagers, understands. “The Company eschews mainstream advertising on TV, radio, and billboards, instead sponsoring huge extreme sporting events – skateboarding, motorcycle racing, surfing, NASCAR racing, professional bull riding – and music festivals as well as getting endorsements from music celebrities and popular sports figures. The core of Defendants’ marketing strategy is prize promotions, price promotions, competitions, endorsements from selected public and extreme sports figures, personality endorsements (including from television and other well-known sports personalities), coupons, sampling and sponsorship of selected causes, events, athletes and teams.” (Paragraph 25.);
- The Complaint then goes on to discuss the use in the promotion of Monster Girls and provides a screen shot from the company website, asking the rhetorical question: “What sexually curious adolescent male (i.e. the Company’s focus group) would not be drawn to Monster Energy Drinks with this kind of marketing?” (Paragraph 27.)
- There are detailed descriptions of competitions in which Defendant “invites ‘13-21’ year-old action sports athletes to apply for sponsorships, and ages 13-24 is the most popular age group of those who ‘Like’ the ‘Monster Army’ on Facebook. Monster Army is the Company’s athlete development program that supports athletes ages 13-21 in moto, bike, skate, surf, snow and wake.” (Paragraph 31.)
- The next section of the Complaint turns to a variety of marketing phrases and statements that are used to describe the product. Here is an example: “Green Tea Rehab Slogan: Our friends at the Rehab pool party in Vegas know all about recovering from a long night and together we came up with Monster Rehab® Green Tea + Energy. Naturally loaded with EGCG antioxidants, infused with coconut water, quercetin, acai berry and goji berry. Monster Rehab® Green Tea + Energy delivers a triple threat that quenches thirst, hydrates like a sports drink, and brings you back after a hard day’s night. Monster Rehab® Green Tea + Energy: RE-FRESH, RE-HYDRATE, RE¬VIVE, or in other words, Re-habilitate with a killer mix of green tea, pineapple juice, electrolytes, and our bad-ass Monster Rehab® energy blend to fire you up. • Rehab The Beast!” (Paragraph 37.)
- And now for the science. The presupposition of the Complaint is that the products contain an unsafe amount of caffeine: “Although the Company does not identify the amount of caffeine in each can, it has disclosed through other sources that one 16 oz. can of Monster Energy Drink contains approximately 160 milligrams of caffeine – the equivalent of four (4) 12 oz. cans of Coca-Cola, while the 24 oz. can contains 240 milligrams of caffeine, or the equivalent of seven (7) cans of Coke. But health experts have voiced concerns about energy drinks over the past few years, saying the caffeine content can be as high as 550 mg.” (Paragraph 39.)
- Various statements from the FDA and other authorities and are included which set the levels of caffeine consumption safe for teenagers. “Three 16 oz. cans contain, even by Defendants’ standards, more than 480 mg of caffeine, significantly more than the 400 mg that that the Federal Drug Administration (“FDA”) has stated is safe for healthy adults to consume. The safe level for adolescents according to the American Academy of Pediatrics is much lower – no more than 100 mg of caffeine per day from all sources. According to the University of California, teenagers who consume more than 100 mg of caffeine per day are at an increased risk for high blood pressure.” (Paragraph 43.);
- The most incredible allegation in the Complaint which may push these theories too far is that “Alarmingly, energy drink consumption has been shown to be positively associated with high-risk behavior, including marijuana use, sexual risk taking, fighting, failure to use seat belts, and taking risks on a dare, as well as with smoking, drinking, problems stemming from alcohol abuse, and illicit drug use.” (Paragraph 65.) I am curious why there is no authority cited for this proposition.
There is much more to this lengthy and detailed complaint, but these are the high points. My guess is that there will be dozens of “copy cat” lawsuits filed in the next several months, but this lawsuit will be the lead piece of litigation to challenge these industry practices. I will be surprised if Monster get rid of this case on a motion to dismiss. After serving up 8 billion cans of its beverage and receiving significant products, Monster will be forced to defend its product and practices in what is sure to be a very closely watched piece of litigation.