The Consumerist reports the following: Four months after a Washington state court ruled that the maker of the popular 5-Hour Energy drink had misled consumers into believing that its product was superior to caffeine, the judge has ordered the company to pay a total of $4.3 million.
Washington state Attorney General originally sued Living Essentials LLC — the company behind 5-Hour Energy — in July 2014, alleging a variety of questionable marketing claims: that doctors recommend the product; that users would experience a “no crash” energy boost; and that the combination of ingredients provides a benefit that is superior to just drinking coffee.
In the end, the judge sided largely in favor of the state, noting that Living Essentials did not provide evidence to support its claim that the “combination of caffeine, B vitamins and amino acids would provide energy that would last longer than consumers would experience from a cup of premium coffee (and in some of the ads, longer than 3 or 4 cups of coffee).”
The court also took issue with Living Essentials’ assertion that the non-caffeine ingredients worked in concert with the caffeine to prolong the stimulant’s effects, pointing out that one study supplied by the company actually showed that the taurine in 5-Hour Energy may counteract the caffeine.
“The studies do not clearly establish that 5-Hour ENERGY’s vitamins and nutrients work synergistically with caffeine to make these benefits last longer than they would last with caffeine alone,” wrote the judge in her Oct. 2016 ruling [PDF].
Speaking of taurine, that is a key ingredient in the decaffeinated version of 5-Hour Energy. However, the judge ultimately found that Living Essentials had deceptively marketed this product because the amount of taurine needed to provide the boost advertised by the company was several times more than you’d find in a single serving of the supplement.
With regard to 5-Hour Energy’s “Ask Your Doctor” campaign, which put forth the message that most physicians would recommend the product, the court also concluded that Living Essentials had phrased its doctors’ survey questions in such a way as to guarantee a positive result for 5-Hour Energy.
“Due to the phrasing of the questions that preceded this question, a ‘no’ response to this question suggested that the responding doctor would instead recommend a high fat, high calorie, or high sodium energy supplement,” explained the judge in her ruling.
Living Essentials did prevail in court on the allegation that it was downplaying the caffeine content of its products. The judge noted that while caffeine might have been low on the list of key ingredients advertised by 5-Hour Energy, much of the marketing material for the supplement made clear that caffeine was an essential part of the product.
Let’s Talk Money
The judge has ordered [PDF] Living Essentials to pay a total of around $4.3 million in penalties and fees to the state. About half of that ($2.184 million) is for each individual violation of Washington state consumer protection laws.
Each airing of a deceptive ad in the state since July 2012 is a $100 violation. So, for example, the “Ask Your Doctor” ads ran 19,716 times in Washington during the lawsuit’s covered time period, resulting in a penalty of $1.9716 million just for those particular ads. Other ads that violated the law were run less frequently: around 2,000 airings, totaling a little more than $200,000 in penalties.
Meanwhile, the violations for the decaf 5-Hour Energy marketing was calculated on a per-item basis. The state says 2,482 bottles of this caffeine-free version were sold in Washington since July 2012; with a penalty of $4.29 each, that comes out to $10,647.
The rest of the $4.3 million will go to cover the state’s attorneys fees and costs. The court determined that trying to force Living Essentials into issuing refunds to customers would be too complicated and expensive.
“The identity of such purchasers is unknown and the amount of each restitution award would be so small that the cost of setting up and administering a restitution fund would dwarf any benefit consumers would receive from restitution,” explains the judge, who chided Living Essentials for waging this costly and ultimately failing legal battle.
“Defendants spent more time trying to justify the science behind their ads after-the-fact than they did before marketing the products in Washington,” wrote the judge, adding “There was scant evidence as to what science anyone at Living Essentials had ever seen or relied on before it began to sell this product.”
We’ve reached out to Living Essentials about this latest legal development and will update if we receive a response. In October, the company accused Washington Attorney General Bob Ferguson of “grossly misrepresenting” the facts and being politically motivated in bringing this lawsuit.
The same week that the Washington court ruled against Living Essentials, a court in Oregon shot down [PDF] a very similar lawsuit brought by that state’s attorney general, concluding that there was nothing in the “Ask Your Doctor” ads to imply that physicians actually recommended 5-Hour Energy, and that the language used in the campaign did not present the surveys as being “scientific or unbiased.”