Troubles keep coming for 23andMe
As if the FDA warning letter wasn’t enough, 23andMe, Inc. now has a lawsuit on its hands. The suit, known as Casey v. 23andMe, was initiated on November 27, 2013, in federal court for the Southern District of California (Case 3:13-cv-02847-H-JMA). The suit is being brought as a class action and on the general basis of breach of implied warranties, unjust enrichment, and misrepresentation.
The Proposed Class
John Conley described this as a “Revolt” of the “Cs,” the consumers of the Direct-to-Consumer (DTC) genetic/genomic industry. As of now, the class relates to one named consumer, Lisa Casey. The Complaint avers that she purchased the test in September after exposure to the 23andMe advertising and received an email in November, just before the FDA’s warning letter was issued, alerting her that her results were ready. It is pure chicken-and-egg speculation as to whether the alleged victim found an attorney willing to take her case or, alternatively, whether the attorney of record found a victim willing to become representative for the class.
It is unclear how many individuals are “similarly situated” and will fit as members of the proposed class. While estimates placed those genotyped by 23andMe at 400,000 individuals, it is unclear how many of those individuals were customers (i.e., those who purchased the PGS®) as opposed to recipients of complimentary analysis from 23andMe or a third-party. For now, saying there is a “revolt” of the “Cs” may be a bit premature.
The causes of action set forth in the complaint include unfair and fraudulent practices, unlawful practice, false and misleading advertising, misrepresentation, breach of the implied warranty of merchantability and fitness for a particular purpose, unjust enrichment, deceit by concealment, and negligent misrepresentation.
The Plaintiff is seeking injunctive relief to prevent 23andMe from “continuing to engage, use, or employ its unfair and fraudulent practice of advertising the sale and use of the PGS products.” (Complaint Paragraph 49) Plaintiff is also seeking restitution (i.e. return of her $99 + tax), attorney’s fees, punitive damages allowable by the consumer protection statutes cited, court costs, applicable interest, and any further relief deemed just and proper. (Complaint Page 25).
As part of her second cause of action, the Plaintiff alleges 23andMe’s activities violate the FD&CA, 21 USC §§301, et seq. (as the FDA asserted in its warning letter but has not yet been adjudicated), the California Sherman Law, Health & Safety Code §110100, et seq., numerous sections of the CLRA, Civil Code §1750, et seq., and the California Business & Professions Code §17500. (Complaint Paragraph 56). And Plaintiff further alleges, in her third cause of action, that 23andMe engaged in a series of misrepresentations, including about its “characteristics, ingredients, uses, and benefits, which it does not have” (Complaint Paragraph 79a); that 23andMe’s PGS “is of a particular standard, quality, or grade, which it is not” (Complaint Paragraph 79b); that the PGS was advertised “with an intent not to sell the PGS as advertised” (Complaint Paragraph 79c); and that 23andMe “represented that the subject of the sale of the PGS has been supplied in accordance with a previous representation when it has not” (Complaint Paragraph 79d).
Burdens of Proof
Generally, the burden of proof rests on the Plaintiff to establish each of the essential elements for a cause of action. To prove fraud, generally speaking, the Plaintiff must prove with clear and convincing evidence that there was a misrepresentation uttered fraudulently, that the maker of the statement intended for the recipient of the utterance to be induced to act, that the recipient justifiably relied upon the misrepresentation thereby damaging the recipient. To prove fraudulent or negligent misrepresentation, it is necessary for the Plaintiff to demonstrate that the Defendant made statements that the Defendant knew were false or made statements recklessly without knowledge as to their truth or falsity and without making reasonable investigation into the veracity of the statements. Furthermore, to prove unjust enrichment, the Plaintiff must show not only that the Defendant was enriched at her expense but also that it would be unjust for the Defendant to keep that benefit without compensating her for it.
How will the Plaintiff meet those burdens of proof?
Plaintiffs sometimes satisfy the first element of such unfair and deceptive trade practice claims (i.e., that there was an unfair or deceptive practice) by pointing to the Defendant’s violation of another statute or regulation and advocating a per se theory of liability. In other words, the Plaintiff argues that the Defendant, by violating the specifically cited statute or regulation, has per se engaged in an unfair and/or deceptive practice. The conclusory statements excerpted by the Plaintiff from the FDA’s warning letter alone will not be sufficient to establish a case. The Plaintiff seems to be trying to use 23andMe’s failure to provide the FDA with information supporting their claims to prove absence of such information. Such an implication is nonsequitur. The authority of the FDA over 23andMe’s activities has not been established and has been seriously questioned by many. Moreover, 23andMe’s acts or omissions with regard to FDA requests have not been adjudicated. Just because the FDA claims something is true does not make it so.
The Plaintiff will face additional challenges in proving her case. For example, she will have to find a way to overcome several provisions of the Terms of Service (ToS) to demonstrate that the advertising claims were anything more than acceptable puffery.
23. Disclaimer of Warranties
YOU EXPRESSLY ACKNOWLEDGE AND AGREE THAT: (1) YOUR USE OF THE SERVICES ARE AT YOUR SOLE RISK. THE SERVICES ARE PROVIDED ON AN “AS IS” AND “AS AVAILABLE” BASIS. 23ANDME EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT. (2) 23ANDME MAKES NO WARRANTY THAT (a) THE SERVICES WILL MEET YOUR REQUIREMENTS; (b) THE SERVICES WILL BE UNINTERRUPTED, TIMELY, UNFAILINGLY SECURE, OR ERROR-FREE; (c) THE RESULTS THAT MAY BE OBTAINED FROM THE USE OF THE SERVICES WILL BE ACCURATE OR RELIABLE; (d) THE QUALITY OF ANY PRODUCTS, SERVICES, INFORMATION, OR OTHER MATERIAL PURCHASED OR OBTAINED BY YOU THROUGH THE SERVICES WILL MEET YOUR EXPECTATIONS AND (e) ANY ERRORS IN THE SOFTWARE WILL BE CORRECTED. (3) ANY MATERIAL DOWNLOADED OR OTHERWISE OBTAINED THROUGH THE USE OF THE SERVICES IS DONE AT YOUR OWN DISCRETION AND RISK AND THAT YOU WILL BE SOLELY RESPONSIBLE FOR ANY DAMAGE TO YOUR COMPUTER SYSTEM OR LOSS OF DATA THAT RESULTS FROM THE DOWNLOAD OF ANY SUCH MATERIAL. (4) NO ADVICE OR INFORMATION, WHETHER ORAL OR WRITTEN, OBTAINED BY YOU FROM 23ANDME OR THROUGH OR FROM THE SERVICES SHALL CREATE ANY WARRANTY NOT EXPRESSLY STATED IN THE TOS. (5) YOU SHOULD ALWAYS USE CAUTION WHEN GIVING OUT ANY PERSONALLY IDENTIFYING INFORMATION ABOUT YOURSELF OR THOSE FOR WHOM YOU HAVE LEGAL AUTHORITY. 23ANDME DOES NOT CONTROL OR ENDORSE ANY ACTIONS RESULTING FROM YOUR PARTICIPATION IN THE SERVICES AND, THEREFORE, 23ANDME SPECIFICALLY DISCLAIMS ANY LIABILITY WITH REGARD TO ANY ACTIONS RESULTING FROM YOUR PARTICIPATION IN THE SERVICES.
6. User Representations
By accessing 23andMe Services, you agree to, acknowledge, and represent as follows:
a.You understand that information you learn from 23andMe is not designed to independently diagnose, prevent, or treat any condition or disease or to ascertain the state of your health in the absence of medical and clinical information. You understand that the 23andMe services are intended for research, informational, and educational purposes only, and that while 23andMe information might point to a diagnosis or to a possible treatment, it should always be confirmed and supplemented by additional medical and clinical testing and information. You acknowledge that 23andMe urges you to seek the advice of your physician or other health care provider if you have questions or concerns arising from your Genetic Information.
23andMe Services are for research, informational, and educational use only. We do not provide medical advice. The Genetic Information provided by 23andMe is for research, informational, and educational use only. This means two things. First, many of the genetic discoveries that we report have not been clinically validated, and the technology we use, which is the same technology used by the research community, to date has not been widely used for clinical testing. Second, in order to expand and accelerate the understanding and practical application of genetic knowledge in health care, we invite all genotyped users to participate in 23andWe Research. Participation in such research is voluntary and based upon an IRB-approved consent document. As a result of the current state of genetic knowledge and understanding, our Services are for research, informational, and educational purposes only. The Services are not intended to be used by the customer for any diagnostic purpose and are not a substitute for professional medical advice. You should always seek the advice of your physician or other health care provider with any questions you may have regarding diagnosis, cure, treatment, mitigation, or prevention of any disease or other medical condition or impairment or the status of your health.
23andMe does not endorse, warranty or guarantee the effectiveness of any specific course of action, resources, tests, physician or other health care providers, drugs, biologics, medical devices or other products, procedures, opinions, or other information that may be mentioned on our website. If we provide to you on our website any recommendations that identify for you, based on your Genetic and Self-Reported Information and scientific literature or research, potentially actionable information, this information is intended for informational purposes only and for discussion with your physician or other healthcare provider. As explained on our website, 23andMe believes that (a) genetics is only part of the picture of any individual’s state of being, (b) the state of the understanding of Genetic Information is rapidly evolving and at any given time we only comprehend part of the picture of the role of genetics, and (c) only a trained physician or other health care provider can assess your current state of health or disease, taking into account many factors, including in some cases your genetics as well as your current symptoms, if any. Reliance on any information provided by 23andMe, 23andMe employees, others appearing on our website at the invitation of 23andMe, or other visitors to our website is solely at your own risk.
While it is possible, it is very unlikely that a court would find the features of the Terms of Service unconscionable (and therefore unenforceable) because they are so one-sided that they “shock the conscience” (See UCC §2-302). After all, is it reasonable for a consumer to rely upon advertising claims and disregard the terms of the consumer contract governing the purchase or warnings made by the manufacturer? Puffery is permissible (e.g., is Snapple® really made from “the best stuff on Earth®”? Does Coast® soap’s scent really “open your eyes”? Are Wheaties® still “the Breakfast of Champions”? Does Weight Watchers® really have “the power to lose weight like never before”?).
Even if the consumer doesn’t read the contract, generally contractual terms are enforceable. [Now might be a good time for you to review those store receipts from purchases you made on Black Friday, Small Business Saturday, or even Cyber Monday!]
Potential for Civil Litigation = A Means of Shaping Industry Behaviors without Specific Regulation
If this case were to proceed to trial, we can expect a collision of scientific fact, legal fact, and societal belief. Where do those categories overlap? Did the advertising claims cross the line? How would reasonable jurors decide? The jury pool could conceivably contain genomophobes, genomophiles, and individuals with perspectives on personal genomics everywhere in between. An all-star cast of expert witnesses could be called to testify for either side, raising never-old questions about whether a scientific expert is a pure educator, an assistant advocate, a hired gun, or a provider of good data for a favored cause (See Science and the Law: Standards, Statistics and Research Issues by David L. Faigman, David H. Kaye, Michael J. Saks, and Joseph Sanders, American Casebook Series, 2002).
Civil suits are an effective way to shape industry practices incrementally. They are a form of policymaking based on actual harms rather than speculations and mere possibilities of harm. As such, the industry behaviors shaped by the threat of litigation and by resolution of litigation can be preferable to the adoption of specific regulations, driven by genetic exceptionalism and paternalism (and occasionally also genetic determinism) and made in the absence of data demonstrating harms of the technology or service. Given the low levels of genetic literacy generally, the dangers of advertising (regardless of technical veracity and acceptable puffery of the claims used) were bound to catch the industry at some point. (Coincidentally, advertising is risk, too, because business can fall victim to the opportunist element of society, regardless of whether the opportunity sought is financial gain or greater regulation or consumer protection). A serious question will be what should a reasonable person understand about genetic claims by a DTC company. It’s often said that tortfeasers find their victims as they are (i.e., the “eggshell skull” or “eggshell plaintiff” rule) and are liable for the damages their actions cause even if those resulting damages are magnified in an unforeseeable way due to the particular characteristics of the victim. Just how far will a bench or jury allow that doctrine to apply in situations of misunderstanding the meaning of scientific communications notwithstanding substantial efforts by some members of the personal genomics industry to educate the public? Only time will tell.