SAN FRANCISCO (CN) — 7-Eleven cannot dodge federal claims that it violated California's unfair competition law by selling a tonic drink which may contain an addictive and harmful ingredient.
U.S. District Judge Vince Chhabria denied a motion to dismiss claims that the Feel Free drink sold at 7-Eleven and other stores contains kratom, a dangerously addictive ingredient. He said while there is not much evidence that 7-Eleven knew of kratom’s harms when selling the drink, liability for a failure to disclose under the unfair-practices prong must be determined by applying tests established by California courts for whether a practice violates that provision of the state's unfair competition law.
Feel Free was marketed by manufacturer Botanic Tonics as a “feel good wellness tonic” and marketed as a drink for people to consume when they “want to feel more social, need a clean boost of energy or need to lock in and focus.” The plaintiff Romulo Torres, who bought the drink, brings his class action claim under the “unfair practices” prong of California's unfair competition law, claiming that 7-Eleven controlled decisions about which products could be sold in its stores and knew full well that the drink was dangerous and addictive.
Kratom, claimed to have been found in the drink, affects the same opioid receptors as morphine and “has similar effects to narcotics like opioids, and carries similar risks of abuse, addiction, and in some cases, death,” according to Torres in his complaint. He contends that 7-Eleven’s decision to allow the drink to be sold in its stores constitutes an unfair business practice within the meaning of the statute as written, if sold without disclosing to customers how harmful the drink’s ingredient could be.
Torres is claiming two causes of action against 7-Eleven, claiming unfair practices and unjust enrichment.
7-Eleven claimed in its motion to dismiss that there can never be liability under the unfairness prong unless some other source of law imposes a duty to disclose.
The judge said in a 10-page order Thursday that he would refuse to dismiss the claims because 7-Eleven’s only argument is categorical.
“The legislature intended the unfair-practices prong to reach beyond existing law, to capture practices that should result in liability but that legislatures and courts had not yet envisioned,” he said. “Depending on the facts, if a seller knows that a product poses a serious danger to its consumers and chooses to sell it without warning of the danger, that seller could potentially be liable under the unfair-practices prong even if there would be no liability for failure to disclose under any other statutory or common law cause of action.”
Chhabria acknowledged that there is "some confusion" in the California and federal courts about what constitutes an unfair practice under unfair competition law. But he said 7-Eleven incorrectly relied on a Ninth Circuit Court of Appeals case, Hodsdon v. Mars, Inc., to say courts treat a common law duty to disclose as a prerequisite to a claim for unfair practices, and that the question has therefore been settled for federal courts.
The judge said the actual ruling from the case does not sound like the Ninth Circuit establishing a categorical requirement that courts must find "a violation of a duty to disclose in common law or other statutory law as a prerequisite to finding an unfairness-prong violation."
“The better interpretation is that the court evaluated the particular alleged injury, considered whether there was a duty to disclose under some other source of law as part of the inquiry, and ultimately concluded that the conduct in question was not sufficiently harmful or unethical to support a UCL claim,” Chhabria said.
Attorneys for both parties in this case did not immediately respond to requests for comment. The parties are not set to return to court until September 2024.
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