Case 2:14-cv-00160-MCE-AC Document 10 Filed 02/21/14 Page 1 of 45 1 BURSOR & FISHER, P.A. L. Timothy Fisher (State Bar No. 191626) 2 Annick M. Persinger (State Bar No. 272996) 3 Julia A. Luster (State Bar No. 295031) 1990 North California Blvd., Suite 940 4 Walnut Creek, CA 94596 Telephone: (925) 300-4455 5 Facsimile: (925) 407-2700 E-Mail: [email protected] 6 [email protected] 7 [email protected] 8 Counsel for Plaintiff 9 10 UNITED STATES DISTRICT COURT 11 EASTERN DISTRICT OF CALIFORNIA 12 YESENIA MELGAR, on Behalf of Herself and Case No. 2:14-cv-00160-MCE-AC all Others Similarly Situated, 13 Plaintiff, FIRST AMENDED COMPLAINT 14 v. 15 JURY TRIAL DEMANDED ZICAM LLC and MATRIXX INITIATIVES, 16 INC. 17 Defendants. 18 19 20 21 22 23 24 25 26 27 28 FIRST AMENDED COMPLAINT CASE NO. 2:14-CV-00160-MCE-AC Case 2:14-cv-00160-MCE-AC Document 10 Filed 02/21/14 Page 2 of 45 1 Plaintiff Yesenia Melgar (“Plaintiff”), by her attorneys, makes the following allegations 2 pursuant to the investigation of her counsel and based upon information and belief, except as to 3 allegations specifically pertaining to herself and her counsel, which are based on personal 4 knowledge. 5 NATURE OF ACTION 6 1. This is a class action against Zicam LLC and Matrixx Initiatives, Inc. (collectively 7 “Defendants”) for falsely representing that the over-the-counter (“OTC”) homeopathic remedy 8 Zicam, “The Pre-Cold Medicine,” prevents, shortens, and reduces the severity of the symptoms of 9 the common cold. The Pre-Cold Medicine includes Zicam Pre-Cold RapidMelts Original, Zicam 10 Pre-Cold RapidMelts Ultra, Zicam Pre-Cold Oral Mist, Zicam Pre-Cold Ultra Crystals, Zicam Pre- 11 Cold Lozenges, Zicam Pre-Cold Lozenges Ultra, and Zicam Pre-Cold Chewables (“Pre-Cold 12 Medicine,” “Pre-Cold Products,” or “Products”). 13 2. Defendants falsely represent on Pre-Cold Medicine product labels and in their 14 nationwide advertising campaign that Zicam is “clinically proven to shorten cold,” “reduces 15 duration and severity of the common cold,” and “reduces severity of cold symptoms ▪ sore throat ▪ 16 stuffy nose ▪ sneezing ▪ coughing ▪ nasal congestion.” According to the sales pitch: “That first 17 sniffle, sneeze or throat tickle…you have a Pre-Cold™, the first sign a full blown cold is coming. 18 Take Zicam® now – clinically proven to shorten a cold. GO FROM PRE-COLD™ TO NO COLD 19 FASTER™.” In fact, Zicam Pre-Cold Products have only highly diluted concentrations of the 20 Products’ so-called “active ingredients” and are nothing more than placebos. 21 3. The dilution of the ingredients, zincum aceticum and zincum gluconicum, in 22 Defendants’ Pre-Cold Medicine renders those ingredients completely inactive. Since the 23 ingredients in the Pre-Cold Products have no pharmacological effect, the Products do not prevent 24 the common cold, are not “clinically shown to shorten cold,” do not “reduce[] duration of the 25 common cold,” and do not “reduce[] severity of cold symptoms ▪ sore throat ▪ stuffy nose ▪ 26 sneezing ▪ coughing ▪ nasal congestion.” 27 28 FIRST AMENDED COMPLAINT 1 CASE NO. 2:14-CV-00160-MCE-AC Case 2:14-cv-00160-MCE-AC Document 10 Filed 02/21/14 Page 3 of 45 1 4. As a direct and proximate result of Defendants’ false and misleading advertising 2 claims and marketing practices, Plaintiff and the members of the Class, as defined herein, 3 purchased Defendants’ ineffective Products. Plaintiff and the members of the Class purchased the 4 Pre-Cold Products because they were deceived into believing that the Products prevent, shorten, 5 and reduce the severity of the common cold. As a result, Plaintiff and members of the Class 6 purchased Zicam Pre-Cold Products that were not effective and have been injured in fact. Plaintiff 7 and the Class Members have suffered an ascertainable and out-of-pocket loss. Plaintiff and 8 members of the Class seek a refund and/or rescission of the transaction and all further equitable 9 and injunctive relief as provided by applicable law. 10 5. Plaintiff seeks relief in this action individually and on behalf of all purchasers of 11 Zicam Pre-Cold Products for violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et 12 seq., for breach of express and implied warranties, as well as for violation of the California 13 Consumer Legal Remedies Act (“CLRA”), Civil Code §§ 1750, et seq., California’s Unfair 14 Competition Law (“UCL”), Bus. & Prof. Code §§ 17200, et seq., and California’s False 15 Advertising Law (“FAL”), Bus. & Prof. Code §§ 17500, et seq. 16 THE PARTIES 17 6. Plaintiff Yesenia Melgar is a California citizen. 18 7. Zicam LLC is an Arizona Limited Liability Corporation with its principal place of 19 business at 8515 E. Anderson Drive, Scottsdale, AZ 85255. Zicam LLC is engaged in the business 20 of manufacturing, mass marketing, and distributing homeopathic formulas, including the Pre-Cold 21 Medicine, under the Zicam brand name. Zicam LLC is a wholly owned subsidiary of Defendant 22 Matrixx Initiatives, Inc. 23 8. Matrixx Initiatives, Inc. is a privately held corporation organized under the laws of 24 Delaware with its principal place of business located at 440 Rte. 22 East, 1 Grande Commons, 25 Suite 130, Bridgewater, New Jersey, 08807. Matrixx Initiatives, Inc. is engaged in the business of 26 manufacturing, mass marketing, and distributing homeopathic formulas, including the Pre-Cold 27 Medicine, under the Zicam brand name. Every Pre-Cold Product package states “©2012 28 FIRST AMENDED COMPLAINT 2 CASE NO. 2:14-CV-00160-MCE-AC Case 2:14-cv-00160-MCE-AC Document 10 Filed 02/21/14 Page 4 of 45 1 Distributed by Matrixx Initiatives, Inc.” Also, Matrixx Initiatives, Inc.’s website maintains that 2 Matrixx Initiatives, Inc. has “continuously developed and introduced Zicam cold shortening and 3 symptom-relieving products to the $6 billion cough/cold/allergy/sinus category.” 4 9. Defendants produce, market, and sell homeopathic products throughout the United 5 States. Defendants have long maintained substantial distribution and marketing operations in 6 California, and in this District. 7 10. Both of the Defendants acted jointly to perpetrate the acts described herein. At all 8 times relevant to the allegations in this matter, each Defendant acted in concert with, with the 9 knowledge and approval of, and/or as the agent of the other Defendant within the course and scope 10 of the agency, regarding the acts and omissions alleged. 11 JURISDICTION AND VENUE 12 11. This Court has subject matter jurisdiction under 28 U.S.C. § 1331 (federal question). 13 This Court has supplemental jurisdiction over state law claims pursuant to 28 U.S.C. § 1367. 14 12. This Court also has jurisdiction over this action pursuant to 28 U.S.C. § 1332(d) 15 because there are more than 100 Class Members, the aggregate amount in controversy exceeds 16 $5,000,000.00, exclusive of interest, fees, and costs, and at least one Class Member is a citizen of a 17 state different from at least one Defendant. 18 13. Venue is proper in this District pursuant to 28 U.S.C. § 1391 because Defendants do 19 business throughout this District, Plaintiff purchased Zicam in this District, and the Products that 20 are the subject of the present Complaint are sold extensively in this District. 21 22 FACTUAL ALLEGATIONS COMMON TO ALL CLAIMS 23 A. The Homeopathic Formulation Of Zicam “The Pre-Cold Medicine” 24 14. All of the Pre-Cold Products contain homeopathic dilutions of zincum aceticum 25 (“zinc acetate”) and zincum gluconicum (“zinc gluconate”). 26 15. Zicam Pre-Cold RapidMelts, Zicam Pre-Cold Rapid Melts Ultra, Zicam Pre-Cold 27 Oral Mist, and Zicam Pre-Cold Crystals list zinc gluconate at a 1X dilution, which means that zinc 28 FIRST AMENDED COMPLAINT 3 CASE NO. 2:14-CV-00160-MCE-AC Case 2:14-cv-00160-MCE-AC Document 10 Filed 02/21/14 Page 5 of 45 1 gluconate is diluted in water to a ratio of 1 to 10, or 1/10th its original strength. Zinc acetate is 2 listed at a 2X dilution, which means it is diluted in water to a ratio of 1 to 100, or 1/100th of its 3 original strength. 4 16. Zicam Pre-Cold “Liqui-Loz,” Zicam Pre-Cold “Liqui-Loz,” and Zicam Pre-Cold 5 Chewables list both zinc acetate and zinc gluconate at a 2X dilution, meaning that the ingredients 6 have been diluted in water to a ratio of 1 to 100, or 1/100th of the ingredients’ original strength. 7 B. Zicam’s False And Misleading Labels 8 17. On its Pre-Cold Product labels, depicted below, Defendants make numerous false 9 and misleading marketing claims about the Products. Every Pre-Cold Product label bears the 10 misleading trademarked tagline: “GO FROM PRE-COLD™ TO NO COLD FASTER™.” The 11 message to consumers is clear: Zicam prevents colds. 12 13 14 15 16 17 18 19 20 21 22 23 24 18. The prefix “Pre” means “before.” Accordingly, the trademarked phrase “Pre-Cold” 25 denotes before-Cold. Indeed, the Products’ labels define “Pre-Cold™” as “That first sniffle, 26 sneeze or throat tickle…you have a Pre-Cold,™ the first sign a full blown cold is coming.” Thus, 27 28 FIRST AMENDED COMPLAINT 4 CASE NO. 2:14-CV-00160-MCE-AC Case 2:14-cv-00160-MCE-AC Document 10 Filed 02/21/14 Page 6 of 45 1 consumers are told that with Zicam Pre-Cold, they will stop a cold before it starts, and will get 2 “NO COLD.” However, Defendants’ message is false and misleading.