Counsel for Plaintiff

[Pages:45]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

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E-Mail: ltfisher@ apersinger@

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jluster@

8 Counsel for Plaintiff

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

12 YESENIA MELGAR, on Behalf of Herself and all Others Similarly Situated,

13 Plaintiff,

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v. 15 ZICAM LLC and MATRIXX INITIATIVES, 16 INC.

Case No. 2:14-cv-00160-MCE-AC FIRST AMENDED COMPLAINT JURY TRIAL DEMANDED

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Defendants.

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FIRST AMENDED COMPLAINT CASE NO. 2:14-CV-00160-MCE-AC

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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.

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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-ColdTM, the first sign a full blown cold is coming.

18 Take Zicam? now ? clinically proven to shorten a cold. GO FROM PRE-COLDTM TO NO COLD

19 FASTERTM." 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."

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FIRST AMENDED COMPLAINT

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CASE NO. 2:14-CV-00160-MCE-AC

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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.

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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

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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

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FIRST AMENDED COMPLAINT

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CASE NO. 2:14-CV-00160-MCE-AC

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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."

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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.

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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.

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FACTUAL ALLEGATIONS COMMON TO ALL CLAIMS

23 A. The Homeopathic Formulation Of Zicam "The Pre-Cold Medicine"

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14. All of the Pre-Cold Products contain homeopathic dilutions of zincum aceticum

25 ("zinc acetate") and zincum gluconicum ("zinc gluconate").

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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

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FIRST AMENDED COMPLAINT

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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.

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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-COLDTM TO NO COLD FASTERTM." The

11 message to consumers is clear: Zicam prevents colds.

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18. The prefix "Pre" means "before." Accordingly, the trademarked phrase "Pre-Cold"

26 denotes before-Cold. Indeed, the Products' labels define "Pre-ColdTM" as "That first sniffle,

27 sneeze or throat tickle...you have a Pre-Cold,TM the first sign a full blown cold is coming." Thus,

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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. 3

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13 19. On the Product labels, Defendants also tell consumers to "Take Zicam? now ?

14 clinically proven to shorten a cold." (emphasis added). The Product labels further represent that

15 the Pre-Cold Products "reduce[] the duration of a cold" or "shorten a cold." 1 In fact, as discussed

16 more fully below, Defendants' so-called "clinical proof" actually demonstrates that the diluted

17 ingredients in Zicam will not shorten a cold.

18 20. All of the Pre-Cold Product labels also represent that the Pre-Cold Medicine

19 "reduces severity of cold symptoms: sore throat stuffy nose sneezing coughing nasal

20 congestion." This claim is likewise provably false.

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26 1 See Find Your Zicam: Cold Remedy Products, (including photos of the front packaging of each of the Pre-Cold Products and the Drug Facts contained on the

27 back of the products).

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21. All of Defendants' labeling claims are false and misleading, because the Pre-Cold

12 Products are nothing more than placebos.

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22. Defendants deliberately and intentionally made uniform false labeling claims about

14 the Products. Defendants spent a significant amount of time, thought, and money developing and

15 implementing its marketing strategy to create a unified, homogenous look for its Pre-Cold

16 Products. Matrixx Initiatives partnered with design firm Beardwood&Co to design the packaging

17 for Zicam products. Julia Beardwood, a principal at Beardwood&Co, explained, "[Zicam] helped

18 define [the pre-cold] segment... But to be successful, we had to help consumers quickly sort

19 through this myriad of products in the cold aisle and understand what Zicam is and when to take

20 it." For example, "[t]o help educate consumers," the Zicam packaging was re-designed to feature a

21 "Pre-Cold seal in the shape of a bulls-eye." This serves as a "unifying element that communicates

22 preparedness and reassurance." Prominently displayed, directly below this is the "benefit 23 statement: `Reduces the Duration of a Cold.'"2

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25 2 See Michael Johnsen, "Matrixx Initiatives gives Zicam a makeover with design firm

26 Beardwood&co," DRUG STORE NEWS (Feb. 22, 2013),

27 beardwoodco (last visited Jan. 6, 2014).

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23. Senior Vice President of Marketing at Zicam LLC, Leslie Malloy, also expressed

2 that Pre-Cold seal is a "big advantage" for Defendants. She said, "It positions us as leaders in this

3 category with a strong central unifying element that has badge value for consumers and empowers

4 them to do something when they feel the first signs of a cold." Defendants extended the Pre-Cold

5 seal into all its marketing platforms, including online and in-store displays. This indicates Zicam is

6 well-aware that consumers rely on the representations asserted on product packaging when

7 considering a cold product.3

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Zicam's False And Misleading Television Commercials Featuring The "Cold Monster"

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24. Beginning in 2012, Defendants started running a series of commercials introducing

11 the "Cold Monster," a "monster version of a cold personified."4 Defendants' Cold Monster

12 commercials air on network and cable television nationwide. In fact, Zicam maintains a YouTube

13 channel consisting of Zicam Pre-Cold Product and "Cold Monster" Commercials. Stills from the

14 "Cold Monster" commercial are incorporated below.

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25. As shown below, the "Cold Monster" commercial depicts a consumer preventing

16 the common cold by taking a Zicam Pre-Cold product "at the first sign of cold."

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25 3 Id. 26 4 Id. See also Allison Schiff, "Common Cold, Uncommon Marketing," DIRECT MARKETING NEWS

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CASE NO. 2:14-CV-00160-MCE-AC

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