Panel selects N. IL District to hear herbal supplement fraud class actions vs Walmart, Walgreen, Target, GNC

Chicago’s federal courts will serve as the forum for the ongoing legal battles over claims several of the country’s largest retailers, including Wal-Mart, Target, Walgreen and GNC, fraudulently sold store-brand herbal nutritional supplements containing far less of the key ingredients listed on the products’ bottle labels.

On June 9, the U.S. Judicial Panel on Multi-District Litigation ruled in Washington, D.C., to transfer about three dozen cases now pending against the retailers in several federal judicial districts to the jurisdiction of U.S. District Judge John W. Darrah in the U.S. District Court for the Northern District of Illinois in Chicago.

The decision, signed by U.S. District Judge Sarah Vance, who chairs the seven-judge MDL panel, said each of the cases bear enough similarities to merit being centralized to one judicial district, under the guidance of one federal judge.

The spate of consumer class actions against the retailers arose in February and March on the heels of a Feb. 2 order from New York Attorney General Eric Schneiderman to compel the four retailers to stop selling herbal supplements, such as those purported to contain gingko, under their proprietary labels.

Schneiderman’s order included supplements sold under the “Finest Nutrition” brand at Walgreen stores; the “Up and Up” brand at Target; the “Herbal Plus” brand at GNC; and the “Spring Valley” brand at Wal-Mart.

The orders were issued after Schneiderman reportedly ordered “genetic testing” on supplements sold at stores in New York. According to the attorney general’s report, the tests revealed most bottles of the supplements contained little to none of the herbs mentioned on the label.

In some cases, the tests showed as few as 4-41 percent of the tested bottles, depending on the supplement and retailer, could be shown to have included any material from the specific herb listed on the bottle’s label.

Instead, the products typically contained ingredients considered fillers or contaminants, including rice, wild carrot, palm, radish, beans, asparagus and others, the report said.

GNC and others within the nutritional supplement business have pushed back, saying in published reports they believe the DNA testing method used by investigators does not apply to supplements, and would yield false results.

Industry groups have said they intend to conduct random tests of their own on the products in question.

However, in federal judicial districts across the country, consumers and their lawyers have lined up to sue the retailers.

In addition to several cases already pending in federal court in Chicago, class action complaints have been brought against the retailers in districts in California, Missouri, Ohio, Arkansas, Florida and Oregon, among others. The panel noted many more cases may yet be filed, as well.

Participants in these cases had asked the MDL panel to centralize the action for ease of discovery, deposing of witnesses and other matters pertaining to the lawsuits. The MDL panel said it selected Illinois’ Northern District to hear the cases because the retailers and at least 20 of the plaintiffs had listed the district as one of their preferred venues, and because Deerfield-based Walgreen was already located within the district.

The MDL panel, however, did not rule on whether the cases should proceed on separate tracks – one for each retailer – or whether those should be centralized, as well. Rather, the panel left that up to Darrah to decide.

“If the transferee judge views establishing separate tracks for the different retailers appropriate, then he can do so, but that is a matter dedicated to his discretion,” the MDL panel wrote.