"Dr. Phil" McGraw Facing Class-Action Suit

Stephen Barrett, M.D.


Three dissatisfied customers are seeking class-action status for a suit against Psychologist Phil McGraw and a company through which he marketed products under the "Shape Up!" brand name. The suit, filed in Los Angeles in 2004, alleges that McGraw falsely claimed that the products would cause weight loss by promoting fat metabolism and reducing carbohydrate cravings and appetite swings. The products, which cost $120 for a month's supply, were supposedly tailored for the person's "body type," a concept for which there is no scientific support. The Los Angeles Times has reported that the FTC dropped an investigation in 2004 when the company agreed to stop marketing the products. [Selvin M. Class status sought for 'Dr. Phil' diet case. Los Angeles Times, Oct 3, 2005]


SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES

JOANNE LEVINE, S______B____, and NANCY HARMON Individually and On Behalf of All Others Similarly Situated,

Plaintiffs,

vs.

DR. PHILIP C. McGRAW, also known as DR. PHIL, and CSA NUTRACEUTICALS, GP, LLC, formerly known as CSA NUTRACEUTICALS, LLC, a Texas entity, and DOES 1 through 300, inclusive,

Defendants.


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CASE NO. BC312830

CLASS ACTION

[The Honorable Charles W. McCoy, Dept. 323]

FIRST AMENDED CLASS ACTION AND REPRESENTATIVE ACTION COMPLAINT FOR VIOLATIONS OF THE UNFAIR COMPETITION LAW, CONSUMERS LEGAL REMEDIES ACT AND ADVERTISING LAW

Complaint Filed: March 26, 2004
Trial Date: None Set

Plaintiffs Joanne Levine, S_______B_______, and Nancy Harmon, by counsel and for their First Amended Class Action and Representative Action Complaint ("First Amended Complaint") against Defendants, Dr. Philip C. McGraw ("McGraw"), CSA Nutraceuticals, LLC, ("CSA"), and Does 1 through 300, hereby allege upon personal knowledge and belief as to their own acts, and upon information and belief (based on the investigation of their counsel) as to all other matters, as to which allegations they believe substantial evidentiary support will exist after a reasonable opportunity for further investigation and discovery, as follows:

I. NATURE OF ACTION

1. This is a class action brought on behalf of all purchasers (consumers) of a product called "Shape Up!" sold in the United States by Defendants McGraw and CSA. During the Class Period, Defendants sold this product to consumers utilizing false and misleading advertising, deceptive practices, and false and fraudulent claims. This is also a representative action brought by Plaintiffs on behalf of themselves and the general public.

2. Shape Up! consists of four categories of products (collectively “Shape Up!”): (a) Supplements”; (b) an “Intensifier”; (c) Complete Nutrition Shakes (“Shakes”), in either a “Ready-to-Drink Can” or pre-measured “Mix and Drink Packets”; and (d) Complete Nutrition Bars (“Bars”).

3. Defendants advertised Shape Up! as helping their customers to lose weight. For all Shape Up! products, Defendants uniformly claimed that “[t]hese products contain scientifically researched levels of ingredients that can help you change your behavior to take control of your weight.” As set forth herein, Defendants’ claims that using Shape Up! resulted in a change of behavior are false and misleading. There is no credible scientific evidence that these products or their ingredients individually or in combination have any effect on behavior.

4. The Shape Up! Supplements were sold by Defendants in two primary formulations. Defendants claimed that the “Apple Body Type” Supplement “[s]upports your weight loss program by helping reduce carbohydrate cravings and appetite swings.” However, this claim is not substantiated by credible scientific research. Defendants also claimed that the “Pear Body Type” Supplement “supports your weight loss program by helping promote fat metabolism and increasing the ability to burn calories.” Similarly, this claim was not substantiated by credible scientific research.

5. Defendants also sold a Shape Up! "Intensifier" Supplement to be used in conjunction with the Apple and Pear body type Supplements. Defendants claimed that this Intensifier Supplement works with both Apple and Pear Supplements to "take your weight management efforts to the next level." Defendants also claimed that the "Intensifier" Supplement works to "help your body by providing extra support during changes associated with weight loss." These claims were not supported by credible scientific evidence and, in fact, Defendants' claims were not true. The Shape Up! Supplements did not modify their customers' behavior and did not aid in weight loss. Simply stated, there is no substantial credible scientific basis for the claims and representation that Defendants made as to Shape Up!'s effectiveness.

6. Defendants further claimed that the Shakes and Bars help “curb hunger cravings” (CSAN 018351) and “control eating impulses” (CSAN 045490), and Defendants claimed that these claims are supported by “solid science” (CSAN 019636). There was no credible scientific evidence to support Defendants’ claims.

7. Defendants' advertisements and representations to consumers constituted deceptive and untruthful advertising and marketing. Defendants' scheme of false and misleading advertising and marketing resulted in thousands of consumers purchasing Shape Up! based upon the expectation that Shape Up! would be effective in changing their behavior and causing them to lose weight, as Defendants represented. Consumers and users of these products were particularly vulnerable to Defendants’ deceptive and fraudulent practices. Most consumers possess very limited knowledge of the likelihood that products that are claimed to be effective in changing behavior and causing weight loss in fact do not modify behavior and do not aid in weight loss. This is a material factor in many people’s purchasing decisions because they believe their behaviors will change and weight loss will result. Due to Defendants’ scheme, and ignorant as to the falsity of Defendants’ claims, Plaintiffs, Class members, and members of the general public were fraudulently induced to purchase Shape Up! products. California’s consumer protection laws are designed to protect consumers from this type of false advertising and predatory conduct. Defendants' unfair and deceptive course of conduct is common to all purchasers of Shape Up!

8. Defendants’ scheme to deceive and defraud consumers violated (a) the Consumers Legal Remedies Act ("CLRA"), Civ. Code §1750 et seq., specifically Civ. Code §1770(a); (b) the Unfair Competition Law, Bus. & Prof. Code §17200 et seq.; and the False Advertising Statute, Bus. & Prof. Code §17500 et seq.

9. Consequently, by this First Amended Complaint and on behalf of the consumers of Shape Up!, Plaintiffs seek money damages and/or restitution to compensate them for their monetary losses, disgorgement of all of the Defendants' wrongfully earned profits and other gains from their scheme, and an injunction to halt the Defendants' continuation of their illegal and meretricious conduct.

II. PARTIES

10. Plaintiff, Joanne Levine (“Levine”), is an individual who resides in the County of Los Angeles. Ms. Levine is a consumer who bought and used Shape Up! in Los Angeles in reliance upon Defendants’ deceptive, fraudulent and false representations that Shape Up! would modify her behavior and aid in weight loss. Levine was injured thereby because she paid for Shape Up! whereas she would have not purchased Shape Up! had Defendants truthfully disclosed that Shape Up! does not change behavior and does not aid with weight loss. Ms. Levine seeks relief in her individual capacity and on behalf of the general public; in addition, she seeks to represent a Class consisting of all other consumers who purchased Shape Up! within four years prior to the date when the Complaint in this action was filed.

11. Plaintiff, [S______B____] (“B”), is an individual who resides in Bensalem, Bucks County, Pennsylvania. Mr. B____ is a consumer who bought and used Shape Up! in reliance upon Defendants’ deceptive, fraudulent and false representations that Shape Up! would modify his behavior and aid in weight loss. B____ was injured thereby because he paid for Shape Up! whereas he would have not purchased Shape Up! had Defendants truthfully disclosed that Shape Up! does not change behavior and does not aid with weight loss. Mr. B____ seeks relief in his individual capacity and on behalf of the general public; in addition, he seeks to represent to represent a Class consisting of all other consumers who purchased Shape Up! within four years prior to the date when the Complaint in this action was filed.

12. Plaintiff, Nancy Harmon (“Harmon”), is an individual who resides in Athens, Tennessee. Ms. Harmon is a consumer who bought and used Shape Up! in reliance upon Defendants’ deceptive, fraudulent and false representations that Shape Up! would modify her behavior and aid in weight loss. Harmon was injured thereby because she paid for Shape Up! where she would have not purchased Shape Up! had Defendants truthfully disclosed that Shape Up! does not change behavior and does not aid with weight loss. Ms. Harmon seeks relief in her individual capacity and on behalf of the general public; in addition, she seeks to represent a Class consisting of all other consumers who purchased Shape Up! within four years prior to the date when the Complaint in this action was filed.

13. Defendant Dr. Philip C. McGraw, also known as Dr. Phil ("McGraw"), is a resident of the County of Los Angeles and does business throughout the State of California and the United States. McGraw resides at 1008 Lexington Road, Beverly Hills, California. During the Class Period, Defendant McGraw conducted the illegal scheme complained of in the County of Los Angeles.

14. Defendant CSA Nutraceuticals, GP, LLC formerly known as CSA Nutraceuticals, LLC (collectively, "CSA") is a Texas entity with its principal place of business located in Irving, Texas. During the Class Period, Defendant CSA did business throughout the County of Los Angeles, the State of California and the United States. During the Class Period, Defendant CSA conducted the illegal scheme complained of here in the County of Los Angeles.

15. The true names and capacities (whether individual, corporate, associate, or otherwise) of the Defendants that are identified as Does 1 through 300, inclusive, and each of them, are unknown to Plaintiffs, who therefor sue said "Doe" Defendants by such fictitious names. Plaintiffs are informed and believe and thereon allege that each of the Defendants fictitiously named herein as "Doe" is legally responsible in some actionable manner for the events and happenings hereinafter described, and thereby proximately caused the injuries and damages to Plaintiffs and Class members, as alleged herein. Plaintiffs will seek leave of Court to amend this First Amended Complaint to state the true names and capacities of said fictitiously named Defendants when the same have been ascertained.

16. Plaintiffs are informed and believe and thereon allege that Defendants (and each of them), including Does 1 through 300, inclusive, were the agents, servants, employees, successors, assignees, transferees and/or joint venturers of their co-Defendants, and each of them was, as such, acting within the course, scope and authority of said agency, employment and/or joint venture and was acting with the consent, permission and authorization of each of the remaining Defendants, and that each and every Defendant when acting as a principal, was negligent in the selection and hiring of each and every other Defendant as an agent, employee and/or joint venturer. All actions of each Defendant, as alleged herein were ratified and approved by every other Defendant or their officers or managing agents.

III. JURISDICTION AND VENUE

17. This Court has subject matter jurisdiction over this class action pursuant to Bus. & Prof. Code §§ 17203, 17204 and 17535, and Civ. Code § 1780. This Court may properly exercise personal jurisdiction over the parties because (a) Plaintiffs and the members of the Class submit to the jurisdiction of this Court; (b) Defendant McGraw is a resident of the County of Los Angeles and also systematically and continuously does business in this County; and (c) Defendant CSA systematically and continually does business in the County of Los Angeles.

18. Venue is proper in this Court pursuant to Bus. & Prof. Code §§ 17204 and 17535, Civ. Code §§ 395 and 395.5, and Civ. Code § 1780(c) because Plaintiff Levine's purchase of Shape Up! took place in the County of Los Angeles and Defendants McGraw and CSA systematically and continually do business in this County.

19. Federal subject matter jurisdiction does not exist over the claims for relief asserted in this First Amended Complaint. The amount in controversy as to Plaintiffs and each member of the Class described herein does not exceed $75,000, including interest and any award of attorneys' fees, costs and treble damages. Plaintiffs and each member of the Class disclaim any recovery greater than $75,000, including damages, punitive damages, awardable attorneys' fees and costs, and specifically limit their total claims to $75,000 or less per Plaintiff and each member of the Class. Plaintiffs assert that damages, punitive damages, attorneys' fees and costs may not be aggregated to meet the federal district court's minimum jurisdictional amount. Because this action was commenced when the Complain was filed March 2004, it is not subject to removal under the “Class Action Fairness Act of 2005,” which does not apply to actions that had been commenced prior to February 19, 2005.

20. This Court may properly exercise jurisdiction over the claims asserted by Plaintiffs on behalf of a nationwide Class of Shape Up! because Defendants’ scheme to defraud consumers emanated from the State of California which clearly has an interest in regulating the fraudulent business practices of California residents, such as Defendant McGraw. As the primary actor in the manufacture, marketing, advertising, and sale of Shape Up! products, Defendant McGraw’s unfair, unlawful, and deceptive business practices emanated from the State of California and his business and home offices located in the County of Los Angeles. Further, upon information and belief, at least 13% of Class members (purchasers of Shape Up! products) reside in the State of California, which constitutes the largest percentage of consumers in any single state. California’s consumer protection laws will adequately protect the rights of consumers nationwide and, under the facts alleged in this First Amended Complaint, the application of California law to the claims of the Plaintiffs and Class members is fair and reasonable for all parties.

IV. CLASS ACTION ALLEGATIONS

21. This action may properly be maintained as a Class Action pursuant to Code Civ. Proc. § 382, Civ. Code §§ 1752, 1780 and 1781, and Rules 1850-1861 of the Rules of Court.

22. Plaintiffs bring this action as a Class Action on behalf of all purchasers of Shape Up! who reside in the United States. The Class Period consists of the time period during which Shape Up! was sold to consumers in the United States.

23. The Class is composed of numerous residents of California and the United States, including Plaintiffs, and joinder of everyone is impracticable. Although the exact number of Class members is presently unknown, Plaintiffs are informed and believe and thereon allege that the Class will number in at least thousands. During the Class Period, Shape Up! was sold throughout the State of California and the United States in pharmacies, supermarkets and convenience stores, as well as by retailers on the Internet. The members of the Class are so numerous that joinder of all members is impracticable. The disposition of the claims of Plaintiffs and other Class members in this action will provide substantial benefits to the parties and this Court.

24. There exists a well-defined community of interest in the questions of law and fact presented by this controversy. These questions of law and fact common to Plaintiffs and Class members predominate over questions which may affect only individual members, if any, because Defendants have acted on grounds generally applicable to the entire Class, thereby making appropriate final injunctive relief and corresponding declaratory relief with respect to the Class as a whole. Among the questions of law and fact common to the Class are the following:

(a) Whether Defendants' scheme to utilize false and deceptive statements violates the CLRA, the UCL and Section 17500;

(b) Whether Defendants made unsubstantiated claims regarding Shape Up!;

(c) Whether Defendants' misrepresentations constitute false and misleading advertising;

(d) Whether Defendants should be enjoined from engaging in the scheme to defraud; and

(e) The amount of damages and/or restitution that Plaintiffs and members of the Class should be awarded.

25. Plaintiffs are members of the Class. Plaintiffs' claims are typical of the claims of the other Class members because Plaintiffs and all Class members were injured by the same wrongful acts and practices in which Defendants engaged as alleged herein.

26. Plaintiffs will fairly and adequately protect the interests of the Class. The interests of Plaintiffs are coincident with, and not antagonistic to, those of the Class members. In addition, Plaintiffs have retained attorneys who are experienced and competent in the prosecution of complex and class litigation. Neither Plaintiffs nor their attorneys have any conflict in undertaking this representation.

27. A class action is superior to the alternatives, if any, for the fair and efficient adjudication of the controversy alleged herein because such treatment will permit a large number of similarly situated persons residing throughout the United States to prosecute their common claims in a single forum simultaneously, efficiently, and without duplication of evidence, effort, and expense that numerous individual actions would engender. This action will result in the orderly and expeditious administration of Class claims. Uniformity of decisions will be assured, thereby avoiding the risk of inconsistent and varying determinations.

28. Because the damages and injuries suffered by individual Class members or the amount of restitution or disgorgement to each class member may be relatively small, the expense and burden of individual litigation make it virtually impossible for the members of the Class effectively to seek redress individually for Defendants' alleged wrongful conduct.

29. Plaintiffs know of no difficulty that will be encountered in the management of this litigation which would preclude its maintenance as a class action.

30. Common questions of law and fact predominate in this case, and a class action is the only appropriate method for the complete adjudication of this controversy for the following reasons, among others:

(a) The individual amounts of damages and/or restitution involved, while not insubstantial, are generally so small that individual actions or other individual remedies are impracticable and litigating individual actions would be too costly;

(b) The costs of individual suits would unreasonably consume the amounts that would be recovered;

(c) Individual actions would create a risk of inconsistent results and would be unnecessary and duplicative of this litigation; and

(d) Individual actions would unnecessarily burden the courts and waste precious judicial resources.

31. Notice to the members of the Class may be accomplished cheaply, efficiently and in a manner best designed to protect the rights of all Class members.

ESTOPPEL FROM PLEADING AND TOLLING OF
APPLICABLE STATUTES OF LIMITATIONS

32. Defendants are estopped from relying on any statutes of limitation by virtue of their acts of fraudulent concealment and by selling Shape Up! with known latent defects. Defendants have actively concealed the true nature of Shape Up!, as alleged in this First Amended Complaint.

33. Defendants have systematically denied that their claims, advertising and representations are false or misleading. Because of Defendants' nondisclosure of the true nature of Shape Up!, Plaintiffs and the members of the Class could not reasonably have discovered the wrongdoing alleged above. Given Defendants' failure to disclose this non-public information about the defective nature of Shape Up! over which they had exclusive control, and because Plaintiffs could not reasonably have known that Defendants' Shape Up! was not effective as advertised and represented, Defendants are estopped from relying on any statues of limitations that might otherwise be applicable to the claims asserted herein. Further, any such statutes of limitations have been tolled by Defendants' acts of concealment and misrepresentations.

DEFENDANTS' SCHEME TO DEFRAUD CONSUMERS

34. Defendants have represented, expressly or by implication, including through advertisements disseminated throughout the County of Los Angeles, the State of California and the United States that:

Shape Up! contains scientifically researched levels of ingredients that help its customers "change" their "behavior";

a. Shape Up! aids its customers to lose weight;

b. Shape Up! promotes fat metabolism and increases the body's ability to burn calories;

c. Shape Up! helps its customers reduce carbohydrate cravings and appetite swings; and

d. Shape Up! supports the customers' body during the changes associated with weight loss.

In fact, Defendants did not have credible scientific research providing a reasonable basis for making these claims and representations. These claims and representations made by Defendants are false and misleading.

35. Defendants have marketed Shape Up! to consumers in the County of Los Angeles, the State of California and the United States by propagating these false and misleading claims through advertisements and other media in order to induce consumers to buy Shape Up! without learning the truth that reputable scientists believe there is no evidence to support Defendants' claims and representations and that no scientific studies conducted according to generally accepted protocols or which have been published in peer reviewed journals support these claims.

36. During the Class Period, Defendants’ actions in defrauding consumers, including Plaintiffs and Class members, emanated from the State of California. Defendant McGraw was the driving force behind the fraudulent marketing of Shape Up! to consumers nationwide. He approved each marketing transaction without verifying the scientific efficacy of Shape Up!. Defendant McGraw’s misleading claims and endorsement of these products induced consumers to purchase Shape Up!.

THE SCHEME TO DEFRAUD CONSUMERS NATIONWIDE EMANATED FROM
DEFENDANT McGRAW IN THE STATE OF CALIFORNIA

37. Defendant McGraw, in his home and office in the County of Los Angeles, served as the head of the organization that created and promoted Shape Up!

38. All marketing and advertising for Shape Up! was approved, and often scripted, by Defendant McGraw. (CSAN 011229, 011235-011237, 011249, 011252-011256, 011268, 011302, 016777, 019642, 045663, 016136.) Specifically, from his home and office in the County of Los Angeles, Defendant McGraw reviewed and granted final approval for the text and format of radio advertisements, commercial brochures, art work, banner ads on the Shape Up! and eDiets Internet websites, and copy for those websites. (CSAN 045663, 016136, 011235-011237, 011252-011256, 011268, 011302, 016777.) Further, Defendant McGraw reviewed and approved all media outlets where Shape Up! would be advertised including the specific radio stations, cable television stations, network television stations, magazines and internet websites where the advertising for Shape Up! would appear. (CSAN 004810-004814.)

39. Each of these advertisements for Shape Up! products, which strategically targeted men and women nationwide as potential consumers of such products, contained false and misleading representations and quotes from Defendant McGraw, and each of these advertisements was approved and/or scripted by Defendant McGraw in the County of Los Angeles. (CSAN 045702, 011229, 011235-011237, 011249, 011252-011256, 011268, 011302, 016777, 019642, 045663, 016136.)

40. Defendant McGraw led, and acknowledged himself as leading, the Shape Up! marketing effort. In an e-mail message, he candidly admitted that “They Need Me,” when referring to retail outlets Wal-Mart and Sam’s Club that were selling Shape Up!. (CSAN 011242-011243.)

41. When deciding to endorse, manufacture, advertise, market and sell Shape Up! nationwide, Defendant McGraw agreed to represent to the public that he chose the “science advisors, business managers and manufacturers he trusted.” (CSAN 045878-045881 [emphasis added].)

42. All staff working for Defendant CSA sought Defendant McGraw’s approval for the advertising of Shape Up! For example, in an e-mail message to Defendant McGraw concerning radio advertisements for Shape Up!, CSA executives stated that they would “re-group at your direction.” (CSAN 011229 [emphasis added].) In another e-mail message, Defendant McGraw made it clear that “IF WE RUN OUT OF TIME FOR ME TO APPROVE THINGS IN A THOUGHTFUL MANNER THEN THE DECISION IS TO PULL IT ALL AND PROVIDE NOTHING.” (CSAN 011249 [emphasis in original]). Without receiving Defendant McGraw’s approval from his place of business within the State of California, no advertising for Shape Up! could be disseminated nationwide to Plaintiffs and class members.

43. Defendant McGraw was keenly aware that he was disseminating false and misleading statements from the State of California because he instructed Defendant CSA to incorporate disclaimers and to “ASSUME a litigation in our future.” (CSAN 019641 [emphasis in original].)

44. Defendants’ corporate structure for the manufacture, marketing, advertising and sales of Shape Up! nationwide placed Dr. Phil at the top of the organizational chart:

FIRST CAUSE OF ACTION
(Violations of the UCL)

45. Paragraphs 1 through 44 of this First Amended Complaint are realleged and incorporated by reference as if fully set forth herein. This claim arises under the UCL, and is alleged against each of the Defendants.

46. Defendants' actions complained of herein constitute unfair trade practices that have the capacity to and do deceive consumers, in violation of the UCL.

47. All of the conduct alleged herein occurred and continues to occur in the ordinary course of Defendants' business. Defendants' wrongful conduct is part of a pattern or generalized course of conduct repeated on thousands of occasions daily. Thus, Defendants' conduct impacts the public interest.

48. Defendants also engage in unlawful business acts in violation of the UCL by violating state law including, but not limited to, Civil Code §§ 1572, 1709, 1710 and 1770(a)(5),(7) and (9), as well as Section 17500. Plaintiffs reserve the right to identify additional violations of California law committed by Defendants as further investigation and discovery warrants.

49. Plaintiffs and the members of the Class have all been directly and proximately injured in their business and property by Defendants' wrongful conduct, and such injury includes the purchase of Shape Up!, which they would not have purchased were they truthfully and fully informed of the facts.

50. As a direct and proximate result of the wrongful and illegal acts alleged in this First Amended Complaint, Defendants received and continue to hold ill-gotten gains belonging to Plaintiffs and the members of the Class. Plaintiffs and Class members request that this Court enter such orders or judgments as may be necessary to restore to any person in interest any money which may have been acquired by means of such unfair practices, as provided in Business & Professions Code § 17203 and Civil Code § 3345, and for such other relief and further relief as may be justified as set forth below.

SECOND CAUSE OF ACTION
(Violations of the CLRA)

51. Paragraphs 1 through 44 of this First Amended Complaint are realleged and incorporated by reference. This claim arises under the Consumers Legal Remedies Act and is alleged against all Defendants.

52. At all times relevant hereto, each of the Plaintiffs was a "consumer," as that term is defined in Civ. Code § 1761(d).

53. At all times relevant hereto, Shape Up! constituted "goods," as that term is defined in Civ. Code § 1761(a).

54. At all times relevant hereto, Defendants each constituted a "person," as that term is defined in Civ. Code § 1761(c).

55. At all times relevant hereto, each Plaintiff's purchase of Shape Up! constituted a "transaction," as that term is defined in Civ. Code § 1761(e).

56. The CLRA provides in relevant part that "[t]he following unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer are unlawful: (5) Representing that goods ... have ... approval, characteristics, uses, benefits ... which they do not have, (7) Representing that goods ... are of a particular standard, quality or grade ... if they are of another, (9) Advertising goods ... with intent not to sell them as advertised. Civ. Code § 1770(a)(5),(7) and (9).

57. Defendants make and continue to make uniform written representations that Shape Up! is effective as represented. These representations, as set forth above, were false and/or misleading and were in violation of the CLRA.

58. Civ. Code § 1780(a)(2), permits any court of competent jurisdiction to enjoin practices that violate Civ. Code § 1770.

59. Plaintiff and the members of the Class are consumers under Civ. Code § 1761(d), and have all been directly and proximately damaged as a result of Defendants’ use or employment of the above-referenced methods, acts or practices that are unlawful under Civ. Code § 1780(a). Plaintiffs are entitled to bring this action against Defendants and to recover or obtain relief, including (a) actual damages; (b) an order enjoining such methods, acts or practices, pursuant to Civ. Code 1780(a)(2); (c) restitution of property; (d) punitive damages; and (e) any other relief which this Court deems proper.

60. In accordance with the requirements of Civ. Code §1782(a), counsel for Plaintiffs have provided Defendants with written notice, which was received by Defendants at least thirty (30) days prior to the amendment of this Complaint, and Defendants have made no attempt to remedy the contested methods, acts or practices. Defendants have made no attempt to rectify the problem by making restitution to Plaintiffs and the members of the Class, nor have they made any attempt to identify other consumers similarly situated to the Plaintiffs and notify these consumers that it would provide them relief upon their request. Plaintiffs and members of the Class respectfully request this Court to make such orders or judgments as may be necessary to restore to any person any money which may have been acquired by Defendants by means of such methods, acts or practices and for such other relief as Civ. Code §1780(a) provides.

THIRD CAUSE OF ACTION
(Violations of Section 17500)

61. Paragraphs 1 through 44 of this First Amended Complaint are realleged and incorporated by reference. This claim arises under Section 17500 and is alleged against all of the Defendants.

62. At all times relevant hereto, each Defendant was a "person," as that term is defined in Bus. & Prof. Code § 17506.

63. Bus. & Prof. Code § 17500 provides that "[i]t is unlawful for any person, firm, corporation or association with intent ... to dispose of ... personal property ... to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state, ... any statement ... which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading..."

64. On the box packaging, advertisements, brochures, and marketing materials, Defendants represented that Shape Up! was effective in changing its customers behavior and aiding its customers to lose weight.

65. Defendants did not disclose, conspicuously or otherwise, on any of these materials that such representations were untrue or misleading because:

a. Little, if any, scientific evidence exists to support the claim that Shape Up! is effective in changing behavior; and

b. Little, if any, scientific evidence exists that Shape Up! aids its customers to lose weight.

66. Defendants' act of untrue and misleading advertising present a continuing threat to members of the public because such advertisements induce consumers to purchase Shape Up!

67. As a result of the violations of California law described above, Defendants have been, and will be, unjustly enriched at the expense of Plaintiffs and the members of the Class. Specifically, Defendants have been unjustly enriched by receipt of hundreds of thousands, if not millions, of dollars in monies received from customers who purchased Shape Up! which is advertised and/or otherwise marketed in this State and this County and the United States, and which is promoted and sold through advertising and marketing materials which materially misrepresent the quality and functions of the product.

68. Pursuant to Bus. & Prof. Code § 17535, Plaintiffs request that this Court make such orders or judgments as may be necessary to prevent the use or employment by Defendants of untrue and misleading advertisements, or which may be necessary to restore to Plaintiffs and the members of the Class any money which may have been acquired by Defendants by means of such untrue and misleading advertisements.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs demand judgment against Defendants as follows:

A. Certify that this action may be maintained on behalf of a Class, with Plaintiffs as Class Representatives, pursuant to Civ. Code § 1781, Code Civ. Proc. §§ 378 and 382, and Rule 1850 et seq.;

B. Award to Plaintiffs and each member of the Class compensatory and punitive damages under the CLRA;

C. Award to Plaintiffs and each member of the Class interest on said award of damages, pursuant to Civ. Code § 3287;

D. Order that all payments for Shape Up! be returned to Plaintiffs and the members of the Class because Defendants procured them through unfair trade practices and in violation of state law;

E. Award to Plaintiffs and each member of the Class restitution;

F. Order that Defendants be enjoined from engaging in unfair and/or deceptive acts or practices, as set forth in this First Amended Complaint;

G. Order that Defendants be enjoined to publish notice of the truth regarding Shape Up!;

H. Award Plaintiffs and the members of the Class the costs of suit and attorneys' fees; and

J. Award all other relief to which Plaintiffs and Class members may be entitled at law or in equity.

DATED: August __, 2005

THE ROSSBACHER FIRM

By:_____________________________

HENRY H. ROSSBACHER
811 Wilshire Boulevard, Suite 1650
Los Angeles, CA 90017
Telephone: (213) 895-6500

Kevin P. Roddy, Esq.
WILENTZ, GOLDMAN & SPTZER, P.A.
90 Woodbridge Center Dr., Ste. 900
Woodbridge, NJ 07095
Telephone: (732) 636-8000

Scott R. Shepherd, Esq.
James C. Shah, Esq.
SHEPHERD, FINKELMAN, MILLER & SHAH LLC
35 East State Street
Media, PA 19063
Telephone: (610) 891-9880

Attorneys for Plaintiffs

This page was modified on July 12, 2006.

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