Confidential
Settlement – $125,000Judge
Court
Solano Superior
Attorneys
Plaintiff
Steven B. Gold
(Gold Firm)
Defendant
James R. Maxwell
(Rogers Joseph & O'Donnell)
Facts
In 2002, California law enforcement officials determined that Walgreen's stores in the state were selling the Ab Energizer Abdominal Muscle Stimulator, after the Federal Trade Commission had investigated and begun actions against the marketers and distributors of the product for false advertising and related claims. The manufacturer claimed that the Ab Energizer, a battery-powered device which is strapped on a user's stomach, causes the user to lose weight with an electrical contraction of the user's abdominal muscles. The people of California, by way of the Napa County District Attorney, the Solano County District Attorney and the San Diego City Attorney, brought an action against Walgreen in September 2004 for civil penalties and injunctive relief, claiming that the Ab Energizer was a medical device that had not been approved by the U.S. Food and Drug Administration. The people claimed that the product's marketers, distributors and retailers had no basis to support any of the product's purported effects. Walgreen's response to the People's claims was that it had immunity under California's Sherman Food and Drug Act, which provides that retailers cannot be prosecuted for selling a misbranded medical device if the retailer obtained a written guaranty from the manufacturer that the product complied with all laws.
Damages
The State claimed Walgreen's owed civil penalties for the sales of the product and their participation in the deceptive advertising. It also asserted that Walgreen's should be stopped from selling similar devices in the future without FDA or State approval.
Result
Walgreen settled with the district attorneys prior to trial pursuant to a stipulated injunction prohibiting the sale of the Ab Energizer or other electronic muscle stimulation devices without appropriate federal or state approvals. To settle the matter, Walgreen agreed to pay $125,000 to the people in restitution and investigative costs without admitting liability. With the money obtained from Walgreen and other settling defendants, the district attorneys have set up a restitution fund where California Consumers who purchased the Ab Energizer can obtain a refund of the purchase price.
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