US: State probe could invite private lawsuits against Monster
Monster is dealing with an investigation by New York's attorney general
An investigation by New York's attorney general into marketing claims made by energy drinks producer Monster could "open the door" for private lawsuits to be launched against the group, a legal expert has warned.
The California-based firm confirmed in August that it received a subpoena from a US attorney general over the "advertising, marketing, promotion, ingredients, usage and sale" of its brand of energy drinks. PepsiCo and Living Essentials are also targets of the investigation, it was later reported.
But, in a conference call hosted by analysts Stifel Nicolaus yesterday (15 October) that focused on Monster, Frederick Stearns, a partner at law firm Keller and Heckman, warned of the probe's consequences. "The state AG's investigation may bring a greater possibility of opening the door to private (law) suits, in the event that there is some finding that Monster claims to do this or to do that, but does not have sufficient evidence," he said.
Keller also suggested that other state attorney generals could be eyeing similar investigations. "It will be important to see whether any other AGs join in," he said.
Keller said the company is more likely to face issues from this investigation, where consumer protection laws could come into play, than any movement by the US' Federal Drug Administration (FDA), which is facing pressure from two Illinois senators to investigate the effects of caffeine levels in energy drinks, and their impact on young people. However, the FDA has since dismissed the concerns and instead is updating its guidance on the regulations around dietary supplements and conventional foods.
Monster products are marketed as a dietary supplement, whereas many other energy drink products portray themselves as conventional foods. Dietary supplements are not required to adhere to the same FDA rules on caffeine content as conventional foods. Keller said this left Monster "tempting as a target" for the FDA, but added that there is no requirement for a company to offer information to the agency.
He also said that, with "relatively low levels" of caffeine in Monster products, it would be difficult to prove any harmful effects.
Monster has been the subject of speculation this year around a possible buy-out by the Coca-Cola Company. But, an analyst last month suggested the regulatory concerns could have scared off the soft drinks giant.
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