Cognitive Dissonance II: Oral Arguments at Second Circuit in Quincy Bioscience’s Brain Health Dietary Supplements Case

On February 26, 2026, a panel of three federal appellate judges[1] heard arguments from Quincy Bioscience (Quincy), manufacturers, and retailers of Prevagen, a dietary supplement that purportedly improves memory, the Federal Trade Commission (FTC), and the New York Attorney General (NYAG). We wrote about this near-decade long litigation here.

As expected, the arguments centered on whether: (i) the “materially misleading” standard under New York General Business Law (NY GBL) Sections 349 and 350 is an essential predicate for liability under New York Executive Law (NYEL) Section 63(12); (ii)  the nationwide injunction is too broad an application of FTC Act Section 13(b); and (iii)  the NYAG was properly denied the opportunity to seek damages. 

“Materially Misleading” and the Standalone Cause of Action for Fraud

Only two of the eight statements at issue were found by the jury to be “materially misleading” – meaning only two of the eight statements, as a matter of law, constituted a violation of NY GBL Sections 349 and 350. Quincy’s first argument, therefore, was that it was acquitted of liability for the other six statements. Importantly, all eight statements were found to violate NYEL 63(12), which allows the NYAG to seek an injunction when “any person [engages] in repeated fraudulent or illegal acts or otherwise demonstrate[s] persistent fraud or illegality in the carrying on, conducting or transaction of business.” Judge Lohier, one of the three appellate judges who heard this case, wanted to know: does the FTC Act embed materiality into Section 5’s definition of deceptive? Judge Lohier drew a comparison between the FTC Act and Section 10(b) of the Securities Exchange Act, noting that “when Congress wants to add materiality, which is a big issue . . .[,] to a particular statutory scheme or a statute, it knows exactly how to do it in the statute.” Quincy argued that materiality is built into Sections 12’s and 15’s false advertising provisions, and prior FTC policy statements and guidelines, which treat materiality as an element.  Quincy went on to argue that, as a result,  NYEL 63(12) liability for the statements were not materially misleading.

Further, Quincy  argued that NYEL Section 63(12) exists as a rapid procedural tool to allow the attorney general to seek a preliminary injunction, not as a standalone fraud statute. According to Quincy, the statute contains two distinct prongs: illegality and fraud. So, when the attorney general pleads illegality, as was done in this case, that prong “imports” all elements of the underlying predicate statutes, including materiality and the reasonable‑consumer standard under NY GBL Sections 349 and 350; whereas the fraud prong turns on whether the conduct has a “tendency to deceive.” However, the judges seemed unconvinced by this argument, pressing Quincy to reconcile its narrow reading of both prongs with modern New York authority interpreting Section 63(12) more broadly.

The NYAG addressed the Section 63(12) arguments by pointing to the statute’s text, history, and long line of appellate decisions, which all made clear, according to the NYAG, that Section 63(12) creates a substantive fraud cause of action independent of the NY GBL. Furthermore, according to the NYAG, materiality is not required for consumer-directed fraud under Section 63(12), because last year, in People v. Trump[2],  the New York Court of Appeals expressly limited any materiality requirement for a finding of fraud to cases involving sophisticated counterparties, such as Deutsche Bank in that case. 

The Nationwide Injunction

All eight statements at issue in this case were banned nationwide by the district court. The FTC defended the nationwide injunction by invoking the “fencing-in” doctrine. In settlements and consent decrees with the government, fencing-in provisions are generally conduct remedies that go beyond what a court may impose at trial, prohibiting specific prior unlawful acts as well as other conduct that may result in recurrence of the violation. The FTC argued that once a jury has found a violation, in this case the two materially misleading statements, the district court was empowered to fence-in reasonably related conduct (here, the six other statements). In its rebuttal, Quincy called this “punishment without liability,” arguing that the fencing-in doctrine cannot be stretched to restrain “acquitted conduct,” and the Judges pressed Quincy on whether the six statements were, in fact, “acquitted,” given that the jury had found that all the statements at issue lacked competent, reliable scientific evidence.

Damages

Finally, the NYAG asked the court to remand for consideration of monetary penalties. According to the NYAG, the district court abused its discretion by concluding that there was no evidence to support monetary relief without giving the state the opportunity to present that evidence. Both Judges Sack and Livingston expressed concern about the lower court’s limited explanation on the record regarding this point.

The tensions addressed in our last article were on full display at the Second Circuit during argument and how the court’s  opinion will address these tensions remains to be seen. Regardless of the outcome, the Second Circuit’s decision is sure to influence future consumer protection cases with respect to the threshold showing required for liability and the scope of impact, both geographically and monetarily, of finding such violations.

Mintz continues to closely monitor this case and will provide updates following the Second Circuit’s opinion. If you have questions about Federal Trade Commission, Department of Justice, or State Attorneys General consumer protection investigations and enforcement actions, contact your regular Mintz attorney or one of the attorneys named above. 

[1] Chief Judge Debra Ann Livingston and Judges Raymond J. Lohier, Jr. and Robert D. Sack.

[2] No. 04756, slip op. at (N.Y. App. Div. Aug. 21, 2025), https://www.nycourts.gov/reporter/3dseries/2025/2025_04756.htm

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