Align Technology sues SmileDirectClub for false advertising

2019 10 18 17 04 1697 Lawsuit 400

Invisalign maker Align Technology has filed a lawsuit against SmileDirectClub claiming that the company misleads patients by advertising that its clear aligner treatment is provided under the care of dentists and orthodontists.

Align filed the lawsuit on January 3 in the U.S. District Court for the Northern District of California alleging that SmileDirectClub is "a company built on a lie" and "from day one," promoted its aligners and services with false, fraudulent claims. Investors and executives at SmileDirectClub also are named as defendants and are accused of engaging in a scheme to preserve the false advertisements, which constitutes a pattern and practice of wire and mail fraud, according to the suit.

Additionally, Align asserts the claim of unfair competition, noting that SmileDirectClub's fraudulent advertisements have hurt its sales. Align Technology is seeking preliminary and permanent injunctions stopping SmileDirectClub from falsely advertising that its clear aligners straighten teeth under the supervision of clinicians. In addition, Align Technology is seeking compensation for the damage that SmileDirectClub has caused to its business, according to the suit.

"Regrettably, SDC (SmileDirectClub) founded its business on a dangerous lie -- telling consumers through television, online, email, print, and retail advertising that they will receive actual medical supervision from actual doctors, responsible for their wellbeing," Align states in the lawsuit.

SmileDirectClub plans to vigorously defend itself against "these baseless claims and continue our mission to make premium oral care accessible and affordable to everyone," according to a company statement.

“It is unfortunate that Align, already a defendant in multiple lawsuits regarding its anticompetitive conduct, has decided to bring this meritless complaint in an attempt to try to maintain its position in the aligner category and apparently justify its continuing decline in revenue. As an early investor in SmileDirectClub, Align has been a proponent of our product and telehealth platform," SmileDirectClub said in its statement.

In the suit, Align states that while Invisalign offers dentists and orthodontists a method to straighten teeth with clear aligners instead of with traditional wires and brackets, SmileDirectClub's direct-to-consumer model claims to offer individuals an equivalent product under the remote supervision of its affiliated dentists. The defendant also reportedly offers the same level of care they would receive from in-person visits with clinicians, according to the suit.

However, the lawsuit states that many SmileDirectClub patients allegedly tried to talk or visit the clinicians assigned to oversee their treatment only for those health professionals to deny the person had ever been a patient. When patients consulted with their own dentists or orthodontists after experiencing problems or damage following SmileDirectClub's clear aligner treatment, the clinicians were reportedly "appalled" that they had been approved for that type of treatment, according to the suit.

Furthermore, SmileDirectClub allegedly perpetuates its scheme by forcing injured and dissatisfied customers to arbitrate disputes and sign nondisclosure agreements to receive their money back. In December 2022, the attorney general of Washington, DC, sued SmileDirectClub for allegedly requiring patients to sign NDAs before they receive promised refunds.

"SDC thus uses lies to get customers and legal tricks to keep them quiet," according to court documents.

Moreover, Align Technology claims SmileDirectClub directly caused it to lose sales and continues to cost the company "millions of dollars." Until recently, SmileDirectClub featured a page on its website that compared itself to Align. The page not only was featured prominently on the site, but it claimed that SmileDirectClub provides "doctor-directed teeth straightening for 60% less than Invisalign," according to the suit.

Finally, the suit lists the following entities and individuals as defendants:

  • Camelot Venture Group, the company that provided the initial funding for SmileDirectClub
  • Dr. Jeffrey Sulitzer, SmileDirectClub's chief clinical officer and a dentist in California, whose license was placed on probation due to claims of misconduct and fraud related to the smile-correcting business
  • David Katzman, CEO and chairman of SmileDirectClub's board and managing partner of Camelot, who allegedly liquidated shares of the company's stock through an initial public offering (IPO) for proceeds of more than $190 million and who still owns a stake in the business
  • Katzman's brother, Steven Katzman, chief operating officer of SmileDirectClub, who reportedly liquidated shares of the clear aligner company's stock for more than $14 million in the IPO and who still owns a stake in the business
  • Jordan Katzman, a co-founder of SmileDirectClub and a board member and David Katzman's son, who purportedly liquidated shares of the company in the IPO for more than $150 million and who retains a stake in the business
  • Alexander Fenkell, a co-founder of SmileDirectClub and a board member, who allegedly liquidated shares of the company in the IPO for more than $140 million and who retains a stake in the business

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