In a recent federal Florida decision, Smith v. W.R. Wrigley Jr. Co, the Court denied a motion to dismiss claims brought on behalf of a putative class alleging that Defendant Wrigley’s claims “that its Eclipse® gum brand is ‘scientifically proven to help kill the germs that cause bad breath’ as a result of the ‘natural ingredient,’ Magnolia Bark Extract (‘MBE’)” were false, deceptive, and likely to deceive. Plaintiff asserted two causes of action -- violation of Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”) and breach of express warranty.
As to the FDUTPA claim, Wrigley argued that Plaintiff only made “conclusory allegations” that the gum caused her to suffer “actual damages.” Critical to the Court’s decision was the fact that Florida courts have allowed diminished value to serve as “actual damages” under the FDUTPA, and that Plaintiff had alleged that Wrigley was able to “charge a price premium” for the Eclipse® gum based on the allegedly false statements.
The Court distinguished Prohias v. Pfizer which involved allegations that advertising Lipitor as reducing the risk of heart disease in women or elderly patients was deceptive. The Court distinguished the Lipitor case on the grounds that, in that case, the court found that “the fact that [the plaintiffs] currently take Lipitor, in light of the information they have, requires me to conclude that they take Lipitor for its cholesterol-reduction or other undisputed health benefits, and therefore cannot claim to have suffered any damage from the alleged misleading statements about Lipitor’s coronary benefits.” Likewise, the Court distinguished Frye v. L'Oreal USA, a case where plaintiff alleged that the defendants marketed lipstick as “safe for use” when it contained dangerous amounts of lead, on the grounds that, in that case, there was “no allegation that the presence of lead in lipstick ha[d] any observable economic consequences.” Thus, the Court’s Wrigley decision appears to hinge on Plaintiff’s allegation of a “price premium” associated with the deceptive advertising.
Whether Plaintiff’s claims of paying too much for gum that does not prevent bad breath will survive remains to be seen, as it is one thing to allege damages based on a premium price and quite another to prove such damages on a classwide basis (a blog for another day). But the case represents another court’s attempt to clarify the allegations of damages sufficient to survive judgment on the pleadings, here under a Florida consumer protection statute, in a consumer false advertising case.
Another point of interest is that the Complaint in support of the false advertising allegations is based on a decision earlier this year by the National Advertising Division of the Council of Better Business Bureaus, Inc. (“NAD”) recommending modification of Wrigley’s campaign, which is on appeal to the National Advertising Review Board. While not the subject of the motion to dismiss decision, it is an interesting question as to what weight, if any, NAD decisions can or should be given by a court in either a Lanham Act false advertising challenge or a consumer fraud case. NAD can be an excellent low-cost, fairly speedy forum for resolution of competitor’s disputes over the truthfulness of advertising claims. When NAD issues a decision, however, it is based on an incomplete record limited to party submissions and issued quickly, albeit by NAD staff lawyers who specialize exclusively in this area, but lawyers working under the tight time constraints of the self-regulatory process. The NAD decisions are thoughtful and comprehensive, but they are hearsay. Whether and how courts consider NAD decisions in litigation is an emerging question we are watching with great interest.
- Rachel Chanin and Amy Mudge
