Consumer Advertising Law Blog

Third Circuit Affirms Dismissal of Food Class Action on Preemption Grounds

The Third Circuit recently upheld the dismissal of a class action complaint against Johnson & Johnson (J&J) challenging the labeling of its Benecol Spreads bearing the statements “No Trans Fat” and “Proven to Reduce Cholesterol.”  The plaintiff argued that these statements were false and misleading because Benecol contains trace amounts of trans fat, which the plaintiff alleged may be harmful to heart health.

A three-judge panel affirmed the district court’s ruling that the Nutrition Labeling and Education (NLEA) preempted the plaintiff’s claims.  The NLEA expressly preempts state food-labeling requirements that are not identical to the requirements in the Food, Drug and Cosmetic Act and its implementing regulations.  In this case, two federal regulations were directly on point and governed the statements regarding trans fat and cholesterol-lowering benefits.

FDA regulations require certain nutritional information on food packaging, including a statement of the number of grams of trans fat in a serving.  The regulations further require where a serving contains less than 0.5 grams of trans fat, the content should be expressed as zero.  The regulations deem these amounts to be “insignificant” for purposes of stating nutrition content.  FDA regulations also allow statements of “no fat” and “no saturated fat” when a product contains less than 0.5 grams per serving, an insignificant amount.  Relying on these regulations, the Third Circuit concluded that Benecol’s “No Trans Fat” claim is authorized by the NLEA.  Because the plaintiff was seeking to enforce a requirement different from what the NLEA allows, the panel found his claims expressly preempted.  This decision is in accord with the Ninth Circuit, which similarly held that a claim challenging a “No Trans Fat” statement was preempted when the amount of trans fat was required to be rounded to zero in the nutrition facts panel.  Carrea v. Dreyer's Grand Ice Cream, Inc., 475 Fed. Appx. 113, 115 (9th Cir. 2012).

Cholesterol claims are also governed by FDA regulations.  Specifically, the regulations provide for health claims “which summarize the relationship between diets that include plant sterol/stanol esters and the risk of [heart disease] and the significance of the relationship.”  The regulations further identify a threshold amount of plant sterols that a product must contain in order to make such a health claim.  Based on these regulations, the Third Circuit concluded that the cholesterol claims were authorized by statute, and thus the NLEA expressly preempted plaintiff’s attempt to bar those claims. 

This decision, cited as Young v. Johnson & Johnson, No. 12-2475, 2013 WL 1911177 (3d Cir. May 9, 2013), has been designated non-precedential.

- Angel Garganta & Jonathan Koenig

Something to Chew On: FDA Announces Review of Caffeine Additives

For better or worse, many of us live on caffeine. We consume coffee as if it were the cornerstone of a balanced diet. And if it’s not coffee, it’s often can after can of diet soda. But in the last few years, caffeinated products have expanded from these time-honored sources to a vast array of energy drinks and caffeinated snacks. Unlike the naturally-occurring caffeine in coffee (or tea), many of these new caffeinated products get their energy boost through caffeine additives. Caffeine is generally recognized as safe (GRAS) for use in cola-type beverages up to a level of 0.02 percent or 200 parts per million. This means that manufacturers do not need the Food and Drug Administration’s (FDA’s) approval to use caffeine additives in soda, as long as the amount of caffeine is within these established limits. Though regulatory agencies such as FDA or the Federal Trade Commission have acted in the past to address health concerns related to the use of caffeine additives in particular products, such as caffeinated alcoholic beverages, energy drinks, or inhalers, this piecemeal approach to caffeine additives may be changing, especially where children are concerned.

On April 29, 2013, FDA Deputy Commissioner for Foods and Veterinary Medicine Michael Taylor issued this brief statement:

The only time that FDA explicitly approved the added use of caffeine in a food was for cola and that was in the 1950s. Today, the environment has changed. Children and adolescents may be exposed to caffeine beyond those foods in which caffeine is naturally found and beyond anything FDA envisioned when it made the determination regarding caffeine in cola. For that reason, FDA is taking a fresh look at the potential impact that the totality of new and easy sources of caffeine may have on the health of children and adolescents, and if necessary, will take appropriate action.

Deputy Commissioner Taylor was responding to a new product launched by Mars Inc.’s Wrigley brand -- a caffeinated gum called Alert Energy. Each Alert Energy package claims that the caffeine in one piece of gum is the equivalent of half-a-cup of coffee, giving each eight-piece pack the potency of four cups of coffee. While the use of caffeine additives in a wide range of products is not new, the introduction of caffeinated gum may represent the tipping point when the proliferation and ubiquity of caffeinated products, from jelly beans to potato chips to trail mix, has simply overwhelmed the long-standing regulatory status quo. 

Though Wrigley’s Alert Energy website states that the gum is “[n]ot recommended for children or persons sensitive to caffeine,” Deputy Commissioner Taylor expressed concerns about “the totality of new and easy sources of caffeine . . . .” Interpreting exactly what his statement means or exactly what FDA will do next requires reading some tea leaves. Broadly speaking, however, Deputy Commissioner Taylor’s statement suggests that before changing its overall regulatory strategy or enforcement priorities, FDA will undertake a comprehensive review of categories of commonly caffeinated foods to determine the cumulative potential effects of these products. On May 3, FDA announced it will undertake this review, considering factors like consumption levels, rates and, patterns among specific populations, particularly children and adolescents.  The review will likely consider other information such as the available scientific data on toxicity, behavioral effects, and other health effects across the specific categories of foods with caffeine additives.

It is unclear at this point what, if any, “appropriate action” FDA may take if it makes adverse findings regarding the health effects of caffeine additives on children. FDA could, for example, impose more stringent requirements on the marketing and sale of products containing caffeine additives. FDA may also increase enforcement activity against particular products that raise health concerns related to caffeine additives. This Blog will continue to monitor the FDA’s progress and provide updates on developments as they occur.

Update (5/9/2013): Following discussions with FDA, Wrigley announced on May 8 that it would voluntarily and temporarily suspend the production and sale of Alert Energy gum.  Wrigley explained that this decision was designed to give the FDA space to develop a new regulatory framework for caffeine additives. The President of Wrigley North America, Casey Keller, stated, “There is a need for changes in the regulatory framework to better guide the consumer and the industry about the appropriate level and use of caffeinated products.” Deputy Commissioner Taylor lauded Wrigley’s decision, which he believed “demonstrates real leadership and commitment to public health.”  He expressed hope that others would follow Wrigley’s lead. 

- Vernessa Pollard and Seth Wiener

Super-Sized Portions Live On In NYC; May Gain Protection in Mississippi

By now, you’ve probably heard that the Bloomberg administration experienced a significant setback on last week when a state judge invalidated the New York City Mayor’s attempt to limit the serving size of sugary drinks sold in the city.  The so-called “soda ban” -- or, as Bloomberg calls it, the “Portion Cap Rule” -- was heavily opposed by the soda companies and relatively unpopular among New Yorkers.

In the decision, Justice Milton Tingling of the State Supreme Court was persuaded by arguments made by the petitioners seeking to enjoin the implementation and enforcement of § 81.53 of the New York City Health Code. Justice Tingling first found that the regulation violates the constitutional separation of powers in New York State, as governed by the Boreali v. Axelrod. The court noted that “[t]he Rule would not only violate separation of powers doctrine, it would eviscerate it.”  Id. at 35.

Justice Tingling went on to hold that the administrative regulation was “arbitrary and capricious because it applies to some but not all food establishments in the City, it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories on suspect grounds, and the loopholes inherent in the Rule, including but not limited to no limitations on re-fills, defeat and/or serve to gut the purpose of the Rule.”

While the Bloomberg administration decides whether to appeal the decision, legislators in Mississippi are doing their best to ensure that a regulation like the Portion Cap Rule never sees the light of day in their hometowns. Last Tuesday, the Mississippi legislature passed a bill, known as the “Anti-Bloomberg Bill,” barring counties and towns from enacting rules that require the posting of calorie counts, cap portion sizes, or prohibition of “consumer incentive items” such as toys in kids’ meals.  The bill is expected to be signed by the Mississippi governor Phil Bryant.

We have previously reported on the struggles of implementing government regulation on food, including the FDA’s recent national menu labeling and calorie content rules. It remains to be seen whether the apparent failure of Mayor Bloomberg’s initiative is a mere hiccup in an increasing trend of government intervention in public health, or whether the decision (and measures such as those potentially implemented in Mississippi) signals a stronger backlash against such government regulation.

- Carolyn Pearce

FDA “Gluten-Free” Regulation Reaches Homestretch of Regulatory Marathon

The Food and Drug Administration’s (FDA’s) proposed regulation defining the term “gluten-free” for food-labeling purposes has at last reached the White House for final approval. Approval by the White House Office of Information and Regulatory Affairs (OIRA) would conclude a regulatory process that began in 2005 in an effort to protect consumers who suffer health-threatening reactions to gluten, a protein in grains and found in such everyday foods such as bread and pasta.

Though harmless to most individuals, gluten -- a protein found in wheat, rye, and barley -- causes intestinal damage to people with celiac disease (CD). The National Institutes of Health estimates that CD affects as much as 1 percent of the U.S. population. For individuals with the disease, gluten consumption can cause abdominal pain, bloating, and vomiting and can lead to serious health problems such as anemia, osteoporosis, diabetes, and intestinal cancer. The only treatment for CD is strict adherence to a gluten-free diet, and the absence of labeling regulations has caused confusion for consumers seeking to purchase gluten-free foods, and uncertainty for food manufacturers seeking to provide gluten-free labeled products.

Under the agency’s proposed regulation, a food may be labeled “gluten-free” if it contains less than 20 parts per million (ppm) gluten.  The < 20 ppm standard is based in part on the lowest level at which currently available test methods can reliably detect gluten (although FDA has indicated in a Q&A document that it would be open to reconsidering the threshold if more sensitive methods become available). It is also consistent with the 20 ppm standard adopted by the European Union.

FDA first proposed its definition in January 2007. After years passed without any further rulemaking, and in the face of mounting criticism including by two US senators,FDA re-opened the proposed rule to public comment in August 2011. Simultaneously, the agency invited comment on its study of the adverse health effects of gluten exposure to individuals with CD, which found that a 0.01 ppm threshold would be protective of even the most highly sensitive individuals. As explained in the proposed regulation, FDA concluded that the study should not be used to define “gluten-free” because “the estimation of risk to individuals with celiac disease associated with very low levels of gluten exposure may be conservative and highly uncertain.”  FDA expressed concern that a threshold lower than < 20 ppm could cause food manufacturers either to label fewer foods as gluten-free or raise the price of foods so labeled, thereby making it harder for people with CD to adhere to a gluten-free diet.

The proposal received thousands of comments, including those in support of the < 20 ppm standard, some that urged a lower threshold, and others that weighed in on the test methods that FDA proposes to use to assess compliance for foods bearing “gluten-free” labels. 

The proposed rule is now with OIRA for final approval before it can be enacted.  The rule has been deemed “economically significant,” meaning that it is expected to have annual impact on the economy of $100 million or more.  While this designation may prioritize review of the rule, it may also invite greater scrutiny. 

- Anita Kalra and Matthew Shultz 

Fishy Labeling

Customers buying seafood at restaurants and grocery stores frequently may not be getting what they order. A recent study conducted by the group Oceana, found that 27 percent of grocery stores, 52 percent of non-sushi restaurants, and 95 percent of sushi restaurants surveyed sold mislabeled seafood.  The group describes itself as the “largest international organization focused solely on ocean conservation.”

The Oceana study, conducted from 2010 to 2012, is one of the largest reported seafood fraud investigations to date. The group collected 1,247 samples from 674 retail outlets in 21 states. Genetic identity was determined for 1,215 of the samples, and of those, it was found that approximately one-third were mislabeled.  Mislabeling rates varied greatly among the types of seafood involved, with fish sold as “tuna” and “snapper” having the highest mislabeling rates.

In describing the methods used for the study, Oceana stated that it considered a fish sample to be mislabeled if “seafood substitution occurred or if retailers were not following the [FDA] Seafood list.”  The FDA’s Guide to Acceptable Market Names for Seafood Sold in Interstate Commerce provides guidance to the seafood industry on the labeling of different species. The FDA makes it clear that its Seafood List does not establish legally enforceable responsibilities per se in labeling. However, seafood mislabeling can be actionable under the Misbranding Section of the Federal Food, Drug, and Cosmetic Act, and under state statutory and regulatory provisions, as well as the common law.

Some critics of the study have suggested that Oceana overstates the mislabeling issue, noting that different vernacular names are used for the same type of fish in different regions of the country.  In fact, this illustrates the pitfalls that even well-meaning retailers may face in attempting to label their seafood so as not to mislead. Thus, the FDA itself comments that a vernacular name, even if common in a particular region, may not be acceptable as a market name for use in interstate commerce.  When it comes to seafood, it’s not only the quarry, but the name of the quarry that can be elusive. 

The obvious injury from seafood mislabeling is that customers will be duped into paying more than they should for what they are actually getting. But depending on the particular species involved, mislabeling can also defeat customer attempts to choose sustainable seafood options. Fishery sustainability is a growing concern of many conservation-minded consumers. In response, conservation organizations have published pocket guidelines for consumers to use in making their seafood choices; and some grocery stores and restaurant groups have taken to promoting  their seafood sourcing policies to attract environmentally-conscious customers.  In a prior post, we discussed how seafood sustainability certifications themselves may be misleading consumers in this regard.  Inasmuch as any certification process necessarily depends on accurate labeling of the product being sold, seafood mislabeling has the potential to exacerbate the problem.

There is potential legal exposure for seafood businesses at every step in the supply chain here-- from fishermen to brokers to retailers and restaurants. Certainly, those who intentionally mislabel seafood for sale are subject to liability for fraud and unfair business practices. Less clear is the degree of exposure for retailers and middlemen who inadvertently sell mislabeled fish. Following a similar seafood investigation conducted by the Boston Globe, several restaurants blamed suppliers for providing them with incorrectly labeled fish, which they in turn innocently served to customers. Given the apparent frequency and risks of such mislabeling, blind reliance on the integrity and competence of one’s suppliers may not be enough. Prudent retailers will consider measured steps to better ensure that they are serving what they claim and to demonstrate their own due diligence in that regard. Like chum in the water, Oceana’s study may begin drawing the interest of state attorneys general and the plaintiff’s bar.

- Christina Brenha and Dirk Schenkkan

Critics Claim There Is Something Fishy About Certified Sustainable Seafood

Environmentally-minded consumers rely more and more on certification labels and logos from organizations they trust to help them navigate the sea of environmental claims they encounter while grocery shopping. However, critics say that consumers may not be getting what they expect when they purchase seafood labeled with the Marine Stewardship Council’s Certified Sustainable Seafood label. 

According to the MSC’s Certification Requirements, certification and the accompanying label communicates that a particular fishery adheres to the MSC’s standards for sustainability, including the use of fishing practices that will not deplete fish populations. If a fishery wishes to become certified by the MSC, it must bring in an auditor to assess its fishery according to MSC standards. Fisheries with a score of 80 or better out of 100 are granted unconditional certification.  A fishery that scores between 60 and 80 may be granted conditional certification, contingent on the fishery making improvements to its fishing practices in order to reach a score of 80 within five years. The MSC’s Certified Sustainable Seafood label does not differentiate between conditionally and unconditionally certified fisheries.  Therefore, critics contend that consumers may be getting seafood that is less sustainable than they believe and spending more at the seafood counter without actually achieving any environmental benefit. 

This controversy is a reminder that marketers using or who want to use environmental seals or certification should pay close attention to the FTC’s revised Green Guides. The FTC declined to specifically address “sustainability” claims in the Green Guide because it found through consumer research that the term does not have a single meaning understood by a significant number of consumers. However, marketers are still responsible for substantiating any claims that would be reasonably understood by consumers, even those conveyed by the use of third-party certifications. Moreover, the Green Guides warn marketers to avoid making “unqualified general environmental benefit claims” and notes that such claims are “difficult to interpret and likely convey a wide range of meaning.”

Although the Green Guides don’t provide guidance for sustainability claims, they do provide guidance on the use of environmental seals and certifications like the Certified Sustainable Seafood label. According to the Green Guides, the use of a seal or certification likely conveys a general environmental benefit, unless it conveys the basis for the award. MSC requires marketers to print text along with the label that explains that the label means that the fishery meets MSC’s standards and provides MSC’s web address, an approach used in the Green Guides’ examples. The question in that and similar situations would be whether it adequately conveys the basis for the award and the limits of the potential environmental benefits. 

- Matthew Shultz and Amie Medley

FDA Proposes New Food Labeling Rule: Are Plumper Prices Going to Be the Cost of Whittled Waistlines?

There is no denying that the United States is facing a health crisis of obese proportions.  To combat the problem, the Food and Drug Administration (FDA) recently issued a proposed food labeling rule and is asking the American public to weigh in.  So what should the government do to help us make healthier choices at the supermarket, and what effect will this proposed rule have on businesses (and consumers) whose profit margins already toe the line between slim and emaciated?

The FDA’s proposed rule would require calorie labels on menus and menu boards in chain restaurants and retail food establishments − including grocery and convenience stores as well as coffee and pastry shops − with 20 or more locations nationwide. The FDA’s existing food labeling regulations already mandate that pre-packaged food include nutrition information labels, but this new rule would require grocery stores “clearly and prominently” to label the calorie content of prepared, unpackaged food such as soups, salad bar items, baked goods and other ready-made snacks.For such food on display, calories would have to be posted either per item or per serving on a sign next to the food. I know what you’re thinking: now I’m going to be forced to confront the waistline implications of that gooey chocolate donut with cream filling before I enjoy it, or feed it to my kids as a weekend treat?  Unfortunately, that’s the point. 

To help consumers understand the significance of this information, a statement concerning daily recommended calorie intake would also be on display.  Additionally, supplemental written nutrition information −  such as calories from fat, total fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrates, sugars, dietary fiber, and protein − would be available upon request for standard menu items. 

The proposed rule stems from a provision of the Patient Protection and Affordable Care Act requiring restaurants and vending machines with 20 or more locations nationwide to post nutrition content for standard menu items. The FDA’s rule extends that mandate to cover establishments that sell restaurant-type food and whose primary business activity is the sale of food to consumers. Under the rule, an establishment’s “primary business activity” is the sale of food to consumers if greater than 50 percent of the establishment’s total floor area is used for the sale of food. This includes grocery and convenience stores, but excludes establishments such as movie theatres, bowling alleys, and airplanes. 

The FDA reasons that this rule is aimed at helping Americans live healthier lives by informing them about how prepared foods they purchase fit in to their overall nutrition needs. Seeing calorie content may incentivize some shoppers to choose the three-bean salad over the higher-calorie mac and cheese.  Critics of the rule claim that it would overburden thousands of grocers and convenience store owners by requiring investment in either expensive software or off-site laboratory testing to determine the nutrition content of food. The FDA estimates an initial cost of $315 million to comply with the proposed regulation, while critics of the rule warn that compliance could weigh in at a hefty $1 billion in the first year alone. That cost, some argue, will inevitably be passed on to consumers in the form of plumper prices at the checkout. 

Let the FDA know where you fall on the scale. The FDA invites public comments to the proposed rule, which it says will be taken into account when drafting the final rule to be issued this spring.  Until then, grocers and other store owners that may be affected by this rule should plan for a possible new expense. 

- Brittany McClure

FTC: POM Wonderful Not What the Doctor Ordered -- Slams Juice Maker for Misleading Disease Claims

In the latest chapter of an ongoing false advertising battle, the Federal Trade Commission issued a final order prohibiting POM Wonderful, maker of POM pomegranate juice products, from claiming that any of its products is effective in diagnosing, treating, or preventing any disease unless such claims are supported by at least two randomized and controlled human clinical trials (RCTs).  The decision may raise the stakes (and costs) for food manufacturers making disease-related claims in their advertising.  (For our coverage of this battle, see here, here, and here.)

The case originated in 2010, when the FTC’s Complaint Counsel brought suit alleging that POM Wonderful violated Sections 5(a) and 12 of the FTC Act by making false or misleading claims in their advertisements for POM products, including POM Wonderful juice and POMx supplements. Specifically, the Complaint alleged that POM Wonderful made unsubstantiated claims that POM products treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction, and that clinical proof established the efficacy of POM products for such purposes.  The FTC challenged a total of 43 advertising and promotional materials, such as the ones seen here, here,and here.

As previously discussed, an Administrative Law Judge found that POM Wonderful made the alleged claims, and that these claims were false or misleading because they were not substantiated with “competent and reliable scientific evidence,” which the ALJ found must include appropriate clinical studies but not necessarily RCTs.  Both POM Wonderful and FTC Complaint Counsel appealed the decision to the Commission.

The Commission agreed with the ALJ’s finding that POM Wonderful’s claims were not backed by competent and reliable scientific evidence, and expanded from 19 to 36 the number of ads it found to be false or misleading.  However, the Commission held that in light of POM Wonderful’s “serious disease claims,” RCTs were required for substantiation.  First, the Commission found that some of the ads conveyed claims that POM Wonderful had clinical proof supporting its claims. The Commission concluded that such claims require proof sufficient to satisfy the relevant scientific community (i.e., experts in heart disease, prostate cancer, and erectile dysfunction) of the claims’ truth, in the form of RCTs.  Second, the Commission concluded that to satisfy the requirement that an advertiser have a “reasonable basis” supporting objective performance or efficacy claims, RCTs are also required.

Purported Fresh Orange Juice Class Action Won’t Squeeze Defendant

A federal court in Alabama recently dismissed a putative class action challenging the labeling of Florida’s Natural Orange Juice as “100% orange juice,” “fresh,” and “pure,” when the product had allegedly undergone processing and contained added flavors and aromas.  The plaintiff asserted claims for breach of contract and breach of express warranty. This case is one of several similar cases brought against orange juice manufacturers in recent years, including at least two other cases brought by the same plaintiff that are pending in the Northern District of Alabama.  Veal v. Winn Dixie Stores, Inc.; Veal v. Wal Mart Stores, Inc.

In granting the motion to dismiss, the court held that the named plaintiff lacked standing because he had not suffered an actual injury by purchasing the Florida’s Natural Orange Juice. The court doubted the plaintiff’s assertions that he believed the juice to be fresh squeezed, stating that “[a]s a matter of common sense, whatever is in a container on a store shelf with an expiration date some weeks hence cannot contain ‘fresh’ anything.” The court went on to state that even if the plaintiff “believed defendant hired individuals to hand squeeze oranges one by one into juice cartons,” learning that the orange juice was commercially produced did not amount to an injury. According to the court, the plaintiff simply did not allege any harm when he purchased and received the exact product, packaged orange juice, that he intended to purchase. 

The court also rejected the plaintiff’s argument that his injury arose when he allegedly did not receive the benefit of the bargain. Put simply, the court stated “[h]e paid for orange juice mass produced and supplied to grocery stores all over the country, and that is exactly what he received.”  

After finding that the plaintiff had failed to allege any injury, the court went on to note that there were no remedies to redress the plaintiff’s grievances and injunctive relief was improper. Finally, although unnecessary to its holding, the court noted that Florida Natural Orange Juice was properly labeled under FDA standards, suggesting that the plaintiff could not suffer injury by purchasing a product that had been labeled in accordance with those standards.

The court denied the plaintiff’s motion to amend the complaint because there was “nothing in the labeling of Florida Natural Orange juice that would in any way deceive a reasonable consumer into believing that the orange juice in question is anything but pasteurized orange juice.” 

Offering insight into the apparent motive of many food-related consumer class actions, the court also noted that it viewed plaintiff counsel’s actions as “shopping for plaintiffs in an attempt to manufacture a claim,” which the court would not countenance. 

The court’s opinion was a refreshing win for the juice maker, in what has become a hostile climate of food-and-beverage related consumer class actions.  However, the reach of the holding in this case may be somewhat limited, as the plaintiff did not assert a false advertising or misrepresentation claim, which are often at the core of these cases.  

- Ginamarie Caya and Jack Koenig

Malicious Prosecution Action Permitted to Proceed Against Plaintiff’s Counsel in Dismissed Consumer Class Action

On November 29, 2012, in an unpublished opinion, Innovation Ventures, LLC v. Howard W. Rubinstein et al., the California Court of Appeal affirmed an order by the trial court permitting Innovation Ventures, LLC, the marketer and seller of the drink 5-Hour Energy, to proceed in a malicious prosecution case against plaintiff’s counsel who had brought, and subsequently dismissed, a consumer class action alleging false advertising in connection with the drink.  The Court, however, reversed the trial court’s ruling that a malicious prosecution action could proceed against the named plaintiff. 

In the underlying purported class action, after some initial discovery, and in the face of impending discovery requests and a request for a second deposition session of the named plaintiff, plaintiff moved to voluntarily dismiss the case. Innovation brought an action for malicious prosecution, and plaintiff and her attorneys responded with a motion under California’s anti-strategic lawsuit against public participation (SLAPP) statute, enacted to prevent lawsuits that target free speech. The California Court of Appeal affirmed the trial court’s denial of the motion as to the attorneys (but reversed as to plaintiff), and concluded that Innovation had established a prima facie case for malicious prosecution. 

Interestingly, the Court relied heavily on the decision by plaintiff’s counsel to continue to prosecute the case even after plaintiff made concessions at deposition and in written discovery responses that she did not suffer any physical or personal injury, that she bought the product “for the case” so she could have a receipt to sue Innovation, and that she voluntarily went back and bought more of the product even after she knew that the effect of the product would not last a full five hours.  The Court also pointed to the fact that in pre-suit conversations plaintiff’s counsel had contacted defense counsel offering to sell “protection.”  Plaintiff’s counsel argued that despite these discovery concessions, all plaintiff had to show, under the California Supreme Court’s decision in Kwikset Corp. v. Superior Court, was that the packaging was likely to deceive a reasonable consumer and actual injury.  But the court noted that “Kwikset held [a] consumer who relies on a product label and challenges a misrepresentation contained therein can satisfy the standing requirement . . . by alleging . . . she would not have bought the product but for the misrepresentation.” (quotations omitted).  And thus plaintiff’s admission that she bought the product for the purpose of suing negated her claim, citing Buckland v. Threshold.  

While the decision is unpublished, it provides a warning bell to plaintiff’s attorneys that may bring or continue to prosecute consumer class actions that have tenuous legal support. Moreover, it emphasizes the importance of obtaining discovery from named plaintiffs in consumer class actions on the issue of the timing and reasons for their product purchases. 

- Rachel Chanin

UK ASA: “Little Me Organics” Not So Organic

The UK’s Advertising Standards Authority (ASA) rapped UK retailer Boots UK Ltd over advertising for its “Little Me Organics” products on its website.  The text on the website read “Little Me Organics Oh So Gentle Hair and Body Wash has pear, mallow & organic aloe vera to clean and moisturise your baby's delicate hair and sensitive skin”.  A single complainant challenged whether Boots’ claim that the product was “organic” was misleading, because it implied that it met an independent organic standard.  In response, Boots argued that “Little Me Organics” was the brand name and that there is no legal definition of what constitutes “organic” for cosmetics in the UK. They also said that they had taken the challenged claims directly from the product label; they did not see how that differed to an in-store display. Boots supplied the ASA with certification for the organic ingredients in the product from four independent bodies (The Soil Association, US. Mayacert, Quality Certification Services and Eco Cert) and provided a percentage breakdown for the product’s organic content.

Assessing the claim, the ASA accepted that the product contained organically-certified ingredients and that there is no legal standard for organic cosmetics in the UK, but said that consumers would understand “Little Me Organics” to mean that the product either met an independently defined organic standard or used a high proportion of organic ingredients. As this was not the case, and the product contained less than 5% organic content, the ASA concluded that the advertising was misleading.  Banning the advert, the ASA told Boots not to promote the product in future marketing communications unless they included a prominent statement disclaiming the implied “organic” claim.

The popularity of organic cosmetics is growing amongst consumers, however this ruling highlights how much of a minefield organic claims can be. The take-away point here is that any “organic” products should meet an independently defined organic standard or should contain a high percentage of organic ingredients; otherwise the claims are likely to fall foul of the ASA. Further, brand names should be chosen carefully to avoid being accused of green washing.  The decision is also an important reminder that the ASA is able to investigate and adjudicate on claims that appear on advertisers’ own websites, as well as other types of printed and broadcast advertising.

- Richard Dickinson and Gemma Davies

UK ASA: We Do Care About Whether You Have Milk With Your Cereal

The UK’s Advertising Standards Authority (ASA) has banned a TV advert for the cereal Weetabix, for misleading customers over its health claims. The advert in question, which was broadcast in July 2011, claimed that the cereal was “Packed with slow release energy to keep you going”. Several viewers challenged the claim as they understood Weetabix to have a high glycemic index (GI) rating. Weetabix produced statistics from 2005 from the Food and Agricultural Organization of the UN (FAO) to show that the cereal had a GI rating of 47 when eaten with semi-skimmed milk, which was lower than the British Nutrition Foundation’s level for a low GI food (55 and below). They also produced the results of a 2012 study which gave the cereal a GI rating of 41 when eaten with semi-skimmed milk. Clearcast (the UK body that pre-clears most TV ads) said that they had followed advice from a nutritional consultant who said that Weetabix had a low GI when eaten with milk and they took the view that as most consumers would eat the cereal with milk, as was shown in the advert, the claim was supported.

The ASA disagreed, holding that while Weetabix eaten with semi-skimmed milk had a low GI, some consumers might infer from that the claim “Packed with slow release energy” related to the Weetabix biscuit itself and not only when consumed with milk. The ASA said that the presentation of the claim was ambiguous therefore, and in the absence of further qualifying evidence, was likely to mislead.  

With the health foods market continuing to grow, this ruling sounds a caution to food manufacturers.  As with other advertising, health food claims must be accurate, true and capable of substantiation, but they must also be suitably qualified. Broad claims are unlikely to pass muster with the ASA or the EU’s toughened rules on health claims (see the recent EU Regulation No 432/2012 on health claims made on foods), which came into force on 14 June 2012. If a health claim relates to a food consumed in a certain way (e.g. only in accordance with manufacturers’ instructions, rather than as sold), this must be made clear on the face of the advertising.

- Richard Dickinson and Gemma Davies

FTC Consent Doesn’t Mean Class Action Success

Following on the heels of an FTC consent order settling allegations that Nestle made deceptive advertising claims about the health benefits of its BOOST Kids Essentials drink, two plaintiffs filed class actions alleging violations of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, New Jersey’s Consumer Fraud Act, and Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, negligent misrepresentation, and breach of warranty.  The cases were consolidated in the New Jersey federal district court, which threw out all of the plaintiffs’ false advertising and negligent misrepresentation claims on Nestle’s motions to dismiss and for summary judgment. 

The court concluded that “the core allegations of fraud in the Complaint are clearly grounded in a prior substantiation theory of liability.”  It is a deceptive practice in violation of the FTC Act for an advertiser to disseminate an advertising claim that lacks substantiation, and the FTC’s complaint alleged that Nestle lacked substantiation for some of its claims for BOOST when they were made.  However, there is no private right of action under the FTC Act and neither New Jersey’s nor California’s false advertising laws recognize claims based on a lack of prior substantiation.  Accordingly, the court dismissed the plaintiffs’ claims to the extent they were based on a prior substantiation theory.  (The court dismissed the claims based on Pennsylvania’s consumer protection law because it had ruled that New Jersey, rather than Pennsylvania, law applied.)

This left plaintiffs with a claim that Nestle’s claims that BOOST was “clinically shown” to provide health benefits were false, on which the plaintiffs bore the burden of proof.  Nestle proffered over 40 studies and articles as substantiation for its “clinically shown” claims.  The court found that plaintiffs experts only criticized the strength of Nestle’s substantiation not that Nestle lacked support for its “clinically shown” claims as plaintiffs were required to prove.  Accordingly, the court granted Nestle summary judgment on the consumer protection and negligent misrepresentation claims.  (The court denied Nestle’s motion for summary judgment on the breach of warranty claim because the parties failed to adequately address this count.)

As documented on this blog, some courts have questioned whether a court should approve settlements with a government agency if the defendant does not admit liability.  Addressing the plaintiff’s allegations that the FTC had “concluded” that Nestle’s “clinical studies show” claims were false and misleading, the New Jersey district court was careful to explain that by issuing a complaint the FTC is indicating only that it has reason to believe that there has been an FTC Act violation, not that it had reached any final conclusions.  If Nestle would have been required to admit to these allegations before entering into the consent with the FTC, it would have had a much more difficult time defending against the class action.  As discussed in our prior post, this risk would likely make companies much less likely to settle.

- Matthew Shultz

Upcoming Webinar: From Health-Focused Marketing to Unappetizing Litigation: The Latest Trends in Food Labeling and Advertising Class Actions

The editors of the Consumer Advertising Law Blog wanted to let our readers know about an upcoming webinar that may be of interest to you, entitled, "From Health-Focused Marketing to Unappetizing Litigation: The Latest Trends in Food Labeling and Advertising Class Actions ". [Full disclosure: Our firm, Arnold & Porter LLP, is sponsoring the event]

This webinar will discuss recent trends in food marketing and advertising consumer class action litigation. Based on analysis of recently filed complaints, the presenters will discuss labeling that is under attack, including "all natural" claims, health benefit claims, ingredient quality claims, and certain nutrient content claims. The presenters will offer strategies, from pre-litigation to settlement, for avoiding or defeating similar suits.

Panelists at the event will include: 

• Angel Garganta, Partner, Arnold & Porter LLP
• Trent Norris, Partner, Arnold & Porter LLP
• Rhonda Stewart Goldstein, Associate, Arnold & Porter LLP
• Jonathan Koenig, Associate, Arnold & Porter LLP

CLE credit is pending. This event has been tailored for in-house counsel and business personnel.

The webinar will take place from 8:30 AM to 10:00 AM PST on July 31, 2012. For more information or to RSVP, please click here for an RSVP link.

Not For the Faint of Heart: The Burger Wars

In our continued look at recent developments in the fantastic field of food, we report on this East meets West case involving two restaurants using similar names for their outsized sandwiches. 

Defendant Heart Attack Grill (HAG) in Jack Lebewohl et al. v. Heart Attack Grill, LLC, is not exactly known for its low-cal menu.  At its Las Vegas location, HAG serves up “Single”, “Double”, “Triple” and “Quadruple” Burgers, the latter clocking in at 8,000 calories, with four half pound beef patties.  In fact, guests at HAG weighing 350 pounds or more eat free.

Plaintiff (the “Deli”) uses the name “Instant Heart Attack Sandwich” for two large potato pancakes enveloping corned beef, pastrami, turkey or salami -- a true delight for the deli aficionado -- and is also developing a “Triple Bypass Sandwich.”  HAG, having palpitations when it heard this, sent a demand letter, telling the Deli to cease using these names because they caused confusion with HAG’s burger names.  The Deli, a much beloved tourist attraction in New York, shot back with a declaratory judgment action, asking the court to state that the restaurants’ use of their sandwich names did not cause public confusion.

In considering this issue, the New York court discussed the multifactor standard for finding a likelihood of public confusion set out in the seminal case Polaroid Corp. v. Polarad Elecs. Corp..  Holding that most of the factors pointed against confusion, the court found no infringement, despite the use of “Heart Attack” in both names.  Geographic remoteness was a factor, as was the difference in the types of customers that the parties served (the Deli’s health conscious consumers versus the caloric-loving populace that HAG serves).  An absence of evidence that the public was actually confused between the parties’ names also figured in the decision.  Indeed, HAG could have helped its case by commissioning a consumer survey, demonstrating that the public thought the sandwich names were somehow related, but HAG evidently chose not to do so.

The court concluded by -- appropriately -- “carving up” the areas in which the Deli could use the “Instant Heart Attack Sandwich” name:  It could use this name within Manhattan, including on signage, menus and Internet advertising, but could not expand beyond Manhattan.  As to the Triple Bypass Sandwich, the court granted the Deli’s motion that it could use this name, but only in a limited manner on menus (but not signage) pursuant to an agreement between the parties.  According to the court, the parties could have saved themselves a lot of heartache -- and legal fees -- by negotiating on their own rather than coming to legal blows, because they wound up essentially where they began, especially as to the Triple Bypass Sandwich.

So, next time you bite into that pastrami on rye, realize that it might become the subject of a legal dispute.

- Roberta Horton

 

NAD Deals a Double Whammy on Two Consumer Promotions

Although the products at issue -- credit cards and breakfast burritos -- could not be much further apart, recent decisions issued by the National Advertising Division of the Council of Better Business Bureaus (the NAD) involving Discover Financial Services LLC (Discover) and Sonic Corp. (Sonic) both remind advertisers to communicate clearly the important terms and limitations of their consumer promotions.  According to the NAD, both Discover and Sonic failed to do so. 

In Discover’s case, competitor Chase Bank challenged Discover’s credit card commercials on the ground that Discover had “obscured critical terms” of its cash-back programs in advertisements claiming “right now, all over the country, Discover card customers are getting 5% Cashback bonus [in selected purchase categories],” and also stating that Discover customers could earn “up to 1% cash back” on ordinary everyday purchases.  In fact, the 5% cash-back benefit was a temporary, opt-in promotion and the “up to 1%” cash-back program was only applicable after Discover card holders made $3,000 in qualifying purchases; prior to that threshold, a 0.25% rate applied.

Although Discover argued that its commercials were directed at existing customers who would understand these limitations, NAD sided with Chase, noting that television commercials are generally understood as messages to the public at large.  NAD has recommended that Discover more clearly disclose the limitations on the cash-back programs or discontinue the advertising, specifically instructing Discover to modify the commercials to make disclosure of the program’s opt-in requirement, limited duration, and qualifying purchase limitation “easy for consumers to notice, read, and understand.”  

NAD was alerted to the Sonic promotion at issue -- offering a “Free Coffee With Any Breakfast Burrito” -- by a disgruntled consumer who, upon ordering a Junior Breakfast Burrito and requesting his free coffee, was told that his order did not qualify.  Instead, only one of Sonic’s Premium Burritos would suffice.  The consumer, who ultimately went to another store, notified NAD of the claim.  In its Sonic decision, NAD stated that advertisers are “responsible for all reasonable interpretations of their clams, not just the messages they intend to convey,” and found that Sonic should have clearly and conspicuously disclosed the material limitations on its promotion “in close proximity to the claim.”  Sonic has since offered the consumer a $50 gift card to regain his goodwill -- what we don’t know is whether the consumer also received any free burritos.

The moral of both stories: Disclose the important limitations on your company’s promotional deals. 

- Joanna Persio and Roberta Horton

 

Supersized Sodas To Be Banned In The Big Apple?

Those of you who enjoy sipping on a 20 oz. soda at Yankee Stadium may soon be forced to downsize.  Citing an increasing population that is overweight, New York City officials announced on May 31 their intention to pursue a ban on certain supersized soda and other sugary beverages sold at restaurants, delis, food carts, movie theaters and sporting venues located in the Big Apple.  The first-of-its-kind restriction, which must be approved by the City’s Board of Health, could go into effect as early as March 2013.  Violators would face $200 fines.

The ban, which does not apply to supersized sodas or sugary drinks sold in convenience or grocery stores, and does not restrict the sale of supersized diet sodas, alcohol beverages, fruit juices, lattes or dairy-based drinks, has been hailed by supporters and roundly criticized by opponents.  On the one hand, supporters claim that the ban will have an impact on the obesity problem and could pave the way for similar legislation throughout the country (much like Gotham’s 2003 ban on smoking in public restaurants).  In stark contrast, fast-food and soda companies have issued statements criticizing the ban as “narrowly focused and misguided” and taking away the consumers choices “about the beverages they purchase.”

The supersized soda ban is the latest attempt by New York City officials to implement progressive public health initiatives in the City.  Residents of the Big Apple have already faced bans of trans fats from restaurants and smoking at City parks and beaches.  The City has also implemented a calorie labeling law and recently unveiled an anti-obesity advertising campaign.

The City has leeway to implement laws that protect the public health and safety, so long as the laws could have an actual health benefit and are not arbitrary or overbroad.  Given that the ban has not been approved by the City’s Board of Health, it is too early to tell if any legal challenges will be launched against the City’s ban, whether on grounds that the ban does not further public health or is otherwise arbitrary in its scope.

- Alan Veronick

ALJ Finds POM Not So Wonderful, But Also Rules Against More Stringent FTC Substantiation Standard

A recent Initial Decision by Chief Administrative Law Judge D. Michael Chappell presents yet another mixed result for the Federal Trade Commission’s ongoing efforts to set more stringent substantiation levels for health claims.  The Initial Decision rejected the substantiation standard proffered by Complaint Counsel for the FTC, but still ruled that POM Wonderful made deceptive health claims regarding its “POM Wonderful 100% Pomegranate Juice” and POMx supplements.  The Judge found that the advertisements in question contained implied claims that the POM products would treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction, but that there was insufficient competent and reliable scientific evidence to support those claims.

The parties agreed that substantiation of such claims required “competent and reliable scientific evidence,” but they disagreed on what that means. The FTC sought to require double-blind, randomized, placebo-controlled clinical trials (RCTs) to substantiate POM’s claims.  The Judge rejected this requirement, stating that RCTs were neither a legal requirement mandated by the FTC Act nor case law, nor appropriate in this case. Applying the so-called “Pfizer factors” to determine the appropriate level of substantiation, the judge’s analysis focused on the sixth factor: “the amount of substantiation experts in the field would agree is reasonable.”  He found that the weight of the expert testimony did not require RCTs where the product is a safe, food-derived product that is not being offered as a substitute for medical treatment. However, the Judge still concluded that “experts in the field” would agree that clinical trials were required, just not RCTs, because the claims were disease-related rather than general and highly qualified health claims. After reviewing POM’s substantiation, the Judge held that it failed to meet the “competent and reliable scientific evidence” standard.

The FTC also sought to prohibit POM from making any disease claim in the future unless the Food and Drug Administration pre-approved any such claim. The Judge rejected this requirement, stating

"no previous decision by the Commission or any court has required FDA pre-approval as the required level of substantiation for disease claims, including for purposes of a cease and desist order.”

Rather, the competent and reliable evidence standard is “established precedent, [] reasonably related to the violations found to exist, and [] sufficiently clear and precise to guide Respondents’ future advertising practices.”  As such, any FDA pre-approval requirement “would constitute unnecessary overreaching.”

As we have noted in previous posts (see here and here), the FTC’s efforts to require stronger substantiation for health claims have met some resistance by courts.  There may yet be further developments in this case as the Judge’s Initial Decision is subject to review by the full Federal Trade Commission on its own motion, or by motion of any party.

- Mac Conforti and Matthew Shultz

GE Foods: To Label or Not to Label - That is the Question (Again)

Right or wrong, scientifically-based or not, the labeling of genetically engineered foods (GE foods) - often, and erroneously, referred to as GMO foods - remains a topic on the mind of activists and legislatures across the country.   

In October 2011, the Center for Food Safety (not to be confused with FDA’s Center for Food Safety and Applied Nutrition), and other nonprofit organizations, filed a citizens’ petition with the US Food and Drug Administration seeking mandatory labeling for foods made from genetically engineered crops. Similar groups launched a “Just Label It” campaign to garner support for the petition, and many nonprofit organizations asked their members to submit comments to FDA in support. Comments closed last month, and FDA recently stated that it hopes to complete its review and respond to the petition in the near future.

For nearly twenty years, FDA has repeatedly asserted that there is “no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way, or that, as a class, foods developed by the new techniques present any different or greater safety concern than foods developed by traditional plant breeding.” The petition, yet again, seeks a new policy and labeling requirements. The FDA’s long-held position is that GE foods are not materially different from their conventional counterparts. 

EU Bureaucrats Have Been Drinking Something, Not Water

The EU earlier this month banned companies that sell water from making claims that water “hydrates.”  Penalties for making such an outrageous claim can range up to two years in prison. What’s going on here you might wonder?  Is it not only the Euro that has become destabilized but also EU bureaucrats?  Apparently the thinking behind this decision is that there are certain medical conditions that can lead to dehydration. So although water can help hydrate someone who’s just engaged in vigorous physical activity or has been out in the hot sun all day, it’s not a “cure” for any disease that causes dehydration and shouldn’t be marketed as such. The EU was asked to consider this issue following an application by two German Professors, who were concerned to ensure that hydration claims wouldn’t be interpreted as meaning that water intake can reduce the risk of developing a human disease.

From the US perspective, it seems that the EU has lost sight of the basic principles that claims must be interpreted through the eyes of a reasonable consumer and in the context of an advertisement as a whole. If a company creates an advertisement showing a beach volleyball player drinking water during a break, surely no reasonable consumer will believe that the product is being marketed as a “cure” for diabetes or diarrhea or any other medical condition that causes excessive thirst or dehydration.  The claim that water helps you “hydrate” to a reasonable consumer is more likely a good reminder that they need to drink an adequate amount of fluids each day and that water can be an important and healthy choice.  Nor is there anything misleading, as some have suggested, about claiming your product helps with something if there are other products that help as well. If the EU truly intends to go down this path it has its work cut out for it. Is the slogan that Snickers is "the snack that satisfies" next -- it won’t satisfy if you’re suffering from a medical condition that causes hunger or malnutrition.  Let water be water and let’s move on to more important things.

- Randy Shaheen