A few months ago, we previewed an imminent decision that would address, for the first time, a long-unsettled question for class actions brought under New York’s General Business Law (“GBL”): can a class of consumers obtain class-wide statutory damages under the GBL in federal court, even though the New York legislature has expressly prohibited statutory damages for GBL class actions brought in state court?
Visit the Full Blog
Misbranded is Patterson Belknap’s blog covering false advertising litigation—both consumer class actions and competitor suits—with a particular focus on FDA-regulated products (foods/beverages, pharmaceuticals, cosmetics, and dietary supplements). Writing from the industry perspective, we provide timely updates on important cases, surveys of litigation trends, and in-depth analyses of “hot” legal issues. Our firm pioneered the modern practice of false advertising law more than 40 years ago, bringing the first competitor suits under the Lanham Act. In the decades since, we have continued to practice at the cutting edge, handling many of the field’s most groundbreaking cases on behalf of the nation’s best-known businesses. Today, led by Steven A. Zalesin, our team advocates creatively, strategically, and efficiently on behalf of our clients at all phases of litigation, from pre-complaint demands to Supreme Court appeals.
For decades, Plaintiffs and defendants have fought bitterly over most aspects of class-action law. One issue, however, had managed to escape serious contention: the propriety of paying “incentive awards” (also known as “service awards”) to class representatives. Broadly speaking, such awards are sums paid to named plaintiffs—above and beyond what they receive as ordinary class members—to compensate them for the time, effort, and inconvenience their role may require. According to one academic study, these awards are generally modest, averaging 0.16% of the class-wide recovery, with a median of 0.02%. Incentive awards became widespread in the 1980s and 1990s, and are now near-ubiquitous, especially in the consumer class action domain where we focus. See 1 William B. Rubenstein, Newberg and Rubenstein on Class Actions § 17:7 (6th ed., June 2022 update) (noting that courts approved incentive awards in 93.4% of consumer class actions between 2006 and 2011).
Federal Court to Consider Constitutionality of Juiced-Up Statutory Damages Awards in Consumer Class Actions
New York’s consumer protection laws are particularly attractive to the plaintiff’s bar. One reason is the availability of “statutory” damages under New York’s General Business Law (“GBL”). While most states’ consumer protection laws limit plaintiffs’ recovery to their actual damages, if any, Sections 349 and 350 of the GBL guarantee minimum statutory damages of $50 (for a violation of § 349) and $500 (for a violation of § 350). So, for example, a consumer who paid $5 for a bottle of juice with a purportedly deceptive label (and paid only a fraction of that price as the “premium” associated with the allegedly deceptive claim) might nevertheless seek to recover a total of $550 in statutory damages under the GBL—more than 100 times what he actually paid for the product.
A common maxim in the service industry is that the customer always knows best. But a recent decision from the Tenth Circuit suggests that the maxim has its limits when it comes to interpreting ambiguous marketing claims. In Bimbo Bakeries USA, Inc. v. Sycamore, the court held that the advertiser’s use of the word “local” in promoting its bread was not actionable under the Lanham Act, even though both a consumer survey and a jury of consumers had found the term to be misleading. The decision reflects courts’ growing comfort in rejecting proffered interpretations of labeling claims as objectively unreasonable, notwithstanding evidence that certain consumers may in fact subscribe to that unreasonable interpretation.
We’ve written before about the growing trend of “ethical sourcing” or “ethical production” class actions, which challenge manufacturers’ claims (or nondisclosures) about the humane (or inhumane) way their ingredients or materials are grown, caught, or harvested. A recent decision out of the Southern District of New York in a case involving “free range” eggs typifies this litigation trend and the danger it poses to food and beverage manufacturers.
Burned Again: District Court Dismisses Putative Class Action Alleging Sunscreen Adulteration Due to Lack of Article III Standing
In this age of mass manufacturing, each unit in a product line is usually the same as every other. But manufacturing isn’t perfect. Sometimes, for various reasons, some units in a product line will deviate from the manufacturer’s intended specifications. When this happens, consumer class actions often follow, on the theory that the manufacturer misled consumers by failing to disclose the defect or by selling goods that didn’t conform to the manufacturer’s promises. But these actions pose serious challenges. For one thing, when the alleged defect is subtle (like the inclusion of an extraneous chemical), it can be difficult for the named plaintiff to plausibly plead that her own unit of product was affected. Moreover, when only some units in a product line have the defect in question, determining whether any individual purchaser received a defective unit is an individualized inquiry. This creates a barrier to class certification, which is usually the whole ballgame in consumer protection suits.
In a recent decision, Beers v. Mars Wrigley Confectionery US, LLC, Judge Seibel of the District Court for the Southern District of New York dismissed all of Plaintiff Steven Beers’s claims under Sections 349 and 350 of the New York General Business Law (“GBL”). Judge Seibel concluded that Beers’s complaint, which took aim at the labeling on Dove brand ice cream bars, failed to plausibly allege that the disputed labeling was misleading to reasonable consumers. Beers reaffirms the basic principle that idiosyncratic or farfetched interpretations of product labeling do not give rise to GBL claims.
In Kibble Quibble, Tenth Circuit Reaffirms That False Advertising Plaintiffs Must Have A Bone to Pick With a Specific, Falsifiable Statement
In the recent case Renfro v. Champion Petfoods, the Tenth Circuit affirmed a district court’s dismissal of a putative class action alleging that Champion Petfoods had deceptively marketed its Orijen-brand dog food. The plaintiffs’ claim centered around an incident in 2018, when Champion Petfoods learned that some ingredients it had sourced for Orijen had been contaminated. According to the plaintiffs, this incident—as well as other aspects of Champion’s sourcing and manufacturing process—rendered false Champion’s marketing claims that the products’ ingredients were generally high-quality. In rejecting this contention, the Tenth Circuit reaffirmed a core principle of false advertising law: that false advertising claims must be based on alleged false assertions of fact, not vague or unprovable marketing statements. The Tenth Circuit also reaffirmed the important principle that only plaintiffs who have been directly and personally harmed by a purportedly misleading practice have Article III standing to bring suit regarding that practice.
Buttery Smooth Application: District Courts Narrowly Apply Second Circuit Precedent in False-Ad Cases
Consumers in false-advertising cases have long targeted food packaging for purportedly misrepresenting the presence or quantity of an ingredient in a product. These litigants typically contend that a product’s name—e.g., “All Butter Loaf Cake””—or other labeling text—e.g., “Made With Whole Grain”—creates expectations that the product be made entirely or predominantly with the advertised ingredient. And when these products do not contain “sufficient” amounts of the advertised ingredient, consumers claim to have been deceived. In response, manufacturers often point to the specific wording of the challenged labeling statement as well the product’s ingredient list, which details the presence and quantity of each ingredient as sufficient to dispel any unwarranted expectation.
 Moreover, the content and ordering of ingredient lists are not compiled at a manufacturer’s whim; it is done pursuant to federal law. Under 21 C.F.R. § 101.4(b)(14)
Fowl Ground: Ninth Circuit Reaches Unusual Result Applying Federal Preemption Law in Poultry Labeling Case
A few months ago, we analyzed the Ninth Circuit’s decision in Webb v. Trader Joe’s Company, No. 19-56389 (June 4, 2021), which held that a private plaintiff’s challenge to poultry labeling claims were preempted by federal law, warranting dismissal at the pleadings stage. However, the Ninth Circuit’s recent decision in Cohen v. ConAgra Brands, Inc., No. 20-55969 (Oct. 26, 2021), declined to apply preemption in a similar challenge to labeling claims on poultry products. In this post, we examine the two decisions and conclude that, notwithstanding Cohen, Webb remains the benchmark for future litigation in this area.
The Second Circuit recently decided an appeal of a putative consumer class action, in which New York Starbucks patrons alleged that the smell of freshly brewed coffee wasn’t the only thing wafting in the air at the famous coffee chain. Plaintiffs in George v. Starbucks Corp. alleged that Starbucks had engaged in deceptive marketing because, at the same time the company was promoting its coffee as high-end and high-quality, some of its New York stores were also liberally deploying noxious pesticides to contain insect infestations. Like a loafer to a cockroach, however, the district court and then the Second Circuit squashed plaintiffs’ claims, brought under the New York General Business Law.
Supreme Court Clarifies Standing Requirements – Implications for Class Action Defendants in Data Security, Privacy, and False Advertising Cases
On June 25, the Supreme Court held in a 5-4 decision that Article III prohibits certification of a class and a damages award where the majority of class members lack actual injury. In TransUnion v. Ramirez, the Ninth Circuit Court of Appeals had previously concluded that a class of over 8,000 individuals who could prove violations of the Fair Credit Reporting Act—and had actually proved them at trial—had standing to pursue damages at trial, even if they had not demonstrated that they had suffered concrete harm. The Ninth Circuit reasoned that violations placed the class members at sufficient risk of harm to confer standing. The Supreme Court reversed, and in so doing, reinforced its earlier holdings that Article III compels each plaintiff to show concrete harm.
Courts are experiencing a recent surge of consumer class action filings alleging that manufacturers are misrepresenting the manner of procurement of materials for their products. These allegations center around claims of “ethical sourcing.” Broadly speaking, the goal of ethical sourcing is to ensure that a company only buys products and materials that are produced under reasonable working conditions and with fair pay for workers, as well as with minimal impact on the environment. Ethical sourcing is intended to reinforce social and environmental responsibility by companies.
Hold onto your chips.
This blog has covered an array of dubious mislabeling theories, but a recent complaint filed in Illinois federal court may take the guac: a proposed class-action complaint against Frito-Lay North America, Inc. (“Frito Lay”) alleges that Frito-Lay’s “Hint of Lime” Tostitos are misleadingly packaged because the chips—which prominently display the phrase “HINT OF LIME” on the front of the bag—contain only a “negligible amount” of lime. As the complaint itself recognizes, consumers understand the word “‘hint’ the same way as its dictionary definition—a slight but appreciable amount.” Compl. ¶ 13. But rather than deliver a hint of lime, the complaint alleges, the chips contain only lime flavoring—or a de minimis amount of lime. In other words, the hint of lime label is misleading because…the chips only contain a hint of lime. You read that right.
Earlier this month, this blog analyzed the preemption provisions of the Federal Meat Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA), which together regulate the labeling of meat and poultry products. We explained that trial courts in California and elsewhere routinely dismiss false advertising claims challenging statements on meat and poultry labels based on the statutes’ preemption provisions, which prohibit states from imposing requirements different from or in addition to federal law. Courts have specifically focused on the FMIA and PPIA’s pre-approval requirements in concluding that such challenges are preempted.
Preemption is a familiar battlefield for litigants challenging or defending advertising claims made on the labels of federally regulated products. Plaintiffs bringing claims under state law must contend with the fact that federal laws often contain preemption clauses that prohibit states from imposing requirements different from or in addition to those found in federal law. We have previously covered cases dealing with preemption in the context of the federal Food, Drug, and Cosmetic Act (FDCA) here and here.
Two (Out of Three) Thumbs Down: Divided Ninth Circuit Panel Rules Rigged Product Reviews Can Be Actionable False Advertising
When you’re in the market for a fresh haircut or a new restaurant, innumerable business and product reviews are available to guide you towards a cleaner trim or tastier takeout. But what happens when the reviewer is not an impartial arbiter, but a less-than-honest broker disguising a financial interest in the service or product they’re applauding? And can a reviewer be held liable for false advertising if the reviews are secretly paid product placements?
Did You See That? Defeating Class Certification Where Class Members Did Not See the Challenged Advertisement
In putative class actions alleging false advertising, plaintiffs often argue that class certification is appropriate because the language being challenged appeared on the defendant’s marketing materials or product label, thereby making the class members’ experience—and the question(s) to be resolved—common. These plaintiffs invariably claim that individualized questions of deception and reliance do not defeat certification, because consumer protection statutes employ an objective, “reasonable consumer” test that does not turn on what each individual class member actually thought or believed.
This blog previously reported on the Seventh Circuit oral argument in Bell v. Albertson Companies Inc.—a case turning on whether a reasonable consumer would understand the phrase “100% Grated Parmesan cheese” on a cheese canister to mean that the product contained literally nothing but cheese. The Defendants had argued that reasonable consumers could not be deceived by such a claim, even though their products contained a small amount of cellulose powder and potassium sorbate mixed in with the grated Parmesan to act as a preservative. This was so, they maintained, since (1) the ingredient list expressly disclosed that non-cheese ingredients were present in the canisters, and (2) the canisters’ position on unrefrigerated store shelves should have signaled that a preservative was present. The district court dismissed these “100% claims” for failure to state a claim, and Plaintiffs appealed.
Last month, the Fourth Circuit joined other Circuits in finding that Lanham Act false advertising and false association claims are governed by a case-specific equitable analysis of laches rather than a hard and fast statute of limitations. Although the Bayer decision may appear more forgiving to plaintiffs looking to pursue older claims, the Fourth Circuit made clear that, in the ordinary case, plaintiffs bringing claims after the applicable limitation period expires will face an uphill battle in obtaining relief.
In a significant case for class action litigants, the Supreme Court is expected to resolve a circuit split over the standing requirements applicable to absent class members, and weigh in on the circumstances – if any – under which statutory violations can be deemed to give rise to Article III injury for such class members. The Supreme Court’s holding may have far-reaching implications for many varieties of class actions, including consumer protection and data privacy suits.
Federal law expressly authorizes manufacturers of dietary supplements to make “structure/function” claims—that is, claims about the effect of particular nutrients on the structure or function of the human body. (Think: “vitamin C supports the immune system” or “calcium supports healthy bones”). Despite this federal authorization, consumers often attempt to bring state-law challenges to manufacturers’ structure/function claims, asserting that they are false or misleading. This type of clash between federal and state law is a classic recipe for preemption. And that is especially true where the relevant federal statute—here, the Food, Drug, and Cosmetic Act (FDCA)—contains an express preemption clause. See 21 U.S.C. § 343-1(a).
In a recent decision, McGee v. S-L Snacks Nat’l, 982 F.3d 700 (9th Cir. Dec. 4, 2020), the Ninth Circuit upheld a district court’s dismissal of a putative class action for lack of Article III standing. McGee is notable for the court’s willingness, at the motion-to-dismiss stage, to subject a consumer’s theories of injury to meaningful scrutiny, and for its willingness to disregard conclusory and implausible allegations of harm. It also serves as a helpful reminder that disclosures in a product’s ingredients list can be highly relevant in assessing the plausibility of a consumer’s claimed losses.
In a recent decision, Ezaki Glico v. Lotte International American Corporation, the Third Circuit rejected a manufacturer’s claims of trade dress infringement regarding Pocky, a chocolate covered cookie stick which Ezaki Glico invented in the 1970s. The court concluded that Pocky’s overall shape and look—cookie sticks partially coated in chocolate—were functional and thus not protected from competitor imitation.
On September 17, the Seventh Circuit heard argument in Ann Bell v. Albertson Companies Inc. The case hinges on whether a reasonable consumer would understand the phrase “100% Grated Parmesan cheese” on a Parmesan cheese canister to mean that the canister contains literally nothing but cheese. The plaintiffs argued that they believed just that, when in fact the cheese product in question contained cellulose, which the defendants claimed was used as an anti-caking agent and the plaintiffs claimed was used as “filler".
In False Ad Dispute Between Inhaler Companies, Court Grants PI Enjoining Unsupportable Clinical Superiority Claims
In its recent decision granting a preliminary injunction in GlaxoSmithKline v. Boehringer Ingelheim Pharmaceuticals, No. 19-5321, the United States District Court for the Eastern District of Pennsylvania enjoined a pharmaceutical company from making certain marketing claims of clinical superiority that the Court found did not match up with the study results purportedly supporting them. In doing so, the Court offered instructive guidance on the proof required to show falsity under the Lanham Act and on the showing necessary to justify preliminary injunctive relief.
Over the past few months, federal courts throughout the country have stayed litigation challenging the labeling of products infused or made with cannabidiol, better known as CBD. These courts, acknowledging that labeling and product quality requirements for CBD products remain unclear, have cited the need to permit the U.S. Food and Drug Administration (“FDA”) to promulgate uniform rules or regulations focused on CBD, which the agency has indicated are forthcoming in a series of recent administrative actions and public statements. Staying these cases affords FDA room to fashion a comprehensive regulatory framework in this still-novel industry, rather than allowing plaintiffs to usurp that role via the judicial process.
Federal food-labeling laws preempt state laws that impose requirements different from or in addition to those established by federal law. In some cases, the FDA has spoken directly to a labeling issue by regulation, and if the food manufacturer is in compliance with that regulation, any state-law liability should be preempted. Careful plaintiffs often try to draft their allegations to get around a federal regulation that would otherwise preempt their claims. For instance, in challenging a defendant’s representations concerning honey in a cereal, a plaintiff avoided the defendant’s compliance with the federal labeling regulation on “flavoring” by alleging she was deceived about the relative amount of honey as a sweetener (which is not covered by a specific FDA regulation), rather than the relative amount of honey as a flavoring agent (which is covered). When courts allow creative pleading to circumvent a preemption defense, defendants are deprived of the protections that Congress intended to provide them under federal labeling law, at least at the outset of the case. But as a recent decision shows, defendants may be able to renew and succeed on a preemption defense after discovery shows plaintiff’s artful allegations were just that.
The Illinois Biometric Information Privacy Act (“BIPA”) protects individuals against the unlawful collection, storage and use of their “biometric” information. Under BIPA, plaintiffs may bring claims against companies for failing to obtain informed consent before collecting biometric identifiers (including fingerprints and face scans) and for not maintaining proper privacy policies and procedures for storage of that information. Because the harm can be nebulous — for example, the economic harm from a violation is not always obvious — these cases often raise issues about what constitutes an actual “injury” sufficient to confer standing. Indeed, a number of recent cases in this area have given rise to an emerging circuit split. As in the false advertising context, some courts have permitted such cases to go forward on mere allegations of “bare procedural violations.” As these cases proliferate, we’ll be watching closely to see whether courts begin to apply the Article III criteria appropriately rigorously, as they have increasingly done in the false advertising context.
Our parents and teachers taught us that “two wrongs don’t make a right.” But in the world of Lanham Act litigation, the opposite is often true. When defending a Lanham Act claim brought by a competitor, the doctrine of unclean hands—the lawyerly version of “But they did it too!”—can be a case-dispositive argument. Last month, the Ninth Circuit made it a bit easier to establish this defense, holding that a defendant arguing unclean hands need not prove that the plaintiff’s unclean conduct caused “actual harm.” See Certified Nutraceuticals, Inc. v. Avicenna Nutraceutical, LLC, 2020 U.S. App. LEXIS 22351 (9th Cir. July 27, 2020).
The past few months have witnessed a veritable sugar rush of decisions dismissing consumer class action complaints alleging that baking chips and candies labeled as “white” falsely imply the presence of actual white chocolate. See, e.g., Prescott v. Nestle USA, Inc., 2020 WL 3035798 (N.D. Cal. June 4, 2020); Rivas v. Hershey Co., No. 19-CV-3379(KAM)(SJB), 2020WL 4287272 (E.D.N.Y. July 27, 2020); Cheslow v. Ghirardelli Chocolate Co., 2020 WL 4039365 (N.D. Cal. July 17, 2020). Each of these decisions is noteworthy for holding, at the pleadings stage, that a consumer’s purported interpretation of a labelling claim is unreasonable as a matter of law. But Cheslow is particularly instructive, as it recognizes that even consumer survey evidence cannot convert an implausible interpretation of a labeling claim into a reasonable one.
Increasingly, consumers base their purchase decisions on facts about a company or its product that have nothing to do with the performance or quality of the product itself. For example, does the manufacturer treat its workforce fairly? Is it a responsible steward of the environment? What are its stances on social issues like abortion or LGBTQ rights? To which parties or candidates does it (or its officers) donate? All of these facts—and countless others—are “material” to many consumers in the sense that they affect (or even dictate) purchase decisions. Indeed, in recent years, ethical, moral, and political concerns like these have led to countless instances of boycotts and other forms of consumer speech—a welcome sign of a healthy body politic and liberal democracy.
Flushable Wipes, Take Three: The Second Circuit Gets Injunctive Standing Right, But Classwide Damages Models Wrong
As our readers know, we’ve kept a close eye on the “flushable wipes” litigation—known variously as Kurtz v. Costco and Belfiore v. Procter & Gamble—as it has bounced between Judge Weinstein’s courtroom in the Eastern District of New York and the Second Circuit. The cases raise several issues important to class-action defendants, including the necessity of a rigorous damages model at the class-certification stage; the availability of injunctive relief to customers who are already wise to the alleged deception; and the appropriateness of massively multiplied “statutory damages” in the class context. We (and others) had hoped that the Second Circuit would use the case to provide clear answers to these questions and to remedy the New York federal courts’ status as a hotbed for questionable class-action complaints. But with that court’s latest ruling—fortunately, an unpublished and non-precedential one—those hopes may have gone down the tubes.
Injunction Defunction: The Second Circuit Extinguishes Injunctive Relief as a Remedy for Consumer False Advertising Claims
Last week, the Second Circuit issued an important published decision holding that previously injured consumers who seek to challenge product labeling lack constitutional standing to pursue claims for injunctive relief, and cannot obtain certification of an injunctive relief class under Federal Rule of Civil Procedure 23(b)(2). See Berni v. Barilla S.P.A., 2020 U.S. App. LEXIS 21167 (2d Cir. July 8, 2020). Although the Second Circuit’s holding arose in the context of a settlement class, not a litigation class, the court’s reasoning was not dependent on or limited to that specific context; rather, the panel held, in unqualified terms, that “past purchasers of a product . . . are not likely to encounter future harm of the kind that makes injunctive relief appropriate.” The Berni decision appears to close the door to injunctive relief for consumers asserting mislabeling claims in the Second Circuit.
What distinguishes a “cosmetic” from a “drug” under the Federal Food, Drug, and Cosmetic Act (FDCA)? The FDA has struggled to offer clear guidance on the distinction, but the classification as one or the other (or both) carries significant legal and regulatory consequences for manufacturers: a product that is a “drug” needs pre-market approval from the FDA, while a “cosmetic” does not. A cosmetic product that has not received this approval may not represent that, like a drug, it is “intended to affect the structure or any function of the body of man.” 21 U.S.C. § 321(g)(1). Thus, a product that claims to be capable of changing how part of the body works (e.g., “reduces cellulite” or “regenerates cells”), but has not been subjected to this pre-approval process, is considered mislabeled under the FDCA.
So Much For “Improved Memory”: Prevagen Class Decertified Post-Trial Due To Lead Plaintiff’s Forgetful Testimony
A California district court recently decertified, after a jury trial, a class of vitamin supplement purchasers in a false advertising case. As we detailed in a prior post, a federal judge declared a mistrial in the same case earlier this this year after the jury deadlocked. The case, Racies v. Quincy Bioscience, LLC, 15-cv-00292 (N.D. Cal.) (Gilliam, J.), was already interesting because certified class actions rarely make their way to trial. And it is rarer still for a district court to decertify a class following a trial. But setting those procedural quirks aside, the opinion may prove useful for defendants seeking to decertify or defeat putative classes on typicality and predominance grounds.
Latest Scoop on the “Happy Cows” Lawsuit: Court Dismisses False Advertising Claims Against Ben & Jerry’s
Patrons of Ben & Jerry’s ice cream should be familiar with Woody, the bovine mascot touted by the company as “the most interesting cow in the world.” Ben & Jerry’s packaging has long featured cartoon illustrations of Woody grazing beneath blue skies in bucolic green pastures. This past year, however, Woody ambled into the sights of the plaintiffs’ class action bar. Thankfully, she (and Ben & Jerry’s) emerged unscathed: the district court (D. Vt.) dismissed the case at the pleadings stage, affirming both the authority of district courts to dismiss implausible consumer protection claims and the requirement that plaintiffs seeking injunctive relief demonstrate a probability of future injury.
Liability Immunity Under The PREP Act: A Potent New Defense Against COVID-Related False Advertising Claims
Our national response to the COVID-19 pandemic has been made more difficult by a shortage of personal protective equipment and lifesaving drugs and medical devices. Some evidence suggests that manufacturers’ fear of lawsuits has exacerbated these shortages. Seeking to allay these concerns, in March 2020, the Secretary of the Department of Health and Human Services (HHS) issued a Declaration providing manufacturers, distributors, health professionals, and other “qualified persons” immunity against certain claims relating to COVID-19 “countermeasures.” See 85 Fed. Reg. 15198 (Mar. 17, 2020). In mid-April, HHS followed up with an Advisory Opinion clarifying the scope of liability immunity under the Declaration.
Much has been written about the Declaration’s potential as a shield against product liability suits. But does the Declaration also provide immunity from false advertising suits, including Lanham Act, common-law, and statutory consumer protection claims? There’s not yet any judicial precedent on this question, but the answer appears to be “yes”—at least in many cases.
Seventh Circuit Rejects Court Intervention In Light Beer Ad Wars: Is A New Trend Brewing In False Advertising Law?
The last few years have seen a pitched battle for market share among the manufacturers of America’s leading “light” beers—a battle that’s been waged not only in America’s bars and on the airwaves, but in the courtroom. Earlier this month, in Molson Coors v. Anheuser-Busch, Nos. 19-2200, 19-2713, 19-2782, 19-3097 & 19-3116, 2020 WL 2097557 (7th Cir. May 1, 2020), the Seventh Circuit gave Anheuser-Busch, the maker of Bud Light, a major victory in that battle, wiping out an injunction that the district court had entered in favor of Molson Coors, the maker of Miller Lite and Coors Light. That’s newsworthy in itself—but, because of its novel reasoning, the Molson Coors ruling may have broader significance for false-advertising law.
The Food, Drug, and Cosmetic Act (FDCA) promotes nationwide uniformity in food labeling by establishing a comprehensive federal labeling scheme and preempting state law that imposes different requirements. 21 U.S.C. § 343-1(a). Over the years, the FDA has issued regulations directed to specific labeling issues, including representations of a food product’s “primary recognizable flavor.” 21 C.F.R. §§ 101.22(a)(3), 170.3(o)(12). So long as a label’s representation of a “primary recognizable flavor” complies with the FDA’s flavoring regulation, the label is not misleading, and any state law that supposedly says otherwise is preempted.
This post originally appeared on Law360.
In Romag Fasteners Inc. v. Fossil Inc., the U.S. Supreme Court recently made it easier for Lanham Act plaintiffs to disgorge the ill-gotten profits of trademark infringers.
Naturally, the question arises: Since false advertising suits are also governed by the Lanham Act, does Romag apply to false advertising suits, too? The answer is likely yes — but there are important differences between the two types of suits that may make disgorgement awards more difficult for false advertising plaintiffs to obtain.
Earlier this month, in a consumer action challenging alleged slack-fill in boxes of Junior Mints and Sugar Babies, the Ninth Circuit considered the reach of the “catalyst theory” for recovering attorney’s fees under California law. See Gordon v. Tootsie Roll Industries, Inc., No. 18-56315, 2020 WL 1846920 (9th Cir. Apr. 13, 2020). Under this theory—which the U.S. Supreme Court has rejected for federal claims—a litigant may be considered a “successful party” entitled to seek a fee award upon a showing that the litigation impelled the defendant to take corrective action. Unfortunately for the plaintiff, the panel held that she was not a “successful party” under California law—even though the defendant had changed its marketing practices after the lawsuit was filed—because she had insisted that those changes would not resolve her gripes.
“Whether reasonable consumers would be deceived by a challenged advertisement is a question of fact that can’t be decided on a motion to dismiss.” This claim is one of the biggest sacred cows in false advertising litigation. But as the Second Circuit has made clear twice in the past year, it’s just a load of bull. Take, for example, Chen v. Dunkin’ Brands, Inc., --- F.3d ----, 2020 WL 1522826, which the Second Circuit decided unanimously earlier this week. In Chen, the court doubled down on its June 2019 holding that a court can decide at the pleadings stage “whether a reasonable consumer would have been misled by a particular advertisement,” Geffner v. Coca-Cola Co., 928 F.3d 198, 200 (2d Cir. 2019), affirming the dismissal of a false advertising claim involving the meaning of “steak.” In the process, the court also served up a tasty side dish of personal jurisdiction doctrine.
As coronavirus (COVID-19) spreads across the country, some companies are advertising their products’ usefulness in preventing or treating the disease. But federal agencies—including the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC)—are close behind. Over the past few weeks, they have together sent more than a dozen warning letters to COVID-19 advertisers, insisting that they cease making coronavirus claims.
Last year, Arkansas enacted a “Truth in Labeling” law that placed restrictions on companies’ ability to label edible products with the term “meat” and other meat-related words. Arkansas Act 501 took effect July 24, 2019.
Food and beverage advertising, like other forms of speech, is usually entitled to First Amendment protection – even if it may not always enjoy the same caliber of protection as, for example, journalism or political speech. See, e.g., Sorrell v. IMS Health, Inc., 564 U.S. 552, 557 (2011) (“Speech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment.”)
Grains of paradise (aframomum melegueta), are a peppery, citrusy spice indigenous to West Africa, related to ginger and cardamom. The name purportedly derives from medieval merchants’ claims that the plant grew only in the Garden of Eden. Common to West African cuisine, grains of paradise are also one of the botanicals sometimes used to give gin its characteristic flavor.
In Florida, however, an obscure 1868 law makes it a third-degree felony to “adulterate … any liquor” with certain specified substances, ranging from grains of paradise and capsicum (chili pepper) to potentially deadly opium and “sugar of lead.” Fla. Stat. § 562.455. Some have postulated that this law’s original intent was to prevent consumer deception, as the banned ingredients were once added to liquor to make it taste stronger (more alcoholic) than it actually was. That same practice spurred an 1816 law of Parliament (56 Geo. III, ch. 58) making it illegal for brewers and dealers in beer to possess grains of paradise. Unlike merrie olde England, however, the Sunshine State never got around to repealing its law.
It was only a matter of time. As we anticipated last summer, the plaintiffs’ bar recently filed a slew of false advertising suits against manufacturers of products infused or made with cannabidiol, a/k/a CBD. This development was a fait accompli, given the combination of a booming CBD market, a murky federal regulatory landscape, and a patchwork of state regulatory efforts at varying degrees of development. This confluence of factors has paved the way for at least ten consumer lawsuits in the last six months against producers of CBD products. We expect more suits to follow in the near future as copycat suits are filed, CBD products become increasingly mainstream, and more deep-pocketed players enter the CBD market.
This blog has previously examined the recent spate of so-called “slack-fill” lawsuits, in which consumers claim that a food (or other) product is misleadingly packaged because it contains excess air. We noted that the growing trend is for courts to reject such suits at the motion-to-dismiss stage, for a variety of reasons. For example, courts have found slack-fill complaints deficient for failing to allege, beyond conclusory platitudes, that the package’s empty space serves no legitimate function, or for failing to allege with plausibility that a reasonable consumer would actually be deceived. Late last year, in Benson v. Fannie May Confections Brands, Inc., the U.S. Court of Appeals for the Seventh Circuit issued an important decision affirming the pleadings-stage dismissal of a slack-fill suit, but based on a distinct justification: the failure to plausibly allege any cognizable damages associated with slack-filled packaging.
Prevagen Maker Avoids Sting of Defeat as Judge Declares Mistrial in Consumer False Advertising Class Action
On January 14, faced with a deadlocked jury, a federal judge in California declared a mistrial in a consumer class action involving the marketing of Prevagen, a popular dietary supplement based on jellyfish-derived proteins that claims to improve brain functioning and memory. This outcome runs counter to the conventional, but mostly untested, viewpoint that juries tend to favor the plaintiffs in consumer class actions. The Prevagen trial also underscores that scientific uncertainty about the truth of an advertising claim may present challenges for the defense in the earlier stages of a class action, but become an advantage for a defendant who chooses to fight all the way to trial.
- Page 1 of 2