Stay ADvised: What's New This Week, June 1
In This Issue:
- SmileDirectClub Turns Tables on Align With NAD Challenge
- Judge in Keurig Pod False Ad Case Appears Ready to Grant Class Certification
- Class Action Claims S.C. Johnson & Son Falsely Advertising Products as Non-Toxic
- Kendall Jenner and Emily Ratajkowski Settle Fyre Festival Promotion Charges
SmileDirectClub Turns Tables on Align With NAD Challenge
In the latest salvo in the battle of the teeth aligners, the National Advertising Division (NAD) recommended that Align Technology (Align), maker of the Invisalign clear aligners, discontinue or modify certain claims the company makes about one of its products.
The matter came before NAD following a challenge by competitor SmileDirectClub (SDC), which only very recently was itself the subject of a NAD review following a challenge brought by Align about claims concerning SDC's competing product.
This time, with the tables turned, SDC challenged a mouthful of express and implied claims made by its competitor, including that Align's clear aligners product was "More Comfortable and Better-Fitting," had "2X Faster" results, and that the Invisalign treatment could be completed "in as little as three months." SDC further alleged that Invisalign's "Tier" designations used in its so-called Provider Locator tool indicate the practitioner's level of skill and/or medical expertise and that Align's SmartForce attachments pose undisclosed harms to consumers.
The parties each presented clinical and other evidence in support of their positions, much of which NAD found insufficient to support the claims made. Interestingly, however, the first issue NAD confronted concerned its own jurisdiction, which the Advertiser claimed did not extend to either the Provider Locator-related claims, which it said were tools and not national advertising claims (the Provider Locator included "tiers" that identified practitioner expertise), or to issues regarding the safety of the SmartForce attachments, medical devices under FDA authority.
NAD disagreed as to the first, explaining that the Provider Locator was not merely a tool that factually identified practitioners but, rather, "ranked" providers which NAD found can serve to "persuade" the audience to use certain doctors. Consequently, NAD determined that the challenged ranking system qualifies as "national advertising" and fell within its jurisdiction. Having accepted jurisdiction, NAD agreed with the challenger that the Locator "rankings" implied skill, with those at the higher end of the rankings more capable at Invisalign treatment than those at the lower end, a conclusion not supported by the evidence. NAD recommended that the advertiser modify its tool to make clear the basis for its ranking categories and to avoid the implied and unsupported message of superior orthodontic skill merely based on the prescriber's number of Invisalign prescriptions.
NAD came to a different conclusion with respect to its jurisdiction over claims related to "disclosure of risk" associated with the use of Align's "SmartForce attachments." The risk profile had been set by the FDA through the product's premarket clearance process which NAD determined deprived it of jurisdiction as to the basic disclosures, but not with respect to express or implied claims going beyond merely stating the FDA-cleared potential side effects. More specifically NAD only considered "the portion of the challenger's argument that suggests that the use of SmartForce attachments results in cosmetic or superficial damage that would be material to the consumer's purchasing decision." NAD determined there was insufficient evidence to demonstrate long term or cosmetic effect and declined to require Align to make additional disclosure.
Briefly turning to additional claims in the case, NAD determined that other apparently comparative claims should be modified to more clearly identify the basis of comparison. Those included claims that the Invisalign aligners are "more comfortable and better-fitting" and "easier to put on and take off."
NAD found insufficient a tiny type disclosure that the comparison was to previous Invisalign models rather than to competitors, resulting in an "unsupported broad comparative superiority message versus the entire aligner market."
"[N]either the express claim nor the advertiser's disclosure effectively clarifies the basis of comparison, and it would be reasonable for a consumer to believe that the object of the comparison was other competing aligner brands," reasoned NAD.
NAD also looked at claims made by Align on social media, recommending one be discontinued. Although NAD found that Instagram posts about overall treatment time were not misleading, a YouTube video featuring a claim that "each smile has made our system smarter" and reduced treatment time from 18 to three months was problematic because it implied a claim of reduced treatment time the advertiser could not substantiate.
Additionally, NAD recommended that Align discontinue its Invisalign "Teen Guarantee" claim that unsatisfied teenage customers could switch to braces at no extra cost within the first six months in order to clarify that the service had limited availability.
Align said it agreed to comply with NAD's recommendations.
Challenges to NAD jurisdiction are relatively rare and may take a number of different forms. Here, NAD provided helpful guidance regarding instances where it will accept jurisdiction vs circumstances where it will stay its hand in favor of other regulatory bodies. This matter also reminds us one good challenge may well deserve another. Would SDC have brought this challenge, which required a fair amount of change to Align advertising, had Align not challenged first? We will never know.
Judge in Keurig Pod False Ad Case Appears Ready to Grant Class Certification
The U.S. District Court for the Northern District of California appears likely to grant class action certification in a lawsuit accusing Keurig of falsely claiming its coffee pods were recyclable. Judge Haywood S. Gilliam Jr. characterized the coffee-maker's efforts to avoid class certification as "fighting an uphill battle," a signal that Keurig may face expanded litigation over its allegedly deceptive claims.
The suit, filed by presumptive lead plaintiff Kathleen Smith, alleges that Keurig advertised its single-use "K-cups" as recycled. In actuality, the complaint alleges, recycling plants are unable to recycle such parts, so the ads were deceptive. Meanwhile, the company produced more than 9.7 billion K-Cups, hardly an eco-friendly amount, noted plaintiffs.
Specifically, the complaint accuses Keurig of violating California's Environmental Marketing Claims Law and the Federal Trade Commission's (FTC) "Green Guides," which provide specific guidance to marketers on environmental advertising claims. Smith filed a motion for class certification in December of last year and seeks to certify a class of California consumers who purchased the Keurig single-use pods from June 8, 2016, onward.
At the hearing on the issue of class certification, Smith reiterated her allegation that the recycling information on the Keurig labels is false. Judge Gilliam expressed skepticism of Keurig's arguments that the court should refrain from granting class certification. "With regard to the class certification motion, I think that this defendant is fighting an uphill battle given the nature of the statutes at issue and the authority in these sorts of labeling cases," said Judge Gilliam.
Keurig also argued that granting class certification would be akin to combining different classes of consumers who purchased the pods for different reasons (i.e., environmental factors). Keurig contended that only a few consumers say they care whether a product is recyclable, and that consumers are not being harmed by Keurig labels. Calling that argument "a little too clever," Judge Gilliam appeared ready to reject that defense, indicating that if certification is denied on such a speculative basis, there would be few class certifications going forward.
As for the damages component of class certification, Smith asserts that her expert put forth several viable damages models while defendant argued that none of plaintiff's proposed damages models address actual demand. Smith countered that Keurig has not provided any sales data, making a damages calculation impossible.
The California Environmental Marketing Claims Law makes it illegal to make express or implied misleading environmental marketing claims. For the definition of environmental marketing claims, the statute points to the FTC's "Guides for the Use of Environmental Marketing Claims" or "Green Guides," which provide general principles applicable to environmental marketing claims, despite being guidance and not law.
Class Action Claims S.C. Johnson & Son Falsely Advertising Products as Non-Toxic
In another case of a company accused of "greenwashing" its products by marketing them as safer or more natural than they actually are, a newly filed class action lawsuit accuses S.C. Johnson & Son (SC Johnson) of falsely advertising many of its Windex cleaning products as non-toxic.
Filed last month in a California federal court, the suit claims that SC Johnson knowingly advertises as non-toxic cleaning products that contain allergens. The complaint alleges violations of the California Deceptive Advertising Practices Act, the Unfair and Unlawful Business Act, the Consumer Legal Remedies Act, and other causes of action for unjust enrichment and breach of warranty. The plaintiff further seeks an injunction to stop SC Johnson from advertising its products as non-toxic, as well as corrective action.
The plaintiff says she purchased a Windex product relying on a label conspicuously marked on it and other Windex formulas that reads "NON-TOXIC FORMULA." While SC Johnson advertised these items as non-toxic, the company knew that the products contained ingredients such as methylpropional, Citronellol, Linalool and other ingredients found to cause health problems, claim plaintiffs.
Defendant sought to capitalize on consumers' desire for less harmful products and their willingness to pay a higher price for such products, says the plaintiff. "Labeling the products as 'Non-Toxic' when they contain any ingredients that can be harmful to humans, animals, and/or the environment is wholly misleading and deceptive," write plaintiffs.
In addition, referencing the Federal Trade Commission's (FTC) "Green Guides," the complaint notes the guidelines specifically provide that "[i]t is deceptive to misrepresent, directly or by implication, that a product, package or service is non-toxic."
In addition to referencing the FTC's Green Guides, the complaint also notes that NAD just this March recommended that SC Johnson discontinue its claims that the Windex Vinegar Cleaner is non-toxic. Although NAD decisions are not legal precedent and will not and may not be used as evidence in court, they can on occasion influence a judge in charge of a given case. Although SC Johnson had provided evidence to NAD, the watchdog found that the information "fell short" of providing support for the company's claim that the product is non-toxic.
Kendall Jenner and Emily Ratajkowski Settle Fyre Festival Promotion Charges
The Fyre fallout continues, with settlements by models/influencers Kendall Jenner and Emily Ratajkowski, in which each agreed to return some portion of the amount paid to them to promote the fraudulent event ($90,000 from Jenner. The details of Ratajkowski's settlement have not been released). Last fall a host of celebrities and influencers was sued in bankruptcy court by the trustee overseeing the Fyre Festival bankruptcy in an effort to recover money from talent agencies, performers, vendors and other entities that were paid to promote and carry out the infamously disastrous festival.
Jenner, for example, was allegedly paid $250,000 to promote the Festival in an Instagram post, and Ratajkowski received some $299,000 for her promotion on Instagram. The lawsuit claimed that neither model disclosed she had been paid for their posts which the complaint charges deceived consumers. These two celebrities were just two of the many who contributed to the heavy promotion of what turned out to be a fraudulent music festival billed as a star-studded luxury event. Much of the hype was thanks to the marketing of Instagram influencers like Jenner and Ratajkowski who advertised the festival in return for generally non-disclosed monetary compensation in violation of FTC requirements.
"The unique social media marketing method employed by Fyre Festival tapped in on the power of FOMO (short for 'fear of missing out') and was extraordinarily successful amongst millennials, resulting in significant ticket sales," notes the complaint against Ratajkowski.
The complaint against Jenner claims that she "successfully promoted … the fantasy that the Festival would be populated with models and beautiful people and that fans would be missing out if they were not there." In reality, there were soggy cheese sandwiches and FEMA tents instead of the promised gourmet meals and luxury lodging.
Additionally, both complaints alleged that the models either never intended to show up at the event or never informed their followers that they would not attend. In Ratajkowski's case, she is alleged to have chosen not to attend because she knew there were problems with the festival but did not inform her followers.
Meanwhile, further similar suits against others, including musicians Blink 182 and Lil Yachty, are still pending.
These cases present a test of the enforcement potential of the FTC's Guides to the Use of Endorsements and Testimonials in Advertising. The FTC has long been impressing upon advertisers and separately upon influencers the need to disclose their "material connections" in paid-for social media posts. The Guides, however, are just that, guidance, and do not have the force of law.
In order for the FTC or, for that matter, any civil complaint to successfully bring action for failure to disclose such connections, there would have to be demonstrable consumer deception and not merely a failure to disclose. It will be interesting to follow these suits to see how reference to the Endorsement Guides plays out in the "real world," outside of cases brought by the FTC itself.