Stay ADvised: What's New This Week, April 12
In This Issue:
- Court "Vanilla" Ices Out Plaintiff's False Ad Suit Against McDonald's
- Plaintiffs Take a Bite Out of KIND Bars With Certification of False Ad Classes
- Smells Like Defeat for MLM Aromatherapeutic Claims at NARB
- Insufficiently Disclosed Man-Made Diamonds Are Not NAD's Best Friend
- Misleading CBD Drug Marketing for Pain Relief Is a Pain—and Illegal—Warns FDA
Court "Vanilla" Ices Out Plaintiff's False Ad Suit Against McDonald's
It seems vanilla is a leading character these days in the world of false advertising class actions. Since February 2019, spurred on by one New York law firm that has filed at least 100 such cases, food manufacturers have faced a barrage of class action lawsuits alleging that products containing "vanilla" flavor are falsely advertised because they contain very little to no real vanilla beans.
In the most recent development in this space, a judge has dismissed without prejudice a California class action lawsuit alleging that McDonald's falsely advertised that its vanilla soft serve ice cream contained natural vanilla flavor. The court held that the plaintiff had pled only facts showing a "sheer possibility that a reasonable consumer would be misled" by the marketing, which amounted to insufficient factual support to make her case even at the pleadings stage.
Suing under California's false advertising trifecta—the California Unfair Competition Law (UCL), the California False Advertising Law (FAL), and the California Consumers Legal Remedies Act (CLRA)—which requires plaintiffs to meet the "reasonable consumer" standard, plaintiff argued that McDonald's' marketing of its "Vanilla Soft Serve" and "Vanilla Cone" is false and misleading because it gives consumers the impression that the vanilla taste derives from vanilla beans, though the ice cream allegedly is flavored mostly with artificial vanillin.
McDonald's countered that it was "utterly impossible" for reasonable consumers to believe that the ice cream derived its vanilla flavor solely from natural vanilla beans. The company further averred that plaintiff had no case since the ice cream actually did contain real vanilla and plaintiff never alleged how much real vanilla consumers expect to be in the ice cream.
While Judge Richard Seeborg acknowledged that "no reasonable person" would understand a "fanciful" ice cream flavor such as "rocky road" to be "a literal description of the ingredients," it was plausible that consumers would assume that more descriptive flavors—like vanilla, chocolate or strawberry—were literal descriptions of the ingredient(s). However, the word vanilla could also denote different meanings, such as "plain," and the plaintiff did not provide support for what reasonable consumers would believe in this situation. Plaintiff could therefore not survive a motion to dismiss when she merely stated "her own belief and conclusions about consumers' beliefs without additional facts."
From vanilla ice cream to vanilla almond milk, a recent Massachusetts lawsuit claims the company Orgain deceptively markets its "Unsweetened VANILLA Orgain Organic Protein ALMONDMILK." Similar to the McDonald's case, the complaint alleges that the use of the word "vanilla" on the product label is deceptive because the ingredient list shows "organic natural flavors" and "natural flavors," which plaintiff alleges is code for vanilla flavor and not real vanilla.
Unlike the McDonald's case, the allegations in this case hinge on a misbranding theory. Plaintiff argues that the product is misbranded under Massachusetts law because the "labeling is not in compliance with federal food labeling laws," and is thereby false and misleading.
As we recently covered on Stay ADvised, although vanilla plaintiffs suffered a setback after the 2nd Circuit Court's dismissal with prejudice of the case against Oregon Chai, vanilla litigation is still the flavor of the year. (As it was in 2019 and 2020, when it accounted for a large chunk of food litigation as well.) Though the few courts that have issued decisions on this hot topic have mostly dismissed the lawsuits, the fact that so much of this litigation is outstanding means it is still too early to tell if that is the way the vanilla cookie will crumble.
Plaintiffs Take a Bite Out of KIND Bars With Certification of False Ad Classes
A New York federal judge certified New York, Florida, and California damages classes in multidistrict litigation against KIND, alleging the company falsely advertised its popular nut and fruit bars as "all natural."
Plaintiffs in the multidistrict litigation allege that KIND Bars are falsely advertised as "All Natural" and "Non-GMO" in order to capitalize on the profitable health food market and charge consumers a premium, but that KIND products are in fact not natural. Instead, plaintiffs allege they contain various processed, synthetic, and genetically modified ingredients (GMOs) such as soy lecithin, palm kernel oil, and canola oil.
In opposing class certification, the maker of the fruit and nut bar contended in part that the three class representatives weren't typical of the class because they had not purchased KIND Bars since 2015 and that from 2014 to 2017 it modified the packaging labels at issue. Due to the evolution of the labels, KIND averred that the class representatives' arguments would not be similar to the rest of the class.
KIND also argued the proposed classes were not ascertainable and that common issues could not predominate largely due to the differing and evolving labels over time. Among other arguments, KIND further argued that common questions could not predominate because plaintiffs offered multiple definitions for the terms "All Natural." U.S. District Court Judge William H. Pauley III disagreed.
First, Judge Pauley found KIND's argument against typicality unavailing, noting that by 2015 all three challenged labels were in circulation and plaintiffs purchased them. Further, there were "only three variations" of labeling over time and the differences among them were slight.
Second, the court found that while KIND labels varied, all the labeling over the putative class period was allegedly deceptive and that "all potential members in Plaintiffs' proposed classes would have seen at least one variation of the allegedly deceptive advertising." Moreover, all three variations of the packaging used either "All Natural/Non-GMO," "Non-GMO" or "No Genetically Engineered Ingredients"—terms the court again called extremely similar and even "functionally equivalent."
Finally, regarding KIND's argument relating to the multiple definitions offered by plaintiffs for the term "All Natural," the court did not disagree that plaintiffs offered multiple definitions of natural but rejected this argument because the definitions did not contradict one another. The court also rejected KIND's remaining arguments against certification.
Notably, while the court granted certification of the damages classes, it refused to certify injunctive-relief classes. In doing so, the court followed the 2nd Circuit's July 2020 ruling in Alessandro Berni v. Barilla S.p.A., which held past purchasers could not maintain an injunctive class because consumers who allege they were deceived by labels in the past are not likely to be deceived again. As applied to this case, "Plaintiffs now purport to know that KIND bars are not 'All Natural' or 'Non-GMO.' As such, an injunctive class cannot be sustained."
Slight changes in advertising and marketing over time are not likely to be sufficient to defeat class certification where the challenged statements and packaging at issue are nearly identical. However, plaintiffs should be aware that the standard for injunctive-relief classes for past purchasers, at least in the 2nd Circuit, remains difficult.
Smells Like Defeat for MLM Aromatherapeutic Claims at NARB
In a resounding defeat for a multi-level marketer of therapeutic oils, the National Advertising Review Board (NARB) affirmed a decision by the National Advertising Division (NAD) recommending that advertiser doTerra discontinue claims promoting the benefits of its essential oils as aromatherapeutic agents.
The challenged claims included "Certified Pure Therapeutic Grade" and claims associating the products with mental and emotional health benefits. doTerra's claims were challenged at NAD by competitor S.C. Johnson & Son (SCJ), which sells Glade home fragrance products.
First on tap for NARB was doTerra's claim that its oils are "Certified Pure Therapeutic Grade" (CPTG). The question here was whether the words "therapeutic" and "certified" were supported. doTerra had argued that CPTG conveys a message of oil purity rather than health and wellness.
NAD had concluded that CPTG "could reasonably be understood by consumers as both a message about the purity and quality of the essential oils being advertised and a message that the products provide relief for consumers' mental and essential health related issues." NAD cited dictionary definitions cited by the parties, and concluded that the "plain meaning" of therapeutic is that it provides "'therapy' to the benefit of the health of individuals who use the product as instructed." NAD also concluded that the term "certified" in the CPTG claim conveyed the implied message that that doTerra's products, but not essential oils in general, were certified to deliver the promoted benefit.
NARB agreed, finding that the terms "certified" and "therapeutic grade" "convey a message to reasonable consumers that the product being described provides health and wellness benefits, a message that goes beyond purity." NARB further held that these unsupported messages were conveyed regardless of context and that consumers could not be expected to go to doTerra's website for additional context.
Next, NARB delved into challenged express claims about the health and wellness benefits of essential oils generally, such as "mental and emotional health." NAD had concluded these were health claims that required substantiation with "randomized, placebo-controlled studies on human beings," and doTerra had not provided such evidence.
On appeal, doTerra argued that NAD had applied too stringent a standard. NARB disagreed, noting that NAD had indeed applied a reasonable basis standard, one that required competent scientific evidence. NAD had found that the over 70 studies provided by doTerra were not persuasive because they did not meet the standard. NARB rebuffed doTerra's attempts to argue that NAD had put too much weight on a prior decision that had found "very little hard evidence or medical science" supporting the health benefits of aromatherapy.
From a procedural standpoint, NAD should have reevaluated the evidence, said doTerra. However, NARB upheld NAD's conclusion because the challenged claims promote health claims from essential oils generally, but the specific oils marketed by doTerra were not tested for health benefits.
NAD had also concluded that implied claims that doTerra essential oils provide health and wellness benefits such as less anxiety, more energy, and a "balanced mood" were unsupported due to the lack of specific testing of doTerra's own products. It had found the studies provided by doTerra in support of these claims to have serious methodological flaws. In essence, the compounds in the oils varied, so that a study that reached one conclusion about essential oils could not be relied on to apply to other essential oils.
Though doTerra argued to NARB that there was "sufficient chemical composition identity" for the results of the studies to apply across the board, NARB stood by NAD's decision. NARB, like NAD, also rejected survey evidence showing customers had experienced the implied claims, saying not only were there possible flaws with the methodology, but it was not a good fit for the desired substantiation.
Quality, not quantity is what counts when reviewing studies that purport to support advertising claims. NARB is increasingly not a rubber stamp for NAD decisions, but its de novo review applies the same standards and looks for the same fit between claims and support.
Insufficiently Disclosed Man-Made Diamonds Are Not NAD's Best Friend
Natural claims are not just about food or vitamins or cleaning products. NAD has chiseled away at a number of claims made by man-made diamond retailer Diamond Foundry, finding that certain claims did not adequately convey that the diamonds it sells are laboratory-grown and not "mined" or "natural" diamonds.
The National Diamond Council (NDC), a trade association representing 75 percent of the world's rough (or mined) diamond production, challenged claims made by the Diamond Foundry, a purveyor of lab-made diamonds, which are indistinguishable to the naked eye from the "real" thing. These laboratory-grown diamonds (LGDs) are marketed as alternatives to the traditional diamond market, which, according to NAD, some consumers view as tainted by armed conflicts and environmentally harmful practices.
Supported by the FTC's 2018 revisions to its long-standing Jewelry Guidance, NDC's challenge asserted that Diamond Foundry's ads did not sufficiently clarify that its diamonds are man-made, albeit they may have the same optical, chemical, thermal, and physical features. Nonetheless, the FTC Guides provide that "[i]t is unfair or deceptive to use the word 'real,' 'genuine,' 'natural,' 'precious,' 'semi-precious,' or similar terms to describe any industry product that is manufactured or produced artificially." The issue, concluded the NAD, is one of origin and making that clear to consumers.
NAD found that the advertiser's general brand messaging, for both the Diamond Foundry manufacturing brand and the VRAI retail brand, includes clear messaging as to the man-made nature of its diamonds and often plainly contrasts its products with mined diamonds. However, NAD took a different view of certain claims made in Diamond Foundry's social media advertising.
First, NAD noted that most consumers who shopped for diamonds infrequently might not know about the distinction between mined and man-made diamonds. Accordingly, NAD recommended that Diamond Foundry conspicuously disclose that its diamonds are man-made, as required by the FTC's Jewelry Guides. NAD added that the company should pay particular attention to advertising that might be viewed on mobile devices, so as to avoid consumers having to scroll down to find out the diamonds are man-made.
NAD also addressed the company's claims that its diamonds are "sustainably grown" and recommended that they, too, be discontinued. NDC argued that "sustainable" as used by Diamond Foundry conveyed the misleading message that the diamonds are "extracted from the earth, albeit in a more environmentally-friendly manner." NAD agreed, finding that a reasonable consumer takeaway from this claim could indeed be that the diamonds are mined sustainably, rather than clarifying that they are man-made.
As to NDC's challenge to use of the word "real" when marketing LGDs, as in the claim that "They are real diamonds," NAD cautioned that their origin must be made clear and so recommended that Diamond Foundry stop calling the diamonds "real" because it could convey the unsupported message that the diamonds are mined and not man-made.
Diamonds can be added to the list of products for which NAD has made clear that consumers care about origin, even where the finished product is indistinguishable from a "natural" one. As one example, NAD has been clear that although chemically indistinguishable, advertisers must make clear when an otherwise "natural" product includes chemically synthesized vitamins.
Misleading CBD Drug Marketing for Pain Relief Is a Pain—and Illegal—Warns FDA
The Food and Drug Administration (FDA) warned two companies against the illegal marketing of unapproved drugs as containing cannabidiol (CBD) for pain relief. By marketing unapproved drugs in this way, the FDA warned Honest Globe and Biolyte Laboratories the companies are violating the Food, Drug, and Cosmetic Act (FD&C Act).
The FDA acknowledged that although selling products with CBD can be legal, marketing products containing CBD as a drug, without formal approval, is not, unless the advertising company meets certain narrow and stringent federal law requirements. To date only one drug containing CBD has been approved by the FDA (with a prescription, and for the treatment of seizures)—and that drug is not sold by either Honest Globe or Biolyte. Accordingly, the FDA considers the companies' marketing as misbranding and constituting the sale of unapproved new drugs.
In its warning letter to Biolyte Laboratories, the FDA accused the company of marketing Elixicure, which contains CBD, for pain relief. According to the FDA, the company explicitly promotes Elixicure's "PAIN RELIEF with CBD," claims it "uses only the purest hemp CBD extract," and that it provides "DEEP-PENETRATING PAIN RELIEF." By making claims that the CBD in Elixicure can provide pain relief, the company is marketing the product as a drug, even though "no FDA-approved application…is in effect…nor [does the product] meet the requirements for marketing without an approved application," wrote the FDA.
Elixicure is also ineligible to market the drug as an OTC medication without an approved application because it markets CBD as an active ingredient. Currently, CBD may not be marketed as an active ingredient in any medication without FDA approval. Even though the company does not explicitly list CBD as an active ingredient, it effectively markets the cannabinoid compound as such by highlighting on product packaging the pain-relieving qualities of CBD.
Biolyte's claims that the Elixicure product is FDA-registered constitutes misbranding in violation of the FD&C Act. According to the FDA, such a claim is misleading because it implies to the average consumer that the "FDA has endorsed or approved the products in some manner" when only FDA approval, not registration, has any meaning in this regard.
Honest Globe likewise markets its Therapeutic Pain Gel and Pain Relief Cream as an unapproved drug, warned the FDA. Although the company lists CBD as an inactive ingredient, the FDA argues that by labeling the drug "Pain Relief Cream with …. Rejuvenating CBD," Honest Globe is representing "CBD as an active ingredient." The FDA alleges that the company also misbranded its products by making misleading claims about CBD's pharmacological properties like pain relief.
CBD products are only on the increase and the FDA, the FTC and NAD have all provided guidance that should help companies keep their marketing claims on the straight and narrow. Marketing advice 101 is to avoid attributing curative properties to CBD ingredients.