Stay ADvised: What's New This Week, April 11
In This Issue:
- Goldfish Crackers "Reduced Calorie" False Ad Claims Likely Dead in the Water
- Federal Court Halts Serial Deceptive Marketers but Stops Short of Imposing Monetary Relief
- Plaintiffs Have Some Beef With Burger King's "Deceptive" Burger Size Ads
- Plaintiffs Say Dos Toros "Humane" Animal Treatment Allegations Are Hogwash
Goldfish Crackers "Reduced Calorie" False Ad Claims Likely Dead in the Water
Plaintiffs seem unlikely to reel in on their allegations that Campbell Soup misled them by marketing Pepperidge Farm Goldfish crackers as low calorie. That, after the federal judge hearing the case expressed skepticism that many of plaintiffs' claims hold water.
Two consumers alleged that Campbell Soup's marketing is materially deceiving consumers by displaying "140 calories per serving" on Goldfish packaging. The Goldfish crackers are "prominently labeled" as containing "0 Sugars" on the main product panel without providing the accompanying U.S. Food and Drug Administration (FDA) required statement warning the product is "not a low calorie food," say plaintiffs.
In its motion to dismiss, Campbell Soup argued that plaintiffs' FDA claims were merely technical. Further, because the calorie count is prominently and accurately listed on the package front as 140 calories, "a reasonable consumer would not and could not be confused about the number of calories in a serving of Goldfish." Reasonable consumers, said the manufacturer, take the "0 total sugars" statement "in the context of the packaging as a whole" and "do not check their common sense at the grocery store door."
At the hearing on the motion to dismiss, U.S. District Judge James Donato seemed to agree that plaintiffs' arguments were sinkers. Expressing hesitance about plaintiffs' claims, Judge Donato highlighted the fact that Goldfish's front label lists the number of calories right next to the "0 Total Sugars" claim. In Judge Donato's initial estimation, it seems he thinks it just as likely that consumers could understand the 140 calories per serving label to mean Goldfish is not a diet food as they could believe Goldfish is a low calorie food.
Plaintiffs argued that "the average consumer cannot—and should not be expected—to determine if a food is a low calorie food simply by looking at the calorie content." Judge Donato disagreed. "I don't think the reasonable consumer could be misled by that. Particularly when you're talking about 100 percent cheese crackers," said the judge, quipping, "I mean, it's not a carrot or a celery stick."
On the other hand, Judge Donato suggested he might be open to keeping plaintiffs' allegations that "Goldfish actually contain sugar" and Campbell's claims that the product contains zero sugar is "just literally false." "That one might have some legs," (or in this case, fins) he said.
Plaintiffs often face a tougher battle making persuasive false advertising arguments when the front labels contain materially relevant information (such as the 140 calories information in this case), as opposed to back labels, side labels, and ingredient lists, to which some courts concede reasonable consumers might not give even a glance.
Federal Court Halts Serial Deceptive Marketers but Stops Short of Imposing Monetary Relief
The Federal Trade Commission (FTC) has won big—sort of—in federal court against marketers it accused of deceptively marketing and selling dissolvable oral film strips hyped as smoking cessation, weight-loss, and sexual performance aids, as well as a kitchen sink's worth of illegal and harmful business practices.
A California federal court entered a permanent injunction barring Redwood Scientific Technologies and individual defendants Jason Cardiff and Eunjung Cardiff from engaging in the allegedly deceptive and illegal marketing tactics they employed for years to sell their mouth strips—but held off on issuing a monetary judgment.
In its 2018 complaint, the FTC accused Redwood and its principals of operating a "fraudulent multi-pronged scheme that has bilked consumers out of millions of dollars" by making "baseless advertising claims" about its supplement "mouth strips," then enrolling consumers in "auto-ship" programs for which they never signed up.
The allegations centered on three of Redwood's products and the unsubstantiated claims the company made about them. For TBX-FREE, a bogus smoking cessation aid, Redwood advertised that the strips were 88 percent successful and cited fabricated clinical studies from the New England Journal of Medicine. While advertising Eupepsia, a phony appetite suppressant, the defendants falsely claimed that the product enabled weight loss without diet or exercise. As for Prolongz, a dubious sexual performance aid, the company's advertising touted that the supplement boosted male sexual performance.
The court found Redwood's unsubstantiated claims and deceptive marketing practices to be in violation of the FTC Act. As for the rest of the myriad ways that Redwood broke the law and bilked consumers, the court also found (as the FTC had alleged) that the Cardiffs and Redwood "failed to honor refund policies and guarantees, used fake testimonials, made false Made-in-the-USA claims, and made illegal robocalls" and "made deceptive earnings claims as part of a multi-level marketing scheme."
In terms of what it prohibits defendants from doing, the court order is comprehensive. It permanently bars defendants from selling, marketing, or advertising thin film strips; engaging in multi-level marketing, robocalling or negative option sales; and from making any unsubstantiated claims about health benefits.
The FTC once again used this case as an example of the ways the U.S. Supreme Court's decision in AMG Capital v. FTC is curtailing the ability of the consumer protection agency to obtain monetary compensation for consumers. Said the agency: "despite the fact that the FTC presented evidence that consumers lost $18.2 million to the defendants' deceptive marketing, the court declined to order any compensation because of a recent Supreme Court's ruling in the case of AMG v. FTC, which undercuts the agency's authority to obtain such consumer redress."
Plaintiffs Have Some Beef With Burger King's "Deceptive" Burger Size Ads
When it comes to burgers, size matters. So say plaintiffs who filed a lawsuit alleging that Burger King is falsely representing that the Whopper is 35 percent larger in advertisements than it really is.
The complaint, filed in Florida federal court, alleges that by showing oversized renditions of the Whopper and other Burger King sandwiches in its ads, the fast-food company is duping consumers about the size and ingredients of these items. On behalf of themselves and a class of similarly situated consumers, plaintiffs allege unfair and deceptive trade practices in violation of state consumer protection laws, as well as unjust enrichment and other common law causes of action.
To make their case, plaintiffs rely largely on photographs of Whoppers past, present, and IRL. Side-by-side comparisons of the current advertisement and the current real-life version of the Whopper are intended to show just how Burger King advertises its sandwiches as "containing oversized meat patties and ingredients and overflow over the bun" to make it look like the burger is much larger than it is, allege plaintiffs.
Plaintiffs allege that this deception began in 2017 and point to a side-by-side comparison of Burger King's current Whopper ad versus its older Whopper ad, which they say depicts a significant size enhancement on the newer promotion. Plaintiffs note that Burger King's big fib doesn't end with the Whopper, alleging the company "materially overstates nearly every menu item on its current advertisements."
In support of their allegations, plaintiffs point to a number of social media personalities who have voiced their dissatisfaction with the wide gulf between burger size in ads versus in hand, as well as numerous customer complaints about the same thing, expressing disappointment online at the tiny portions and some even saying they were "tricked" into ordering the allegedly diminutive menu items.
Finally, plaintiffs note that the U.K.'s advertising regulator, the Advertising Standards Authority (ASA), has been onto the alleged ruse for years. Twelve years ago it ordered the chain to stop advertising misleading burger sizes: "We also examined the size of the burgers in the hands of an average-sized man and considered that they don't fill the hands to the same extent as the burger featured in the advert," finding the visuals likely to mislead viewers about the size of the product.
Plaintiffs allege that as a result of Burger King's deceptive advertising, consumers—many of whom are already strapped for cash due to inflation and high food prices—have been financially harmed and were duped into making purchases they otherwise wouldn't have. Plaintiffs allege that Burger King's false advertising harms not only consumers but also competitors that do not resort to the same underhanded practices, asserting the defendant is "unfairly competing with burger chains that more fairly advertise the size of their burger and menu items."
Is this case puffery in its truest sense (pun intended)? Maybe not. There is history in the food space all the way back to marbles in soup that says if you are using an undisclosed mockup relevant to a material selling point (e.g., an oversized burger), you need to tell the unwary consumer.
Plaintiffs Say Dos Toros "Humane" Animal Treatment Allegations Are Hogwash
Moving from burgers to burritos, another fast food chain is facing allegations it is deceiving consumers with its marketing—this time about its "natural" and "humane" treatment of animals.
Class plaintiff Lauren Prescott claims that New York-based Mexican-style fast-food chain Dos Toros is aiming to capitalize on consumer interest in foods that come from sustainable and humanely raised sources. According to plaintiff, while the chain claims that it prides itself on "sustainability," Dos Toros continues to adhere to business-as-usual treatment of animals by sourcing pork and chicken products from manufacturers that do not adhere to humane animal treatment standards.
Right out of the pen, plaintiff's complaint points to the source of the alleged misleading statements: store signage "prominently displayed" in Dos Toros stores. A large placard touts the company's "sustainability." In explaining what these sustainable practices mean, the placard continues: "Our chicken, steak, and pork are all naturally and humanely raised and are 100% ANTIBIOTIC and HORMONE FREE." Another claim states "WE PROUDLY SOURCE 100% NATURALLY RAISED CHICKEN, STEAK & PORK."
Yet, according to plaintiff, Dos Toros actually uses pigs and chickens raised in "unnatural and inhumane conditions" because the animals don't have access to the outdoors and are "routinely raised, fed, handled, and slaughtered in inhumane, crowded and stressful conditions of confinement that prevent the expression of their natural behaviors."
As examples, plaintiff points to a video on the website of a farm Dos Toros uses to source its pigs. According to the plaintiff, the video reveals crowded conditions for the pigs. Further, plaintiff says the company's been subject to government inspections documenting animal cruelty and neglect (of which the complaint features some graphic descriptions).
Likewise, plaintiff alleges that the chickens Dos Toros sources come from a supplier also cited on multiple occasions by government inspectors for the death of a large number of its birds, as well as their negative treatment.
"Dos Toros knows that American consumers increasingly and consciously seek out,
and will pay more for, animal products marketed as 'naturally' and 'humanely' sourced," and capitalizes on consumers' lack of knowledge by misrepresenting its treatment of animals, alleges plaintiff. Contrary to Dos Toros' recent assertions, plaintiff alleges that the company knew that its material misrepresentations were false and that its suppliers don't treat their animals humanely, deceiving reasonable consumers into believing that they were purchasing humanely raised animals.
"Sustainability," "humane," and even "natural" false ad claims continue to be front and center for the class action bar, as well as for regulators and the National Advertising Division. Where these cases land will guide future marketing claims. And that is a good thing given that for now the definitions of these terms remain murky—and in broad strokes, unless tied to specific attributes, are likely not supportable at all.