The halfway point of 2022 finds NAD digging deep on supplement substantiation and looking closely at whether product names convey misleading claims.  Here are highlights from the past quarter and links to our posts from earlier this year.  Enjoy!

The Proof Is In the Testing (NAD Case No. 7067)NAD recommended that Dakota Nutrition, Inc., discontinue a broad range of claims relating to the presence of elderberry in the company’s Elderberry Capsules and Elderberry Gummies products, including claims that the products even contain elderberry or provide benefits commonly associated with elderberry.  NAD also recommended that Dakota Nutrition discontinue use of the term “elderberry” in the product name given that Dakota Nutrition was unable to provide a reasonable basis that its products contain elderberry, based on HPLC and HPTLC testing provided by the advertiser.  This case is a reminder of the importance of robust ingredient and finished product testing, particularly as many companies have shifted to alternate suppliers during the pandemic to meet consumer demands.

Mmmm…Chicle (NAD Case No. 7077):  NAD also went deep into ingredient testing in a challenge filed by global confectioner Perfetti Van Melle USA, Inc., against Mazee, LLC, maker of Glee Gum.  Mazee advertised Glee Gum as, among other things, an all-natural, eco-friendly chewing gum made from chicle, a tree sap that Mazee claimed is sustainably harvested from the rainforests of Central America.  To support its claims that Glee Gum contained chicle, Mazee provided information from its supplier stating that the gum base is 94% chicle tree sap (the other 6% consists of candelilla wax and natural citrus acid), along with the results of Carbon-14 testing by Beta Analytic.

Perfetti rebutted that the supplier information did not show that chicle is an ingredient because the CAS Registry Number it listed to identify “Chicle Tree Sap” is not the CAS Registry Number of chicle or any other known chemical substance.  Further, the challenger argued that the results of Mazee’s Carbon-14 tests do not provide any information as to whether the gum base in Glee Gum contains chicle, but only purport to provide information regarding whether the carbon in Glee Gum is plant or fossil-based.  Perfetti further attacked Mazee’s claims with analysis from two experts who concluded that Glee Gum did not exhibit typical chicle-related characteristics and, instead, their analysis suggested the presence of synthetic materials.   Based on this, NAD recommended that the advertiser discontinue claims that the gum base of Glee Gum is “made with chicle.” Continue Reading Mid-Year Check-in on NAD Food, Supplement and Personal Care Product Cases

This month’s update kicks off spring with a Best in Show throwback ad comparing dog flea and tick medication, pivots to claims for survivalist ready-to-eat meals (don’t even try to act like you saw that coming), highlights FDA’s recently-issued voluntary recall guidance, provides a food court update on the latest ingredient class actions and cleans up with a pet food win in the Tenth Circuit on “fresh” and “regional” claims.  Call it March madness because there’s a lot going on. Let’s get started…

NAD

Best in Show NAD evaluated whether flea and tick medications were fairly compared via a television advertisement reminiscent of the beloved film Best in Show.  The challenged ad featured a comparison of NexGard and Bravecto in a dog show setting.  The host announces: “Welcome. It’s time to see which chew is best in show for long-lasting flea and tick protection.”  As shown below, a disclosure appears on the bottom the screen stating “BRAVECTO Chews for Dogs kills fleas, prevents flea infestations, and kills ticks (black-legged tick, American dog tick, and brown dog tick) for 12 weeks. BRAVECTO Chews also kills lone star ticks for 8 weeks. NexGard is approved for 30 days.”  By week 12, the host declares Bravecto the “clear winner”.

NAD determined that, viewing the commercial in its entirety, the commercial blends duration of action claims with a comparative superiority message and that one reasonable interpretation of  the commercial is that Bravecto is superior to NexGard in protecting dogs from flea infestations. Further, NAD determined that the presentation and plain language of the disclosure were inadequate to explain that dosing intervals were the basis for the product comparison, not overall efficacy.  NAD recommended discontinuing the advertisement.  Merck is appealing to the NARB.  For more on this “apples to oranges” comparison and, better yet, a picture of cute dogs, check out Gonzalo Mon’s blog post and podcast episode here.

Not #1 NAD reviewed baby wipes testing to determine whether Water Wipes could substantiate claims that its wipes were the “#1 wipe against the causes of diaper rash” and a similar “clinically proven” claim.  As support for its claims, the advertiser relied on the results of its “Baby Skin Integrity Comparison Survey” (BaSICS Study), involving home use tests of three baby wipe brands on infants from birth to eight weeks old.  NAD identified several concerns about the design of the BaSICS Study, including:

  • The study universe was too narrow to support the broad #1 claims;
  • The study’s failure to attempt to control for the use of skin creams and lotions to treat infants with diaper rash, which could significantly impact the role of the wipes in preventing diaper rash; and
  • The study did not attempt to blind the branding and marketing on the packaging itself, which could have biased the survey participants’ responses.

Based on this, NAD found that the “#1” and “clinically proven” claims were unsubstantiated.

Delivering Social Justice?  NAD initiated a challenge against app-based delivery service DoorDash relating to the following claim: “We are donating $1 million, with $500,000 going to Black Lives Matter and $500,000 to create a fund to be directed by the Black@DoorDash  ERG  (Employee  Resource  Group)  towards  state  and  local organizations.”  In response to the inquiry, DoorDash provided documentation that substantiated donations exceeding $1 Million to various state and local organizations pursuant to its Black@DoorDash ERG.  NAD determined that the documentation adequately substantiated the claim.

These kinds of campaigns, frequently called commercial co-ventures, are subject to various state registration and bonding requirements in addition to advertising laws.  For more resources on these campaigns, check out our commercial co-ventures resources.

Sign of the Times And finally, if your tastes tend more toward preparing for the end of days, check out NAD’s decision regarding advertising for survival food kits. In a challenge that explores a range of advertising issues, one among them is whether the name of the meal kit – “3-Month Survival Food Kit” or “1-Year Survival Food Kit” conveys any messages about serving size, caloric content, or adverse effects of consuming the food for the stated period.  NAD determined that no implied claims were conveyed by the names alone but suggested that the advertiser modify disclosures regarding the number of calories offered in each kit to ensure that they are clear and conspicuous.

This decision stands in contrast to FTC’s Dietary Supplements: An Advertising Guide for Industry, which explains that product names can convey claims.  See the Identifying Express and Implied Claims section here.

 

FDA + USDA

Updated Voluntary Recalls Guidance FDA published Initiation of Voluntary Recalls under 21 CFR Part 7, Subpart C, which is an update to draft guidance issued in April 2019.  The guidance describes steps that all FDA-regulated firms should take to prepare for recalls, including identifying appropriate personnel and training them on their responsibilities, identifying reporting requirements, use of adequate coding, and maintaining records.  In addition, the guidance discusses procedures relating to initiating and executing a recall and how FDA works with recalling firms.  Comments may be submitted here.

PFAS  FDA issued new test results regarding PFAS levels in a range of foods and shared an update on the voluntary market phase-out of certain short-chain PFAS used in food packaging.  From the agency’s summary: Results from the FDA’s most recent survey of the general food supply show that 89 of 92 food samples had no detectable levels of PFAS. Three seafood samples—tilapia, cod, and shrimp—had detectable levels of PFAS. The food samples analyzed were collected for the FY2021 regional collection of the Total Diet Study (TDS) and are the fifth set of general food supply testing done by the FDA. To date, there have been 10 samples with detectable PFAS out of 532 TDS samples the FDA has tested since 2019. Based on the best available current science, the FDA has no scientific evidence that the levels of PFAS found in the TDS samples tested to date indicate a need to avoid any particular food.

  • Alleged presence of PFAS in non-food products is being used as the basis for false advertising lawsuits involving a range of cosmetics and even underwear.  Check out this link for a few recent examples.   Companies seeking to evaluate risk around PFAS should look carefully at ingredients and warning language to determine whether disclosures are adequate.
  • On a related note, our friends at Kelley Green Law Blog wrote about EPA’s recent release of PFAS data and plans to eliminate a de minimis exemption for PFAS here.
  • In addition, Washington state is considering legislation to ban PFAS and other chemicals from cosmetics and personal care products.  SB 5703, the Toxic-Free Cosmetics Act, would ban PFAS, phthalates, and formaldehyde, among other chemicals.  If enacted, the new law would become effective in 2025.

Tech Talk  As part of FDA’s New Era of Smarter Food Safety initiatives, on March 21, the agency will air the third episode in a quarterly podcast series which focuses on the development and use of new technologies to accelerate prevention of food safety problems and speed responses to foodborne-illness outbreaks.

Climate Smarts USDA announced details of the Partnerships for Climate-Smart Commodities opportunity on February 7, 2022. Through this new program, USDA will finance partnerships to support the production and marketing of climate-smart commodities via a set of pilot projects lasting one to five years. Pilots will provide technical and financial assistance to producers who implement climate-smart practices on a voluntary basis on working lands; pilot innovative and cost-effective methods for quantification, monitoring, reporting and verification of greenhouse gas benefits; and market the resulting climate-smart commodities.

  • As we wrote about last month, climate-beneficial claims are getting an are likely to continue to get a significant amount of attention from consumers, regulators, and the plaintiffs’ bar.

FTC + State AGs

Looking to Make Money?  Whether it’s food or package delivery, sale of cosmetics or dietary supplements, or another interest-earning venture, the FTC is concerned about potentially deceptive earnings claims.  To that end, the FTC released an Advanced Notice of Proposed Rulemaking (ANPR) on earnings claims as it embarked on a mission to adopt a rule that would give the FTC, in its own words, “an important new tool to return money to consumers injured by deceptive income claims, and to hold bad actors accountable with civil penalties.”  Importantly, the ANPR also suggests that the rule could do more than just change the FTC’s enforcement tools and also seek to substantively change the standard that has long been applied in analyzing earnings and lifestyle claims.  Interested parties will have 60 days from publication in the Federal Register to submit comments and respond to the FTC’s questions and requests for evidence.  Check out the full blog post and podcast from Donnelly McDowell and John Villafranco to learn more about past enforcement and where the agency is headed.

But Are You Who You Say You Are? The State AG’s joined the FTC in expressing concern about impersonation scams such as deceptive mail solicitations and phone calls that appear to come from government agencies.  Our State AG team analyzes the multi-state efforts and what’s likely to happen here.

Class Action Update

The courts served up a bit of a mixed bag in February, deciding a number of dispositive motions in the voluminous “ingredient” class action docket.

Starting with the dismissals:  A New York federal court dismissed a lawsuit alleging that Mars falsely advertised its vanilla ice cream bars as having “milk chocolate” coating when, in fact, the coating contained vegetable oils.  The court ruled it was “nothing more than a conclusory leap” to allege that reasonable consumers read statements about milk chocolate “to implicitly mean that the product necessary contains no vegetable oils.”  Additionally, two different judges in the Northern District of California dismissed cases filed against Kind, LLC and Kashi Co., alleging that various food products were miscalculating the products’ protein content in the Nutrition Facts panel.  Applicable FDA regulations only require identification of the raw of number of grams of protein in a food product, and allow that calculation to be made using what is known as the “nitrogen” method.  If a label makes a protein nutrient claim on the front of the package, however, the Nutrition Facts panel must also include a “% Daily Value” calculated using a different method, the Protein Digestibility Corrected Amino Acid Score (“PDCAAS”).  The plaintiffs in both of these cases argued that if a protein nutrient claim is on the label, then both the raw protein content and the % Daily Value must be calculated using the PDCAAS method. The court disagreed, finding that such claims are preempted by the FDCA because they would impose labeling requirements that go beyond what the FDA regulations require.

Some courts took a different approach, denying motions to dismiss in several “ingredient” cases and sending them into discovery.  For example, an Illinois court sustained a complaint alleging that a product labeled “smoked almonds” suggested that the nuts were actually roasted over an open fire, particularly because the product’s red packaging was “evocative of fire.” And in California, a judge allowed a “vanilla” yogurt class action to proceed despite three prior dismissals.  The court previously ruled that dismissal of the California Unfair Competition Law (“UCL”) claim was appropriate because no reasonable consumer would conclude that the yogurt’s vanilla flavor was derived only from natural sources and therefore the plaintiff had failed to plausibly allege reliance as required by the UCL.  The amended complaint, however, contained allegations that the yogurt violated various FDA regulations, which are incorporated into California state law through the state Sherman Food, Drug, and Cosmetic Law.  Since the Sherman Act does not require reliance as measured by a reasonable consumer, nor should the plaintiffs’ UCL claim.

And some new filings:  We saw a number of new food class action filings following the same trends we have been seeing in recent months including: (1) challenges to the use of “natural flavoring” in Poland’s sparkling water (N.D. Illinois); (2) alleged misrepresentation of cacao content in various Mondelez’s dark chocolate products; and (3) allegations relating to the amount of whole grains used in The Cheesecake’s Factory’s “brown bread” (N.D. Illinois).  Infant formula and baby food products were also a target in February, with new actions filed against Abbott Laboratories alleging that various Similac infant formulas are causing infants to develop bacterial infections and gastrointestinal illness (N.D. Illinois and S.D. Florida), against CVS for allegedly misleading label similarities between its infant and toddler formula products (N.D. Illinois), and against Sprout Foods for suggesting its baby food products are healthier than its competitors’ products (N.D. California).

In the personal care, supplement, and drug space, new filings included:  (1) multiple actions challenging “non-drowsy” claims for over-the-counter cough and flu medicine (C.D. California, S.D.N.Y., M.D. Florida, N.D. Illinois, and E.D. Michigan); and (2) a number of efficacy challenges including to claims that E.T. Browne Drug Co.’s “Tummy Butter” drastically reduces the appearance of stretch marks (Illinois state court) and Mommy’s Bliss’s gripe water reduces symptoms of colic in newborns (N.D. California).

Finally, the Tenth Circuit affirmed the dismissal of various challenges to pet food marketing claims in Renfro v. Champion Petfoods USA, Inc.  Specifically, the court ruled that “Fresh” and “Regional” claims were subjective, and that the plaintiffs’ suggested meaning—that all ingredients were “fresh”—were belied by the rest of the products’ packaging.  The court also found that Champion’s “Trusted Everywhere” claims were inactionable puffery.  Finally, the court disagreed with the plaintiffs’ allegations relating to Champion’s “Biologically Appropriate” claims, finding that no reasonable consumer would interpret the claim to mean that the dog food mirrored the “richness, freshness, and variety” of a dog’s natural prey, and was “protein rich and carbohydrate limited.”

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Stay tuned for our next monthly update and, in the meantime, check out www.adlawaccess.com for regularly-posted content on all things advertising, privacy, and consumer protection.

Food + Personal Care Litigation and Regulatory Highlights – January 2022Welcome to our 2022 inaugural issue of Food and Personal Care Litigation and Regulatory Highlights, where we explore trends and developments from around these industries.  It’s fair to say that the year has started off very busy in both the courtroom and the regulatory arena.  On this chilly winter day, our first stop is in California.

Prop 65

Our friends at Kelley Green Law Blog get the starting position for this issue by highlighting a precipitous uptick in the number of Prop 65 filings over the prior year.  While the Covid-19 pandemic caused all sorts of disruptions to society and the economy, at least one area of business has thrived over the last two years:  private plaintiff enforcement of California Proposition 65.  In 2020-2021, over 40% more Prop 65 actions were brought by private plaintiff “bounty hunters” than in the two years prior to the pandemic (2018-2019).  Compared to a decade ago, private plaintiff groups now initiate three times more Prop 65 actions each year, and five times more than in 2008.  Learn more here about the most frequently cited chemicals and those that are emerging, including PFAS. Continue Reading Food + Personal Care Litigation and Regulatory Highlights – January 2022

UK’s ASA Roasts Oatly’s Climate-Friendly ClaimsIf you’re among the over 40% of U.S. consumers who vowed to change how you eat in the new year, fitting into pants that don’t have elastic waistbands may be one of numerous motivators.  For many consumers, climate considerations are increasingly among the dietary priorities, and 2022 looks likely to bring plates filled with climate-friendly chicken or one of the many plant-based-protein options, which have grown in market share over 50% in the last two years.  As with all environmental claims, though, precise claim language and adequate disclosures are paramount.  One enforcement matter from across the pond is a helpful reminder of these ad law basics.

Need Help Talking To Dad About Milk?

The UK’s Advertising Standards Authority (ASA) recently investigated advertising by Oatly for advertisements that allegedly overstated the environmental benefits of the popular oat-based beverage.  Here’s an example:

The first TV ad, seen on January 16 2021, featured a man sneaking into his home and putting a bottle of milk in the fridge. He was interrupted by his son who said, “What have we here? Cow’s milk? Really?” Large, on-screen text stated “NEED HELP TALKING TO DAD ABOUT MILK?”. Smaller text at the bottom of the screen stated “Oatly generates 73% less CO2e vs. milk, calculated from grower to grocer. To verify see www.oatly.com/helpdad”.

UK’s ASA Roasts Oatly’s Climate-Friendly Claims

The ASA found the “Need Help Talking to Dad About Milk” ad to be misleading not because the life cycle assessment conducted to support the claims was not sufficiently robust to support a benefit.  Rather, the substantiation was limited to Oatly’s Barista Edition but the ad and the disclosure could reasonably be understood to apply to all Oatly products.  Because of this gap, the ASA found the ads misleading.

What’s the takeaway?  The ASA’s decision, which also covers four other ads, is worth a read by any food company considering how to substantiate environmental claims.  There are valuable insights from a technical perspective, including detailed discussion of life cycle analyses for Oatly’s product as well as the dairy, meat, and transportation industries.

There is also a focus on less complex but equally important features for food marketers – such as the consumer understanding of what is included in references to the “meat industry” or the “dairy industry”.  Because consumers could interpret “dairy and meat” more narrowly than how Oatly did, the ASA found the claim “Today, more than 25% of the world’s greenhouse gases are generated by the food industry, and meat and dairy account for more than half of that” to be misleading.

Stepping back, the biggest issue with Oatly’s advertising wasn’t that the company didn’t have robust substantiation for some claims.  It appears that they did.  The claims reasonably conveyed didn’t match the limitations and definitions in their substantiation, though, and this wasn’t made clear to consumers.

Welcome back from the annual food coma known as Thanksgiving dinner.  If you’re still dreaming of cranberries, stuffing, and pumpkin pie, continue the gastronomic journey with our monthly wrap up of what’s been going on in the food court, NAD’s opining on use of emojis to convey advertising claims , and highlights from FDA’s recent summit on foods sold in e-commerce.

October Food Filings…More of the Same

As we have seen throughout the year, October brought a number of new class actions, mostly filed in various federal courts in Illinois, challenging representations that plaintiffs believe suggest the use of a specific ingredient in the product, as opposed to describing the product’s flavor.  These suits include challenges to:

  • Bud Light’s Platinum Hard Seltzer use of agave syrup, as opposed to the more desirable agave spirit (N.D. Illinois);
  • Ore Ida pizza bagels’ use of a “cheese blend” despite the label’s suggestion that the product contained mozzarella, cheddar and Monterey Jack cheese (N.D. Illinois);
  • The Kroger Company’s use of artificial smoke flavor in its smoked gouda cheese rather than subjecting the cheese to a smoking process (E.D. Wisconsin);
  • Kellogg’s inclusion of fruits other than strawberries in its strawberry Pop Tarts product (S.D. New York);
  • Trader Joe’s use of combined strawberry and apple filling in its strawberry flavored “Frosted Toaster Pastries” (N.D. Illinois);
  • Lorna Doone’s use of oils and baking soda instead of butter in its shortbread cookies (S. D. Illinois); and
  • Whole Foods’ use of chocolate substitutes and vegetable oil as opposed to cacao ingredients in its vanilla ice cream bars marketed as being “dipped in organic chocolate” (N.D. Illinois).

We also observed a number of new “natural” filings against the food industry, including multiple suits challenging the use of artificial preservatives and flavorings such as citric acid, ascorbic acid, and malic acid in products marketed as “natural.”

There were also a number of health related claims filed in October.  Two such suits were filed challenging various kombucha drinks marketed in a way that suggests they can aid health when, in fact, they contain high amounts of sugar (N.D. California) or the benefits will only be observed by a small portion of the population with certain vitamin deficiencies (N.D. Illinois).  Another alleges that Stop & Shop’s “High Potency Fish Oil” fails to provide promised health benefits because it has been deprived of its omega-3 fatty acids through a chemical process called transesterification (S.D. New York).  And a fourth suit alleges that Bowmar Nutrition LLC’s whey protein-fortified nut spreads, powders, bars and frostings sold as dietary supplements and food replacements contain substantially less protein than represented on the products’ labels and website (S.D. Iowa).

And Some Victories In The Courts

Despite the number of filings, the courts issued a handful of victories for the food industry in October.  In Amin v. Subway Restaurants, the Northern District of California dismissed a putative class action alleging that Subway misrepresented that its products were manufactured with 100% sustainably caught skipjack and yellowfin tuna.  More specifically, the plaintiffs alleged that the tuna was not sourced from sustainably farmed fisheries, and did not even consist of 100% tuna.  The Court dismissed the complaint, finding that it failed to identify the specific representations being challenged, but granted plaintiffs leave to amend.

In Chong v. Nestlé Water North America Inc., the Ninth Circuit affirmed the dismissal of claims that Nestlé’s Arrowhead Water was sourced exclusively from Arrowhead Mountain.  The Court found that this was one of the “rare” cases where it could conclude that no reasonable consumer would be misled based on the pleadings and product labels alone.  The product label specifically noted that the water was collected from various mountain springs, and not from one specific mountain, and the Court ruled that the mountain and lake images on the label would not cause reasonable consumers to think otherwise.

In Vizcarra v. Unilever United States, Inc., the Northern District of California denied class certification in a suit alleging that Breyers’ Natural Vanilla Ice Cream contained only natural vanilla.  In so ruling, the Court found flaws in the plaintiff’s consumer perception survey, namely that the survey did not test the effect of the vanilla representations and instead tested the entire package which contains other statements and elements that were not being challenged in the suit.  With no other evidence suggesting class-wide deception, the Court found that the central question in the case could not be resolved with common proof and therefore class treatment was inappropriate.

Finally, in Iglesia v. Tootsie Roll Industries, LLC, the District of New Jersey dismissed a slack fill case filed against Tootsie Roll Industries, alleging that the company dramatically underfilled boxes of Junior Mints and Sugar Babies.  First, the court ruled that the plaintiff did not have standing to assert his claims regarding Sugar Babies, as he only alleges to have purchased Junior Mints, and the two products have different sizes and volumes, and contain different net weights.  As to the products that Plaintiff did purchase, the Court ruled that the product’s disclosure that it was sold by weight, and not volume, would not confuse a reasonable consumer and that the product’s statement of net weight was obviously displayed on the front panel of the product’s packaging.  Finally, the Court ruled that the plaintiff’s conclusory allegation that he was “shortchanged” was insufficient to establish damages, and that he should have specifically alleged how much he paid for the product and/or facts relating to the price of the product more generally.

NAD

The “Nauseated Face Emoji”  (and others) Can Convey Claims

In a SWIFT challenge between sports drink titans Stokely Van-Camp, maker of Gatorade, and BA Sports Nutrition, maker of BodyArmor sports drink, NAD determined that emojis can convey claims.  The case involved social media posts by Cleveland Browns quarterback Baker Mayfield, who is also a BodyArmor endorse.  As described in the decision, “The short video at issue begins with the caption “BLIND BODYARMOR TASTE TEST WITH BAKER MAYFIELD [eyes emoji].”  Standing on a practice football field dressed in  workout  attire,  Mr.  Mayfield  engages  in  a  blind “taste  test”, attempting to identify which of BodyArmor’s various flavors he has been handed by an individual who is off-screen. As Mr. Mayfield correctly verbally identifies the first three BodyArmor SuperDrink and BodyArmor Lyte flavors he samples, a green checkmark appears on the screen after each correct answer.  He is then handed what is clearly a bottle of Gatorade’s Orange Thirst Quencher drink.  After taking a sip, a green emoji depicting a face holding back vomit is displayed on the screen (the “Nauseated Face Emoji”), alongside the popular yellow laughing “Face with Tears of Joy Emoji.” Mr. Mayfield spits the Gatorade out on to the ground, and says to the camera, “Yo, that is not cool. That’s awful,” while removing his blindfold and shaking his head.  Mr. Mayfield’s accounts caption the video with, “I’m not sure I’ll ever forgive you for this.” As shared by BodyArmor, the video is captioned “C’mon @BakerMayfield, please return our calls! We’re very sorry!!! [3 Face with Tears of Joy emojis] #TeamBODYARMOR.”

In addition to contending that the video disparaged Gatorade, the challenger requested NAD’s review of four express claims:  (1) Gatorade is “awful”; (2) having to drink Gatorade is “not cool”; (3) Gatorade is nauseating (as depicted via nauseated emoji); and (4) people spit Gatorade  out  after  drinking  it.  The advertiser asserted that the video was a “social media joke” and that the emojis were subjective expressions open to different interpretations.  The advertiser also claimed that the video was puffery and did not convey objectively provable claims.

NAD focused on the “unmistakable negative” references to Gatorade in Mayfield’s express statements, e.g., Gatorade is “not cool”.  Further, Mayfield spit out the Gatorade, an action timed with use of the “Nauseated Face Emoji” showing on-screen.  In finding the video disparaging, NAD characterized it as a “harshly negative” statement about a specific BodyArmor competitor.  The disparaging nature of the message also negated BodyArmor’s argument that the video constituted puffery.  The decision highlights several recent NAD cases on point but ultimately concludes that “[e]xaggerated images and humor can be used to emphasize a message provided, however, that the underlying message is truthful.  Here the advertising makes an expressly  disparaging statement that Gatorade  is  “awful,” nauseating, or undrinkable. Because the Advertiser did not have any support for the messages about Gatorade, NAD recommended that the Advertiser discontinue the express claims made in the video.”

FDA

FDA hosted a three-day virtual summit to explore the safety of foods sold in e-commerce.  Key themes included the following:

  • The Last Mile – Even pre-pandemic, FDA was concerned about food delivery and, specifically, how to ensure food safety in the final stages before it reaches the end consumer.  As food delivery and takeout options proliferated during the pandemic, the safety concerns did as well.  Specifically, traceability poses a particular obstacle as delivery drivers may pick up food at multiple restaurants or stores for delivery to multiple different consumers.  These drivers may use varying measures to ensure food safety, such as insulated bags or coolers, or take no safety measures whatsoever.  This variability in practices, training, and even awareness of the potential problem, along with willingness on the part of industry to address the issue, emerged as key issues.
  • Cross-Contamination and Traceability – With the rise of subscription and e-commerce-only food options such as regional offerings for nationwide delivery, gift baskets, and meal kits, participants noted that labeling compliance – particularly use of lot codes and other traceability indicators – may not be sufficient to adequately identify adulterated or mislabeled products if needed.  Further, given the single serving and convenience-sized packaging commonly used in meal kits, there is potential for cross-contamination particularly if an unpackaged but contaminated item is included in the kit.  This very concern may have manifested in the form of the ongoing onion recalls due to presence of salmonella, which impacted meal kit services including HelloFresh and Everyplate.
  • New Models – As food delivery evolved and customers trended toward at-home dining, the restaurant industry has evolved as well to incorporate “ghost kitchens”.  “Ghost kitchens” are restaurant kitchens used only for preparation without any in-person dining areas.  For example, these kitchens may prepare orders only for delivery such that the ultimate customer never knows if their food was prepared in a traditional sit-down restaurant or a “ghost kitchen” functioning either out of standalone or, potentially, central kitchen-type location shared with similar services.  On the food retail side, a similar concept called “dark stores” have cropped up, in which the stores function only as fulfillment operations without any in-person shopping available.  Given the limited visibility into these operations, the concern is that it may be difficult for consumers – much less regulators – to identify food safety concerns.

FDA accepted comments through November 20, 2021 at docket no. FDA-2021-N-0929.  While the comment period has ended, stakeholders should view this as an ongoing conversation with the agency and continue to maintain the dialogue to the extent they have useful perspectives to share.

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Lina Khan was appointed FTC Chair in June of this year, about five months ago as of this writing. Even before she arrived, she promised to bring bold new thinking to the agency and to change the way it does business. In previous posts, we highlighted Khan’s vision for the agency, her plans for privacy, and the FTC’s aggressive use of penalty offense warning letters, among many other topics. In this post, we’re focusing on how Khan is changing the process and tone at the agency.

First, a little background to remind our readers of our FTC “roots,” past and present. I was a longtime career official at the agency for 26 years, rising to become Director of its Bureau of Consumer Protection (BCP) for four years during the Obama Administration. Many of my colleagues are former longtime FTC’ers too – Bill MacLeod (another former BCP Director), Laura Riposo VanDruff, Aaron Burstein, and even our managing partner Dana Rosenfeld. Others (Christie Thompson, Alysa Hutnik, John Villafranco, Donnelly McDowell, Kristi Wolff) have been practicing before the FTC for decades. We know the FTC and its powers and tools well, we’re currently representing companies under FTC investigation, and we’re watching the agency’s actions closely. Here’s what we’ve learned so far:

The FTC is in a hurry to get big, dramatic results.

Khan has styled herself as the new sheriff in town, eager to take on fights others have shied away from, and to rack up accomplishments like never seen before. So far, the agency has announced relatively few cases (as opposed to policy statements, plans, and process changes), creating ever more pressure on Khan and her appointees to speed things up and “think big.” In some instances, this has led the agency to take legal and procedural shortcuts that could backfire in the long run.

For example, even as an official review of FTC’s Health Breach Notification Rule was pending, the agency suddenly issued a policy statement “clarifying” that the rule applies to a wide array of health and fitness apps, an interpretation never contemplated in the original rulemaking. This summer, the FTC approved (by 3/2 vote) numerous resolutions allowing one Commissioner, rather than all five, to consider and approve civil investigative demands in a host of new topic areas – a move decried by the two dissenting Commissioners as a way to bypass oversight by the full Commission. In addition, the speed of investigations has accelerated – not necessarily a bad thing unless, as we are experiencing, it means skipping the thorough analysis and vetting needed to understand the facts and apply appropriate legal theories.

The agency is laser-focused on obtaining significant civil penalties and other monetary relief.

Adding to the FTC’s sense of urgency are recent limits imposed on its ability to obtain monetary relief in its law enforcement actions. In April, as we discussed here, the Supreme Court ruled that the FTC can’t obtain monetary relief under Section 13(b) of the FTC Act. As a result, the agency is attempting to use other tools to obtain money in its cases, including by re-pleading and re-filing pending cases, as we’ve discussed here.

One of these tools is to blanket the marketplace with penalty offense warning letters (over 1800 sent so far) to lay the foundation for obtaining civil penalties in later cases – an aggressive use of a little-known legal provision that we believe is a big stretch under the law. Another is to allege rule violations (which trigger penalties and/or consumer redress), including by asserting overly broad interpretations of existing rules (e.g., the Health Breach Notification Rule, discussed above). Yet another is to partner with other federal agencies and state enforcers to enhance available remedies – a strategy that forces companies to navigate multiple agencies and multiple laws in a single investigation. Newly installed CFPB Director Rohit Chopra has already announced plans to collaborate with the FTC in this manner to address “business models that rely on harvesting and monetizing personal data.”

Much of this activity is designed to give FTC staff a basis for demanding large sums from companies and individuals in consent negotiations, before a case goes to court. And indeed, some of the FTC’s penalty demands have increased substantially in recent months, with the new amounts seeming to bear little or no relation to prior cases or the number and seriousness of the alleged violations. In certain instances, these heightened demands appeared suddenly after Khan joined the agency. FTC staff are often at a loss to explain their positions and seem to have little authority to alter them.

Many agency decisions are “top down,” in contrast to prior practice.    

And that brings us to our next big observation – “top down” management. For as long as we can remember, most FTC cases and initiatives have filtered up to the Commission from career staff, both to ensure decisions on the merits (by nonpolitical staff with deep expertise) and maintain an organized deliberative process. In contrast, most decisions today appear to be coming from the top. As a result, it’s difficult to make progress simply by talking to career staff, who are not empowered or “in the know.”

In addition, many decisions appear to be driven by a desired outcome, not built from the evidence and governing law. For example, the FTC appears to be naming individuals as defendants reflexively, even though the law requires proof of participation or control over the alleged violations.

The agency, at least for now, has abandoned its bipartisan traditions.

In contrast to the FTC’s longstanding practice of developing policy and cases through consensus, many votes today are 3/2 – including those involving a reported 20 “zombie” votes that former Commissioner Chopra cast the day before his departure, which are still being counted weeks later to create a majority. This means there is less deliberation to consider different arguments and reach the best outcome, as Commissioners Christine Wilson and Noah Phillips have repeatedly argued. Although Biden’s nominee to replace Chopra – Alvaro Bedoya, a respected academic – could change the interpersonal dynamics when he arrives, he seems very likely to vote with the majority, continuing the 3/2 trend.

So what does this mean for companies and individuals being investigated by the FTC?

With an aggressive and unpredictable FTC, whose positions may not always comport with sound law and policy, the need for advocacy and strategy has never been greater. Clients need to know what arguments to make, when to make them, and who are the decision-makers. They also will need to carefully evaluate their options as they engage with agency, including:

  • Settle or litigate?
  • Take it slow or speed it up?
  • Meetings, letters, and/or White Papers?
  • Deal with staff or escalate to the Commission?

These are the types of judgments and recommendations this team has made for years, and we encourage clients to call us with any questions, large or small.  We will continue to monitor FTC developments and post updates as they occur.

If the summer slide and the start of school kept you too busy to follow what’s going on in the food scene, we hear you!  Catch up on key developments below in this issue of our Food Industry Litigation and Regulatory Highlights.

The Courts Were Kind to the Food Industry This Summer

This summer brought a series of class action victories to the food industry, including a trio of decisions from the Second and Ninth Circuits, both long-time hot beds for false advertising class actions, as well as four dismissals from the Southern District of New York.

At the appellate level, the Second Circuit affirmed the dismissal of a putative class action challenging Starbucks’ claim that its drinks are the “best coffee for you” and that its coffee is “watched over … from the farm to you,” despite the use of pesticides to kill roaches at certain retail locations.  The Court ruled that the challenged claims were not specific enough to misrepresent a quality or characteristic of Starbucks’ coffee, and that no reasonable consumer would interpret them to suggest anything about the use of pesticides in Starbucks’ stores.

The Ninth Circuit decertified a class of consumers claiming that Coca-Cola falsely labels its drinks as having no artificial flavors when they contain phosphoric acid, ruling that consumers lacked standing to pursue injunctive relief.  According to the Court, the plaintiffs’ claims that they “would consider purchasing” Coke in the future if certain disclosures were included or if the product’s labels were truthful were insufficient to show an actual or imminent threat of future harm. Continue Reading Food Industry Litigation and Regulatory Highlights, July – September 2021

As they often have done in the past, the FTC and the FDA issued joint cease and desist letters last week to 10 companies suspected of making unproven health claims – in this instance, claims that dietary supplements treat or cure diabetes. The FTC and the FDA join forces on such letters in order to deliver a strong and consistent message that unsubstantiated health claims are illegal under the laws enforced by both agencies.

The FTC warned that the claims do not appear to be supported by competent and reliable scientific evidence, in violation of the FTC Act. The FDA warned that the products are being marketed as drugs that could cure, treat, mitigate, or prevent disease, but are not generally recognized as safe and effective for the marketed uses and not approved by the FDA. As such, the products are misbranded and illegal under the Food Drug and Cosmetic Act (FD&C Act).  The letters demanded that the companies cease and desist from making unsubstantiated claims within 15 days.

Deceptive Claims under the FTC Act

To be sure, these letters are noteworthy for companies making diabetes-related claims, but their importance is not necessarily limited to that. Advertisers should pay attention more broadly to the FTC section of the letters, as it may signal the FTC testing its authority to seek penalties under Section 5(m)(1)(B).

In particular, in describing how and why the claims violate the FTC Act, the letters cite to cases holding that unsubstantiated disease claims of various types are unlawful, and appear to be styled as so-called Section (5)(m)(1)(b) letters laying the groundwork for civil penalties – similar to letters the FTC has sent companies making allegedly unsubstantiated claims that their products are made from bamboo. In general, the FTC has limited authority to obtain civil penalties. However, Section (5)(m)(1)(b) of the FTC Act authorizes the agency to seek penalties when the FTC has (1) previously determined in a litigated administrative proceeding that a practice is unfair or deceptive (2) issued a final cease and desist order with respect to such practice, and (3) put a company on notice of this fact (such that it has “actual knowledge) via warning letter.

It’s not clear yet whether the FTC will actually seek civil penalties based on these letters. But if it does, it would be testing the limit of its authority under Section 5(m)(1)(b). That’s because the law arguably contemplates that the “final cease and desist order” cited in a Section 5(m)(1)(b) letter be more specific to the practice being warned about than the potpourri of health cases cited in these current letters. Put another way, to confer “actual knowledge” on the companies, the cited cases should address unsubstantiated diabetes claims, not wholly different health claims about heart disease, cancer, erectile dysfunction, etc. Indeed, the language of Section (5)(m)(1)(m) and precedent from the bamboo cases support this narrower reading. Top FTC officials have called for more frequent and aggressive use of the FTC’s Section 5(m)(1)(b) authority, and this appears to be a move in that direction.

Misbranding Under the FD&C Act

The FDA section of the letters doesn’t break new ground, but it does provide a helpful gauge for risk and a reminder about the importance of context.

Companies marketing supplements and foods to people with diabetes or pre-diabetes should review the claims cited in the letters to help assess risk of their current marketing. For example, some letters cite to claims that clearly exceed the bounds of structure function claims, e.g., claiming that the ingredients or products produced quantifiable improvements in fasting blood sugar, A1C levels, and reduced blood pressure as well as risk of heart attacks. However, other letters cite to claims that many marketers may think fall more squarely on the structure-function side of the line, e.g., “promote healthy glycemic response” and “supports healthy glucose tolerance.”  In addition to product labels and websites, the letters also cite to claims on social media – including testimonials dating as far back as 2018 – and to Amazon store fronts.

As is standard, the letters cite to specific claims, but it’s important to also consider the broader context. When marketing diabetes-related products, it’s risky to position any product as the fix for a condition that likely requires medication along with constant dietary discipline and monitoring. Even if the product claims are substantiated and within structure-function limitations, the context of positioning the product as one part of an overall diabetes management plan is key to managing risk.

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We will closely monitor developments in these matters, as well as the agencies’ future use of warning letters and sources of legal authority, and post updates as they occur.

Subscribe here to Kelley Drye’s Ad Law News and Views newsletter to see another side of the team in our second annual Back to School issue. Subscribe to our Ad Law Access blog here.

 

The dietary supplement and personal care product space continued to see enforcement on false CBD, COVID, and fertility claims as well as related litigation involving “germ-killing” claims on hand sanitizers and wipes.  Messy stuff…Let’s take a look…

 

LITIGATION

Personal Care Products

In a blow to the trending “pink tax” theory of liability in consumer class actions, in May, the Eighth Circuit ruled that various personal care product manufacturers and retailers did not violate Missouri’s anti-discrimination laws by charging more for products marketed towards women as compared to allegedly identical products that were either marketed towards men or utilized gender-neutral marketing.  The Court found that the plaintiff “mistakes gender-based marketing for gender discrimination” and, in the process, ignores numerous differences between the products that account for the higher price tag.  There has been a handful of similar “pink tax” cases filed over the last year or two, but this is the first appellate court to rule on the issue. Continue Reading Dietary Supplement and Personal Care Products Regulatory and Litigation Highlights – May and June 2021

For our June review, the action stays largely in the litigation arena with vanilla getting thrown out and sustainability as well as settlements getting called into question.  Meanwhile, environmental and health stakeholders are pushing FDA to ban PFAS from food contact uses as many in industry move away from PFAS-containing packaging.  How to digest all of it?  Consider some yogurt.  FDA updated the standard of identity, making it more delicious than ever.  Let’s take a look….

LITIGATION

Two More Vanilla Cases Get Thrown Out of the Food Court

In Robie v. Trader Joe’s Co., the Northern District of California dismissed claims that Trader Joe’s Almond Clusters cereal should have been labeled as “artificially flavored.”  The court held that, because the vanilla flavor can from both the vanilla plant and vanillin derived from tree bark, it was properly labeled as “Vanilla Flavored With Other Natural Flavors” under applicable FDA regulations and the plaintiff’s claims suggesting otherwise were preempted.  The court also found that the plaintiff had failed to allege facts suggesting that reasonable consumers would interpret “vanilla” on the product label to mean that the product’s flavor is derived exclusively from the vanilla plant, especially given that the challenged label did not contain any other words or pictures suggesting that the flavor was derived exclusively from the vanilla bean. Continue Reading Food Industry Regulatory and Litigation Highlights – June 2021