Category Archives: False Advertising

Campbell Seeks Dismissal of “Healthy” Labeling Lawsuit

Campbell Soup Company (“Campbell”) has moved to dismiss a putative class action lawsuit alleging that Campbell’s Chunky™ Healthy Request® Grilled Chicken & Sausage Gumbo Soup product is falsely and misleadingly advertised as “healthy” because it contains partially hydrogenated oils (PHO’s, i.e. artificial trans fats) that are harmful to human health.

In its motion, Campbell argues that the USDA’s review and pre-approval process for labels pre-empts the suit because that regulatory framework specifically looks at whether labels are false or misleading and includes “pervasive” regulations relating to “healthy” claims. Campbell contends that these regulations — as propounded pursuant to the Poultry Products Inspection Act and the Federal Meat Inspection Act — prohibit any consumer protection claims under state law.

Ultimately, the key question will be whether the Court accepts that the suit seeks to impose requirements on “approved labels” that add to, or differ from USDA’s requirements relating to “healthy” claims.   In some cases, courts have rejected preemption arguments on the grounds that the lawsuit seeks to help, rather than hinder, the federal objectives.  But Defendants may have an uphill claim to the extent the court agrees with Campbell that its labels fully comply with USDA regulations for “healthy” claims, which do not expressly prohibit the existence of trans fats.

 

Wal-Mart Seeks Dismissal of “Pork and Beans” False Advertising Lawsuit

On October 7, 2015, a putative class action lawsuit was filed against Wal-Mart Stores Inc. and Wal-Mart Stores East, LP (collectively “Wal-Mart”) in the U.S. District Court for the Central District of California.  The lawsuit alleges breach of warranty, unjust enrichment, and violations of California, Pennsylvania and New Jersey law.

Plaintiffs allege that Wal-Mart’s store-brand Great Value Pork and Beans in Tomato Sauce does not actually contain pork. They allege that “rigorous scientific testing, including microscopic and chemical analysis, has revealed that the product contains no pork whatsoever” and that the labels for each and every can of these products is false and misleading.

On January 27, 2016, Wal-Mart filed a motion to dismiss the complaint, asserting that “Plaintiffs concede that the label on Great Value Pork & Beans in Tomato Sauce states very clearly that the product ‘contains less than 2%’ of pork” and that Plaintiff’s test results are therefore not surprising.  Wal-Mart’s motion continues:

If Plaintiffs relied on testing that was not sensitive enough to detect an ingredient that was less than 2% of a product, then the fact that their testing failed to detect pork does not mean that pork is not an ingredient in the product at issue. Thus, without more detail, Plaintiffs’ allegation – that because their testing was unable to detect pork in the product means it does not contain pork – is logically fallacious, an invalid inference.

Put differently, Wal-Mart alleges that the Complaint is too vague and conclusory with regard to the testing that allegedly occurred.  Wal-Mart further argues:

In essence, at least as currently pled, Plaintiffs are alleging that the product at issue does not contain enough pork to use the name “Great Value Pork & Beans in Tomato Sauce.” But such an allegation is preempted – federal law mandates that this product include the work “pork” in its title if it contains any pork.

Thus, Wal-Mart’s motion is based on two key arguments.  First, that Plaintiffs’ allegation about testing lacks specificity and is thus not facially plausible because it does not plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”  In this regard, Wal-Mart ties its argument to Plaintiffs’ alleged concession that the product contains less than 2% pork but fails to include allegations regarding the sensitivity of the alleged testing.  Second, Wal-Mart notes that Plaintiffs’ Complaint refers to FDA documents that establish that “pork and beans” is the “common or usual name of canned beans packed in sauce and that has been prepared with even relatively small quantities of pork.”  Accordingly, Wal-Mart argues that, so long as its product includes very small quantities of pork, federal regulations necessarily require that it be labeled as “pork and beans” and Plaintiffs’ claims are thus preempted.  In fact, Wal-Mart specifically argues that “the [Nutrition Labeling and Education Act of 1990] actually requires Wal-Mart to label its Pork & Beans product as ‘pork and beans’ because that is the ‘usual or common name’ of the product.”

This case is definitely worth watching and I’ll provide an update with the court’s ultimate ruling.

Welch’s Fruit Snacks Violate “Jelly Bean Rule” Alleges New Class Action Lawsuit

A class action lawsuit has been filed against Welch Foods, Inc. alleging that it is misrepresenting the fruit content and the nutritional and health qualities of its fruit snacks.  The case was filed on September 18, 2015 and is pending as case no. 1:15-cv-05405 in the U.S. District Court for the Eastern District of New York.

Specifically, plaintiffs allege that Welch deceived consumers by suggesting that Welch’s Fruit Snacks contain significant amounts of the fruits depicted in the marketing and on the labeling of the products, are nutritious and healthful to consume, and are more healthful than similar products.  In this regard, plaintiffs highlight that the product labels include the claim that the Fruit Snacks are “Made With REAL Fruit” and include images “of the characterizing fruit.”  Moreover, they allege that claims such as contains “100% Vitamin C,” “25% Vitamins A & E,” and “no preservatives” are representations that the Fruit Snacks are healthy.

But the products are not healthy, according to plaintiffs, because the products allegedly “contain only minimal amounts of the vibrantly depicted fruits, and are no more healthful than candy.”  Those depicted fruits, plaintiffs allege, “are not the predominant ingredient or even the most prominent fruit in the” Fruit Snacks which actually “contain significant amounts of sweeteners and added sugars, as well as artificial flavors and artificial colors.”

Notably, Plaintiff’s specifically alleged that the Fruit Snacks or misbranded under FDA regulations because Welch fails to display the true percentage of the fruits used in the product name on the front label in violation of 21 C.F.R. §102.5(b).  That provision requires a product to “include the percentage(s) of any characterizing ingredient(s) or component(s) when the proportion of such ingredient(s) or component(s) in the food has a material bearing on price or consumer acceptance or when the labeling or the appearance of the food may otherwise create an erroneous impression that such ingredient(s) or component(s) is present in an amount greater than is actually the case.”

In addition, Plaintiff’s assert that the Fruit Snacks violate the FDA’s Fortification Policy (known as the “jelly bean rule”) which provides that the FDA “does not encourage indiscriminate addition of nutrients to foods, nor does it consider it appropriate to fortify . . . sugars; or snack foods such as candies . . . .”  21 C.F.R. §104.20(a).   In this regard, Plaintiffs further allege that if Welch “had not … fortified the Fruit Snacks with vitamins A, C, and E, they could not claim that these sugary snacks were a nutritious, vitamin-rich food.”

In response to the Complaint’s allegations, Promotion in Motion, which makes the snacks under license for Welch Foods,  issued the following statement: “It is a fact that fruit, whether in the form of juices or more recently purees, has always been the first ingredient in Welch’s Fruit Snacks.  Our labeling is truthful and gives consumers the information they need to make informed decisions.  For nearly 15 years, we have been proud to bring consumers snacks made with the highest quality ingredients, that consistently meet and even exceed quality standards and FDA regulation.”

This case underscores the continuing risks associated with marketing products that include real fruit (including fruit juices) but also added sugar and other ingredients.  Food companies naturally want to include imagery highlighting the fruit flavors associated with a product and highlight that the products include real fruit.  And fortification can help make a product more healthy and attractive to consumers.  On the other hand, plaintiff’s attorneys are quick to attack such marketing as detailed above.  This case also has echoes of the  class action over Coca-Cola’s Vitaminwater which settled last year, where the central allegation was that the product’s name and labeling were misleading because many of the flavors contained negligible amounts of fruit juice and were predominantly made up of water and sugar.

My Comments on the Blue Diamond “Almond Milk” Class Action Suit.

Blue Diamond Growers has been targeted in a class action lawsuit alleging that its “almond milk” products mislead consumers because they only contain 2% almond milk.  I provided some thoughts on this case to FoodNavigator-USA, which can be found here.

Lagunitas “IPA” Lawsuit and Lessons in Social Media

Lagunitas-IPA???????????????????

When determining whether to file a lawsuit, the cost-benefit analysis must always include public reaction, which these days plays out almost instantly on social media.  But predicting public reaction is quite imprecise.  Case in point is Lagunitas Brewing Co.’s recent lawsuit against Sierra Nevada Brewing Co., which was filed on Monday, January 12th and then voluntarily dismissed on Thursday, January 15th.

In the lawsuit, Lagunitas claimed that Sierra Nevada infringed numerous trademarks registered with the U.S. Patent and Trademark Office for several design-plus-word marks pertaining to its India Pale Ale, all of which feature  the words “Lagunitas IPA” that are variations on the above.   None of the registrations, however, are for the word mark “IPA” standing alone and many other brewers have trademark registrations for names of beer that include “IPA.” Recognizing this fact, Lagunitas further alleged that, “[w]hile other brewers have adopted the shorthand parlance of “IPA” to market their India Pale Ales, only Lagunitas is identified with the large, bold, black, centralized “IPA” lettering ….”

Claims for trademark infringement, unfair trade practices and unjust enrichment were alleged against Sierra Nevada premised on the following allegations:

[Sierra Nevada’s] proposed design uses all capital, large, bold, black “IPA” lettering in a font selection that is remarkably similar to the iconic Lagunitas design and, indeed, is the central and most prominent feature of the new Sierra Nevada design, emulating the iconic Lagunitas Family  of IPA Trademarks.  This proposed design even uses the kerning between the “P” and the “A” characters that is distinctive to the Lagunitas Family of IPA Trademarks….  Significantly, Sierra Nevada now appears to be making a radical departure from its traditional label designs which feature “IPA” lettering in much smaller text, usually preceded by another term (i.e., “Fresh Hop,” “Extra,” “Rye”, “Red,” etc.) of the same text size and which feature outdoor/nature scenes. Instead, … the proposed Hop Hunter IPA design is strikingly different from its prior imagery used with its India Pale Ales.

Lagunitas further alleged that the likelihood of confusion as to origin increases when the product is viewed at some distance and, moreover, that there’s a high likelihood of confusion as to “sponsorship or approval” between the companies because “Sierra Nevada is well-known in the craft brew industry for its collaboration with other brewers.”

But when the filing the lawsuit became publicized, Lagunitas was harshly criticized because it seemed focused on protecting the acronym “IPA”, which describes a type of beer.  As noted by CNBC:

The beer battle fell flat on social media.

“Really – Is this necessary?” tweeted @FW_Brewmaster.

“This is ridiculous, @lagunitasbeer should be ashamed,” added @mattmaceachem.

As for the logos creating confusion among consumers, @BeerMagazine tweeted, “The only thing confusing is this,” referring to the lawsuit.

“It was stunning actually, and by 10 o’clock in the morning I was reeling,” [the founder and CEO of Lagunitas, Tony] Magee said about the backlash online. ”  I went home at the end of the day feeling as if I’d run a marathon or been beaten up.”

Indeed, on February 13th, Magee sent the following tweets which began by defending the lawsuit and ended with the statement that the lawsuit would be withdrawn.

This is just a course of action we did not want to take. I attempted to work it out privately w/ SNB but not successful. Deeply saddened…

Today, January 13th 2015, has been the worst day ever in 23 years of growing my brewery. Worst. Growing a biz involves defending a biz…

Defending a biz requires answers to Hard Questions. Q’s like: Are our Foundations Strong? Are our Flavors right? Are our Labels Defensible?

There r many Courts in the world. For me, over the last month, one Court was a series of rebuffed phone calls. Another was a court of law…

Today was in the hands of the ultimate court; The Court of Public Opinion and in it I got an answer to my Question; Our IPA’s TM has limits.

I don’t know every answer beforehand, so I feel around for the edges and try to learn. Today I was seriously schooled & I heard you well…

Tomorrow mornin we’ll Drop the Infringement Suit & get back to answering other Questions. I don’t think I was wrong for wanting to know cuz…

I had to know the Answer, but the Answer came much sooner than I thought and in a different Court than I thought it would. Can I say thanks?

As he wisely notes, there are various “courts” in which business disputes are considered and judged.  Because trademark rights represent the goodwill of a company, sometimes efforts to defend trademarks can, ironically, do more than good to that goodwill.

Unilever: “Just Mayo” Misleads Consumers Because It’s Not “Mayo”

Unilever owns the Hellmann’s® and Best Food’s® brands of mayonnaise.  On October 31, 2014, Unilever filed suit in the U.S. District Court in New Jersey against Hampton Creek, Inc. for false advertising and unfair competition for selling an egg-free spread under the brand name “Just Mayo.” According to Unilever, the lack of any eggs in the product precludes it from being labeled as “mayonnaise” under federal regulations and consumers are further misled in this regard by the egg on the product label.  As alleged in the Complaint:

“Mayo” is defined in the dictionary and in common usage as “mayonnaise.”  Under federal regulations, common dictionary definitions and as consumers understand it, “mayonnaise” or “mayo” is a product that contains eggs. That ingredient does not exist in Just Mayo.  By calling its vegan sandwich spread Just Mayo, Hampton Creek falsely communicates to consumers that Just Mayo is mayonnaise, when it in fact, it is not.  The literally false product name is highlighted on the label, which also features a giant image of an egg … and in advertising for Just Mayo.

Finally, Unilever complains that comparisons made by Hampton Creek claiming that JUST MAYO tastes better and is superior to “real” mayonnaise, including Hellmann’s, are unsubstantiated and part of its “larger campaign and pattern of unfair competition.”

The JUST MAYO brand is a rising newcomer in this market segment.  As noted by the Wall Street Journal, “Hampton Creek, founded three years ago, has raised $30 million from investors including Microsoft co-founder Bill Gates for its vision of making plant-based substitutes for common egg-based products that it says are healthier and more environmentally friendly.”  The lawsuit has inspired a petition on Change.org asking Unilever to “stop bullying sustainable food companies” which has more than 16,000 supporters as of November 11th.

Although certain blogs have labeled the lawsuit frivolous, it is highly doubtful that Hampton Creek can have the claims dismissed as a matter of law.  Rather, the case will likely move forward and hinge on the ultimate question of whether the “Just Mayo” label and associated marketing  includes one or more false or misleading statements of fact that actual deceived or has the tendency to deceive a substantial segment of consumers and influence the purchasing decisions of consumers.

Significantly, this case underscores the dangers of creating and investing in an attractive but risky brand name.  It is undisputed that the FDS’s standard of identity defines mayonnaise as “the emulsified semi-solid food prepared from vegetable oil(s),” an “acidifying” ingredient of either (1) vinegar or (2) lemon juice or lime juice, or both, and an “egg yolk-containing” ingredient.  21 C.F.R. § 169.140.   Thus, by naming an egg-free product “Just Mayo,” there was always a risk that it would be accused of deceiving consumers.

UPDATE:  I was just quoted in connection with this lawsuit on FoodNavigator-USA — see here.

Crown Royal TM Suit Survives Summary Judgment Against “Crown Club”

Crown-Royal

Crown-Texas

In March 2013, Diageo North America, Inc., which owns the Canadian Whiskey brand “Crown Royal,” filed various trademark and unfair competition claims against Mexcor, Inc. and EJMV Investments, LLC.  Diageo alleged that Defendants have been selling “directly-competing Canadian whisky products” under various brands “dominated by the term ‘CROWN,’ including Texas CROWN Club, Florida CROWN Club … and South Carolina CROWN Club.” Diageo alleged that this issue was compounded by Defendants’ packaging of the products in “imitative bags … violate Diageo’s rights in [its] Purple Bag mark” and “unfairly imitate the overall look and feel of Diageo’s CROWN ROYAL® product line.”  In sum, Diageo claimed that consumers will mistakenly believe that [Defendants’] whiskeys are “affiliated with, sponsored by, approved by, or associated with Crown Royal” and/or that they “are regional variations or novelty line extensions of Crown Royal.”

Fast forward 20 months to the present and the case is now set to go to trial on December 3, 2014.  Both parties had filed motions for summary judgment that were all rejected by the court in an October 27th Order that did not elaborate as to the reasons for the denials.

Specifically Defendants’ motions sought summary judgment (1) as to trademark dilution on the grounds that the Crown Royal trademarks were not “famous” (2) on all claims based on laches and limitations, and (3) on the trademark infringement and unfair competition claim.   For its part, Diageo sought summary judgment on its trademark infringement, unfair competition, and false designation of origin claims.

The lack of any elaboration by the Court in its order likely means that it views issues of fact as precluding summary judgment on any of the motions.

With respect to the laches and limitations motion, Defendants claimed that they had been using the “CROWN” word mark on bottles in conjunction with velvet bags since 2008.  Diageo’s Response disputed those facts and also focused on the doctrine of progressive encroachment, which “allows a trademark owner to tolerate de minimis or low-level infringements and still have the right to act promptly when a junior user either gradually edges into causing serious harm or suddenly expands or changes its mark.”  This is an important principle to keep in mind for any brand owner.   A brand owner might be at risk of a trademark infringement suit by expanding its product lines or its geographic scope.  Thus, even if such a suit seems like a remote possibility when a trademark is adopted, strong consideration should be given to future events, especially if the brand might potentially be expanded or sold.