Tag Archives: false advertising

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.

Lanham Act Claim Targeting Nestlé’s “Poland Spring” Bottled Water Dismissed For Lack of Standing

Last summer, Maine Springs LLC filed a false advertising suit over the use of “Poland Springs” on bottled water sold and distributed by Nestle Waters North America Inc. (a unit of Nestle SA).   Yesterday, however, a Maine district court dismissed the lawsuit, holding that Maine Springs’s plans to eventually sell bottled water that would compete against Nestle’s Poland Spring® brand product was too speculative to constitute injury-in-fact.

Maine Springs LLC, based in Poland Springs, Maine, sells bulk water and aspires to produce and sell its own bottled water.   In its Complaint against Nestle, it alleged two sets of related, but distinct, facts.

First, Maine Springs alleged that Nestle had previously asserted that Maine Springs could not identify the source of its water, Poland Spring, Maine, without creating confusion with Nestle’s “Poland Spring” products.  Accordingly, Nestle demanded that Maine Springs not use any label that would identify Poland Spring, Maine as the source of its water.  Maine Springs responded by noting that, as a matter of federal and state law, bottled water must identify its source on the label.  When an amicable resolution could not be reached, Maine Springs alleged that it lost proposals to supply bulk water to several companies based on fears that Nestle might file suit.  As a result, Maine Springs alleged that it was “prevented from selling any of its water and the bottling and distribution facilities have sat idle.”

Second, Main Springs’s alleged that Nestle was engaged in false advertising because the water contained in the Poland Spring products was not “extracted from the [actual] Poland Spring,… does not even come from the same aquifer as the original source,” “does not necessarily come from carefully selected mountain springs that are continually replenished, as advertised, but from other sources including ground water and well water,” and was “sold as 100% natural spring water when it is not.”

In light of the second set of allegations, Main Springs alleged a claim under Section 43(a) the Lanham Act for false advertising which included the following allegation on damages:  “As a direct and proximate result of Nestle Water’s misrepresentations about Poland Spring® Brand water, competitors, such as Plaintiff Maine Springs, have and continue to suffer damage.”   And Main Springs alleged a second claim for tortious interference regarding the first set of facts which included the following damages allegation: “As a result of Defendant’s interference, Plaintiff has suffered actual damages in that it is being prevented from entering the market and selling its product.”

The Court granted Nestle’s motion to dismiss both claims.  With respect to the Lanham Act claim, the Court labeled Maine Springs’s damages allegation as a “bald and conclusory assertion [that] alone is insufficient to state an injury.” Construing all facts in the Complaint in the most favorable light for the plaintiff, the Court further found that the “allegedly false advertising or false designation of origin cannot have harmed Maine Springs by channeling customers toward Poland Spring® Brand water when Maine Springs has not even begun to offer bottled water.”  Moreover,  although the rejection of supply proposals was viewed as concrete and particularized, and is a sufficient injury at the pleading stage of litigation, the Court held that Maine Springs did not establish that this injury was fairly traceable to Nestle’s alleged false advertising.  Thus, Maine Springs did not establish causation and there was not Article III standing.

In light of its dismissal of the Lanham Act claim, the Court refused to exercise supplemental over the state law claim and it was dismissed without prejudice.

Wal-Mart Targeted with False Advertising Class Action Over Pomegranate-Cranberry Juice

Great-Value

To no one’s surprise, the POM Wonderful v. Coca-Cola ruling from the U.S. Supreme Court has inspired class action lawsuits against similar fruit blends. The crux of the claim is essentially the same, as highlighted in the following allegations:

Defendant strategically and purposely misleads the consuming public to believe that the Product is, or at a minimum, primarily consists of, cranberry and pomegranate juice.  The Product’s label prominently displays the words “CRANBERRY POMEGRANATE,” while at the same time down plays the other words in smaller and thinner font that reveal the juice is actually a flavored juice blend from concentrate, primarily consisting of water and cheap white grape juice concentrate, apple juice concentrate, and plum juice concentrate.  The names o f the cheap juices are not identified on the front of the label.  Cranberries and pomegranates are prominently depicted on the Product’s label, while none of the other cheaper juices are even pictured on the Product’s label.

Plaintiff’s allege claims under Florida’s Deceptive and Unfair Trade Practices Act, and common law claims for negligent misrepresentation and unjust enrichment.

Notably, the central holding of the Supreme Court’s POM Wonderful v. Coca-Cola ruling is that a federal Lanham Act claim between competitors is not precluded by FDA regulations under the Food, Drug and Cosmetic Act (FDCA) because these acts complement, rather than contradict, each other — and claims under the Lanham Act are thus not precluded by regulations under the FDCA.  That reasoning does not apply to the Wal-Mart case which involves state law claims that do not involve competitors.

Accordingly, the plaintiffs in Wal-Mart have an entire section of their complaint titled “Plaintiff’s Claim is Not Preempted” which alleges as follows in an effort to to ride the coattails of the Supreme Court ruling while attempting to avoid preclusion.

The Supreme Court of the United States has ruled on this issue.  Plaintiff’s claim is predicated on the fact that the naming, labeling, and marketing are misleading, deceptive, and unfair according to Florida’s Food Safety Act, but only in regards to the provisions that are identical in material aspects to the FFDCA or FDA regulations already imposed by the Federal Government.

****

A simple reading of the plain language of the Florida’s Food Safety Act and the FFDCA shows that Plaintiffs claims do not seek to contest or enforce anything in Florida’s Act that is beyond the FFDCA or FDA regulation requirements.  Instead, Plaintiff’s claims are predicated on the fact that Defendants’ naming, labeling, and marketing are misleading, deceptive, and unfair according to Florida’s Food Safety Act, but only in regards to the provisions that are identical in material aspects to the FFDCA.

Whether this contention holds up in light of any potential motion to dismiss remains to be seen.  A copy of the Complaint may be found here.

My Radio / Podcast Appearance on “Bloomberg Law” Regarding Unilever’s False Advertising Suit Against “Just Mayo”

It was my pleasure today to be a guest on Bloomberg Law’s Podcast / Radio show  with host June Grasso.  The topic was Unilever’s lawsuit for false advertising against the egg-free spread sold by Hampton Creek under the brand name “Just Mayo.”  You may listen to the complete podcast here.

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.

Templeton Rye Whiskey Accused of Deceptive Advertising Because It’s Allegedly Not “Made In Iowa” and Not a Prohibition-Era Recipe

Templeton Rye Spirits, LLC  from Templeton, Iowa has been accused of consumer fraud, false and/or deceptive advertising and unjust enrichment in a putative class action lawsuit filed in Cook County Circuit Court in Chicago, Illinois.

The Complaint, filed on September 9, 2014, highlights Templeton Rye’s marketing which, among other things, touts that its namesake rye whiskey is  “Made in Iowa” using small-scale production methods and produced pursuant to “a prohibition-era whiskey recipe that was the favorite drink of Chicago mobster Al Capone.”

Plaintiff alleges that, contrary to these representations, Defendant’s rye whiskey is actually mass produced in Indiana where it is “distilled and aged at the Indiana factory of MGP Ingredients, Inc.” and “the only activity that occurs in Iowa is the emptying of the barrels and the filling of the bottles….”

Plaintiff further contends that Templeton Rye has admitted that the rye whiskey it obtains from MGP is a “stock” recipe from MGP and “not one tied to Templeton’s Prohibition era” and that “reproducing the [prohibition-era] recipe is impossible due to federal rules regulating the proof and production of rye whiskey.”

Based on the foregoing, Plaintiff filed claims under Iowa and Illinois consumer fraud and deceptive business practices statutes and common law claims for “consumer fraud”, “fraud by omission” and “restitution / unjust enrichment.”  All of these claims contend that consumers have been damaged because they reasonably believed the “premium” price they allegedly paid for the product was based on it being a small-batch, “Iowa whiskey, made in Iowa, distilled just like the prohibition-era  ‘good stuff’, and [made] with Iowa ingredients (e.g , Iowa water).”

As is common for these cases, it may ultimately prove difficult for plaintiffs to show that the alleged deception actually caused them any damage, i.e., payment of a premium price because of the alleged misstatements.  After all, they paid for a good rye whiskey and received a good rye whiskey and the associated marketing may simply be “typical advertising fluff” not be tied to any economic harm.

Muscle Milk Target of Another False Advertising Claim

Muscle-Milk

Cytosport, Inc., maker of MUSCLE MILK protein shake products, is the target of a false advertising claim under the Lanham Act brought by Global Beverage Enterprises, Inc. which markets beverages under brand names such as MR. Q. CUMBER and SWEET BLOSSOM.  Although Global Beverage’s products are not protein shakes, it alleges that its beverages are displayed alongside MUSCLE MILK roducts in the same beverage coolers at Fresh Market s

Global Beverage claims that the Cytosport products are misleading because they prominently display the term MUSCLE MILK even though they do not contain milk and that this has the effect of suggesting to consumers that its products  “are healthier beverages when compared to competitor’s products, including the Plaintiff’s products.”  Global Beverage asserts that these “deceptive efforts” include marketing products (i) in flavors traditionally associated with milk such as ‘chocolate’ and ‘chocolate malt’ and terms traditionally associated with milk as ‘chocolate malt’ and ‘shake'” and (ii) as  “lactose free” which is a phrase “that would only be associated with a product containing milk.”

This case is noteworthy for two key reasons.  First, Global Beverage’s products are not protein shakes or milk products which undermines its allegation that it is harmed by the marketing of Cytosport’s products.  In this regard, Global Beverage alleges that its beverages are displayed alongside MUSCLE MILK products in the same beverage coolers at Fresh Market stores nationwide and that they therefore “compete.”  Pursuant to recent Supreme Court precedent, a plaintiff has standing to bring false advertising claims under the Lanham Act if can (1) allege an injury to a commercial interest in reputation or sales; and (2) show that such injury was proximately caused by defendant’s misrepresentations.   Because it does not appear that the parties’ products are directly competitive, both of these elements are likely to be tested in this litigation.

Second, as shown in the above image taken from Global Beverage’s complaint, MUSCLE MILK products include the statements “contains no milk” and “includes milk proteins” directly below the product name on the front label.  In  2010, the Federal Trade Commission (FTC) reviewed the use of “Muscle Milk” in connection with the “contains no milk” disclaimer and found the label was not deceptive to consumers.  One year later, the FDA took a different view and sent Cytosport a warning letter stating that the MUSCLE MILK products are misbranded because they (a) prominently feature the word “MILK” but contain no milk with the actual statements of identity (“Protein Nutrition Shake” and “Nutritional Shake”) in significantly smaller and less prominent type and (b)  contain certain milk-derived ingredients but the “Contains No Milk” disclaimer could give consumers the impression that these products are free of milk-derived ingredient, which is especially relevant with respect to allergens.  Presumably, the “Includes Milk Proteins” statement directly below “Contains No Milk” was added in response to these concerns.

The lawsuit is pending as Case No. 0:14-cv-60950 in the U.S. District Court for the Southern District of Florida.