Proskauer on Advertising Law
Proskauer on Advertising Law

Update: Second Circuit Affirms Dismissal of Lanham Act Claims Based on Allegedly False UL Certification

Last fall, we covered the Southern District of New York’s dismissal of Board-Tech Electronic Company’s Lanham Act false advertising claim.  Based on its own internal testing, Board-Tech alleged that light switches sold by its competitor, Eaton Corporation, were falsely labeled as complying with an Underwriters Laboratories (“UL”) certification standard.  However, the district court found that Board-Tech had not plausibly alleged that Eaton’s labelling was false because the product was in fact certified by UL.

Earlier this month, the Second Circuit affirmed, holding that Board-Tech failed to plausibly allege that Eaton’s placement of the “UL 20” mark on its product labelling was literally false.  The mark merely communicated that the product was certified by UL, which Board-Tech conceded was true.

Board-Tech contended that the use of the “UL 20” mark necessarily implied, falsely, that any given product bearing the mark would meet the UL 20 standard, but the Second Circuit disagreed:  “The use of the UL 20 mark on Eaton’s products represents that a sampling of those products complied with UL standards when UL tested the products.  It does not represent that every single unit will perform the same way when tested by different entities.”  To sustain a claim under the false-by-necessary-implication theory of literal falsity, the Court explained, Board-Tech would have needed to show that UL no longer considered Eaton’s products to be compliant with the UL 20 standard.

Watch this space for any further developments.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Federal “Spring Water” Standards Runneth Over State Claims

We often cover cases in which false advertising claims brought under state law are challenged as preempted by a federal regulatory scheme.  Poland Spring was a recent target of state law false advertising claims, and successfully obtained the dismissal of those claims on the ground that they were preempted by federal statute.  Patane v. Nestle Waters N. Am., 2018 WL 2271161 (D. Conn. May 17, 2018).

In consolidated actions, putative class action plaintiffs alleged that Poland Spring water is not actually 100% “spring water” as defined under the Food, Drug and Cosmetics Act (FDCA).  The Food & Drug Administration’s regulations define spring water as “deriv[ing] from an underground formation from which water flows naturally to the surface of the earth,” with a “natural force causing the water to flow to the surface through a natural orifice.”  The water may be collected by a tap and with an external hydraulic force, so long as the water has all the physical properties of the water that naturally flows to the surface, and so long as the water is collected by a “hydrogeologically valid method.”  Since the FDCA does not provide a private right of action for the violation of the regulations in question, plaintiffs asserted fraud, breach of contract, and consumer deception claims under various state laws.

The district court (Judge Jeffrey A. Meyer) held that plaintiffs’ claims were preempted by § 337(a) of the FDCA, which provides that only the federal government—not private parties—may enforce FDCA violations.  According to the court, § 337(a) impliedly preempts any claim under state law based solely on a violation of the FDCA.  Plaintiffs’ principal complaint was that Poland Spring did not comply with the FDA’s standards for spring water, and plaintiffs tellingly proclaimed that they sought to enforce those standards in the FDA’s stead.  Since all claims for relief hinged on the alleged non-compliance with FDA standards, all claims were dismissed as impliedly preempted.

Plaintiffs were given leave to replead any proper state claims that are not preempted.  Though not essential to its holding, the court also expounded upon § 343–1(a)(1) of the FDCA, which expressly preempts any state law from imposing any definition of “spring water” that is not identical to the FDCA definition.  According to the court, implied preemption under § 337(a) and express preemption under § 343–1(a)(1) result in a broad preemptive effect under which only a narrow range of state law claims can survive:  “In order to survive preemption, a state law claim must rely on an independent state law duty that parallels or mirrors the FDCA’s requirement for ‘spring water,’ but must not solely and exclusively rely on violations of the FDCA’s own requirements.”  Given the court’s dicta on the combined effect of express and implied preemption, if plaintiffs’ claims in their amended pleadings are again preempted, we might expect dismissal with prejudice.  Watch this space for further developments.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Sixth Circuit Says T-bone Steaks and Salmon Filets on Pet Food Packaging Not Misleading

Last month, the Sixth Circuit held that photographs of “premium cuts” of meat on pet food packaging were not enough to mislead a reasonable consumer into believing that the kibble was made from these high-end ingredients.  Wysong v. APN, 889 F.3d 267 (6th Cir. 2018).

In 2016, Wysong Corporation, a pet-food manufacturer, sued six other pet-food manufacturers asserting that the packaging used by their competitors was deceptive under the Lanham Act because the lamb chops and other premium cuts depicted on the product packaging did not accurately represent the products’ actual ingredients—meat trimmings.

The Sixth Circuit found the plaintiff’s allegations insufficient to state a claim.  First, the packaging was not literally deceptive because it showed the type of animal from which the food was made even if it did not indicate the precise cut of meat.  Second, the packaging was not misleading because a reasonable consumer would not believe that cheap pet food was made from the same ingredients as “people-food” found “a few aisles over” in a grocery store.  Moreover, the full list of ingredients often appeared next to the allegedly deceptive photos on the product packaging, eliminating any possibly misleading effects.

To illustrate its point, the Court analogized to a fast food drive-through menu.  A reasonable consumer would not expect a burger received from a drive-through window to “look just like the one pictured on the menu.”  Rather, the idealized imagery of the drive-through menus, like the defendants’ pet-food packaging, is nothing more than puffery.

The Court also affirmed the district court’s denial of leave to amend.

We have previously highlighted a similar decision by a federal district court in California.  In that case, the court held that prominent photographs of fruit and vegetables on the packaging of Plum Organics cereal were not deceptive.

Whether it is lamb chops and dog food or pomegranates and cereal, when it comes to stating a Lanham Act claim based on deceptive food imagery, context and common sense are key.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Lanham Act Injunction Floored Where Social Media Criticisms Were Not “Commercial Advertising”

A judge in the Western District of Wisconsin recently denied a motion for a preliminary injunction that sought to prevent a customer from criticizing the plaintiff’s products over social media.  Buckeye Int’l v. Schmidt Custom Floors, 2018 WL 1960115 (W.D. Wis. Apr. 26, 2018).  Plaintiff Buckeye sells floor finishing products, and defendant Schmidt is a flooring installer and refinisher.  Schmidt purchased Gym Bond, Buckeye’s floor finishing product, to facilitate the bonding of a clear topcoat to finished hardwood sports courts.  When the topcoat peeled off, Buckeye blamed Schmidt and refused to pay for repairs and refinishing.  Schmidt then complained about Gym Bond and Buckeye on social media, which caused Buckeye to sue Schmidt for false advertising under the Lanham Act and seek a preliminary injunction barring Schmidt’s social media postings about Buckeye and its product.

At its core, the decision is a correct, although in arriving at that decision, the court made some dubious characterizations of law along the way.  In denying Buckeye’s motion, Judge Peterson first ruled that Schmidt’s statements were not made “in commercial advertising or promotion” as required by 15 U.S.C. § 1125(a)(1)(B) because that term does not encompass “individualized person-to-person communication.”  That is not quite correct.  Whether a communication meets the “commercial advertising” test depends in large part on whether the communication is intended to reach a meaningful segment of the relevant market.  Although it may be unusual for person-to-person communications to satisfy this test, such communications sometimes are sufficient, and thus there is no bright line rule, as the court supposed, that individual communications are not advertising.  Second, social media postings such as Schmidt’s are not individualized person-to-person communications.  To the contrary, statements on social media, such as Facebook postings and tweets, are often intended to reach large audiences.  The practice of companies using social media to advertise has become ubiquitous in today’s society, as the FTC and NAD have often recognized.

In addition, the court predicated its denial of a preliminary injunction on the fact that Schmidt and Buckeye were not competitors.  At first glance, that proposition too would seem incorrect, because the Supreme Court recognized in Lexmark Int’l v. Static Control Components, 134 S. Ct. 1377 (2014), that Lanham Act standing is not strictly limited to competitors.  However, what the court seemed to be getting at is that Schmidt’s public criticisms of Buckeye were not akin to a comparative advertisement in which one company disparages another’s products to promote its own.  Instead, Schmidt was simply a customer of Buckeye which was pointing out its dissatisfaction with the product it purchased and at the same time defending its own reputation from Buckeye’s attacks.  In short, the court correctly held that Schmidt was not attempting to persuade potential customers to choose its own services over those of Buckeye.  As the court explained, while the Lanham Act prohibits unfair competition, “it does not insulate commercial entities from criticism.”

The court’s decision in Buckeye reminds us that the Lanham Act is not a tool for enjoining criticism in social media where the speech is not commercial in nature, even if it may be harmful to the plaintiff’s business.  This decision is consistent with an Eleventh Circuit decision we covered last year, in which the court held that blog articles criticizing the prescribing practices of a medical clinic did not constitute advertising under the Lanham Act because the blog articles were primarily educational, not commercial.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Diet Soda Lawsuit Fizzles Out

Recently, a plaintiff’s purported class action against Diet Dr. Pepper went flat when a California federal judge held that the term “Diet” alone on a soft drink label does not constitute a claim that the soft drink will assist in weight loss.

In Becerra v. Dr. Pepper/Seven Up, Inc., Plaintiff Shana Becerra brought a putative class action in the Northern District of California against Dr. Pepper, claiming the prominent display of the term “diet” on the Diet Dr. Pepper label falsely indicated that the product would contribute to healthy weight management and would not cause her to gain weight.  2018 WL 1569697 (N.D. Cal. Mar. 30, 2018).  Instead, Becerra alleged that the use of artificial sweeteners in Diet Dr. Pepper actually caused her to gain weight.

Judge William H. Orrick dismissed Becerra’s claim, holding that nothing on the label, packaging, or advertising of Diet Dr. Pepper would suggest to a reasonable consumer that Diet Dr. Pepper will help a consumer with weight loss or healthy weight management.  Rather, the court held, a reasonable consumer would know that the term “diet” on the Diet Dr. Pepper label is simply used to denote a lower calorie version of the standard Dr. Pepper soft drink.  From the term “diet,” a reasonable consumer has no basis to infer anything more than the fact that the soft drink is calorie-free; that term, standing alone, does not imply that the soft drink has any benefit for weight loss or weight management.

Judge Orrick dismissed Becerra’s complaint without prejudice, granting her leave to amend.  The court warned Becerra, however, that the scientific studies she cited in her complaint to support her allegation that the aspartame in Diet Dr. Pepper caused weight gain were insufficient to state a claim.  The studies did not establish any causation between aspartame and weight gain.  At best, these studies merely evidenced a correlation between weight gain and the consumption of artificial sweeteners like aspartame.  Because Becerra failed to cite a single study that found a causative link between aspartame and weight gain, this provided a separate basis to dismiss her claim.

A materially identical suit was also brought against the maker of Dr. Pepper by two New York consumers in the Southern District of New York.  Relying on Judge Orrick’s decision and another California decision involving another brand of soft drink, Judge Daniels of  the Southern District of New York dismissed this suit without prejudice in an April 18, 2018 summary order.  Although both dismissals were without prejudice, it is difficult to conceive how either case can plausibly be revived.  Watch this space for further developments.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Organic Baby Food for Thought: Second Circuit Holds that OFPA Certified Organic Product Labels Cannot Be Challenged as Misleading Under State Law

The Second Circuit recently affirmed the dismissal of a class action asserting state law claims that a manufacturer falsely advertised its baby formula as organic.  In doing so, the appellate court agreed with the district court’s finding that the claims were preempted by a federal law called the Organic Foods Production Act (“OFPA”).  Marentette v. Abbott Labs., 886 F.3d 112 (2d Cir. 2018).

A group of parents who purchased baby formula sued Abbott under state law for allegedly marketing its baby formula as organic even though it supposedly did not qualify as such under state law as plaintiffs construed it.  However, the OFPA has its own process for determining whether products can be labeled as organic, and the baby product at issue had already been certified as organic pursuant to the OFPA’s statutory scheme.  Thus, the district court found plaintiffs’ claims to be preempted.

In affirming the district court’s ruling that plaintiffs’ state law claims “posed an obstacle to Congress’s objectives in enacting the OFPA,” the Second Circuit elaborated that there was simply no way to rule in plaintiffs’ favor without contradicting the certification decision by an accredited certifying agent acting pursuant to the OFPA’s terms.  Thus, the Second Circuit found a direct conflict between plaintiffs’ construction of state law and the structure and purpose of the OFPA.

The Second Circuit noted that an OFPA-compliant certification of a product as organic does not automatically preclude all false advertising lawsuits addressing an advertiser’s touting its product as organic.  Citing a decision by the Eighth Circuit, the Court of Appeals acknowledged that a suit claiming that an advertiser materially misrepresented to the accredited certifying agent the facts related to the ingredients and/or manufacturing process that led to the agent’s certification of a product as organic would not be preempted by the OFPA.  However, where as here, a plaintiff’s state law claim is premised on a different determination of what is “organic” than the OFPA provides, the state law claim is preempted.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Ninth Circuit Finds Grounds to Dismiss Iced Coffee False Advertising Suit

Recently, the Ninth Circuit affirmed a district court’s dismissal of a putative class action claiming that Starbucks deceived its customers by under-filling the liquids in its iced drinks and adding ice to make the cups appear full. Forouzesh v. Starbucks Corp. The Ninth Circuit held that “no reasonable consumer would think (for example) that a 12-ounce ‘iced’ drink, such as iced coffee or iced tea, contains 12 ounces of coffee or tea and no ice.” Continue Reading

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