Proskauer on Advertising Law
Proskauer on Advertising Law

Key 2020 Decisions from the NAD and NARB

With more than 100 closed cases, 2020 was another busy year at the National Advertising Division and National Advertising Review Board. Proskauer’s False Advertising Group closely tracks these decisions from the advertising industry’s self-regulation system to stay apprised of the latest developments and trends, and has compiled a guide providing case summaries, with our insights and key takeaways, of key 2020 decisions from the NAD and NARB. This resource, organized by industry, will help advertisers stay up-to-date on current trends, best practices and recent important changes to NAD’s procedures.

Download the guide here.

Judge Has No “Reservations” Dismissing Advertising Suit Against Omni Hotels

Judge Cathy Ann Bencivengo of the U.S. District Court for the Southern District of California recently dismissed with prejudice a putative class action alleging that the Omni luxury hotel chain deceptively advertised its hotel room rates on Expedia. In doing so, the Court found plaintiff failed to adequately allege that reasonable consumers would be deceived by Omni’s representations. Charbonnet v. Omni Hotels, No. 20-cv-01777-CAB-DEB (S.D. Cal. Dec. 16, 2020).

Plaintiff alleged Omni utilized a “drip pricing” scheme that misrepresented the true rates for its hotel rooms. The FTC defines “drip pricing” as a “technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process.” Here, plaintiff alleged Omni engaged in drip pricing by failing to disclose a “property fee” until a consumer is finalizing his or her room purchase on Expedia. Plaintiff contended she was therefore “lured into [Omni’s] artificially lowered rate.” Based on these allegations, plaintiff brought claims for violations of California’s Consumer Legal Remedies Act, Unfair Competition Law and False Advertising Law.

In dismissing plaintiff’s complaint, Judge Bencivengo found plaintiff failed to plausibly allege that Omni had engaged in any deceptive conduct. Omni’s Expedia page explicitly discloses before consumers click “Reserve” that the advertised daily rate is not the room’s total cost. Directly below the daily rate, in only marginally smaller text, Omni states the higher, total price for the room that “includes taxes & fees.”

Even though the total price appeared in slightly smaller print than the daily rate, the court found the disclosure adequate because “anyone reading the daily rate would be able to read the marginally smaller text as well.” The court further noted that on the same page, before beginning the reservation process and without having to search for the added fees, a consumer can also click on the prominently displayed “Price details” drop-down menu to see a breakdown of what taxes and fees will be added to the daily rate. The drop-down menu clearly discloses the property fee. As a result, the court found plaintiff failed to plausibly allege that the fee was hidden from consumers.

In light of all these disclosures, the court noted the implausibility of plaintiff’s theory of deception. Specifically, the court observed “[t]o believe that the total cost of a one-night stay at the Omni is the daily rate amount, solely because it is in slightly larger font than the actual stated total price listed below, would require a consumer to ignore both the total price and the ‘Price details’ link, click ‘Reserve’ directly below them and pay for a room at the higher price including the stated taxes and fees without recognizing the difference.” Finding that this purported consumer “would not be a reasonable one,” the court concluded plaintiff failed to plausibly allege a reasonable consumer would be deceived.

This case serves as a reminder that theories of deception directly contradicted by reasonably prominent disclosures in an advertisement itself are ripe for dismissal. 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.

2020 Advertising Law Year in Review

While 2020 was an eventful year in the world of advertising law, it feels wrong to begin any type of “year in review” without acknowledging the global events of this year, and the challenges they have brought to every individual in one way or another. In our role, we are often in a position of criticizing or defending from criticism the marketers who create the content at the center of our work. But, right now, we would like to take a moment to celebrate and congratulate them for a year spent capturing the tone of the times with sensitivity, insight, and just the right amount of humor, including the challenges of working from home, our newfound sense of responsibility in not going anywhere, the importance of uplifting and supporting each other, and the fact that we can’t wait to end our relationship with 2020. And, amidst all the challenges, we would like to remind everyone that 2020 also brought us Some Good News.

We look forward to a better 2021, and to seeing those of our readers who are old friends in person again and meeting others for the first time. In the meantime, let’s talk about this year’s key developments in advertising law…

Class Actions

The appellate courts didn’t skip a beat this year, issuing several important decisions in the world of class actions:

In California, we saw several unsuccessful attempts to rescue otherwise deficient pleadings by adding allegations related to consumer surveys that purported to show consumers were misled by a defendant’s advertising. Time and time again, in dismissing claims related to Mott’s applesauce, Ghirardelli baking chips, and Westbrae soymilk, the Northern District of California reaffirmed that consumer surveys alone do not make plausible an allegation that reasonable consumers are misled where the complaint has not otherwise plausibly alleged deception.

Every year brings its own set of new and ever more creative theories of false advertising. This year was no different, with decisions that resolved a plethora of interesting (albeit unsuccessful) allegations of deception:

  • In a case against SeaWorld, the Northern District of California found the (human) plaintiffs failed to demonstrate standing to defend the rights of orca whales via false advertising claims.
  • The District of Vermont dismissed false advertising claims from a consumer disappointed that Ben & Jerry’s ice cream is allegedly not, in fact, made exclusively from milk sourced from “happy cows” and “Caring Dairy” farms.
  • The Southern District of New York reminded us that claims that a seller’s products are “premium” or “the best” are mere puffery, and certainly cannot be used as a backdoor to complain about Starbucks’s alleged use of pesticides.
  • While condemning the exploitation of children in the cocoa bean supply chain, the First Circuit affirmed a series of decisions holding that chocolate companies’ failure to disclose information about upstream labor abuses on product packaging did not constitute unfair or deceptive business practices under Massachusetts law.
  • The Eastern District of New York threw out another cocoa claim, finding plaintiffs failed to plead that the labeling of Oreo cookies with the statement “Always Made With Real Cocoa” was deceptive, where plaintiffs did not dispute that Oreos do contain cocoa, but rather took issue with the fact that the cocoa was allegedly refined through an alkalizing process.
  • The Seventh Circuit affirmed the dismissal on summary judgment of claims that Fruit of the Earth’s aloe vera products were deceptively labeled as “Aloe Vera 100% Gel” and “100% Pure Aloe Vera Gel. ” The Court found (among other things) that plaintiffs failed to demonstrate that consumers interpreted these claims to mean these products were of “high quality” or “especially effective,” and the inclusion of stabilizers and preservatives in the products did not make these claims deceptive.
  • The Second Circuit affirmed the dismissal of claims that Dunkin’s “Angus Steak”  products were deceptively marketed to cause consumers to believe they contained an “intact” piece of meat, when they were actually ground beef patties with additives. The Court noted that the ads at issue included zoomed-in images clearly showing the beef patty, and reasonable consumers purchasing a $2-4 grab-and-go sandwich would not be misled into thinking they were purchasing an unadulterated, intact piece of meat.
  • The Southern District of Florida found that Burger King’s promise of a non-meat patty in its plant-based “Impossible Burger ” did not constitute a promise that the burger would be prepared separately from meat items. The court took it a step further, also granting Burger King’s motion to deny class certification at this early pleading stage, crediting Burger King’s argument that each consumer has different personal preferences for the preparation of his or her food.
  • In a case against Church & Dwight, plaintiffs alleged that the number of “loads” stated on OxiClean stain remover labels  is deceptive because, for some purposes other than a typical load of laundry, more than one load’s worth of product should be used. The court granted Church & Dwight’s motion to dismiss, concluding that plaintiffs failed to plausibly allege a reasonable consumer would be deceived by the labels. The court agreed with defendant’s arguments that reasonable consumers are not likely to be misled by the challenged claims given the disclosures made by the OxiClean labels. Proskauer represented Church & Dwight in this matter.

2020 also brought a series of “white” non-chocolate claims, with lawsuits filed against numerous confection makers alleging their “white”-labeled sugary goods deceived reasonable consumers into thinking the products contain white chocolate, when they do not. The candy gods (i.e., federal district courts) so far have not looked favorably on these claims, dismissing claims against Nestle Toll House’s Premier White Morsels, Ghirardelli’s Premium Classic White baking chips, and Hershey’s Kit Kat White bars.

However, taking the cake for largest number of class actions filed regarding a single word is almost certainly the category of allegedly deceptive “vanilla” claims, alleging that defendants’ “vanilla”-labeled products contain flavoring ingredients that do not come from vanilla beans. Claims against Wegmans vanilla ice cream, Westbrae Natural’s Organic Unsweetened Vanilla Soymilk and Blue Diamond’s vanilla almond milk have been dismissed already, and we expect many more will follow.

Lanham Act

In a year involving a good deal of Supreme Court drama, false advertising (and trademark) law did not go ignored at the highest court in the land:

  • In Romag Fasteners v. Fossil, 140 S.Ct. 1492 (2020), the Court unanimously held that a Lanham Act plaintiff can recover the defendant’s profits without proof the defendant acted willfully.  That being said, willfulness will still be an important part of Lanham Act cases moving forward, as the Court indicated it is a relevant factor for disgorgement (plus, a showing of willfulness can entitle a plaintiff to a presumption of consumer confusion).

Several circuit courts issued notable Lanham Act decisions this year as well:

  • In the great beer battle of 2020, the Seventh Circuit reversed a district court’s decision preliminarily enjoining Anheuser-Busch from advertising that Bud Light has “no corn syrup” whereas Molson Coors’s competing Miller Lite and Coors Lite beers are “made with” or “brewed with” corn syrup.
  • The Fifth Circuit vacated a disgorgement and corrective advertising award in a case involving windshield water repellant, concluding that the plaintiff failed to show the defendant’s profits were attributable to its false advertising, and that corrective advertising constituted an unsupported windfall.
  • The Ninth Circuit affirmed the dismissal of PragerU’s false advertising suit against YouTube and Google, concluding that YouTube’s content restrictions and statements about its moderation policies did not constitute commercial speech sufficient to support a Lanham Act claim.

As for notable district court decisions from the past year, two caught our eye:

  • One of those cases we handled: In MCS Healthcare v. MMM Healthcare, Proskauer successfully defended a company accused of denigrating its competitor in a widespread media campaign in Puerto Rico.  MMM’s advertising accused MCS of “tricking” its customers about the availability of special Medicare benefits, and spreading “disinformation” about MCS’s Medicare plans.  MCS challenged these claims and brought two successive preliminary injunction motions against MMM.  We defeated both motions.  The court agreed with our arguments that MCS was not entitled to a preliminary injunction concerning MMM’s advertising.
  • We are also closely following the ongoing dispute between Chanel and The RealReal over the latter’s alleged sale of counterfeit Chanel bags.  While the court dismissed Chanel’s trademark infringement claim, it declined to dismiss Chanel’s false advertising claim premised on The RealReal’s marketing claims that the products it resells are “100%” authentic.

Regulatory

The FTC’s Green Guides have become increasingly relevant to advertisers over the past few years as consumer demand for “green” products increases. This past year saw a few challenges in this space. Whether it becomes a focus for the FTC itself remains to be seen, but we anticipate this may be an area that attracts consumer class actions in the wake of an attention-grabbing NPR investigation. Watch this space.

This was a busy year in the self-regulatory space, with the National Advertising Division closing well over 100 cases. Stay tuned—and make sure you’re subscribed to our blog—for our upcoming “NAD Year in Review” deep-dive into notable cases and trends from this past year at NAD and NARB.

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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.

Judges Toss Plain “Vanilla” Deceptive Labeling Claims

The beverage industry came out on top in a pair of recently dismissed lawsuits alleging the use of the term “vanilla” on drink labels was misleading, where the vanilla flavor allegedly did not come exclusively from the vanilla bean plant. Howard Clark v. Westbrae Natural, No. 20-cv-03221-JSC (N.D. Cal. December 1, 2020); Ryan Cosgrove et al. v. Blue Diamond Growers, No. 19-Civ-8993 (S.D.N.Y. December 7, 2020).

In Clark v. Westbrae, plaintiff alleged the labeling of Westbrae Natural’s Organic Unsweetened Vanilla Soymilk was misleading because a significant portion of the vanilla flavor came from sources other than the vanilla plant. Based on these allegations, plaintiff brought claims for violations of California’s Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law.

Noting that nothing in the word “vanilla,” by itself, suggests the flavor comes exclusively from the vanilla bean, Magistrate Judge Jacqueline Corley of the Northern District of California held plaintiff failed to plausibly allege a reasonable consumer would be misled. In reaching this conclusion, the court noted the packaging did not contain any other words or images to suggest the vanilla flavor came exclusively from the vanilla bean.

Plaintiff’s allegations regarding a 2020 consumer survey were not enough to save their claims. This survey supposedly showed 69.5% of 400 consumers believed the word “vanilla” on Westbrae’s product meant the product’s flavor came exclusively from the vanilla bean. However, citing Becerra v. Dr. Pepper and Yu v. Dr. Pepper, two cases we previously blogged about, the court noted a consumer survey alone cannot satisfy the reasonable consumer test where plaintiff has not otherwise plausibly alleged that a reasonable consumer would be deceived. Here, the court found plaintiff’s survey allegation “does not make plausible that reasonable consumers understand that ‘vanilla’ soymilk is flavored exclusively with vanilla bean.”

In Cosgrove v. Blue Diamond, plaintiffs alleged the word “vanilla” on packaging for Blue Diamond’s vanilla almond milk was misleading because the almond milk “has less vanilla than the label represents, contains non-vanilla flavors which provide its vanilla taste,” and “contains artificial flavors, not disclosed…on the front label as required by law and consumer expectations.” Plaintiffs alleged violation of sections 349 and 350 of the New York General Business Law, negligent misrepresentation, breach of express warranty, breach of implied warranty of merchantability, violation of the Magnuson Moss Warranty Act, common law fraud, and unjust enrichment.

Like in Clark, the Cosgrove court found the use of the term “vanilla” by itself does not communicate to a reasonable consumer that the product was made exclusively with vanilla beans or vanilla bean extract. Instead, the court determined a reasonable consumer would understand “vanilla” to refer to a flavor, not an ingredient. Without additional representations about how that flavor is achieved, the court found a plain “vanilla” representation “would be misleading only if the [p]roduct did not actually taste like vanilla.” Since plaintiffs conceded Blue Diamond’s vanilla almond milk did in fact taste like vanilla, the court found Defendant’s “vanilla” representation was not misleading.

In reaching its conclusion, the court relied heavily on two other recent decisions from the Southern District of New York that likewise rejected arguments that simply labeling a product with the word “vanilla” would mislead a reasonable consumer into thinking it was made with vanilla beans or vanilla extract—Steele v. Wegmans Food Markets (a case we previously blogged  about) and Pichardo v. Only What You Need. The Cosgrove plaintiffs tried, unsuccessfully, to distinguish Steele and Pichardo in three ways. First, they argued that unlike plaintiffs in those cases, they alleged that the use of artificial vanilla flavor made the product “taste differently from the name of the flavor indicated.” However, the court found this was belied by allegations in the amended complaint, which stated that artificial vanilla flavor was used “to achieve the same vanilla taste.” Second, plaintiffs argued that, unlike in Steele and Pichardo, they alleged the presence of artificial vanilla flavoring was material to their purchasing decision. However, the court found this went only to materiality—it had no bearing on whether the labeling was misleading in the first place. Lastly, plaintiffs argued that the proportion of real vanilla to artificial vanilla flavoring was much smaller here than in either Steele or Pichardo. However, the court found this was beside the point; the only relevant inquiry was whether the product had the vanilla flavor, not what ingredients were used to achieve that flavor.

2020 has seen a substantial number of “vanilla” lawsuits. The courts’ decisions in these cases highlight a definite trend; a complaint that alleges defendant’s use of the word “vanilla,” on its own, is false or misleading because the product’s vanilla flavor allegedly does not come exclusively from vanilla beans is unlikely to pass muster, even at the pleading stage. Defendants can drink to this victory, but don’t forget to 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.

 

 

The Parent Trap: Ninth Circuit Affirms Dismissal of Complaint Against Advertiser’s Subsidiary and Distributor

The Ninth Circuit recently upheld a decision granting a motion to dismiss a putative class action challenging the accuracy of “natural” labeling on soap products made by Grisi Mexico, where the lawsuit was filed against the manufacturer’s U.S. subsidiary and distributor, rather than against the manufacturer itself. Prudencio v. Midway Importing, Inc., No. 19-55150, 2020 WL 6268246 (9th Cir. Oct. 26, 2020).

Plaintiffs alleged that purchasers of four varieties of Grisi Mexico soap products sold in boxes with the word “natural” were misled because the products contained synthetic ingredients. Based on these allegations, plaintiffs sued Grisi Mexico’s U.S. subsidiary, Grisi USA, and its distributor, Midway, under New York and California consumer protection statutes. The district court burst plaintiffs’ bubble and dismissed the complaint, finding plaintiffs failed to plead that these defendants were responsible for the allegedly misleading “natural” labeling on Grisi Mexico’s products. Rivera v. Midway Importing, Inc., No. CV1801469ABRAOX, 2018 WL 6438552 (C.D. Cal. Aug. 21, 2018). 

The Ninth Circuit affirmed the district court’s dismissal, holding appellants must sue Grisi Mexico, not its U.S. subsidiary or distributor, to pursue their claims. While plaintiffs alleged that Grisi USA and Midway “are together responsible for labeling . . . Grisi Products in the United States, including the soap Products at issue,” the Court found plaintiffs’ sole factual basis for these conclusory allegations were that: (i) Grisi Mexico has an ownership interest in Midway and Grisi USA; (ii) Midway and Grisi USA share ”common employees, ownership, and business functions”; and (iii) an article and an employee’s LinkedIn profile indicating Midway and Grisi USA are responsible for “marketing.” These allegations were insufficient to plausibly state a claim against Midway and Grisi USA.

First, the Court noted a parent-subsidiary relationship by itself is insufficient to impute liability on Grisi USA or Midway. Though there can be an exception where there is an alter ego relationship, “the complaint [was] devoid of any alter ego allegations.” Plaintiffs’ allegation of Grisi Mexico’s ownership interest in Midway and Grisi USA was therefore irrelevant. Similarly, the allegation that Midway and Grisi USA share employees, ownership and business functions was irrelevant, absent allegations plausibly tying these entities to the “natural” labeling at issue. The court also found “generic references to ‘marketing’ in a[n] article and on an employee’s LinkedIn page do not give rise to a plausible inference that Midway or Grisi USA were involved with the ‘Natural’ labeling.”

This decision serves as a reminder that a complaint filed against an advertiser’s subsidiary that fails to plead an alter-ego relationship or the subsidiary’s involvement in the challenged advertising is ripe for dismissal. While the result in this case certainly made sense as to a distributor like Midway who generally has no involvement with the advertising, an operating subsidiary like Grisi USA could very well have control over or involvement in the content of challenged advertising. But plaintiffs’ complaint failed to allege facts concerning the operating subsidiary’s involvement (if any), and instead lumped both defendants together in its conclusory allegations that failed to cross the threshold of plausibility required to defeat a motion to dismiss. As a result, the Court’s analysis did not (and did not need to) focus on the distinction between the distributor and the operating subsidiary, and plaintiffs were left to watch their claims slip out of their hands.

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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.

 

Seventh Circuit Sides with Plaintiffs in Appeal of “100% Grated Parmesan Cheese” Claims

The Seventh Circuit recently reversed a district court’s dismissal of a class action false advertising complaint, holding that an ingredient list’s disclosure of components other than parmesan cheese did not foreclose the possibility of reasonable consumers being deceived by a “100% Grated Parmesan Cheese” front label claim.  Bell v. Publix Super Markets, Nos. 19-2581 & 19-2741 (7th Cir. Dec 7, 2020).

Defendants, several cheese manufacturers and major food retailers, sell “100% Grated Parmesan Cheese” in shaker tubes. Plaintiffs alleged this claim was deceptive because the products also contain cellulose and potassium sorbate (to prevent caking and mold, respectively). Judge Gary Feinerman of the Northern District of Illinois granted the defendants’ motion to dismiss on two grounds: First, a consumer can easily dispel any ambiguity regarding whether 100% refers to the products being 100% grated, 100% cheese, or 100% parmesan by reading the ingredient list on the back label. And second, common sense dictates the products must contain added ingredients because they are sold unrefrigerated in grocery store aisles, alongside dried pastas and canned sauces.

As noted, the Seventh Circuit rejected that reasoning and reversed. The appellate court pointed to several decisions of other circuits, including Williams v. Gerber, 552 F.3d 934 (9th Cir. 2008), that found a defendant could not immunize itself against prominent, misleading front-label claims by disclosing the truth about a product’s ingredients on the back label. The Court feared that following the district court’s so-called “ambiguity rule”—that an advertiser can clear up an ambiguous front label via its back label—would encourage deceptive labeling. In addition, the Seventh Circuit disagreed that common sense rendered plaintiffs’ interpretation of the product labels unreasonable, as pure grated parmesan cheese can be shelf-stable for a long time without refrigeration.

Further, plaintiffs alleged they conducted consumer surveys showing 85 to 95 percent of consumers understood “100% Grated Parmesan Cheese” to mean the product contains only cheese, without additives. The Court saw no reason not to accept those allegations as true at the motion to dismiss stage, noting that it would not be surprising if “many grocery shoppers make quick decisions that do not involve careful consideration of all information available to them.” As a result, the Seventh Circuit concluded that “[h]ow reasonable consumers actually understand defendants’ ‘100% Grated Parmesan Cheese’ labels is a question of fact that cannot be resolved on the pleadings.”

We anticipate Bell will quickly join Williams among the false advertising decisions most frequently cited by the plaintiffs’ bar. But while Bell surely is a setback for “100% Grated Parmesan Cheese” sellers, it will not change the status quo that it is both common and entirely appropriate for courts to dismiss as a matter of law complaints alleging unreasonable interpretations of front-of-the-package labeling and other advertising. There are many decisions recognizing this principle, including several recent and notable decisions from the Second and Ninth Circuits:

  • In Fink v. Time Warner, the Second Circuit affirmed the dismissal of plaintiffs’ false advertising complaint, acknowledging that it is “well settled that a court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer,” and that “the presence of a disclaimer or similar clarifying language may defeat a claim of deception.” 714 F.3d 739, 741-42 (2d Cir. 2013).
  • In  Jessani v. Monini North America, the Second Circuit affirmed the dismissal with prejudice of plaintiffs’ complaint alleging that reasonable consumers would take away the false message that a flavored olive oil truthfully described as “truffle flavored” contains real truffles. 744 F. App’x 18 (2d Cir. 2018). The Court agreed with Monini, who Proskauer represented, that this was simply not a reasonable takeaway in the overall context of its label, and given the absence of truffles on the ingredient list.
  • In Ebner v. Fresh, the Ninth Circuit explained that Williams merely “stands for the proposition that if the defendant commits an act of deception, the presence of fine print revealing the truth is insufficient to dispel that deception.” 838 F.3d 958, 966 (9th Cir. 2016) (emphasis in original). In Ebner, the Ninth Circuit found it was not plausible that reasonable consumers would be deceived as to how much lip balm the defendant’s product contained where the label accurately stated its net weight.
  • In Becerra v. Dr. Pepper/Seven Up, the Ninth Circuit affirmed the district court’s conclusion that no reasonable consumer would assume that “diet” on a Dr. Pepper soft drink promises weight loss or management, notwithstanding plaintiffs’ allegations that a consumer survey showed otherwise. 945 F.3d 1225 (9th Cir. 2019).
  • In Razo v. Ashley Furniture Industries, the Ninth Circuit held that the “district court properly granted summary judgment on Razo’s claims because a reasonable consumer would have read the unambiguous and truthful disclosures placed on the front and back of Ashley’s DuraBlend hangtag.” 782 Fed. Appx. 632, 633 (9th Cir. 2019).

Nothing in Bell suggests that the Seventh Circuit intended to deviate from this established law. Bell merely stands for the same proposition the Ninth Circuit recognized years ago in Williams: advertisers cannot immunize themselves from the consequences of front label false advertising with a “gotcha” disclaimer on the back. On the other hand, “deceptive advertising claims should take into account all the information available to consumers and the context in which that information is provided and used,” and “where plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of labels or other advertising, dismissal on the pleadings may well be justified.” Bell at 10.

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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.

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Much A-Brew About Nothing: Court Dismisses False Ad Suit Against Starbucks

Judge Alison Nathan of the U.S. District Court for the Southern District of New York recently dismissed with prejudice a putative class action alleging Starbucks misrepresented itself as a “premium” coffee retailer. In doing so, the Court found that plaintiffs failed to allege Starbucks made any statements likely to mislead reasonable consumers, and that nearly all of the challenged statements were just puffery.  George v. Starbucks, No. 19-cv-6185 (S.D.N.Y. Nov. 19, 2020).

Plaintiffs alleged Starbucks marketed itself as a high-end coffee brand, including claims that it serves “the finest whole bean coffees”; has a reputation for “quality” products; provides a “PERFECT” coffee experience; offers the “Best Coffee for the Best You”; brags that “It’s Not Just Coffee. It’s Starbucks;” and touts its warm welcoming environment. According to plaintiffs, this was false and misleading because many New York Starbucks locations allegedly are infested with pests and use noxious pesticides to abate these pests. Plaintiffs alleged violations of Sections 349 and 350 of the New York General Business Law, this statute’s unfair competition and false advertising provisions.

In dismissing plaintiffs’ claims, Judge Nathan found that “[n]early all of the language the customers object to consists of obvious ‘puffery’” that no reasonably buyer would take at face value. Plaintiffs argued that the whole of Starbucks’s brand messaging was “more than the sum of its parts,” pointing to two cases in which courts allowed advertising suits to proceed even where a defendant’s ads were not literally false when taken in isolation. However, the court noted that in both those cases, the plaintiffs claimed that defendants’ advertising campaign “implied specific, falsifiable facts.” By contrast, plaintiffs here did not allege Starbucks’s advertising communicated—even indirectly—any specific details about its products. Instead, plaintiffs argued the advertising was misleading because it portrayed Starbucks as providing “premium products made with the best ingredients.” However, as Judge Nathan found, claims that a seller’s products are “premium” or “the best” cannot support a cause of action for deceptive practices, whether made once or across all of the company’s brand messaging.

The court found one statement cited in the amended complaint could, if false, be actionable—that Starbucks baked goods contain “no artificial dyes or flavors.” However, the court noted the pesticide mentioned in the complaint was not an “artificial dye or flavor,” and no reasonable consumer would understand this statement to convey information about the company’s use of pesticides in its stores.

In their amended complaint, plaintiffs alleged that the pesticides Starbucks supposedly uses have manufacturer warnings against use in food service establishments, and the CDC warns that exposure to these pesticides can have serious health effects. However, none of the plaintiffs claimed to have gotten sick. Nor did plaintiffs allege that Starbucks advertised that it did not use these (or any other) pesticides. This case serves as yet another reminder that absent an actionably false or misleading statement, false advertising claims cannot be used to remedy other consumer complaints, and consumer assumptions not grounded in the text of advertising are ripe for dismissal. Watch this space for further development.

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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.

 

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