Proskauer on Advertising Law
Proskauer on Advertising Law

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

Snack Bar Class Action is KIND-ly Stayed Pending USDA Regulation on Bioengineered Food

Earlier this month, Judge William H. Pauley III in the Southern District of New York stayed a lawsuit against the snack bar maker KIND LLC, styled as a class action, alleging that KIND falsely marketed its products as “all natural” and “non-GMO.”  In re KIND LLC “Healthy & All Natural” Litigation, 2018 WL 1156009 (S.D.N.Y. Mar. 2, 2018).  The case, which has unfolded against a backdrop of increasing regulatory activity by the USDA, will remain on hold pending the USDA’s establishment of a national disclosure standard for bioengineered food.  The disclosure standard is due to be released by July 29, 2018.

The lawsuit began in 2015, with Plaintiffs’ original complaint claiming that KIND deceptively marketed certain products as “healthy,” “all natural,” and “non-GMO” in violation of New York and other state laws.  After Plaintiffs voluntarily dismissed their “healthy” claims, Judge Pauley in 2016 stayed litigation of Plaintiffs’ challenge to KIND’s “all natural” advertising in light of ongoing FDA rulemaking regarding the use of “natural” labeling.  Judge Pauley also dismissed without prejudice Plaintiff’s challenge to KIND’s “non-GMO” advertising claim as insufficiently pled, prompting Plaintiffs to file an amended complaint that re-alleged its arguments as to why the stayed “natural” advertising claim was false and sought to cure the deficiencies of its challenge to KIND’s “non-GMO” advertising.

KIND moved to dismiss the amended complaint, arguing that Plaintiffs’ challenge to KIND’s “non-GMO” statement was preempted by the USDA’s statutory mandate to formulate a national disclosure standard pertaining to bioengineered food.  However, the court found that the only agency-level guidance on the issue corroborated the view that food manufacturers may voluntarily label their foods as non-GMO “as long as such information is truthful and not misleading.”  Since Plaintiffs merely sought remedies under state laws against untrue and misleading representations, the court held Plaintiffs’ claims were not preempted.

The court did, however, grant KIND’s motion in the alternative to stay Plaintiffs’ challenge to the “non-GMO” advertising claim pending the USDA’s establishment of the disclosure standard.  The court reasoned that the danger of a ruling inconsistent with the eventual guidelines was substantial, since the guidelines might explain whether ingredients from genetically modified crops could be considered “non-GMO.”  The risk of delay, on the other hand, was minimized by the fact that the USDA standard must be released by July 29.

In addition, the court denied Plaintiffs’ motion to immediately lift the stay on their challenge to KIND’s “all natural” advertising statement.  Plaintiffs argued that FDA rulemaking on the subject had stalled, with no apparent activity since the close of the notice and comment period in May 2016.  The court acknowledged the “glacial pace” and uncertain timeline of agency action, but to avoid piecemeal litigation, it continued the stay on the challenge to the “all natural” advertising claim so it could be litigated simultaneously with the “non-GMO” challenge.

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.

No Meat on the Bones: Proposed Vegetarian Class Action against Buffalo Wild Wings Failed to Plead Actual Injury

Recently, a federal district court judge in the Southern District of New York dismissed claims asserted under New York General Business Law § 349 on behalf of a putative class of vegetarian customers of Buffalo Wild Wings. The court’s decision found that although the plaintiff had standing to bring her claims, her allegations did not point to an “actual injury” sufficient to state a claim under section 349. Plaintiff has appealed. Continue Reading

No More Baby Talk: Class Certification Denied in Gerber False Advertising Suit

The Northern District of California recently denied class certification to a plaintiff who alleged that Gerber Products misbranded nutritional claims about baby food products in violation of state and federal labeling laws.  Bruton v. Gerber Products Co. et al.  The plaintiff had previously moved to certify a damages and an injunctive relief class in 2014.  However, the court found that neither proposed class was ascertainable and denied class certification.  In July 2017, the Ninth Circuit reversed and remanded.  On remand, Judge Lucy Koh found that (i) plaintiff lacked Article III standing to assert a claim for injunctive relief and (ii) plaintiff’s proposed damages theories failed to satisfy Rule 23(b)(3)’s predominance requirement. Continue Reading

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