Proskauer on Advertising Law
Proskauer on Advertising Law

Ninth Circuit Confirms Dr Pepper Can Stick to its “Diet”

The Ninth Circuit recently affirmed the dismissal of a putative class action alleging that defendant Dr Pepper/Seven Up, Inc. (“Dr Pepper”) violated various California consumer fraud laws by using the term “diet” in naming and marketing Diet Dr Pepper. Becerra v. Dr Pepper/Seven Up, Inc., 945 F.3d 1225 (9th Cir. 2019). Plaintiff alleged that this “diet” label misled consumers by promising that the product would assist in weight loss or, at minimum, not cause weight gain. The Ninth Circuit, however, agreed with the District Court that plaintiff failed to allege that reasonable consumers would understand the word “diet” in a soft drink’s brand name to promise weight loss, healthy weight management, or other health benefits, and upheld the dismissal of the lawsuit in its entirety.

In October 2017 plaintiff Shana Becerra filed suit against Dr Pepper in the Northern District of California, alleging that the use of the word “diet” in the Diet Dr Pepper brand name contains an “implicit promise [] that, because Diet Dr Pepper does not contain sugar or calories, it will assist in weight loss, or at least healthy weight management.” District Court Justice William Orrick disagreed and, after plaintiff’s fourth unsuccessful attempt to file a pleading that adequately states a claim, granted Dr Pepper’s motion to dismiss plaintiff’s third amended complaint without leave to amend.

On appeal, the Ninth Circuit affirmed the District Court decision and found that, “[w]hen considering the term in its proper context, no reasonable consumer would assume that Diet Dr Pepper’s use of the term ‘diet’ promises weight loss or management.” Instead, the Court found, “[i]n context, the use of ‘diet’ in a soft drink’s brand name is understood as a relative claim about the calorie content of that soft drink compared to the same brand’s ‘regular’ (full-caloric) option.” Therefore a reasonable consumer would understand the use of the term “diet” in this context to mean that the “diet” version of a soft drink has fewer calories than its non-diet counterpart, and not that the “diet” soft drink will assist in weight loss, healthy weight management, or other health benefits.

In reaching its decision, the Ninth Circuit rejected plaintiff’s argument that, regardless of the common understanding of the word “diet” in the context of a soft drink brand name, her complaint should nonetheless have survived because she alleged a plausible “misunderstanding” of the word. Citing Ninth Circuit precedent affirming dismissal of claims based on similar unreasonable assumptions, the Court noted that “[j]ust because some consumers may unreasonably interpret the term [‘diet’] differently does not render the use of ‘diet’ in a soda’s brand name false or deceptive.”

The Court also gave little weight to survey results summarized in plaintiff’s third amended complaint that purportedly showed that some consumers expected diet soft drinks to help them lose weight or maintain/not affect their weight. While survey results are ordinarily not to be taken lightly at the pleading stage, where the Court is required to accept the allegations surrounding the survey as true, the Court held that the survey nonetheless “cannot, on its own, salvage [plaintiff’s] claim,” given that “a reasonable consumer would still understand ‘diet’ in this context to be a relative claim about the calorie or sugar content of the product,” and the survey “does not address this understanding or the equally reasonable understanding that consuming low-calorie products will impact one’s weight only to the extent that weight loss relies on consuming fewer calories overall.” Accordingly, the Court found “the survey does not shift the prevailing reasonable understanding of what reasonable consumers understand the word ‘diet’ to mean or make plausible the allegation that reasonable consumers are misled by the term ‘diet.’”

This decision serves as an important reminder of the key role that context and reasonableness play in determining whether an advertising claim is false or deceptive as a matter of law, and that these considerations can tip the scales even at the pleading stage of a case. Now, with the weight of this lawsuit lifted, Dr Pepper can breathe easier knowing it can keep the Diet Dr Pepper brand just the weigh it is.

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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.

Update on Oral Argument in Romag: Supreme Court Considers Whether Willfulness is Required to Disgorge a Defendant’s Profits under the Lanham Act

Last summer, we covered  the Supreme Court’s decision to grant certiorari in Romag Fasteners v. Fossil in order to decide whether § 1117(a) of the Lanham Act requires that a plaintiff make a showing of willfulness in order to obtain a trademark infringement defendant’s profits for a violation of § 1125(a). As we noted in our previous post, although Romag involves allegations of trademark infringement, the case is of interest to advertising litigants because § 1117(a) governs damages for both trademark infringement and false advertising. Yesterday, the Supreme Court heard oral argument on this issue.

Romag, a manufacturer of magnetic snaps, alleges that defendants infringed its trademark by selling merchandise with metal snaps that feature the ROMAG mark. While the jury returned a verdict of trademark infringement, the district court declined to award plaintiff the defendants’ profits on the ground that the plaintiff failed to show defendants acted willfully. The Federal Circuit affirmed and plaintiff petitioned the Supreme Court for certiorari.

The core issue, as petitioner’s counsel framed it during yesterday’s argument, is whether the willfulness inquiry acts as a “gateway on/off switch” that must be decided before courts can consider whether to award profits, or whether it is merely one of several factors to be weighed as part of the damages inquiry. Petitioner’s counsel noted that the text of § 1117 explicitly mentions willfulness as a requirement for profits awards for violations of § 1125(c), but not for violations of §§ 1125(a) and (d). Respondents’ counsel, however, noted that all awards under § 1117 are “subject to the principles of equity,” which counsel argued courts have interpreted as meaning a showing of willfulness. This argument was addressed by Justices Ginsberg and Gorsuch, who questioned whether Congress would have incorporated a mens rea threshold so indirectly.

Much of the Supreme Court’s questioning focused on whether a gateway willfulness requirement would limit courts’ ability to address reckless behavior, with the Justices distinguishing between “reckless” and “willful” conduct. While counsel on both sides agreed that entirely accidental infringement was insufficient for an award of profits, Justices Sotomayor and Kavanaugh both noted that there is a range of behavior that is not innocent but does not rise to the level of willfulness. In probing the issue, Justice Kagan asked if it might be possible to forge a middle ground, such as by applying a presumption that willfulness must be shown in order for profits to be awarded. Petitioner’s counsel argued that a presumption would still give too much weight to the willfulness question, while respondents’ counsel reiterated that willfulness should be a threshold issue. In response to these concerns, Justice Breyer floated the possibility of simply making partial awards of profits, but Chief Justice Roberts expressed skepticism as to the viability of simply “split[ting] the baby” in this way.

The oral argument did not give a clear signal as to how the justices intend to decide the case, but we will provide an update here as soon as they do. Watch this space.

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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.

Hershey Kisses Chocolate Mislabeling Suit Goodbye

A California federal judge recently handed a victory to the Hershey Co. in a suit alleging the company falsely represented that its Brookside chocolate products have no artificial flavors. Clark v. Hershey Co., 18-cv-06113 (N.D. Cal. Nov. 15, 2019). U.S. District Judge William Alsup granted summary judgment in favor of Hershey on the basis of facts undermining plaintiffs’ contentions that they were misled by the products’ labeling and relied on the misleading labeling in deciding to purchase the Brookside chocolates.

The plaintiffs filed a consumer class action in October 2018 alleging that Hershey deliberately deceived consumers by labeling its Brookside Dark Chocolate products as containing no artificial flavors, when in fact the products contain malic acid, a synthetic chemical. The plaintiffs claimed they believed they were purchasing all-natural products made only with natural ingredients, and were surprised to learn the chocolates contained an artificial ingredient.

According to the suit, Hershey falsely represented that the products contained all natural ingredients by including the “no artificial flavors” label, and neglecting to include a label disclosing the artificial flavoring as required by California law.

As an initial matter, Judge Alsup distinguished between the terms “artificial ingredient” and “artificial flavor,” finding that while the description “artificial ingredient” covers a wide range of substances, “artificial flavor” is to be understood more narrowly as something used to impart flavor. Thus, the judge found that Clark had misunderstood the “no artificial flavors” label by interpreting it to mean the products contained no artificial ingredients whatsoever, and that Clark’s injury stemmed from his own misunderstanding rather than from any alleged mislabeling.

Regarding the claims of the two other plaintiffs, Judge Alsop found that both began purchasing the products well before the introduction of the label, and did not demonstrate any change in purchasing habits following the appearance of the label containing the “no artificial flavors” language. This being the case, the judge found no indication that the label played any role in either plaintiff’s decision to purchase the products. In fact, the judge noted, the decision to stop buying the products was prompted by the lawyers informing plaintiffs that the chocolates contained an artificial ingredient, and not based upon the label.

As part of the order granting summary judgment, Judge Alsup also denied as moot the plaintiffs’ request to certify California and New York classes in the suit.

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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.

Seventh Circuit Remands after District Judge Makes Injunction Stickier in Light Beer Corn Syrup Dispute

The Seventh Circuit has remanded a lawsuit concerning beer advertising to the district court for failure to follow required procedures in issuing a preliminary injunction – the latest development in the case’s torturous procedural history. On May 24, 2019, Judge William Conley of the Western District of Wisconsin issued a preliminary injunction banning Anheuser-Busch from suggesting in its advertising that Miller Lite and Coors Lite contain corn syrup. With an interlocutory appeal from the May 24 opinion pending, Judge Conley issued an opinion on September 4, 2019 modifying the injunction, and then on September 6, 2019, modified the modification. The September decisions were noteworthy for expanding the enjoined activity to encompass Anheuser Busch’s use of packaging featuring the literally true statement “no corn syrup.”

Anheuser-Busch launched the advertising campaign at issue during Super Bowl LIII with a television commercial featuring claims that Miller Lite and Coors Lite are “made with” or “brewed with” corn syrup. The campaign also included billboards and print ads stating that Bud Light has “100% less corn syrup”’ than either rival brand, as well as Bud Light packaging prominently featuring the statements “no corn syrup” and “find out what’s in your beer.” MillerCoors argued that these ads deceive consumers into believing that Miller Lite and Coors Lite contain corn syrup and high fructose corn syrup in the finished product, when in fact corn syrup is merely used during the brewing process; according to MillerCoors, it is not present in the final products that reach consumers. MillerCoors sought an order enjoining Anheuser Busch from repeating the corn-syrup claims, blocking airings of all the ads in the corn syrup campaign, and compelling Anheuser-Busch to run corrective advertising. Judge Conley partially granted this request, enjoining Anheuser-Busch from running ads stating that Bud Light contains “100% less corn syrup,” referencing corn syrup without context, and describing corn syrup as an ingredient in in Coors Light or Miller Light, but declining to enjoin ads stating that Coors Lite and Miller Lite “use” or are “made with” or “brewed with” corn syrup. He reserved decision as to whether the injunction should extend to barring the Bud Light packaging claims due to an insufficiently developed record on that issue.

Following further briefing, Judge Conley expanded the preliminary injunction to bar Anheuser-Busch from making the “no corn syrup” and “find out what’s in your beer” claims on Bud Light packaging. In reaching this decision, Judge Conley found that the “no corn syrup” claim could imply that other beers do contain corn syrup. Moreover, he noted that Bud Light together with Miller Lite and Coors Lite comprise nearly 100% of the “premium light beer” market, potentially leading a substantial number of consumers to infer from Bud Light’s packaging that the MillerCoors products in particular contain corn syrup.

Judge Conley rejected Anheuser-Busch’s argument that the claims on Bud Light packaging should be considered separately, rather than as part of the full advertising campaign. While Anheuser-Busch presented survey evidence supporting its argument that consumers did not link the Bud Light packaging to either other beer brands or any statement about corn syrup, MillerCoors’ expert criticized the survey for not presenting the packaging in a retail setting next to MillerCoors products, and for the limited time given to respondents to inspect the packaging. Citing these criticisms, Judge Conley found MillerCoors had demonstrated some likelihood of success in proving that the Bud Light packaging, when displayed next to Miller Lite and Coors Lite packaging and considered in the context of Anheuser-Busch’s full marketing campaign, would mislead consumers into believing the MillerCoors products contain corn syrup. However, in recognition of the fact that the Bud Light packaging did not make any express comparative statements, Judge Conley mitigated the injunction by giving Anheuser-Busch until March 2, 2020 to sell Bud Light using the packaging it had on hand as of June 6, 2019.

In Judge Easterbrook’s 2-1 majority decision, the Seventh Circuit remanded on two procedural grounds. First, it held that all three district court decisions ran afoul of FRCP 65(d) by failing to set forth the injunctions in a document separate from the opinions. Second, the majority found that two of the district court decisions contravened FRCP 62.1 governing procedures for modifying an order that is before the court of appeals, and therefore that the district court lacked jurisdiction over the parts of the case that were on appeal. Judge Hamilton dissented, arguing that the appeal was ready for a decision on the merits, and that the court of appeals should not stand in the way of fast-moving litigation on the basis of procedural issues that prejudiced neither party.

The September decisions are likely to raise eyebrows for the finding that truthful statements on packaging that are not rendered misleading by any other content on the packaging can be found misleading purely by reference to other advertisements in an advertising campaign. They serve as a warning to advertisers to consider advertising claims holistically, examining not only the literal truth of individual claims, but also the potential messages implied by the campaign’s messaging as a whole. The Seventh Circuit’s decision, meanwhile, underscores the importance for litigants of ensuring that court orders conform to procedural requirements. Otherwise, they may find the speedy resolution of their cases impeded for non-substantive reasons.

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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.

Proskauer in San Diego at the 41st Annual ANA/BAA Marketing Law Conference

The Association of National Advertisers and the Brand Activation Association will be hosting their 41st annual Marketing Law Conference at the Marriott Marquis in San Diego, CA from November 4-6. Proskauer is a sponsor of the conference, and will be speaking on two separate panels. Lawrence Weinstein, the co-chair of Proskauer’s Intellectual Property Litigation Group and of our False Advertising and Trademark Practice, and partner Alexander Kaplan will lead a plenary panel titled “A View from the Bench: Federal Judges Discuss their Views of Advertising Litigation and Litigants,” together with Judges Faith Hochberg and Beth Freeman. Associates Jeffrey Warshafsky and Jennifer Yang will also conduct a presentation on what marketing executives need to know to prevent avoidable advertising challenges. If you will be attending the conference, we hope to see you there!

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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.

District Court Judge Finds that Herbal Extract Manufacturer Fails to Capture the Essence of a Lanham Act Claim

In a recent application of the Supreme Court’s 2014 Lexmark decision on standing, Judge Katharine Hayden of the District of New Jersey held last month that an herbal extract manufacturer allegedly misled by its supplier into purchasing diluted saw palmetto extract lacked standing to bring a Lanham Act false advertising claim. Jiaherb, Inc. v. MTC Indus., Inc., No. 18-15532, 2019 WL 4785784 (D.N.J. Sept. 30, 2019).

Jiaherb had purchased all of its saw palmetto extract—$442,262.50 worth—from MTC, a nutritional ingredient supplier and distributor.  Jiaherb alleged that MTC induced it to unknowingly purchase a diluted product cut with hard-to-detect vegetable oils, misrepresenting that the extract was unadulterated.  The complaint alleged injuries to Jiaherb’s “business, reputation, and good will” as well as lost profits due to cancelled orders, and included claims under the Lanham Act, the UCC, and state law theories of liability.

As we have discussed previously, under the first prong of the Lexmark test, a plaintiff must “fall within the zone of interests protected by” the Lanham Act in order to have standing to sue.  While Lanham Act standing is not exclusively limited to direct competitors, “[a] consumer who is hoodwinked into purchasing a disappointing product” falls outside of its zone of protected interests and “cannot invoke the protection of the Lanham Act.” Lexmark Int’l , Inc. v. Static Control Components, 134 S. Ct. 1377, 1390 (2014).

Judge Hayden dismissed Jiaherb’s Lanham Act claim in a short opinion. She noted that the Third Circuit had upheld the dismissal of a case with similar facts in Knit With v. Knitting Fever, Inc. (a case previously covered by this blog), in which a business purchasing yarn from a supplier alleged that the yarn was inferior to what it expected. The Third Circuit in Knit With held the plaintiff did not have standing to sue for a Lanham Act violation, quoting Lexmark’s statement that “[e]ven a business misled by a supplier into purchasing an inferior product is, like consumers generally, not under the Act’s aegis.” Applying the same reasoning, Judge Hayden found that, since Jiaherb characterized its role as that of a consumer of MCT’s products, its alleged injury was merely that of a “consumer-entity that was misled into purchasing a ‘disappointing product.’” This, Judge Hayden noted, “is precisely the type [of injury] that the Lexmark Court excluded from Lanham Act relief.”

However, in a footnote in its opposition brief, Jiaherb had noted that its relationship with MCT might be more analogous to potential competitors.  Based on this possibility, Judge Hayden dismissed plaintiff’s Lanham Act claim without prejudice, allowing for the possibility that Jiaherb might replead to assert a “less limited” relationship.

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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.

Food for Thought: Outcomes of Food Labeling Cases Prove Difficult to Predict

As we wrote recently, the past year has seen a proliferation of lawsuits alleging that food product labels mislead consumers about the product’s ingredients. The trend continued last month, with decisions from the Court of Appeals for the First Circuit and one of its district courts reaching different results on motions to dismiss complaints alleging deceptive food labels.

Last month, the First Circuit reinstated a class action lawsuit against New England Coffee for violation of Massachusetts’ consumer protection laws related to the coffee brand’s label for “Hazelnut Crème” coffee. Dumont v. Reily Foods, 18-2055 (1st Cir. Aug. 8, 2019). Plaintiff alleged that the product name was deceptive because the product did not contain hazelnuts. A Massachusetts federal district court judge dismissed the suit because the complaint lacked sufficient particularized facts to satisfy the heightened pleading standard for fraud allegations.

The First Circuit reversed in a 2-1 decision. The majority noted that although the ingredient list on the product package’s back label read “100% Arabica Coffee Naturally and Artificially Flavored,” reasonable consumers might take different approaches in determining whether the coffee actually contained real hazelnuts. One might check the list of ingredients to ensure the coffee contained hazelnut while others may not, instead relying on the name of the product, without searching the ingredient list, “much like one might easily buy a hazelnut cake without studying the ingredients list to confirm that the cake actually contains some hazelnut.” The majority accordingly concluded that whether the product name implied that the product contained hazelnuts was better suited for resolution “from six jurors, rather than three judges.” In dissent, Circuit Judge Lynch argued that “a reasonable consumer plainly could not view the phrase ‘Hazelnut Crème’ as announcing the presence of actual hazelnut in a bag of coffee which also proclaims it is “100% Arabica Coffee.”

Neither opinion is especially persuasive. As for the dissent, hazelnuts are not coffee, and the fact that a coffee product called “Hazelnut Crème” is said to contain 100% Arabica Coffee does not reasonably rule out the possibility that the product contains hazelnuts. By the same token, however, other courts have concluded that reasonable consumers do not ignore a product’s prominently displayed ingredient list when information on the front label may be viewed as ambiguous concerning whether an ingredient is or is not contained in the product. See, e.g., Jessani et al. v. Monini North America, which one of the authors litigated and which this blog covered. To the extent the Dumont majority suggests otherwise, the opinion would be misguided. That said, whereas the olive oil product in Monini was labeled as “truffle flavored,” here, there was no modifier to suggest that the coffee in question simply tasted, or smelled, like hazelnuts. In such cases, perhaps, one could conclude that the front label lacked ambiguity, and thus would not compel prospective purchasers to search the label further.

Less than a week after the First Circuit’s Dumont decision, Judge Alison Burroughs of the District of Massachusetts tossed a putative class action suit alleging that the advertising and packaging of the cereal “Honey Bunches of Oats” falsely suggested it was sweetened only or primarily with honey, when in fact the main sweeteners are sugar, brown sugar, and corn syrup. Lima v. Post Consumer Brands, 18-12100 (D. Mass. Aug. 13, 2019).The plaintiffs pointed to images of a sun, bee, and honey dipper as representing that honey was the principal sweetener in the cereal. They also cited surveys showing that most consumers believe honey is “better for you than sugar” and that approximately half of consumers are willing to pay more for foods that are primarily sweetened with honey.

In concluding that the consumers failed to state a claim, Judge Burroughs found that plaintiffs had offered no reasonable basis for their alleged belief that the honey references on the packaging implied that honey was the primary sweetener in the cereal rather than simply one of its primary flavors. In addition, even assuming the packaging could be viewed as portraying honey to be an ingredient instead of or as well as a flavor, Judge Burroughs found that plaintiffs still failed to state a claim. She noted that, unlike the “Hazelnut Crème” product in Dumont that did not contain any hazelnut, Honey Bunches of Oats did, in fact, contain honey. She also distinguished the case from Mantikas v. Kellogg, in which the Second Circuit found that a “made with whole grain” claim could imply that the product contained more whole wheat flour than white flour. Here, according to Judge Burroughs, the mere references to honey on the package carried no implication that honey was the primary sweetener, and a reasonable consumer concerned about how the cereal was sweetened would have consulted the cereal’s list of ingredients.

If nothing else, these cases underscore the fact-specific nature of the inquiry as to what product labels imply about their ingredients. Watch this space as decisions continue to clarify the contours of this body of law.

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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.

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