Proskauer on Advertising Law
Proskauer on Advertising Law

New Jersey Supreme Court Announces Last Call for TCCWNA Happy Hour

In recent years, creative plaintiff-side class action attorneys in New Jersey have attempted to seek relief under the Truth in Consumer Contract, Warranty and Notice Act (“TCCWNA”), which allows for $100 in statutory damages per violation to “aggrieved consumers” when terms in certain contracts or other writings violate a “clearly established legal right of a consumer or responsibility of a seller.” N.J. Stat. Ann. § 56:12-14 et seq.  Although the TCCWNA has been around since the 1980s, it has only recently been employed by named plaintiffs in putative class actions, most likely in an attempt to circumvent the ascertainable loss and causation requirements of New Jersey’s Consumer Fraud Act (“CFA”) and because the prospect of $100 per violation greatly exceeds actual damages in many cases.  Thankfully for defendants, a recent New Jersey Supreme Court decision, Dugan v. TGI Fridays, Inc., 2017 WL 4399352 (N.J. Oct. 4, 2017), makes it more difficult to certify class actions brought under the TCCWNA and circumscribes the type of “clearly established legal right[s]” that may form the basis of a TCCWNA claim.

Dugan is a consolidated appeal of two actions in which plaintiffs alleged that the defendant operators of New Jersey restaurants engaged in unlawful practices with respect to the disclosure of prices charged to customers for alcoholic and non-alcoholic beverages. In the first action, plaintiffs alleged that TGI Fridays and Carlson Restaurants (collectively, “TGIF”) offered beverages in menus without listing their prices. Plaintiffs claimed this was a violation of the CFA and a related regulation, § 56:8-2.5, which provides that it is unlawful to sell merchandise at retail unless the “total selling price” is plainly marked at the point where the merchandise is offered for sale. The named plaintiff in the second action similarly claimed that Carrabba’s Italian Grill (and other restaurants) violated the CFA and the same regulation based on allegations that menus and other displays failed to disclose drink prices and discounts in effect at different times the restaurant was open. Plaintiffs in both actions also sought relief under the TCCWNA.

At the class certification stage, the lower courts in the two cases were split on whether common questions predominate over individual issues with respect to ascertainable loss.  On appeal, the Supreme Court of New Jersey held that class certification was improper for the TCCWNA claims because, among other things, plaintiffs failed to show that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.” Specifically, the Supreme Court noted that the TCCWNA, by its terms, does not apply when a defendant fails to provide the consumer with a required writing, be it a “contract,” “warranty,” “notice” or “sign.” Thus, each member of the class would have to prove he or she was presented with a menu during his or her visit to the defendants’ restaurants. This individual question would require testimony by each class member or another witness to prove that the member is an aggrieved consumer.

The Supreme Court also held that the failure to provide prices on a menu is not a violation of a “clearly established legal right of a consumer or responsibility of a seller” as required under the TCCWNA because such cases have never arisen in the history of prosecutions under § 56:8-2.5. Moreover, the Supreme Court noted that “if plaintiffs were to prove that each of the thirteen to fourteen million restaurant visits by a member of the plaintiff class gave rise to a TCCWNA violation warranting a civil penalty of $100, [then] TGIF would be liable for penalties amounting to more than a billion dollars.”  The Supreme Court found there is nothing in the legislative history of the TCCWNA suggesting the legislature intended to impose billion-dollar penalties on restaurants that serve unpriced food and beverages to customers.

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.

Chambers and Partners Releases Pharmaceutical Advertising 2018 Guide

We are pleased to announce that Chambers and Partners has released its 2018 Pharmaceutical Advertising Global Practice Guide, the U.S. chapter of which was authored by Proskauer partners Lawrence Weinstein and Alexander Kaplan.  The Guide’s U.S. chapter provides a detailed overview of U.S. civil and criminal laws, regulations and ethical codes governing the advertising and promotion of prescription and over-the-counter drugs.  It also highlights important FDA regulations and recent guidance, judicial decisions and legislative developments relevant to pharmaceutical marketing.  Read the full U.S. chapter of the Chambers guide here.

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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.

FDA Approves First Qualified Health Claim about Allergy Prevention on Baby Food Labels

Last month, the FDA announced that companies will be able to label baby food products with advice about how the early introduction of peanuts in an infant’s diet may reduce the risk of developing a peanut allergy. This marks the first time the FDA has permitted a qualified health claim of food allergy prevention. These labels will be allowed on foods containing ground peanuts suitable for infant consumption, but not whole peanuts, which may be a choking hazard for young children.

The permitted qualified health claim states that “for most infants with severe eczema and/or egg allergy who are already eating solid foods, introducing foods containing ground peanuts between 4 and 10 months of age and continuing consumption may reduce the risk of developing peanut allergy by 5 years of age.” In addition, the claim includes language that recommends that parents check with their child’s health care provider before introducing food that contains ground peanuts and discloses that the claim is based on one study.

The study, a clinical trial funded by the National Institutes of Health, found that introducing foods containing smooth peanut butter to babies as early as 4 months of age who are at high risk of developing a peanut allergy due to severe eczema, egg allergy, or both, may reduce their risk of developing peanut allergies later in childhood by about 80 percent.  As a result, the NIH issued new guidelines in early 2017 recommending that parents of infants with such risk factors introduce peanut-containing foods to their child’s diet as early as 4 to 6 months of age. The guidelines also advise parents to check with the child’s health care provider before introducing peanut-containing foods to determine if an allergy test should be administered and whether feeding should be done under a doctor’s supervision. The NIH’s recommendations have been supported by groups such as the American Academy of Pediatrics and the National Institute of Allergy and Infectious Diseases.

In permitting this new qualified claim, the FDA stated that its goal was to make sure parents are aware of the latest science so they can make informed decisions about these important issues in their children’s lives. According to the FDA’s announcement, around 2% of American children are allergic to peanuts, a figure that has more than doubled from 1997 to 2008. According to the announcement, peanut allergies are the leading cause of deadly food-induced anaphylaxis in the United States, and the majority of people who develop this allergy as children never outgrow it. The FDA noted that doctors had previously advised parents not to feed peanuts to children who were at high risk of developing a peanut allergy before age three, but that the NIH now recommends a “different approach.”  Companies have already begun making baby food specifically for the purpose of introducing infants to peanuts.

Now that the FDA has allowed one qualified allergy prevention claim on food labels, future evidence-based dietary recommendations may expand beyond peanuts and baby food. The prevalence and danger of food allergies in children, combined with the rapidly developing research on these subjects, make food labeling a particularly interesting space to watch.

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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.

SEC Issues Risk Alert on the Most Frequent Advertising Rule Compliance Issues and Use of Accolades in Advertisements

On September 14, 2017, the staff of the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a National Examination Program Risk Alert on the most frequent advertising rule compliance issues identified in OCIE examinations of investment advisers.  This Risk Alert reflected issues identified in deficiency letters generated in the course of over 1,000 adviser examinations conducted by OCIE staff.  Among other things, the issues pertain to advertising of past performance results and use of accolades in marketing materials under the Advertising Rule of the Investment Advisers Act.

Proskauer published a client alert summarizing this Risk Alert, which may be read here.

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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.

Tough Puffery: Court Closes Door on Ford False Advertising Suit

The Northern District of New York recently found that Ford Motor Company’s “Built Ford Tough” slogan was non-actionable puffery, and dismissed putative false advertising class action claims brought under New York law that centered on that slogan. The case is Kommer v. Ford Motor Company, No. 1:17-cv-296 in the Northern District of New York.

The case involved Ford’s F-150 pickup trucks, which were advertised as being “Ford Tough.”  Plaintiff Kommer purchased a 2015 Ford F-150 truck, but allegedly experienced issues with the truck’s doors and locks.  According to Kommer, when temperatures dropped below freezing, the doors would not latch closed and the electric locks would not open.  These door and lock issues were the subject of Technical Services Bulletins that Ford issued in 2015 and 2016.  Plaintiff Kommer alleged that the “Built Ford Tough” advertisement was false because it misled him and other consumers into believing that the doors of Ford’s F-150 pickup trucks would “operate correctly at temperatures at or below freezing.”

The court noted that the advertisements at issue made “no reference whatsoever to the quality of the vehicles’ door handles.”  Furthermore, the court determined, the phrase “Built Ford Tough” was mere puffery—an “exaggerated and generalized claim” that a reasonable consumer would not interpret as a factual statement on which he or she could rely.  The court’s determination accords with a 2010 District of Colorado case that also found Ford’s “Built Ford Tough” and “Quality is Job #1” slogans to be mere puffery, as well as a case regarding Chevrolet Suburbans that found the phrases “Like a Rock” and “most dependable, long-lasting trucks on the planet” to be mere puffery.

The court dismissed Kommer’s claims that “Built Ford Tough” was an affirmative misrepresentation, and denied leave to amend.  The court also showed Kommer the door on his second theory of liability—that Ford had violated New York law in failing to disclose the door and lock issues to consumers—because the court found that Kommer had not alleged any cognizable injury.  Kommer had not personally expended any money to repair his vehicle, the court wrote, nor had he alleged that he paid too much for what he received, because Ford provided a warranty for the free repair of the door issues of which Kommer complained.  However, the court did grant Kommer leave to amend his failure-to-disclose claims.

Kommer filed an amended complaint centering on his failure-to-disclose claims on August 28, 2017.  Watch this space for notable developments in this case and other false advertising matters.

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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.

Jury Tests the Limits in AndroGel False Ad Verdict

In late July, an Illinois jury came to a bizarre verdict in a case over an alleged link between heart attacks and AndroGel, a gel product used for treating low testosterone (or “low T”). The jury found that AbbVie, Inc., the drug company behind AndroGel, although not strictly liable or negligent in allegedly causing a user’s heart attack and owing $0 in compensatory damages, was nevertheless liable for fraudulent misrepresentation in its product advertising and was responsible for $150 million in punitive damages.

Over the past few years, roughly 6,000 individuals have filed lawsuits linked to testosterone gel products alleging health concerns, like heart attacks.  One of those lawsuits was brought by Jesse Mitchell in Illinois district court in 2014.  This July, Mitchell’s lawsuit became the first of these cases to reach a jury verdict, and could have an important impact on the vitality of the remaining lawsuits.

In Mitchell’s complaint, he alleged that he suffered a heart attack because of his use of AndroGel. To start, Mitchell asserted that AbbVie embarked on a “massive advertising campaign” to convince men that they suffer from low T, while promoting a product to treat the condition that was not safe for consumers.  Through its advertising campaign, the complaint alleged, AbbVie hoped to artificially boost the customer base for products used to treat low T.  In order to do so, AbbVie allegedly created unbranded websites containing questionnaires that attributed common symptoms of aging (like “listlessness” and “increased body fat”) to low T.  Mitchell further alleged that AbbVie was promoting a product that was not a safe and effective treatment for low T, and pointed to studies that associated the use of testosterone replacement gel with a number of health risks, like strokes and heart attacks.

At trial, AbbVie countered that AndroGel could not be linked to Mitchell’s heart attack.  First, AbbVie argued that Mitchell’s cited studies were flawed and did not show a risk of heart attack associated with the use of testosterone replacement gel in individuals of Mitchell’s age.  Further, AbbVie pointed to Mitchell’s own health conditions, noting that he was an overweight smoker who suffered from high blood pressure and cholesterol, and that he harbored a family history of heart disease.  According to AbbVie, these factors alone, without the use of AndroGel, could have caused Mitchell’s heart attack.

After hearing these arguments, the jury’s verdict was rather unorthodox.  The jury found that AbbVie was not liable for Mitchell’s heart attack, thus rejecting Mitchell’s claims for strict liability and negligence, but then determined that AbbVie was liable for fraudulent misrepresentation as a result of its advertising campaign.  The jury denied any compensatory damages sought by Mitchell, yet required that AbbVie pay $150 million in punitive damages.

A jury verdict awarding punitive damages in the absence of any compensatory damages is a highly unusual outcome, which seemingly will be overturned. Earlier this week, AbbVie filed a motion to strike the punitive damages award, citing, among other cases, the Seventh Circuit’s decision in Pileco v. Slurry Systems, in which it was “obvious” to Circuit Judge Posner that “punitive damages can’t lawfully be awarded when no compensatory damages are awarded.” 804 F.3d 889, 892 (7th Cir. 2015).  Regardless of the outcome of the motion to strike the punitive damages, the jury verdict was an outcome that neither party likely expected, and a peculiar one in the annals of false advertising 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.

Truffle Kerfuffle: Truffle Lawsuit Not on the Menu for Plaintiffs

Truffles are renowned as one of the rarest delicacies in the world.  Perhaps not quite as rare, but still fairly uncommon, is the dismissal with prejudice of a false advertising class action without the plaintiffs being afforded even a single opportunity to amend their complaint.

We are pleased to report today on a victory that a Proskauer team, led by Larry Weinstein and Jeff Warshafsky, obtained on behalf of Monini North America, Inc., in the defense of a class action false advertising lawsuit in the Southern District of New York, before Senior District Judge Louis Stanton.  As discussed below, Judge Stanton’s decision confirms that under both New York and California law, food and beverage makers may describe their products as being “substance flavored,” even if the product does not contain the substance, so long as the product label clearly discloses the product’s ingredients.

In May 2017, plaintiffs Vinay Jessani and Wendy Burnett sued Monini alleging violations of New York and California consumer protection law, as well as claims for breach of warranty, fraud and negligent misrepresentation.  Their class action complaint alleged that Monini, the U.S. subsidiary of one of the largest Italian olive oil manufacturers, falsely advertised that its “White Truffle Flavored Extra Virgin Olive Oil” was flavored by actual white truffle when, in fact, it is flavored by a synthetic aroma and contains no actual white truffle.

Monini moved to dismiss, and briefing was completed three weeks ago.  Last week, Judge Stanton dismissed the complaint in its entirety with prejudice, holding that no reasonable consumer would understand the product’s label as meaning that it contains white truffle.

“Courts routinely conclude that where a product describes itself as substance-flavored despite not containing the actual substance, and the ingredient list truthfully reflects that fact, as a matter of law the product would not confuse a reasonable consumer acting reasonably under the circumstances, and thus does not sustain a consumer fraud claim,” Judge Stanton wrote.  Monini’s label claimed that the product tasted like white truffle, but nowhere did it state that it contained white truffle.  Further, the label’s ingredient list disclosed that the ingredients were “extra virgin olive oil 98%” and “aroma 2%”; white truffle was not listed as an ingredient.  Under these circumstances, Judge Stanton held, no reasonable consumer would be misled.

Plaintiffs’ warranty- and fraud-based claims fared no better because the label’s representation that the product is “white truffle flavored” was indisputably true; the complaint conceded that the product’s synthetic aroma gave it the taste and smell of white truffle.

As noted, Judge Stanton dismissed the complaint with prejudice.  Although this is an unusual step in a false advertising class action, this case turned on the plain meaning of the product label.  No amendment to the pleadings could change the fact that Monini’s product label accurately disclosed its contents.

While this lawsuit met a quick end, several other similar lawsuits filed by Plaintiffs’ counsel remain pending against other sellers of truffle-flavored olive oils.  One case, making nearly identical allegations against Trader Joe’s, was filed in the Southern District of New York the same day as the case against Monini.  Trader Joe’s was recently ordered to answer the complaint and to engage in discovery.  Two other similar cases, filed against Sabatino and Urbani, are under way in California.  Proskauer is not representing any of these other ‘truffle oil’ sellers, but we will keep an eye on these cases as they move forward.  Watch this space for 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.

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