Proskauer on Advertising Law
Proskauer on Advertising Law

Let it “Bee”: Ninth Circuit Affirms Dismissal of Trader Joe’s Manuka Honey Advertising Suit

By Lawrence Weinstein, Anisha Shenai-Khatkhate and Timothy E. Burroughs on Posted in Class Actions, Deceptive Trade Practices, Labeling Claims

A Ninth Circuit panel recently affirmed dismissal of a putative consumer class action alleging Trader Joe’s misleadingly labeled its store brand honey as “100% New Zealand Manuka Honey,” where plaintiffs’ pollen content testing showed that only about 60% of the honey was derived from Manuka flower nectar. In doing so, the Court reinforced the importance of considering context (including a reasonable consumer’s background knowledge) in evaluating whether advertising would be likely to mislead a reasonable consumer. Moore v. Trader Joe’s Co., No. 19-16618 (9th Cir. July 15, 2021).

Under the FDA’s Honey Guidelines, “Manuka Honey” is the “common or usual name” for honey whose “chief floral source” is the Manuka bush, a plant native to Australia and New Zealand. Plaintiffs conceded that Trader Joe’s labeling is consistent with these guidelines. Even still, plaintiffs maintained that “100% New Zealand Manuka Honey” could nonetheless mislead consumers into thinking that the honey was “100%” from Manuka flower nectar. As noted, plaintiffs commissioned pollen content testing that showed nearly half of the honey was derived from other non-Manuka flower nectar.

The Court of Appeals noted the “100%” in the “100% New Zealand Manuka Honey” label could be read in multiple ways: “100% could be a claim that the product was 100% Manuka honey, that its contents were 100% derived from the Manuka flower, or even that 100% of the honey was from New Zealand.” To determine if this ambiguity would mislead a reasonable consumer, the Ninth Circuit panel relied on precedent from multiple federal appellate courts supporting “the general principle that [courts considering] deceptive advertising claims should take into account all the information available to consumers and the context in which that information is provided and used.”  The panel also noted, “information available to a consumer is not limited to the physical label and may involve contextual inferences regarding the product itself and its packaging.”

Here, the Court found three key contextual inferences would dissuade a reasonable consumer from adopting the “unreasonable or fanciful” belief that the product consists solely of honey derived from the Manuka flower: (1) the impossibility of making a honey that is 100% derived from one floral source; (2) the low price of Trader Joe’s Manuka Honey; and (3) the presence of the “10+” on the label.

First, the Court explained that because of the well-known “foraging nature of bees” any reasonable consumer would know it is impossible to completely control what flowers a bee visits – making it impossible to produce a honey 100% derived from one floral source.

Second, the Court considered the price of Trader Joe’s Manuka Honey relative to the cost of products containing higher concentrations of Manuka-derived honey. Trader Joe’s honey costs $13.99 per jar ($1.59 per ounce), while a jar of honey 92% derived from Manuka costs around $266 ($21.55 per ounce). Given this dramatic price difference, the Court found any consumer aware of the market for Manuka honey could not reasonably expect a $13.99 jar of honey to be “100%” derived from Manuka flower nectar. In support of its reasoning, the Ninth Circuit cited the Second Circuit’s decision in Jessani v. Monini – a lawsuit where Proskauer successfully represented the makers of “white truffle flavored” olive oil. There, the Court found it was “simply not plausible that a significant portion of the general consuming public acting reasonably would conclude that [the defendant’s] mass produced, modestly-priced olive oil was made with ‘the most expensive food in the world.’”

Third, the Court turned to the “10+” on the product label. Although the Court noted there are “no other details on the jar about what ‘10+’ means, the presence of this rating on the label puts a reasonable consumer on notice that it must represent something about the product.” In fact, the “10+” refers to the honey’s Unique Manuka Factor (UMF) score, which measures a Manuka honey product’s concentration of honey derived from Manuka flower nectar. The Court observed that reasonable consumers of Manuka honey would routinely encounter such ratings and would likely have some knowledge about them – and any consumer with even a cursory knowledge of the UMF scale would know Trader Joe’s Manuka Honey was decidedly on the lower end of the scale, which ranges from 5+ to 26+.

The Court thus held “a reasonable consumer would be left only with the conclusion that ‘100% New Zealand Manuka Honey’ means that it is 100% honey whose chief floral source is the Manuka plant, which is an accurate statement.”

While some district courts in the Ninth Circuit can be unduly hesitant about dismissing at the pleading stage complaints alleging unreasonable interpretations of advertising, Moore is a reminder that “where plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of labels or other advertising, dismissal on the pleadings may well be justified.”  Moore is also a reminder that in advertising law, context is king—or perhaps queen, in the case of the honey bee.

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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.

 

 

Tags: Class Action, Deceptive Trade Practices, Food and Beverages, Labeling, Marketing, Ninth Circuit, Reasonable consumer standard

Court Considers FTC’s Ability to Seek Monetary Relief Post-AMG

By Lawrence Weinstein, Jennifer Yang and Amy Gordon on Posted in Deceptive Trade Practices, Regulatory

Earlier this year, we blogged about the Supreme Court’s decision in AMG v. FTC, which significantly curtailed the FTC’s ability to seek monetary restitution under Section 13(b) of the FTC Act.  One quick update there: The U.S. House of Representatives recently voted to restore the FTC’s Section 13(b) disgorgement powers.  For now, though, in the absence of any action by the Senate, the FTC remains without that power.

Recently, Judge Dolly M. Gee of the District Court of the Central District of California considered the FTC’s post- AMG ability to seek monetary relief under a different provision of the Act. Though the court ultimately found the FTC could not do so on the particular facts of the case, Judge Gee’s decision left open the possibility that the FTC may, in theory, seek monetary relief under Section 19 of the FTC Act for violations of the Restore Online Shoppers’ Confidence Act (“ROSCA”). FTC v. Cardiff, No. 18-cv-2104 (C.D. Cal. June 29, 2021). However, because ROSCA claims are fairly limited in scope, this decision does not create the possibility of rendering the Supreme Court’s AMG decision a dead letter; there still exist substantial categories of FTC suits for which monetary relief is not permitted, absent an act of Congress.

The FTC alleged defendants, the marketers of smoking cessation products, enrolled consumers who purchased their products in a “monthly autoship program,” through which defendants shipped (and charged customers for) products without their consent. Based on these allegations, the FTC sued defendants under ROSCA, which prohibits charging consumers for goods sold online through an opt-out program unless consumers receive clear notice and a simple mechanism to cancel. Noting “[c]onsumers had to take an affirmative step to cancel the autoship program, and even when they took this step, they were not always able to effectuate a cancellation,” the court previously granted summary judgment to the FTC on its ROSCA claim. In the instant proceeding, the court considered damages owed to the FTC.

While the Supreme Court’s decision in AMG curtailed the FTC’s ability to seek restitution under Section 13(b), the FTC argued it could still seek monetary relief under Section 19. Section 19 authorizes the FTC to sue directly in federal court to obtain relief for unfair or deceptive acts or practices. Observing that Section 19 defines the available relief broadly, so as to include “the refund of money or return of property” and “the payment of damages,” the court agreed that the language in Section 19 plainly authorizes the FTC to seek equitable monetary relief to redress consumer injury resulting from ROSCA violations. It also noted that the Supreme Court’s decision in AMG explicitly stated that “[n]othing” in the decision “prohibits the Commission from using its authority under § 5 and § 19 [of the FTC Act] to obtain restitution on behalf of consumers.”

However, the court nonetheless denied the FTC’s ability to recover monetarily under Section 19 in this particular case, on the ground that the FTC failed to timely disclose its only evidence in support of its computation of ROSCA damages. The court noted that in its papers, the FTC only cited to Section 13(b) of the Act (not Section 19), and did not offer a separate calculation of damages for violations of ROSCA or any other statutes or rules. Finding that the FTC had put “all its eggs in the Section 13(b) basket,” the court determined it was too late for the FTC to pivot to Section 19 to recover damages.

Although the FTC did not succeed in obtaining monetary relief, it did succeed in obtaining injunctive relief against the defendants. The Court held that the FTC was permitted to seek a permanent injunction against defendants under Section 13(b) without first initiating administrative proceedings, because AMG only curtailed its ability to seek monetary relief under Section 13(b). 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.

 

Tags: Deceptive Trade Practices, FTC

More Than “Puffery”: Claims Against Canada Goose Survive Motion to Dismiss

By Lawrence Weinstein, Jeff Warshafsky and Anisha Shenai-Khatkhate on Posted in Class Actions, Deceptive Trade Practices, Labeling Claims

Judge Victor Marrero of the Southern District of New York recently largely denied a motion to dismiss claims that Canada Goose misled consumers by representing that the fur on Canada Goose jackets is ethically and sustainably sourced. In doing so, the court determined plaintiff’s allegations were “thin,” but viewing the complaint in the light most favorable to plaintiff, found plaintiff had plausibly alleged that a reasonable consumer would be misled. Lee v. Canada Goose US, Inc., No. 20 Civ. 9809 (VM) (S.D.N.Y. June 29, 2021).

In his complaint, plaintiff cited Canada Goose’s representations that the fur was acquired through “ethical, responsible, and sustainable sourcing.” Plaintiff also alleged a tag on the coats referred to Canada Goose’s “Fur Transparency Standard,” and stated that the company purchases fur in accordance with certain third-party standards only from licensed trappers. Plaintiff alleged these representations were misleading, because allegedly inhumane practices like leghold traps and snares are widely used by trappers in the U.S. and Canada.

However, plaintiff did not specifically allege that Canada Goose sources fur from coyotes trapped using these methods. Rather, he alleged that these allegedly inhumane practices were widely used by trappers who abide by standards cited by Canada Goose. While the court found these allegations thin, they were enough to support a reasonable inference that Canada Goose obtained fur from trappers whose methods are inhumane.

But not all of Plaintiff’s claims survived the motion to dismiss. The district court dismissed claims that customers would be misled by Canada Goose’s representations about their (1) compliance with third-party trapping standards and (2) sourcing through licensed trappers. Plaintiff merely alleged that the standards/regulations were themselves inhumane, not that Canada Goose’s statements concerning its compliance were false.  This case represents just one of a recent wave of sustainability-related class action lawsuits. For example, class actions have been filed against:

We encourage our readers to get in touch to discuss strategies for mitigating risk when drafting sustainability-related advertising claims.

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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.

Tags: Class Action, Deceptive Trade Practices, Environmental Claims, Labeling, Marketing, SDNY, Sustainability Claims

The Legal “Pecking Order”: Ninth Circuit Finds Poultry Labeling Claims Preempted

By Lawrence Weinstein, Jennifer Yang and Anisha Shenai-Khatkhate on Posted in Class Actions, Deceptive Trade Practices, Labeling Claims, Primary Jurisdiction/Preemption

In a unanimous precedential decision, a Ninth Circuit panel recently affirmed the dismissal of a putative class action against Trader Joe’s, which alleged that the statement “Up to 5% Retained Water” on Trader Joe’s poultry product labels was misleading. According to Plaintiff, her independent testing showed Trader Joe’s poultry products contained a higher percentage of retained water.  However, the Ninth Circuit affirmed the district court’s finding that federal law preempted Plaintiff’s challenge to those advertising claims. Webb v. Trader Joe’s, No. 19-56389, 2021 WL 2275265 (9th Cir. June 4, 2021).

As the Ninth Circuit’s decision explained, poultry testing and labeling are federally regulated under the Poultry Products Inspection Act (“PPIA”) and overseen by the Food Safety and Inspection Service (“FSIS”). Importantly, FSIS had already inspected and approved Trader Joe’s “Up to 5% Retained Water” claim. FSIS had also reviewed and declined to object to the testing protocol Trader Joe’s used to obtain the data supporting that claim. And because Trader Joe’s had never publicly published its testing protocol, the Court found Plaintiff had not (and could not) allege that her testing protocol was the same as that used by Trader Joe’s.

On this basis, the Ninth Circuit found Plaintiff’s claims were preempted by the PPIA. Since the FSIS had already reviewed and accepted Trader Joe’s testing protocol and labeling, requiring Trader Joe’s to conform to Plaintiff’s test protocol, or to accept  Plaintiff’s test data, would impose requirements “in addition to, or different than those” required under federal law—namely, the PPIA.

Plaintiff tried to avoid that finding by arguing Trader Joe’s protocol was not “preapproved” by FSIS.  In other words, Plaintiff argued FSIS did not object to the testing protocol, but did not explicitly approve it either.  The Court was not persuaded.  It noted that under the PPIA, Trader Joe’s was only required to make its protocol available to FSIS, which “may object to or require changes” within 30 days.  And under the federal regulatory scheme, FSIS’s decision not to object or otherwise require changes to the protocol constituted federal approval.

Many advertising class actions take issue with labels that are allegedly misleading.  When those labels are subject to a federal regulatory scheme (more commonly the FDCA than the PPIA) in which the federal agency approves or signs off on a subsequently challenged statement, preemption can be a strong basis for a dismissal motion.

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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.

Tags: Class Action, Deceptive Trade Practices, Food and Beverages, Labeling, Marketing, Ninth Circuit, Preemption

Judge Wipes Out “Wet Ones” False Advertising Suit

By Lawrence Weinstein, Jeff Warshafsky and Anisha Shenai-Khatkhate on Posted in Class Actions, Deceptive Trade Practices, Labeling Claims

Judge Todd W. Robinson of the Southern District of California recently dismissed a putative class action against Edgewell Personal Care, the makers of Wet Ones antibacterial hand wipes, alleging it misled consumers by representing Wet Ones kill 99.99 percent of germs and are “hypoallergenic” and “gentle.” In dismissing plaintiff’s claims, the court found no reasonable consumer would take these representations to mean that Wet Ones kill 99.99 percent of all kinds of germs (including those not commonly found on hands), or that the hand wipes are entirely free of allergens or skin irritants. Souter v. Edgewell Personal Care Co., No. 20-cv-1486 (S.D. Cal. June 7, 2021).

The Wet Ones product label states that the wipes “Kill[] 99.99% of Germs.” Plaintiff alleged this statement is misleading because the wipes’ active ingredient is “ineffective against certain viruses, bacteria, and spores, which comprise more than 0.01 percent of germs and can cause serious diseases.” Specifically, Plaintiff alleged the wipes could not protect consumers from – among other conditions – food-borne illnesses, sexually transmitted diseases, polio, and COVID-19.

The court, however, found “no reasonable consumer would be misled by [these representations] in the way that Plaintiff alleges.”  Plaintiff did not explain “how or why a reasonable consumer would believe that a hand wipe would protect against these viruses and diseases.” Indeed, the court found it implausible that a reasonable consumer would believe a hand wipe could protect them against conditions like polio or HPV. Instead, if anything, the court found a reasonable consumer would suspect that a hand wipe would be effective only against bacteria commonly found on hands. Plaintiff’s complaint failed to allege how common it is for the strains of bacteria she identified to appear on hands.

The court was likewise unconvinced that defendant’s use of the words “hypoallergenic” and “gentle” was misleading. It found “[n]o reasonable consumer would read ‘hypoallergenic’ and ‘gentle’ to mean that [the product] is completely free of ingredients that can cause an allergic reaction.” Rather, a reasonable consumer is more likely to interpret the label to mean the product poses a lower risk (as opposed to no possible risk) of skin irritation. Furthermore, the court found a reasonable consumer may understand these terms to convey a message about the effect of Wet Ones on the skin, rather than a message about its ingredients.

This decision serves as a reminder of the importance of context in determining reasonable consumer takeaway. When plaintiffs ignore context and claim to have taken away an objectively unreasonable message, their complaint is ripe for dismissal.

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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.

Tags: California, Class Action, Deceptive Trade Practices, Labeling, Marketing, Reasonable consumer standard

Don’t Sweat It: 8th Circuit Affirms Dismissal of Deodorant Class Action

By Lawrence Weinstein, Jennifer Yang and Anisha Shenai-Khatkhate on Posted in Class Actions, Deceptive Trade Practices

The Eighth Circuit recently affirmed the dismissal of a class action alleging that Unilever’s differential pricing of men’s and women’s antiperspirants violated the Missouri Merchandising Practices Act (MMPA). In doing so, the Court found plaintiff’s claims wrongly equated marketing targeted to women with point-of-sale price discrimination by gender (i.e. charging a different price for the same product based on the gender of the purchaser, at the time and place where the retail transaction is completed).  Schulte v. Conopco, Case No. 20-2696 (8th Cir. May 18, 2021).

Dove “Men + Care” is an antiperspirant line primarily marketed to men, with five different scents. A differently branded product, Dove “Advanced Care,” is marketed primarily to women. Dove Advanced Care  is offered in a range of fifteen different scents – all of which are different from the scents available with the Men + Care product. The two lines have distinct packaging and labels, and are often priced differently.  Plaintiff alleged she purchased an Advanced Care antiperspirant stick from each of the six defendant retailers, and paid a premium of up to $1.00 per stick. According to plaintiff, this price differential constituted a “pink tax,” which she claimed violated the MMPA’s prohibition on “unfair practices.”

The district court dismissed the complaint, noting “[w]omen are able to purchase any of the Dove antiperspirants for the same price as men regardless of the scent or variety.” 2020 U.S. Dist. LEXIS 126194 (E.D. Mo. 2020).  On appeal, the Eighth Circuit affirmed. Without reaching the question of whether the MMPA does, in fact, prohibit gender discrimination in pricing, the Eighth Circuit found plaintiff incorrectly equated gender-based marketing with gender discrimination. According to the Court, to plausibly allege gender discrimination, plaintiff needed to plausibly allege that the only difference between “Men + Care” and “Advanced Care” was the gender of the consumer. Noting the various other differences between the two lines (including differences in scents, packaging, and labels), the Court found plaintiff failed to do so. Instead, the Court determined these various differences make the different products potentially attractive to different customers with different preferences.

The Eighth Circuit also emphasized the difference between marketing a product to appeal to a specific gender, and actually charging different point-of-sale pricing according to the consumer’s gender. The Court found plaintiff’s position incorrectly assumes that women must purchase products marketed to their gender, due to (in plaintiff’s words) “social conditioning and societal expectations regarding what is ‘feminine’ and ‘masculine.’” The Court noted that if plaintiff’s primary concern was price, she was free to purchase the cheaper “Men + Care” antiperspirant line. Plaintiff chose not to because, as stated in her brief, she did not want to “smell like a man.” Thus, the court concluded, plaintiff’s grievance was that she did not want to pay extra for her preference. But preference-based pricing, the Court said, was not in and of itself “unfair.”

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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.

Tags: Class Action, Deceptive Trade Practices, Eighth Circuit, Marketing

Judge Looks “Kind”ly Upon Certifying Class in Snack Bar Advertising Suit

By Lawrence Weinstein, Jennifer Yang and Alyson Tocicki on Posted in Class Actions, Commonality Requirement, Deceptive Trade Practices, Labeling Claims, Regulatory

In a recent opinion out of the Southern District of New York, Judge William H. Pauley III certified three classes of plaintiffs in New York, California, and Florida who allege that KIND LLC, the manufacturer of KIND Bars, deceptively marketed several products as “all natural” and “non-GMO,” even though they purportedly contain synthetic and genetically modified ingredients.  In re KIND LLC “Healthy and All Natural” Litig., No. 15-md-02645 (S.D.N.Y. Mar. 24, 2021).

The court began its analysis by examining each of the four Rule 23(a) requirements—numerosity, commonality, typicality, and adequacy—and determining that each weighed in favor of class certification.  Most notably, the court found that common questions predominated despite the absence of any uniform definition of the term “natural” because, in its view, all the definitions plaintiffs advanced were consistent with one another.  Plaintiffs offered definitions of “natural” from the dictionary, FDA policy, the USDA, and Congress. In considering these various definitions, Judge Pauley recognized that “these formulations of the definition ‘natural’ differ,” but dismissed these concerns because he believed none “exclude[d] another.”

This decision is somewhat surprising, given the deep reservoir of class certification decisions finding that, where plaintiffs fail to establish a controlling definition for a key term or phrase in the challenged advertisement, individual issues predominate and class certification should be denied.  A number of courts have reached this conclusion in the “natural” labeling sphere:

  • In Astiana v. Kashi Co., the court refused to certify a class bringing “all natural” claims, in part because the plaintiffs were unable to show that “all natural” had a shared meaning amongst the proposed class. 2013 U.S. Dist. LEXIS 108445, *40 (S.D. Cal. 2013)
  • In Thurston v. Bear Naked, Inc., a federal judge in the Southern District of California found commonality and predominance lacking because the plaintiffs “fail[ed] to sufficiently show that ‘natural’ has any kind of uniform definition among class members.” 2013 U.S. Dist. LEXIS 151490, *25 (S.D. Cal. 2013).
  • In Randolph v. J.M. Smucker Co., the court denied class certification where plaintiff had “not demonstrated that an objectively reasonable consumer would agree with her interpretation of ‘all natural,’” while also noting that this failure “unequivocally exposes the fact that there is a lack of consensus” surrounding what constitutes a “natural” product. 2014 U.S. Dist. LEXIS 176731, *14 (S.D. Fla. 2014).

Courts regularly adopt this reasoning in other contexts also. See Pierce-Nunes v. Toshiba Am. Info. Sys., 2016 U.S. Dist. LEXIS 149847 (C.D. Cal. 2016) (holding that the predominance requirement was not satisfied where plaintiffs could not establish a common meaning for the term “LED TV”); In re 5-Hour Energy Mktg. & Sales Practices Litig., 2017 U.S. Dist. LEXIS 220969 (C.D. Cal. 2017) (same based on “energy”); In re Tropicana Orange Juice Mktg. & Sales Practices Litig., 2019 U.S. Dist. LEXIS 102566 (D.N.J. 2019) (same based on “pasteurized”).

The FDA also has not adopted, and has actually declined to adopt, a formal definition of the term “natural,” citing the “many facets of this issue” the agency would have to carefully consider if it were to undertake the task of defining the term.  See 58 Fed. Reg. 2302, 2407 (Jan. 6, 1993).  In doing so, the FDA noted “the ambiguity surrounding use of this term.”  It is difficult to square this ambiguity with the KIND court’s certification decision.

Watch this space as we monitor whether this decision is part of a shifting tide in “natural” certification decisions, or merely an outlier amidst continuing struggles to reach consensus on what “natural” even means.

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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.

Tags: Class Action, Class Certification, Deceptive Trade Practices, FDA, Food and Beverages, Labeling, Marketing, Natural Claims
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