Rejection of Lanham Act Juice Blend Labeling Challenge Upheld; California Law Claims Revived

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Pom Wonderful, a seller of pomegranate juice and juice blends, was precluded from asserting Lanham Act false advertising claims based on Coca Cola's naming and labeling of “Pomegranate Blueberry Flavored Blend of 5 Juices,” the U.S. Court of Appeals in San Francisco ruled yesterday. The product contained about 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice, according to the court.

A ruling that Pom Wonderful failed to assert an injury in fact under the California Unfair Competition Law (UCL) and False Advertising Law (FAL) was vacated and remanded for further proceedings. Not considered on Pom’s appeal from the decision of the federal district court in Los Angeles (CCH Advertising Law Guide ¶63,889) was a ruling that Pom can pursue Lanham Act claims that consumers were confused by Coca Cola's intentionally misleading marketing and advertising (apart from naming and labeling) of the pomegranate-blueberry flavored blend.

Food Labeling Regulation

Pom’s challenge to the name “Pomegranate Blueberry Flavored Blend of 5 Juices” would create a conflict with Food and Drug Administration regulations and would undermine the FDA’s apparent determination that so naming the product is not misleading, the court determined. As to labeling, Pom apparently wanted to force Coca-Cola to alter the size of the words on its label so that the words “Pomegranate Blueberry” would no longer appear in larger, more conspicuous type on Coca-Cola’s label than did the words “Flavored Blend of 5 Juices.”

Congress and the FDA had considered and spoken to what content a label must bear, and the relative sizes in which the label must bear it, so as not to deceive. Despite speaking extensively to how prominently required words or statements must appear, the FDA had not required that all words in a juice blend’s name appear on the label in the same size or that words hew to some other standard. Coca-Cola’s label presumptively complied with the relevant FDA regulations and thus accorded with the judgments the FDA had so far made, the court held.

California Law

In rejecting the claims under California law, the district court had interpreted statutory “lost money or property” language to require a plaintiff to show that it is entitled to restitution from the defendant—even if the plaintiff seeks only injunctive relief. That was error in light of California Supreme Court rulings making it clear that standing under UCL Section 17204 of the Unfair Competition Law and FAL Section 17535 did not depend on eligibility for restitution, the court concluded.

The May 17 decision in Pom Wonderful LLC v. Coca-Cola Co., No. 10-55861, will be reported at CCH Advertising Law Guide ¶64,708 and CCH 2012-1 Trade Cases ¶77,892.

Labeling, Advertising Food as “Healthy” Could Violate California Law

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Advertising Nutella® hazelnut spread as a “tasty yet balanced breakfast” was not mere puffery, and purchasers satisfied the reasonable consumer test under California consumer protection statutes in a suit against the food manufacturer Ferrero U.S.A., Inc., the federal district court in San Diego has ruled.

In a class action complaint, the purchasers alleged that Ferrero misleadingly labeled and advertised Nutella as healthy and beneficial to children, when in fact it contained dangerous levels of fat and sugar.

The purchasers’ complaint provided detailed lists of the challenged representations, the sections of the Consumers Legal Remedies Act (CLRA) that Ferrero allegedly violated, and a statement of how each section was violated. The purchasers stated a claim of unlawful conduct under the Unfair Competition Law (UCL) based on alleged violations of the False Advertising Law and the CLRA. The purchasers stated a claim of unfair conduct under the UCL by alleging that the misleading labeling of Nutella was immoral, unscrupulous, and offensive to public policy, and that the utility of the advertising and labeling was outweighed by the harm suffered by the purchasers.

Preemption

Federal law preempted an allegation that Ferrero deceptively omitted from its Nutella labeling the fact that it contained artificial flavoring, the court held. Food labeling was governed by the federal Food, Drug, and Cosmetic Act, as amended by the Nutrition Labeling and Education Act. Because Nutella’s label stated the fact that it contained vanillin, an artificial flavor, the label complied with the federal disclosure requirements, the court said.

Ferrero did not argue that the purchasers’ allegations regarding statements from its television advertisements were preempted.

Standing to Challenge Website Statements

The purchasers lacked standing to challenge statements on the Nutella website because, according to the purchasers’ allegations, they did not actually rely on the website statements before making their purchases, the court decided. The purchasers alleged that they only relied on representations from Nutella’s label and television advertisements in purchasing the product, and they admitted in their briefing that they had not visited the website.

The purchasers argued that they did not have to rely on individual website misrepresentations because the representations were part of a long-term, multifaceted advertising campaign, but the purchasers did not allege this in their complaint, the court noted. The purchasers were given 30 days to cure deficiencies in the complaint.

The June 30, 2011 opinion, In re Ferrero Litigation, 11-CV-205 H (CAB), will be reported at CCH Advertising Law Guide ¶ 64,349.

Soup Labels Touting “Less Sodium” Could Cause Ascertainable Loss

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

In a class action complaint, consumers stated claims under the New Jersey Consumer Fraud Act (CFA) by alleging that labels for Campbell’s 25% Less Sodium Tomato Soup and 30% Less Sodium Healthy Request Soup were misleading and caused the consumers to buy the higher-priced less sodium soups even though the sodium content of those soups was equal or nearly equal to that of Campbell’s regular tomato soup, the federal district court in Camden, New Jersey has ruled.

Campbell’s contention that the labels were accurate comparisons to the old formulation of regular tomato soup relied on facts outside the scope of a motion to dismiss, the court noted. In addition, even if the labels were literally true, this did not mean they could not be misleading to the average consumer, the court added.

Campbell also contended unsuccessfully that using a misrepresentation to cause a consumer to purchase a product does not cause an ascertainable loss under the CFA.

Benefit-of-the-Bargain Theory

The New Jersey Supreme Court had repeatedly and explicitly endorsed a benefit-of-the-bargain theory under the CFA that required nothing more than that the consumer was misled into buying a product that was ultimately worth less to the consumer than the product promised.

A reasonable reading of the complaint was that the soup paid for was identical, for the consumers’ purposes, to soup that allegedly was 20 to 80 cents cheaper, according to the court. A reasonable fact-finder could therefore conclude that the reasonably calculated value to consumers of the item actually received was 20 to 80 cents less than the value of the item promised. That was a sufficient allegation of ascertainable loss under New Jersey law, the court held.

Preemption

The federal Food, Drug, and Cosmetic Act (FDCA) did not preempt the CFA claims. The FDCA, as amended by the Nutrition Labeling and Education Act, provided that a state may not impose any requirement respecting any claims of nutritional content on labels “that is not identical to the requirement” imposed by the Act.

The state law claims that the labels were misleading were not preempted because they mirrored the federal requirements. However, claims that the labels omitted material information regarding sodium were preempted by the FDCA because the consumers sought to impose a labeling requirement for the nutrient content that was inconsistent with the Food and Drug Administration’s nutritional labeling regulations, the court determined.

The opinion in Smajlaj v. Cambpell Soup. Co. is reported at CCH Advertising Law Guide ¶64,238.

Snapple Purchasers’ “All Natural” Claims Meet Fraud Pleading Standards

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Purchasers of Snapple drink products pleaded with particularity that “all natural” labeling of beverages containing high fructose corn syrup (HFCS) was deceptive and fraudulent under California consumer protection laws, the federal district court in Sacramento has ruled.

The purchasers' broader allegations regarding unspecified “commercial advertisements” and “other promotional materials” were dismissed.

Labeling Claims

The purchasers alleged that between March 4, 2005 and March 4, 2009, Snapple used “All Natural” and other similar terms in labeling its drink products. The purchasers submitted examples of the labels from bottles of each of the sixty drink products, all of which contain the term “All Natural” or “100% Natural.”

The purchasers alleged that this labeling deceived consumers because the drink products contained HFCS, which they asserted is not a natural product. The purchasers further alleged that if they had not been deceived by the labels on the products, they would not have purchased the products, but would have purchased alternative drink products.

These allegations satisfied the heightened standard for specifying the who, what, where, and how of fraud, under Rule 9(b) of the Federal Rules of Civil Procedure, the court held.

Advertisements, Promotional Materials

The purchasers' allegations regarding unspecified “commercial advertisements” and “other promotional materials” were dismissed because they failed to (1) identify any specific advertisements or promotional materials; (2) allege when plaintiffs were exposed to each advertisements or materials; or (3) explain how such advertisements or materials were false or misleading, according to the court.

The January 6 opinion in Von Koenig v. Snapple Beverage Corp. will be reported at CCH Advertising Law Guide ¶64,116.

FDA Calls on Food Companies to Correct Labeling Violations

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

The U.S. Food and Drug Administration has notified 17 food manufacturers that the labeling for 22 of their food products violates the Federal Food, Drug, and Cosmetic Act.

The action follows an October 2009 statement by Commissioner of Food and Drugs Margaret Hamburg, M.D., encouraging companies to review their labeling to ensure that they were in compliance with FDA regulations, and were truthful and not misleading.

Letter to Industry

In an open letter to Industry dated March 3, 2010, Dr. Hamburg underscored the importance of providing nutrition information that consumers could rely on.

“Today, ready access to reliable information about the calorie and nutrient content of food is even more important, given the prevalence of obesity and diet-related diseases in the United States,” Dr. Hamburg said in the letter.

She also expressed her hope that the warning letters would clarify the FDA’s expectations for food manufacturers as they review their current labeling.

Front-of-Package Labeling Initiative

Dr. Hamburg has made nutrition labeling a priority for the FDA. The warning letters are the agency’s most recent action to help improve consumers’ ability to make nutritious choices.

The FDA soon will propose guidance regarding calorie and nutrient labeling on the front of food packages and plans to work collaboratively with the food industry to design and implement innovative approaches to front-of-package.

Warning Letters

The violations cited in the warning letters include unauthorized health claims, unauthorized nutrient content claims, and the unauthorized use of terms such as “healthy,” and others that have strict, regulatory definitions.

Companies that received warning letters have 15 business days to inform the FDA of the steps they will take to correct their labeling, according to the FDA’s press release.

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Firm: Dreyers Grand Ice Cream, Inc.

Product: Nestle Drumstick Classic Vanilla Fudge

Type of Claim of Major Topic Area: The front panel shows that the product has no trans fat, but it doesn't have a disclosure statement to alert consumers that the product has significant levels of saturated fat and total fat.

Action: Warning Letter

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Firm: Dreyers Grand Ice Cream, Inc.

Product: Dreyers Dibs Bite Sized Ice Cream Snacks Vanilla Ice Cream with Nestle Crunch Coating

Type of Claim of Major Topic Area: The front panel shows that the product has no trans fat, but it doesn't have a disclosure statement to alert consumers that the product has significant levels of saturated fat and total fat.

Action: Warning Letter

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Firm: Gorton's, Inc.

Product: Gorton's Fish Fillets

Type of Claim of Major Topic Area: The front panel shows that the product has no trans fat, but it doesn't have a disclosure statement to alert consumers that the product has significant levels of sodium, saturated fat and total fat.

Action: Warning Letter

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Firm: Schwan's Consumer Brands

Product:Mrs. Smith's Coconut Custard Pie

Type of Claim of Major Topic Area: The front panel shows that the product has no trans fat, but it doesn't have a disclosure statement to alert consumers that the product has significant levels of saturated fat and total fat.

Action: Warning Letter

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Firm: Spectrum Organic Products, Inc.

Product: Organic All Vegetable Shortening

Type of Claim of Major Topic Area: The front panel shows that the product has no trans fat, but it doesn't have a disclosure statement to alert consumers that the product has significant levels of saturated fat and total fat.

Action: Warning Letter

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Firm: Spectrum Organic Products, Inc.

Product: Organic All Vegetable Shortening

Type of Claim of Major Topic Area: The product makes nutrient content claims such as "cholesterol free," "less saturated fat than butter," and "good source of … monounsaturated fat," but does not meet the legal requirements to make these claims.

Action: Warning Letter

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Firm: Beech-nut

Product: Beechnut DHA Plus line of products

Type of Claim of Major Topic Area: The product makes claims on its website such as "no added refined sugar" and "plus vitamins and minerals," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm:Beech-nut

Product: Beechnut Whole Grain Oatmeal with mixed fruit

Type of Claim of Major Topic Area: The product makes claims such as "low sodium," "plus fiber," and "plus vitamins & minerals," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm:PBM Products

Product:Parent's Choice Little Puffs Plus Calcium Blueberry Naturally Flavored

Type of Claim of Major Topic Area: The product makes claims such as "plus calcium," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm:PBM Products

Product: Parent's Choice Little Puffs Made with Whole Grains Peach-Mango Naturally Flavored

Type of Claim of Major Topic Area: The product makes claims such as "a good source of calcium," "a good source of Vitamin D," and "a good source of iron," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm: Nestle

Product: Juicy Juice Brain Development Fruit Juice Beverage

Type of Claim of Major Topic Area: The product makes claims such as "no sugar added," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter (issued 12/2009)

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Firm: Nestle

Product: Juicy Juice All-Natural 100% Juice Orange Tangerine and Juicy Juice All-Natural 100% Juice Grape

Type of Claim of Major Topic Area: The product labels imply that the products are 100% juice when they are actually
juice blends with added flavors.

Action: Warning Letter (issued 12/2009)

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Firm: Nestle Nutrition

Product: Gerber's 2nd Foods Carrots

Type of Claim of Major Topic Area: The product makes claims such as "healthy," "excellent source of … Vitamin A," and "no added sugar," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm: Nestle Nutrition

Product: Gerber Graduates Puffs

Type of Claim of Major Topic Area: The product makes claims such as "good source of iron, zinc, and Vitamin E," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm: Redco Foods

Product: Salada Naturally Decaffeinated Green Tea

Type of Claim of Major Topic Area: The product makes claims that it will treat, prevent, or cure diseases such as Alzheimer's disease, rheumatism, and cancer. These types of claims are not allowed on food products.

Action: Warning letter

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Firm: Redco Foods

Product: Salada Naturally Decaffeinated Green Tea

Type of Claim of Major Topic Area: The product makes claims on the product website that it is effective in the prevention of cardiovascular disease, but this claim has been not authorized for this product.

Action: Warning letter

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Firm: Redco Foods

Product: Salada Naturally Decaffeinated Green Tea

Type of Claim of Major Topic Area: The product makes claims such as "fortified with antioxidants," but the claim does not meet the requirements of the antioxidant regulation.

Action: Warning letter

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Firm: Sunsweet Growers

Product: Antioxidant Blend Dried Fruit Mix

Type of Claim of Major Topic Area: The product makes claims such as “full of nutritious antioxidants,” but the claim does not meet the requirements of the antioxidant regulation.

Action: Warning letter

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Firm: Fleminger Inc.

Product: TeaForHealth Green Tea products Dr. Lee's TeaForHealth 710EGCG inabottle Green TeaTea For Health 710EGCG Ready-To-Drink Natural Brewed Green Tea

Type of Claim of Major Topic Area: The product makes claims that it will treat, prevent, or cure diseases such as Alzheimer's disease, diabetes, and cancer. These types of claims are not allowed on food products.

Action: Warning Letter

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Firm: Fleminger Inc.

Product: TeaForHealth Green Tea products Dr. Lee's TeaForHealth 710EGCG inabottle Green TeaTea For Health 710EGCG Ready-To-Drink Natural Brewed Green Tea

Type of Claim of Major Topic Area: FDA has authorized a qualified health claim for green tea, but the claims for these products do not meet the criteria established by FDA.

Action: Warning Letter

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Firm: Fleminger Inc.

Product: TeaForHealth Green Tea products Dr. Lee's TeaForHealth 710EGCG inabottle Green TeaTea For Health 710EGCG Ready-To-Drink Natural Brewed Green Tea

Type of Claim of Major Topic Area: The product makes claims such as "drink high antioxidant green tea," but the claim does not meet the requirements of the antioxidant regulation.

Action: Warning Letter

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Firm: POM Wonderful

Product: POM Wonderful 100% Pomegranate Juice

Type of Claim of Major Topic Area: The product makes claims that it will treat, prevent, or cure diseases such as hypertension, diabetes, and cancer. These types of claims are not allowed on food products.

Action: Warning Letter

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Firm: Ken's Foods, Inc.

Product: Ken's Healthy Options Salad Dressings

Type of Claim of Major Topic Area: The product makes claims such as, "Healthy Options," but has more fat than is allowed in products labeled as "healthy."

Action: Warning Letter

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Firm: Pompeian, Inc.

Product: Pompeian Imported Extra Light Olive Oil

Type of Claim of Major Topic Area: The product makes nutrient content claims such as "light," and "high in good monounsaturated fat," but doesn't meet the requirement to make these claims.

Action: Warning Letter

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Firm: Pompeian, Inc.

Product: Pompeian Imported Extra Light Olive Oil

Type of Claim of Major Topic Area: The product makes claims that it will treat, prevent, or cure diseases such as heart disease and cancer. These types of claims are not allowed on food products.

Action: Warning Letter

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Firm: Diamond Food,Inc.

Product: Diamond of California Shelled Walnuts

Type of Claim of Major Topic Area: The product label makes claims that the product can help prevent heart disease. FDA has authorized a claim relating walnuts and heart disease, but the claim on this product doesn't meet the requirements to make the claim.

Action: Warning Letter

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Firm: Diamond Food,Inc.

Product: Diamond of California Shelled Walnuts

Type of Claim of Major Topic Area: The product makes claims that it will treat, prevent, or cure diseases such as heart disease, arthritis and cancer. These types of claims are not allowed on food products.

Action: Warning Letter

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Firm: First Juice, Inc.

Product: Organic Fruit and Veggie Juice Beverage products

Type of Claim of Major Topic Area: The product make claims such as "plus calcium," and "50% less sugar," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm: First Juice, Inc.

Product: Purple carrot products

Type of Claim of Major Topic Area: The products make claims that the products will "reduce the risk of cancer and stroke," This claim has not been authorized by FDA for use on food products.

Action: Warning Letter

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Firm: Want Want Foods

Product: Baby Mum-Mum Original Selected Superior Rice Rusks

Type of Claim of Major Topic Area: The product make claims such as "low in fat," and "no added fats for oils," which are not allowed on products intended for children under 2 yrs of age because appropriate dietary levels have not been established for children in this age range.

Action: Warning Letter

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Firm: Nature's Path Foods, Inc.

Product: Organic Flax Plus Multibran Cereal

Type of Claim of Major Topic Area: The product label includes the nutrient claim, "excellent source of Omega-3+," which has not been approved for use on food products.

Action: Untitled Letter