Dannon Forced to Open Wallet and Change Advertising (Again)
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The multinational food company Dannon agreed to a 45 million dollar class action settlement earlier this year based on consumer complaints about advertising claims regarding the health benefits of its probiotic line of dairy products. Now the company has entered into a $21 million dollar settlement with the attorneys general from 39 states. The L.A. Times reports that this is the largest-ever multistate attorney general consumer protection settlement with a food producer. The attorneys general alleged that Dannon made deceptive and unlawful claims in advertising which were not substantiated by competent and reliable scientific evidence at the time the claims were made. According to the allegations, the majority of scientific studies showed improvement in intestinal transit time when an individual consumed three servings of the probiotic products per day for two weeks, and did not support Dannon's advertised claims that one serving per day for two weeks improved digestive health. In addition, the attorneys general alleged that Dannon could not substantiate claims regarding improved immunity against the flu and common cold.
Dannon also agreed with the FTC to drop claims that the probiotic foods help prevent irregularity and offer protection against the flu and common cold. The FTC found no substantiation of these claims. This isn’t the first time Dannon has had to alter its advertising; the March settlement required Dannon to remove specific language about the health benefits of the products from labels and advertising.
Between this and the March settlement, Dannon has now agreed to pay $66 million as restitution for the misleading health claims, which comes out to about 1.3% of Dannon reported $5 billion in worldwide net sales of the probiotic line in 2009. This latest settlement should remind companies to keep state governments on the list of watchful eyes monitoring health claims related to food and supplement products.
The Show Goes On: USDC Allows Vitaminwater Lawsuit to Proceed
By Guest Blogger Tyler Anderson
In an opinion issued on July 21, 2010, Judge John Gleason of the United States District Court for the Eastern District of New York largely denied the defendant’s motion for dismissal and held that 10 of the 13 claims in a class action suit brought against Coca-Cola for alleged unlawful health claims on its Vitaminwater drinks could proceed. The claims that still must be examined in court include allegations of misleading advertising, fraudulent business acts, and unfair methods of competition.
The plaintiffs in the class action, which include the health advocacy group Center for Science in the Public Interest (“CSPI”) as co-counsel, contended that Vitaminwater’s labeling and marketing is misleading because it (1) communicates a number of purported health benefits (including healthy joints, optimal immune function, and reduced risk of chronic disease), drawing consumer attention away from the significant amount of sugar (33 grams per bottle) in the product; (2) portrays Vitaminwater as healthy when it is essentially a snack food that provides nutritional benefits because it has been specifically fortified to do so; and (3) suggests that Vitaminwater contains nothing but vitamins and water.
While the court concluded, citing applicable Food and Drug Administration (“FDA”) rules and commentary, that sugar was not a “disqualifying nutrient” under applicable FDA regulations, the plaintiffs’ latter two claims were found to accurately describe violations of FDA regulations, and accordingly may serve as a non-preempted basis of state law liability.
The FDA regulations restricting health claims or implied claims of healthiness related to foods that meet certain minimum nutrient levels, colloquially termed “the jelly bean rule,” were developed in an effort to prevent food producers from encouraging the consumption by consumers of junk food by fortifying the food in question with nutrients. The “jelly bean rule” is applicable only to (1) health claims, and (2) nutrient content claims that use the word “healthy” to suggest that a food may help consumers maintain healthy dietary practices because of its nutrient content. Finding that Vitaminwater’s labeling contains claims in each of these two categories, the court ruled the plaintiffs could proceed with this claim.
The plaintiffs alleged Vitaminwater’s labeling is misleading because it uses a product name that includes two of the product’s ingredients (vitamins and water), but fails to mention another notable ingredient (sugar). FDA regulations on this subject recognize that such product names have the potential to mislead consumers. Thus, the court held that the plaintiffs were allowed to pursue this claim. In the aftermath of this ruling, Coca-Cola released a statement expressing their confidence that the plaintiffs’ claims are without merit and will ultimately be rejected. Given that the implications this case could carry into the growing functional food and beverage segments of the market, we will continue to track it closely.
FTC Announces Intent to Issue Compulsory Process Orders Regarding Marketing of Food and Beverages
By Guest Blogger Tyler Anderson
This post also appears on The Food Liability Law Blog
In a May 25, 2010, Federal Register Notice, the Federal Trade Commission (the “FTC”) announced its intention to issue compulsory process orders to 48 food and beverage manufacturers, distributors, marketers, and quick service restaurant companies. The proposed orders seek information concerning the companies’ marketing expenditures targeted toward children and adolescents, and nutritional information about the companies’ food and beverage products marketed to children and adolescents.
The proposed orders, issued under Section 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), will seek information in six categories, including:
• The categories of foods marketed to children (ages 2-11 years) and adolescents (ages 12-17 years);
• The types of measured and unmeasured media techniques used to market food products
to children and adolescents;
• The amount spent to communicate marketing messages about food products to children and adolescents;
• The nature of the marketing activities used to market food products to children and adolescents;
• Marketing to children and adolescents of a specific gender, race, ethnicity, or income level; and
• Marketing policies, initiatives, or research in effect or undertaken relating to the marketing of food and beverage products to children and adolescents.
By procuring this information, the FTC will be able to evaluate the impact of self-regulatory efforts on the nutritional profiles of foods marketed to children and adolescents. In addition, the FTC seeks to determine and analyze how companies allocate their promotional activities and expenditures among various media and for different food products. Interested parties may submit comments on or before June 24, 2010.
This FTC action is a follow-up to its July 2008 report entitled, Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation. That report represented the findings of a 2006 FTC study of promotional activities related to food and food products targeted toward children and adolescents. It found that, while room for improvement existed, the food and beverage industries had made significant progress on this front since the FTC and the Department of Health and Human Services co-sponsored a Workshop on Marketing, Self-Regulation & Childhood Obesity in 2005. As everyone from the First Lady to the World Health Organization is focused on the impact of marketing on childhood obesity, the results of this FTC action will bear monitoring.
Five Tips for "Green" Advertising
Yesterday, Stoel Rives' Salt Lake City office hosted a seminar on Advertising Law with Catherine Lake, Josh Gigger, and myself presenting. As part of the seminar, I offered some tips on avoiding legal problems when advertising the environmental friendliness of your goods or services. Here is a summary of those tips:
New Legislation Seeks to Soften FDA Regulation of Nutritional Supplements
One major complaint of companies marketing nutritional supplements is that the FDA severely limits their use of scientific findings in promoting the health benefits of their products. Under current FDA regulations, use of a scientific study to advertise the health benefits of a given product can convert the product from a nutritional supplement into a drug, and therefore impose the vast array of regulations applied to drugs. As a result, nutritional supplement manufacturers have to be very careful about claiming health benefits or citing to scientific research, whether on their product labeling or even on their websites.
In response to these concerns, Congressmen Jason Chaffetz (R-UT) and Jared Polis (D-CO), introduced what they are calling the “Free Speech About Sciences Act.” This proposed legislation seeks to soften the application of these FDA regulations to nutritional supplements. If the law were to pass, companies would be allowed to reference “legitimate scientific research” in support of claims about the health benefits of their products. In order to fall within the definition of “legitimate scientific research,” the study must have been conducted and reviewed according to certain standards, and must appear in a peer-reviewed scientific publication. Companies must also follow certain guidelines in presenting the findings, such as including an accurate and balanced summary of the research, providing consumers a citation to the study, and providing information about the entities who funded the research.
Court Cuts Back Claims in Great Pomegranate Dispute
By Guest Blogger Jay Eckhardt
This post also appears in the Food Liability Law Blog
In a dispute over product labeling and marketing, the Coca-Cola Company avoids liability as a result of its careful compliance with FDA rules. (Also, see Rick's post from last week, regarding Coca-Cola's victory in a dispute over its original formula label found on Coke® Classic.) But pomegranate champion POM Wonderful can still pursue a Lanham Act deceptive advertising claim against the company.
On May 5 the U.S. District Court for the Central District of California issued summary judgment orders that cut out two of POM's claims against Coca-Cola's "Minute Maid Enhanced Pomegranate Blueberry Flavored 100% Juice Blend." (Download a copy of the Central District of California's Order here.)
The court acknowledged that consumers have griped about the emphasis on pomegranate and blueberry in the Minute Maid product labeling and advertising. (See Ken's post about a consumer class action concerning Tropicana's pomegranate blueberry juice blend here.) Still, the court agreed with Coca-Cola that POM could not bring a Lanham Act claim challenging the product name, because the company complied with FDA labeling requirements. The Minute Maid product contains less than one-half of one percent (0.5%) pomegranate and blueberry juice, but the court determined that the name is compliant with FDA rules, which allow for product names that prominently cite ingredients that are less than prominent in volume. Because the label clearly notes that the juice is "flavored" with pomegranate and blueberry juice and that the juice is a "blend" of several juices, the court held that the name complies with applicable FDA regulations (21 C.F.R. §§ 102.33(c) and 101.22(i)(1)(i)).
A second claim raised by POM was thrown out by the court. POM sought restitution under California Business & Professions Code section 17200, which provides a cause of action for "Unfair Competition." The court dismissed this claim because "restitution" has been narrowly interpreted by the California Supreme Court, thus barring POM's claim for recovery of a "lost business opportunity." Among authorities cited for the decision to dismiss this claim, the court reported that POM's similar claims under California's Unfair Competition law, brought against Tropicana and Welch's, have recently been dismissed in separate actions.
A third claim survived Coca-Cola's summary judgment attack. POM may proceed under the Lanham Act to challenge the marketing and advertising for the "blueberry pomegranate" product. The court held that POM may attempt to prove at trial that advertising and marketing actually deceived customers, or that Coca-Cola willfully and intentionally misled customers with the marketing of its product.
As noted from the court's order, Coca-Cola is not the only target of POM's litigation strategy. Other juice makers, Tropicana and Welch's, have been the focus of POM's efforts to defend its niche. Ken reported on POM's challenge to Ocean Spray's pomegranate cranberry juice blend last August, when POM survived Ocean Spray's initial motion to dismiss all claims.
An inspired marketing campaign for POM's products, and its essential ingredient, helped build the pomegranate franchise. It's hard to say whether litigation against advertising and labeling practices of POM's pomegranate competitors will be effective. At the same time, there's no doubt that POM is well aware of the burdens of FDA labeling regulations – the company was one among 17 companies notified by the FDA last February that its product labeling and advertising did not pass muster. The FDA warned POM that its advertising was suspect, based on the health claims made on its web site about the benefits of pomegranate juice.
FDA Seeks Public Comment Regarding FOP Labeling
Post by Tyler Anderson, co-author of the Food Liability Law Blog.
In an April 28 release, the Food and Drug Administration (the “FDA”) asked for comments and information from the public and other interested parties about front-of-pack (“FOP”) nutrition labeling and shelf tags in retail stores. The FOP is the part of the package label that is most likely to be examined under customary conditions of display for retail sale.
According to the FDA release, the FOP nutrition labeling effort aims to “maximize the number of consumers who readily notice, understand, and use point-of-purchase information to make nutritious choices for themselves and their families.” Specifically, the agency is seeking to learn more about:
- the extent to which consumers notice, use, and understand nutrition symbols on FOP labeling of food packages or on shelf tags in retail stores
- research that assesses and compares the effectiveness of particular approaches to FOP labeling
- graphic design, marketing, and advertising data and information that can help develop better point-of-purchase nutrition information
- how point-of-purchase information may affect decisions by food manufacturers to reformulate products
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Surprise! U.S. Marshals Pay a Visit to a Wisconsin Supplement Manufacturer
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The Feds paid an unwelcome visit last month to Beehive Botanical’s Wisconsin manufacturing facility seizing a wide range of products. According to an April 5th FDA press release, U.S. Marshals, at the FDA’s request, went to the site on March 31 and seized creams, capsules, tablets, gum, throat spray, and hair care products. The seizure was based on a complaint filed by the U.S. Attorney’s Office for the Western District of Wisconsin which alleged that the products were mislabeled and contained new unapproved drugs in violation of the Federal Food, Drug, and Cosmetic Act. On March 26, a judge issued a warrant for seizure of the products under §334 of that same Act.
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Dannon's Costly Yogurt Claims
If you haven’t seen Jamie Lee Curtis in the commercials, you have seen 
the products in the yogurt section at the grocery store. “It Works Or Your Money Back!” is the guarantee that Dannon makes regarding the ability of Activia, its probiotic line of dairy products, to boost digestive system health and immunity. Now an Ohio judge has signed a settlement agreement (pdf) in which the company agreed to pay up to $45 million as part of a class action settlement.
Understanding Front-of-Package Violations: Why Warning Letters Are Sent to Industry
Ever wonder if what you say on your label or packaging could draw the attention of the FDA? It's always helpful to be able to learn from examples of what's unacceptable before you release your product packaging.
The FDA has a helpful chart that summarizes FDA warning letters for nutrition claims on packaging that provides great examples of what to avoid.
So if, for example, your product is intended for children under 2 years of age, you may want to study the chart to understand why the FDA issued multiple warning letters to companies making nutrition claims for products intended for children under 2 years of age.
Dietary Supplement Manufacturers Encounter "New Drug" Labeling Pitfalls In FDA's Enforcement of Federal Food, Drug, and Cosmetic Act
Manufacturers of dietary supplements should continue to keep a wary eye toward the claims they make in their product labeling, in light of recent government action. Regulatory enforcement actions by the FDA, in association with the United States Attorney’s Office, highlight the risks associated with the manufacture and labeling of dietary supplements.
Recently, government ire was peaked when one dietary supplement manufacturer made broad labeling claims touting its products’ ability to diagnose, mitigate, treat, cure or prevent certain diseases (including diabetes, irritable bowel syndrome, gout, high blood pressure, heartburn and diarrhea).
According to the government, the maker’s claims made it subject to several FDCA provisions, including Section 343(r)(6), and corresponding requirements under the Code of Federal Regulations. Consequently, the claims reflected in the products’ respective labeling resulted in the “designation” of each as a “new drug,” triggering federal regulatory compliance relating to the maker’s submission, and subsequent government regulatory review, of New Drug Applications (NDAs), Abbreviated New Drug Applications (ANDAs) or Investigational New Drug applications (INDs), for each product.
After each was designated a “new drug”, the following enforcement action was filed by the United States Attorney’s Office: United States v. Thao, et al (.pdf). Further, the “new drug” designation, and the resulting trigger of additional regulatory requirements, left the maker subject to charges stemming from several statutory violations leading to government claims of wire and mail fraud, money laundering and conspiracy.
The stakes associated with inaccurate or overreaching product labeling are high. Effective guidance through the labeling process, with the advice of counsel familiar with requirements under Federal law, is a must.
Competitors both guilty of false advertising
A recent case illustrated two important points in advertising:
- substantiate one’s advertising claims; and
- make sure your glass house is strong before casting stones at a competitor.
Schering-Plough sued Neutrogena (PDF) claiming that Neutrogena’s sunscreen ads falsely claimed to offer the “best line of sun sport protection.” The judge agreed because a graph on the product suggested that UVA and SPF were different measures, which was false.
Notably, the judge found it irrelevant that the false information pertained to both products. Schering-Plough’s victory was short lived, however, because the judge also found that it lacked sufficient support for its advertisement that its Coppertone sun screen provided better coverage than Neutrogena’s sun screen. It seems that Schering-Plough had not tested Neutrogena’s product.
It is important to remember that advertisements need to be accurate and to have backup for all claims made. As this case shows, it is also important to review one’s own advertisements before bringing claims that a competitor’s advertisements are false.
