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Brand Protection & Advertising

Stay ADvised: What's New This Week, September 21

09.25.20
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In This Issue:

L'Oréal Washes Away Keratin Shampoo False Ad Suit

L'Oréal has successfully obtained dismissal of claims that it falsely advertised that its "EverSleek Keratin Caring" hair care product line contains keratin as an ingredient.

The proposed class action lawsuit, filed in U.S. District Court for the Southern District of New York, alleged violations of Florida, New York, and Alabama consumer protection and fraud statutes. In the suit, the putative class plaintiff claimed that L'Oréal's "EverSleek Keratin Caring" products are labeled and advertised to deceive consumers into believing the line of shampoos and conditioners contain keratin, leading them to purchase the products over less expensive alternatives.

The alleged misrepresentations included the claims "Keratin Caring" "Reparative Smoothing," and "Cares for the essential protein and keratin that is found in hair," among others. Plaintiff also alleged the supposed benefits of keratin in L'Oréal products were reinforced on websites and media commercials.

In granting L'Oréal's motion to dismiss, Judge George B. Daniels found that a simple reading of the labeling would reveal to the consumer that the EverSleek products do not, in fact, contain keratin. Rather, the label states that the product "gently cleanses chemically straightened hair while caring for the essential protein and keratin that is found in hair."

"The product's labels state multiple times—including on the center of the front labels, as well as in small font on the backs of the labels—that the products are 'Keratin Caring,'" Judge Daniel wrote. "It is reasonable to understand this to mean that it cares for the keratin already found in the hair."

The judge also noted that the complaint did not address the discrepancy between the fact that the labels prominently state that the products are vegan — and thus don't have any ingredients derived from animals — while keratin is a chemical present in humans.

Key Takeaways

Advertisers who are able to point to clear disclosure of the product's ingredients, particularly when coupled with other explanatory language or context, are frequently successful in obtaining upfront dismissal of claims premised on allegedly misleading statements about a 'product's ingredients. Advertisers should keep these concepts in mind when reviewing packaging that references an ingredient found in other products in the relevant category but not in the products at issue.

What Is a Margarita Without Tequila? Plaintiffs Bring Anheuser-Busch to the Class Action Party

A pair of plaintiffs recently filed a proposed class action lawsuit against Anheuser-Busch over claims the beer giant's line of Ritas™ drinks duped consumers by advertising that the products contain wine or spirits when they are actually "flavored malt beverages."

According to the lawsuit, filed in U.S. District Court for the Southern District of New York, Anheuser-Busch misled consumers with the labeling and marketing of its Ritas beverages— "Sparkling Margarita" products, "Sangria Spritz Sparkling Sangria Cocktail," "Rosé Spritz Sparkling Rosé Cocktail," and "Mojito Fizz Sparkling Cocktail" (note: the Ritas beverages also include a "Cosmo Fizz Sparkling Cocktail," but the complaint did not identify it). The plaintiffs claim they purchased the Rita™ beverages under the impression that each of the Rita beverages contain the wine and spirits traditionally associated with the mixed drinks referenced on the labeling (i.e., tequila, rum, and wine).

In addition to the names of the products, the complaint points to certain images and phrases on the packaging and in marketing that allegedly reinforce the message that the Ritas™ beverages contain wine or spirits. For example, plaintiffs alleged that the Sparkling Margarita products contain an image of a salted margarita glass and that in a commercial for the Sangria- and Rosé- Spritz Sparkling Sangria Cocktails, "a woman is seen standing in front of a wine cellar, holding a wine glass filled with one of the Ritas™ Spritz products."

The complaint also asserts that similar products offered by competitors actually contain the wine and spirits that reasonable consumers would expect in those types of beverages. Finally, with respect to the Sparkling Margarita and Sparkling Cocktail products, the lawsuit pointed to federal alcohol regulations that allow "use of a cocktail name as a brand name or fanciful name of a malt beverage" only if "the overall label does not present a misleading impression about the identity of a product."

Following one of the recent trends in food and beverage class action, the gravamen of plaintiffs' complaint is that the Ritas' packaging and labeling fail to adequately disclose the fact that the beverages contain no wine or spirits. According to the complaint, the disclosure is limited to a statement in small font on the bottom of the outside packaging (e.g., the 12-pack packaging) indicating the products are flavored malt beverages, while most consumers make purchasing decisions after viewing only the front facing of packaging. On this basis, plaintiffs argue that reasonable consumers would have no idea that Anheuser-Busch's Ritas™ products do not contain wine or spirits.

The lawsuit alleges violations of New York General Business Law, breach of warranty, breach of implied warranty of merchantability, common law fraud, and unjust enrichment. Beyond damages for the plaintiffs, the lawsuit also looks to force Anheuser-Busch to change its advertising for the Ritas™ products and engage in a corrective ad campaign.

Key Takeaways

Food and beverage manufacturers should exercise care in selecting brand and product names that arguably state or suggest that an ingredient is present when it is not. In the absence of clear limiting language, ambiguous or potentially misleading terms carry risk of consumer class actions (and possible regulatory enforcement). Although many of these cases end in upfront dismissal of the claims, some courts appear less willing to impose on the consumer a duty to carefully inspect the entirety of the package for potentially conflicting information.

General Mills Resolves Suit Challenging "No Artificial Flavors" Claim for Fruit Snacks

There will be no payday for the thousands of consumers who bought certain General Mills' fruit-flavored snack products after the company agreed to qualify its "no artificial flavors" claim in lieu of a financial restitution to plaintiffs.

This proposed settlement comes after lawsuits were filed against General Mills in 2017 and 2018 that claimed the company marketed its fruit-flavored snacks as containing "no artificial flavors" and giving the impression that the product was "naturally flavored," even though the products contain a synthetic chemical called dl-malic acid. Synthetic dl-malic acid has multiple functions, including to enhance or simulate flavors used in food products. The lawsuits claimed that not only did consumers lose money paying a premium for a supposedly natural product but that harm was suffered by General Mills' competitors that disclosed the artificial ingredients in their own fruit-snacks.

Under the proposed settlement, the new labeling would include an asterisk with a URL next to the claim "No Artificial Flavors" for consumers to visit which will prominently note that:

  • (1) The flavors used in the identified products come from all natural sources;
  • (2) The "natural flavors" ingredient in the ingredient list is declared in accordance with FDA regulations;
  • (3) The products may "contain synthetic malic acid or other acidulants"; and
  • (4) "[M]alic acid is intended for use not as a flavor or to impart the characterizing flavor of these products, but is a substance the FDA approves for multiple uses including a flavor enhancer, a flavoring agent or adjuvant, or as a pH control agent."

The total cost for General Mills could be upwards of $1.175 million—a figure that includes not only $725,000 in plaintiffs' attorneys fees but also approximately $450,000 for changes to labeling on over 150 of its fruit-flavored products. Although the lawsuit alleges that consumers paid a "premium" for these products, the settlement notes that the amount of money consumers would have been entitled to would have been "economically infeasible" to distribute to the class.

FTC Outlines Its Plan to Refund Consumers Almost $4 Million From Maker of Deceptively Advertised Pain Relief Device

The Federal Trade Commission (FTC) has outlined its plan for distributing $3.8 million in restitution to the tens of thousands of consumers who purchased wearable chronic pain relief devices marketed by NeuroMetrix, Inc. (Quell), a Massachusetts company.

Quell is a transcutaneous electrical nerve stimulation (TENS) device worn below the knee that NeuroMetrix claimed was "clinically proven" and "cleared by the FDA" to treat chronic pain throughout the body. The FTC's complaint alleged that these claims were deceptive and that NeuroMetrix lacked the scientific evidence to support claims of widespread chronic pain relief.

The FTC's complaint noted that NeuroMetrix's core advertising messages state that by activating areas of the brain responsible for inhibiting pain, Quell produces widespread relief from chronic pain and severe pain throughout the whole body. While the FTC did note in its complaint that TENS technology has been used for decades to relieve local pain, such devices have not been shown to do so beyond the site of application.

The FTC determined that the two exploratory or pilot clinical studies upon which NeuroMetrix based its claims on suffered from several flaws, including a small sample size, lack of adequate controls, and insufficient duration. The FTC was also concerned that one of the two studies failed to show a statistical difference between the treatment and placebo groups. The FTC also alleged that NeuroMetrix had improperly passed off market research as clinical studies to dupe consumers into believing that Quell could treat their widespread chronic pain.

The FTC reached a settlement with NeuroMetrix in March 2020. As part of the settlement, over 70,000 refunds will go out in the form of paper checks and PayPal transfers to consumers, with an average refund amount of $55.10. Further, NeuroMetrix Inc. is barred from making deceptive claims about the efficacy of its Quell device to treat chronic pain throughout the body.

Key Takeaways

The FTC continues to closely scrutinize claims promising relief from chronic pain. As Bureau of Consumer Protection Deputy Director Daniel Kaufman stated: "With the opioid crisis, consumers are searching for drug-free pain relief. …. Devices claiming pain relief without scientific support harm consumers and undermine the market for non-drug products. The FTC will act on empty promises of pain relief."

Advertisers playing in this space should be mindful of FTC's expectation that such claims be supported by "randomized, placebo-controlled, prospective, human clinical trials ('RCTs') demonstrating non-localized analgesia in persons with chronic pain, or for the specific conditions claimed."

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