Often, a marketing strategy can lead to unwanted consequences, including litigation. For example, one company decorated its fruit juice snacks with images of fruits, which led consumers to believe the fruit snacks contained actual fruit.1 In another case, a cracker manufacturer stated its product was “Made With Real Vegetables” and placed images of vegetables on the carton, even though it contained none of those depicted vegetables.2 These are just a handful of examples that have led to expensive and time-consuming litigation.
Now, Dr. Pepper Snapple Group, Inc., the maker of Canada Dry Ginger Ale, faces multiple lawsuits because of a marketing campaign that claimed that Canada Dry Ginger Ale was “Made from Real Ginger.” One television commercial pictured a ginger farm and showed a worker harvesting ginger, but “[w]hen he pulls up one of the plants by its stalk, he finds a bottle of Canada Dry Ginger Ale where the ginger root would normally be.”3 The same ad then stated that Canada Dry was “the root of relaxation.”4 According to various lawsuits, many consumers believed that Canada Dry contained real ginger root,5 but, after a detailed laboratory analysis these consumers learned that Canada Dry contained no discernable amounts of ginger.6 Instead, Canada Dry Ginger Ale contained a ginger derivative called ginger oleoresin.7 Because Canada Dry aggressively marketed its product as made with real ginger, it now faces uncertain legal liability.
Food and beverage manufacturers can learn important lessons from Canada Dry’s marketing campaign, including to avoid specific non-factual claims on which consumers could rely, and to confirm that a product’s label conforms to the Nutritional Labeling Education Act (“NLEA”).
Minimizing Actionable Puffery In Food and Beverage Advertisements
Puffery is generally defined as exaggerating an opinion in connection with the sale of a good or service.8 Opinions are generally not actionable, but in some cases unsubstantiated marketing claims can lead to legal consequences. In one case, Quaker Oats stated that certain granola bar products were “wholesome.”9 Several consumers, however, determined that the granola bars contained high levels of transfats, which are not naturally occurring, and can lead to illnesses such as heart disease and cancer.10 Eventually, these consumers brought suit against Quaker Oats. As a defense, Quaker Oats contended that the term “wholesome” was puffery.11 Evaluating these arguments, the Court stated that “[p]uffery involves outrageous generalized statements, not making specific claims, that are so exaggerated as to preclude reliance by consumers.”12 In the case of Quaker Oats’ granola bars, the Court found that it could not dismiss the consumers’ claims because the term wholesome “could mislead a reasonable consumer.”13 Under the Court’s analysis, puffery becomes actionable when it crosses a line between opinion and specific non-factual statements which consumers could believe to be true and which they may rely.14
Similar to Quaker Oats, the makers of Canada Dry Ginger Ale have argued that its ads were puffery, and therefore immune from suit. But one Court determined that it was unable to conclude that certain statements made in the Canada Dry Ginger Ale commercial were merely puffery.15 In particular, the Court was troubled with television advertisements that stated,“[f]or refreshingly real ginger taste, grab a Canada Dry Ginger Ale. Real ginger, real taste. Real Ahh,” while the words “real ginger” simultaneously appeared on the screen.16 Based on these statements, the Court concluded that a reasonable consumer could believe that Canada Dry Ginger Ale contained real ginger root.17
Food and beverage manufacturers should recognize the line between generalized opinion and specific non-factual claims and take steps to minimize the amount of actionable puffery. These steps should include scrutinizing the content of the ad, including imagery and statements. Indeed, the question should be asked: would a reasonable consumer rely on these statements and believe them to be true, when they are not?
Businesses Should Comply with the NLEA
In order to reduce the risks of litigation surrounding labeling, businesses should comply with the Food, Drug & Cosmetic Act, including subsequent amendments, such as the NLEA. “The purpose of the NLEA [is] to primarily establish a national uniform labeling standard.”18 In some cases, if a food or beverage product complies with the standards of the NLEA, then it may not be subject to liability.19 Specifically, courts have held that when a food and beverage manufacturer has met the standards under the NLEA, the NLEA preempts conflicting state laws.20 However, preemption only applies to certain enumerated provisions, and therefore some state laws and causes of action are outside the scope of the NLEA.21
In Red v. Kraft Foods, Inc., 754 F. Supp. 2d 1137, 1143 (N.D. Cal. 2010), a group of consumers complained that they had been deceived when they purchased ginger snaps based on the manufacturer’s statements that the snaps were “Made with Real Ginger & Molasses”, when in reality, the snaps did not contain either real ginger or molasses. Yet, the Red Court noted that it was possible for the manufacturer to avoid liability under the NLEA’s Characterizing Flavor Regulation (the “Flavor Regulation”).22 Under the Flavor Regulation, a manufacturer may depict imagery of food if such depiction is being used to convey a certain flavor in connection with the food.23 If a manufacturer follows the Flavor Regulation, it may avoid liability for state law claims. In Red, the Court concluded that it was unable to dismiss plaintiffs’ claims on other grounds, but noted that there were substantial questions about “who gets to decide whether a product labeling claim is a characterizing flavor claim or a claim about the product’s ingredients . . .”24
Similar to Red, Canada Dry raised the defense that certain claims brought by plaintiffs could be barred under the Flavor Regulation. In at least one case, the Court informed a group of plaintiffs that if the basis of their claims was founded on the flavor and not the ingredients, then their claims would be preempted by the Flavor Regulation.25 However, the Court noted that the allegations did not need to be resolved at the pleading stage, and declined to dismiss the claims.26
To date, the Flavor Regulation has not provided a bright line for dismissal of consumer complaints, but Courts appear to be open to the use of the Flavor Regulation as a defense in consumer labeling litigation. It would behoove all food and beverage manufacturers to comply with the NLEA, both for its outright preemptive protections and for those potentially afforded by the Flavoring Regulation.
The food and beverage marketplace is a contentious arena, and many businesses use aggressive marketing tactics to distinguish their products. However, consumers are likely to turn to litigation when those marketing claims stretch beyond opinion to non-factual statements that the products do not meet. Food and beverage manufacturers should scrutinize their marketing practices to minimize the risk of litigation