In This Issue:

All's Fair in Love and Animal Rights as Coca-Cola Shells Out $21 Mill to Settle False Ad Claims

Coca-Cola is the latest company to fall prey to allegations that it deceptively claims to source dairy products from humanely treated cattle—as it and other defendants agree to settle a class action suit for $21 million.

The company and additional defendants Fairlife and Select Milk Producers and their executives were the subject of lawsuits in which plaintiffs alleged that although the group advertised their premium dairy products as made from "humane" dairy, those dairy cows used to make the milk were, in fact, treated deplorably.

According to the amended complaint, the joint venture between Coca-Cola and Select Milk exploited every opportunity to tout the milk as a product made by corporations concerned with animal welfare—from the evocative name "Fairlife" to the "guiding principle" that "the better you treat an animal, the happier and more productive she is," as well as defendants' repeated representations about the quality of animal treatment. According to the complaint, Coca-Cola and its partners pointedly marketed their products to consumers specifically looking to buy milk from livestock treated humanely and ethically.

For example, the companies advertised: "Extraordinary care and comfort for our cows; Exceptional quality milk standards; Traceability back to our farms; Continual pursuit of sustainable farming." Additionally, defendants offered tours of an "exemplar farm" to show how well they treated their animals and to demonstrate their commitment to transparency.

Plaintiffs allege that defendants' actions inevitably induced "reasonable consumers into believing" the cows were treated humanely when, in fact, an undercover investigation revealed that rather than constituting care, defendants' treatment of their cows and calves was "brutal" and not in line with animal welfare practices. Plaintiffs alleged "[d]efendants did not fulfill or live up to the explicit Animal Welfare Promises that they made to consumers, including that dairy cows that were used to create Fairlife products were treated ethically and humanely."

Now, two years after the filing of the lawsuit, the parties have settled. Aside from the monetary component, Coca-Cola and the other defendants have agreed to take significant steps to improve animal welfare practices. Coca-Cola also wholly acquired Fairlife following the incident, and Fairlife has since said it has "significantly strengthened" its animal care programs.

Key Takeaways

Interestingly, Unilever was able to obtain dismissal of a similar lawsuit alleging Ben & Jerry's falsely marketed the "humane" treatment of "happy cows;" however, some have argued that win, lose or draw, these types of accusations have not led to long-term harm for brands.

Regardless, the wave of litigation over deceptive "humane" or "sustainable" claims is likely to continue, especially given consumers' interest in sustainable and humane-sourced products and advertisers' efforts to cater to this interest.

FTC Pumps the Brakes on Frontier Internet Speeds Claims

The Federal Trade Commission (FTC) and attorneys general for the states of Arizona, California, Indiana, Michigan, North Carolina, and Wisconsin have approved a settlement with internet telecommunications provider Frontier Communications, taking the company to task over its alleged misrepresentations about DSL internet speeds.

The proposed order resolves allegations from a May 2021 complaint in which the FTC and its partners accused Frontier of charging for high-speed DSL internet services the company failed to provide. The complaint accused Frontier of falsely making high-speed service a "prominent selling point for its residential DSL service," despite knowing it could not consistently provide these speeds and in some cases couldn't provide them at all.

According to the allegations, in various print and online advertisements Frontier promoted tiers of internet service based on download speeds—without reference to slower (asymmetric) upload speeds. In some cases, the company advertised the data transfers that consumers could receive as going "up to" or "as fast as" a certain speed. But the actual speeds consumers received were not as advertised and were significantly slower in many cases.

The complaint states that even where Frontier provisioned a customer for a particular internet speed, that didn't guarantee the consumer would actually get it. Many times, Frontier customers received "DSL Internet service at speeds consistently slower than even the provisioned limits set for those consumers, preventing these consumers from ever, or for more than di minimis durations, receiving the maximum speeds Frontier represents those consumers can achieve for the speed tiers to which they subscribe."

How slow did the speeds go? According to the complaint, consumers said they often couldn't do basic internet tasks using the speeds Frontier promoted. Adding insult to injury, the complaint further alleged that many of Frontier's customers from rural areas didn't have much choice in the matter of which internet provider to engage.

Although according to the FTC Frontier knew that it could not provide the internet speeds it promised, the company allegedly instructed its sales staff to promise those speeds anyway. Frontier also included in many ads an "inconspicuous" (and insufficient) fine print disclaimer warning that its maximum speeds may not be available in all locations and that internet speeds were not guaranteed. The complaint alleged that the Frontier violated various state consumer protection and consumer fraud laws along with the FTC Act.

As part of the consent order, Frontier will pay $8.5 million in penalties to district attorneys of two California counties, as well as $250,000 to be distributed to consumers harmed by the company's actions. The settlement also obligates Frontier to deploy fiber-optic internet services, which are generally faster than DSL and which provide like upload and download speeds, to various California locations for four years, at a cost of up to $60 million, among other non-monetary requirements.

Key Takeaways

Notably, as Commissioner Noah Joshua Phillips explained in his concurring statement, this is the FTC's first settlement since it adopted the "Restoring Internet Freedom Order reestablishing the FTC's authority to protect consumers from unfair or deceptive practices by broadband providers." The message is clear: the FTC takes its web surfing seriously, and internet service providers should review their claims and their speeds.

BodyArmor Breathes in the Sweet Smell of Success, but Fruit Labeling Claims Remain

BodyArmor succeeded in shielding itself from claims that it falsely advertised its sports drinks as healthy "superior hydration," but allegations that the drinks are deceptively promoted as containing healthy fruits survived a motion to dismiss.

Plaintiffs filed the original complaint against BodyArmor in 2020, alleging that the company misled consumers by advertising "superior hydration" when really the drinks are "dressed up soda masquerading as a health drink." But after the court dismissed the complaint on the grounds that "superior hydration" was vague and highly subjective enough to constitute inactionable puffery, plaintiffs fine-tuned the original allegations that they were deceived into believing the sports drinks had benefits.

Plaintiffs argued that they understood BodyArmor's labeling claims to mean that the drinks' "capacity of superior hydration was objective" and that the drinks were "good for their bodies and health overall" because of the "superior hydration claims." In fact, they said, BodyArmor is sweetened with sugar, poses serious health risks that plaintiffs didn't understand from the labels, and does not provide "superior hydration."

Plaintiffs also amended their complaint to add a new allegation which proved to be more persuasive: namely arguing that they were misled by the fruit-based labeling of the drinks, which, per the complaint, prominently features photos of juicy-looking pineapples, blueberries, and other fruits. Plaintiffs have a "favorable" view of fruits, they alleged, and understood the label, with its use of fruit names for each drink flavor, to convey the message that the drinks contained fruit juice.

The drinks did not contain any fruit juice, said plaintiffs. Instead, they are made with synthetic ingredients and have "unauthentic flavors simulating the taste of the named and imagined fruits."

Considering plaintiffs' deposition testimony in which they testified they kept drinking the sports drinks after reading the labels, the court found that plaintiffs had not shown that they were injured by or relied on the allegedly deceptive labeling and advertising of "superior hydration." It didn't help that both plaintiffs testified they didn't think "superior hydration" was an objective attribute, as their complaint claimed. The same goes for claims about the sugar content, as plaintiffs testified that they always knew sugar was unhealthy and that they knew BodyArmor contained sugar.

The court found, however, that their deposition testimony didn't "doom their claims that they were misled by the fruit labeling." Plaintiffs testified that the fruit images drew them to the label, that they thought fruit was healthy, and that they thought the fruit in the drinks was "natural" and came from fruit.

The court also rejected BodyArmor's argument that plaintiffs' fruit labeling claims are preempted by the Food, Drug, and Cosmetic Act (FDCA) because they are "nutrient content claims" governed by the FDA's nutrient content regulation. The company had asserted that plaintiffs' claims that fruit depictions are misleading are preempted because they attempt to state the level of the nutrient in the food. The court disagreed, finding that plaintiffs weren't challenging any claims about the level of nutrients but about the appearance that the drinks contained fruit.

Key Takeaways

While courts have been less sympathetic to claims of false advertising based on information readily available on the label (as here the sugar and "hydration" content), the converse is true: when the front label is clearly depicting something that consumers will have to look elsewhere than the front label to confirm, courts tend to look more favorably for plaintiffs.

Chew On This, Merck: NARB Affirms NAD Decision to Discontinue "Best in Show" Commercial

The National Advertising Review Board (NARB) upheld a decision made by the National Adverting Division (NAD) that had struck down a Merck flea and tick commercial as an improper "apples to oranges" comparison (or "ticks to fleas," as the case may be).

Boehringer Ingelheim Animal Health USA had challenged Merck Animal Health's 30-second commercial for Merck's competing flea and tick product, Bravecto, before the NAD. The commercial featured actor John Michael Higgins presiding over a dog show comparing Merck's Bravecto flea and tick chews to Boehringer's NexGard.

As depicted in Merck's commercial, the weeks go by in the course of the competition and the results at each week flash on the screen. As "Week 5" flashes on the screen, the NexGard dog scratches, suggesting he's been the victim of flea bites, and Higgins ultimately declares Bravecto the "clear winner" of a "#1 Long Lasting Chew" trophy.

In the earlier proceeding, NAD concluded that one reasonable takeaway is that Bravecto is more effective than NexGard at protecting dogs from fleas and that this was an unsupported message, given that dosing is different. Bravecto's dose is one chew every 12 weeks, while NexGard is one chew every month. NAD recommended that Merck "take steps to ensure that when making apples-to-oranges comparison … that the material dosing difference between the compared products is sufficiently disclosed."

In its appeal, Merck argued that any reasonable consumer would take away the message that one dose of Bravecto lasts three times longer than one dose of NexGard and that its depiction truthfully shows the respective duration of each product for a single dose. Merck further argued that the commercial does not create the misleading 'apples to oranges' message that its longer lasting performance in preventing fleas is based on superior efficacy rather than its longer single dose duration of action.

NARB found Merck's argument that the commercial conveyed the message that Bravecto's longer-lasting performance was due to the dosage design of the chew insufficient because the ad didn't provide any visual cues about this aspect. This lack of clarity resulted in the possibility that a reasonable consumer would take away the inaccurate message that NexGard failed to work for three months because it's a less effective product, rather than because of differing dosage regimes.

Key Takeaways

To make a supported "apples to oranges" comparisons, advertisers need to be really, really clear about exactly what they're comparing. Merck could not meet its burden do that here.