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August 2nd, 2010
Class Action False Advertising Lawsuit Against Vitaminwater Will Go Forward
A New York federal court is allowing a class action lawsuit brought by consumers from three states, alleging that the labeling for Coca-Cola;s vitaminwater is misleading, to go forward. Here’s a summary.\
The Plaintiffs’ Claims.
The plaintiff class -- vitaminwater purchasers from California, New York, and New Jersey -- alleges that claims on vitaminwater’s labels (e.g., that drinking vitaminwater can help prevent certain diseases and boost the immune system) are misleading. The plaintiffs also allege that the product name "vitaminwater," and advertising slogans such as "vitamins + water = what’s in your hand" imply that the only ingredients in the beverage are vitamins and water. The plaintiffs say this is false because the product also contains "high amounts" of sugar. They characterize vitaminwater as "just another flavored, sugary snack food like Coca-Cola, except that Defendants chose not to carbonate it."
Significantly, the plaintiff class is relying on a variety of state consumer protection laws (as those laws provide so-called "private rights of action"), and do not allege any federal claims.
Coca-Cola’s Defenses Rejected.
Preemption. Coca-Cola first asked the Court to dismiss the suit on the basis that the plaintiffs' state law claims were "preempted" by federal law. (Preemption means that if a federal law conflicts with a state law on the same subject matter, then the federal law supersedes the state law.) Here, the issue was whether the Food Drug and Cosmetic Act (FDCA) and Nutritional Labeling Education Act (NLEA) -- the federal laws governing food labeling - superseded a variety of state consumer protection law claims.
The court divided the plaintiffs’ complaints about vitaminwater into three categories: (1) health claims made about the product despite its high sugar content; (2) health claims made despite the violation of the FDA’s anti-fortification policy; and (3) the featuring of some, but not all, of the ingredients in the product’s name and on its label.
The Court Found that Category (1) Claims Were Preempted. The FDA had specifically considered whether sugar content would prohibit claims that a product was healthy. It had decided not to regulate such statements. Thus, plaintiffs will not be able to advance state law claims "solely premised" on the idea that vitaminwater could not be called healthy because it contained sugar.
But Category (2) and (3) Claims Did State Violations of FDA Regulations, According to the Court. These claims were therefore not preempted. Of particular interest to marketers: the court’s holding about category (3) claims (claims arising from the name of the product itself):
"Plaintiffs allege that vitaminwater’s labeling is misleading in that it uses a product name that includes two of the product’s ingredients (vitamins and water) but fails to mention one other notable ingredient (sugar). The FDA has recognized that such product names may mislead consumers: ‘The labeling of a food which contains two or more ingredients may be misleading by reason (among other reasons) of the designation of such food in such labeling by a name which includes or suggests the name of one or more but not all such ingredients, even though the names of all such ingredients are stated elsewhere in the labeling’ [21 C.F.R. sec. 101.18(b)]."
The Court noted that the potential for product ingredient confusion was "heightened by the presence of other statements in vitaminwater’s labeling" (e.g., description of the product as a "vitamin enhanced water beverage" and the phrases "vitamins + water = all you need").
Puffery. Coca-Cola also argued that many of the labeling claims on which plaintiffs relied were "puffery" " expressions of opinion or exaggeration upon which no reasonable consumer could legally rely. In other words, Coca-Cola argued that reasonable consumers would not think that vitaminwater, which tastes sweet, really only contained "vitamins + water"; or that vitaminwater would actually make consumers "healthy as a horse."
The Court disagreed. It held that the statements did not meet the definition of puffery because they "describe[d] the contents of a food product in ways consumers might reasonably rely on in choosing to purchase vitaminwater." Significantly, the Court added: "consumers who have some awareness that food product labeling is subject to government regulation (owing in part to the ubiquitousness of the FDA’s "nutrition facts" label on food products) may reasonably be expected to rely on label claims as accurate depictions of a food’s contents and nutritional value."
The nutrition label indicates that the product contains sugar. Coca-Cola also argued that the FDA-mandated nutritional information label on every bottle of vitaminwater makes clear that the product contains sugar; accordingly, no consumer could reasonably believe that the only ingredients were vitamins and water.
The Court rejected this argument as well. It held that "the notion that the FDA-mandated nutritional facts would ‘cure’ the potentially misleading impression that vitaminwater was a healthy beverage (rather than primarily sugar water)" improperly required consumers to "look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side.." Coca-Cola’s argument was further undercut by the fact that it chose to list vitaminwater’s sugar content on the much smaller "per serving" basis, rather than a per bottle basis, which contains 2.5 servings.
This highly fact-specific case is at an early stage and the Court’s decision was based entirely on taking the plaintiffs’ allegations as true. Coca-Cola will have a chance to test those allegations and to seek dismissal of these claims on summary judgment -- or to refute the plaintiffs’ evidence at trial. Nevertheless, it’s a decision that should put all marketers on notice that false advertising claims brought under state consumer protection laws may not be easily dismissed. It remains to be seen whether Coca-Cola will change the name, labeling, and marketing plan for this flagship product during the pendency of this suit.
If you have any questions about this decision, or other advertising law or commercial litigation issues, please contact any member of the Frankfurt Kurnit Litigation Group.
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