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March 8th, 2013
NAD Decision Did Not Support Class Action Suit Against Bayer
On February 11, 2013, Judge Stanley R. Chesler, United States District Judge for the District of New Jersey, held in an unpublished decision that a report from the National Advertising Division of the Better Business Bureau ("NAD") provided insufficient support for class action plaintiffs' claims of false advertising and misrepresentation under the New Jersey Consumer Fraud Act ("NJCFA").
In early 2012, the NAD issued a report finding unreliable the sole study Bayer Healthcare, LLC ("Bayer") offered to support labeling claims for its calcium supplement product, Citrical SR. The NAD recommended Bayer discontinue any and all labeling claims based on the evidence provided by this study.
Class action plaintiffs filed suit soon after, claiming that Bayer's Citracal SR advertising was false in violation of the NJCFA. Plaintiffs argued that the NAD''s findings provided sufficient factual basis to support claims that Bayer''s advertising was false and misleading.
Bayer moved to dismiss plaintiffs' complaint, and the court granted Bayer's motion. See Gaul et al v. Bayer Healthcare, LLC, No. 12-5110, 2013 U.S. Dist. LEXIS 22637 (D.N.J. February 11, 2013). In his decision, Judge Chesler explicitly stated that "unreliability" for purposes of claim substantiation was a "very big leap" from a finding of "falsity" in the consumer class action context, and thus plaintiffs had not met their burden of pleading a violation of the NJCFA.
For advertisers who rely on NAD to adjudicate their disputes with competitors, the court's decision, albeit unpublished and therefore of limited precedential value, may help parties feel more confident about participating in this useful alternative to litigation. This is good news too for regulators who tout the self-regulatory forum as an important tool for keeping advertisers in line.
If you have questions about the Gaul decision or any other advertising or litigation matter, please contact Terri J. Seligman at 212.826.5580 or tseligman@fkks.com, Hannah Taylor at 212.705.4849 or htaylor@fkks.com, or any other member of the Frankfurt Kurnit Advertising or Litigation groups.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
