What better time than the day after the Golden Globes to host my own awards, the 2011 Advertising Litigation Cases of the Year Awards. Even Ricky Gervais would struggle to make this topic funny, so I won’t even try. But while false advertising cases may not make for great party conversation, they do keep inside counsel awake at night, and thus the trends reflected by the cases discussed below are worthwhile for inside counsel to keep in mind as they review their company’s own proposed advertising and those of their competitors in the coming year.
False advertising cases typically take the form of:
Spirits manufacturer Pernod sued Bacardi, alleging that the latter’s Havana Club rum, by virtue of its name, communicated the false message that the product was made in Cuba, when in fact the rum was made in Puerto Rico from local ingredients. Among Pernod’s evidence was a consumer survey showing that nearly 20 percent of those surveyed believed that after looking at the Havana Club bottle, that Havana Club rum was either made in Cuba or from Cuban ingredients.
The district court found in favor of Bacardi, and the 3rd Circuit affirmed. The appeals court found no fault in the methodology of Pernod’s survey but, nonetheless, concluded that because the Havana Club label clearly and prominently stated that the rum was a “Puerto Rican rum” that was “distilled and crafted in Puerto Rico,” no reasonable person could be believe that the rum or its ingredients came from Cuba.
2. Consumer Class Actions: Kwikset Corp. v. Superior Court, 51 Cal 4th 310 (2011)
3. NAD: Procter & Gamble Crest Sensitivity Toothpaste, NAD press release Oct. 28, 2011
On the merits, NAD’s recent decision recommending that Procter & Gamble (P&G) cease advertising that its Crest Sensitivity toothpaste eases tooth sensitivity “within minutes” is of little interest except to P&G and the competitor who successfully challenged that advertising statement. What elevates this decision to my NAD Case of the Year is that, just before year’s end, a plaintiffs’ firm, piggybacking on the NAD decision, very publicly commenced a consumer class action false advertising suit in New Jersey federal court. Rossi v. Procter & Gamble (D.N.J.), reported in Law360 Class Action Law, Dec. 16, 2011.
Among Reebok’s products were EasyTone and RunTone shoes, which were advertised to have various muscle toning and strengthening benefits. For example, EasyTone shoes were “proven” to “work your hamstrings and calves up to 11% harder” and “ton[e] your butt up to 28% more than regular sneakers. Just by walking.”
The FTC alleged that these and similar claims, made in provocative advertisements portraying well-toned, sometimes scantily clad women, were unsubstantiated by reliable scientific testing. Faced with the FTC lawsuit, Reebok entered into a settlement which, according to the FTC website, included a $25,000,000 refund and strong injunction provisions. The upshot of this litigation is that major, reputable advertisers are not immune from FTC lawsuits for advertising claims that the FTC believes are unsubstantiated and materially deceptive to consumers.