Pooja S. Nair is a partner at Ervin Cohen & Jessup. She advises food and beverage clients, startups and other businesses on issues including employment, trade secrets, partnership disputes, contract negotiations and intellectual property. Cate Veeneman is an attorney in the Litigation Department of Ervin Cohen & Jessup and focuses on general commercial litigation matters.
Despite the COVID-19 pandemic, 2020 saw more false advertising food and beverage cases filed than any year prior, continuing a trend in this area. One hundred seventy-seven actions were filed in 2019, up from 164 in 2018, and 145 in 2016 and 2017. To put these numbers in context, there were only 53 of these cases filed in 2011.
Under the Biden administration, both the Federal Trade Commission and Food and Drug Administration have indicated that regulating labeling, standards of identity, and advertising are a priority. Additionally, the House Appropriations Committee directed the FDA to prioritize some of these labeling and product standards of identity issues to increase clarity for consumers.
Below, we assess the state of some current cases and trends we anticipate seeing through the end of the year and beyond.
Environmental and Sustainability Claims
Companies touting the environmental actions and sustainability of their products in their advertising and labeling are increasingly facing scrutiny and lawsuits. These lawsuits allege that companies "greenwash" consumers by claiming to be environmentally friendly in contrast to pollution-generating and unsustainable.
In February 2021, consumer groups filed a complaint letter with the FTC against Smithfield Foods, claiming the company’s portrayal of its farming process as environmentally friendly is deceptive and misleading. The FTC has yet to take action against Smithfield on these claims. It is likely that similar claims against meat processors will continue to be filed.
In May 2021, a class-action suit was brought against Hefty’s recycling bags, which were marketed as "perfect for all your recycling needs." The lawsuit alleged the bags were not recyclable and were indistinguishable from regular plastic bags. Although many of these sustainability lawsuits involve plastic products rather than food and beverage products, manufacturers that extoll the virtues of their packaging or claim that some products are particularly recyclable must ensure they are able to support such claims.
In June 2021, an environmental nonprofit group filed a lawsuit against Coca-Cola in Washington, D.C., for false advertising under the District's consumer protection laws, alleging that the company "greenwashes" consumers by advertising sustainable solutions while being a significant corporate polluter.
Vanilla Lawsuits Continue, with Limited Success
In the past three years, vanilla flavoring has been the focus of the largest number of false advertising cases filed regarding a single word. Claims allege that defendants' "vanilla"-labeled products contain flavoring ingredients that do not come from vanilla beans. In the past few years, courts have considered and dismissed claims against Wegmans vanilla ice cream, Westbrae Natural’s Organic Unsweetened Vanilla Soymilk and Blue Diamond’s vanilla almond milk. Some claims filed in 2020 and 2021 have already been dismissed, and defendants continue to have success with early dismissal of these claims. The past few months alone have seen a string of rejections by the court of these vanilla cases, with Trader Joe's, Whole Foods and Mars Wrigley Confectionery, the maker of Dove ice cream bars, all defeating vanilla false advertising claims.
In the Mars case, plaintiffs allege that the company misrepresented the ice cream bar on the packaging by claiming it “tastes like vanilla” when in reality the vanilla flavoring did not come exclusively from natural sources. The court dismissed the case on the grounds that at no point was it represented that the flavoring came exclusively from natural sources, but rather that the product "tastes" like vanilla, which the court noted it does. The case was dismissed.
Beyond Vanilla: Other Flavors
Despite frequently resulting in a dismissal, plaintiff attorneys are determined to continue trying their luck with flavoring lawsuits, branching out to several new products. Most recently, plaintiff firms have had their eyes set on popular snack products. For example, a case was filed in Illinois against Frito-Lay North America alleging that the snack maker falsely advertised its Tostitos chips as having a "hint of lime" when, in reality, the chips' lime taste comes from artificial ingredients, not actual limes.
The same plaintiff's firm filed a similar case concerning TGI Fridays branded onion ring snacks, alleging that manufacturer Inventure Foods falsely advertised the product as "onion snacks" when the product does not contain any actual onions. Specifically, the plaintiff alleges that, by referring to the product as "onion snacks," the defendant has misrepresented the product as a reasonable consumer would assume the food would contain onions "in an appreciable, non de minimis amount[.]"
Sparkling Water Wars
Various sparkling water brands have been hit with false advertising claims, primarily related to the flavoring of these beverages. This is as the global sparkling water market, valued at $29.71 billion in 2020, is expected to expand at a compound annual growth rate of 12.6% from 2021 to 2028, Grand View Research reported. These types of lawsuits are likely to continue trending as sparkling water expands its market share. However, similar to diet soda cases that were resolved in 2019 and 2020, it is likely that some of these flavoring cases will be resolved at the pleading stages.
In April, two food retailers — Whole Foods and Kroger — were hit with suits about the amount of fruit used in their store brand sparkling waters.
The consumer complaint filed against Kroger in the Northern District of California alleges the packaging for Kroger sparkling water products sold with flavors such as "Black Cherry," "White Grape" and "Kiwi Strawberry" is misleading because the waters are purportedly flavored artificially rather than with extracts of the fruits. It claims the company's "packaging, labeling and advertising scheme for these products is intended to give consumers the impression that they are buying a premium, all-natural product instead of a product that is artificially flavored." The plaintiff asserts the flavoring in the beverages comes from malic acid, "a synthetic chemical manufactured in a petrochemical factory from petroleum feedstocks." Kroger has filed a motion to dismiss the lawsuit, which is set to be heard in January 2022.
"All Natural" Claims Continue Without FDA Guidance
Litigation regarding products' use of the term "all natural" remains prevalent in light of the FDA's reluctance to provide guidance concerning the meaning of the term "natural." Notably, the FDA's recently released list of food safety and labeling guidance topics that it anticipates issuing by June 2022 did not include guidance on "natural" labeling.
Kind Bar Plaintiffs Granted Class Certification. On March 24, a federal judge in New York certified three classes of plaintiffs in a litigation against Kind LLC in which plaintiffs allege that Kind deceptively marketed several products as "all natural" and "non-GMO" when in truth the products contain synthetic and genetically modified ingredients. The court granted certification despite the fact that the plaintiffs could not provide a concrete definition of the term "natural."
McCormick Settles "Natural" Spices Class Action. In May, parties in a litigation concerning McCormick's use of the term "natural" to advertise several of its products filed a motion for preliminary approval of a class-action settlement. The litigation rests upon plaintiff's allegations that McCormick misrepresented several varieties of its spices and seasoning products by labeling them as "natural" when they contained synthetic, artificial and/or genetically modified ingredients, including corn starch, white corn flower and citric acid. If approved, the settlement agreement dictates that McCormick would pay a total of $3 million to the putative settlement class. McCormick would also agree to modify the labeling on its products and website to remove all representations of "natural" or "all natural" from the contested products' labeling.
Plaintiffs Seek Certification of Consumer Class Against Snapple. Plaintiffs filed a nationwide class-action lawsuit alleging that Snapple Beverage Co. and Keurig Dr Pepper Inc. engaged in deceptive advertising by marketing a number of Snapple beverages as "all natural" when in fact the beverages contained added coloring as well as a number of vegetable and fruit juice concentrates. Plaintiffs seek to represent a nationwide class of purchasers alleging a number of claims, including unjust enrichment and breach of express warranty.
Post and Kellogg Settle Added Sugar Cereal Class Actions
Federal courts in California have seen an uptick in proposed settlements in added sugar cases. In June, a federal judge in northern California approved a $15 million class-action settlement in a case involving Post Foods' cereals. Plaintiffs allege that Post violated a number of state consumer protection laws by deceptively marketing high-sugar cereals with health and wellness claims. Under the settlement, Post will pay $15 million to the class and agree to stop making certain claims on its cereal, including "no high fructose corn syrup," "less processed," "wholesome," "smart" and "nutritious" on products where 10% or more of the calories come from sugar.
Similarly, in March, the plaintiff, in a near-identical lawsuit involving Kellogg cereals such as Raisin Bran and Frosted Mini-Wheats, sought approval of a settlement agreement reached between the parties. If approved, Kellogg would pay $13 million to the settlement class and agree to stop making certain claims on its cereal, including "heart healthy" and "lightly sweetened."
The increase in settlements is likely tied to the FDA's failure to create an official definition for "healthy" labeling, despite asking for public comment in September 2016. Without official FDA guidance, industry confusion and consumer class actions on "healthy" labeling are likely to continue. The FDA recently announced its plan to conduct quantitative consumer research on symbols that could be used on products to convey the nutrient content claim "healthy." The goal of this research is to develop symbols by which consumers could quickly determine what health benefits a food or beverage they choose might have.
Trends and Takeaways
In the wake of the pandemic, consumer class actions and false advertising cases against food and beverage companies continued to grow. The lawsuits filed so far in 2021 indicate this litigation trend will continue, and that plaintiffs' firms are targeting trending food and beverage products. Under the Biden administration, regulatory agencies, including the FDA and the FTC, have indicated they will take a more active role in issuing standards of identity and clarifying regulations. Here are four takeaways for the year ahead:
Healthy claims: While "healthy" false advertising cases remain pervasive in 2021, recent announcements by the FDA provide hope that we will finally receive some guidance regarding proper usage of "healthy" terms in the not too distant future.
Artificial flavoring: Although there has been an increase in the number of cases filed, this will not necessarily translate to an increase in victories. Several of the cases were filed by the same group of plaintiff firms that are notorious for filing hundreds of lawsuits alleging false advertising causes of action based on the use of artificial flavoring. These lawsuits are increasingly being dismissed in the early stages of litigation for failure to allege a viable claim.
"All natural" cases: Plaintiffs continue to find traction with "all natural" cases, in light of the FDA’s reluctance to provide more guidance on what exactly qualifies as "natural." Without further guidance from the FDA, it is likely that class certifications and settlements will continue.
Added sugar cases: In light of the FDA's failure to provide further guidance on the meaning of "healthy," defendants will likely opt to settlement putative class actions rather than see the litigation through to trial.