AD-ttorneys@law – December 2, 2021

Alerts / December 2, 2021

In This Issue:

SDNY: Pepperidge Farm Butter Suit Is Half-Baked

Stalking suit plaintiffs’ counsel is kicked out of the kitchen again

All Publicity Is Good Publicity

As a rule, we don’t mention the names of the law firms involved in the stories we deliver to your inbox. Why give the competition free advertising?

But you can, of course, do the legwork yourself. And if you decided to take the time to check out this lawsuit filed against Pepperidge Farm, and then cross-indexed the plaintiff’s counsel against the counsel involved in every case we’ve ever covered, you’d find that the firm leading the charge against Pepperidge Farm has given us a lot to write about—including cases against Chobani, Blue Diamond Growers, Mars Wrigley Confectionery, Dreyer’s Ice Cream, and Kingsford Products.

In Mars’ response to the above-referenced lawsuit, it claimed that the action was a “strike suit”—one of about “100 putative class actions” that employ “a raft of recycled complaints” against food manufacturers. While the cases are different, they take on a few similar shapes: Artificial or secondary ingredients contribute to and degrade the flavor of the product (or, in the case of the charcoal suit, the product’s efficacy and environmental impact).

Having paid a premium for natural products that taste (or burn) better, the plaintiffs demand recompense.

Gen X Remembers

Plaintiff Hawa Kamara’s beef with Pepperidge Farm involved the use of the word butter.

Taking her cue from some of the earlier cases, Kamara took issue with a specific product name: “Golden Butter” crackers. The crackers, she notes, are indeed made with butter but also contain “a non-de minimis amount of vegetable oil, more than expected given the absence of any qualification of ‘Golden Butter.’” She goes on to claim that “consumers prefer butter to chemically produced ‘vegetable’ oils for reasons including taste, health and avoidance of highly processed artificial substitutes.”

Given this mixed ingredient list, consumers are being deceived into purchasing a product that’s less tasty, healthy, and natural than they expect from the name. She sued the company in the Southern District of New York for a mix of New York State consumer protection law violations, negligent misrepresentation, various warranty breaches, fraud, and unjust enrichment.

Recipe for Dismissal

This approach seems to be designed to provoke settlement negotiations, but the earlier cases we mentioned were mostly tossed, and so was this one—the court reviewed Pepperidge Farm’s motion to dismiss in early November and granted it completely.

It’s easy to sympathize with the Southern District’s logic, mainly because butter is the second ingredient listed on the back panel.

“The packaging accurately indicated that the product contained butter,” the court wrote in its order, “and the ingredients list confirmed that butter predominated over other oils and fats. ... The Complaint does not plausibly allege why a reasonable consumer also would believe that the use of butter precluded secondary usage of other fats or oils, either as an additional shortener or for external application to enhance the crackers’ appearance.”

The Takeaway

Thus ended yet another case brought by the-law-firm-that-shall-not-be-named. But before you shed a tear for its loss, recall that the Blue Diamond suit mentioned above settled for $2+ million under strange circumstances. The approach works, maybe even enough for it to continue and spread to other plaintiffs’ counsel.

If you manufacture food products, it might be wise to develop an overall litigation action plan in case you ever find yourself in the crosshairs of such a complaint—or series of complaints. Figuring out how to get clear of these cases quickly and cheaply is the best course of action.

New-South Bourbon Brand Distills Trouble for Hard Seltzer Upstart

Accuses fledgling company of ripping off Georgia-centric trademark

Battle of the Savannahs

We’re talking about dueling sensibilities—two visions of Savannah, Georgia’s celebrated Hostess City.

On the one hand, a crisp, modern vision of down-home southern luxury, and on the other—well, we’re not sure. There’s just a broken social media link.

The first is the marketing patina adopted by Savannah Distilling, maker of a series of popular beverages, including the eponymous premium bourbon. Yacht parties. Quayside bars. Mature artisans interacting fussily with wood barrels. Plenty of languid drone shots.

Someone spent money on this.

Oh My Lord—Zima?! Again?!

The broken Facebook page link is all the presence we can find, however, for Savannah Seltzer, a company that allegedly produces “vodka-based hard seltzer.”

We say allegedly, because Savannah Distilling’s complaint claims that the seltzer company isn’t planning to introduce its product until next year. Nonetheless, the complaint continues, the upstart hard seltzer mavens are hawking “collateral merchandise bearing the mark SAVANNAH SELTZER...such as can coolers and apparel.”

Savannah Distillers owns the trademark SAVANNAH for “alcoholic beverages except beer; alcoholic beverages, namely, distilled spirits such as whiskey, bourbon, gin and vodka,” and sees the seltzer company as walking all over its turf with its branded merch.

The Takeaway

After the seltzer company and one of its officers brushed off a demand letter ordering the company to stop using the Savannah mark, the distillery launched a lawsuit alleging trademark infringement, unfair competition, and violation of the Georgia Deceptive Trade Practices Act. The case was filed at the beginning of November, so there’s been no action on the docket as of yet.

We did notice a record of a trademark application, filed in late September—before the distillery sent its demand letter, but still, only by a matter of weeks. Given the seltzer company’s lack of online presence and low-fi vibe (the application was launched for “marketing services” and “creating corporate logo for my business”), this seems to be a David v. Goliath scenario. We’ll see.

While it’s not an origin claim suit, one wonders how even the most basic due diligence about the Savannah moniker didn’t set off alarms at the seltzer company’s HQ. Whether you hail from the town or not, it pays to make sure that someone didn’t already claim the name for themselves.

Cali AG Suit Against For-Profit Education Giant Goes to Trial

Ashford University is a poster school for allegations of marketing abuse

Prairie Techno

Was Ashford University originally founded in 1918, or in 2001? Did it claim its pedigree from the prosaically named Franciscan University of the Prairies, a small religious institution founded at the turn of the 20th century? Or did it begin life as TeleUniversity, founded in 1999 to help people finish their community college degrees?

It really depends on your focus; like the drawing of a framework box, one blink and you might see an entirely different perspective.

The central fact of Ashford’s history is clear, however: The company behind TeleUniversity purchased the Franciscan University of the Prairies in 2005 and held on to its accreditation as it shifted to a mainly online institution. The renamed Ashford University lost its accreditation in 2012, and while it recovered it a year later, it never really shook off a pall of academic and legal troubles. These included a loss of funding, negative attention from the press, shareholder lawsuits, and declining enrollment—woes that anyone who has followed the for-profit education sector will find familiar.

Trick Mirror

Are for-profit colleges part of the grand tradition of American education? Or are the troubles experienced by that sector a natural consequence of introducing profit motive to what is in essence a public service? Or are those troubles simply the efforts of gatekeepers trying to keep the upstarts out?

The answers to these questions are, too, a matter of perspective; we won’t add ours to the pile. But the for-profit education sector has generated its share of marketing-related controversy over the years—controversy that has added to its troubled public profile. Ashford’s latest dispute is just the next chapter in a long story.

In 2017, then-California Attorney General Xavier Becerra launched a suit against the university accusing it of false advertising and hardball debt collection tactics. According to the complaint, Ashford’s then-owner, Bridgepoint Education, leveraged the accreditation formerly owned by the University of the Prairies to reach phenomenal enrollment levels—80,000 in 2012—and $120 million in profits that year. 

But there was a darker side to the story, Becerra alleges.

The Takeaway

Bridgepoint Education—rechristened Zovio, Inc., somewhere in the middle of all the drama—“provided false and misleading information to students to persuade them to enroll in the school and then used illegal debt collection practices when students struggled to pay their bills,” the attorney general states.

Ashford’s admissions department—in reality “the most aggressive sales floor I have ever seen,” according to one company supervisor—allegedly misrepresented the likelihood and timing of financial aid, not to mention the cost of the education itself. The complaint states, “Many Ashford students discovered ... that they were not eligible for enough financial aid to cover their entire costs of attending, and that they were liable to Ashford for these shortfalls.”

Becerra seeks “restitution for these students, a permanent injunction prohibiting Zovio from engaging in similar activities in the future, and civil penalties.” We’ll see how the trial turns out.

Readers may be aware of Ashford’s latest incarnation: The University of Arizona purchased it and retooled it as the University of Arizona Global Campus, a huge online addition to the traditional university akin to Purdue’s acquisition of Kaplan University. Would this merger with a large, “legitimate” institution put a spike in Ashford’s persistent woes?

Becerra, at least, doesn’t think so. “Zovio continues to provide the same misleading enrollment and marketing services to the University of Arizona Global Campus as it previously provided to Ashford, and this lawsuit aims to provide restitution for students and stop Zovio from continuing these unlawful business practices.” It’s the perfect illustration of how marketing and advertising controversy can complicate and even jeopardize transactions—or the new entities created by them.

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Taking a Break from the FTC Drama

The latest Federal Trade Commission (FTC or Commission) public meeting was notable for what did not happen – there were no 3-2 votes taken over the strong objections of the Republican commissioners. With former Commissioner Rohit Chopra’s departure to head the CFPB, for at least the next few weeks – or, more likely, months – we are in 2-2 territory at the agency. Until, of course, the Senate acts on the nomination of Alvaro Bedoya, the founding director of the Center on Privacy & Technology at Georgetown Law. (Note: His hearing was held earlier this week.) So let’s dive into a relatively tame Commission meeting.

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