AD-ttorneys@law – January 19, 2021

Alerts / January 19, 2021

In This Issue:

Candymaker Tries to Fend Off Vanilla Class Action

Plaintiff argues that consumer taste justifies painful legal extraction

Bean Stalkers

Mars Wrigley Confectionery—we’ll just call them Mars, the familiar corporate shorthand for the snack food giant that produces M&M’s, 3 Musketeers, Milky Way and the eponymous Mars Bar—thinks that the lawyers representing Mohammed Garadi have an unhealthy obsession with their company.

Garadi and his counsel do not stand accused of being chocoholics; oh no—nothing that benign. Rather, Mars insists that Garadi’s counsel are choco-chasers, the scourge of the snack bar.

Mars claims that Garadi’s lawsuit, launched in May 2019 in New York’s Eastern District, is a “strike suit”—part of a flotilla of about “100 putative class actions” that employ “a raft of recycled complaints” against food manufacturers alleging they “intentionally deceived consumers by failing to flavor their products with flavoring 100% derived from the ‘tropical orchid of the genus Vanilla.’” (Garadi alleged misrepresentation, fraud and unjust enrichment under New York law.)

As support, the footnotes to Mars’ memo in support of dismissal list enough vanilla lawsuits to fill half a page. “The procedural history of these cases underscores their purpose,” the memo proclaims—to “leverage the threat of putative class claims and force early settlements.”

What Happened to Plain Old Vanilla?

But despite their obvious contempt for the plaintiff’s motivations, there was a genuine legal tussle going on beneath the surface.

Mars moved to dismiss the case a few days before Christmas, claiming that Garadi lacked standing to sue. The company accused Garadi of invoking the more stringent rules for labeling vanilla extract and flavoring in a context that relied on the rules for ice cream labeling. The Mars products in question—Dove Bars coated in milk chocolate—simply contain vanilla ice cream, the company argued, which invokes a separate set of definitions by the Food and Drug Administration (FDA) than vanilla extract and flavoring.

Those products, Mars argues, are distinguished from one another by the FDA through specific instructions about the amount of the product derived from vanilla beans (if you’re curious, extracts are set apart from flavorings by the amount of alcohol in each product).

But those rules don’t carry over for vanilla ice cream — “natural flavors” on the Dove Bar ingredient list is sufficient for consumers. Mars isn’t required, the company argues, to prove that those ingredients are derived from vanilla beans in the same manner they would if they were selling vanilla extract or flavoring.

The Takeaway

In addition, Mars argued that Garadi and his fellow plaintiffs were “not authorized to enforce their view of FDCA regulations” because there is no private right of action under the Food, Drug, and Cosmetic Act and “their consumer deception and common law claims are preempted, implausible, insufficiently pleaded, and cannot withstand a motion to dismiss … .”

Garadi filed his own opposition memo defending his right to sue. He argued that the dispute was really about taste. “Defendant’s Product may contain some vanilla,” he writes, “but its taste is provided by artificial vanilla flavors, including ethyl vanillin, that are not disclosed to consumers.”

Here’s the kicker: “Plaintiffs have plausibly alleged Defendant’s ‘Vanilla’ representation on the front of the Product is likely to deceive reasonable consumers into believing the Product has a vanilla taste, provided predominantly or exclusively from vanilla beans,” the memo continues. “As Defendant has failed to rebut the [first amended complaint’s] contentions with documentation outside of the pleadings, this is not a rare situation in which dismissal as a matter of law is appropriate.”

Wow. Strike suit or not, we’re really interested in how the court will react to Garadi’s argument. Is anyone invoking a subjective judgment regarding taste free to challenge a product that has a generic characterizing flavor? Or is Garadi merely trying to rope together two unrelated FDA rulesets to make an unfair and deceptive practices case?

We await the court’s decision.

War Drums Beat in Energizer Performance Class Action

Consumer calls everything into question, from fonts to content

Snarketing Campaign

Here’s a flip: Last year, Energizer, the marketing demiurge behind the world’s favorite ubiquitous drum-playing rabbit, took competitor Duracell out to the woodshed over its marketing claims that the company’s Optimum batteries “offer both ‘extra life’ and ‘extra power’ in all devices – when they do not.”

We covered the dispute at the time, including the delicious snark that Energizer unloaded in its complaint. (Both parties dropped the suit in December 2019 for reasons unknown.)

Font of Trouble

But now, a little more than a year later, Energizer is on the receiving end of its own class action brought by Eduard Skylar, a consumer from Brooklyn, New York.

The Brooklynite plaintiff is leveling multiple allegations regarding a recent set of Energizer marketing claims. Some of them are rather interesting—if they’re true, that is.

The complaint centers around one tag from a 2020 marketing campaign that stated that Energizer’s AA MAX batteries were “up to 50% longer lasting than basic alkaline in demanding devices” across several marketing vehicles.

Skylar notes that the “up to” and “than basic alkaline in demanding devices” portions of the tag were considerably smaller than the “50%” font. But he maintains that “Energizer AA MAX batteries are not ‘up to 50% longer lasting’ than other competing batteries, including, for example, Duracell Coppertop batteries.”

The Takeaway

There’s more to this action than maladjusted point sizes, however. Skylar asserts that “demanding devices” aren’t specifically defined anywhere on the packaging. Likewise, just what “basic alkaline” means is left up to the consumer’s imagination.

The most interesting dig at Energizer, though, is that “the longevity of Energizer AA MAX batteries varies based on where any particular AA MAX battery is manufactured.” Whether this holds true for batteries in general or only for the AA MAX battery is outside the scope of the charges, of course, but nonetheless it’s interesting to learn that “AA MAX batteries manufactured outside the United States have a significantly shorter life than those AA MAX batteries that are manufactured inside the United States,” allegedly.

For now, there’s little explicit backup to Skylar’s accusations in the complaint—no specifically named product testing report or study. We’ll hear more about the basis of the allegations soon, we expect.

In the meantime, beware of tags like this one unless your substantiation is airtight—and printed somewhere the consumer can easily lay their eyes on it.

Glue Maker Gets Largest Made in USA Penalty Ever

Chemence Inc. settlement signals tighter enforcement, says Commish Chopra

Sticky Bidness

Kwik Fix, Hammer Tite and Krylex—no, we’re not writing about the latest obscure rap crew. We’re talking adhesives, baby—specifically, brands produced by James Cooke and his glue maker posse Chemence Inc.

Chemence just got a spanking from the Federal Trade Commission (FTC, or the Commission) to the tune of $1.2 million, the largest-ever monetary judgment for false “made in the U.S.A.” advertising.

Kwik Fix, etc. are consumer superglues. According to the FTC, the company “provides third parties with marketing materials so third parties can market and sell products under its own brand names,” and also “manufactures private-labeled products sold under retailer brand names [providing] those retailers with labeling and promotional materials … .”

The Commission alleges that Chemence printed up these materials with a “made in USA” logo, even though “foreign materials [often] accounted for more than 80% of materials costs and more than 50% of overall manufacturing costs for these products.”

Back in the Day

So, what explains the record-setting amount? Did one of the commissioners get frustrated putting together a model airplane over the weekend and decide to take it out on the first superglue company they ran across?

Nope—there’s a back story.

Chemence got stuck with its first FTC investigation regarding U.S.-origin claims in 2016; the charges then alleged nearly the same behavior as they are accused of today. What was different four years ago was the amount Chemence had to cough up to settle the charges—$220,000. That probably seemed like a large sum at the time.

But compared to the most recent $1.2 million judgment, it wasn’t much at all.

The Takeaway

The only other demands made by the Commission in 2016 were a prohibition against future unqualified claims without evidence “that the product’s final assembly or processing – and all significant processing – take place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States.” Qualified claims were allowed if the company provided clear and conspicuous disclosure regarding the substance of the claims.

Chemence provided a mandatory compliance report, duly filed by Cooke in 2017. But as far as the FTC is concerned, they kept right on with the original offending behavior, which earned them the $1 million increase in penalties (the old prohibitions about qualifications and disclosures remain in the new settlement).

Ladies and gentlemen, please bone up on the FTC’s made in the USA rules. Here’s a link. Review your advertising with your counsel if you have any doubt about origin claims that you’re making.

The Commission isn’t playing. FTC Commissioner Rohit Chopra issued a statement to that effect after Chemence’s most recent settlement agreement was inked. “For decades,” he writes, “there was bipartisan consensus at the Federal Trade Commission that Made in USA fraud should not be penalized. ... [But] [t]oday’s action against Chemence and its top executive marks another turning point for the FTC’s enforcement strategy … [it] imposes real consequences – a major difference from the Commission’s past Made in USA settlements.”

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New York Legislature Introduces CCPA Clone with Private Right of Action

The 2021-22 New York State legislative session started off with a bang, featuring nearly a dozen consumer privacy bills introduced in the House and Senate on the opening day. A number of the proposals, including the New York Privacy Act and the Right to Know Act, are carbon copies of bills that were introduced in the 2019-20 legislative session but did not make it out of committee. Others, such as SB 567, which closely resembles the California Consumer Privacy Act, are new this session. With a Democratic supermajority in the House and Senate, the New York Legislature appears poised to move forward with pro-consumer privacy legislation, though it remains to be seen whether the ongoing COVID-19 pandemic will continue to consume legislative focus this year. Here we provide a summary of the bills introduced on January 6 that have broad applicability to consumer privacy and are generally industry agnostic.

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