Alerts

AD-ttorneys@law – October 2, 2020

Alerts / October 2, 2020

In This Issue:

First Amendment Rescues Butter Marketing from Regulation’s Hot, Hot Knife

Miyoko’s Kitchen can keep buttering up consumers, but must let the hormones go

Precious?

Miyoko’s Kitchen is an extremely popular producer of plant-based vegan cheese and butter products. Founded by Japanese immigrant Miyoko Schinner, the San Francisco-based company sports a hipsterish vibe replete with cutesy slogans (“WE'RE INTO OMG NOT GMO”), “old-tyme” fonts and border deco, and a mission to change food culture (“Phenomenally Vegan is how we change the world. Together.”).

That mission was threatened, Miyoko’s claims, when the California Department of Food and Agriculture (CDFA) fired off a letter to the company insisting that it revise a label on one of its products or be in violation of the California Food and Agriculture Code for misleading claims.

Miyoko’s earnestness might lead you to assume that the company folded before the state, like a young artist from Williamsburg deprived of their monthly allowance check.

But you’d be wrong.

Butter Beware…

Heads up: If you read on, you may never want to hear the word “butter” again.

The state’s letter demanded that Miyoko’s remove claims that its “Cultured Vegan Plant Butter” was “cruelty free,” “hormone free” and “lactose free.” “Because the food is not a dairy product,” the letter states, “it cannot assert these claims as they imply that the product may be a dairy food without these characteristics.”

In addition, the CDFA maintained that Miyoko’s could not legally use the word “butter” in the current name of the product. “The product cannot bear the name ‘Butter’ because the product is not butter,” the letter reads, adopting a terse, tautological tone.

The letter goes on to restate the definition of “butter” from the U.S. Code—“made exclusively from milk or cream” is the key phrase—and then wraps up its argument with this flourish: “The pervasive advertising of this product as ‘Butter’…is offering for sale this food, which is not butter; as a form of butter, or as butter itself.”

Seriously. The word just lost all meaning.

This Butter Got Salt

Instead of meekly submitting, Miyoko’s fought back in an interesting way—an approach that may have ramifications in the ongoing war over the use of “dairy terms”—milk, butter, cream—in foods that are not traditional dairy products.

Miyoko’s sued California in its own Northern District, accusing it of infringing Miyoko’s First Amendment rights.

“The State’s action has already chilled Miyoko’s speech and will significantly obstruct plant-based producers’ ability to convey their message,” the company’s complaint states. It also reads, “The State’s position, and its purported application of state and federal law, violate the First Amendment on an as-applied basis.” The company sought declaratory and injunctive relief and, in the words of a recent order from the district court, insisted “that its references to butter [were] qualified by conspicuous language making clear to consumers that the product is not, in fact, regular dairy-based butter.”

Tests, Tests, Tests

California moved to dismiss, but Miyoko’s claims survived, and the company moved for preliminary injunction to prevent the state from acting on its demands. How did the First Amendment approach fare?

There are two distinct steps to determining whether contested commercial speech enjoys First Amendment protection. Right off the bat, such speech is not protected if the communication is either “misleading” or “related to unlawful activity.”

That knocked out Miyoko’s defense of its “hormone free” claim. In the words of the court: “Because plants contain naturally occurring hormones, and because Miyoko’s vegan butter is made of plants, it necessarily contains hormones as well. That the claim is literally false places it beyond the bounds of protected commercial speech….”

One claim down. What about the butter label?

First, the court found that Miyoko’s use of the word butter, “in immediate or close proximity to terms like ‘vegan,’ ‘made from plants,’ ‘cashew cream fermented with live cultures,’ and ‘cashew & coconut oil spread,’” was not misleading commercial speech because there was a lack of “precedent, empirical research, or any other form of independently authoritative ballast” that demonstrated that the word as used was genuinely misleading.

The Takeaway

If such a claim survives the initial misleading/criminal test, it can only be restricted if the government fails one of three further tests. “Assuming the speech is protected,” the court explained, “any governmental restriction on it survives only if ‘(2) the State . . . assert[s] a substantial interest to be achieved by [the] restriction; (3) the restriction . . . directly advance[s] the state interest involved; and (4) [the restriction] . . . is not more extensive than is necessary to serve that interest.’”

The state did, in this case, assert an abstract “substantial interest” in its restriction of the use of the word butter—people shouldn’t be deceived when they purchase a product. But the “butter” restriction fell because the state could not demonstrate how the butter ban would “directly advance” that interest.

“The State might satisfy this requirement with a moderate showing of the ban’s tendency to redress harms caused by Miyoko’s vegan butter in particular, if not the dairy-alternative market writ large,” the court concluded. But “there is, on this record, no such showing to be found. Nowhere, for instance, does the State present testimony from a shopper tricked by Miyoko’s vegan butter, or otherwise make the case for why Miyoko’s substitute spread is uniquely threatening to the public weal.”

Miyoko’s won a preliminary injunction, preserving the right to call its product “butter.”

This case will be cited by other companies championing their marketing as speech worth protecting. And as long as plaintiffs are not engaged in outright chicanery, government regulators will need to provide compelling evidence as to why their desire to restrict the marketing is worth the effort.

Co-defendant Ends Bone Growth Claims in FTC Settlement

The other defendant soldiers on, but at what risk?

The Fault in Their Stars

Check out the folks in the picture on this webpage, which promotes the benefits of Ostinol, a supplement produced by ZyCal Bioceuticals. Don’t they look phenomenal?

Ecstatic, in the middle of a laugh or a dance, or both; they’re nearly jumping into the air for joy. Or check out this webpage, from the same site, with three generations of women getting all Stepmom-era-Susan-Sarandony on a suburban living room couch. You can almost hear the Tammi Terrell in the background.

These people appear to be overjoyed by a product that supports “the body’s ability to grow new bone and tissue.” But check out the proliferation of asterisks, all leading to the disclaimer below: “These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.”

Growing Pains

There’s a story behind the disclaimer, of course. Back in February, the Federal Trade Commission (FTC or Commission) came down like a ton of bricks on ZyCal Bioceuticals; its marketing partner, Excellent Marketing Results, Inc. (EMR); and a couple of their officers. The Commission’s complaint alleges that ZyCal and EMR worked together to deceptively advertise StimTein, an “oral product” containing the active ingredient Cyplexinol (Ostinol contains the same ingredient).

The deception allegedly involved claims across a variety of media “that StimTein grows new bone, including in persons with osteoporosis or osteopenia; that StimTein grows new cartilage; that StimTein provides substantial and long-lasting relief from joint pain, including pain caused by arthritis, bursitis, and stenosis; and that these benefits are clinically proven.”

Along with these alleged unsubstantiated claims, the Commission accused the companies of using employees to create testimonials.

The Takeaway

EMR settled, and the checks are in the mail—the total settlement is capped at $145,000. But “litigation continues against ZyCal Bioceuticals,” the FTC notes, “the supplier of StimTein’s purported active ingredient.”

How is the ongoing litigation related to ZyCal’s current Ostinol product marketing? Equivocations such as the ones that currently appear on its website are often the product of post-settlement marketing adjustments, but in this case, the fight continues. Perhaps the company is trying to create an advance defense against a future lawsuit; but if that’s the case, it may need to do more to differentiate its current claims from the old.

TINA Sounds Off on SoundOff’s Scientific, Health Claims

Company’s comparison claims may land it in hot water

Good Will Hearing

We quote from Wikipedia, that great universal fount of knowledge-that’s-needed-in-a-hurry: “[W]hite noise is a random signal having equal intensity at different frequencies, giving it a constant power spectral density.” And “Pink noise or ​1⁄f noise is a signal or process with a frequency spectrum such that the power spectral density (power per frequency interval) is inversely proportional to the frequency of the signal.”

Impressed?

We don’t understand it either, but the important thing is that, in addition to white noise—the stuff produced by those fancy sleep aid noisemakers—there’s a whole spectrum of other noises: pink noise, brown noise and even black noise. And predictably, companies are tripping over their own pseudoscience to monetize them.

Chasing Waterfalls

Truth in Advertising Inc. (TINA) recently published a short expose on SoundOff, a company that manufactures pink noise earbuds—a pink noise version of the many popular white noise machines and apps that are out on the market.

What tickled TINA’s fancy? SoundOff is making some bold claims about its technology.

“What is pink noise?” the company asks on its website. “Pink noise is similar to white noise, only better. It’s smoother than white noise. It hits the same tones as soothing sounds in nature like wind, rain or a waterfall.” A bit more poetic than Wikipedia, but not more informative.

The Takeaway

The problem—for TINA at least—is that there is a dearth of evidence that pink noise is any better in aiding sleep than white noise is. There have been studies linking pink noise to brain activity related to sleep, but no head-to-head comparisons against white noise.

Moreover, TINA says that the study cited by SoundOff didn’t support the claim—that, rather, it compared the effects of pink noise with no noise at all (no noise at all is black noise, if you’re keeping track at home).

If that weren’t enough, TINA is raising the alarm on other of SoundOff’s claims regarding tinnitus and brain relaxation—representations that are verging on health claims. SoundOff denies that it makes medical claims.

Nonetheless, listen closely and you may hear, through the background noise, the gathering rumble of the Food and Drug Administration.

Again with the TCPA? SunRun Settles Another Class Action

Herd Immunity

“For every 7,000,000 robocalls, there’s only one TCPA lawsuit in federal court,” wrote William Loftus, Sidney Naiman and Louis Naiman in the opening of their complaint against Nevada-based solar power company SunRun, filed in the Northern District of California in June 2019.

It’s a statistic that highlights interesting facts that are often lost in the muddle of the current Telephone Consumer Protection Act (TCPA) meshugas. First, there’s the staggering number of robocalls that get made (Americans received almost 60 billion in 2019). The numbers have dropped in 2020, but that may be related more to COVID-19 than to a sudden desire to toe the TCPA line.

Then there’s the call-to-lawsuit ratio. If the plaintiffs’ numbers are sound, there remains an enormous potential for TCPA violations—intended or not—that will never be addressed, let alone redressed, by the law.

Yahtzee!

SunRun, however, has been receiving more than its share of attention in the courts. Loftus and the Naimans weaponized that fact in their complaint: “Demonstrating the massive scope of its robocalling,” the complaint asserted, “SunRun has lost this 1-in-7,000,000 lottery repeatedly, being sued under the TCPA time and again.”

The plaintiffs accused SunRun of the usual TCPA song and dance: unrequested automated calls to numbers, and—in the case of two of the plaintiffs—calls made despite the defendants’ enrollment in the National Do Not Call Registry. They sued for violations of the TCPA and the California Invasion of Privacy Act.

We’re writing in the past tense because the case recently settled, with SunRun forking over $5.5 million to end the suit. Each class member will receive $57. To circle back to the opening salvo of the complaint: That’s a lot of phone calls. We should note that SunRun did not “concede or admit” the allegations.

The Takeaway

What did the plaintiffs mean when they called SunRun a “lottery loser”? The complaint cited eight other TCPA cases filed against the company between 2015 and 2018. (We covered one of those cases a while back—it settled with little fanfare in less than a year.)

So, given the lawsuit-per-robocall stats and the incentive to settle cases early, perhaps neglecting—or even flouting—the TCPA simply represents a smart bet for certain defendants: Chances are they won’t get sued, chances are they won’t go to court…chances are that settlements are a reasonable expense given the possible returns.

But there’s one statistic—an anecdotal statistic, if such a thing can exist—that any company engaging in telemarketing must remember. In the complaint, Loftus and co-plaintiffs quote John Oliver, host of HBO’s Last Week Tonight, and his hilarious, NSFWish report on robocalls: “Everybody is annoyed by robocalls. Hatred of them might be the only thing that everyone in America agrees on now.”

100 percent of people are annoyed by unwanted robocalls. Do you want to be on the losing side of that statistic?

Acetamino-Fear Leads to Class Action Against Dollar General

The doses are the same, so what’s with the distinct packaging and higher price point?

Deadly Dose

According to a recent complaint filed in Florida’s Middle District in September, a commonly used anti-fever drug—acetaminophen—has been on the radar of parents and regulators for decades as potentially dangerous to children and infants.

“Prior to the acts giving rise to this Complaint,” plaintiff David Levy writes, “liquid acetaminophen marketed for ‘infants’ was only available in 80 mg/0.8 mL or 80 mg/mL concentrations, while liquid acetaminophen marketed for ‘children’ was only available in 160 mg/5 mL concentrations. The difference in concentrations caused some consumers to accidentally provide the wrong dosage of medicine to their children, causing them to overdose and, in many cases, suffer significant bodily harm and even death.”

Quantity or Quality?

The suit claims that the Food and Drug Administration received reports of 20 children dying because of acetaminophen toxicity between 2000 and 2009. These cases most likely led to the administration’s 2011 guidance “that liquid acetaminophen marketed for infants would now only be available in 160 mg/5 mL concentration in order to prevent confusion and reduce the risk of accidental acetaminophen overdoses.”

Since that guidance was issued, Levy states, the only differences between children’s- and infants’- branded acetaminophen “have been the price and dosing instrument included with the product.”

And there’s the rub.

Levy is suing variety store Dollar General with violations of the Florida Deceptive and Unfair Trade Practices Act and the Magnuson-Moss Warranty Act, along with unjust enrichment for deceptively advertising its infants’ and children’s Pain & Fever Acetaminophen products. Dollar General allegedly packages these products—which contain the same dosage of acetaminophen—in distinct ways, starting with the names of each product. More important: Dollar General charges “a substantially higher price” for its infants’ product than the children’s version—three times as much, according to Levy.

The Takeaway

He also accuses the company of placing tags on each product’s box, directing consumers to compare the ingredients in its product with analogous Tylenol-brand products, thereby attempting “to deceive reasonable consumers into believing that the active ingredient…in Infant Tylenol® is different than the active ingredient in Children’s Tylenol®, when it knows that the active ingredient is the same.”

We’re still in the early days of the suit, so we’ll see how it develops. Regardless of the result, the lesson is simple: Identical ingredient panels should throw up red flags to any marketer designing multiple product packages.

The mistake might lead to a headache.

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.