AD-ttorneys@law – October 5, 2018

Alerts / October 5, 2018

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Organic, Sure, but Don’t Be All Superior About It

ERSP unboxes Green Chef’s mixed bag of organic claims

Add Two Cups of Sentiment …

Here’s a marketing legend that may or may not be true.

The story goes that when powdered cake and cookie mixes first appeared on the market, the only ingredient necessary for baking was water. Just mix the powder with water, put the resultant goop in the pan and bake.

“But what about the eggs?” you ask, likely because you remember helping your favorite adult bake cakes by beating the eggs, adding them to the mix and blending away the lumps.

Well, the story goes, the eggs were a marketing ploy. To liven up flagging powdered cake sales, marketers for one of the larger cake-mix companies created a mix that required fresh eggs to be added prior to baking. The marketers believed that requiring homemakers to take that extra step reconnected them to positive feelings about cooking their own meals for their families.

Quit Yer Kitchen

While it’s not clear that the eggs really impacted sales (other reasons have been advanced to explain the market longevity of cake mixes), a similar marketing theme may be tugging on the heart and apron strings of today’s affluent consumers.

Several companies have pioneered at-home meal kits. Consumers order premeasured and uncooked ingredients, which arrive boxed and ready to cook. The consumer does the cooking but skips the prep. Along with artisanal ingredients and exotic recipes, this last bit of consumer effort is key to the marketing.

For example, “Go ahead, pat yourself on the back,” Green Chef’s copy encourages. “You’ll be amazed by the tasty, restaurant-worthy meal you cooked.” Emphasis on you.

Some meal-kit companies have received negative attention because of the claims they make about their ingredients (we’ve written about one such case before). Latest on the chopping block is Green Chef, an at-home kit service that was recently challenged by an anonymous competitor before the Electronic Retailing Self-Regulation Program (ERSP).

The competitor took exception to several of Green Chef’s assertions, particularly its organic claims, arguing that its marketing language − “Organic Meal Kits,” “proud to be USDA-certified organic,” “90% or more organic ingredients” − was misleading. After reviewing the phrases, and considering some of Green Chef’s self-imposed language changes, ERSP had a mixed bag of recommendations.

The competitor’s main beef was that the language implied that all of Green Chef’s ingredients and kits were organic, which wasn’t true. ERSP found that the organic claims (and use of the USDA seal) were too broad, and recommended that the company restrict claims to particular ingredients with conspicuous disclosures. ERSP also rapped Green Chef’s knuckles over superiority claims, which it recommended be eliminated, and told the company it could not claim to deliver “the most organic ingredients compared to other meal delivery kit companies.”

The Takeaway

Green Chef agreed to the recommendations and promised to partner with California Certified Organic Farmers, an organic certifying agency, to craft language consistent with its guidelines. This decision serves as a reminder that green marketing claims, including organic claims, must be narrowly tailored and appropriately substantiated.

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Infrared Protection Claims Rub NAD the Wrong Way

Will Sea & Ski sun care products get burned before the FTC, FDA?

New Threat!

Bayer HealthCare, a manufacturer of sunscreen products, brought complaints against competitor Sea & Ski before the National Advertising Division (NAD) in September.

Sea & Ski, a product line owned by Cross Brands Manufacturing, is in many ways a typical sunscreen product, offering protection against ultraviolet rays. But the brand decided to set itself apart from the pack with new claims, which is why it caught Bayer’s attention.

Cross Brands claims that Sea & Ski products protect users against infrared radiation, using a variety of claims including “Beyond UV with IR-GUARD infrared protection” and “INFRARED sunscreen protection for your skin from free radical damage caused by long-term exposure to IR-A waves.”

The problem is, as Bayer claims, Sea & Ski doesn’t protect anyone from infrared radiation. In fact, Bayer maintains that there is no proof that infrared rays are dangerous in the first place.

The NAD agreed with Bayer, determining that Cross Brands’ “in vitro” testing (testing in petri dishes or tubes as opposed to testing on humans) could not substantiate the company’s infrared protection claims. In addition to criticizing the company’s alleged incomplete studies, the NAD found that the in vitro test did not indicate how well the product might work when actually spread on human skin.

And now that you’re nervous about a whole new invisible threat to the well-being of your skin, the NAD stepped back from addressing whether infrared rays pose an actual threat to anyone.

“Because the advertiser’s evidence did not support its claims that its products provide consumer relevant screening of infrared solar rays,” the division wrote, “[we] did not reach the issue of whether protection from infrared rays is, in fact, a health benefit or that infrared solar radiation protection helps prevent ‘free radical damage caused by long-term exposure to IR-A waves.’”

The NAD asked Cross Brands to pull “infrared protection” claims and to stop claiming that Sea & Ski’s protection went “beyond UV.”

The Takeaway

In a bold move, Cross Brands responded to the challenge by not responding at all, neglecting to file an advertiser’s statement with the division. With the sand kicked in its face, the NAD turned the case over to the Federal Trade Commission and the Food and Drug Administration for further action. Advertisers that choose not to participate in the self-regulatory process, or those that do not agree to abide by the NAD’s decisions, should be reminded of the consequences of such a course – referral to law enforcement agencies.

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Cali Sets the Pace Again With New Internet of Things Security Bill

Senate Bill 327, signed by the governor on Aug. 28, sets up a simple framework

American Grandstand

It’s an old schtick at this point.

A legislator, perhaps playing the role of a commonsense reformer, wheels a thousand (or two or three)-page stack of papers into a press conference: the entire text of a law that he or she opposes, made concrete and visible. The legislator then bemoans the unnecessary bureaucracy and regulation that demanded such a tidal wave of ink and warns about the red tape that will stifle us all if the bill passes.

The California State Senate has turned this unfortunate image on its head with Senate Bill No. 327, which passed and was signed in by Governor Jerry Brown on Aug. 28. The law will not be in effect until Jan. 1, 2020.

Simple ≠ Easy

The bill, which addresses an enormously complex issue − security requirements for connected devices networked across the Internet of Things − is a masterpiece of simplicity. Aside from a few adjustments and definitions, the law simply requires connected device manufacturers to provide “reasonable” security features that are appropriate to the function of the device and the information it may store or traffic, and to protect the device and any information contained therein from unauthorized access or destruction.

The bill goes on to state that when it comes to connected devices with the “means for authentication outside a local area network,” either assigning a unique default password for each individual device or requiring a user to generate a new means of authentication upon first access will meet the definition of a “reasonable” security feature.

And that’s about it.

The Takeaway

Given the contentious nature of American political life, there are surely those who will protest the simplicity of the law; how can legislation that is so schematic address the incredible complexity of security issues in a world where appliances and cars and clothing gather information and communicate incessantly?

But consider a problem that the law already addresses. One of the Internet’s most famous and persistent security vulnerabilities is the fact that many existing connected devices − the router in your home network, for instance − ship with easy-to-guess user IDs and passwords (“admin” and “password” being notorious examples). That practice will have to be abandoned under this bill.

Beyond that, there is much about the Internet of Things that we cannot yet imagine, but that may be why the law was construed in such a broad fashion − as the complexity of the connected world increases, the idea of what a “reasonable” security feature is will have to change. Not to mention the different security standards that would apply to devices that have disparate functions and uses.

California Senate Bill No. 327 is the first state law of its kind, and follows on the heels of the California Consumer Privacy Act of 2018, which was signed into law in June. As always, expect the provisions of California’s approach to these laws to have an outsized effect on the rest of the nation.

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Dunkin’ Stampedes Angus Steak Class Action

Court shrinks the plaintiff pool, then tosses false ad claims on the merits

High Steaks

According to the commercial, the first thing that people crave after hearing great news is not champagne, but … steak and eggs.

Back in 2013-2014, (pre re-brand), Dunkin’ Donuts was making a big push on its steak sandwich products, including a steak-and-egg breakfast offering and something called the Angus Steak Big N’ Toasted sandwich. The commercials are your typical hybrid of the appealing and the implausible − in the aforementioned commercial, an attractive young professional man announces to his attractive young professional friends that he just landed a job. Their reply? “Steak and eggs!”

The ads also made claims about the sandwich’s ingredient list: Angus beef, meat derived from Scottish Angus cattle. Angus beef has been a bit of an obsession in the fast-food industry since the early 2000s; both McDonald’s and Burger King have offered their own Angus-derived sandwiches in the past few years.

Ground Down

Consumers who purchased Angus beef sandwiches and wraps from Dunkin’ Donuts sued the company in the Eastern District of New York in June 2017. They alleged that despite the names of the products, the sandwiches didn’t contain Angus steak − that is, a whole, intact cut of meat. Instead, the patties that made up the sandwiches consisted of ground Angus steak and other ingredients.

In the second amended complaint, the putative class charged Dunkin’ with violations of a number of state laws, including deceptive practices and false advertising claims under the Magnuson-Moss Warranty Act, the California Unfair Competition Law, the Florida Deceptive and Unfair Trade Practices Act, the Massachusetts Consumer Protection Act, the Michigan Consumer Protection Act, the New York General Business Law, and the consumer protection laws of the 45 other states and the District of Columbia.

Dunkin’ Donuts moved to dismiss in February, attacking the plaintiffs’ standing, the Eastern District’s personal jurisdiction and the merits of the false advertising claims themselves.

In an order filed in September, the court dismissed the plaintiffs’ demands for injunctive relief straight away and agreed with Dunkin’s overall jurisdictional arguments.

In the end, the court picked off all the plaintiffs except for Chufen Chen, the New York consumer who filed the original complaint. In her case, the court dismissed her Magnuson-Moss Act claims, holding that the ingredient disclosed by Dunkin’ Donuts in its advertising was a product description, and “not a written warranty under the Magnuson-Moss Act.”

As for her allegations made under New York General Business Law, the court dismissed them as well. Chen had claimed that the commercials were deceptive in that they obscured from the audience’s view the fact that the steak in the products was not a single cut of meat; the court dismissed this argument by including several unobscured closeups of the sandwiches drawn directly from the commercials.

The court also did away with Chen’s argument that additives, preservatives and other ingredients gave the lie to the Angus steak marketing claims. “Had Defendant used terms such as ‘All-Meat Patty with 100% Angus Steak’ or ‘All-Natural Angus Steak’…Chen’s case would be different,” the court maintained. “Without other qualifications, ‘Angus Steak’ guarantees just some Angus beef.”

The Takeaway

With the lawsuit effectively gutted, it is unclear how the case will proceed. If we were willing to bet, we’d place our money on settlement.

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More Reverberations From D.C. Circuit TCPA Ruling

Ninth Circuit jolts Crunch TCPA case back to life

Ripple Effect

Back in March, the D.C. Circuit trimmed back a 2015 Federal Communications Commission (FCC) order that expanded the scope of the Telephone Consumer Protection Act (TCPA). ACA International v. FCC struck down the commission’s broad definition of autodialer, pinching the definition of an autodialer by excluding systems with a mere theoretical capacity to place autodialed calls.

That ruling’s effects continue to be felt. First, the Third Circuit put a long-disputed class action to rest with a June decision, and now the Ninth Circuit has revived a class action that was put to sleep by the Southern District of California in 2014.

The original case, brought by one Jordan Marks, alleged that gym and health center Crunch San Diego violated the TCPA with three marketing text messages to Marks. The Southern District ruled that the text system that sent the messages to Marks was not an automatic telephone dialing system (ATDS) because it didn’t feature a random or sequential number generator.

The Ninth Circuit, in a unanimous three-judge panel decision, reversed the Southern District’s summary judgment ruling, specifically relying on the D.C. Circuit’s rejection of the FCC’s ruling.

“In light of the D.C. Circuit’s recent opinion in ACA International v. Federal Communications Commission,” the Ninth Circuit held, “…and based on our own review of the TCPA, we conclude that the statutory definition of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.”

The Ninth Circuit’s review included a re-examination of the original TCPA wording. “After struggling with the statutory language ourselves, we conclude that it is not susceptible to a straightforward interpretation based on the plain language alone,” the court wrote. But “The structure and context of the TCPA as originally enacted indicate that Congress intended to regulate devices that make automatic calls.”

The Takeaway

With that, the case was vacated and remanded to the Southern District of California. It’s a ruling that brings the TCPA back to its roots, but also introduces more uncertainty regarding the definition of an ATDS. We explore it further in a blog post here.

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