False advertising lawsuits are becoming increasingly common, particularly in the food and beverage industry. And they can be quite lucrative for successful plaintiffs and their enterprising counsel. For instance, Clif Bar & Co. recently settled a claim for $10.5 million over its “healthy” protein bars that allegedly contained large amounts of sugar. But what exactly constitutes false advertising?
Defined broadly, false advertising lawsuits may be brought against companies on the basis that their advertisements are false, misleading, or deceptive to a reasonable consumer. The law distinguishes between (1) product statements that are general, vague or clearly subjective claims of superiority understood as opinions—which are considered non-actionable exaggerated boasts or “puffery” (e.g., “world’s best pizza”)—and (2) product claims that are specific and measurable factual representations, which are actionable (e.g., an ad claiming that a product contains “no preservatives”). An actionable product claim can be literally false, or literally true but tend to mislead, confuse or deceive the consuming public.
While false advertising suits are not a new phenomenon, they are steadily on the rise, with over 200 class action lawsuits filed each year from 2020-2022, compared with 53 suits filed in 2011.
Several factors are likely contributing to this rise in cases. Consumers are increasingly aware of marketing tactics due to pervasive online advertising. Health-conscious consumers are also paying closer attention to nutritional facts and advertisements of “healthy” or “all natural” products. Furthermore, social media enables dissatisfied customers to easily garner widespread support when their causes go “viral.” Recent case filings show that claims regarding flavorings of products and the source of these flavorings are on the rise. Additionally, as companies continue to try to move towards appeasing consumers’ desires for sustainable products, product claims on sustainability or greenwashing are ripe for challenge.
There are a myriad of state unfair competition and consumer protection laws. For example, California’s Consumers Legal Remedies Act (Cal. Civil Code § 1750) provides a private right of action and can even act as a conduit for class action lawsuits based on false advertising. The CLRA provides for numerous remedies, including monetary damages, punitive damages, an injunction, and attorneys’ fees and court costs. The possibility of attorneys’ fees makes the CLRA attractive to class action litigators.
False advertising claims can also be brought by competitors under the Lanham Act, the federal Trademark and False Advertising statute. The Lanham Act allows an action for (1) false, misleading or deceptive advertisements that (2) influence purchasing decisions of consumers, and (3) cause economic or reputational injury. False advertising laws can protect companies from losing market share to competitors who engage in false comparative ads or mislead consumers with false information/claims about their products.
While multiple federal and state laws protect consumers of food and beverage products, the line between mere exaggeration and actionable false advertising is not always clear. The recent lawsuits below against popular brands illustrate the complexity surrounding these issues.
Pushback on Totino’s “Cheese”
In March 2022, consumers in Illinois filed a class action lawsuit against the manufacturer of Totino’s Pizza Rolls because the product’s packaging states the pizza rolls are “naturally flavored” and are “pizza in a golden crust” despite the product containing imitation cheese and minimal pizza ingredients.
The court held in March 2023 that Totino’s product packaging was not misleading because federal regulations do not define “pizza” and a reasonable consumer would not expect a “naturally flavored” food to predominantly contain real cheese. However, the court indicated the outcome might have been different if Totino’s had claimed that the product contained “Real Cheese” or “100% Cheese.”
A Fishy Situation for Subway
Subway has also been on the receiving end of several false advertising suits, including allegations that its “foot long” subs are less than 12 inches. That case was settled for around $525,000—most of which was to go to the attorneys—and some changes to Subway’s practices. The Seventh Circuit later rejected the settlement, holding that “[a] class action that seeks only worthless benefits for the class and yields only fees for class counsel is no better than a racket and should be dismissed out of hand.”
In 2021, California consumers filed suit based on false advertising, fraud, and unfair competition, including a claim under the CLRA, claiming that Subway misled consumers by advertising their products as “100% tuna” when their tuna products “partially or wholly” lacked tuna.
A marine biologist tested samples of Subway’s tuna product from 20 separate establishments and subsequently reported that of the 20 samples, 19 did not contain any detectable tuna DNA but rather contained pork, chicken, and cattle DNA.
While Subway urged the judge to dismiss the case because its tuna is regularly mixed with other ingredients and consumers should expect cross-contamination, the judge allowed the case to continue in July 2022 because it is possible that Subway’s “tuna” contains ingredients that a “reasonable consumer would not reasonably expect to find in a tuna product.” In an interesting twist, the named plaintiff recently sought to dismiss the case. As Subway is countersuing for legal fees, the sandwich chain and its attorneys may not agree to the dismissal. This illustrates the risk plaintiffs and their attorneys face in bringing such claims.
Butter or Spray?
In another case, consumers sued the manufacturer of “I Can’t Believe It’s Not Butter” because the product’s label advertises zero calories and zero grams of fat per serving, which the plaintiffs asserted was misleading due to its serving size of 0.2 grams.
At the heart of the dispute was whether “I Can’t Believe It’s Not Butter” should be classified as “butter” or a “spray,” because the Food, Drug, and Cosmetic Act (“FDCA”) allows different serving sizes for each product category. Plaintiffs maintained that the product is “butter” because it is marketed as a butter substitute and complained that the serving size was too small to reflect ordinary use of butter.
In April 2023, the Ninth Circuit affirmed the district court’s dismissal of the complaint on the ground that the product is a “spray” since it is a liquid dispensed through a pump on the bottle. The Ninth Circuit held that, as the FDCA allows smaller serving sizes for spray products than butter products, the “I Can’t Believe It’s Not Butter” spray product complied with federal regulations and the label was not misleading.
Although the products and issues may vary, recent case filings indicate that the upward trend of false advertising lawsuits in the food and beverage industry will likely continue. Companies of all sizes are vulnerable to false advertising lawsuits, which may result in costly monetary awards, reputational harm and legal costs even if the companies are ultimately vindicated. As such, it is important for companies and brands to vigilantly protect their interests and carefully review their product claims.
Lynda Zadra-Symes is a litigation partner and co-chair of Knobbe Martens’ trademark, false advertising and copyright Litigation practice group. She represents clients through all stages of U.S. intellectual property, false advertising and unfair competition litigation in federal courts throughout the country, the ITC and before the Trademark Trial and Appeal Board.
Jonathan Hyman is a partner at Knobbe Martens, where he handles a broad range of intellectual property matters, including false advertising and domestic and foreign trademark prosecution. He represents clients in a wide range of industries and fields including restaurants and hospitality, and food and beverages, and is co-chair of the firm’s CBD and legal cannabis group.
Rachel Zacuto is an associate at Knobbe Martens and is a member of the firm’s trademark practice group. Her practice focuses on domestic and international trademarks, copyright, unfair competition, and licensing.