AD-ttorneys@law – October 2020 #3

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Puffy Class Action Deflated by $1.9 Million Settlement

Mass-producer of tandoori supermarket breads won’t change packaging (much)

Folklore Fusion

Friend v. FGF Brands (USA), Inc. is a modern-day, South-Asian themed take on the legend of John Henry: the battle of traditional manual labor against soulless industrial automation.

If you were paying attention in that American Studies class you took sophomore year, John Henry was a steel-driving man who punched steel drills into rock with nothing but his hammer and his legendary strength. He won a pyrrhic victory against a steam-powered machine in a rock-drilling contest – he died with his hammer in his hand after besting the machine.

The underlying theme of Friend v. FGF Brands is the same, but it doesn’t end in tragedy, and it tastes a whole lot better.

Feed of Clay

At the heart of the class action, filed by Illinois consumer Emily Friend in 2018, is naan, the delicious puffy bread familiar to every lover of Central- and South-Asian cuisines (but most popularly associated with Indian food).

Naan is traditionally produced in small clay ovens known as tandoors. These ovens, specially constructed and cured, are heated to extremely high temperatures (500-700 degrees Fahrenheit or above) during use. Naan dough is kneaded by hand, stretched by hand and slapped by hand on the interior walls of the tandoor. The bread cooks quickly and is plucked from the oven by the baker, usually with a set of metal tongs.

A naan-making team in action is a phenomenon that makes you proud of human capability. The deftness, rhythm and teamwork required to turn out the bread for restaurant or home consumption are hypnotic to watch – check out this team here, but be sure to watch them after you’ve already eaten a big meal.

Mass Reduced?

Nonetheless, the clay cookery required to make naan capable of satisfying a purist means that it is difficult to produce satisfactory naan on a large scale. It was this problem that Florida-based FGF Brands claimed to address with a line of naan produced and packaged for the average consumer to take home from Whole Foods, Mariano’s and other supermarkets.

That’s where Emily Friend entered the picture.

Friend sued FGF Brands over package marketing for the company’s Stonefire Original Naan and Stonefire Original Mini naan, which she purchased “routinely” before she filed her class action in 2018. At issue were several claims made by FGF on its frozen naan products – that the breads were “Tandoor Oven Baked” and “TANDOOR OVEN BAKED TO HONOR 2,000 YEARS OF TRADITION.”

Friend did some digging and uncovered patents that FGF held for a “conveyor belt commercial oven system.” “The mislabeled Naan products are mass produced on a conveyor belt in a gas-heated commercial oven designed by Defendants to overcome the impracticalities of using a tandoor oven to mass-produce products,” Friend claimed. She quotes one of the company’s founders as saying that the oven was designed to produce 15,000 pieces of naan an hour.

Fully Baked

The case, according to Friend’s unopposed motion for preliminary approval of class action settlement, was “in-depth and contentious,” featuring depositions, thousands of pages of production and 14 hours of settlement negotiations. FGF moved to dismiss in March 2019; the court denied FGF’s motion almost in its entirety.

“A reasonable consumer who sees naan pre-packaged and plastic-wrapped could believe that each piece had been baked in small quantities in traditional tandoor ovens – all the more so when that naan supposedly was ‘hand-stretched and tandoor oven-baked to honor 2,000 years of tradition,’” the court wrote.

Weary perhaps, and sensing a long and difficult trial, Friend and FGF came to terms in late September. The agreement awards $1.9 million to the consumer classes invoked by the suit, with individuals entitled to $2.50 per product with proof of purchase required after the first five claims.

The Takeaway

According to the agreement, “While Defendants contend no change of labeling has been necessary to comply with any applicable laws, Defendants’ Product labeling currently states that the Products are ‘baked in our patented tandoor tunnel oven.’ Plaintiff agrees that no further labeling changes are necessary.” With that, the naan dispute went cold.

The takeaway? If you’re going to patent an alternative process for a traditional product, consider marketing claims that are about the comparison. If FGF had marketed naan “that tastes tandoor-baked,” for example, it might have avoided a lawsuit.

In any case, please excuse us – we’re starving. If you want to meet, we’ll be down at Panna II on First Avenue and 6th. We won’t be bringing back any leftovers.

NAD Offers Slight Adjustments to BodyArmor Drink Claims, Approves Others

Specificity is key to the survival of taglines, but broader claims fail

Bratty

It’s clear that BodyArmor likes to get under Gatorade’s skin. Founded in 2011, the company is a relative newcomer to the sports drink game, and Gatorade – founded in 1965 and owned by PepsiCo – is the industry’s 800-pound gorilla. So it’s natural that BodyArmor has its sights set on the leader. Check out this cheeky ad, recently posted to Twitter. Or its tagline from several years ago: “Thanks, Gatorade. We’ll take it from here.”

Gatorade decided to fight back, questioning several BodyArmor marketing efforts across different media before the National Advertising Division (NAD). As always, NAD’s decisions are worth a close read.

First, it examined two short videos on BodyArmor’s Instagram and Twitter accounts and a press kit sent out to support a recent marketing campaign. NAD gave both ads a passing grade, arguing that their specificity was their saving grace.

“Although [Gatorade] argued that consumers could take away a broader message about the full line of Gatorade products,” the watchdog wrote, “NAD noted that the commercial compares a single Gatorade flavor, depicting and describing it in a way that limits the message to a single flavor.” Likewise, the press kit “accurately [highlighted] the different ingredients in specific BodyArmor products and specific Gatorade products.” The kit “did not reasonably convey any broader unsupported messages about the quality or performance of BodyArmor and Gatorade products.”

The Takeaway

NAD asked BodyArmor to make some adjustments, however, to banner ads and store displays. The tags in question stated that BodyArmor SuperDrink is “The only sports drink. No artificial sweeteners, flavors or dyes. Potassium packed electrolytes” and BodyArmor Lyte is “The only sports drink. Low calorie. No sugar added. No artificial sweeteners, flavors or dyes.”

Claiming that you’re the “only one” or “one and only” product in a competitive field might normally be considered puffery. But NAD thought the statements that followed the opening tag broadened the claim. “One reasonable takeaway” from the tags, NAD maintained, “is the unsupported implied message that BodyArmor SuperDrink is the only sports drink that has no artificial flavors, sweeteners, and contains potassium packed electrolytes, and that BodyArmor Lyte is the only sports drink that is low in calories and contains no added sugar, artificial sweeteners, flavors, and dyes.” Keep in mind that potential deception is judged based on net impression of the entirety of an ad.

To fix the problem, NAD urged BodyArmor to discontinue the claims.

In its advertiser statement, BodyArmor noted that it wanted to make “truthful and accurate comparisons between specific flavors of BodyArmor and specific flavors of Gatorade” and that it was “pleased that NAD agreed” that its press kit and Twitter and Instagram ads “achieved that goal.”

FTC: Lending Company Poses as PPP Lender

Ponte Investments ran afoul of the Commission by offering unauthorized CARES Act loans

Agony

The country’s hurting. On multiple levels. Which is why the scheme we’re about to describe – if true – is low down.

By now, you’re all familiar with the COVID-19-created economic distress that led to the Coronavirus Aid, Relief, and Economic Security (CARES) Act. How could anyone miss it?

The Act, which was designed to provide economic assistance to those whose livelihood was destroyed by quarantine measures, made provision for the Paycheck Protection Program, or PPP, which offered loans to small businesses under the auspices of the Small Business Administration (SBA). It’s a program intended to help people.

Paycheck Protection Perversion

If the Federal Trade Commission (FTC) accusations are true, Ponte Investments (doing business as SBA Loan Program and SBALoanProgram.com) took advantage of the desperate need for PPP loans to do some business of its own.

The Commission filed suit against the company and its owner, John C. Ponte, in April, accusing them of offering PPP loans when they were not authorized lenders; the specific charges encompassed misrepresentations about loans and misrepresentations concerning government status.

The complaint outlines an alleged multipronged marketing strategy, including calls to potential borrowers, email follow-ups and deceptive ad tags on the company’s website. In one case cited by the FTC, “[Ponte Investments’] representative informed the consumer that SBA Loan Program was working with that consumer’s bank and urged the consumer to apply immediately because the PPP program had limited funds that would run out.”

The Takeaway

The individual tactics used by Ponte are familiar tricks of the trade, well summarized in the complaint. But it’s the ongoing damage caused by the alleged scheme that is the heart of the suit. It’s just best to quote the complaint at length.

“Struggling small businesses who have applied through SBA Loan Program instead of through actual SBA loan program lenders have not received PPP loans, while small businesses who have applied through these lenders have exhausted the majority of the allotted CARES Act funds available for PPP loans. SBA Loan Program’s victims thus continue to suffer significant economic injury, including further jeopardizing employee jobs and potentially even losing their entire businesses.”

The company and its owner settled with the FTC in late September, agreeing to bans on misrepresenting their connection with the SBA or claiming to issue loans on their behalf. Their domain name was taken away, along with their right to the data they gathered.

Our guess is that our readers have no desire to emulate the alleged behavior outlined in this case.

Nonetheless, perhaps this scrap of advice might be useful: If you are aiding consumers with services that are even slightly adjacent to government programs, be ruthless with your own copy and disclosures – make sure you don’t appear to be something or someone you are not.

Cali Eastern Keeps Olympia Beer Suit Brewing

Packaging art plus slogan mean plaintiff passes reasonable consumer test

Downstream

Here’s an update to a case we covered back in the Dark Ages, when people congregated in person without face masks and drank beer.

The case is a class action filed against Pabst Brewing Company, producer of Olympia beer products, in the Eastern District of California in 2018. Brandon Peacock, concerned California citizen, sued the company when he discovered that the water used to make his beloved Olympia brew was no longer sourced from artesian wells located in the obscure town of Tumwater, Washington.

No, Pabst had moved production of the beer to what he termed a “mega-brewery” located in Irwindale, California. The Irwindale water, Peacock claims, is contaminated in a variety of ways, including possible chlorination and contamination by industrial solvents.

Where Do They Source Schlitz?

So far, the complaint sounds like the finicky grousing of a beer snob, but the Olympia label gave the complaint legs.

Pabst purchased the Olympia Brewing Company in 1999 and closed the Tumwater plant about four years later. But it continued to use the original packaging art – presumably a depiction of the lovely falling waters of Tumwater – and the original marketing slogan – “It’s the water” – on Olympia cans. And that rubbed Peacock the wrong way.

Peacock claimed that the company also maintained the façade of its original water source through various statements in the media, on its website and in its social media – including an alleged Facebook post showing a hand holding a can of Olympia in front of a familiar real life waterfall and the slogan “It really is the water.”

Peacock sought damages for violations of the Consumer Legal Remedies Act; the California Sherman Food, Drug, and Cosmetic Law; and the California Unfair Competition Law.

The Takeaway

Back in 2018, we opined that the case would hinge on whether the images, taglines and packaging would combine to create confusion in the mind of a reasonable Olympia beer consumer. In a recent order denying Pabst’s motion to dismiss, the district court agreed; who knew this blog had such wide influence?

“Although Olympia’s packaging does not contain a map pinpointing the alleged misrepresentation or an explicit statement regarding origin,” the court wrote, “Plaintiff alleges enough facts to draw a reasonable inference that a reasonable consumer would believe Olympia Beer is brewed with water from the Olympia area of Washington.”

Additionally, the phrase “The Original Olympia Beer” and the waterfall image might cause a reasonable consumer to associate Olympia Beer with the Olympia area of Washington. Finally, the court maintained that “a reasonable consumer could construe the phrase ‘It’s the Water’ – when taken with the can’s labeling as a whole – to suggest that Olympia Beer is brewed using water from the Olympia area.”

The Olympia class action abides. We’ll let you know what happens next.

Supplement Maker Mum on Big Claims, Meets Feds

Council for Responsible Nutrition adds another notch on its belt

Step Right Up!

It’s an election year, so perhaps grandstanding is in the air. But just because absolute pronouncements and unfounded hyperbole are flying left and right doesn’t mean you let your guard down when you’re cooking up marketing copy.

Take, for example, Optimunner, a “Revolutionary Immune System Booster” produced by Hypernaturals, LLP. Claims surrounding the supplement were challenged before the National Advertising Division by the tireless folks at the Council for Responsible Nutrition.

In response, NAD took Hypernaturals to task for several, shall we say, bold claims. The watchdog recommended that Hypernaturals discontinue a number of claims, including that Optimunner provides “invaluable help to people suffering from terminal or autoimmune disease”; represents “a revolutionary advance in immunotherapy supplements”; is “clinically & scientifically proven”; offers “real hope”; and promises “radical improvements during the first weeks.”

The Takeaway

“The advertiser did not submit a substantive response” to the initial challenge, wrote NAD, “but instead disputed that it was making the challenged express claims while simultaneously arguing that such statements are ‘accepted facts by the scientific community.’”

As for the detailed lists of recommended discontinuations, Hypernaturals didn’t bother to respond or initiate an appeal with the National Advertising Review Board. The challenged Optimunner claims are therefore being referred to the Federal Trade Commission and the Food and Drug Administration – two organizations that are not fond of exaggeration.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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