Advertising Law -- Dec 07, 2012

by Manatt, Phelps & Phillips, LLP

Is This Lawsuit Bananas?

Dole “misrepresents reality” in its marketing materials and fails to disclose that its production methods “expropriate and contaminate water supplies, destroy wetlands, cause flooding, destroy the crops of local communities, and cause illnesses in children,” a new lasuit against the banana manufacturer alleges.

California resident Clayton Laderer filed a putative class action complaint against the company claiming violations of California’s false advertising and consumer protection laws. Laderer believed that Dole farmed in an “ecologically friendly and otherwise sustainable manner,” and therefore purchased Dole bananas on a “regular basis.”

Laderer contends that Dole repeatedly “promised” consumers that it had an “unwavering commitment” to environmental responsibility and “strives to be a responsible corporate citizen in all of the countries” in which it operates, the complaint contends.

But despite these assurances, the company purchased almost 300 million pounds of bananas from a Guatemalan plantation that constructed dams to protect its products. The dams caused severe flooding to nearby communities, ruining their harvests and causing significant economic loss, Laderer says. 

In addition, the suit alleges that when the plantation fumigates and spreads various fungicides on its banana fields on a weekly basis, these toxic chemicals have caused the children of the nearby communities to suffer nausea, dizziness, and other health problems. “The drinking water of the communities today has levels of nitrites, nitrates, and sulfates that are ten times the maximum level recommended by the World Health Organization.”

“Dole assures potential customers that its ‘independent growers’ meet its standards. Dole promises that ‘if an independent grower fails to comply [with Dole’s requirements], then it is the responsibility of [Dole’s] management to intervene immediately so that product quality and environmental protection are maintained.” According to the complaint, “Dole nowhere discloses that methods used to product its bananas expropriate and contaminate water supplies, destroy wetlands, cause flooding, destroy the crops of local communities, and cause illnesses in children.”

The suit – which notes that various governmental and environmental groups have confirmed the actions of the plantation – seeks to certify a nationwide class of consumers who seek actual, compensatory, and exemplary damages, as well as restitution of all monies paid to Dole.

To read the complaint in Laderer v. Dole Food Co., click here.

Why it matters: Dole has previously faced suits regarding its actions in Central America, including dozens of suits brought by residents of Nicaragua claiming that they were injured by pesticides used on a company plantation. But this false advertising suit follows the trend of “greenwashing” suits being filed by plaintiffs who claim they have relied upon companies’ environmental marketing.

Judge Approves $22.5M Google Settlement

Just around the recent Thanksgiving holiday, a federal district court granted final approval of the record-setting $22.5 million settlement between the Federal Trade Commission and Google, which had been accused of violating the terms of a previous consent order with the agency.

According to the FTC, Google circumvented Safari’s no-tracking browser settings by using hidden code to install a cookie that tracked users’ browsing habits. Although the installation of the cookie itself was arguably not a deceptive practice, Google had informed its users that Safari would block tracking cookies. The failure to honor that statement, the agency claimed, constituted a violation of a 2011 consent decree with the FTC.

In that case, Google was charged with using deceptive tactics and violating its own privacy policy with regard to its Buzz social networking feature. That case resulted in a settlement that required Google to implement a comprehensive privacy program and promise not to make future misrepresentations about its privacy.

Although Google agreed to pay the agency $22.5 million for violating the terms of that agreement – the largest fine ever levied for violating an existing consent order – Commissioner J. Thomas Rosch dissented because Google did not admit liability.

Public interest group Consumer Watchdog also jumped into the fray and filed a notice of objection with the California federal court overseeing the case.  The group argued that the penalty was too small, the injunction was inadequate, and that Google should be forced to admit liability.

Despite the objections, U.S. District Court Judge Susan Illston ruled that the settlement is “fair, adequate, and reasonable” and approved the penalty. She disagreed with Consumer Watchdog that the settlement also needs to “protect the public interest” and distinguished this matter from the only other court to have reached such a determination.

Addressing concerns that Google was allowed to keep and use the information it had previously collected from its users, the court said the data was outdated and anonymized and therefore was of very low value to the defendant. She found the injunction adequate because it enjoins Google from collecting new information and sets forth compliance reporting mechanisms.

Given that the FTC never alleged that consumers suffered any monetary harm or that the Safari cookies yielded “significant revenues” for Google, the monetary penalty is appropriate, the court said.  And contrary to Commissioner Rosch’s concerns, the “position that a consent decree requires an admission of liability is contradicted by legal history and precedent,” Judge Illston wrote. “Indeed, courts in this circuit have upheld many agreements without an admission of wrongdoing, and Consumer Watchdog fails to cite a single case that does not.” In fact, such a requirement “would in most cases undermine any chance of compromise.”

To read the court’s order in U.S. v. Google, click here.

Why it matters: FTC Bureau of Consumer Protection Director David Vladeck said the court’s approval was “a clear victory for consumers and privacy. As this case and many others demonstrate, the Commission will continue to ensure that its orders are obeyed, and that consumers’ privacy is protected.” The decision also strengthened the position held by the majority of Commissioners that an admission of liability is not required when a defendant settles with an agency.

Stay in School: Cranberry Industry Fights to Keep Juice in Schools

Ocean Spray and other cranberry drink makers are fighting back against possible U.S. Department of Agriculture regulations that would govern the sale of snacks and beverages sold at schools.

New rules on drinks and snacks that can be sold in school outside of meal programs are due next spring.  But most assume that the regulations will mirror rules issued by the USDA this year for the National School Lunch and Breakfast program meal rules, which prohibited sugar-added fruit drinks.

Because most cranberry drinks contain sugar to offset the naturally tart flavor of the berries, the cranberry industry has launched a campaign to keep its drinks in schools. If the USDA doesn’t make an exception for cranberry drinks, the industry could be harmed, Ocean Spray CEO Randy Papadellis told USA Today. “We obviously would want to be on the list of things USDA and other agencies buy. Our concern is more the signal a standard that says cranberries are unhealthy sends out to other constituencies. Many people take their cue from USDA in terms of what is healthy.” According to the petition, “While efforts to reduce the consumption of sugar are commendable, the unintended result has been the lumping of cranberry juice with beverages that offer little or no nutritional value.”

Ocean Spray is the driving force behind the campaign, which emphasizes the nutritional value and health benefits of cranberry drinks. It also attempts to distinguish cranberry beverages from others that have added sugar. The campaign includes the “Cranberry Health” Web site, which features scientific studies about the benefits of cranberries and the petition for consumers to sign in support of a cranberry drink exception.

“The Exceptional Cranberry” campaign features videos and branded pages on social media sites like Facebook and Twitter. One video features Papadellis and the pair of cranberry farmers found in Ocean Spray ads. Chatting with the farmers – in their typical position standing in a cranberry bog – Papadellis asks for their help in the campaign, noting that “unlike grapes, apples and oranges, cranberries are naturally low in sugar and require some sweetening to be enjoyed.”

At the video’s conclusion, one of the farmers instructs viewers to “learn more and sign our online petition by visiting” the Web site. “Cranberries are an exception fruit, and you can help us make cranberries the exception in added-sugar policy and practice,” he says. To visit the Web site and watch the video, click here

Why it matters: The cranberry industry is doing everything it can to keep its drinks in schools. In addition to the advertising campaign, the industry formed a 17-member congressional caucus “to provide a platform for the cranberry industry to educate members of Congress and the public about the health benefits of cranberries.” The caucus, which includes federal legislators like Sens. John Kerry and Scott Brown, both from Ocean Spray-based Massachusetts, has already reached out to the USDA. “Given the beneficial and scientifically proven health properties of cranberries, we believe there is a need to establish clear standards that recognize cranberries as a part of a healthy diet,” the caucus wrote in a letter to USDA Secretary Tom Vilsack. “We ask that you consider including a variety of cranberry juice and dried cranberry products in USDA's food nutrition program so that children, seniors and adults served by these programs are not denied benefits unique to cranberries.”

This Symbol Means Something

On the heels of the FTC’s announcement that it is working on a “nutrition label” for privacy policies, a group of lawyers and tech types at Mozilla headquarters are now attempting to establish an iconography for such data that will assign a graphic icon for various data points.

For example, if a Web site sold users’ personal information to third parties, an orange circle with a dollar sign in the middle and an orange arrow pointing up – to suggest caution – would appear. A green circle with a dollar sign would accompany a site that does not sell information.

In another example, an orange sheriff’s badge with an arrow pointing up would indicate to consumers that a Web site makes personal information available to law enforcement without the necessity of legal proceedings. And a calendar with an infinity sign informs consumers that a site does not state how long it keeps user data. For sites that do indicate a specific length of time, the number of days would be shown in the calendar.

Users of Mozilla’s Firefox browser can install a plug-in to see the sites marked with the icons. For now, the icons will appear only on desktop computers and are unavailable on mobile devices.

Mozilla’s chief privacy officer Alex Fowler told The New York Times Bits blog that consumers currently do not read privacy policies. “Does icon-ifying them make it of interest to the user? We have a ways to go,” Fowler said.

Why it matters: The experiment is the latest attempt to make privacy policies more accessible to consumers. The Mozilla team faces sizable challenges given the density and length of most privacy policies. The team hoped to assign icons to 1,000 sites, but managed to work their way through the policies of only 235 sites on the first day.

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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