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False Advertising Claims on the Rise

One issue is whether fruit in plastic containers on refrigerated shelves in grocery produce sections could be labeled and sold as “fresh,” or whether the labeling could be misleading.

By ROBERT D. TOWEY, Litigation Practice & AURORA F. PARRILLA, Associate, Lowenstein Sandler

Food companies often find themselves besieged by complaints from consumers and competitors for false or misleading advertising. The risks are especially high when products feature hard-to-define claims such as “fresh” or “natural.”

Such was the case with Fresh Del Monte v. Del Monte Foods. In this lawsuit, the central issue was whether fruit in plastic containers on refrigerated shelves in grocery produce sections could be labeled and sold as “fresh,” or whether such presentation and labeling could be considered misleading.

The question was whether such presentation was in violation of the Lanham Act, as well as in violation of a licensing agreement between the two companies when the single Del Monte Company split several decades ago. The licensing agreement stated that Fresh Del Monte had the right to sell “fresh fruit, fresh vegetables and fresh produce” under the Del Monte name. Del Monte Foods, on the other hand, had the right to sell canned and preserved fruits, vegetables and produce. Since the time the agreement was made, the companies have been engaged in legal battles, each accusing the other of being the “rotten apple.”

The heart of the Del Monte lawsuit was the claim that Del Monte Foods had breached the licensing agreement by selling cut and prepared food products under the names “Orchard Select,” “Fruit Naturals” and “Sun Fresh,” which were sold in plastic tubs on refrigerated shelves and produce sections of grocery stores. Fresh Del Monte contended that selling produce this way was misleading to consumers because the products were not “fresh” fruit.

Ultimately, a federal court jury ruled in favor of Fresh Del Monte, finding that Del Monte Foods had misled consumers with the labeling of some of its cut, refrigerated food products and violated the terms of the licensing agreement. Fresh Del Monte was found in violation of the majority of the Lanham Act false advertising claims, and a jury awarded Fresh Del Monte damages in excess of $13 million.

The result of the Del Monte case increases the risk of litigation for food companies that may have believed that their exposure to false advertising risks was limited to the words they used to describe their products. Now, false advertising claims may arise based on the totality of the circumstances of the company’s marketing and sale of the product, including in-store presentation.

False advertising claims have also affected other large food companies in recent years, including Kellogg and Campbell Soup. Below are some of the most recent, big-name false advertising disputes to hit the news:

  1. Kellogg announced a settlement payment of $2.5 million in a class action filed against the company for false advertising arising out of its claim on boxes of Cocoa Krispies® that the product improves immunity for kids.
  2. Another recent settlement with the Wrigley Company over false advertising of its gums’ advertised germ-killing benefits resulted in the payment of $7 million.
  3. Four New Jersey women have sued Campbell’s claiming they were tricked into buying tomato soup labeled “25% less sodium” when it purportedly contained a comparable amount of salt to regular Campbell’s soup. Campbell’s sought unsuccessfully to dismiss the case, arguing that the advertising claim refers accurately to its soup in comparison with the average sodium content of the soup on the food market. The judge allowed the case to go forward, stating that “the fact that the labels were literally true does not mean they cannot be misleading to the average consumer.”
  4. A woman has sued General Mills after consuming 24 packs of YoPlus® yogurt and not seeing any improvement in her digestive health despite the company’s marketing of the yogurt on a digestive health platform. Federal district and appeals courts have ruled that a class of plaintiffs can be certified based upon her claim despite General Mills’ objection that shoppers purchased YoPlus® for different reasons, different places, different times, with different results and, as such, cannot be grouped together as a class.

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