POM vs. FTC

As we reported last week, Federal Trade Commission (“FTC”) Chief Administrative Law Judge D. Michael Chappell sided with the FTC when he found that POM’s marketing campaign – the one that reminded us of the alleged “wonderful” capability of pomegranate juice to treat, prevent, or reduce the risk of certain medical conditions – was in fact “deceptive.”  In particular, Judge Chappell found that POM’s claims that its juice can ward off and treat heart disease, prostate cancer and even erectile dysfunction lacked the scientific “juice” to support these statements.

Unlike other companies that have been recently embroiled in this same type of fight with the FTC POM is not going away without a fight.  In fact, it has poked a big stick in the eye of the FTC with a new advertising campaign which omits any mention of its failure to substantiate its claims of disease prevention and treatment, and instead “illuminates the facts and opinions” in the judge’s decision which emphasize the health “benefits” of pomegranate juice.

http://youtu.be/Z1cLQBQTzkM

Using excerpts pulled directly from Judge Chappell’s 335 page decision, POM’s “new” marketing approach touts the facts that pomegranate juice “supports prostate health” and “provides a benefit to promoting erectile health and erectile function.

POM and the FTC have until June 18 to appeal Judge Chappell’s decision.  And based on its actions thus far, it is likely that POM will in fact appeal the ruling.  In the meantime, it is clear that POM will not go down without a fight, and will challenge the limits of the FTC’s power to regulate the content of its advertising campaigns.  This strategy is, however, not without risks.  Such actions may cause the FTC, at some later date, to seek corrective advertisements and penalties if it finds that POM mischaracterized the judge’s ruling in its advertising.  Stay tuned, as this fight has likely just begun.
Continue Reading UPDATE: POM Down, Far From Out! POM’s New Advertising Campaign Strikes Back at the FTC

POM WonderfulClass action lawsuits against major consumer product companies are on the rise thanks, in large part, to the Better Business Bureau’s National Advertising Division (“NAD”). The NAD assists in the advertising industry’s self-regulatory efforts to ensure truth and accuracy in advertising by providing guidance to industry in an effort to ensure that consumers can rely on the claims made by companies in their advertising campaigns – ironically enough –in an effort to avert litigation.

NAD does so by investigating complaints submitted to it by either competitors or consumers concerning advertising claims made by various companies.  NAD then uses a hybrid form of alternative dispute resolution to decide whether the claims can be substantiated, and publishes its decision online, in print, and via press release.

Recently, plaintiffs’ class action lawyers from across the country have begun to look to the decisions of NAD in order to support false advertising class action claims.  In a never-ending effort to seek out and discover the “next big thing,” plaintiff attorneys have begun to focus their attention on NAD rulings, which have sparked a new wave of class action lawsuits aimed at companies’ advertising campaigns.

According to NAD Director Andrea Levine, these NAD-driven lawsuits are not so much about “fixing the advertising or protecting the public,” but instead are all about the “money,” as there is no shortage of both product sales and consumers to join in these claims.

The NAD decisions inadvertently lay out a “roadmap” for plaintiff attorneys because they not only detail the legal doctrines which support their findings, but they also indentify an advertiser’s potential defenses and vulnerabilities before discovery even commences.  A perfect example of this is the class action lawsuit which was filed against the William Wrigley Jr. Company, based on the claim that its Eclipse brand gum was scientifically proven to kill germs that cause bad breath.  In a decision published one month prior to the filing of this suit, the NAD chronicled in great detail its critique of Wrigley’s support for its position and concluded that Wrigley should discontinue or modify its advertising campaign.  The class action plaintiffs then used the information gleaned from the NAD decision as a basis to sue Wrigley’s.  In fact, they actually cited the decision in their complaint.  Wrigley’s wound up settling that case for $6 million.

In another recent case, a federal class action lawsuit charges that POM Wonderful falsely advertised that its pomegranate juice provided certain health benefits to its users.  The NAD found that some of the research on which POM relied did not support its health claims – evidence which is directly cited by the plaintiffs in their class action lawsuit.  A copy of the POM Wonderful Class Action Lawsuit can be read here.

It appears that NAD rulings are becoming a gateway for class action lawsuits which, if left unchecked, may spiral out of control.  Companies must coordinate their efforts to enact legislation that makes it more difficult for a class
Continue Reading POM Wonderful? Not so much. The Better Business Bureau Inadvertently Fuels Class Action Lawsuits