As this space has addressed before (see here and here), the California Transparency in Supply Chain Act (Civ. Code section 1714.43), enacted in 2010, requires large retailers and manufacturers (those with worldwide sales in excess of $100 million) doing business in California to disclose on their websites their efforts to eradicate slavery and human trafficking from their direct supply chain for tangible goods offered for sale.

In Hodsdon v. Mars, a putative class action, the plaintiff alleged that this California consumer protection law required Mars, Inc. (of Mars Chocolate fame) to disclose on its products’ labels that the products’ supply chains may involve slave labor. The trial judge dismissed the complaint, and on June 4, 2018 the Ninth Circuit affirmed the trial court’s decision, holding that the California consumer protection laws do not obligate Mars to label its goods as possibly being produced by child or slave labor. The court explained that, in the absence of any affirmative misrepresentations by the manufacturer, manufacturers do not have a duty to disclose the labor practices in question, even though they are reprehensible, because they are not physical defects that affect the central function of the chocolate products. Continue Reading Where No Misrepresentation, Ninth Circuit Does Not Require Labels Disclosing Slave Labor

We reported a few weeks ago about a new warning from FDA related to the safety of certain teething-related, non-prescription homeopathic drug products, and in that post we mentioned that both FDA and the Federal Trade Commission (FTC) held public workshops in 2015 to gather information about this uniquely-regulated class of consumer products.  Today, FTC released an Enforcement Policy Statement on Marketing Claims for OTC Homeopathic Drugs  (available here); a Staff Report on the discussions held during the September 2015 workshop (available here); and an FTC blog post summarizing these actions.

For readers who are not familiar with homeopathy, the practice dates back to the 1700s and posits that disease symptoms can be treated by tiny doses of substances that produce similar symptoms if given in larger doses to healthy people (“like cures like”).  Accordingly, modern-day homeopathic remedies that we find ubiquitously in drug stores today are highly diluted formulations, which some people consider to be no more effective than placebo.  The FTC Staff Report provides an excellent overview of how this OTC industry has grown over the past 50 years and the viewpoints presented by both supporters and skeptics of homeopathy.

 The upshot to the new FTC Enforcement Policy is this:
 “No convincing reasons have been advanced either in the comments or the workshop as to why efficacy and safety claims for OTC homeopathic drugs should not be held to the same truth-in-advertising standards as other products claiming health benefits.”

Continue Reading FTC Issues Long-Awaited Enforcement Policy on OTC Homeopathic Drugs

Evaporated cane juice, a term usually used to inform about sweeteners derived from the fluid extract of sugar cane, is present on the ingredient lists of many products we see on grocery store shelves. However, newly finalized FDA guidance on use of the term “evaporated cane juice” (“ECJ”) as an ingredient in food labels may change things.  Specifically:

FDA’s present view is that “such sweeteners should not be declared on food labels as ‘evaporated cane juice’ because that term does not accurately describe the basic nature of the food and its characterizing properties (i.e., that the ingredients are sugars or syrups) . . . .  Moreover, the use of ‘juice’ in the name of a product that is essentially sugar is confusingly similar to the more common use of the term ‘juice’ – ‘the aqueous liquid expressed or extracted from one or more fruits or vegetables, purees of the edible portions of one or more fruits or vegetables, or any concentrates of such liquid or puree’ (21 CFR 120.1(a)).  Thus, the term ‘evaporated cane juice’ is false or misleading because it suggests that the sweetener is ‘juice’ or is made from ‘juice’ and does not reveal that its basic nature and characterizing properties are those of a sugar.”

Continue Reading FDA Finally Decides that “Evaporated Cane Juice” Is Misleading Consumers

The potential pitfalls of native advertising were on display this month at the Federal Trade Commission (FTC). The agency reported that national retailer Lord & Taylor settled with it on charges that the company improperly paid for native advertisements. Lord & Taylor allegedly did not disclose that an article in the online publication Nylon, as well as a Nylon Instagram post, were paid promotions for one of the company’s clothing collections. In addition, the company allegedly gave fashion “influencers” dresses and then paid them to post photos wearing them on social media. The company’s contracts with the influencers obligated them to use the “@lordandtaylor” Instagram user designation and hashtag “#DesignLab” in the captions of their photos. The FTC charged that Lord & Taylor did not require the influencers to disclose that they were compensated by the company (none did).

The FTC unanimously voted to issue a complaint and approve a proposed consent agreement. The agreement:

Continue Reading National Retailer Settles FTC Native Advertising Complaint

shutterstock_268298027Allegations are increasing against The Honest Company, Inc. for false and misleading marketing of its products as “all natural” and “plant-based” when they supposedly contain synthetic ingredients.  The Honest Company sells personal care, cleaning, and baby products in multiple channels including at retail, online and through consumer subscriptions.  The company was co-founded by the actress Jessica Alba and guarantees that its products never contain certain harsh chemicals.  Last month, a proposed class action complaint was filed in the Southern District of New York against The Honest Company and then, just last week, another putative class action was filed in the District Court for the Central District of California.

In both cases, the plaintiffs allege that the company violated each state’s consumer protection laws and also allege some variation of misrepresentation, false advertising, fraud, breach of warranty, and unjust enrichment.  These lawsuits have been spurred, in part, by a recent Wall Street Journal report which showed that the results of independent tests proved that The Honest Company’s laundry detergent contained a chemical the company advertised as not being in its products.  Reasonable people may debate whether the timing of these class action complaints was also spurred by recent news reports that The Honest Company is working on an initial public offering with a valuation that could be over $1 billion (see Bloomberg article here).  A spokesperson for The Honest Company has defended its products, stating that the “allegations are without merit.”

As readers of this blog know, plaintiffs have for several years been targeting companies that distribute foods and beverages, cosmetics, and other consumer goods like soaps and cleaning products for allegedly deceptive labeling and advertising of those products with express and implied natural claims.  Although FDA has begun what will certainly be long process towards developing standards and criteria for labeling food products under its jurisdiction as “natural” (note – the comment period for this FDA request for information was extended until May 10, 2016), the lack of a comprehensive policy has left many companies that use natural and plant-based labeling vulnerable to lawsuit.  For instance, any future FDA guidelines for food may not fit comfortably onto cosmetics or personal care products due to the different types of processing techniques used in those different industries.  In addition, answers about whether trace amounts of a synthetic ingredient in an otherwise plant-based product may require a labeling or advertising modification have not yet been determined.  As a result of these litigation risks and the regulatory ambiguity surrounding the term “natural,” we believe that companies manufacturing natural products should carefully monitor developments in this area of law.  We  encourage you to check-in with this blog as we continue to highlight the legal and regulatory landscape of “natural” consumer products.

In case you hadn’t heard about it or didn’t get involved in any of the events hosted by various campaign members, the week of March 6-12 was National Consumer Protection Week.  Besides the usual efforts to educate the public about our basic rights as consumers, the risks of identity theft, and certain types of scams such as crimes aimed at seniors and other vulnerable populations, this year’s campaign included a significant focus on fraudulent and unsafe dietary supplements.

First, U.S. Attorney General Loretta Lynch recorded a video message as part of National Consumer Protection Week that highlighted the Justice Department’s (DOJ’s) recent work against fraudulent, deceptive, or unsafe dietary supplements.  Continue Reading Fraudulent Dietary Supplements Highlighted in the 2016 National Consumer Protection Week

Barber v NestleWe recently blogged about a new wave of class action litigation related to California’s Transparency in Supply Chains Act.  In December, Nestlé USA won the dismissal of a complaint against it alleging that the company was “obligated to inform consumers that some proportion of its cat food products may include seafood which was sourced from forced labor.”  See Barber v. Nestle USAThe question was whether Nestlé had a duty to disclose on its packaging the possibility that some of its suppliers or suppliers’ suppliers used illegal labor practices, particularly when it is virtually impossible to trace such practices directly to their food products.  The Central District of California found that the law recognizes a “safe harbor” and that Nestlé complied with the law by providing a limited disclosure to its customers regarding the company’s efforts to ensure compliance with labor laws on its website.

It turns out that fish used in cat food is not the only product that may include sourcing from forced labor.  Suppliers of cocoa used to make chocolate may be using forced labor and child labor in cocoa fields.  Continue Reading Another California Dismissal of Proposed Class Action Regarding Disclosure of Forced Labor in the Supply Chain

We blog frequently about new regulatory developments coming from CPSC or FDA and about enforcement actions brought by those federal agencies as well as state counterparts and private plaintiffs.  But we don’t very often discuss actions involving the Federal Trade Commission (FTC) and its enforcement of the FTC Act’s broad prohibition on unfair or deceptive acts or practices, which incorporates false advertising for consumer products such as food, cosmetics, OTC drugs, medical devices, and goods overseen by the CPSC.  We thought it was worth a quick reminder that this area can be fraught with booby traps for the uninitiated advertiser.

The FTC Act is the primary federal law enforcement tool for preventing false advertising that has the capacity to deceive consumers. Continue Reading Reminder – Truthful Advertising Is Not Optional

The first round goes to the industry: on December 9, 2015, the Central District of California dismissed the complaint in Barber v. Nestle USA, a key bellwether case in a new wave of class action litigation related to California’s Transparency in Supply Chains Act. The Barber plaintiffs’ theory was that Nestle had violated California’s panoply of consumer protection statutes by failing to disclose that “some proportion of its cat food products may include seafood [that] was sourced from forced labor.”

Judge Cormac McCarthy disagreed, finding instead that Nestle’s disclosures under the Supply Chains Act were protected under California’s “safe harbor” doctrine. And as the details of the decision make clear, this is no one-off victory: the court’s reasoning sets the blueprint for companies defending against similar suits going forward.

Continue Reading Knockout in Round One: Court Dismisses California Supply Chains Act Class Action

On December 2, 2015, the Grocery Manufacturers Association announced SmartLabel, a pioneering technology initiative that gives manufacturers and retailers an important new channel for disclosing information about their products directly to consumers. Through SmartLabel, simply by searching online or scanning the bar code on a product’s label, consumers can readily access a wealth of detail about that product’s ingredients, including whether any are derived from generally modified organisms (GMOs).

With more than 30 food, beverage, and consumer products companies already on board, SmartLabel is an ambitious effort to increase the amount of product information accessible to consumers. And by allowing companies to provide more context than can fit on a typical label or package, the initiative also gives companies a new tool for defending against false advertising suits attacking the use of marketing terms like “natural” and “non-GMO.” But at least in California—long a hotbed for this type of class action litigation—it is not clear that SmartLabel will in fact decrease the litigation exposure that participating companies face. One major reason: Ninth Circuit precedent instructing federal courts to focus first and foremost on the claims made on a product’s front label, to the exclusion of “fine print” and other less visible sources.

So what, exactly, is the Ninth Circuit’s position on ingredient disclosures?  And how will this stance affect how companies can use SmartLabel to defend against false advertising class actions?

Continue Reading What Does GMA’s SmartLabel Initiative Mean for False Advertising Litigation?