Source: http://apps.americanbar.org/buslaw/blt/2009-05-06/ernst.shtml
Timestamp: 2018-01-18 02:17:12
Document Index: 275326211

Matched Legal Cases: ['art 101', '§ 101', '§ 101', '§ 331', '§ 343', 'art 101', '§ 45', '§ 52']

Understanding the Regulatory Mix
By Timothy S. Ernst
Advertising has become an increasingly important tool for food manufacturers to sell their products. No longer is it sufficient for a food product to be wholesome, good tasting, and available on store shelves. With the proliferation of new food products responding to increasingly diverse consumer demands and an expanding diversity in channels of distribution, advertising has become critical to the success of new products and the survival of old favorites. Consumers need to know about the existence of a product, understand how it meets their needs, and know where to obtain it. Launching a new product without a well-designed and executed advertising program may condemn an otherwise excellent product to an early trip to the remainder aisle. Importantly, not only must an advertising program be effective, it must be legally sound in order to avoid a potentially serious detour to the courthouse or regulatory agency.
Advertising is any direct or indirect communication of information by a company about itself or its products. Magazine ads, Web pages, and television commercials are obvious forms of advertising. Less obvious forms of advertising include the sponsorship of a cooking school, paying actors to use certain products in television shows or movies, and press information kits distributed to food editors of local newspapers. Advertising also includes written materials designed for use by distributors, retailers, or brokers (so-called sell sheets); statements made by servers offering samples at the local club store; and, of course, claims made on product labels.
Although advertising is a constitutionally protected form of commercial speech, it is subject to extensive regulation. Food products, in light of health and safety concerns associated with them, are subject to more regulatory oversight than other types of consumer products. Advertising that is false or deceptive is not constitutionally protected and may be illegal. Furthermore, even advertising that is literally truthful may be restricted by the governmentand even banned in some contextsif it is misleading due to its context or if the government has determined that the public well-being requires that certain types of claims be limited.
This article will provide a brief overview of legal issues related to the advertising of food products. It is intended to give the general practitioner a brief introduction to this area of the law. As with any specialized area, there are a number of detailed regulations, interpretations, and practices that may impact a particular area or inquiry.
Regulation by the FTC and FDA
The Federal Trade Commission Act (the FTC Act) and associated regulations are the federal government's primary weapon against false, deceptive, or unfair advertising. Section 5 of the FTC Act prohibits "unfair or deceptive acts or practices in or affecting commerce." Section 12 of the FTC Act deals specifically with the false advertising of "food, drugs, devices or cosmetics," and prohibits the dissemination of any false advertisement for the purpose of inducing, or which is likely to induce, directly or indirectly, any purchase of such items. "False advertisement" is defined as any advertisement, other than labeling, that is misleading in a material respect. In determining whether an advertisement is misleading, the Federal Trade Commission (FTC) will take into account not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal material facts about the product or its performance.
As noted above, the FTC's authority over advertising does not cover labeling. The Food and Drug Administration (FDA) regulates claims made on labels of food products while the Department of Agriculture regulates claims made on labels of meat and poultry products. Section 201(m) of the Food, Drug, and Cosmetic Act (the FD&C Act) defines labeling as "all labels and other written, printed or graphic matter upon any article or any of its containers or wrappers or accompanying such article." Under this formulation, labeling includes not only actual product labels, but also point-of-sale materials (such as display-ready units, "shelf-talkers," and retail handouts) that accompany food products. And in a controversial reach for expanded jurisdiction, the FDA recently took the position that if a product label refers consumers to a Web site, then FDA's regulatory authority over labeling extends to claims made on that Web site (see FDA Warning Letter to Ocean Spray Cranberries, Inc., Jan. 19, 2001).
Under section 403 of the FD&C Act, food labeling that is false or misleading in any particular causes the product to be misbranded in violation of section 301 of the FD&C Act. Note that this is a much more rigorous standard than under the FTC Act, which prohibits only advertising claims that are misleading "in a material respect." While this distinction had some significance in the past (one court said that unlike the standard used by the FTC, FDA's regulatory authority was intended to protect "the ignorant, the unthinking and the credulous"), since December 2002 FDA has followed the FTC's "reasonable consumer standard" in determining whether a claim on a conventional food is misleading.
FDA has issued detailed regulations governing claims on product labeling. See, e.g., 21 C.F.R. Part 101. For example, and of particular recent interest, FDA has adopted a comprehensive regulatory framework governing nutrition and health claims made on food products. FDA both restricts the number and type of nutrition and health claims that can be made on product labels and has issued detailed definitions and guidelines that must be met with respect to those claims that are allowed. FDA has adopted a highly technical structure characterizing different types of claims:
Health ClaimsAs defined by regulation, a health claim is anyclaim that expressly or by implication characterizes the relationship of any substance to a disease or health-related condition (for example, a claim that links the consumption of soluble fiber to a reduced risk of heart disease is considered by FDA to be a health claim). Heath claims can only be made on food labels if supported by the "totality of publicly available scientific evidence" and there must be "significant scientific agreement" among qualified experts that the claim is supported by such evidence. FDA has authorized only a limited number of health claims. See 21 C.F.R. §§ 101.70-101.83.
Qualified Health ClaimsQualified health claims are claims that describe substance/disease relationships based on "competent and reliable scientific evidence" but that must be accompanied by explicit qualifying language informing consumers that the evidence supporting the claim is not conclusive.
Structure/Function ClaimsStructure/function claims describe the effect of a particular food or nutrient on the structure or function of the body (for example, the claim that a particular food or nutrient helps maintain joint health and flexibility).
Dietary Guidance StatementsA dietary guidance statement addresses the role that general categories of food play in the diet. For example, "Diets rich in fruits and vegetables may reduce the risk of some types of cancer and other chronic diseases."
The requirements associated with each of the above types of claims are beyond the scope of this paper, but practitioners should understand that any type of health claim made on a food product should receive a high degree of scrutiny and should be reviewed by a lawyer who is an expert in the field. This is particularly important where label claims are involved since once a label is printed and attached to a product, it becomes extremely difficult and expensive to modify or remove the claim.
Self-regulatory bodies play an increasingly active role in the regulation of food-related advertising. Most important of these self-regulatory bodies is the National Advertising Division of the Better Business Bureau (NAD) and its sister organization, the Children's Advertising Review Unit (CARU). With respect to food-related advertising, the NAD has stated that it will harmonize its self-regulatory efforts with the regulatory schemes of the FDA and FTC. However, the NAD rarely will refuse to adjudicate a matter based solely on the argument that the subject area is preempted by FDA.
Despite the voluntary nature of participation in NAD proceedings, the NAD has become the de facto regulatory authority over advertising that either is national in scope or is distributed within several regions of the country. Refusal to participate in the NAD process may result in a referral to a governmental agency (and personnel at such governmental agencies have indicated that referrals from NAD land at the top of the enforcement list). Although challenges from competitors constitute the principal source of NAD cases, the NAD and CARU also monitor television, radio, and print advertising and respond to complaints from individual consumers, consumer groups, and local Better Business Bureaus. CARU monitors advertising directed to children (generally persons under the age of 12) and has published comprehensive Guidelines for Children's Advertising.
If the NAD or CARU determines that an advertisement is false or misleading or that a claim is not adequately substantiated, it will ask the advertiser to discontinue or modify the advertisement. While the NAD/CARU cannot force an advertiser to take certain action, if an advertiser refuses to cooperate with the NAD or CARU, the matter may be referred to the appropriate governmental regulatory agency. NAD, CARU, and NARB (National Advertising Review Board) decisions are available in online reports. Each published report identifies the advertiser and product, includes the positions of the advertiser and challenger, and concludes with the adjudicating body's decision and a statement of the advertiser (in most cases accepting the decision). The reports published by NAD/CARU/NARB are thorough, well-reasoned, and the best available source for the latest legal thinking with respect to advertising claims.
Analyzing the Advertiser's Claim
What Claim Is Being Made? In determining whether an advertisement is truthful, on the one hand, or deceptive (i.e., false or misleading), on the other, the first thing that must be determined is what claims are being made. An advertiser is responsible for both express and implied claims made by its advertisement. The overall impact of the advertisement is determinativewhat a reasonable consumer would take away from an advertisementnot the literal meaning of individual words or phrases. Thus, even if an advertisement may be literally or technically correct, if the overall message of the advertisement is deceptive or misleading, the advertisement is subject to challenge. Advertisers must substantiate any implied claim that can reasonably be derived from the literal language of an advertisement.
In reviewing proposed advertising with marketing personnel, this concept of the primacy of the consumer takeaway (rather than the literal claim) can be difficult to communicate. Often marketing personnel are quite pleased with some of the implied messages associated with creative efforts, which may communicate more than the literal facts may allow. This is sometimes referred to as the halo effect of a claim. Marketing personnel are further reluctant to allow a lawyer to dictate what the consumer takeaway from a creative piece may be, and are resistant to the idea that a claim can be misleading even if factually correct. A great teaching tool for this issue, I have found, is an NAD case involving Duncan Hines chocolate chip muffin mix.
In this case, General Mills challenged Aurora Foods' claim that Aurora Foods' Duncan Hines chocolate chip muffin mix contained "50 percent more chocolate chips" than General Mills' comparably sized Betty Crocker muffin mix. General Mills conceded that the Duncan Hines claim was literally truethe Duncan Hines mix really did contain 50 percent more chocolate chips. However, the NAD agreed with General Mills that the consumer takeaway from the claim was that the Duncan Hines mix contained more chocolate than the Betty Crocker mix. In fact, however, because the Betty Crocker mix contained larger chocolate chips, there was actually more chocolate in the Betty Crocker mix, rendering the Aurora Foods' claim misleading in the eyes of the NAD. The NAD recommended that Aurora Foods discontinue the claim, and Aurora Foods agreed to do so. NAD Case Report No. 3623 (Feb. 1, 2000). This case provides an excellent illustration of the importance of the implied claim and how a claim can be misleading even if literally true.
An implied claim also may be made by the omission of certain information, the inclusion of which is necessary to prevent an affirmative representation from being misleading. Claims therefore must be not only accurate but also complete. Similarly, when the overall impression of an advertisement is misleading, it will not be cured by a tiny footnote placed at the bottom or back of a label. Disclaimers, footnotes, and information boxes are appropriate only to explain language that may be susceptible to more than one meaning or to provide additional information, not to contradict messages that are primarily conveyed by the advertisement.
An Advertiser Is Responsible Only for Claims That Are Material. An advertiser will only be responsible for deceptive claims that are material. A claim is "material" if it is one that is "likely to affect a consumer's choice or use of a product or service." FTC Policy Statement on Deception (1983). Thus, even though a particular claim or statement may be found to be incorrect, if it is immaterialwould not affect a reasonable consumer's purchase decisionthe claim itself will not be actionable. Express claims, intentional implied claims, and claims involving health or safety are presumptively considered material.
Some Claims Do Not Require Substantiation; These Are Called Puffing.Puffing is a statement of exaggeration or hyperbole that is (1) obviously a statement of subjective opinion; (2) a statement of broad generality, impossible to verify; or (3) so extreme or outrageous that reasonable consumers would not rely upon the statement in making their purchase decision. Puffing claims do not require substantiation.
The line between puffing and a claim that requires substantiation can sometimes be a fine one, and the line is constantly evolving and may be drawn differently by different persons. Although no hard and fast rule can identify precisely where the boundary between puffery and a representation of fact may lie, the following characteristics of a particular advertisement could influence the review of a regulator or judge:
General claims are more likely to be considered puffing than specific claims.
The more obvious the exaggeration, the safer the claim will likely be.
Statements relating to health, safety, or nutrition, no matter how soft or generalized, are generally more vulnerable to challenge as objective claims.
The content of an advertisement can influence the interpretation of a claim. A humorous setting can soften specific claims, while a serious authoritative figure can make general statements seem more like objective claims.
Visual Depiction of Food
Advertisers of food products wish to present their products in the most appealing light: they want hamburgers to appear fat and juicy, vegetables to appear crisp and green, and soups to appear robust and chunky. So-called food stylists are commonly employed during commercial filming or photo shoots to ensure that food products look their best for the photographers. However, the law requires that photographs, pictures, or models used in an advertisement accurately reflect the product being represented. Colors should not be enhanced, product consistency should not be modified, and quantity or concentration of ingredients should not be adjusted so as to make the product appear more attractive in the advertisement. So, while it is appropriate to use care and effort to ensure that a product presents its best face to cameras, the product should not be manipulated to misrepresent its actual appearance. One major food manufacturer got into trouble by placing clear marbles in the bottom of a bowl of soup used in an advertisement in order to make the soup appear more chunky. In addition to the legal problems this created, the advertiser suffered a lot of bad publicity.
One exception to this general rule is when a product is modified for purposes unrelated to product appearance or performance. For example, mashed potatoes could be substituted for ice cream in a television advertisement showing the joys of eating ice cream (real ice cream would melt under the hot camera lights). On the other hand, mashed potatoes could not be used in an advertisement emphasizing the creamy texture of a particular brand of ice cream.
Just How Fresh Is "Fresh"?
"Fresh" is a word that food marketers love to use. In fact, "fresh" may be the favorite of all words available to the food brand manager. As a result of the abuse of the term, FDA has established rules relating to use of the word "fresh" and the NAD frequently issues decisions involving improper use of the word. In its "fresh" regulations (found at 21 C.F.R. § 101.95), FDA states that the word "fresh" cannot be used on food product labels in a manner that suggests or implies that the food referred to is unprocessed or unpreserved unless the food referred to is in its raw state and has not been frozen or subjected to any form of thermal processing or any other form of preservation. An advertiser generally cannot use the word "fresh" to describe a food that has been thermally processed or subject to preservation (unless such usage does not suggest or imply that the food is unprocessed (e.g., "fresh bread")). It is acceptable to claim that a thermally processed product is "made from" fresh ingredients if factually correct. Marketers will sometimes rely on statements such as "fresh idea" and "fresh taste" to convey the concept of "freshness" with respect to a processed product, but the permissibility of such efforts will depend on the context.
As noted above, the regulation of food advertising is a complex area with multiple pitfalls. Unlike other forms of advertising, where an unsubstantiated claim may mean a withdrawn advertisement, guessing wrong on a claim that appears on a product label can be a very costly mistake. Therefore, it is important that all claims be carefully evaluated for both the express and implied claim being communicated and that applicable regulations be consulted to ensure that claims that may in other contexts be permissible are not restricted under FDA's unique regulatory authority.
The FDA obtains its regulatory authority over false labeling by virtue of section 301 of the Food, Drug, and Cosmetic Act (21 U.S.C. § 331), which prohibits the misbranding of any food in interstate commerce. Section 403 of the FD&C Act (21 U.S.C. § 343) defines "misbranding" as labeling that is "false or misleading in any particular." Regulations issued under the Nutrition Labeling and Education Act contain FDA's rules on nutrition and health claims, and can be found at 21 C.F.R. Part 101.
Section 5 of the FTC Act (15 U.S.C. § 45) proscribes "unfair or deceptive acts or practices in or affecting commerce." Section 12 of the Act (15 U.S.C. § 52) addresses the marketing of food products, and declares that the dissemination of any false advertisement in or affecting commerce that is likely to induce the purchase of food constitutes a prohibited unfair or deceptive act or practice.
The FTC has published a number of guides and policy statements that are very useful. See, particularly, the FTC's Policy Statement on Comparative Advertising, Policy Statement on Deception, Advertising Substantiation Policy, and Guides Concerning Use of Endorsements and Testimonials in Advertising (which are currently in the process of being revised). All are available on the FTC's Web site at www.ftc.gov.
The best resource for advertising law issues are the Case Reports published by the NAD and CARU. These thoughtful and reasoned decisions are available online (with membership) at nadreview.org.
The Washington, D.C., law firm of Keller & Heckman presents annually an excellent seminar on Food Labeling, Advertising, and Promotion. See www.khlaw.com.
Ernst is the vice president and associate general counsel of Del Monte Foods in San Francisco. His e-mail is tim.ernst@delmonte.com.