Hunton Retail Law Resource

This past week, several consumer actions made headlines that affect the retail industry.

“Black Truffle Flavored Extra Virgin Olive Oil” Case Dismissed Against Trader Joe’s

On August 30, 2018, the Southern District of New York dismissed class action claims for consumers who purchased Trader Joe’s “Black Truffle Flavored Extra Virgin Olive Oil.” The complaint alleged that the product label contained the words “black truffle” in large black letters, with the words “flavored” and “extra virgin olive oil” in smaller cursive letters underneath. However, DNA testing revealed that the oil did not contain actual truffle, but rather 2,4-dithiapentane, a petroleum-based synthetic injection that imitates the taste and smell of truffles.

The court found that the plaintiffs failed to plead a material misrepresentation, reasoning “the label on the Product’s front clearly states that the product is ‘Black Truffle Flavored.’ The word ‘Flavored’ is in large lettering underneath the words ‘Black Truffle.’ All that label would suggest to a ‘reasonable consumer acting reasonably’ is that the product is designed to taste like black truffles.” Brumfield v. Trader Joe's Co., No. 17 CIV. 3239 (LGS), 2018 WL 4168956, at *2 (S.D.N.Y. Aug. 30, 2018). The court denied leave to amend the complaint.

Goop Inc. Settles Vaginal Egg Health Claims Suit

Goop Inc., Gwyneth Paltrow’s women’s fashion and wellness company, agreed to pay $145,000 to settle a lawsuit brought by 10 California counties, accusing Goop of making bogus health claims about its vaginal “egg” products because the benefits were not backed by scientific evidence. California targeted three products: the Jade Egg and Rose Quartz Egg—small stones inserted into the vagina supposedly capable of regulating menstrual cycles, balancing hormones and preventing uterine prolapse—and the Inner Judge Flower Essence Blend, which was advertised as essential oils to be taken orally or added to a bath that could prevent depression.

Goop said in a statement that it believes there is an “honest disagreement” about the claims, but it wanted to settle the lawsuit “quickly and amicably.” The company also said that “Goop provides a forum for practitioners to present their views and experiences with various products like the jade egg,” and that “[t]he law, though, sometimes views statements like this as advertising claims, which are subject to various legal requirements.”

NAD Seeks to Rein in Claims Regarding ACT “Dry Mouth” Products; Healthcare Company to Appeal

On August 22, 2018, following a challenge from GlaxoSmithKline, the NAD recommended that a healthcare company discontinue certain advertising claims for its ACT “Dry Mouth” products. Among the claims were that ACT Dry Mouth Mouthwash “provides immediate, long-lasting relief,” “soothes dry mouth” and that ACT Dry Mouth Lozenges are uniquely formulated to stimulate saliva flow and soothe and moisturize dry mouth.

The company intends to appeal the NAD’s decision as being inconsistent with the NAD’s reasonable basis (and not perfection) standard. The company also stated that it will appeal because it believes the NAD’s findings are not well harmonized with FDA clearance of a separate company’s claims for dry mouth products.

NAD Refers Claims for Aubio’s Cold Sore Treatment Gel to FDA and FTC for Further Review

The NAD referred Aubio Life Sciences’ claims for its Cold Sore Treatment Gel to the FDA and FTC after a challenge by GlaxoSmithKline, manufacturer of Abreva. The NAD found that Aubio’s use of the claim “[a]pply at the first sign of a cold sore” conveyed that consumers would experience a benefit from product application while a cold sore is forming. Aubio argued that the FDA’s External Analgesic Tentative Final Monograph allows claims regarding itching, burning and tingling associated with cold sores at any stage, including during their initial development; the challenger disputed this finding. In the end, the NAD determined that Aubio had not established that it had a reasonable basis for claims that the product provides a benefit prior to the formation of a cold sore. The NAD clarified that nothing in its decision prevents Aubio from instructing consumers to start using the product at the first sign of an indication.

Aubio stated its disagreement with the NAD’s conclusion, maintaining that the challenged claim is authorized according to the FDA monograph. Accordingly, the NAD referred the matter to the FDA and the FTC.

ERSP Curtails Certain Purple Innovation, LLC’s Claims Promoting Its Purple Mattresses

The Electronic Retailing Self-Regulation Program (“ERSP”) found that Purple Innovation, LLC, could support certain innovation claims for its Purple Mattresses, but recommended the marketer modify or discontinue other claims. The ERSP’s focus was on Purple Innovation’s claims that its mattress technology alleviates pain, never breaks down and is “temperature neutral,” thus cooler than other mattresses.

Purple Innovation submitted clinical studies conducted on its technology. ERSP found that these studies were not adequate to support claims for superiority against other mattresses, nor could Purple Innovation support disparaging claims against competitive mattress systems. ERSP did find that Purple Innovation could support a monadic claim of the long-term (i.e., 10 years) durability of its mattresses.

NARB Filing Fees Increased on September 5, 2018

Since 2004, the National Advertising Review Board (“NARB”) process filing fees have helped defray the costs of the system. Effective September 5, 2018, the filing fee for NARB appeals increased from $15,000 to $20,000 to better cover the costs of each appeal.

Annie M. Ugurlayan, of the NAD’s Advertising Self-Regulatory Council, issued the following statement on the increase: “Because we want to assure access to the NARB appeal process for small- and medium-sized companies, the NAD/CARU/NARB Policies and Procedures will continue to specifically provide that the filing fee can be waived or reduced on a showing of economic hardship.”