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As Americans become more likely to buy products based on green and health-conscientious labels, many companies have tried to capitalize on these new marketing strategies. But these campaigns are not without risk. Despite highly interpretative FDA guidance on “all-natural” products, some litigants are willing to take on major corporations.
In one high-profile suit, plaintiffs alleged that Frito-Lay, a subsidiary of PepsiCo, falsely marketed SunChips, Tostitos, and Fritos Bean Dip products as “All Natural” despite the use of unnatural, genetically-modified corn. Genetically modified organisms (GMOs) have had their DNA purposely changed through genetic engineering techniques like introducing traits from other plants, animals, bacteria, or other materials. GMOs in the US food market are both significant and protected as intellectual property, but some advocacy groups contest the health risks associated with GMOs. The use of GMOs is on the rise and as of 2012, the US Department of Agriculture estimated that 88 percent of the corn grown in the United States was genetically modified.
The Frito-Lay suit originated in New York as the named plaintiff said he spent 10 cents more per ounce for Frito-Lay’s all natural options instead of products without similar labeling. Moreover, Mr. Shake says he never would have purchased the product if he’d known that modified vegetable and corn oils were present in the chips. Plaintiffs brought warranty, intentional misrepresentation, and consumer protection claims under the laws of multiple states.
Frito-Lay must face the lawsuit, despite its motion for summary judgment. Significantly, however, the Eastern District of New York dismissed numerous claims against Frito-Lay in this multidistrict class action. Late last month, U.S. District Judge Roslynn R. Mauskopf dismissed warranty claims under the federal Magnuson-Moss Warranty Act and Florida and New York law, the intentional misrepresentation claims under Florida, New York, and California statutes, the claims based on California’s Unfair Competition and False Advertising laws, as well as claims under the Florida Deceptive and Unfair Practices Act. Notably, PepsiCo’s role in the advertising scheme as a parent company was deemed too minimal to be named in the case.
It wasn’t all bad news for the plaintiffs. The court denied Frito-Lay’s motion to dismiss or stay the action under the primary jurisdiction doctrine. Other courts recently decided to wait for the FDA to decide whether products containing GMOs can be labeled “all natural.” In the August 29 order, she explained that the courts were better suited than the FDA to answer this question. Judge Mauskopf also acknowledged that the plaintiffs were harmed.
Despite this narrowing of the issues, a number of issues will still exist going forward. Still at the core of the case is the question of what a reasonable consumer should expect.
Regardless of the outcome, this and similar lawsuits are causing companies to reconsider. PepsiCo has decided to strip some of its other subsidiaries of similar sales techniques; it recently announced that it would no longer call Naked Juices “all-natural” as a part of a $9 million settlement.
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