An Illinois federal court has dismissed a franchisee’s lawsuit alleging KFC wrongfully prevented him from advertising halal chicken, finding the franchise contract gave KFC control over advertising and promotional material. Lokhandwala v. KFC Corp., No. 17-5394 (N.D. Ill., entered January 23, 2018). Although the plaintiff alleged that KFC's prohibition on advertising dietary claims contradicted the earlier representations KFC had made to him, the court found that the franchise agreement gave KFC express power to change its advertising policies. In particular, the contract stated that “[n]o failure, forbearance, neglect or delay of any kind or extent on the part of KFC in connection” with enforcing and exercising its rights “shall affect or diminish KFC’s right to strictly enforce . . . this Agreement at any time.” The court ruled that given the contract’s “unambiguous language on advertising” as well as its integration clause, it would not consider extrinsic evidence of KFC’s…
After reviewing an ad for Subway’s “Fresh Fit for Kid’s Meal” featuring premium toys and offering a sweepstakes for a tablet, the Children’s Advertising Review Unit (CARU) has recommended that the restaurant chain clearly disclose material information and avoid sales pressure when advertising to children. CARU determined that while the contest rules were available on Subway’s website, the ad itself did not disclose that the contest was only open to those 18 and older, did not provide a free means of entry and did not disclose the odds of winning the tablet. CARU also found that the language “Hurry into Subway … otherwise you’ll miss out” could create undue sales pressure on children. CARU recommended that future ads contain audible disclosures understandable to children, and Subway agreed to take the recommendations into account.
The U.K. Advertising Standards Authority has upheld a challenge to a Heinz television ad for canned beans that claimed the beans contained similar levels of protein, fiber and fat as those in a protein shake. The ad showed a man drinking a beverage that he described as “supercharged with high fibre and minimal fat,” and although the beverage was not labeled or identified, ASA decided most consumers would conclude the man was drinking a protein shake. While the ad did not directly compare the nutritional benefits of beans to those of protein drinks and the ad’s nutritional claims for beans were substantiated, ASA ruled that Heinz made a nutrition claim prohibited by broadcast codes.
The Eleventh Circuit has denied a petition for rehearing in a putative class action against Chipotle Mexican Grill alleging false advertising related to genetically modified organisms (GMOs). Reilly v. Chipotle Mexican Grill, Inc., No, 16-17461 (11th Cir., entered November 14, 2017). The appeals court previously denied the plaintiff’s appeal from the trial court’s entry of summary judgment. The plaintiff alleged that she stopped eating Chipotle's chicken burritos after learning from the company website that although the meat and dairy products it uses are not genetically modified, “most animal feed in the U.S. is genetically modified, which means that the meat and dairy served at Chipotle are likely to come from animals given at least some GMO feed.” She began eating at a different Mexican restaurant, where she paid more for a similar chicken burrito despite the restaurant not claiming its food was non-GMO. The district court ruled that the plaintiff…
The Beech-Nut Nutrition Co. has reportedly told the National Advertising Division (NAD) it will no longer use the terms “natural,” “sensitive” and “complete” nutrition or claim that its baby cereals have zero grams of sugar, were “formulated to be gentle on baby’s tummy,” and have “all the tastiness of oatmeal with smaller proteins that are gentler on your baby’s tummy.” Beech-Nut discontinued the ads for “unrelated business reasons” before they were challenged, so NAD will not review the claims on the merits.
New York City’s Metropolitan Transit Authority (MTA) board has passed a resolution banning all advertising for alcohol products over concerns that exposure to the ads “influences many young people to start drinking earlier and to drink more," which "leads to much higher public health and safety costs.” Although the primary purpose for MTA ads is to raise revenue, alcohol ads account for about $2.8 million annually, about 2 percent of the $144.8 million raised in 2016. Other cities that have instituted similar bans reportedly include Los Angeles, San Francisco, Detroit, San Diego and Baltimore; Chicago and Atlanta allow the ads, the board said, but “with restrictions that limit their exposure to young people.” The ban will take effect January 1, 2018, but MTA stopped contracting for additional advertising as of October 25, 2017.
The U.K. Advertising Standards Authority (ASA) has ruled that Kerry Foods Ltd.'s television advertisements for Richmond Sausages asserting that its products are “the nation’s favourite” are backed by independent third-party market research and did not breach advertising codes. After ASA received three complaints about the ads, Kerry Foods provided research showing the sausages were the highest-ranked for both value and unit sales in the 12 months preceding the dates the ads were aired. ASA found that while the ads did not contain information that would allow consumers to verify the comparison, the market research was sufficient to substantiate the claim.
Fifth Generation, Inc. will reportedly discontinue advertising asserting that its Tito's Handmade Vodka scored higher in taste tests than four of its competitors. Absolut Spirits Co. challenged the advertising claims before the National Advertising Division (NAD), arguing that the tests were completed before 2010 and are therefore outdated. Further, Absolut argued, the challenged ads implied that the taste tests occurred as comparisons between the five brands rather than five independent tests that were not conducted concurrently. In lieu of offering substantiation, Fifth Generation opted to permanently and voluntarily discontinue the claims.
In a settlement with California, The Gatorade Co. has agreed to stop suggesting that drinking water harms athletes. California v. Gatorade Co., No. BC676734 (Cal. Super. Ct., Los Angeles Cty., entered September 21, 2017). Gatorade launched a mobile game featuring Usain Bolt that featured the runner speeding up when he ran over the Gatorade logo and slowing down when he touched water droplets. The complaint alleged that players were instructed to “Keep Your Performance Level High By Avoiding Water” and claimed Gatorade violated state unfair competition and false advertising laws. Under the settlement agreement, Gatorade will no longer make the “Bolt!” app available in any form that “creates the misleading impression” that water will hinder athletic performance or that water should be avoided. Gatorade also agreed not to make “statements that disparage water or the consumption of water” and will include a provision in contracts with endorsers that “clearly and…
An Illinois federal court has dismissed with prejudice a lawsuit alleging that Mondelez International falsely advertises Belvita breakfast biscuits and cookies as providing “four hours of nutritious steady energy.” Spector v. Mondelez Int’l, No. 15-4298 (E.D. Ill., entered September 27, 2017). The court held that the plaintiff failed to allege plausible facts to support her claim of false advertising and could not “rely on mere allegation of falsity, which is conclusory and thus not entitled to the assumption of truth.” The plaintiff "appears to draw her own conclusions” about daily calorie requirements, the court noted, and her arguments about variability of metabolism that would cause a consumer to receive fewer than four hours of energy “proceed as if the inherent inconsistency is self-evident.”