The Ultimate Guide to False-Advertising Law in New York: 22 FAQs

author by Jesse Dennis Langel on Apr. 14, 2023

Consumer Rights Consumer Protection Industry Specialties  Advertising Accident & Injury  Products Liability 

Summary: Learn New York False Advertising through FAQs and case analyses.

1) What are the elements of false advertising under New York law?

For a private plaintiff to "state a claim" under General Business Law § 350, the following elements must be alleged in sufficient detail: 

  1. consumer-oriented conduct; 
  2. materially misleading;
  3. an injury caused by act or practice.”[1]

The legal elements of false advertising under GBL § 350 claims are identical to those of deceptive business practices under GBL § 349.[2] However, GBL § 350 applies only to “false advertising.”[3]

GBL § 350, often used in connection with GBL § 349, prohibits “false advertising,” including false product labels.[4]

2) Which particular statutes govern false advertising under New York law?

The two false-advertising statutes under New York Law:

General Business Law § 350: False advertising unlawful

"False advertising in the conduct of any business, trade or commerce or the furnishing of any service in this state is hereby declared unlawful."

General Business Law § 350-a: False advertising

“1. The term “false advertising” means advertising, including labeling, of a commodity or of the kind, character, terms, or conditions of any employment opportunity if such advertising is misleading in a material respect. In determining whether any advertising is misleading, there shall be taken into account (among other things) not only representations made by a statement, word, design, device, sound, or any combination thereof but also the extent to which the advertising fails to reveal facts material in the light of such representations concerning the commodity or employment to which the advertising relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual...”

3) What other statute is used in conjunction with GBL § 350?

GBL § 349 (Deceptive acts and practices), which prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce.” While deception itself is not an element of the prima facie case, it goes to the “consumer protective purpose” of the statute, which safeguards consumers' “right to an honest marketplace where trust prevails between buyer and seller.”[5] It is also closely related to the “materially misleading” standard, which “require[es] a showing that a reasonable consumer would have been misled” by the deceptive conduct.[6]

4) Who can sue under New York’s false-advertising statute GBL § 350?

Both private plaintiffs and the Attorney General can bring a false-advertising lawsuit.[7]

5) Can I recover monetary damages for a falsely-advertised product?

Yes. Prevailing private plaintiffs (consumers or competitors) are entitled to damages or injunctive relief in successful cases.[8] The court, at its discretion, may also award reasonable attorneys' fees[9] with treble damages (three times actual or compensatory damages).[10] Treble damages require a willfulness to violate GBL § 350 and are limited to ten thousand dollars.[11]

Were you deceived by false advertising? Free legal evaluation.

6) How broad is New York’s false-advertising statute GBL § 350?

The scope of GBL § 350 is broad. The New York Court of Appeals in Karlin v. IVF AmericaInc. stated that GBL § 350, on its face, “applies to virtually all economic activity.”[12] However, just like GBL § 349, GBL § 350 is restricted to transactions that occurred in New York state.[13]

7) Who determines whether the advertising is “sufficiently consumer-oriented”?

Courts will conduct a factual analysis to determine whether conduct is sufficiently consumer-oriented under GBL § 350.[14]

8) How is the misleadingness of an advertisement determined?

The test for misleadingness is objective: whether the advertisement will likely mislead a reasonable person acting reasonably under the circumstances.[15] However, the reasonableness standard may change depending on the facts. For example, in two similar cases involving law school graduates who sued their law schools for misrepresenting students' post-graduate career prospects, the courts analyzed the allegedly misleading statements according to how a “reasonably well-educated individual” would interpret those statistics.[16]

9) Can false advertising appear on a product’s label?

Yes, false advertising under GBL § 350 includes mislabeling. Galaxy Export, Inc. v. Bedford Textile Products, Inc. 443 N.Y.S.2d 439 (2 Dept. 1981). The definition of mislabel is “to label (something) incorrectly or falsely,” according to Merriam-Webster dictionary.

Mislabeling and Misbranding lawyer Jesse Langel

10) Can the New York Attorney General pursue damages for false advertising?

Yes. The Attorney General may elect to sue and, if successful, may cause a court to impose civil penalties of up to five thousand dollars per violation under GBL § 350-d.[17] New York Supreme Courts (trial courts in New York) have broad discretion to determine the amount of the civil penalties considering factors such as the defendant's profitability, ability to pay, and the extent of the violations.[18] But defendants enjoy a “safe harbor” defense if they comply with “rules, regulations, or statutes administered by the FTC or New York State agencies.[19] Some courts have ruled that compliance with other federal agencies constitutes a complete defense under GBL § 350-d.[20]

Worth noting is that courts have held that federal agency approval of product labels did not constitute compliance with GBL § 349c[21] or GBL § 350-d.[22] Nor did the FDA’s non-binding guidance provide a defense to a class action alleging mislabeling as “natural.”[23]

11) Must I be specific in my false-advertising lawsuit?

Yes. Although New York law is liberal in its pleading requirements under CPLR § 3013,[24] conclusory statements should not survive against a good motion to dismiss. Good practice requires pleading the “what, where, when, why, and how” of the bad advertising claim.

12) Top 16 factual issues to consider before bringing a false-advertising lawsuit.

  1. Which advertising claim(s) did you find false, misleading, or deceptive?
  2. Why were the claim(s) false, misleading, or deceptive?
  3. Were the claim(s) measurable and ascertainable (i.e., “20% more room”)?
  4. Were the advertising claim(s) manifested as statements, excerpts, images, or video?
  5. Was there a disclaimer? If so, was it accurate and prominently displayed?
  6. Did a human being affirm the claim(s) verbally or nonverbally?
  7. Have you spoken to the seller or manufacturer since the purchase seeking clarification?
  8. Did the seller make any post-sale statements or promises relevant to the advertising claim(s)?
  9. Where was the product viewed or purchased?
  10. When and how was the product purchased?
  11. Did you rely on the advertising claim(s) when purchasing?
  12. Did the advertising claims influence your decision to buy the product? How?
  13. Does the business’s website or social media make or support the same problematic claim(s)?
  14. Were the claim(s) on a label, and if so, have you made a Freedom of Information Act Request (FOIA) to the USD? A (meat and poultry) or FDA (other food products), if applicable?
  15. What details and documentation support any damages claim based on a purchase price, invoices, receipts, or evidence of personal injury or emotional injury?
  16. If you intend to sue for breach of express warranty in New York, have you sent a pre-suit letter as required under UCC § 2-607(3)(a)? [25]

13) Does a false-advertising lawsuit require “reliance” on the advertising?

No. Similar to GBL § 349, Section 350 does not require “justifiable reliance” according to the New York Court of Appeals in Koch v. Acker, Merrall & Condit Co.[26] The Koch court made class actions more accessible. Before Koch, courts declined class certification because class members could not prove reliance across the class.[27]

Still, plaintiffs must prove an injury causally related to a misrepresentation. In that sense, reliance and causation are “close cousins.” But merely “seeing the misleading statements before coming into possession of the products” was sufficient to establish that causal connection.[28]

Generally, the person “injured” is the one who should sue. Suing “derivatively” (on behalf of aggrieved consumers) appears to be disallowed. For example, in Center for RheumatologyLLP v. Shapiro, a counterclaiming defendant in a business dispute lacked standing to pursue an unrelated consumer claim on behalf of the partnership’s patients. The court held that Defendant “failed to allege that he was deceived by this practice in any manner, and the defendant may not maintain a derivative action on behalf of [the Partnership's] patients.”[29]

14) May advocacy organizations sue on behalf of consumers?

The issue is whether an organization may sue “derivatively”—on behalf of consumers—with no injury to the organization itself.

Generally, under GBL § 349, plaintiffs may not assert “derivative” claims, or those claims alleging indirect injuries resulting from deception experienced by third parties.”[30] Therefore, to state a claim under GBL § 350, a plaintiff must allege that the defendant directed its unlawful conduct at the plaintiff.[31] But a case may be made if a plaintiff can show that, despite the acts being directed to a third party, the defendant intended harm to be caused to the plaintiff.[32]

This issue was front, and center in Voters for Animal Rights v D'Artagnan, Inc. wherein the court cited Blue Cross,[33] which held, “the Legislature did not intend to permit recovery for those suffering from “derivative” or “indirect” injuries – to wit, those occurring “solely as a result of injuries sustained by another party.”[34]

The court in Voters for Animal Rights cited the defendant’s brief:

“If an [n] advocacy organization ... were found to be ‘injured’ any time it encountered allegedly false statements made by businesses touting the virtues of their products or services – ... whether they be foie gras or fake turkey, trigger locks or guns, vaccines or even abortions – then the advocacy group could drag that business into costly litigation merely because it refuses to believe what the sellers say about their products or services.”). Plaintiff's argument, if adopted, would recognize a cognizable injury to any organization that opts to spend its resources persuading consumers to boycott a product or service."[35]

Voters for Animals Rights is essential in organizational, social-justice cases because the plaintiff expended significant resources counteracting the defendant’s advertising of foie gras (livers of force-fed ducks or geese). The organizational muscle of Voters for Animals Rights included more than 60,000 supporters in New York State. It spent “hundreds of hours” disseminating information and lobbying against selling foie gras products in New York. But that was not enough to overcome a general bar for pursuing injuries on behalf of third parties.

15) Do Plaintiffs alleging false advertising have a “heightened pleading standard”?

No. Although the New York Court of Appeals has not yet addressed the issue, the Second Department has held that the pleading-with-particularity requirement of CPLR 3016(b) generally required for claims sounding in fraud does not apply to GBL §§ 349 and 350 causes of action.[36]

16) Must I suffer an “actual injury” to sue for false advertising?

Yes, a plaintiff must allege an actual injury to state a cognizable claim.[37] The alleged injury must be actual and cannot be speculative or based on the “perceived … risk of future injury that may never occur.”[38] A fear of future garnishment based on an unlawfully procured judgment did not allege a recognizable injury—but a lowered credit score based on false reporting stated an injury.[39] The injury must be actual, identifiable, and confirmed. But the injury need not be monetary.[40]

For example, the court in Guzman v. Mel S. Harris and Associates, LLC,[41] acknowledged that “[e]motional harm … satisfies the injury requirement for a claim under … GBL § 349” and found the plaintiff's “emotional injuries” were sufficient to withstand a summary judgment motion where he claimed to be “stressed and frustrated … to the extent that he left his job as a truck driver because he feared having an accident, and experienced difficulty sleeping and concentrating.”

17) What evidence should I preserve in a false-advertising case?

Preserve any purchase receipt. Capture all communications had with the retailer or manufacturer. Locate and preserve marketing campaign material and advertisements. Think expansively about other discoverable electronic and hardcopy evidence.

Parties should consider the necessity of experts, including a consumer-perception expert who could create a consumer-perception survey about the impression of the claim on consumers. Consumer surveys can reveal consumer expectations, which can support the case. Both parties are expected to scrutinize the methodology employed in the surveys, and the expert’s qualifications will also be examined.

18) Can an omission constitute a form of deception under GBL § 349?

Yes. Deception need not be an affirmative act but can also be accomplished through omission. For example, in Miller v. Kaminer, the plaintiff sought a refund for a deposit and prepayment of childcare services paid to the defendant, who knew at the time of payment that the business owner was terminally ill.[42] The court found that “[t]he failure to inform claimant at the time his child was placed in child care that his deposit and pre-payment would not be reimbursed because of the imminent dire health circumstances is an omission which constitutes a deceptive act.”[43]

19) What is the statute of limitations (time deadline) for false-advertising claims under GBL §§ 349 and 350?

A three-year statute of limitations under CPLR 214(2) governs GBL §§ 349 and 350 claims brought by private plaintiffs.[44] The same period generally applies to claims by the Attorney General, except when the Attorney General seeks prospective injunctive relief.

The limitations period for a GBL § 349 claim begins at the time of the injury, not when the injured plaintiff learned or reasonably should have learned of the deception.[45] The time of injury depends on specific facts of the deceptive acts alleged.[46]

The date of injury determination also has important procedural implications long before the limitations period runs. The Second Department has recently reiterated that deceptive practice claims under § 349, and thus by relation, § 350, are claims sounding in tort.[47] As a result, causes of action under § 349 and § 350 are subject to the requirements of GML § 50-e.[48] Under § 50-e, plaintiffs asserting claims against a municipality or government agency must serve notice of a claim within 90 days after the claim arose. Claims arise under GBL § 349 and § 350 at the time of injury—triggering both the 90-day service period and statute of limitations.

In addition, a defendant's active concealment of the deception is sufficient to toll the limitations period [49] even though the mere failure to disclose is insufficient.[50] Under limited circumstances, the courts have also held that the “continuing wrongs” doctrine applied to toll the limitations periods to the date of the last wrongful act.[51] However, continuing effects of earlier unlawful acts cannot toll the limitations period under the doctrine.[52]

20) When was General Business Law § 350 enacted?

GBL § 350 was enacted in 1963 to address weak enforcement of false advertising. Neither common law (case law) nor New York Penal law could combat false advertising.[53] New York's Attorney General welcomed help to “cope with the numerous, ever-changing types of false and deceptive business practices which plague consumers in our State.”[54] The result was General Business Law § 350, which was designed to be “a strong deterrent against deceptive business practices,” to “supplement the activities of the Attorney General in the prosecution of consumer fraud complaints,” and to provide consumers with “an honest market place where trust prevails between buyer and seller.”[55]

GBL § 350 borrowed heavily from the Federal Trade Commission Act of 1915 (FTC Act). The phrase “deceptive acts or practices” mirrors the FTC Act to harmonize state and federal law.[56] Although politicians debated whether identical wording would create confusion and conflicting law, Governor Rockefeller honored the potential benefits of conformity between state with federal law.[57] This is why GBL § 350-c[58] recognizes a defense for FTC compliance. Before taking legal action, the Attorney General must send the business a “Notice of proposed action” by certified mail.

21) When and why was GBL § 349 enacted?

General Business Law § 349 was enacted in 1970. At that time, the Attorney General was empowered to enforce it.[59] In 1980, after it became apparent that the Attorney General could provide only minimal enforcement, the New York State Legislature amended the statute to create a private right of action.

That amendment was “intended to afford additional protection for consumers, allowing them to bring suit on their behalf without relying on the Attorney General for enforcement.[60]

22) What are some legal defenses to false advertising?

  • The advertising statement is not materially misleading under the “reasonable consumer” standard.
  • Express disclaimers remove the claim’s misleadingness, like an explicit admission of domestic origin if an impression is made that it’s foreign.[61]
  • The misleading statement was nonactionable puffery, an exaggeration of opinion, such as the “best in town.”
  • The claim is “derivative,” which means that Plaintiff is suing on behalf of an injured party.
  • The statement or conduct at issue constitutes constitutionally protected free speech.[62]
  • A federal law or another New York law preempts the claim. An example is an ingredient challenge on a USDA pre-approved meat or poultry product. But otherwise, courts have generally held that federal laws do not preempt GBL § 350 claims.[63]
  • The statute of limitations, which is three years from the date of injury, has expired.
  • The dispute is subject to binding arbitration.[64]
  • Defendant already complies with FTC regulations or other federal regulations, which invoke the “safe harbor” provisions of GBL § 349(d) or GBL § 350-d.
  • GBL §§ 349 or 350 does not apply to the statements or conduct of municipalities.
  • The primary jurisdiction doctrine, pursuant to which proceedings are stayed pending the outcome of an agency's rulemaking process, applies.[65]

New York Cases: Deceptive Practices & False Advertising

Ambiguity in the amount of Omega-3s in Whole Foods' Fish Oil was not necessarily misleading

2023:  The below label for Whole Foods' fish oil was not misleading, held the court. The plaintiffs alleged that reasonable consumers would believe that 1000 mg was applied to each: a) Omega-3s, b) EPA, and c) DHA. The back of the label, however, clarified that only 180mg of EPA and 120mg of DHA exist for a total of 300 mg. Although the front was ambiguous, it was "readily resolved" by the back information panel. This circuit has recognized that "clarification can defeat a claim for deceptive packaging if a front label contains an ambiguous representation. See, e.g., Reyes v. Crystal Farms Refrigerated Distrib. Co., (EDNY July 26, 2019) (a statement on the front of pre-packaged mashed potatoes, "made with real butter," was merely ambiguous, and any "confusion was sufficiently dispelled by the ingredients label on the back of the package," which showed that the product was made with both real butter and butter-substitute fats). Mantikas (below) is distinguishable because "Made with Whole Grain" was unambiguously misleading on the front. Here the 1000mg ambiguity was not materially deceptive as a matter of law. Foster v. Whole Foods Mkt. Group, Inc., 22CV01240ERKRML, 2023 WL 1766167, at *3 (E.D.N.Y. Feb. 3, 2023).

False advertising case against Whole Foods reported by Jesse Langel

Other law cited in Foster v. Whole Foods Mkt. Group, Inc.:

  • GBL § 349 prohibits "deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service."
  • A "deceptive act" or practice is "likely to mislead a reasonable consumer acting reasonably under the circumstances." Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000).
  • GBL § 350 similarly prohibits "[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service."
  • "False advertising means advertising, including labeling ... if such advertising is misleading in a material respect."
  • "The standards under GBL §§ 349 and 350 are "substantively identical." Gristede's Foods, Inc. v. Unkechauge Nation, 532 F. Supp. 2d 439, 451 (E.D.N.Y. 2007).
  • To establish a prima facie case under GBL §§ 349 or 350, a plaintiff must demonstrate that (1) the defendant's deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result. See Orlander v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015).
  • "Courts view each allegedly misleading statement in light of its context on the product label or advertisement as a whole." Belfiore v. Procter & Gamble Co., 311 F.R.D. 29, 53 (E.D.N.Y. 2015). "In this analysis, font size, placement, or emphasis count." Warren v. Whole Foods Market Group, Inc., 574 F. Supp. 3d 102, 115 (EDNY 2021) (internal quotation marks omitted).
  • "An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim." Corsello, 944 N.Y.S.2d at 790.

Environmental impact and animal welfare claims were deemed not materially misleading

2022:   The defendant made shoes with wool and marketed them using environmental impact and animal-welfare claims. The plaintiffs attacked the defendant’s carbon-measuring tool because it tested for singular-product impact—not for the overall environmental impact of wool production. The court held that the plaintiffs failed to show misleadingness conveyed in the defendant’s carbon footprint measuring methodology. The plaintiffs could not prove the defendant’s methodology or related disclosures were false or misleading. Reasonable consumers would “not expect a carbon footprint calculation to include non-atmospheric inputs, such as land occupation and eutrophication.” The plaintiffs failed to show that a significant number of consumers expected a different methodology. The defendant’s “reliance” on a third-party standard “to measure carbon dioxide equivalent emissions was not deceptive.” Other ad claims, such as “Our Sheep Live The Good Life” and “happy” sheep depicted in pastoral settings, were non-actionable puffery. Puffery is generalized or exaggerated opinions. Dwyer v. Allbirds, Inc., 598 F. Supp. 3d 137 (S.D.N.Y. 2022).

Specific, actionable misrepresentations not asserted against Target's "Toddler Next Stage" drink

2022:   The plaintiff alleged that Target mislabeled its Toddler formula a) to appear more nutritious than it is, b) is necessary for development, c) is as nutritious to toddlers as Target's infant formula is to infants, d) deceptively conceals 2 grams of added sugar, and e) is less nutritious than cow’s milk. But the “plaintiff failed to identify a material misstatement” in any of these categories. The plaintiff “seemed to take issue with the Transition Formula industry as a whole—as evidenced by academic articles to which Plaintiff cites, none of which is specific to Defendant or the product.” Plaintiff lacked authority for the notion that relevant experts must recommend a food product to be merchantable.

More case holdings in Gordon v. Target Corp.:

  • Each allegedly misleading statement is viewed in a broad context. The “entire mosaic” is viewed rather than each tile separately. (quoting Belfiore v. Proctor & Gamble Co., 311 F.R.D. 29, 53 (E.D.N.Y. 2015).
  • An actual injury under GBL §§ 349 and 350 typically requires a plaintiff to allege that, on account of a materially misleading practice, she purchased a product and did not receive the full value of her purchase.” Duran, 450 F. Supp. 3d at 350 (alteration omitted) (quoting Daniel v. Mondelez Int'l, Inc., 287 F. Supp. 3d 177, 195 (E.D.N.Y. 2018)).
  • A plaintiff can show injury by alleging an overpayment, or a price premium, whereby a plaintiff pays more than she would have but for the deceptive practice.’” Id. (quoting Izquierdo v. Mondelez Int'l Inc., No. 16-CV-4697, 2016 WL 6459832, at *7 (S.D.N.Y. Oct. 26, 2016)). However, “[t]o allege injury under a price premium theory, a plaintiff must allege not only a price premium, but also a connection between the misrepresentation and any harm from, or failure of, the product.” See also Sabatano v. Iovate Health Scis. U.S.A. Inc., No. 19-CV-8924, 2020 WL 3415252, at *3 (S.D.N.Y. June 22, 2020).
  • In the Second Circuit, a plaintiff’s failure to respond to contentions raised in a motion to dismiss constitute[s] an abandonment of those claims.” Laface v. E. Suffolk BOCES, No. 18-CV-1314, 2019 WL 1959489, at *8 (E.D.N.Y. May 2, 2019).

Gordon v. Target Corp., 20-CV-9589 (KMK), 2022 WL 836773, at *9 (S.D.N.Y. Mar. 18, 2022).

FDA warning letter over unregulated Phenibut did not prove a false-advertising case

2021:   Following an FDA warning letter for misbranded sleep capsules containing Phenibut, civil plaintiffs sued Evol. Nutrition for its energy drinks that also contained Phenibut. Phenibut is a synthetic derivative of the neurotransmitter gamma-aminobutyric acid (GABA) that is commonly used as a nootropic or anti-anxiety supplement. Phenibut is not GRAS [generally recognized as safe], so for its use in public, the FDA must pre-approve it for sale in the United States.

The plaintiffs claimed to have experienced side effects including “unwell ... uneasy, nausea, and other hangover-like symptoms for up to twenty-four hours after.” The plaintiffs alleged that the defendant failed to warn of the side effects of Phenibut, including addiction. However, GBL § 349 requires an “inherently deceptive,” “free-standing claim” that would be “misleading to a reasonable consumer,” ruled the court. The plaintiffs “essentially tried to re-characterize a statutory violation for the ‘deceptive’ requirement.” The FDA’s warning letter did not alone put the defendant on notice of the addictive nature of Phenibut.

The elements to state a claim under General Business Law § 349:

  1. the challenged act or practice was consumer-oriented;
  2. the act was misleading in a material way; and
  3. the plaintiff suffered injury as a result of the challenged act.

Womack v. EVOL Nutrition Associates, Inc., 621CV00332BKSTWD, 2021 WL 5906340, at *7 (NDNY Dec. 14, 2021).

 

Chapstick's directions to "reapply every 2 hours" clarified any ambiguity about the duration of sunblock protection

2021:   The Chapstick brand was in the hot seat for its claim "8 Hour Moisture," placed right above "SPF 15," which implied 8 hours of sunblock protection, alleged the plaintiffs. Chapstick's "2 in 1 Lipcare" is related to the product's two functions: moisturizing and sun protection. The plaintiff argued that he paid more because of the confusing misrepresentation that acts to "encourage less-frequent and under-application" of the product.

However, the back of the package provided directions to "reapply at least every two hours." Any ambiguity caused by "8 Hour Moisture" was dispelled by "reapply at least every two hours," ruled the court. "Context is crucial," especially when the ambiguity is not a "blatant misstatement," like in Mantikas, where "Made with Whole Grain" implied that whole grain was the dominant ingredient. The nutrition panel on the back did not cure the deception. Here, the court found the Chapstick labeling non-misleading using "common sense." The plaintiff's attempt to exclude the back directions from the court's context analysis did not work. The complaint was dismissed. Engram v. GSK Consumer Healthcare Holdings (US) Inc., 19-CV-2886(EK)(PK), 2021 WL 4502439, at *4 (E.D.N.Y. Sept. 30, 2021).

Other holdings in Engram v. GSK Consumer Healthcare Holdings (US) Inc.:

  • "The Second Circuit has observed that in deceptive marketing cases, context is crucial." SeeWurtzburger v. Ky. Fried Chicken, (S.D.N.Y. Dec. 13, 2017).
  • "Some context, however, has tended to matter more than other contexts. Where the front of a package makes a bold and blatant misstatement about a key element of a product, there is little chance that clarification or context on the reverse of the package will suffice to overcome a deception claim (especially at the motion-to-dismiss stage)." But when the front of the package is better characterized as ambiguous than misleading, courts look at the alleged misrepresentations in their full context. They are more likely to grant a motion to dismiss. Engram *3 (EDNY Sept. 30, 2021).
  • "In other cases, context was sufficient to overcome some identified ambiguity — as opposed to outright falsehood — on the front of the package. See, e.g.Nelson, 246 F. Supp. 3d at 675-76 (reasonable consumer would not be misled into believing beer was produced in Australia based on images of a kangaroo, the Southern Cross constellation, and the company's website (which touted its historic roots in Australia), where the packaging also contained a clear statement that the beer was made in Georgia and Texas); Davis v. Hain Celestial Grp., Inc., 297 F. Supp. 3d 327, 335 (EDNY 2018) (reasonable consumer would not be misled where the "label taken as a whole" made the contested fact clear)." Engram *4 (EDNY Sept. 30, 2021).
  • A "consumer survey showing that 92% of respondents supported their interpretation of the labeling did not "salvage" previously dismissed claims because it "omitted the back panel, ... depriving respondents of relevant information". Cheslow v. Ghirardelli Chocolate Co., 472 F. Supp. 3d 686, 692-95 (N.D. Cal. 2020).

Smokehouse® almonds may misleadingly imply that they are smoked over a fire

2021:   Plaintiffs sued Blue Diamond Growers for deceptively marketing almonds as “smoked” when they were merely smoke flavored. Using a Smokehouse® trademark with a “red color scheme” may have implied to reasonable consumers that the almonds were smoked over a fire. The consumers stated a claim for false advertising and deceptive business practices under NYGBL §§ 349 and 350. The word “smokehouse” is defined in the dictionary as a “physical structure where food is prepared through the process of using actual smoke.” The plaintiffs pointed to federal regulation (21 CFR § 101.22) that allegedly prohibits the misrepresentation of the word “smoked.” To proceed with the case, the plaintiffs must also allege an injury, which in a false advertising case, usually means not receiving the full value of the purchase. Here, a price-premium theory (overpayment) was sufficient to allege an injury. All other claims were dismissed: fraud (lack of fraudulent intent), negligent misrepresentation (no special relationship), breach of express warranty (no pre-suit notice), implied warranty (lack of privity and lack of pre-suit notice), and unjust enrichment (duplicative theory). Colpitts v. Blue Diamond Growers, 527 F. Supp. 3d 562 (S.D.N.Y. 2021).

An incomplete legal treatise is “consumer-oriented” but not “materially misleading”

2021:  Allegations that a legal publisher misrepresented the completeness of its legal coverage was not “materially misleading” under GBL § 349, held the court. The plaintiffs, who are legal professionals, alleged that New York Landlord-Tenant Law deceptively omitted rent control and stabilization laws and regulations. But New York’s highest court ruled that reasonable consumers would not expect every section to be current and accurate, especially given a disclaimer stating otherwise. The lower court erred, however, in ruling that GBL § 349 was inapplicable because the treatise was not used for personal, family, or household use (traditional consumer standard). But the practice is “consumer-oriented” with “a broader impact on the public at large.” GBL § 349 is “focused on the seller’s deception and its subsequent impact on consumer decision-making, not on the consumer’s ultimate use of a product.” Besides, legal professionals are a subclass of consumers; The defendant’s conduct need not be “directed to all members of the public.” Himmelstein v. Mathew Bender & Company, Inc., a Member of LexisNexis Group, Inc., 150 N.Y.S. 3d 79 (Ct. App. 2021).

 

Weight-loss product not “materially misleading” for not disclosing alleged cancer risk

2021:   A patient prescribed a weight-loss medication sued the manufacturer, distributor, and pharmacy for false advertising and other theories. She alleged that the defendant’s failure to disclose an elevated risk of cancer rendered it “unfit for use.” She pointed out a rat study that linked an ingredient, lorcaserin, to aggressive tumors in rats. The plaintiff alleged that the failure to disclose the risks in that study constituted a material omission that misbranded the product and elevated the price. But the court found a lack of evidence connecting the alleged omission to a traceable injury to the plaintiffs. More than a mere purchase of the product is needed to demonstrate an injury. Nor did the plaintiff’s putative class develop cancer. The plaintiff pointed to no affirmative misrepresentation and did not prove that the defendant knew of any misrepresentation, which needed to support fraud or fraudulent concealment. Evidence of reliance on any particular representation was also lacking. As to direct liability, the court found that doctors—not manufacturers or distributors— have the duty to warn patients of potential side effects and health risks. This duty arises from the intermediary doctrine that imposes a duty to warn the doctor—not the patient—of a “drug’s side effects and risks. Zottola v. Eisai Inc., 564 F. Supp. 3d 302 (S.D.N.Y. 2021).

More holdings in Zottola v. Eisai Inc.

  • “Materially misleading” means likely to mislead a reasonable consumer acting reasonably under the circumstances.
  • Reliance is not an element of a false-advertising claim under GBL § 350, consistent with the New York Court of Appeals in Koch. With some disagreement, courts in the second circuit tend to agree. For example:
    • Neither GBL §§349 nor 350 require proof of reliance. New World Sols., Inc. v. NameMedia Inc., 150 F. Supp. 3d 287, 330 (S.D.N.Y. 2015). Also, a business may bring a claim under GBL §§349 or 350, provided the conduct is directed at consumers or causes harm to the public at large.
    • Reliance is not an element of either GBL §§349 or 350 because of the uniform nature of the tests for each, as held in OrlandoRelating to a computer protection plan bought through Staples, the plaintiffs alleged that Staples unlawfully disclaimed services in the first year of the manufacturer's warranty period. Consumers may be misled by ambiguous warranty provisions relating to the first year of coverage. Staples providing dual coverage for the first year is a reasonable interpretation. Staples’ refusal to provide service during that year was sufficiently alleged as an injury under GBL §§349 or 350.
  • In a breach of implied warranty of merchantability, a plaintiff must show that the product was not reasonably fit for its intended purpose. This inquiry focuses on expectations for the product’s performance when it’s used in a customary and reasonably foreseeable way. N.Y. Uniform Commercial Code § 2-314. [Implied Warranty: Merchantability; Usage of Trade].
  • There is no privity (legal connection) with the pharmacy to support a merchantability claim because the pharmacy did not market or make the product.
  • A fraud claim in New York is (1) a material misrepresentation or omission of fact, (2) made with knowledge of its falsity, (3) with an intent to defraud and (4) reasonable reliance on the part of the plaintiff, (5) that causes damage to the plaintiff.
  • To establish fraudulent concealment, a plaintiff must prove that the defendant had a duty to disclose material information relevant to an issue.
  • “Under New York law, an unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim; nor is it a catchall cause of action to be used when others fail.”
  • The defendants, in this case, were Eisai Inc., Arena Pharmaceuticals, Inc., and CVS Pharmacy, Inc.

 

"Florida Natural" orange juice is not deceptive for containing trace amounts of the weed killer glyphosate

2020:   Is "Florida Natural" orange juice deceptive if it contains trace amounts of the weed killer glyphosate? No. The court exercised its discretion to objectively find that reasonable consumers would not interpret "Florida Natural" to guarantee the absence of all "traces of glyphosate as a result of the planting and cultivation of oranges in its product." The plaintiff's offered survey was unconvincing since it lacked an important distinction: the label versus the brand name. The label did not claim "100% natural" but instead claimed "100% Orange Juice." As to injury, however, the plaintiff plausibly alleged standing. The "inflated price" was sufficient to state an injury. Not necessary at this stage is the need to "identify the prices of competing products to establish the premium paid." Axon v. Florida's Nat. Growers, Inc., 813 Fed. Appx. 701 (2d Cir. 2020) (unpublished).

False Advertising case Axon v. Florida's Nat. Growers, Inc.:

Other law cited in Axon v. Florida's Nat. Growers, Inc.:

  • As for Article III standing, Axon has suffered an injury-in-fact because she purchased products bearing allegedly misleading labels and sustained a financial injury – paying a premium – as a result. Seee.g.Langan v. Johnson & Johnson Consumer Cos., Inc., 897 F.3d 88, 92 (2d Cir. 2018).
  • NYGBL §§ 349 and 350 "prohibit the use of deceptive acts or practices and "false advertising in the conduct of any business, trade or commerce.
  • To survive a motion to dismiss, "plaintiffs must plausibly allege 'that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled by the relevant statements." Jessani v. Monini N. Am., Inc., 744 F. App'x 18, 19 (2d Cir. 2018) (quoting Ebner v. Fresh Inc., 838 F.3d 958, 965 (9th Cir. 2016)).
  • Where the allegations are "materially inconsistent" with the evidence "lack the facial plausibility necessary to survive a motion to dismiss." Fink v. Time Warner Cable, 714 F.3d 739, 742 (2d Cir. 2013).
  • "Unlike 'natural,' the words 'pure' and '100% natural' indicate the absolute absence of contaminants." See, Merriam-Webster Dictionary.

 

Godiva Chocolate, marketed as "Belgium 1926," reasonably implied that it was made in Belgium

2020:   The phrase "Belgium 1926" on Godiva chocolate boxes, and in other media, reasonably implies that Godiva made them in Belgium versus Pennsylvania—where they were actually made. This case did not present the "rare instance" where the court should dismiss the case under the objective, reasonable-consumer standard. While it is also possible to interpret "Belgium 1926" as the place and year Godiva started as a company, it could not prove that the plaintiff's interpretation was "categorically unreasonable." In advertising, context is crucial: "Here, part of that 'mosaic' is another, crucial representation: some of Godiva's packaging and social-media advertising describes its chocolates as Belgian. The front packaging of one of its boxes, for example, contains the phrase "' ASSORTED BELGIAN CHOCOLATE CARAMELS.'" Hesse v. Godiva Chocolatier, Inc., 463 F. Supp. 3d 453, 460 (S.D.N.Y. 2020).

Hess v. Godiva-False Advertising Lawsuit Reported by Jesse Langel

The court let proceed the consumer-deception claims, but it denied injunctive relief. Injunctive relief to enjoin Godiva from using "Belgium 1926" was dismissed because the hypothetical future harm of possibly buying the product was too conditional to constitute future harm. The court held, "it is difficult to fathom how they could be harmed by Godiva's continued representation if they know that the company's chocolates come from Pennsylvania."

Other holdings cited in Hesse v. Godiva Chocolatier, Inc.:

  • "Courts apply the "reasonable consumer" standard to determine whether a representation is false or deceptive." See Marcus v. AT & T Corp., 138 F.3d 46, 64 (2d Cir. 1998); Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008).
  • "Under the reasonable-consumer standard, plaintiffs must show that consumers are likely to be deceived by a representation." See Fink v. Time Warner Cable, 714 F.3d 739, 741 (2d Cir. 2013). "In other words, while a representation need not be false to mislead a reasonable consumer, the representation must nevertheless be misleading or have the capacity, likelihood, or tendency to deceive or confuse members of public." Romero v. Flowers Bakeries, LLC, 2016 WL 469370, at *7 (N.D. Cal. Feb. 8, 2016).
  • "This reasonableness inquiry is rarely resolved on a motion to dismiss. See, e.g., Quinn v. Walgreen Co., 958 F.Supp.2d 533, 543 (S.D.N.Y. 2013) ("whether a particular act or practice is deceptive is usually a question of fact" best suited for a jury.); accord Buonasera v. Honest Co., 208 F.Supp.3d 555, 566 (S.D.N.Y. 2016).
  • Dismissal is warranted only in a "rare situation" where "it [is] impossible for the plaintiff to prove that a reasonable consumer was likely to be deceived." Williams, 552 F.3d at 939; Atik v. Welch Foods, Inc., No. 15-cv-5405 (MKB), 2016 WL 5678474, at *8 (E.D.N.Y. Sept. 30, 2016) (adopting the "rare situation" standard); see also In re Frito-Lay N. Am., Inc. All Nat. Litig., 2013 WL 4647512, at *16 (E.D.N.Y. Aug. 29, 2013) (for a court to grant a motion to dismiss, the label's context must meet the "heavy burden of 'extinguish[ing] the possibility' that a reasonable consumer could be misled.").

"Natural" cosmetics are possibly deceptive when they contain synthetic ingredients

2018:  Cosmetics marketed as "natural" were fair game for a false-advertising case under GBL §§ 349 and 350. The plaintiffs contended that 22 synthetic agreements rendered words like "natural" false and material to purchasing decisions. The issue was whether a "reasonable consumer acting reasonably" would be misled by the use of "natural"—not whether plaintiffs disproved the product's naturalness. The plaintiffs' interpretation was not unreasonable as a matter of law to support a dismissal. Listing synthetic ingredients in the ingredient list would not cure a reasonable misimpression caused elsewhere on the package. All statements are viewed in context as an "entire mosaic." Notably, the court ruled that the consumer plaintiffs had standing for injunctive relief, regardless of their intention to purchase the products in the future. Petrosino v. Stearn's Products, Inc., 16-CV-7735 (NSR), 2018 WL 1614349, at *6–7 (S.D.N.Y. Mar. 30, 2018).

Cheez-It “made with whole grain” deceptively implied that whole grain was the main ingredient, alleged plaintiffs

2018:   The claims “whole grain” and “made with whole grain” in large font on the front of Cheez-It boxes were misleading because the predominant ingredient was enriched flour—not whole grain, alleged the plaintiffs. In the eyes of reasonable consumers, “context is crucial.” The court considers the “advertisement as a whole,” disclaimers, and qualifying language in its misleadingness analysis. The defendant accurately displayed enriched flour as the first ingredient but did not “dispel the inference” to reasonable consumers that the product was predominantly whole grain. “Disclosures on the side of the box did not render the plaintiff’s allegations implausible.” The court continued, “[t]he misleading quality of the message is not effectively cured by implicitly disclosing the predominance of enriched white flour in small print on an ingredients list on the side of the package.” “Reasonable consumers should not be expected to consult the Nutrition Facts panel on the side of the box to correct misleading information set forth in large bold type on the front.” Mantikas v. Kellogg Co., 910 F.3d 633 (2d Cir. 2018).

Other law cited in Mantikas v. Kellog Co.:

  • As required by federal regulation, the defendant listed ingredients in order of their predominance, with the primary ingredient listed first. See 21 C.F.R § 101.4 (requiring ingredients to be listed “in descending order of predominance by weight”).
  • “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662 (2009).

Plaintiffs failed to prove that Dannon’s “natural” yogurt was not “natural”

2017:   Dannon Company’s “natural” yogurt stood up against attack by claims that its cows generally consumed G.M.O. feed and antibiotics. Without alleging specific facts or specific practices against Dannon to dispute the “natural” labeling, the plaintiff’s industry-based arguments were too speculative and&

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