Recent Kellogg Class Action Settlement is a Reminder that Litigation Over Advertising Claims Often Comes in Several WavesMay 31, 2013
By JP Ellison –
You may not recall our prior April 2009 blog post about the FTC’s settlement with Kellogg over its marketing campaign for Frosted Mini-Wheats. To briefly recap, Kellogg had claimed that “its cereal was “clinically shown to improve kids’ attentiveness by nearly 20%.” The FTC disagreed, and claimed that “[i]n fact, the study showed that the children who ate the cereal for breakfast averaged just under 11 percent better in attentiveness.” The 2009 FTC settlement prohibited Kellogg from making comparable claims unless they were substantiated. The FTC settlement did not include any consumer redress.
A few weeks after the FTC settlement was announced, plaintiff class action attorneys sent a proposed complaint to Kellogg and shortly thereafter the class action case was filed. The class action case involved the same advertising, and at least with respect to equitable/injunctive relief regarding advertising claims, sought nothing that was not already covered by the FTC settlement A proposed settlement of the Mini-Wheats class action was recently announced. The more than four years between the FTC resolution and the class action settlement can be explained, at least in part, by challenges to the original Frosted Mini-Wheats class action settlement.
In the years between the FTC Frosted Mini-Wheats settlement and the class action Mini Wheats settlement, the FTC again investigated Kellogg over health benefit claims for a cereal – specifically, antioxidant and immune support claims for Rice Krispies. In that case the FTC seems to have followed in the footsteps of state and local authorities who first challenged the same claims. The Rice Krispies FTC settlement expanded the existing (Frosted Mini-Wheats) FTC order against Kellogg to cover a wider scope of claims, but again, did not include monetary relief. As with the earlier FTC settlement, there was a follow-on class action that the company settled in 2011.
The Kellogg experience is not unusual. FTC investigations and settlements are often followed by class action suits, and state attorney general inquiries can result in federal enforcement actions. In other instances, private litigation leads to governmental enforcement actions, and sometimes, governmental and private actions proceed simultaneously. It is not uncommon for these plaintiffs to coordinate with one another.
Given the myriad of potential investigations and litigations that can arise when advertising claims are challenged, companies facing actual or potential litigation over such claims must be mindful of the effects that one investigation or litigation may have on another.