Enforcement Litigation and Compliance Washington, DC December 9- 10, 2015 Food: Industry Self Regulation Hal Hodes, Attorney, National Advertising Division Steve Armstrong, Chief Food Law Counsel, Campbell Soup Company and Member, FDLI Board Leslie Krasny, Partner, Keller and Heckman LLP and Member, FDLI Board Moderated by Jennifer Fried, Special Counsel, Kelley Drye & Warren LLP

Food Advertising Self-Regulation and Litigation Steve Armstrong, Hal Hodes, Leslie Krasny, Jennifer Fried

False Advertising Satisfying Federal and State Regulators is Not Always Enough Competitor challenges: Industry self-regulation Class Actions Lanham Act lawsuits Areas of Concern: Natural and Organic Claims Health Claims Slack Fill

The Advertising Self- Regulatory Council Hal Hodes Attorney National Advertising Division

What are ASRC and NAD? Voluntary industry self-regulation. Formed in 1971 by advertising industry, supported by the FTC. Mission: To protect the integrity and credibility of advertising by ensuring that claims are truthful and accurate, and to preserve “fair play” between competitors. Cost effective alternative to litigation.

Challenger files complaint regarding competitor’s advertising claims. Two rounds of submissions, then separate meetings with NAD. NAD makes recommendations about advertising, it does not make findings of wrongdoing or provide compensation or restitution. NAD Review Process

NAD’s Approach To Claim Review What are the messages that are reasonably conveyed? Is there a “reasonable basis” for those claims? Initial burden on the advertiser. Harmonize decisions with regulatory authorities whenever possible.

NAD’s CRN Initiative Launched in 2006 to promote self-regulation and increase consumer confidence in the dietary supplement industry. Includes CRN challenges, challenger initiated inquiries and monitoring cases. Note: Health claims require competent and reliable scientific evidence as support.

NAD Response to ABA Recommendations Procedural Changes were implemented as of November 1 st by the ASRC Board. Major Changes: –Parties may close cases on the basis of agreement or settlement. –NAD no longer a party to appeals (but NARB Appeal panel can request their presence). –Format of advertiser’s statement; cross-appeal timetable; format for submitting confidential exhibits.

The Advantages and Disadvantages of going to NAD Steve Armstrong Chief Food Law Counsel Campbell Soup Company

Bringing a Case at NAD: The Challenger’s Perspective Advantages Disadvantages What Happens Next

Going to NAD: The Pros Timing: On average, 60-day briefing Less expensive than litigation –No discovery Proceedings are confidential Experienced case attorneys Rich body of NAD precedent

Going to NAD: The Cons Not an option if immediate action is needed -- TRO No power, other than persuasion –No enforcement action; no damages –Reliant on parties who support the process –Regulators need not defer to NAD; not all are familiar with the process Confidential proceedings mean no publicity, other than the NAD’s own press release Class action advocates read NAD cases

When The Smoke Clears… For Challenger, a win does not mean it’s over –Watch to assure removal of ad or label –Go back if material not removed / changed NAD compliance proceeding Referral to FTC or FDA –Not required to act –But tend to give NAD referrals priority

Lanham Act Claims Leslie Krasny Partner Keller and Heckman LLP

Lanham Act Private cause of action under §43 for unfair competition, including false or misleading food labeling (15 U.S.C.§1125) POM Wonderful v. Coca Cola, 134 S. Ct (2014) –Minute Maid pomegranate blueberry juice blend (0.5% pomegranate/blueberry juices; >99% apple/grape juices) –Labeling complied with FDA’s regulation on juice labeling –Decision: FD&C and Lanham Acts complement each other in the federal regulation of misleading labels; no preclusion of Lanham Act cause of action on these facts

Lanham Act – Pros and Cons Pros –Potential for quick relief (TRO/PI); damages –Plaintiff may prevail even if compliance with regulations –Publicity in the event of a good outcome –Federal court judgment likely to get FDA attention –Enforcement of order -- contempt proceedings Cons –Burden of proof on plaintiff re deception and damages –Significant expense; likely longer time to resolution –Implications of a bad outcome