Sugary Cereal Makers Facing Costly Class-Action Suits Over Health and Nutrition Claims

Sugary Cereal Makers Facing Costly Class-Action Suits Over Health and Nutrition Claims

Post Consumer Brands recently agreed to pay $15 million to resolve allegations it misled consumers…

Post Consumer Brands recently agreed to pay $15 million to resolve allegations it misled consumers by using health and nutrition claims to advertise several of its high-sugar cereals. Post is the latest cereal maker to face a costly class-action lawsuit alleging false advertising claims.

Laws Governing False or Misleading Advertising

False or misleading advertising claims can be brought under a number of state and federal laws. The Federal Trade Commission Act (FTC Act) prohibits unfair or deceptive advertising, which means that advertising must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that’s not true. In addition, claims must be substantiated, especially when they concern health, safety, or performance. 

With regard to food advertising, the U.S. Food and Drug Administration (FDA) also has enforcement authority. The Federal Food, Drug, and Cosmetic Act (FDCA) prohibits “labeling [that] is false or misleading in any particular.” Additionally, the Nutrition Labeling and Education Act of 1990 (NLEA) allows only FDA-approved nutrient content claims and health claims to appear on food labels. Since 1954, the FTC and the FDA have operated under a Memorandum of Understanding, under which the FTC has assumed primary responsibility for regulating food advertising, while FDA has taken primary responsibility for regulating food labeling.

States also have laws prohibiting false advertising. For instance, the New Jersey Consumer Fraud Act makes it unlawful to use any deception, fraud, false promise, or misrepresentation in connection with the sale or advertisement of any merchandise or real estate.

Rise in Class-Actions Involving Health and Nutrition Claims

The class-action lawsuit against Post alleged that while the company marketed its cereals as healthy, wholesome, and nutritious, they contained high amounts of sugar, which is associated with numerous health issues. According to the plaintiffs, Post “leverages a policy and practice of marketing high-sugar cereals with health and wellness claims.”​

Post unsuccessfully sought to dismiss the suit, arguing that the statements ​were truthful, authorized under FDA regulations, and/or nonactionable puffery. Judge William H. Orrick disagreed, concluding that while statements such as “No High Fructose Corn Syrup,” might be literally true, that “does not mean that those statements cannot be found to convey a false or misleading impression concerning the overall health or nutrition benefit of the product when read together with the other challenged statements found on the same label and in light of the allegedly excessive amount of added sugar in those products.”​ Under the terms of the recent settlement, Post must remove the following phrases — “Less Processed,” “No High Fructose Corn Syrup,” “‘Natural,” “Healthy,” “Smart,” “Nutritious,” ​and “Wholesome” — ​on products in which more than 10 percent of the calories come from added sugar.

Kellogg Co. and General Mills, Inc. have faced similar lawsuits. Last fall, Kellogg Co. agreed to pay approximately $30 million to settle a class action lawsuit alleging it misled consumers by using health and nutrition claims in connection with its Raisin Bran, Frosted Mini-Wheats, Smart Start, Crunchy Nut and Krave cereal brands, as well as its Nutri-Grain brand of snack bars. In addition to the monetary settlement, Kellogg agreed to no longer use phrases such as “healthy,” “wholesome” and “nutritious” on the products for at least three years. The company also agreed to remove or limit “heart health” claims on its Smart Start and Raisin Bran cereals, refrain from using the phrase “lightly sweetened” from Frosted Mini-Wheats and Smart Start, and stop using “no high-fructose corn syrup” to advertise its Nutri-Grain products.

While class-actions increasingly target food manufacturers making health and nutrition claims, such suits are not always successful. In 2019, General Mills was able to secure the dismissal of a similar suit alleging it misled consumer about the sugar content of several popular cereals. “Statements that these products are ‘healthy,’ ‘nutritious,’ or ‘wholesome’ are false, or at least highly misleading, because, due to their high sugar content, consumption of these products is decidedly unhealthy​,” the class-action suit argued.

A California federal judge sided with the cereal company, concluding that consumers could not “plausibly be misled” because General Mills’ labels were truthful. “Plaintiffs cannot plausibly claim to be misled about the sugar content of their cereal purchases because defendant provided them with all truthful and required objective facts about it​s products, on both the side panel of ingredients and the front of the products’ labeling,” U.S. District Judge Jeffrey White wrote. “The actual ingredients were fully disclosed and it was up to the plaintiffs, as reasonable consumers, to come to their own conclusions about whether or not the sugar content was healthy for them.”​

Key Takeaway

Food and beverage manufacturers should be aware that class action lawsuits involving health and nutrition claims are on the rise. While ensuring that the nutrition facts panel is accurate may not totally insulate companies from false advertising claims, it can provide key evidence when arguing that the overall package would not mislead reasonable consumers.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Pat McNamara, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.