Friday, April 18, 2008

Playing chicken: "raised without antibiotics" draws lawsuit

Sanderson Farms, Inc. v. Tyson Foods, Inc., -- F. Supp. 2d --, 2008 WL 1733607 (D.Md.)

Tyson advertises its chicken as “Raised Without Antibiotics” (unqualified RWA claim) or “Raised Without Antibiotics that impact antibiotic resistance in humans” (qualified RWA claim). Its label has been approved by the Department of Agriculture. The court ruled that this was not insulation from a Lanham Act false advertising claim.

In its chicken feed, Tyson uses molecules called ionophores, which kill microorganisms in chicken by disrupting transmembrane ion concentration gradients. Plaintiffs allged that ionophores are antibiotics. The Department of Agriculture originally approved the unqualified RWA label, then revoked that approval on the grounds that ionophores are antibiotics. In late 2007, USDA issued a labeling guidance for ionophores affirming “longstanding” policy that ionophores are antibiotics because they meet the American Vetinary Medical Association’s definition of antibiotics, and the FDA agrees. Thus, birds to whom ionophores have been given can’t bear a RWA claim.

Plaintiffs alleged that the unqualified RWA claim is literally false and that the qualified RWA claim doesn’t cure the literal falsity of “Raised Without Antibiotics.” Further, these are material claims, and make an implied health and safety superiority claim over plaintiffs’ chicken. Plaintiffs’ shopping-mall survey of about 600 consumers involved two cells shown an unqualified RWA claim, one shown a qualified RWA claim, and one showed a control claim. The survey allegedly showed that 59-63% of respondents perceived a false message of safety superiority regardless of qualification. Consumers reason (1) Tyson’s chicken has no antibiotics, and (2) therefore Tyson’s chicken doesn’t impact antibiotic resistance in humans. (I.e., they reason that the qualified RWA claim is on the order of “fights the germs that cause bad breath,” in that it provides a reason why one would purchase chicken raised without antibiotics.) Thus, the qualification is ineffective.

Tyson argued that the RWA claims were approved by USDA, which has the authority to regulate poultry labels, thus precluding any Lanham Act claim. There’s no private cause of action for violation of the Poultry Products Inspection Act (PPIA), and that, defendant argued, is what plaintiffs were trying to create. A line of cases holds that statements that “comport substantively” with FDA-approved claims can’t be attacked via the Lanham Act. More broadly, “federal courts should not unduly entangle themselves in regulatory agency decisions where the agency has special expertise in the subject matter and where, more importantly, doing so would usurp the authority specifically delegated by Congress to that agency.”

Tyson was entirely out of luck with respect to the unqualified RWA claim; there was “absolutely no tension” between the Lanham Act and the USDA. Given that the USDA revoked Tyson’s authorization to use the unqualified RWA claim, Tyson “cannot rely on the USDA’s former (and briefly held) position to defend itself against allegations that it continues to run false and misleading advertisements ….”

What about the qualified RWA claim? Tyson has current approval for this language on labels. But no case on point resolves the question whether USDA approval is insulation from false non-label advertising claims. Distinguishing the FDA cases, the court reasoned that the USDA has no jurisdiction over ads, whereas the FDA does (though it has a coexistence agreement with the FTC for OTC drugs). Indeed, USDA acknowledges that the FTC has responsibility for poultry ads. Thus, the idea that drug ads are ok if they “comport substantively” with FDA-approved wording is inapplicable here.

The scope of the labeling provisions was also at issue. USDA defines labels broadly, to include all materials that accompany a product, including point-of-purchase displays. But some labeling is also “commercial advertising and promotion” under the Lanham Act. (Comment: I would think, indeed, that virtually all labeling is advertising, but apparently courts are beginning to be confused about this; if a product name can be false advertising, as in BreathAsure, then I can’t see what else on the label would be excluded.)

The court held: “Point-of-purchase materials that merely restate the language approved for the label cannot fairly be characterized as advertising. [But] point-of-purchase materials that may well be considered labeling to [USDA] often contain images and promotional slogans in conjunction with the language approved for the label. This sort of labeling is merely advertising by another name. … [USDA’s definition of labeling] will not insulate what is plainly an advertisement intended to induce consumers to purchase Defendant's product.” Thus, the complaint covers any labeling that, “despite including language approved by the USDA, contains additional images and promotional slogans that effectively turn the labeling into an advertisement.”

Of note: the court also drew support for its conclusion from a case from the Better Business Bureau’s National Advertising Division (NAD). NAD reviewed a USDA-approved “no preservatives” label and independently determined that the words were misleading to consumers when used in ads.

There’s no private cause of action under the USDA’s governing statutes, but at the same time, the USDA’s existence shouldn’t eviscerate the Lanham Act. Thus, courts have drawn lines between (1) precluded claims that involve application and interpretation of an agency’s statute and (2) allowed claims against false advertising. Plaintiffs couldn’t use the Lanham Act as a disguised effort to enforce the PPIA. Thus, if their claim had targeted Tyson’s labels, it would fail because it would directly challenge the USDA’s primary jurisdiction to determine whether a label is false or misleading.

But claims about non-label ads are not within the USDA’s jurisdiction. USDA conducts a “highly technical and scientific review” of proposed label language, but it doesn’t address whether language is misleading to consumers when combined with images and slogans. “Undoubtedly, language that is technically and scientifically accurate on a label can be manipulated in an advertisement to create a message that is false and misleading to the consumer.”

Thus, the Lanham Act’s prohibition on literally true but misleading claims can be invoked in this circumstance. To prevail, plaintiffs would need to show that the qualified RWA claim “means something different to the consumer public when viewed as part of Defendant's advertisements than the language did to the experts and scientists at the USDA during the label-approving process.” And the complaint alleges just that. (This seems to be more about lack of expertise/focus than lack of jurisdiction. Scientists are not marketing experts.)

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