Class action lawsuits against major consumer product companies are on the rise thanks, in large part, to the Better Business Bureau’s National Advertising Division (“NAD”). The NAD assists in the advertising industry’s self-regulatory efforts to ensure truth and accuracy in advertising by providing guidance to industry in an effort to ensure that consumers can rely on the claims made by companies in their advertising campaigns – ironically enough –in an effort to avert litigation.
NAD does so by investigating complaints submitted to it by either competitors or consumers concerning advertising claims made by various companies. NAD then uses a hybrid form of alternative dispute resolution to decide whether the claims can be substantiated, and publishes its decision online, in print, and via press release.
Recently, plaintiffs’ class action lawyers from across the country have begun to look to the decisions of NAD in order to support false advertising class action claims. In a never-ending effort to seek out and discover the “next big thing,” plaintiff attorneys have begun to focus their attention on NAD rulings, which have sparked a new wave of class action lawsuits aimed at companies’ advertising campaigns.
According to NAD Director Andrea Levine, these NAD-driven lawsuits are not so much about “fixing the advertising or protecting the public,” but instead are all about the “money,” as there is no shortage of both product sales and consumers to join in these claims.
The NAD decisions inadvertently lay out a “roadmap” for plaintiff attorneys because they not only detail the legal doctrines which support their findings, but they also indentify an advertiser’s potential defenses and vulnerabilities before discovery even commences. A perfect example of this is the class action lawsuit which was filed against the William Wrigley Jr. Company, based on the claim that its Eclipse brand gum was scientifically proven to kill germs that cause bad breath. In a decision published one month prior to the filing of this suit, the NAD chronicled in great detail its critique of Wrigley’s support for its position and concluded that Wrigley should discontinue or modify its advertising campaign. The class action plaintiffs then used the information gleaned from the NAD decision as a basis to sue Wrigley’s. In fact, they actually cited the decision in their complaint. Wrigley’s wound up settling that case for $6 million.
In another recent case, a federal class action lawsuit charges that POM Wonderful falsely advertised that its pomegranate juice provided certain health benefits to its users. The NAD found that some of the research on which POM relied did not support its health claims – evidence which is directly cited by the plaintiffs in their class action lawsuit. A copy of the POM Wonderful Class Action Lawsuit can be read here.
It appears that NAD rulings are becoming a gateway for class action lawsuits which, if left unchecked, may spiral out of control. Companies must coordinate their efforts to enact legislation that makes it more difficult for a class to be certified and more difficult for weak cases to survive. Otherwise, they run the risk of being “Eclipsed” by potentially game-ending class action lawsuits.