Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

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

Author: Scarinci Hollenbeck, LLC

Date: April 6, 2021

Key Contacts

Back

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

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 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.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Corporate Transactions: Best Practices for Successful Deals post image

Corporate Transactions: Best Practices for Successful Deals

Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]

Author: Dan Brecher

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!