Module 6 Homework
POM Wonderful v. F.T.C. 777 F.3d 478 (D.C. Cir. 2015) POM Wonderful, LLC produces, markets, and sells a number of pomegranate-based products. In a series of advertisements from 2003 to 2010, POM touted medical studies ostensibly showing that daily consumption of its products could treat, prevent, or reduce the risk of various ailments, including heart disease, prostate cancer, and erectile dysfunction. Many of those ads mischaracterized the scientific evidence concerning the health benefits of POM’s products with regard to those diseases. In 2010, the Federal Trade Commission filed an administrative complaint charging that POM and related parties had made false, misleading, and unsubstantiated representations in violation of the Federal Trade Commission Act. After extensive administrative proceedings, the full Commission voted to hold POM and the associated parties liable for violating the FTC Act and ordered them to cease and desist from making misleading and inadequately supported claims about the health benefits of POM products. The Commission’s order also bars POM and the related parties from running future ads asserting that their products treat or prevent any disease unless armed with at least two randomized, controlled, human clinical trials demonstrating statistically significant results. POM and the associated parties petition for review of the Commission’s order, arguing that the order runs afoul of the FTC Act, the Administrative Procedure Act, and the First Amendment. SRINIVASAN, CIRCUIT JUDGE. Since 1987, entrepreneurs Stewart and Lynda Resnick have acquired and planted thousands of acres of pomegranate orchards in California. In 1998, they began to collaborate with doctors and scientists to investigate the potential health benefits of pomegranate consumption. They formed POM Wonderful, LLC to make, market, and sell pomegranate-based products. POM’s promotional materials regularly referenced scientific support for the claimed health benefits of its pomegranate products. By 2010, the Resnicks, POM, and Roll had spent more than $35 million on pomegranaterelated medical research, sponsoring more than one hundred studies at forty-four different institutions. This case involves studies examining the efficacy of POM’s products with regard to three particular ailments: heart disease, prostate cancer, and erectile dysfunction. [Heart Disease Studies]: Although Drs. Ornish and Davidson completed their arterial thickness studies in 2005 and 2006, respectively, a consumer reading POM’s promotional materials after 2006 would not have known of those studies or that they cast doubt on Dr. Aviram’s prior findings. In June 2007, for example, POM distributed a brochure featuring a statement by Dr. Aviram that “POM Wonderful Pomegranate Juice has been proven to promote cardiovascular health,” along with a description of his arterial thickness study, but with no mention of Drs. Ornish’s and Davidson’s contrary findings. That same summer, POM published a newsletter in which it asserted that “NEW RESEARCH OFFERS FURTHER PROOF OF THE HEART–HEALTHY BENEFITS OF POM WONDERFUL JUICE.” The newsletter claimed a “30% DECREASE IN ARTERIAL PLAQUE” on the basis of Dr. Aviram’s limited study but again omitted any mention of the Ornish and Davidson findings. And in 2008 and 2009, POM conducted a $1 million promotional campaign, with seventy ads in newspapers and magazines across the country, in which it trumpeted Dr. Aviram’s findings—including the 30% figure—without any acknowledgement of the contrary Ornish and Davidson studies. [Prostate Cancer Studies]: POM, however, made no mention of the limitations of the Pantuck study in its public statements. In a July 2006 press release, POM claimed that “drinking 8 ounces of POM Wonderful pomegranate juice daily prolonged post-prostate surgery PSA doubling time from 15 to 54 months,” without noting that some or all of the increase in the patients’ PSA doubling times may have resulted from the radical prostatectomies or radiation treatments undergone by the patients. POM advanced similar claims in a June 2007 brochure and in a fall 2007 newsletter, again with no disclosure of the study’s limitations. In 2008 and 2009, POM ads in the New York Times Magazine and TIME Magazine asserted that prostate cancer patients who drank eight ounces of POM Wonderful 100% Pomegranate Juice a day for at least two years experienced “significantly slower” PSA doubling times, once again without any acknowledgment that the patients’ PSA doubling times may have slowed regardless of whether they consumed pomegranate juice. [Erectile Dysfunction Studies]: In its public statements about Dr. Padma–Nathan’s study, POM made no mention of the negative results with respect to the validated IIEF measure. POM instead touted the study outcomes based exclusively on the non-validated GAQ measure. That press release, while referencing IIEF and thus suggesting that its description of the findings would account for that measure, in fact promoted the results based solely on the GAQ measure with no acknowledgment of the adverse findings on IIEF scores. In 2009 and 2010, POM similarly touted the GAQ findings—again without any mention of the negative IIEF results—on websites and in print ads. In September 2010, the Federal Trade Commission filed an administrative complaint alleging that POM, Roll, the Resnicks, and POM’s then-President Matthew Tupper had made false, misleading, and unsubstantiated representations in violation of the FTC Act. The complaint identified forty-three advertisements or promotional materials containing claims alleged to be false, misleading, or unsubstantiated. In May 2012, following an administrative trial, the Commission’s chief administrative law judge found that nineteen of POM’s advertisements and promotional materials contained implied claims that POM products treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction. He further concluded that POM and the related parties lacked sufficient evidence to substantiate those claims, and that the claims were material to consumers. He therefore held the POM parties liable under the FTC Act and ordered them to cease and desist from making further claims about the health benefits of any food, drug, or dietary supplement unless the claims are non-misleading and supported by competent and reliable scientific evidence. In determining whether an advertisement is deceptive in violation of section 5 of the FTC Act, the Commission engages in a three-step inquiry, considering: (i) what claims are conveyed in the ad, (ii) whether those claims are false, misleading, or unsubstantiated, and (iii) whether the claims are material to prospective consumers. At the first step, the Commission “will deem an advertisement to convey a claim if consumers acting reasonably under the circumstances would interpret the advertisement to contain that message.” The Commission “examines the overall net impression” left by an ad, and considers whether “at least a significant minority of reasonable consumers” would “likely” interpret the ad to assert the claim. In identifying the claims made by an ad, the Commission distinguishes between “efficacy claims” and “establishment claims.” An efficacy claim suggests that a product successfully performs the advertised function or yields the advertised benefit, but includes no suggestion of scientific proof of the product’s effectiveness. An establishment claim, by contrast, suggests that a product’s effectiveness or superiority has been scientifically established. The distinction between efficacy claims and establishment claims gains salience at the second step of the Commission’s inquiry, which calls for determining whether the advertiser’s claim is false, misleading, or unsubstantiated. If an ad conveys an efficacy claim, the advertiser must possess a “reasonable basis” for the claim. For establishment claims, by contrast, the amount of substantiation needed for an establishment claim depends on whether the claim is “specific” or “non-specific.” If an establishment claim “states a specific type of substantiation,” the “advertiser must possess the specific substantiation claimed.” If an ad instead conveys a non-specific establishment claim—e.g., an ad stating that a product’s efficacy is “medically proven” or making use of “visual aids” that “clearly suggest that the claim is based upon a foundation of scientific evidence”—the advertiser “must possess evidence sufficient to satisfy the relevant scientific community of the claim’s truth.”The Commission therefore “determines what evidence would in fact establish such a claim in the relevant scientific community” and “then compares the advertisers’ substantiation evidence to that required by the scientific community.” For both petitioners’ efficacy claims and their non-specific establishment claims, the Commission found that “experts in the relevant fields” would require one or more “properly randomized and controlled human clinical trials”—“RCTs”—in order to “establish a causal relationship between a food and the treatment, prevention, or reduction of risk” of heart disease, prostate cancer, or erectile dysfunction. Without at least one such RCT, the Commission concluded, POM’s efficacy claims and its non-specific establishment claims were inadequately substantiated. Petitioners challenge the Commission’s factual finding that experts in the relevant fields require RCTs to support claims about the disease-related benefits of POM’s products. We conclude that the Commission’s finding is supported by substantial record evidence. That evidence includes written reports and testimony from medical researchers stating that experts in the fields of cardiology and urology require randomized, double-blinded, placebo-controlled clinical trials to substantiate any claim that a product treats, prevents, or reduces the risk of disease. Affirmed. Problem Cases: 1. Sabal manufactured and sold a line of over-the-counter hair loss products known as the “hair farming system.” She claimed that these products work by cleaning out congested pores and allowing hair that was trapped beneath the scalp to escape. During an infomercial, Sabal stated that her products would deep clean underneath the surface of the scalp and clean out all of the debris that prevents the hair from reaching the surface. She further stated that “It’s guaranteed to work on every human being…and everyone should have their hair back in six months to a year, permanently, painlessly, and never have to purchase anything again.” The FTC charged her with deceptive advertising and fraudulent misrepresentation. How should the court rule? 2. Kraft manufactured process cheese slices. Kraft began to lose its market share to imitation cheese slices that were advertised as being less expensive and just as nutritious. (By regulation, process cheese food slices must contain at least 51% natural cheese; imitation slices contain little or no natural cheese.) Kraft responded with its “Five Ounces of Milk Campaign” designed to inform consumers that Kraft Singles cost more because they are made from five ounces of milk. The ads also focused on the calcium content of Kraft Singles. Although Kraft did use five ounces of milk in making each Kraft Single, roughly 30% of the calcium content contained in the milk is lost during processing. Also, the vast majority of imitation slices sold in the U.S. contain the same amount of calcium as contained in Kraft Singles. In one of the challenged ads, a mother is heard saying: “Imitation slices use hardly any milk. But Kraft has five ounces per slice. Five ounces. So her little bones get calcium they need to grow.” In another ad, the announcer states: “Well, a government study says that half the school kids in America don’t get all the calcium recommended for growing kids. That’s why Kraft Singles are important. Kraft is made from five ounces of milk per slice. So they’re concentrated with calcium.” The FTC contended that the Kraft ads made two implied claims, neither of which was true: (1) that a slice of Kraft Singles contains the same amount of calcium as five ounces of milk; and (2) that Kraft Singles contained more calcium than imitation slices. Is the FTC correct? 3. Sunday Riley Modern Skincare, LLC manufactures and sells cosmetic brands through Sephora. Sephora provides the opportunity on its website for customers to review products sold by Sephora. Sunday Riley directed its employees to each create three fake accounts to write positive reviews of Sunday Riley products and gave detailed instructions as to how to make those reviews not traceable to Sunday Riley. Sunday Riley also told its employees to dislike any negative reviews because if enough dislikes were posted, the negative review would be taken down. Has Sunday Riley violated any provision of the FTC Act? If so, which one(s)?
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