People on social media, and in some face-to-face social settings, often reveal more about themselves than they need to or really should. When someone makes an embarrassing but unnecessary disclosure, we call it “oversharing.” We might respond, “Oh, wow, TMI” (the online code for “too much information”).
Last week, two court rulings – one dismissing a litigation, and the other ruling an ordinance unconstitutional – helped food companies resist efforts by activists to compel them to overshare.
Chocolate and Labor Practices
On January 30, Massachusetts District Court Judge Allison D. Burroughs dismissed a case filed in early 2018 against candy companies Nestle USA Inc., The Hershey Co., and Mars Inc., asserting that these companies should be required to disclose on their packaging that the cocoa that goes into their chocolate may have been sourced from slave labor and/or child labor in Ivory Coast and Ghana. The plaintiff contended that these companies violated the Massachusetts Consumer Protection Act, known as Chapter 93A, by not disclosing on their product packaging, at the point of sale, that children and forced laborers may have harvested some of the ingredients in their products. The plaintiff’s theory was that this information was material to consumers, in the sense in which “material” is used in advertising law, meaning that it is likely to influence consumers’ decisions whether to purchase the products.
Omitted information generally is not actionable as a deceptive practice, even if it is material. Setting aside regulatory requirements, the false-advertising and deceptive-practices laws impose an affirmative duty to disclose only when information that already is presented in the advertising or on the packaging would tend to deceive, absent the disclosure. In the most common circumstance, an advertisement or label tells a half-truth, such as by making a comparative claim against a competitor’s product without mentioning some difference in the products that makes the comparison apples-and-oranges. It is also possible to mislead by omission if the circumstances are such that silence on the subject constitutes an implied false representation.
In contrast, Judge Burroughs found, this was a case of what the Federal Trade Commission has called “pure omission,” where the advertiser has made no affirmative representation on the subject. The plaintiff tried to take advantage of broad language in Chapter 93A’s implementing regulations that a business may violate the statute when it fails to disclose “any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.” 940 Mass. Code Regs. § 3.16(2). Judge Burroughs declined to take this language at its strongest interpretation, instead following the FTC’s rule that pure omissions are rarely deceptive under the FTC Act. Without laying down an absolute rule, the court ruled that under these circumstances, it was not plausible that the candy companies’ failure to disclose information about the labor practices in its supply chain had the capacity to mislead consumers to believe that no child or forced labor went into the cocoa harvesting. The dismissal of the chocolate cases is being appealed to the First Circuit.
The Alleged Perils of Sugared Beverages
Meanwhile in California, the next day (January 31), the Ninth Circuit Court of Appeals affirmed the overturning of a San Francisco ordinance that would have required warnings about the health impact of sugar to occupy a whopping 20 percent of the space on advertisements for non-diet soda beverages in locations such as sports venues, public transit and taxis, billboards, and wall posters. The en banc ruling affirmed a 2018 Ninth Circuit panel decision ruling that the law, passed in 2015, should be preliminarily enjoined because plaintiffs challenging the requirement would likely prevail on their argument that it infringes the First Amendment rights of beverage producers. The warning required by the San Francisco Sugar-Sweetened Beverage Warning Ordinance would have stated, “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.” The Ninth Circuit’s grounds for overturning the ordinance were that the 20 percent space requirement was unduly burdensome, but a minority of three judges, while concurring with the decision, would have added the additional ground that the warning is not purely factual and noncontroversial, violating another requirement for government-compelled speech.
In its decision, the Ninth Circuit noted that a disclosure occupying only 10 percent of the advertising space had been tested and had been found to fulfill the government’s purposes, making the mandated 20-percent version unduly burdensome. But the court was quick to point out that it was neither holding that a 10-percent warning is necessarily valid nor that a warning occupying more than 10 percent of an advertisement is necessarily invalid.
So, two food-and-beverage sectors were able to fend off efforts to force them to disclose negative information about their products under circumstances where they were not making any misleading affirmative representations. In so doing, the chocolate companies avoided having to choose between sales-killing package disclosures and revamping their supply chains. The beverage companies avoided having to add warnings to their San Francisco advertising that would have made some campaigns unwieldy or impossible, just because of the amount of real estate reserved for the warnings. In both cases, the companies involved must be relieved, subject to any further appeals, not to have to overshare.