August 6th, 2007

POV: Food Marketers Could Face Fresh Challenge

By Wendy Melillo
AdWeek

Can advertising cause harm?

There is little doubt among many parents. Consumer advocacy groups have been preaching this gospel for years. But proving it in court has been a tough battle. Case, or cases in point: Various advocacy groups and individuals are now 0 for 9 in their attempts to get the federal courts to stop or restrict alcohol ads.

While “parents have a right to make fundamental decisions about a child’s upbringing, they have no legal right to attempt to prevent other private parties from attempting to influence their children,” the Sixth Circuit Court of Appeals said in its opinion July 18, which threw out a complaint by parents that alcohol advertising caused their kids to drink. The opinion quoted from a lower court’s ruling.

Wow. That ruling is pretty sweeping since it’s likely to set precedent for other similar claims. No doubt alcohol marketers and their lobbyists are rejoicing once again since the message is clear: Attempts to use the tobacco litigation model as a tool to compel other marketers to clean up their advertising act has not gained traction with alcohol.

Food and beverage marketers who have been feeling the heat lately might think they can breath a sigh of relief. The reasoning would be that if the courts are setting a high bar for proving harm with alcohol ads, maybe they shouldn’t worry so much about the public complaints arguing that junk food marketing is linked to obesity.

Not so fast. Remember the Pelman case? That’s the New York woman who sued McDonald’s in 2002, arguing that her kids were overweight because of Big Macs and fries. Despite being dismissed twice, this seven-headed hydra hasn’t vanished yet. The presiding judge has allowed the plaintiffs to amend their complaint and now the case is in the discovery phase, a fact that should make every food marketer shudder.

“It is fair to say that in any product liability or consumer fraud case, the end game for the plaintiffs is to survive a motion to dismiss and get to discovery,” said Tony Klapper, a partner at Reed Smith who specializes in marketing and advertising to children. Reed Smith represents the Association of National Advertisers.

Discovery is that fun phase where you can subpoena all kinds of interesting documents if you can show cause. It went like this with tobacco.

The court battles against Big Tobacco ended up being so successful because the tobacco companies had documents showing they knew about the hazards of smoking long before the Surgeon General weighed in. Then they put out those filtered, low-tar and low-nicotine cigarettes, which suggested to smokers that this was a safe alternative to quitting. Once again, the internal documents showed that the companies knew these low-tar cigarettes were not any safer. It was unethical and certainly reprehensible.

In the food arena, the plaintiffs would only have to find a McDonald’s document written by some clueless marketing executive saying “our next ad campaign needs to convince people that eating our French fries is better for them than carrots” to give parents and consumer advocates their chance to prove harm.

In this completely hypothetical case, the company would be seen as deliberately trying to hurt people by encouraging them to eat less healthy food, which would leave McDonald’s, which spends some $1.3 billion annually in global media, in a tough position indeed.

There are three issues left on the table for the judge to decide in the Pelman case. Did some 40 ads by McDonald’s create the false impression that its food was nutritious and part of a healthy lifestyle if consumed daily? Did McDonald’s fail to adequately disclose that its additives and food processing methods made some of its foods less healthy than represented? And was McDonald’s deceptive when it said it would provide nutritional information to its New York customers but failed to make it available at a number of its New York stores?

A lot can happen between now and next January when the discovery phase is expected to end. The trial is scheduled to begin by April 16.

I would like to see just what McDonald’s has in some of its marketing files. We all know advertising works. And marketers who have hardly hidden the fact that they want to build brand loyalty starting at a very young age have also been working hard lately to show us that they are responsible citizens who care about the environment, AIDS in Africa and fair labor practices. McDonald’s should convince us that it also cares about the quality of the food it sells people. What is at stake is the trust that McDonald’s or any marketer has built up with its loyal consumers. And that trust gets tarnished when promises are broken. The company already paid $8.5 million to settle claims that it did not adequately inform the public that it had encountered delays in removing trans fats from its cooking oils.

All of these cases are a pressure tactic to force companies to behave like good corporate citizens. As a public relations tool, they can be very effective because they create peer pressure. But these cases also raise a much larger issue that should scare marketers. The Institute of Medicine report on food marketing to children in 2005 drew an association between TV advertising and the request by children for less nutritious food. It stopped short of saying the ads caused the kids to actually seek out the unhealthy stuff.

What if the authors of that report, who could only rely on public documents at the time, had access to marketing data from McDonald’s? What if they could study all the documents the Federal Trade Commission is about to subpoena from food marketers asking that they disclose details about their marketing practices to children? I wonder what conclusion they would draw then.

Those FTC subpoenas, should they indicate questionable practices, could also become a smoking gun to parents and consumer advocates who file future lawsuits. It will make it a lot harder for marketers to argue about how much of a burden it would be to produce such documents since they will have already done it for the government.

Some advocates have an even loftier goal in mind, which is to change commercial speech law. “The work companies are doing around branding creates an environment that saturates people with impressions about food and lifestyle,” says Jason Smith, associate executive director of the Public Health Advocacy Institute at Northeastern University. “Companies need to change the marketing environment or the courts are going to have to revisit commercial law doctrines.”

There is little reason for marketers to celebrate their most recent court victory in the alcohol arena. The threats they see when they look over their shoulders are real, and the only way they can successfully protect themselves is to value people over profits. That goes for their advertising practices as well.

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