Courts and NAD Come to Different Conclusions on Package Disclosures

Federal courts and NAD are coming to different conclusions on whether disclosures on the back of packages can effectively qualify claims that appear on the fronts of the packages. Some courts – such as courts in the Ninth Circuit – have held that disclosures on the back of a package can help to qualify a claim on the front, as long as that claim is ambiguous, as opposed to false. NAD, on the other hand, tends to think those disclosures are too far-removed to be effective.

Last year, for example, a California federal court ruled on a case in which a plaintiff claimed that the term ​“fruit naturals” on the front of fruit cups made by Del Monte Foods misled her into thinking that the products ​“contained only natural ingredients,” when that wasn’t the case. Del Monte argued that reasonable consumers wouldn’t be misled because the back of the cups clearly discloses that they include ingredients like citric acid, potassium sorbate, and sodium benzoate.

The court held that the term ​“fruit naturals” does not ​“make any affirmative promise about what proportion of the ingredients are natural” and was, therefore, ambiguous. The court found that ​“such ambiguity can be resolved by reference to the back label, which clearly discloses the inclusion of multiple synthetic ingredients.” Moreover, the use of ​“general knowledge and common sense” would lead consumers to understand that the product included some synthetic ingredients.

In contrast, consider a case that NAD initiated involving claims on the front of Quilted Northern packages advertising that the toilet paper was made ​“sustainably.” Because that term is ambiguous, NAD considered whether the advertiser had effectively qualified it. In that case, the advertiser included an explanation on the front of the package. NAD didn’t think that was sufficient, though, because the claim appeared at the top, the explanation appeared at the bottom, and there were a lot of other things in between. Similarly disclosures on the back of the package couldn’t cure the issue NAD found on the front.

What would the FTC think? Odds are they’d be closer to NAD’s position. We’ve already seen that in some contexts – such as the revised Endorsement Guides – the FTC has taken stricter positions on what is necessary for a disclosure to be clear and conspicuous, often insisting that it must be ​“unavoidable.” And when the FTC announced in 2022 that it was seeking input on ways to modernize its .com Disclosure Guidelines, the tone of the press release suggested that more stringent requirements were on the way.

What does this mean for you? It depends what side of the argument you’re on. If you’re an advertiser facing a class action lawsuit over claims on your packages, a growing number of cases suggest you should be able to rely on disclosures that appear on those packages. However, if you are looking to challenge a competitor over claims on its packages, a growing number of cases suggests that NAD may be a friendly forum for you to bring your challenge.