False advertising class action lawsuits on the rise
Red Bull offers settlement; website crashes on first day.
Earlier this month, Red Bull proposed a $13 million agreement to settle a false advertising class action lawsuit.
The lawsuit was brought by a consumer who said, after 10 years of drinking the energy drink Red Bull, he had not seen the benefits promised in the “Red Bull gives you wings” advertising campaign.
The plaintiff’s attorneys argued the advertising campaign implied that by drinking the expensive energy drink, consumers would experience increased performance, concentration and reaction speed, when in fact that was not true.
“What they know about Red Bull is that any benefit to performance, concentration or reaction speed comes from caffeine in the product,” said Janet Ramsey, an attorney with Warner Norcross. “The fact is an 8-ounce can of Red Bull is only 84 milligrams of caffeine, and a 7-ounce cup of coffee has about double that. The plaintiff argued that, really, it’s a more expensive, less efficient source of caffeine, and you could get a 12-pack of Coke for the price of a can of Red Bull.
“That was the thrust of the complaint: that Red Bull’s whole campaign was that their product was a superior source of energy. You got better energy from them and that is why you should pay this premium price, when really the energy came from caffeine and it had less caffeine than a half-cup of coffee.”
While Red Bull does not admit any wrongdoing, it has made the decision to settle the case, offering anyone who purchased Red Bull between 2012 and Oct. 3, 2014, the opportunity to either receive up to $10 cash or $15 worth of product.
Red Bull has set up a website, energydrinksettlement.com, where consumers of the product can sign up to become part of the class action group. Consumers do not need proof of purchase in order to become part of the class action settlement, although they do need to electronically sign a document saying they purchased the product.
The site crashed its first day from all of the traffic.
Ramsey said the Red Bull case illustrates a new trend about which consumer product businesses need to be aware. She said false advertising class action lawsuits are on the rise.
“Before, if your claims weren’t accurate, if you had something misleading or false in your advertising, who would come to you was usually your competitor or the government,” Ramsey said.
Ramsey said a group of plaintiff’s attorneys have turned their attention to false advertising class action lawsuits, which she said could be big moneymakers for them.
“They are the ones who actually benefit the most because they get a huge chunk of attorneys’ fees out of these,” she said.
As the “Red Bull gives you wings” campaign shows, consumer product businesses need to be extra careful about any direct or implied claims in their advertising.
“It’s not that people were shocked when wings didn’t sprout from their back,” Ramsey said. “The claim was that the context around the advertising campaign implied increased performance, concentration and reaction speed.
“As an advertiser, you are responsible for your implied claims as well as your explicit claims. That has always been true, but this is a different mechanism — this class action — for seeing people challenge claims.”
Ramsey said consequences of implied claims are much higher than before.
“Before, you might have had a competitor challenge you and you’d say, ‘OK, I’ll take the claim out of the marketplace or add a disclaimer; I’ll modify it,’ and now the consequence is much higher,” she said.
“The risk of a class action is so high … almost all defendants settle these cases just like Red Bull did.”
Ramsey said Pom Wonderful, a pomegranate juice company, recently had to change its ads after the government questioned implied claims in its advertising campaign about its health benefits.
“Their most recent campaign, it’s got this anti-oxidant superhero who is pomegranate colored. They had to really push the humor so far to the unbelievable side that no one could possibly take away any kind of even implied claim,” Ramsey said.
For Red Bull consumers, the $13 million settlement proposal still must be approved by the court, which could occur in May. If the settlement is approved, consumers who have registered on the class action website will see their $10 or $15 worth of product within 150 days of the approval.
Ramsey noted the settlement is capped at $13 million, so the class action group could receive less than $10 or $15 worth of product depending on how many people seek the compensation.