State of Washington v. Living Essentials (5-Hour-Energy)
$4.3M final judgement – Living Essentials (LE) ran ads and used product packaging that allegedly made misleading claims about the effectiveness of its Decaf 5-Hour Energy drink. The AGs office alleged that Decaf 5-Hour Energy was deceptively advertised as:
• superior to coffee
• recommended by doctors
• generated energy and alertness that ‘lasts for hours’
• ‘provides a sustained energy boost’
As a result LE was:
- Enjoined from making performance claims that are not supported by competent and reliable scientific evidence, alone or in combination with other products/ingredients
- Enjoined from misrepresenting survey results in advertising
- survey data used in advertising claims must be created, conducted, and evaluated by qualified professionals, using survey industry accepted/approved methods
- Ordered to pay the AGs office $2,095,992.63 in fees and costs
- Ordered to pay $2,183,747 in civil penalties for allegedly deceptive ads/packaging
- Ask Your Doctor” ad (aired 19,716 times * $100 = $1,971,600)
- “Choose Wisely” ad (aired 1,040 times * $100 = $104,000)
- “Construction Site Cowboy” ad (aired 975 times * $100 = $97,500)
- misleading product labels (2,482 units sold * $4.29 = $10,647)
The AGs office argued the penalties were reasonable as there were a large number of sales over a short period of time, once consumed there was no way to return the product or reverse any health impacts, and defendant “spent more time trying to justify the science behind their ads after-the-fact (i.e., at trial) than they did before marketing the products“.
[King Co (WA) Super. Ct.; 14-2-19684-9]
jbho: I think the main lesson here is if you are going to cite product tests, or scientific testing in your ads, make sure those test are verified by an independent 3rd party.
Living Essentials has indicted they will appeal. Interestingly, LE prevailed in a similar suit in Oregon, where the court found the claims were puffery as they were subjective statement about “a ‘feeling’ of energy or alertness” (Multinomah Co (OR) Circ. Ct; 14CV09149), and even if misleading would not materially influence consumer purchasing decisions. Additionally, the studies cited were subject to varying interpretations, so to the extent statements may have been misleading, the court felt they were not willful.