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A Gala Day for Comparative Advertising
Given the expense and burden of resolving false advertising cases in federal court, the promise of an expedient and less expensive alternate forum invites attention. Adding to speed and thrift an assurance that ads will be assessed by experts in the field makes the forum more interesting still. What is this alluring avenue of adjudication? For 33 years, the National Advertising Division of the Better Business Bureau (NAD) has sought to provide just such a mechanism. Yet, even for long-time veterans of federal proceedings, the NAD may be terra incognita. One recent decision by the NAD, In re Distillerie Stock USA Ltd., NAD Case No. 4197 (June 2004), reveals both benefits and drawbacks of the forum, particularly in how some familiar yet some unique allocations of the burdens of proof can produce results both similar to and quite unlike those in federal court.
Distillerie Stock recently retained the well-known taste-testing service, Beverage Testing Institute (BTI), to conduct blind taste tests comparing its GranGala triple orange liqueur, the second best selling brand in the United States, with number one Grand Marnier and virtually all of the other premium orange liqueurs available in this country. (As reported in another recent NAD decision, In re Sidney Frank Importing Co. Inc., NAD Case No. 4016 (Feb. 2003), the BTI has achieved remarkable consistency in its taste tests, far exceeding what a cynic might dismiss as an inherently subjective subject.) In relevant part, the test showed a marked preference for margaritas mixed with GranGala liqueur over Grand Marnier, numerically ranked at 94 to 86. Stock promptly produced print advertising promoting the comparative product rankings. “We Came, We Mixed, We Won” announced one such promotional item that also reported the test score. Marnier Lapostolle and its U.S. distributor, Schieffelin, objected ' first threatening suit, but ultimately opting instead to mediate the matter before the NAD.
To commence a mediation, the challenger submits to the NAD a complaint, typically in the form of a letter, together with a required fee (currently $1500 for members and $2500 for nonmembers). The complaint can incorporate virtually any manner of evidence, but need not, and no particular level of formality is required. The advertiser then has at least 15 business days to respond. A further reply and surreply are permitted (each after 10 business days, subject to extensions). The parties can request a hearing, but one is not strictly required, and under NAD rules, the decision to hold a hearing is discretionary with the NAD. With or without a hearing, the NAD renders a decision, which it submits to the advertiser for comment (principally to indicate whether it will or will not comply with the NAD's rulings) before the decision is then published. Either party can appeal to the National Advertising Review Board. If the advertiser refuses to follow the NAD's recommendations, the NAD can refer the matter to the Federal Trade Commission.
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