Court: District Court, N.D. New York; January 28, 2016; Federal District Court
Chobani, LLC and The Dannon Company, Inc. are engaged in a legal dispute concerning advertising practices in the yogurt market. Chobani initiated the action under the Declaratory Judgment Act, seeking a ruling that its "Simply 100 Campaign," which promotes its new "Simply 100 Greek Yogurt" as free of artificial sweeteners and preservatives while comparing it to Dannon's products, does not constitute false or misleading advertising as defined by the Lanham Act. In response, Dannon filed counterclaims against Chobani for false advertising and product disparagement under the same act, and sought a temporary restraining order and preliminary injunction to stop Chobani's campaign until the case could be resolved. On January 11, 2016, the court denied Dannon's request for a temporary restraining order but expedited the briefing for a preliminary injunction, with oral arguments held on January 22, 2016.
Dannon has been a prominent yogurt producer since 1942, investing significantly in building its brand, which includes over 35,000 retail outlets. The company introduced "Dannon Light" in 1988 and has since become a leading brand in light yogurts, particularly noted for its "Light, Fit" line, including the innovative "Light, Fit Greek" launched in 2012. This product targets health-conscious consumers, especially women, and is strategically marketed during the first quarter of the year, which is critical for sales as consumers typically aim for health and fitness resolutions during this period.
Chobani, established in 2005 in South Edmeston, New York, has rapidly become the leading Greek yogurt brand in the U.S., emphasizing natural, non-GMO ingredients and environmental sustainability. Its marketing strategies include campaigns such as “Go Real Chobani” (2013), “How Matters” (2014), and “To Love This Life Is [T]o Live It Naturally” (2015), all aimed at promoting the authenticity and natural qualities of its products.
The current advertising initiative, centered on Chobani Simply 100 Greek Yogurt—offering 100 calories per serving without preservatives or artificial sweeteners—seeks to extend this messaging. The campaign, which launched in January 2016, encompasses a commercial, print ads, and digital content.
The commercial features a young woman rejecting Dannon Light, Fit Greek Yogurt after realizing it contains artificial sweeteners, highlighted by a voiceover mentioning the inclusion of chlorine in sucralose. She discards the Dannon yogurt and opts for Chobani Simply 100 instead, which is presented as a naturally sweetened alternative. The ad concludes with a joyful scene and the hashtag “#NOBADSTUFF,” accompanied by a jingle reiterating the theme of living naturally.
The Print Ad features a prominent question, “Did You Know Not All Yogurts Are Equally Good For You?” suggesting that consumers may unknowingly purchase yogurt containing undesirable ingredients, specifically “Artificial Ingredients,” which are defined in fine print as such. The ad highlights the ingredients label of Dannon Light, Fit Greek, emphasizing the use of sucralose as a sweetener, questioning its necessity due to its chlorine content. It contrasts Dannon’s product with Chobani Simply 100, claiming it is the only 100-calorie Greek yogurt free from artificial sweeteners and preservatives.
The Digital Content includes a website and social media outreach, prompting users to inquire about the contents of their yogurt. It features a comparison of ingredients with other light yogurts and highlights Dannon Light, Fit Greek’s nutrition label, marking several items as “artificial” in red. A link to the Print Ad is also included.
Sucralose, the focus of the dispute, is a zero-calorie sweetener FDA-approved since 1999, with extensive safety studies conducted on it. Sucralose is composed of twelve carbon, nineteen hydrogen, eight oxygen, and three chlorine atoms, created by substituting chlorine for hydrogen-oxygen groups on a sucrose molecule. Chlorides, including those in sucralose, are naturally occurring compounds, distinct from pool chlorine (calcium hypochlorite), which is harmful and not used in Dannon's products.
A preliminary injunction is characterized as an extraordinary remedy not granted automatically. The burden of proof lies with the party seeking the injunction, requiring a clear demonstration that the essential elements are met. Historically, a two-pronged test was established, necessitating proof of irreparable harm and either a likelihood of success on the merits or sufficiently serious questions regarding the merits, with a balance of hardships favoring the requesting party. However, confusion arose following the Supreme Court's 2008 decision in *Winter*, which articulated a four-pronged standard: the plaintiff must show a likelihood of succeeding on the merits, irreparable harm without the injunction, that the balance of equities tips in their favor, and that the injunction serves the public interest. The Second Circuit later adapted this framework in *Salinger*, applying a similar four-pronged test specifically for copyright cases, but suggesting its broader applicability. Despite subsequent inconsistent applications of these standards, the Second Circuit has reaffirmed that the modified standard remains valid.
To obtain a preliminary injunction, a party must demonstrate four elements: (1) a likelihood of irreparable harm; (2) either a likelihood of success on the merits or serious questions as to the merits combined with a favorable balance of hardships; (3) a balance of hardships favoring the party seeking the injunction, regardless of success likelihood; and (4) that the injunction serves the public interest. The Lanham Act, specifically Section 43(a), addresses unfair competition through false advertising, imposing liability for any false or misleading representations in commerce that misrepresent goods or services. Claims can be based on literal falsity—where a statement is false on its face—or misleading statements that confuse consumers, established by considering the advertisement in full context. Literal falsity may also be proven by implication, where the relevant audience recognizes the false claim as if it were explicitly stated. An advertisement cannot be deemed literally false if its language is open to multiple interpretations. If an advertisement is found to be literally false, consumer deception is presumed, allowing for relief without needing to assess the actual impact on consumers. Deception may also be presumed if the defendant engaged in egregious conduct aimed at misleading the public.
A party may pursue an “implied claim” if an advertisement, while literally true, is misleading. To establish such a claim, the plaintiff must present extrinsic evidence showing that the advertisement confuses consumers and that a significant portion of the audience holds the false belief conveyed by the ad. For a successful Lanham Act false advertising claim, the plaintiff must demonstrate five elements: 1) a false or misleading statement; 2) connection to commercial advertising or promotion; 3) materiality; 4) interstate commerce involvement; and 5) actual or likely damage to the plaintiff.
Chobani argues that Dannon’s request for a preliminary injunction is “mandatory,” which requires a higher standard of proof, specifically a “clear” or “substantial” likelihood of success on the merits. This differs from a “prohibitory” injunction, which aims to maintain the status quo ante—defined as the last uncontested situation between the parties before the dispute arose. In this case, the relevant status quo refers to the situation before Chobani’s Simply 100 Campaign launched.
The court generally seeks to preserve this status quo through prohibitory injunctions, which restrain actions pending trial. However, a mandatory injunction involves compelling action and thus requires a heightened standard. Courts frequently apply the prohibitory standard in Lanham Act cases, affirming that Dannon's request falls into this category, as it seeks to prevent allegedly false advertising rather than compel a specific action.
Dannon argues it is likely to succeed in its claim against Chobani’s Simply 100 Campaign, asserting that Chobani's statements regarding added chlorine imply that the sucralose in Dannon’s Light, Fit Greek is unsafe. Chobani defends its claims by stating that it is true sucralose has chlorine added and that its assertions about Dannon's artificial ingredients being "bad stuff" are merely opinions or puffery. However, this defense lacks merit, as puffery is defined as vague, exaggerated statements that cannot mislead consumers and are not actionable under the Lanham Act. Conversely, when an advertiser attacks a competitor while promoting its own products, it crosses a different threshold. The phrase "no bad stuff" could be seen as puffery if isolated, but in the context of other statements that imply Dannon's products pose safety risks due to sucralose, it becomes problematic. Courts acknowledge that even if specific statements are true, the overall message can still be considered literally false if it misleads consumers when viewed in context.
Representations of opinion may imply underlying facts that support the opinion or indicate a lack of contrary facts known to the speaker. In Polar Corp. v. Coca-Cola Co., the court issued a preliminary injunction against a Polar advertisement suggesting that Coca-Cola lacked purity, ruling it a misrepresentation due to the absence of evidence to support such a claim. The court emphasized the importance of consumer perception regarding quality and purity, determining that Coca-Cola would suffer irreparable harm from this falsehood. Dannon, as a counter-claimant, likely has a strong case for false advertising regarding the Simply 100 Campaign, as it appears to convey a false message that its product contains sucralose and is thus unsafe. Although Chobani argued that sucralose’s safety is debated, the evidence suggests it is safe for consumption. The comparison to Time Warner Cable, Inc. v. DIRECTV, Inc. reinforces that claims of superior quality are also likely false, as both companies provide comparable picture quality. While Dannon's case shares some distinctions from Polar Corp., the similarities are more significant, and accepting Chobani’s arguments would contradict the analysis framework. Consequently, Dannon is poised to succeed on its Lanham Act false advertising counter-claim.
Dannon alleges it has suffered substantial harm from Chobani's Simply 100 advertising campaign, including loss of sales, market share, and goodwill, and asserts that a presumption of irreparable harm applies due to the likelihood of success on its claim regarding false, comparative advertising. Chobani contends that this presumption has been abrogated and that Dannon has not provided non-speculative evidence of irreparable injury. The requirement of proving irreparable harm is critical for obtaining a preliminary injunction. Historically, plaintiffs showing literal falsity in comparative advertisements mentioning their product were granted a presumption of irreparable harm, as such false comparisons devalue their products in consumers' perceptions. Although the parties are direct competitors and the advertising campaign explicitly referenced Dannon's product, Chobani argues that the presumption may no longer apply, referencing evolving standards in case law. The Second Circuit has warned against applying a categorical presumption of irreparable harm without legislative intent. Other circuits have eliminated this presumption altogether, emphasizing that movants must demonstrate irreparable harm as a prerequisite. Recent Supreme Court decisions have altered the approach to assessing irreparable harm. Even without the presumption, Dannon must show it is a competitor in the relevant market and establish a logical causal link between Chobani's false advertising and its own sales decline to prove irreparable harm in a Lanham Act case.
The parties involved are in direct competition within the health food and yogurt markets, specifically for low-calorie Greek yogurt products. A causal link exists between the alleged false advertising and Dannon's sales, as the success of one party’s products directly affects the other's. The likelihood of customer diversion from the competitor's product to Dannon's, if the misleading advertisement continues, further supports Dannon’s claim of irreparable harm. Chobani cannot claim an equitable interest in maintaining false advertising, and thus the balance of hardships favors Dannon.
Regarding public interest, courts prioritize preventing false or misleading advertising, especially when it impacts consumer safety and information accuracy, particularly concerning children’s products. Therefore, issuing an injunction aligns with public interest. Dannon has met the necessary legal requirements for a preliminary injunction, and the only remaining issue is the amount of the required bond. Both parties agreed on a bond of $1,000,000, which the court found appropriate and not subject to change. Consequently, Dannon must post this bond.
Chobani is permitted to promote the importance of natural ingredients but is prohibited from spreading false claims regarding Dannon’s products, particularly that sucralose makes them unsafe. The court has granted Dannon's motion for a preliminary injunction, which enjoins Chobani and its associates from disseminating specified false advertising claims about Dannon products across various media platforms while the case is resolved. The prohibited claims include assertions that Dannon products contain harmful chemicals, such as chlorine, and misleading statements about the safety of sucralose and Dannon's products. Dannon is required to post a $1,000,000 security bond within five business days of the order’s issuance, which will cover potential costs and damages incurred by Chobani. The injunction takes effect upon the court's acceptance of this bond. Dannon's request for an evidentiary hearing was denied, as the court found that essential facts were not in dispute, and no extensive evidence gathering was necessary at this stage. The court referenced relevant case law to support its conclusion that a preliminary injunction may be granted based on misleading advertising claims without the need for exhaustive surveys, relying instead on expert testimony to gauge consumer reaction.
The heightened standard for granting a preliminary injunction applies when it would provide the movant with nearly all the sought relief, which cannot be reversed if the defendant ultimately wins at trial. The case references Tom Doherty Assocs. Inc. to underscore this principle. The document evaluates claims related to a marketing campaign, noting that while certain aspects of the Digital Content may not align with product comparisons, it includes a link to a full version of the Print Ad, warranting a combined assessment. A contested statement in the campaign indicates that chlorine is "added to" sucralose, which may be misleading; sucralose is produced by adding chlorine to a precursor compound, making the phrasing potentially inaccurate. Dr. George W. Gokel, an expert for Chobani, corroborates this in his declaration, affirming that chlorine is involved in the formation of sucralose. Product safety is recognized as a significant characteristic for meeting materiality standards. Although Dr. Gokel mentions research suggesting high doses of sucralose may lead to toxicity, he acknowledges that all substances, including common ones like salt and water, can be toxic at high levels. Furthermore, there is no evidence that sucralose at typical consumption levels, such as those in Dannon Light Fit Greek, causes harm. Notably, Chobani does not disclose that its own products contain the same type of chlorine present in all-natural, non-GMO milk in its Simply 100 Campaign.
