Dannon lost the latest round in the battle between yogurt brands when a federal judge in New York denied the company’s motion for a preliminary injunction against competitor Chobani.
Dannon sells the leading kids’ drinkable yogurt product, Danimals, which is sold in eight different flavors and packaged in 3.1-fluid-ounce bottles. All eight of the flavors currently contain 9 grams of sugar per 3.1-ounce serving, although three of the flavors once contained 10 grams of sugar.
In November 2018, Chobani launched its own drinkable yogurts product, Gimmies, in three flavors and 4-fluid-ounce servings, which contain either 9 or 7 grams of sugar per serving. In three different places, the Gimmies stated that the drinks contain “33% less sugar than the leading kids’ drinkable yogurt.”
The claim includes an asterisk that refers consumers to two footnotes found below the nutrition facts panel in barely legible type: “*Chobani Gimmies Milkshakes: avg. 8g sugar; leading kids’ drinkable yogurt: avg. 12 g sugar, per 4 fl oz serving” and “**Chobani Gimmies Milkshakes: net 4 fl oz; leading kids’ drinkable yogurt: net 3.1 fl oz.”
With no argument that Dannon sold the “leading kids’ drinkable yogurt,” Dannon filed a false advertising suit against Chobani and followed with a motion for a preliminary injunction to enjoin the challenged claim.
Applying the two-step analysis for a preliminary injunction, U.S. District Judge Colleen McMahon agreed with Dannon that it was likely to succeed on the merits of its Lanham Act and state law claims against Chobani. However, she denied the motion for a lack of irreparable harm.
“There can be no question that, read in the easiest and most straightforward way, the advertising on the Gimmies package is not accurate,” the court said. “A bottle of Gimmies has either 7 or 9 grams of sugar; a bottle of Danimals has either 9 or 10 grams of sugar. Even taking the biggest difference (7 grams to 10 grams), without any averaging, there is not 33% less sugar in a serving of Gimmies over a serving of Danimals.”
Chobani attempted to persuade the court with elaborate mathematical calculations involving an average of all the drinks rounded to the nearest gram and conversion of the different sizes of the products to a “common standard of measurement.”
“But Chobani offers no persuasive evidence that a consumer would read the packaging in the manner needed to convey all the information that rends the 33% less claim true, or would understand in what sense the claim was true,” the court wrote. By contrast, Dannon provided a consumer survey conducted by an expert that indicated “very few consumers are likely to understand Chobani’s advertisement,” the court noted.
Judge McMahon also pointed to the recent U.S. Court of Appeals for the Second Circuit decision in Mantikas v. Kellogg Co., where the federal appellate panel said consumers “should not be expected to look beyond misleading representations on the front of the box to discover the truth … in small print on the side of the box.”
“Reasonable purchasers of Gimmies who see ‘33% less sugar than the leading brand’ on the front of the box cannot be expected to study the back of the packaging in the detail necessary to discover the cryptic, microscopic footnoted disclosures explaining Chobani’s ‘33% less sugar claim’—never mind figure out what needs to be ‘averaged’ with what and perform the multiple calculations needed to make sense of that claim,” the court wrote.
Despite this conclusion, the court found Dannon had not established that it would suffer irreparable harm absent an injunction against the challenged ads.
“The evidence presented at the preliminary injunction hearing indicates that Danimals’ share of the overall yogurt market improved, and that Danimals itself had its second-best ever market share in its product class, during the month when Gimmies came to market,” the court noted. “This data strongly suggests that neither Danimals’ sales position nor its brand equity has suffered irreparably.”
Nor did Dannon’s argument that the advertising had a negative impact on its reputation sway the court. Even after decreasing the sugar content of its drinks, Dannon used stale packaging that overstated the sugar content of its products for several months, the court pointed out.
“Dannon was perfectly willing to sell Danimals in packaging that said the product inside had more sugar than it actually does—all to save money rather than to have to throw away incorrect packaging,” Judge McMahon wrote. “That undermines any suggestion that Chobani’s packaging is working irreparable harm on its competitor.”
To read the memorandum decision and order in Danone, US, LLC v. Chobani, LLC, click here.
Why it matters: The decision offers a mixed bag for Dannon. While the court had little difficulty finding the company would be successful on the merits of its false advertising claims, Judge McMahon denied the motion for a preliminary injunction as Dannon failed to establish that it would suffer irreparable harm should Chobani continue to make its claims.