Coca-Cola against Pepsi - Term Paper Example

?MEMORANDUM Chief Executive Officer of Coca Cola RE: Charging Pepsi with false advertising Question Presented Did Pepsi made a false or misleading advertisement sufficient to violate the Lanham Act by distributing more than 1 million direct-to-consumer mailers that falsely claimed Coca Cola’s product were harmful and can cause obesity? Will the surveys of Coca Cola consumer experts be admitted to court as substantial evidence of false advertising against Pepsi? Brief Answer Yes, Pepsi made a false or misleading advertisement. Lanham Act prohibits the false or misleading representation of fact by way of commercial advertising or promotion which misrepresents the nature, characteristics, qualities or geographic origin of another person’s goods, services and even commercial activities. Yes, the surveys of the Coca Cola consumer experts can be admitted to court. According to the Federal Rule of Evidence Rule 702, expert testimonies that will assist the trier of fact based on sufficient facts or data are admissible to court. The survey must be a product of reliable principles and methods applied reliably to the facts of the case. Statement of Facts This office is considering whether to prosecute the Pepsi company for false advertising. Coca Cola company discovered that months ago, Pepsi company distributed a mailer directly to consumers as part of their campaign. The mailer focused on Coca Cola causing obesity and compared it to their own product. The mailer stated how Coca Cola products can make the consumers fat due to excessive sugar content. The mailer was distributed across the country to more than 1 million consumers between January 2011 to March 2011. The mailer specifically contained the following statements: “The Coca Cola products’ sugar content is higher than any other Pepsi product.” “More sugar, more harmful.” “More sugar, more prone to obesity.” Weeks after discovery, the Coca Cola Company conducted surveys through the company consumers experts regarding the mailers of Pepsi. One consumer experts made a survey by making interviews amoung groups of consumers. The consumers were divided into two. The first group was exposed to the “control mailer” and the other one was not. The second consumer expert conducted an online survey to group of participants who were consumers of the products. Discussion It is very clear that Pepsi committed false advertising by distributing mailer that claimed Coca Cola’s products can cause obesity. In order to prosecute Pepsi for violating the Lanham Act, the company should be able to prove that the defendant made a false or misleading description in a commercial advertisement. This advertisement actually deceives and should likely influence the purchasing decision which injures the plaintiff as a result. Scotts Co. v. United Industries, 315 F.3d 264, 272 (4th Cir.2002). The challenge in this case is to prove that the advertisement or the mailer is intended to mislead or confuse the consumers upon a claim of implied falsehood. In short, a court may find the mailer statements literally false but absent a literal falsehood, statements can only be said impliedly misleading if presented with evidence of actual consumer deception. PBM Products LLC PBM LLC v. Mead Johnson Company, No. 10–1421 (4th Cir. 2011). In your case, since Pepsi did not literally and expressly stated that Coca Cola is harmful and can cause obesity, the company needs to supply evidence that the misleading statements made through the mailer confused and deceived the consumers. The court must determine if claims are made unambiguous and false. There are times that a literally false message may either be explicit or conveyed by necessary implication only. If advertisement is considered in its entirety, the consumers will know that the claim is clear and unambiguous. In the case of the mailer statements made by Pepsi, there is no express statement that Coca Cola is harmful and can cause obesity. But the relationship of the statements made shows that if Coca Cola has higher sugar content than Pepsi, then consumers who are drinking Coca Cola products are more likely to become obese than those drinking Pepsi products. In a decision rendered by the United States Court of Appeals, 4th Circuit, a jury found that Mead Johnson had engaged in false advertising. The district court issued an injunction prohibiting Mead Johnson from making similar claims. PBM Products LLC PBM LLC v. Mead Johnson Company, No. 10–1421 (4th Cir. 2011). According to the district court, false advertising is substantially synonymous with lying. The decision even stated that under the Virginia Law, a defamation plaintiff “first must show that a defendant has published a false factual statement that concerns and harms the plaintiff or its reputation.” Therefore, Coca Cola must establish that the statements in the mailer concern and harm the reputation of Coca Cola as a company. Concerning the second question, the Supreme Court explained that evidence is admissible under Rule 702 if it rests on a reliable foundation and is relevant. Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 597 (1993). The Federal Rule of Evidence Rule 702 stated that expert testimony is admissible if it will assist the trier of fact and is (1) “based upon sufficient facts or data,” (2) “the product of reliable principles and methods,” and (3) “the principles and methods [have been applied] reliably to the facts of the case.” Fed.R.Evid. 702. The Coca Cola Company should therefore make sure that the surveys conducted are product of dependable and trustworthy methods and are reliable to the facts of the case. The reason for this is because expert witnesses have great potential and power to persuade the jury. Thus the court needs to protect and make sure that all scientific testimonies must not only be relevant but also reliable. In the case of PBM Products v. Mead Johnson (2011), the defendant Mead Johnson contended that the surveys conducted were unreliable and irrelevant. But the district court concluded that even if Mead Johnson pointed out numerous ways in which the surveys could have been conducted differently, the arguments presented were not able to demonstrate that they are not reliable and relevant. Therefore, the burden of proof lies to those who question the reliability and relevance of expert surveys as admissible evidences. Conclusion Therefore, given the facts of the case of Coca Cola against Pepsi, the case will prosper. Based on the Lanham Act, the false advertising of Pepsi by distributing mailer will definitely be punished under the Act. It is clear even if Pepsi has not directly or expressly stated in the commercial campaign that Coca Cola is harmful and can cause obesity, they can be held liable. The Coca Cola Company can present evidence that the consumers were mislead and their company’s reputation has been harmed. The surveys conducted can be admissible as evidence. It is important that the company can establish that these surveys are reliable and relevant to the case. These evidences will be admissible according to the Federal Rule of Evidence Rule 702. Recommendation I recommend that your company files an action against Pepsi for false advertising. The company can claim for damages and ask the court to issue an injunction against Pepsi. I recommend that your company should produce the evidences to support the claim for false advertising against Pepsi. References: Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 597 (1993) Federal Rule of Evidence Rule 702 PBM Products LLC PBM LLC v. Mead Johnson Company, No. 10–1421 (4th Cir. 2011) Scotts Co. v. United Industries, 315 F.3d 264, 272 (4th Cir.2002) Read More