Business Law Cases Study

1. 42.1 False Advertising Papa John’s International, Inc., is the third-largest pizza chain in the United States, with more than 2,050 locations. Papa John’s adopted a new slogan— “Better Ingredients. Better Pizza.”—and applied for and received a federal trademark for this slogan. Papa John’s spent over $300 million building customer recognition and goodwill for this slogan. This slogan has appeared on millions of signs, shirts, menus, pizza boxes, napkins, and other items, and it has regularly appeared as the tag line at the end of Papa John’s radio and television advertisements.     Pizza Hut, Inc., is the largest pizza chain in the United States, with more than 7,000 restaurants. Pizza Hut launched a new advertising campaign in which it declared “war” on poor-quality pizza. The advertisements touted the “better taste” of Pizza Hut’s pizza and “dared” anyone to find a better pizza. Pizza Hut also filed a civil action in federal court, charging Papa John’s with false advertising in violation of Section 43(a) of the federal Lanham Act. What is false advertising? What is puffery? How do they differ from one another? Are consumers smart enough to see through companies’ puffery? Is the Papa John’s advertising slogan “Better Ingredients? Better Pizza” false advertising? Pizza Hut, Inc. v. Papa John’s International, Inc., 227 F.3d 489, Web 2000 U.S. App. Lexis 23444 (United States Court of Appeals for the Fifth Circuit) 2. Rule Making The Food and Drug Administration (FDA), a federal administrative agency, is charged with enforcing the Food, Drug, and Cosmetic Act. This statute mandates that the FDA limit the amount of “poisonous or deleterious substances” in food. Pursuant to this authority, the FDA established certain “action levels” of unavoidable contaminants, such as aflatoxins, in food. Food producers that sell products that are contaminated above the set action level are subject to enforcement proceedings initiated by the FDA. In announcing these action levels, the FDA did not comply with the notice and comment procedure required for the adoption of a substantive or legislative rule. The FDA argued that the “action levels” are merely interpretive rules or statements of policy that do not re- quire notice and comment. The Community Nutrition Institute, a consortium of consumer public interest groups, sued to require the FDA to follow the notice and comment procedure. Who wins? Community Nutrition Institute v. Young, 260 U.S. App. D.C. 294, 818 F.2d 943, Web 1987 U.S. App. Lexis 6385 (United States Court of Appeals for the District of Columbia Circuit) 3. Food Regulation Barry Engel owned and operated the Gel Spice Co., Inc. (Gel Spice), which specialized in the importation and packaging of various food spices for resale. All the spices Gel Spice imported were unloaded at a pier in New York City and taken to a ware- house on McDonald Avenue. Storage and repackaging of the spices took place in the warehouse. During three years, the McDonald Avenue warehouse was inspected four times by investigators from the Food and Drug Administration (FDA). The investigators found live rats in bags of basil leaves, rodent droppings in boxes of chili peppers, and mammalian urine in bags of sesame seeds. The investigators produced additional evidence which showed that spices packaged and sold from the warehouse contained insects, rodent excreta pellets, rodent hair, and rodent urine. The FDA brought criminal charges against Engel and Gel Spice. Are they guilty? United States v. Gel Spice Co., Inc., 601 F.Supp. 1205, Web 1984 U.S. Dist. Lexis 21041 (United States District Court for the Eastern District of New York)