Advertiser's Small Bottom-Of-Pack Disclosure Okay, Says Second Circuit

The maker of Craftsman vacuum cleaners, Stanley Black & Decker, got a big win from the Second Circuit recently in a putative class action involving its product packaging. The plaintiff had alleged that the labeling on the package was misleading because consumers would not be able achieve the peak horsepower advertised on the label as "Peak HP". The District Court dismissed the complaint, concluding that no reasonable consumer would be misled by the packaging because the dagger or asterisk symbol next to the "Peak HP" label directs the consumer to a disclosure explaining that "Peak HP" is the horsepower achieved in laboratory testing, not ordinary use.

The Second Circuit affirmed. Having determined that "context is crucial," the court reviewed the entire packaging at issue and found that a reasonable consumer would not be misled because the disclosure (the "language in the fine print") explains and qualifies the claim. In so finding, the Court rejected the plaintiff's argument that the "peak HP" claim is so inherently misleading that "...a reasonable consumer should not be expected to review the fine print to discover its true meaning." Rather, the Court found, the dagger or asterisk symbol next to the "Peak HP" label, "would alert a reasonable consumer to the fact that certain caveats may apply" to the claim. The Court also rejected plaintiff's argument that the disclosure, in seven point font on the bottom of the package near, and not visually set apart from, other fine print was not sufficiently conspicuous. The Court disagreed, stating "fine print may clarify an ambiguous label on packaging." Accordingly, the Court held that the complaint failed to state a claim under New York law.

As readers of this blog know, on-pack claims are often the subject of litigation and self-regulatory actions. These cases typically revolve around the clarity and conspicuousness of any disclosures qualifying the claim. What's noteworthy here is that this case is further evidence that there may be a growing divide between the judicial and the self-regulatory view of on-pack disclosures, with some courts giving far more latitude to companies regarding their placement and size, even allowing for back-of-back disclosures in some instances, an approach that often doesn't get a pass from NAD. At least some courts, as here, seem to expect some effort from "reasonable consumers" to read the disclosures, especially if the claims they qualify are ambiguous and there is a dagger or asterisk signaling their presence.

As recently noted by my colleague Jeff Greenbaum, "the law...isn't a model of clarity or consistency on what types of disclaimers are effective on packaging." Couldn't agree more. Moreover, where a case gets adjudicated could determine whether a particular disclosure convention passes muster or not.

William Montgomery vs. Stanley Black & Decker, Inc., d/b/a Craftsman, No. 23-735-cv (2nd Circuit 2024)

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