Brief Case - Kraft, Inc. V. Federal Trade Commission

Case Brief

Kraft, Inc. v. Federal Trade Commission

970 F.2d 3II (7th Cir. 1992)

The Federal Trade Commission is the plaintiff instituting a deceptive advertising proceeding against Kraft, Inc. Kraft is the defendant and appellant.

Kraft, Inc. produces, among other products, individually wrapped processed cheese food slices. In the mid-1980s Kraft, Inc. decided to run a "Skimp" and "Class Picture" advertising campaign in an effort to gain market share it had lost to competitors. The broadcast version included a woman who stated she bought the Kraft Singles for her daughter rather than "skimping" by purchasing imitation slices because imitation slices hardly used any milk. She goes on to proclaim that Kraft has 5 ounces per slice. "Five ounces that will help her daughter's little bones get the calcium they need to grow." A footnote in the commercial stated that "one ¾ ounce had 70% of the calcium of five ounces of milk." Additionally the commercial sited a government study depicting calcium deficiency in America's school children. The Federal Trade Commission (FTC) claimed that Kraft's Skimp and Class Picture advertisements made the false implied claim that a Singles slice contains the same amount of calcium as 5 ounces of milk (the milk equivalency claim). During trial court, the administrative law judge (ALJ) concluded that the advertisements made a false and material milk equivalency claim. Additionally the ALJ stated that Kraft's footnote disclaimer of the calcium lost during processing was confusing and insufficient to dispel the misleading claim regarding the milk equivalency claim. Kraft was ordered to cease and desist making the claim for any of its cheese slice products. Kraft appealed to the FTC commissioners but the trial court's decision was not only upheld but extended to include any cheese product Kraft produces.

The FTC argued that Kraft's advertisement was false and misleading and considered deceptive under section 5 of the FTC Act. The FTC supported the ad campaign was material to consumers by citing a Kraft survey which showed 71% of respondents rated calcium content an extremely or very important factor in their decision to by Kraft Singles v. another brand. The FTC commissioners also concluded that the 30% exaggeration of calcium was significantly enough to persuade consumer's purchasing decisions. Additionally the FTC found further evidence to support Kraft's deceptive practices when discovering that ABC television had asked Kraft to support the milk and calcium claims in addition to Kraft's own ad agency who warned Kraft to substantiate the claims prior to running the ads. A Kraft executive decided to not change the potentially deceptive ad copy because the "Singles business is growing for the first time