Red Bull to Pay $13 Million for False Advertising Settlement
Red Bull GmbH agreed on Thursday to pay more than $13 million to settle a proposed class action lawsuit that alleges false advertising of its energy drinks,according to Law360.
If the proposed settlement is passed by the court, Red Bull would be required to pay $6.5 million into a settlement fund within seven days.
The settlement could include millions of individuals who purchased at least one Red Bull can over the past 10 years, offering class members the option of a $10 cash reimbursement or two free Red Bull products with an approximate retail value of $15 (Red Bull would cover shipping costs).
Red Bull sent BevNET an email with the following statement:
“Red Bull settled the lawsuit to avoid the cost and distraction of litigation. However, Red Bull maintains that its marketing and labeling have always been truthful and accurate, and denies any and all wrongdoing or liability.”
The plaintiff representing the class, Benjamin Careathers, said he had been drinking Red Bull since 2002 as part of the lawsuit he filed on Jan. 16, 2013 in U.S. District Court of the Southern District of New York. The suit argues that Red Bull misleads consumers about the superiority of its products with its slogan “Red Bull gives you wings” and its claims of increased performance, concentration and reaction speed, to name a few. This deception is proliferated through the company’s advertising on television, the Internet, social media and events, athlete endorsers, glossy print brochures, marketing campaigns and its slogan-promoting Red Bull Flugtag series, according to the suit.
“Such deceptive conduct and practices mean that [Red Bull’s] advertising and marketing is not just ‘puffery,’ but is instead deceptive and fraudulent and is therefore actionable,” the suit says.
The class action cites articles by The New York Times, Nutrition Reviews and theEuropean Food Safety Authority Journal, which indicate that energy drinks provide their boost through caffeine alone, not guarana or any other ingredient.
The suit says that a 7 oz. cup of drip coffee contains approximately 115 to 175 milligrams of caffeine, depending on the blend, and a 12 oz. serving of Starbucks coffee costs $1.85 and “would contain far more caffeine than a regular serving of Red Bull.” An 8.4 oz. can of Red Bull contains 80 milligrams of caffeine.
“Even though there is a lack of genuine scientific support for a claim that Red Bull branded energy drinks provide any more benefit to a consumer than a cup of coffee, the Red Bull defendants persistently and pervasively market their product as a superior source of ‘energy’ worthy of a premium price over a cup of coffee or other sources of caffeine,” the suit says.
Despite Red Bull’s denial of wrongdoing, the company has voluntarily withdrawn and revised marketing claims challenged in court, according to the plaintiff’s motion.
Plaintiffs David Wolf and Miguel Almaraz made similar allegations in a lawsuit filed in California federal and later transferred to New York, Law360 writes.
BevNET spoke with August T. Horvath, a partner with the law firm Kelley Drye, who focuses his practice on advertising law and antitrust matters. While Horvath didn’t offer an opinion on the potential settlement, he said the case features difficult claims from the plaintiff. He posed the following questions about the complaint:
Did Red Bull really make the alleged claims?
How many consumers actually saw the claims?
How many consumers believed the claims?
How many people consumed the product because of one of the aforementioned claims, and not for some other reason?
“As with any class action,” Horvath said, “there’s a lot to prove before you can get to the end.”