Thursday, 4 June 2015

Lifestyle advertising and misleading the "credulous and inexperienced consumer"

Is lifestyle advertising for harmful products inherently false and misleading if it fails to mention product risks?

In his ruling this week, Justice Riordan went some way to saying "yes".  Or it certainly looks this way to this "credulous and inexperienced consumer" of legal rulings.

Exhibit 40480


Exhibit 152
Exhibit 1381.33
Exhibit 1534.2

The judge assessed whether the advertisements that had been widely displayed in Quebec after 1980 (when the Consumer Protection Act was adopted) complied with that law's provisions that: "219. No merchant, manufacturer or advertiser may, by any means whatever, make false or misleading representations to a consumer."

He reviewed some specific ads, including those displayed here, and decided that the law did not require smokers to get the impression that smoking was healthy in order for the ads to be misleading. "The test would be whether the general impression is true to reality. It would be enough if they suggested that it was not harmful to health."

Not all ads were misleading in this way, he found. He cited as a non-offending "neutral' advertisement one which had been used to promote Macdonald Select in 1982. 

Others, however, he found "contain a theme and sub-message of elegance, adventure, independence, romance or sport. As well, they use attractive, healthy-looking models and healthy-looking environments."  These, he decided, were misleading within the context of the Supreme Court's concern for the "credulous and inexperienced consumer." 

[536] From the viewpoint of a 'credulous and inexperienced' consumer, ads such as these would give the general impression that, at the very least, smoking is not harmful to health.

He ruled that the Consumer Protection Act had been violated and that the companies must pay both compensatory and punitive damages.

Interestingly, this was not exactly the argument that the plaintiffs had made to the judge. The view of their expert witness, Richard Pollay, that widespread advertisements created a "friendly familiarity" was not one that this judge bought into.

But having rejected the advice of the plaintiffs' marketing expert, the judge cast his own eye to the ads which had been shown during the trial. "It is by viewing them – through the eyes of a credulous and inexperienced consumer – that the Court can assess whether there is a contravention of this provision."

The plaintiffs may not have convinced the judge through their expert, but they did through their evidence. And it was the defendants' evidence that the judge used to make the link between these ads and the need for compensation.

The Supreme Court has set four criteria for a misleading ad to result in a financial award. Two of those require that the advertisement resulted in people buying the product and also that it was capable of influencing that decision.

Throughout the trial, the defendants had argued that the purpose of advertising was to win market share away from their competitors -- i.e. to get people to buy their cigarettes. Many marketers from the companies had spoken about the prolonged efforts and enormous sums that were spent on marketing to generate sales. So it was by their own admission that Justice Riordan ruled that the companies' misleading ads were able to and were successful at selling cigarettes.

This section of Justice Riordan's ruling is pasted below.


 [518] Section 219 reads as follows: 219. No merchant, manufacturer or advertiser may, by any means whatever, make false or misleading representations to a consumer.
519] Section 218 is also relevant for these purposes. It reads: 218. To determine whether or not a representation constitutes a prohibited practice, the general impression it gives, and, as the case may be, the literal meaning of the terms used therein must be taken into account.
 [520] With respect to the general impression mentioned there, it is "the impression of a commercial representation on a credulous and inexperienced consumer".267
 [521] The Plaintiffs argue at paragraph 154 of their Notes that "Throughout the class period, (the Companies) contrived and executed an elaborate strategy that used affirmations, behaviour, and omissions to deny the true nature of their toxic, useless product or mislead consumers about these important facts". In paragraph 155, they add: 155. Throughout the class period, the Defendants not only failed to inform consumers but also used every form of public interaction available to them to deny the harms and extent of risk associated with cigarette consumption. In the rare circumstances where they acknowledged that cigarettes could be dangerous or harmful, the Defendants trivialized those harms and the intensity of the risk. They further falsely represented cigarettes as providing smokers with benefits when they knew that were selling a pharmacological trap.
 [522] For reasons that are not clear, the Plaintiffs do not focus on marketing activities under this section of the CPA, reserving that for their arguments under section 220(a). In our view, that discussion should occur in the present section, and we shall proceed accordingly.
 [523] The extent of the Companies' representations to consumers during the part of the Class Period when this provision was in force was to advertise their products between 1980 and 1988, as well as between 1995 and 1998, and to print Warnings on the packages. This was the period of their Policy of Silence, so they were making no direct comments about smoking and health.
 [524] In section II.E.6 of the present judgment, we found no fault on the Companies' part with respect to conveying false information about the characteristics of their products. That is relevant to this question but, in light of sections 216 and 218, it is not conclusive. A different test is called for under the CPA. 267 Op. cit., Time, Note 20, at paragraph 70. 500-06-000076-980 PAGE: 117 500-06-000070-983
[525] In similar fashion, our rulings in section II.B.1 that the Companies' faults with respect to the obligation to inform about safety defects ceased as of January 1980 for the Blais File and March 1996 for the Létourneau File is not relevant to the CPA-based claims. Under the CPA, the consumer's knowledge of faulty representations does not exculpate the merchant.
[526] As stated in Turgeon, the CPA is "a statute of public order whose purpose is to restore the contractual [balance] between merchants and their customers".268 Its method is to sanction unacceptable behaviour on the part of merchants, regardless of the effect on the consumer269. Hence, the defence of consumer knowledge open to a manufacturer under article 1473 of the Civil Code is not available.
[527] Even though the Companies' ads did not convey false information, since they conveyed essentially no information, under the CPA the question is whether their representations would have given a false or misleading impression to a credulous and inexperienced consumer. For that, it would not be necessary for them to go so far as to say that smoking was a good thing. The test is whether the general impression is true to reality270. It would be enough if they suggested that it was not harmful to health.
[528] ITL and RBH plead a lack of proof, coupled with a complaint about overly general allegations and lack of interest. JTM argues in its Notes as follows: 215. As will be demonstrated below, there is nothing misleading or inappropriate with lifestyle advertising. The methods used by JTIM for its marketing were legitimate and similar to those used by other companies in other areas. JTIM’s advertisements did not make any implicit or explicit health claims, and there is no evidence whatsoever that any class member was misled by any of JTIM’s advertisements.
[529] JTM cites a 2010 Court of Appeal decision dealing with the purchase of a motor home that supports the position that banal generalities in advertising do not constitute false or misleading representations.271 Although not directly on point, that reasoning is relevant here.
[530] The Companies' argument about overly general allegations is well founded. The Plaintiffs point to few if any specific incidents in support of their argument. Their reference to paragraph 18.12 of Professor Pollay's report does them little good. We have already concluded that it is unconvincing on this question.
[531] The Plaintiffs accuse the Companies of using "labelling and lifestyle advertising to create a 'friendly familiarity' with (the Companies') product in order to falsely convince consumers that cigarette smoking was consistent with a healthy, successful lifestyle" 272, without explaining how they see that process working. In the absence of further explanation, the Court does not see the evidence as supporting this general statement.
 [532] All this seemingly leads to a conclusion that the Companies did not violate section 219. The problem is that none of it looks directly at the evidence in the record, i.e., the typical ads used by the Companies since 1980. It is by viewing them – through the eyes of a credulous and inexperienced consumer – that the Court can assess whether there is a contravention of this provision.
[533] It should not be controversial to assert that every single cigarette ad since 1980 for every single brand of the Companies' products attempted to portray those cigarettes in a favourable light. That does not necessarily mean that they all suggested that smoking was not harmful to health.
[534] A good example of a "neutral" ad is Exhibit 40480. It simply shows the packages of the three sub-brands of Macdonald Select cigarettes, with a short message aimed at "those who select their pleasures with care". There are other ads of this sort and none of them constitute violations of section 219 CPA. They, however, are the exception.
[535] As a general rule, the ads contain a theme and sub-message of elegance, adventure, independence, romance or sport. As well, they use attractive, healthy-looking models and healthy-looking environments, as seen in the following exhibits:
• Exhibit 1381.9 – Macdonald Select ad of 1983 showing an elegantly-dressed couple apparently about to kiss;
• Exhibit 1040B – Export A 1997 ad portraying extreme skiing
• Exhibit 1040C – Export A 1997 ad portraying mountain biking
• Exhibit 1381.33 – Belvedere 1988 ad showing young adults on a beach
• Exhibit 152 – two Player's Light 1979 ads273 portraying horseback riding and canoeing in the Rockies
• Exhibit 1532.4 – Belvedere 1984 ad from CROC magazine showing a tanned couple on the beach
• Exhibit 243A – Vantage 1980 ad from The Gazette, text only, explaining how Vantage delivers taste but "cuts down substantially on what you may not want"
• Exhibit 40436 – two Export A 1980 ads showing loggers and truckers
• Exhibit 40479 – two Export A 1982 ads showing a mountain lake and a man on top of a mountain
• Exhibit 573C – Export A 1983 ad portraying a windsurfer
• Exhibit 771A – Player's Light 1987 ad seeming to portray a windsurfer in Junior Hockey Magazine
• Exhibit 771B – Export A 1985 ad in Junior Hockey Magazine portraying alpine skiing and Viscount 1985 vaunting it as the mildest cigarette 273 Although this ad is from 1979, we assume it carried over at least into the next year.
[536] From the viewpoint of a "credulous and inexperienced" consumer, ads such as these would give the general impression that, at the very least, smoking is not harmful to health. In this manner, the Companies failed to fulfil one of the obligations imposed by Title II of the CPA.
[537] As for each and every Member of both Classes seeing the infringing representations, we dealt with this issue in an earlier section. The Companies admit that all Members would have seen newspaper and magazine articles warning of the dangers of smoking. Since the ads appeared, inter alia, in the same media, it is reasonable to conclude that all Members would have seen them, as well.
[538] We come to the third condition: that seeing the representation resulted in the Members' purchasing of cigarettes. In their proof, the Companies consistently emphasized that the purpose of their advertising was to win market share away from their competitors. To that end, they spent millions of dollars annually on marketing tools and advertising. Moreover, the Court saw the result of such marketing efforts, particularly through the success of ITL at the expense of MTI in the 1970s and 80s.
[539] This is sufficient proof to establish the probability that the Companies' ads induced consumers to buy their respective products. The third condition is met.
[540] The same evidence and reasoning shows that the final condition: that the prohibited practice was capable of influencing a consumer's behaviour with respect to the decision to purchase cigarettes, is also met.
[541] As a result, there is a contravention of section 219 CPA here. The Members may claim moral and punitive damages pursuant to section 272 CPA, subject to the other holdings in the present judgment.

268 Op. cit., Turgeon, Note 259, at paragraph 36. 269 Op. cit., Time, Note 20, at paragraph 50.
270 In Time, the Supreme Court calls for a two-step analysis for questionable representations: describe the general impression on a credulous and inexperienced consumer and then determine whether that general impression is true to reality: Op. cit., Note 20, at paragraph 78.
271 Martin v. Pierre St-Cyr auto caravans ltée, EYB 2010-1706, at paragraphs 24 and 25.
272 Plaintiffs' Notes at paragraph 157.