Back in 2004, as the advertising spat between sugar substitutes Equal and Splenda turned more bitter, Kirkland & Ellis partner Gregg LoCascio made a bold move. Instead of filing his false advertising claims in Chicago, where his client Merisant Company, maker of Equal, is based, LoCascio passed up the potential home court advantage and took the fight to Philadelphia, right in the backyard of Splenda's owner McNeil Nutritionals LLC. The Johnson & Johnson subsidiary is headquartered in Fort Washington, Pennsylvania.
"I knew this case would rise and fall on McNeil's own statements," recalls LoCascio. Therefore, he adds, he wanted to be able to compel McNeil employees to personally appear at trial on his timetable which he'd be able to do if the case were held in the Eastern District of Pennsylvania.
McNeil had launched Splenda in 2000 with the slogan "Made from sugar, so it tastes like sugar." In fact, Splenda's principal ingredient is sucralose, a manmade chemical produced from roughly a dozen ingredients, including chlorine, phosgene, and sugar. (During the manufacture of sucralose, sucrose is selectively chlorinated so that three of its hydroxyl groups are replaced with chlorine atoms.)
Splenda's ad campaign played up the product's "natural" qualities, Equal claimed, helping Splenda win a growing share of the nearly $200 million-a-year U.S. market for artificial sweeteners. By 2004, Splenda had replaced Equal as the country's top-selling sugar substitute.
When trial started last April, LoCascio used his opening statement to show jurors a sampling of Splenda ads, such as a television commercial featuring parents and kids enjoying a variety of Splenda-sweetened baked goods with the tagline "Think Sugar, Say Splenda."
Then he went on offense, summoning a procession of McNeil employees and consultants to the stand to build the case that the company knew that its ads for Splenda misled consumers into believing it was natural or contained sugar.
The Equal side's first witness: Ann Davis, an outside marketing consultant for McNeil. Under questioning by LoCascio, Davis recapped the results of a 2004 study she had conducted on Splenda packaging, showing that almost half of those surveyed believed the product actually contained sugar. What's more, she conceded that the study strongly suggested that the prime cause of that confusion was Splenda's "made from sugar" slogan.
LoCascio proceeded to show that those findings were not an isolated case, calling on Eric Paul, McNeil's director of market research. Paul acknowledged that between 2001 and 2004 the company had conducted a dozen similar surveys that all found consumer confusion over whether Splenda contained sugar or was natural. As Paul spoke, the Kirkland trial team hammered home the point, flashing the survey results on large courtroom screens.
When pressed by LoCascio, Paul initially rejected the suggestion that a consumer who said Splenda was "natural" must be confused. But LoCascio quickly countered by showing jurors a videotape of Paul's deposition in which Paul had conceded the very same point.
"He was boxed in," recalls LoCascio. "He didn't have any room to move."
The Kirkland team had an equally damaging surprise in store for another key witness, McNeil president Debra Sandler. In response to questioning by LoCascio, Sandler testified that it would be wrong to characterize Splenda as "natural" or "sugar without the calories." When LoCascio insisted that she herself had described Splenda that way, Sandler denied that was the case.
Once again LoCascio rolled the videotape, showing jurors a clip unearthed during discovery of a 2000 internal McNeil media training session. In it Sandler had called Splenda "sugar without the calories," then smiled and looked straight into the camera. "This was as good as it gets," recalls LoCascio, who used the clip to close out his questioning of Sandler. " It was directly contrary to what she had said."
When the defense's turn came, McNeil's lawyers at New York's Patterson, Belknap, Webb & Tyler tried to repair the damage, bringing Sandler back to the stand. Under friendlier questioning, Sandler pointed out that none of Splenda's commercials claim it is natural or contains sugar, and she noted that Splenda boxes explicitly say it is a no-calorie sweetener. She also said that consumers switched to Splenda not because they were misled, but because it is much better for baking and has a superior taste.
The defense also called on survey expert Susan McDonald. She claimed that the consumer studies she conducted showed confusion among a mere 2 to 3 percent of Splenda users. Her survey, she insisted, which used so-called "open-ended" questions, let respondents freely describe their reactions to an ad, and was more accurate. In contrast, she said, the survey cited by Equal's lawyers was based on "closed-ended" or leading questions that forced respondents to pick among multiple answers and yielded the results the survey's authors wanted.
In his cross of McDonald, however, LoCascio pointed out that McNeil's own marketing department had frequently relied on closed-ended survey questions. He also confronted McDonald with testimony she had given in a previous false advertising case, in which she claimed open-ended questions weren't reliable because the answers were random.
In early May, after a month-long trial, the jury began what turned out to be just four hours of deliberations. After jurors asked for a calculator and reports from damages experts, McNeil and Merisant began serious settlement talks. One juror told reporters that it had found for Merisant and was prepared to award substantial damages. Before the jury could deliver its verdict, however, McNeil and Merisant issued a joint statement announcing they had struck a confidential settlement.
Steve Zalesin, McNeil's lead lawyer at Patterson Belknap, declined to be interviewed for this article, saying he was not at liberty to discuss any aspect of the case.
Case: Merisant Company v. McNeil Nutritionals LLC
Type of Case: False Advertising
Win: The two parties settled before the jury announced its verdict, though one juror told reporters that it had found for Merisant.
At issue: Advertising campaign by McNeil for the sugar substitute Splenda, which claimed Splenda is "made from sugar, so it tastes like sugar."
Lessons Learned: Taking a fight to an opponent's home turf can work out just fine. Put the other side on the defense by calling their top witnesses to the stand straightaway.
REPRINTED WITH PERMISSION FROM THE OCTOBER 2007 EDITION OF IP LAW & BUSINESS © 2008 INCISIVE MEDIA. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED