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ITT Continental Baking Co. v. Federal Trade Commission

decided: March 1, 1976; As Amended May 11, 1976.

ITT CONTINENTAL BAKING COMPANY, INC., PETITIONER,
v.
FEDERAL TRADE COMMISSION, RESPONDENT, TED BATES & COMPANY, INC., PETITIONER, V. FEDERAL TRADE COMMISSION, RESPONDENT



Petitions for review of an order of the Federal Trade Commission requiring baking company and its advertising agency to cease and desist from deceptively advertising food products. Order modified by deleting portions thereof and adding a defense, as to petitioner advertising agency, where it neither knows nor has reason to know of falsity of advertisement.

Anderson, Feinberg and Mulligan, Circuit Judges.

Author: Anderson

ANDERSON, Circuit Judge:

These are petitions to review an order of the Federal Trade Commission (Commission or FTC) requiring that the petitioners, ITT Continental Baking Co., Inc. (ITT Continental) and Ted Bates & Company, Inc. (Bates), cease and desist from making various types of nutritional claims in advertising food products.*fn1 The cease and desist order was predicated on the Commission's finding that, in a series of advertisements, ITT Continental and Bates, its advertising agency, violated ยงยง 5 and 12 of the Federal Trade Commission Act by falsely representing ITT Continental's product, "Wonder Bread", to be "an extraordinary food for producing dramatic growth in children." The petitioners claim that the Commission's finding of a violation was both procedurally defective and unsupported by the record. They also claim that, even on the basis of the finding itself, the Commission's cease and desist order is too broad and vague to be sustained.*fn2 For the reasons hereinafter stated, we affirm the Commission's order as to the violation found but modify the cease and desist portions thereof.

I.

Although there is evidence that American consumers do not pay much attention to nutritional content when purchasing bread,*fn3 for many years the advertisers of Wonder Bread apparently operated on the contrary assumption; and petitioner Bates used the nutritional qualities of Wonder Bread as that product's "unique selling proposition"*fn4 in the advertisements it helped develop for ITT Continental. In particular, the petitioners ran two advertising campaigns emphasizing Wonder Bread's nutritional value which formed part of the basis for the FTC proceedings here reviewed. The first, referred to as the "Wonder Years" campaign, took place between 1964 and 1970, and featured, inter alia, television*fn5 commercials referring to the "Wonder Years - ages one through twelve - when your child actually grows to ninety percent of his adult height" and enumerating the "vital elements" found in Wonder Bread "for growing minds and bodies."*fn6 The second campaign, which ran in 1970 and 1971, involved the so-called "How Big" commercials, which typically portrayed responses of several children to the question, "How big do you want to be?" - e.g., "Big enough to ride a two-wheeler" - and suggested that the viewer could help "by serving nutritious Wonder Bread."*fn7 The television commercials in both campaigns generally contained what the petitioners refer to as a "fantasy growth sequence," a visual insert in which, "through some unexplained filming technique," a small child is shown growing to the size of a 12-year-old in a few seconds.

The above-described advertisements were aimed mainly at women between 18 and 49 years of age with children below the age of 18,*fn8 but "substantial numbers" of children were stipulated to be in the viewing audience as well.*fn9 In addition, the petitioners presented on children's television programs advertisements for Wonder Bread which were specifically directed at children. For example, on the "Captain Kangaroo" show, the host was portrayed discussing with "Mr. Moose" the latter's goals concerning physical growth, and, while conceding that Wonder Bread would not cause Mr. Moose to grow " quite as big as a tree," the Captain asserted that "Wonder does help boys and girls grow up big and strong . . . ."*fn10 These commercials did not contain the so-called fantasy growth sequence.

On August 24, 1971, the FTC issued a complaint against the petitioners alleging that their Wonder Bread advertisements were false, misleading, deceptive, and unfair in several different respects. The complaint also contained allegations relating to advertisements for another group of ITT Continental's products, "Hostess Snack Cakes," which allegations were ultimately dismissed and are irrelevant for purposes of this review except possibly insofar as the fact of their dismissal bears on the reasonableness of the Commission's cease and desist order, to be considered infra. The crucial allegations concerning Wonder Bread were contained in paragraphs eight, ten, and eleven of the complaint. Paragraph eight charged that the petitioners had represented, "directly and by implication," that:

"(a) . . . Wonder Bread is an outstanding source of nutrients, distinct from other enriched breads.

(b) Consuming . . . Wonder Bread in the customary manner that bread is used in the diet will provide a child age one to twelve with all the nutrients, in recommended quantities, that are essential to healthy growth and development.

(c) Parents can rely on Wonder Bread to provide their children with all nutrients that are essential to healthy growth and development.

(d) The optimum contribution a parent can make to his child's nutrition during the formative years of growth is to assure that the child consumes Wonder Bread regularly.

(e) The protein supplied by said Wonder Bread is complete protein of high nutritional quality necessary to assure maximum growth and development."

Paragraph ten alleged:

"Certain of the [Wonder Bread] advertisements are addressed primarily to children or to general audiences which include substantial numbers of children, which advertisements tend to exploit the aspirations of children for rapid and healthy growth and development by falsely portraying, directly and by implication, . . . Wonder Bread as an extraordinary food for producing dramatic growth in children.

Paragraph eleven alleged:

"Certain of the [Wonder Bread] advertisements are addressed primarily to parents of children or are addressed to general audiences which include substantial numbers of parents of children, which advertisements tend to exploit the emotional concern of such parents for the healthy physical and mental growth and development of their children by falsely portraying, directly and by implication, Wonder Bread as a necessary food for their children to grow and develop to the fullest extent during the predolescent years.

For the most part the petitioners admitted that Wonder Bread did not have the nutritional qualities alleged to have been claimed for it in the challenged advertisements, but they denied that the advertisements represented that the bread did have those qualities. The case turned, therefore, on the meaning of the Wonder Bread advertisements themselves. In his opening remarks to the Administrative Law Judge before whom the case was initially tried, the Commission's complaint counsel announced that primary reliance would be placed on the Commission's own expertise in interpreting what advertising says or implies, but that expert testimony and documentary evidence would also be presented on the question of people's actual perception of the challenged commercials. In the evidence introduced by complaint counsel were the results of several surveys of consumer attitudes toward Wonder Bread and other brands of bread, including one series of inquiries which attempted directly to measure the effect of some of the challenged advertisements on consumers and which also elicited "verbatim responses" as to their recollections of the content and message of particular Wonder Bread commercials.*fn11 Experts for both sides testified as to their analyses of one or more of the studies in question; in addition both sides presented expert opinions on how viewers would perceive the challenged advertisements.

Although some of the evidence indicated that to a limited extent consumers tend to view Wonder Bread comparatively favorably on general nutritional grounds, and that some of the Wonder Bread commercials increased the product's nutritional rating among the viewers interviewed, the Administrative Law Judge found that no significant proportion of consumers understood the Wonder Bread advertisements as making any of the specific claims alleged in paragraph eight of the complaint, that any positive impact of the advertisements on viewers' attitudes had not been shown to result from nutritional claims as distinguished from a general "halo effect"*fn12 unrelated to nutrition, and that the challenged advertising did not in fact contain, either directly or by implication, any of the representations alleged. On appeal to the full Commission, it concluded that the evidence, at best "ambiguous" as to the subparagraph (a) allegation, did not demonstrate that the petitioners had made the specific nutritional representations alleged in paragraph eight. Both the Administrative Law Judge and the Commission also concluded that there was no proof that the advertisements had represented (as alleged in paragraph eleven) that Wonder Bread is a necessary food for the healthy growth of children.

With respect to the paragraph ten allegation, involving the portrayal of Wonder Bread as "an extraordinary food for producing dramatic growth in children," complaint counsel introduced, in addition to the Wonder Bread advertisements themselves, testimony by two psychiatrists and a pediatrician concerning how children perceive and react to television commercials. These experts testified that, while a child's perception of such commercials is influenced by his parents and other external factors, children below the age of seven would generally tend to accept the "fantasy growth sequence" in Wonder Bread advertising as literal truth: i.e., they would believe that eating Wonder Bread could cause them to grow on the spot. Normal older children, between six and twelve years of age, would be more skeptical of the fantasy growth sequence and would generally reject it as a literal representation of reality, but such children would still tend to accept statements in the advertisements about the product's nutritional value and to believe that Wonder Bread has some special capacity to enhance growth. Complaint counsel witnesses also testified that the commercials shown specifically on children's programs (which lacked the fantasy growth sequence) would be particularly effective with child viewers because the commercial message was delivered by trusted figures and without a clear distinction between the content of the programs themselves and the advertisements. As for the psychological impact of the commercials, one witness testified that a young child might feel that something was wrong ...


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