Settlement Reached in States’ Lawsuit Against Yogurt Company

Press Release from Tennessee Attorney General Rober Cooper, Dec. 15, 2010:

Tennessee Attorney General Bob Cooper today announced his Office along with several other states reached a $21 million agreement, resolving deceptive-advertising complaints against Dannon Company, Inc., the producer of Activia and DanActive. The settlement follows a closely-coordinated investigation with the Federal Trade Commission, which is announcing a separate settlement today.

The state agreement, signed today by Davidson County Circuit Court Judge Hamilton Gayden, Jr., amounts to the largest payment to date in a multistate settlement with a food producer. The settlement is the result of 39-member state investigation led by the Tennessee Attorney General’s Office and the Oregon Attorney General’s Office. The lawsuit filed today alleges that Dannon made unsubstantiated claims regarding the health benefits touted in the marketing, packaging, advertising, offering and selling of their line of yogurt products.

“During the winter months, consumers are more interested in buying products that may help them stay healthy or provide added health benefits,” Attorney General Cooper said. “My Office intends to do everything possible to ensure companies can back up their claims and do not mislead Tennesseans about their products.”

Dannon is alleged to have charged an estimated 30 to 50 percent premium for Activia, a yogurt product advertised as helping to regulate the digestive system within two weeks, over other yogurt products. The company is alleged to have exaggerated the health benefits of Activia by emphasizing the purported effect of a particular bacteria strain it coined as “Bifidus Regularis.” Among other things, the Attorney General alleges that Dannon represented that Activia improved intestinal transit time when consumed one serving per day for two weeks when this was not the case, and made other unsubstantiated and unlawful claims about Activia’s benefits.

Dannon also positioned its DanActive dairy drink product as providing consumers with “immunity” and cold and flu prevention benefits rather than as having a modest role in helping support or maintain the immune system. It was being sold at a similar premium as Activia over other dairy drinks. As with Activia, Dannon emphasized the presence of a bacteria strain it named “L. Casei Immunitas” to distinguish the product in the marketplace. Among other claims, the Attorney General alleges that Dannon unlawfully positioned DanActive as having antimicrobial benefits and health benefits on children and individuals with normal functioning immune systems.

Under the settlement, Dannon has agreed to stop making certain claims entirely. In addition, it has agreed to refrain from making claims concerning the health benefit, performance, efficacy or safety of their probiotic food products unless the claims can be substantiated by competent and reliable scientific evidence.

The multistate settlement follows a private class action settlement in which consumers were collectively eligible to claim up to $35 million in restitution. Under that claims procedure, which is now closed, Dannon agreed to donate the difference between the amount claimed by consumers and $35 million, less administrative and attorneys’ fees, in products to charitable groups. Dannon denies any wrongdoing outlined in the complaints, and the company has cooperated in the investigation and resulting agreement.