Warner-Lambert Company v. Federal Trade Commission
46 A.L.R. Fed. 873, 562 F.2d 749, 183 U.S. App. D.C. 230 (1977)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The Federal Trade Commission (FTC) has the statutory authority under Section 5 of the FTC Act to order corrective advertising as a remedy when a deceptive ad campaign has created a lingering false belief in the public mind that would not be dispelled by a simple cease and desist order.
Facts:
- Listerine Antiseptic mouthwash has been on the market since 1879 with an unchanged formula.
- Beginning in 1921, the Warner-Lambert Company began directly advertising to consumers that Listerine was beneficial for colds, cold symptoms, and sore throats.
- For decades, the company represented that Listerine would prevent, cure, or alleviate the common cold.
- Scientific evidence presented to the FTC showed that Listerine's ingredients have no therapeutic effect on colds or the viruses that cause them.
- Evidence also showed that when gargling, it is impossible for Listerine to reach the critical areas of the body where cold viruses are present in medically significant concentrations.
- Expert testimony established that the bacteria in the oral cavity that Listerine kills do not cause colds or play a role in their symptoms.
- A clinical study conducted by Warner-Lambert, the 'St. Barnabas study,' which purported to show Listerine's effectiveness, was found to be scientifically unreliable due to flaws in its design and execution.
Procedural Posture:
- In 1972, the Federal Trade Commission (FTC), acting as the court of first instance, issued a complaint against Warner-Lambert Company, alleging violations of the Federal Trade Commission Act.
- Following hearings, an Administrative Law Judge (ALJ) issued an initial decision in 1974 sustaining the complaint's allegations.
- Warner-Lambert appealed the ALJ's decision to the full Commission.
- On December 9, 1975, the Commission affirmed the ALJ's findings and issued a final cease and desist order which included a requirement for corrective advertising.
- Warner-Lambert Company, as petitioner, sought review of the Commission's final order in the United States Court of Appeals for the District of Columbia Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the Federal Trade Commission have the statutory authority to order an advertiser to include affirmative corrective disclosures in future advertisements to counteract the residual effects of previous, long-running deceptive advertising?
Opinions:
Majority - J. Skelly Wright
Yes. The Federal Trade Commission has the authority to order corrective advertising. The court held that the FTC's power is not limited to the express 'cease and desist' language in Section 5 of the FTC Act. Citing modern Supreme Court precedent, the court reasoned that administrative agencies possess ancillary powers necessary to effectively remedy the unlawful practices they are charged with preventing. A simple cease and desist order would be inadequate to remedy the effects of Warner-Lambert's hundred-year campaign of deceptive advertising, as the false consumer belief in Listerine's efficacy for colds would persist. The court analogized this remedy to established precedents requiring affirmative disclosures to prevent consumer deception, such as in the 'Royal Baking Powder' and 'Waltham Watch' cases. Furthermore, the court rejected the argument that corrective advertising violates the First Amendment, noting that the Supreme Court in 'Virginia Pharmacy' explicitly stated that false or misleading advertising is not protected speech and that disclaimers may be required to prevent deception. The court modified the FTC's order slightly, removing the prefatory phrase 'Contrary to prior advertising' as unnecessarily punitive.
Dissenting - Robb
No. The Federal Trade Commission lacks the statutory authority to order corrective advertising. The dissent argued that the FTC's power under the act is prospective, designed 'to prevent illegal practices in the future,' not to punish past conduct, which a corrective advertising order does. The 1975 amendment to the FTC Act, which explicitly granted federal courts the power to order 'public notification' upon a finding of dishonest or fraudulent conduct, indicates that Congress did not believe the Commission already possessed this power on its own. The majority's reliance on cases like 'Pan American' and 'Dean Foods' is misplaced, as those decisions involved broader statutory schemes and were necessary to preserve the agency's or court's jurisdiction, not to remedy the lingering psychological effects of past advertising. The cases requiring affirmative disclosure were different because the future ads in those cases would have been inherently misleading without the disclosure, which is not the situation here once Warner-Lambert ceases making cold claims.
Analysis:
This landmark decision firmly established the Federal Trade Commission's authority to order corrective advertising, significantly expanding its remedial powers beyond simple cease and desist orders. It recognized that the economic and psychological effects of a long-term, deceptive ad campaign can linger long after the ads stop running. By empowering the FTC to 'un-ring the bell,' the ruling created a powerful deterrent, forcing companies to internalize the cost of dispelling the false impressions they create. This case has had a profound impact on advertising law, ensuring that advertisers cannot simply cease a misleading campaign and retain the market advantage built on consumer deception, and it remains a cornerstone of the FTC's enforcement arsenal.
