• by David Goetzl  @dgoetzl, Erik Sass  @eriksass1, February 9, 2006

Cereal giant Kellogg is interested in negotiating a settlement to a pending lawsuit charging it with harmful marketing to kids, according to a group pursuing the case.

Representatives of the Center for Science in the Public Interest (CSPI), one of several plaintiffs, said they have met with Kellogg and discussed options for settling the matter. They declined, however, to offer details about what a resolution might include.

"We'd certainly like to reach a settlement without going to court," said CSPI Executive Director Michael Jacobson.

No further face-to-face talks are scheduled, and the suit is scheduled to be filed the week of Feb. 20. Kellogg declined comment.

Last month, CSPI signaled its intention to file suit in Massachusetts against both Kellogg and Viacom, which operates children's programmer Nickelodeon, seeking to prevent them from marketing junk food to kids younger than eight. Massachusetts law requires plaintiffs--which here also include another advocacy group and four parents--to give 30 days' notice of intent to file this type of suit, which charges "unfair and deceptive" marketing practices.

CSPI representatives said they have not been contacted by Viacom about the suit. A Nickelodeon representative said, "We will absolutely respond according to Massachusetts state law."

In a related matter, the Children's Advertising Review Unit (CARU), an industry arm that sets child advertising guidelines, has named a former top FTC official to lead a review of all its rules. Joan Z. Bernstein, ex-director of the FTC's Bureau of Consumer Protection, said in an interview Wednesday that continued self-regulation is the "desirable" process for combating advertising blamed for childhood obesity.

The CSPI suit will ask the court to prevent Kellogg and Viacom from marketing high-sugar-low-nutrient foods to audiences, where 15 percent or more of the individuals are under the age of eight. It also seeks a halt to marketing via Web sites, contests, and other tactics.

Viacom could be charged $25 each time a child in Massachusetts views an ad for the foods in question on Nickelodeon, and Kellogg each time a child views an ad for one of its products such as Apple Jacks on Nick or another network. Damages could also be assessed for each time a child views a Kraft package featuring a Nick character such as Dora the Explorer.

"We would be more than happy to settle with Kellogg and continue with Viacom," said Steve Gardner, CSPI's director of litigation. "There are others in the same category as Kellogg and they deserve to be sued, and if we settle with Kellogg we might go after someone else." Gardner declined to speculate on other food marketers CSPI may target, although Jacobson cited General Mills, Chuck E. Cheese, McDonald's, and Burger King.

CSPI spokesman Jeff Cronin said the group has settled cases out of court with marketers such as Tropicana and Quaker Oats on issues such as labeling. He said CSPI notified Frito-Lay about a pending lawsuit in Massachusetts regarding deceptive marketing of chips with olestra, and agreed to postpone filing when Frito-Lay asked for some time to perhaps come to an agreement.

When CSPI announced it would sue Kellogg and Viacom, it charged that industry self-regulator CARU "lacks teeth" and doesn't enforce meaningful penalties for companies that violate its policies. The accusations from CSPI and other advocacy groups prompted CARU, part of the Better Business Bureau (BBB), to appoint Bernstein to lead the review of its guidelines and suggest new ones. Bernstein said that industry self-regulation--if done properly--allows enforcement of broader, more effective standards than government regulation.

"The problem with government regulation in the past has been that the rules don't stick because of First Amendment issues," she said. "The regulations just don't stand up to judicial scrutiny--they get struck down, and then you end up worse off than before." Last year, Kraft Foods said it would stop advertising sugar-heavy products such as Kool-Aid and Oreos in television programming aimed at kids ages 6 to 11. Kraft already eschewed ads targeting kids under the age of six.

Bernstein is expected to issue her recommendations for new CARU standards in 90 to 120 days. "I am busily at work with the people from the BBB and the CARU to make final plans for how we're going to go about this review," she said, promising regular contact with "the advocacy community, regulators, elected officials" and other interested parties.