2021 – Consumer Products Law Watch

No Manifestation, No Standing

Dec 15 2021

Summary: Eighth Circuit affirms that a plaintiff does not have standing to sue for a defective product unless the defect has actually manifested.

Key Takeaways: In In re Polaris Marketing, Sales Practices, and Products Liability Litigation, 9 F.4th 793 (8th Cir. 2021), the purchasers of off-road vehicles filed a putative class action against the manufacturer and designer of the vehicles based on allegations that the vehicles’ engines overheat and cause fires. Half of the named plaintiffs alleged their vehicles caught fire, while the other half alleged only a risk of fire. The Eighth Circuit upheld the District of Minnesota’s decision that a plaintiff whose vehicle had not experienced a fire – i.e., the alleged defect had not manifested in their vehicles – lacked Article III standing to sue because they had no injury in fact. The “no-fire” plaintiffs contended that they suffered economic damages because they would not have purchased the vehicles or they would have paid less if they had known about the alleged defect. This was not enough: “In the context of defective products, . . . it is not enough for a plaintiff to allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather, the plaintiffs must allege that their product actually exhibited the alleged defect.” Without manifestation, there was no injury and, accordingly, no standing.

Doctors Need Substantiation, Too: NAD Emphasizes that Advertising Claims Directed to Sophisticated Audiences are Subject to the Same Accuracy and Truthfulness Standards as Lay Consumers

Dec 13 2021

By: Meg Tierney and Katie Staba

Summary: The National Advertising Division (NAD) of the Better Business Bureau recently published a decision reminding advertisers that claims directed to sophisticated audiences are still subject to the same rules and guidelines as those claims directed to the general public and lay audiences. In Bausch Health US, LLC (INFUSE Contact Lenses) the NAD reviewed a number of claims in a Bausch & Lomb (B & L) brochure distributed to eye care professionals (ECPs) for single-use contact lenses.

Among the claims challenged by Alcon and reviewed by NAD were a number of claims related to the scientific properties and measurements of the lenses, incorporated into a bar graph that demonstrated the different measurements among B & L lenses and those of its competitors (specifically, comparable lenses produced by competitors Alcon and Johnson & Johnson). Under the chart, the brochure displayed various statements that the B & L lenses provide superior comfort, wearability, or eye health benefits. For example, a claim about B & L lenses having the “lowest modulus” (a measurement of the lens) was immediately accompanied by the statement “that ‘low modulus’ . . . provides a comfortable lens wearing experience.”

The NAD turned to a prior case involving B & L contact lenses where the NAD found that “lens property claims paired with a superiority claim . . . conveyed a comparative message requiring a showing that the demonstrated differences will be clinically significant (i.e., consumer relevant.)” In the present case, NAD found that the lens property claims were “clearly intertwined” with clinical benefits of such properties and thus required separate studies to support such claims—which B & L was unable to provide.

The NAD specifically noted that “while a sophisticated audience may understand nuanced and technical language, as well as industry-related data used in a claim . . ., all messages reasonably conveyed should be truthful and accurate.”

Key Takeaways: The key takeaway in this case is a simple one: that all claims by an advertiser, regardless of audience sophistication, should be supported by reliable evidence. The K&L Gates consumer protection and advertising group can help review your final advertising campaign for claim substantiation concerns and a wide variety of other advertising issues.

Disclosure of Sugar Content on Nutrition Label Dooms Plaintiffs in “Cane Juice” Case

Dec 09 2021

By: Matthew G. Ball

Summary: Eastern District of New York dismisses claims that labeling of Whole Foods’ Oats & Flax Instant Oatmeal is false and misleading as to sugar content

Key Takeaways: In Warren v. Whole Foods Market Group, Inc., No. 19-CV-6448 (RPK) (LB) (E.D.N.Y. Dec. 3, 2021), two plaintiffs who purchased Whole Foods’ 365 Everyday Value brand Oats & Flax Instant Oatmeal alleged that the product’s labeling was false and misleading under New York’s General Business Law because (1) they believed that the use of the term “dehydrated cane juice solids” referred to a fruit juice, rather than sugar, and (2) a stamp on the product that said “whole grains” misled them into thinking that the oatmeal contained only whole grains. The Court granted the motion to dismiss on all claims. The Court noted that the nutrition label on the back of the product clearly disclosed the sugar content, there were no representations on the front of the product that the oatmeal was “sugar-free,” “low in sugar,” “without added sugar,” or anything similar, and, in light of that, the Court was unwilling to conclude that a reasonable consumer would be misled given the totality of the labeling. The Court also found that plaintiffs offered no reason why a reasonable consumer would conclude that “cane juice” meant “fruit juice.” Similarly, the Court found that no reasonable person would conclude that the entirety of the product was composed only of whole grains, given, among other things, the actual stamp-at-issue read “100% Whole Grain – 18g or more per serving” immediately conveying that the whole grains make up a portion of each serving and the product name itself disclosed a non-grain ingredient, flax. At least in the Eastern District of New York, a reasonable consumer is not permitted to focus on one area of labeling to support an implausible interpretation of the labeling as a whole. As the Court stated, the “analysis begins with the front of the box and ends on its back.”

Prescribing the Entry and Exit: Is Your Business Ready for the Newest Round of Revisions to the California Automatic Renewal Law?

Dec 07 2021

By: Katie Staba and Ashley Song

Summary: Effective July 1, 2022, Assembly Bill (“AB”) 390 strengthens protections under the existing California Automatic Renewal Law (“ARL”), which applies to all businesses that make automatic renewal offers and continuous services offers to California consumers.

Key Takeaways: The new law supplements the ARL to ensure that consumers are given the opportunity to cancel automatic renewal and continuous service subscriptions online. Specifically, AB 390 dictates notice requirements prior to automatic renewal dates for businesses selling certain paid automatic renewal plans to California consumers online, and further dictates mechanisms for ease of cancellation.

Tis the Season . . . for Enforcement Actions

Dec 06 2021

By: Desiree Moore and Katie Staba

Summary: The FTC has sent letters to many major consumer brands, warning them about the proper and lawful use of endorsers and testimonials. This blog post provides an overview into the warning letters and how companies can proactively protect themselves.

Key Takeaways: The FTC is on heightened alert as to compliance with the Act as it concerns endorsers and testimonials; how to protect an organization proactively.

Class Action Standing in Federal Court: TransUnion v. Ramirez

Dec 04 2021

By: Amy Wong

Summary: The Supreme Court’s holding in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), significantly narrows the ability of consumer class action plaintiffs who have no real world injury to assert claims in federal court.

Key Takeaway: The Supreme Court’s holding significantly curtails class actions in federal court, especially for consumer classes premised on statutory violations without real injuries. In the absence of concrete injury, plaintiffs are now precluded from suing in federal court. Going forward, we can expect to see state courts, which are not bound by the federal rules of justiciability, adjudicate more consumer class actions filed under federal statutes.

Federal Court Denies Request to Consolidate Nationwide Baby Food Heavy Metal Cases

Dec 03 2021

By: Amy Wong

Key Takeaway: Courts are reluctant to centralize industry-wide cases involving competitors as it rarely promotes judicial efficiency and complicates discovery. For now, the baby food cases will proceed in their respective forums.

The Judicial Panel on Multidistrict Litigation (JPML) has denied a motion to centralize and consolidate 38 lawsuits pending in 10 districts against baby food companies alleging that the companies knowingly sold baby food products containing heavy metals (arsenic, lead, cadmium, and mercury), and falsely marketed these products as healthy and as not containing harmful ingredients. In re Baby Food Marketing, Sales Practices and Products Liability Litigation, MDL No. 2997, 2021 WL 2369296 (JPML, decided June 7, 2021).

Clean Energy Homeowners Seek En Banc Review of Class Certification Denial

Dec 02 2021

Woolley v. Ygrene Energy Fund, Inc.

Summary: A group of borrowers who claim they were misled by terms of clean energy loans were denied class certification for failure to show they had actually viewed various versions of the company’s contracts and alleged misrepresentations. A three-panel judge affirmed, and the borrowers now seek en banc review.

Key Takeaway: In fraud actions, satisfying the required element of predominant commonality poses a major hurdle to class certification because of differences among the putative class on issues of what representations were made to or received by a given class member, and the extent to which the class members relied on the purported misrepresentations. While reliance is easier to establish where the purported class members were exposed to massive and pervasive advertising campaigns (In re Tobacco II Cases, 46 Cal.4th 298 (2009)), the plaintiffs must define the class to include only members who were exposed to such misleading advertising, or, in the absence of a pervasive marketing campaign, the plaintiffs must demonstrate that the alleged misrepresentations affected their decision to enter into the loan contract.

Intellectual Property Basics for the Food Industry

Nov 30 2021

By: Chris Vindurampulle

Summary: This article serves as an ‘IP check list’ for food sector business – providing detail on common forms of IP protection that can be used as a basis for building a strong commercial strategy.

Key Takeaways: The food sector is highly competitive and fast moving. The rate of change of consumer preference should not, however, diminish the importance of IP protection for food businesses. In contrast, it is clear that some of the world’s most recognised food businesses strategically leverage IP protection to ensure market exclusivity and dominance. For smaller businesses, understanding and developing an IP strategy can be useful as risk minimisation tool for building the foundations to increase scale.

Not-So-Free Shipping: Yeezy Brand to Pay $950k Over Late Shipping under California Consumer Protection Laws

Nov 11 2021

By: Melissa J. Tea and Kelsi E. Robinson

Supply chain disruptions, coupled with a surge in online shopping, have led to overstretched companies and impatient customers. The supply chain crisis continues to cause shipping delays across the nation as companies struggle to work around pandemic-related constraints. A recent case in the Los Angeles County Superior Court has put companies and individuals who advertise or conduct business, online or otherwise, in California on notice that failure to adequately communicate with customers regarding accurate shipping times could result in consumer protection law liability for missed shipment deadlines.

On 8 November 2021, the Los Angeles County District Attorney’s Office announced that the high-end sneaker and retail clothing companies, Yeezy Apparel LLC and Yeezy LLC (collectively, Yeezy), will pay US$950,000 to settle a civil consumer protection lawsuit. The lawsuit, filed by district attorneys in Los Angeles, Alameda, Sonoma, and Napa counties, alleged that Yeezy engaged in unlawful business conduct under the California Business and Professions Code (BPC) for failing to ship items in a timely manner and false advertising.

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Archive:2021