Earlier this month, Judge George B. Daniels, sitting in the Southern District of New York, adopted the recommendation of Magistrate Judge Robert W. Lehrburger in certifying a limited class in a suit against online digital asset exchange, KuCoin.
Read MoreBy: Meg Tierney
Summary: In February 2022, the National Advertising Division (NAD) of the Better Business Bureau published two decisions related to truth in advertising when making claims about a company’s social justice initiatives. As part of its ongoing monitoring program, the NAD initiated challenges of advertising claims made by Niantic, Inc. (Niantic)[1] and DoorDash, Inc. (DoorDash)[2] regarding allied monetary donations to a variety of social justice initiatives and organizations.
Read MoreSummary: In a case alleging a failure to disclose the presence of toxic heavy metals in baby food, a California federal judge granted in part and denied in part a motion to dismiss. The judge found that plaintiffs have Article III standing and that their cause of action for failure to disclose is not preempted by Federal law.
Key Takeaways: In In re Plum Baby Food Litigation, plaintiffs allege that Plum PBC fails to disclose that its baby food products contain, or have a risk of containing, arsenic, cadmium, mercury and perchlorate. According to Plaintiffs, Plum uses deceptive, unfair and false labeling to obscure the potential presence of toxic metals in its baby food products and charge a price premium for what is labelled and advertised as high quality organic healthy baby food.
Read MoreBy: Ashley Song
Summary: The Northern District of California dismissed, without further leave to amend, a proposed class action against Apple, which claimed virtual loot boxes in the video game application “Brawl Stars” amounted to gambling.
Key Takeaways: In Taylor et al. v. Apple Inc., Rebecca Taylor and her underage son brought a proposed class action seeking to hold Apple liable for distributing game apps through the Apple App Store that they alleged include features that are legally equivalent to slot machines, as defined and prohibited under California law. The complaint advanced claims for relief under California’s Unfair Competition Law (“UCL”) and California’s Consumers Legal Remedies Act (“CLRA”).
Read MoreBy: Loly G. Tor and Patrick J. Perrone
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.
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.
Read MoreBy: 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.”
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.
Read MoreBy: 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.
Read MoreBy: 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.
Read MoreCopyright © 2024, K&L Gates LLP. All Rights Reserved.