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The Advertising Disputes & Litigation and Consumer Protection Committees’
RECENT LITIGATION DEVELOPMENTS
Quarterly Report
[Cases from July 1 to September 30, 2014]
Prepared for the ADL and CP Committees by Dan Blynn, Sherrie Schiavetti, Katie Riley, and
Donnelly McDowell of Kelley Drye & Warren LLP; Dale Giali and Thibault Schrepel of
Mayer Brown LLP; Dave Conway, Shahin Rothermel, and Kristen Brown of Venable LLP;
Douglas Brown, Darren McCartney, and Samantha Duke of Rumberger, Kirk & Caldwell,
P.A.; Scott Dupree of Shook, Hardy & Bacon, LLP; Eugene Benick of Finkelstein Thompson
LLP; Heather Goldman of Bryan Cave LLP; Camille Calman of Davis Wright Tremaine LLP;
Lauren Valkenaar of Norton Rose Fulbright LLP; Michael Mallow and Rachel Straus of Loeb
& Loeb LLP; Hal Hodes and Linda Bean of the National Advertising Division; Peter Farnese
of Beshada Farnese LLP; Tiffany Ge of Frost Brown Todd LLC; Lauren Aronson of Manatt,
Phelps & Phillips, LLP; and Jeremy A. Schachter of Kilpatrick Townsend & Stockton LLP.
RECENT DECISIONS
Lanham Act and Other Competitor Actions
The U.S. District Court for the District of New Hampshire grants in part and denies in part defendant
Advanced Drainage Systems, Inc.’s motion for judgment on the pleadings and denies the plaintiff
Presby Environmental, Inc.’s motion for leave to amend its complaint. The parties are competing
manufacturers of in-ground waste treatment disposal systems. Plaintiff alleged breach of a prior
settlement agreement between the parties and violation of the Lanham Act. The court allowed the
claim of breach to proceed in part, but dismissed the Lanham Act claim, finding that the plaintiff
failed to state a plausible Lanham Act claim. In so ruling, the court found the complaint failed to
allege that the defendant engaged in commercial advertising of any kind, and the complaint was
silent as to consumer confusion that might have resulted from the defendant’s actions. (Presby
Envtl., Inc. v. Advanced Drainage Sys., Inc., No. 13-cv-355-LM, 2014 WL 4955666 (D.N.H.
September 30, 2014)).
The U.S. District Court for the Southern District of New York initially denies in part, but ultimately
grants in full, summary judgment in favor of the defendant on all of the plaintiff’s Lanham Act false
advertising claims. Defendant made allegedly false comparative claims concerning the parties’
competing databases, which both list and detail construction projects nationwide, and are utilized by
approximately 70,000 construction industry members annually. Plaintiff claimed that the
defendant’s claims about the manner in which the comparisons were conducted; the number of
projects listed on the databases; the ratio of different types of projects between the databases; that
some projects were exclusive to one database; and other similar claims were literally false or
misleading. The court entered judgment in the defendant’s favor on many of the statements at issue
but also found that a reasonable juror could conclude that claims that the testing involved was
independent and objective, certain construction projects were listed on the defendant’s database
exclusively, and that the defendant’s database had between three and five times more projects than
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the plaintiff’s were literally false, and denied summary judgment as to those claims. Nevertheless,
as quickly as the court denied summary judgment on those issues, it granted it, finding that none of
those claims possessed the requisite level of materiality to survive a claim under the Lanham Act.
As for the other claims, which could not be deemed by a reasonable juror to be literally false but
could be deemed implicitly false if the plaintiff proffered sufficient evidence of consumer confusion
(actual confusion because it was a case for damages not an injunction) or otherwise showing
intentional deception, the court held that no such evidence existed and granted summary judgment in
the defendant’s favor. Ultimately, summary judgment was entered in the defendant’s favor on all
counts except one. Plaintiff survived summary judgment on its New York unfair competition law
claim because the facts revealed that the defendant conceded that it used phony entity names to
subscribe to the plaintiff’s database, access its information and, in at least a few instances, take
information from the plaintiff’s database and incorporate it into its own. However, with respect to
the claim that did survive, the court also granted the defendant’s Daubert motion and excluded the
plaintiff’s damages expert entirely. (Reed Const. Data Inc. v. McGraw-Hill Companies, -- F. Supp.
3d --, No. 09-CV-8578, 2014 WL 4746130 (S.D.N.Y. Sept. 24, 2014)).
The U.S. District Court for the Northern District of California grants in part and denies in part the
University of California’s and individual defendants’ motion to dismiss a claim that they plotted
with an employee of Plaintiff Parallel Synthesis Technologies to misappropriate “Parallume,” a
proprietary product used in biotechnology research and development. The complaint alleged a
breach of fiduciary duty, fraud, misappropriation of trade secrets, and false advertising and unfair
competition under the Lanham Act. The defendants allegedly contacted the plaintiff and expressed
interest in using Parallume in their own research, representing that they had a large financial backer
and wanted to obtain a grant. Plaintiff supplied Parallume samples in confidence, with the
expectation that it would be included in the grant and future projects; the defendants then ceased
contact with the plaintiff, submitted a proposal, and received a $1 million grant. The court denied
the motion to dismiss as to the fraud claims, finding that that the plaintiff would not have shared its
material but for misrepresentations that it would be included in the grant. The court denied the
motion to dismiss with respect to the Lanham Act claims, concluding that, although the defendants
did not compete with the plaintiff, they allegedly advertise for and sell licenses for the same
Parallume technology. This was sufficiently direct, because the plaintiffs adequately pled that the
defendant misrepresented that they and not the plaintiff were the inventors and owners of the
technology, and such alleged misrepresentation harmed or likely would harm the plaintiff’s sales by
discrediting its claims. The court also found that the claims against the University of California and
the Board of Regents were entitled to sovereign immunity under Section 43(a) of the Lanham Act.
The court granted the motion to dismiss as to the plaintiff’s intentional fraud claim regarding the
defendants’ representations regarding the existence of a large financial backer. (Parallel Synthesis
Techs, Inc. v. DeRisi, et. al., No. 5:13-cv-05968, 2014 WL 4748611, (N.D. Cal. Sept. 23, 2014)).
The U.S. District Court for the Northern District of Georgia grants the plaintiff and defendants’
various cross-motions for summary judgment. The plaintiff, a marketer and seller of web-based
camera systems brought a complaint against its competitor alleging various forms of corporate
espionage surrounding the defendant’s access to its webpages. The defendant brought a
counterclaim based on statements made by the plaintiff’s agents about the defendant. Both sides
filed motions for partial summary judgment on the claims at issue. The court, first, granted the
defendant’s motions for partial summary judgment on the plaintiff’s trade secret and copyright
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infringement claim finding the alleged “trade secret” was publically available on its website. The
court also granted the defendant’s motion for partial summary judgment on the tortious interference
claim, finding the contract that was allegedly interfered with was unenforceable in Georgia. The
court granted the plaintiff’s motion for partial summary judgment on the defendant’s Lanham Act
claim because the alleged false statements were not widely disseminated to the public. (EarthCam,
Inc. v. OxBlue Corp., No. 1:11-cv-02278, 2014 WL 4702200 (N.D. Ga. Sept. 22, 2014)).
The U.S. District Court for the Central District of California denies defendant Euro-Pro Operating
LLC’s ex parte application for an order requiring plaintiff Homeland Housewares LLC, a rival home
blender manufacturer, to stop “publicizing” the preliminary injunction granted to it previously.
Homeland asserted that Euro Pro’s packaging made false representations about Homeland’s blender.
Homeland sought a preliminary injunction, and on August 22, 2014, the court granted the motion,
ordering Euro Pro to remove the challenged statements from its packaging and any advertising.
Homeland, then, sent letters to retailers notifying them of the injunction, and of another injunction
issued against Euro Pro in Pennsylvania in another false advertising case. Euro Pro sought an order
prohibiting Homeland from sending any such letters and allowing Euro Pro to issue a notice
correcting the letter’s alleged mistakes. The court reviewed the letters and found that they truthfully
stated that they were from Homeland’s counsel in a false advertising case and that the injunction was
a preliminary one. While the language could have been clearer that the case was ongoing and no
final judgment on the merits had been made, the letter “convey[ed], if infelicitously, the procedural
posture of the case” and did not misrepresent the language of the injunction. Euro Pro also argued
that the letter advised the retailers to comply with the court’s injunction, which it claimed was
incorrect because retailers are not in “active concert or participation with” the defendant. The court
held that the question of who is in “active concert or participation with” a defendant is an unsettled
area of law and, therefore, the letters put forth a plausible legal theory – the court could not say for
certain that Homeland had misrepresented the scope of the injunction. Finally, the court held that
the purpose of the Lanham Act is to protect persons engaged in commerce from unfair competition,
and, to the extent that a litigant’s possession is meritorious enough to justify a preliminary
injunction, that litigant is entitled to assert the injunction’s protection in the marketplace
aggressively. The court suggested that Homeland should not have mentioned the unrelated
Pennsylvania injunction in its letter, and cautioned it that if it did not immediately delete that
reference, it would set a hearing on whether the preliminary injunction should be vacated. The court
recommended that Euro Pro exercise its own First Amendment rights and issue its own letters.
(Homeland Housewares, LLC v. Euro-Pro Operating LLC, No. 14-cv-03954, 2014 WL 4449922
(C.D. Cal. Sept. 10, 2014)).
The U.S. District Court for the Southern District of Ohio denies the defendants’ motion for
attorneys’ fees under the Lanham Act. Defendants asserted that they are entitled to attorneys’ fees
pursuant to 15 U.S.C. § 1117(c)(3), which grants the court discretion to award attorneys’ fees to
parties who prevail “in exceptional cases” brought under the Lanham Act. The court held that
whether the defendants are entitled to attorneys’ fees “hinges on two considerations: (1) whether the
[defendant] qualify as a ‘prevailing party’; and (2) whether this case qualifies as ‘exceptional.’” In
determining whether the defendants qualify as a “prevailing party,” the court held that to be
considered a prevailing party, one must receive at least some relief on the merits of his claim,
resulting in a judicially sanctioned change in the legal relationship of the parties; a party, however,
does not need to win every claim to be considered the prevailing party. In making the determination
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of whether a case qualifies as “exceptional,” the court stated that the first step is to make an
objective inquiry into whether the suit was unfounded when it was brought, and the next step is to
make a subjective inquiry into the plaintiff’s conduct during litigation. The court further noted that,
for the first step, the relevant inquiry is not whether the plaintiff’s claims ultimately succeeded on
the merits, but whether they objectively had some legal and factual basis at the time they were
brought. In this case, the court denied the defendants’ motion because the court did not find the case
to be “exceptional” for purposes of the fee-shifting provision – objectively, the court could not
conclude that the plaintiffs’ claims were meritless from the outset, and subjectively, the court could
conclude that plaintiffs’ conduct during the case was oppressive. (Wagner v. Circle W Mastiffs, Nos.
2:08-CV-00431, 2:09-CV-00172, 2014 WL 4417761 (S.D. Ohio Sept. 8, 2014)).
The U.S. District Court for the District of New Jersey grants defendant Expansys’s motion to
dismiss Locus Telecommunication, Inc.’s Lanham Act claim against it, and dismisses the plaintiff’s
state law claims without prejudice for lack of subject matter jurisdiction. Expansys sells personal
identification numbers (“PINs”), which allow users to add minutes to prepaid cell phones. Locus
alleged that Expansys falsely claimed on its website that its PINs were “The Easiest Way to Refill a
USA PrePay Plan.” Locus purchased PINs from Expansys for resale to distributors, and claims that
the PINs did not work, thereby causing customer dissatisfaction and harm to Locus’s goodwill. The
court held that the conduct complained of did not fall within the purview of the Lanham Act,
because Locus’s injury did not “stem from conduct by Expansys which unfairly diminished Locus’s
competitive position in the marketplace.” Rather, it stemmed from Locus being “hoodwinked into
purchasing a disappointing product,” which the Supreme Court held in Lexmark, Int’l, Inc. v. Static
Control Components, Inc. was not a Lanham Act claim. The court dismissed the Lanham Act claim
with prejudice because the complaint could not be amended to state a cognizable false advertising
claim. The court denied Expansys’s motion for Fed. R. Civ. P. 11 sanctions, holding that it was not
frivolous for Locus to seek to expand the Lexmark holding. (Locus Telecomms., Inc. v. Talk Global,
LLC, No, 14-cv-1205, 2014 WL 4271635 (D.N.J. Aug. 28, 2014)).
The U.S. District Court for the District of South Carolina grants default judgment to a plaintiff that
competed with the defendant in the business of supplying and installing replacement windows.
Plaintiff alleged violations of the Lanham Act, common law unfair competition, and a violation of
the South Carolina Unfair Trade Practices Act. The court found that the defendant’s advertisements,
which stated that the defendant adhered to the “strictest industry standards” in its replacement
window installation services, were false or misleading because, contrary to the defendant’s
assertions, it installed windows without permits required by law. Defendant’s advertisements that it
was “lead certified” were also false or misleading, because the defendant neglected to notify
homeowners of lead-based paint concerns, neglected to check or perform testing to determine if
lead-based paint was present, and failed to perform lead remediation when installing replacement
windows. The court also found that the defendant’s representations were material to consumers and
likely to influence their purchasing decisions, and that its actions diverted sales from the plaintiff,
because there was evidence that 44 contracts were likely diverted from the plaintiff’s business.
Analyzing the Fourth Circuit’s six non-exclusive factors for courts to consider when making a
damages award, the court held that the plaintiff should be allowed a full recovery. In addition, the
court granted disgorgement of profits and treble damages under the Lanham Act for actual lost
contracts due to the defendant’s multiple failures, omissions, and misrepresentations. (Muhler Co. v.
Window World of N. Charleston LLC, No. 2:11-CV-00851, 2014 WL 4269078 (D.S.C. Aug. 28,
2014)).
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The U.S. Court of Appeals for the Third Circuit affirms the holding of the district court that a party
bringing a claim under the Lanham Act is not entitled to a presumption of irreparable harm when
seeking a preliminary injunction and must demonstrate that irreparable harm is likely. In the lower
court, appellant Ferring Pharmaceuticals, Inc. sought a preliminary injunction under the Lanham Act
against appellee Watson Pharmaceuticals, Inc. to enjoin Watson from making allegedly false
statements regarding one of Ferring’s competing hormone treatments. After analyzing two U.S.
Supreme Court holdings, the Third Circuit concluded that, in a comparative advertising case, a
plaintiff is required to demonstrate irreparable harm for an injunction to be issued. Because
Watson’s misrepresentations were made during a webcast that was no longer available to consumers,
the Third Circuit affirmed the district court’s holding that the evidence did not support the harm
being irreparable, such that it could only be cured by a preliminary injunction. (Ferring Pharms.,
Inc. v. Watson Pharms., Inc., -- F.3d --, No. 13-2290, 2014 WL 4194094 (3rd Cir. Aug. 26, 2014)).
The U.S. District Court for the Northern District of Illinois denies defendant Navarre Corporation’s
motion to dismiss plaintiff Toddy Gear, Inc.’s complaint, which asserted claims for false advertising
in violation of the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act. Toddy
Gear, the manufacturer and distributor of a microfiber cloth, alleged that the defendant distributed a
knock-off cloth to retail stores and that the product markings for this knock-off stated that the
product was designed and produced in the United States, when, in fact, the product is actually
imported from China. In its motion to dismiss, the defendant argued: (i) that the plaintiff could not
invoke a cause of action under the Lanham Act because of the Textile Fiber Products Identification
Act; (ii) that the plaintiff failed to assert a discernable competitive injury; (iii) that the plaintiff failed
to allege that a false statement was made in a commercial advertisement; and (iv) that the false
statements alleged were insufficient under Fed. R. Civ. P. 9(b). In denying the motion to dismiss,
the court disagreed with the defendant’s arguments and held that: (i) the Textile Fiber Products
Identification Act does not preclude Lanham Act claims; (ii) as pleaded, the complaint alleged a
direct injury to the plaintiff’s commercial interests; (iii) statements made on labels constitute
commercial advertisements under the Lanham Act; and (iv) the allegations were sufficient to satisfy
Rule 9(b). (Toddy Gear, Inc. v. Navarre Corp., No. 13 CV 8703, 2014 WL 4271631 (N.D. Ill. Aug.
26, 2014)).
The U.S. Court of Appeals for the Eight Circuit affirms in part, vacates in part, and remands the
district court’s decision to dismiss the plaintiff’s United States Warehouse Act (“USWA”) and third-
party beneficiary claims on the pleadings, and granting summary judgment on the Lanham Act
claim. Plaintiff, a biotechnology company, brought suit alleging that the defendant-federally
licensed warehouse operator breached its obligation under the USWA, breached its duty to third-
party beneficiaries of the licensing agreement between the operator and the federal government, and
engaged in false advertising in violation of Lanham Act, when it refused to accept corn grown from
the plaintiff’s genetically-modified seed. The Eighth Circuit held that the USWA did not permit the
company to bring action against the operator directly, the USWA did not implicitly authorize private
causes of action, the plaintiff was not the intended third-party beneficiary of the licensing agreement,
and summary judgment on its Lanham Act false advertising claim was not warranted. In vacating
summary judgment on the Lanham Act false advertising claim, the court noted that the Supreme
Court’s recent decision in Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1337
(2014), established the zone-of-interests test and proximate causality requirement as the proper
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analysis for analyzing standing to allege a claim under the Lanham Act, and rejected the requirement
that challenged commercial speech be made by a competitor. (Syngenta Seeds, Inc. v. Bunge N. Am.,
Inc., No. 13-1391, 2014 WL 3882886 (8th Cir. Aug. 8, 2014)).
The U.S. District Court for the District of New Jersey grants in part the defendant’s motion to
dismiss the plaintiff’s complaint, which arose out of allegedly defamatory statements regarding the
plaintiff’s financial stability. The court dismissed several of the plaintiff’s claims for various
reasons. The court dismissed the Lanham Act claim because the alleged defamatory statements were
not contained in a commercial advertisement or promotion. An unfair competition claim was
dismissed because the claim merely asserted that the defendant potentially misappropriated
prospective business relationships, which does not constitute a claim for unfair competition.
(Innovasystems, Inc. v. Proveris Scientific Corp., No. 13-05077, 2014 WL 3887746 (D.N.J. Aug. 6,
2014)).
The U.S. Court of Appeals for the Second Circuit affirms the district court’s application of
presumptions for finding liability and damages in a Lanham Act false advertising action.
Defendant’s advertising claimed that its folate (a B vitamin that helps the body make new cells) was
comprised of “pure” isomers when it actually was comprised of two isomers (one natural the other
not) mixed together. The district court found that the defendant’s claim that its folate was pure was
literally false and that its claims describing the benefits of pure folate were literally true but
implicitly false when applied to its impure folate. The district court also found that the defendant
intended to deceive consumers with its advertising, and applied presumptions to find liability and to
injury and award damages. The Second Circuit held that, while a plaintiff bringing a claim about
implicitly false advertising must ordinarily prove confusion, the district court’s decision to presume
confusion (i.e., liability) was appropriate because the plaintiff, instead, proved that the defendant
intended for its advertising to deceive. Willful deception, according to the court, shifts the burden to
the defendant to prove a lack of confusion, which it did not do. The Second Circuit also affirmed the
district court’s use of a presumption in finding an injury and awarding damages by comparing this
case to a typical comparative advertising case, which does not raise concerns of speculativeness
because it is clear exactly who the false message was intended to harm. According to the court,
although the advertising at issue in this case did not make any references to the plaintiff, because the
plaintiff was the only other player in the folate market and already had proved literal falsity and
willful deception, injury and damages could be presumed. The court did not limit its holding to
damages but held that the same rationale (direct competitors in a two-player market, literal falsity,
and willful deception) may be used to award both injunctive relief and damages. (Merck Eprova AG
v. Gnosis S.p.A., -- F.3d --, No. 12-4218, 2014 WL 3715078 (2d Cir. July 29, 2014)).
The U.S. District Court for the District of Utah determines that one of the claims contained in
plaintiff Catheter Connections’ motion for preliminary injunction was precluded by the federal Food,
Drug and Cosmetic Act (“FDCA”), but the other claim was not. Catheter Connections and
defendant Ivera Medical are competitors in the medical device field; both make disinfectant caps that
prevent infection in IV lines. Ivera received approval from the FDA to market its “X10” line of
caps. Ivera, then, introduced an “X13” line of caps and used language from the FDA’s clearance
letter for the X10 model on the X13 website and packaging. Catheter Connections sued Ivera for
patent infringement and unfair competition, and the court enjoined the sale of the X13 caps in
January 2014. Following that injunction, Ivera introduced its “Rev. G” line of caps. Catheter
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Connections filed an emergency motion for temporary restraining order and preliminary injunction
against Ivera, alleging four counts of false advertising under the Lanham Act – one arising from
Ivera’s assertion that it did not need a separate FDA clearance letter for the Rev. G, and the other
three arising out of other claims about the Rev. G (including one based on clinical testing and one
based on factual findings purportedly made by the FDA about the Rev. G). Ivera argued that all four
claims were precluded by the FDCA because the FDA has exclusive jurisdiction over medical device
testing and labeling, and the court would have to interpret FDA regulations to make a ruling as to
any of the claims. Catheter Connections, citing Pom Wonderful LLC v. The Coca-Cola Company,
189 L. Ed. 2d 141 (June 12, 2014), argued that its claims could go forward because they did not
intersect with the FDA’s regulatory expertise. The court agreed with Ivera that only the FDA could
determine whether Ivera needed a new clearance letter, but agreed with Catheter Connections that
the other three advertising claims were representations about the features and functionality of the
device, and the mere fact that the FDA has jurisdiction over medical devices and their testing does
not necessarily mean that courts cannot pass judgment on representations concerning the function of
the device, results of clinical testing, or what factual findings the FDA actually made about the
device. Catheter Connections, Inc. v. Ivera Medical Corp., No. 2:14-cv-70, 2014 WL 3536573 (D.
Utah July 17, 2014).
The U.S. District Court for the Central District of California denies a motion to dismiss the Lanham
Act and state false advertising claims brought by a commodity trading firm against a competitor for
operating affiliate websites purporting to contain independent consumer reviews that, in reality, were
false advertisements disparaging the plaintiff and its products. In summary fashion, the court found
that plaintiff adequately alleged the elements of Lanham Act false advertising, trade libel,
defamation, and intentional interference with prospective economic advantage by claiming that the
defendant used phony affiliate websites to make false claims about the plaintiff and its products.
(Am. Bullion, Inc. v. Regal Assets, LLC, No. CV 14-01873, 2014 WL 3516252 (C.D. Cal. July 15,
2014)).
The U.S. District Court for the Northern District of Illinois grants in part and denies in part the
defendant’s motion to dismiss claims under the Lanham Act. Plaintiff Yellow Group sued Uber
Technologies, alleging that Uber competed unfairly by misrepresenting certain features of its
service, and also encouraged taxi drivers to breach their agreements with the plaintiff. The court
first dismissed the plaintiff’s claim that the defendant deceptively represented on its website that its
taxis charged “standard taxi rates,” because there was no allegation that that directly injured the
plaintiff. The court, then, dismissed in part the claim of misrepresentation arising out of Uber’s
reference to “fleet partners.” (Yellow Group LLC v. Uber Techs. Inc., No. 12 C 7967, 2014 WL
3396055 (N.D. Ill. July 10, 2014)).
The U.S. District Court for the Northern District of Illinois grants summary judgment in favor of the
plaintiff and denies the defendant’s cross-motions for summary judgment, in a patent infingement
action, which also asserted Lanham Act false advertising claims. Plaintiff sued the defendant for
infringement of seven of its patents related to oxygen absorber technology; the defendant
counterclaimed, alleging infringement of two of its own patents, and false advertising in violation of
the Lanham Act. With respect to the Lanham Act counterclaim, the court held that, because none of
the customers deposed testified that they cared the least bit whether the system was patent-protected
or not, the defendant’s counterclaim could not be sustained. (Pactiv, LLC v. Multisorb Techs., Inc.,
No. 10 C 461, 2014 WL 2976558 (N.D. Ill. July 2, 2014)).
8
The U.S. District Court for the District of Minnesota grants the defendant’s motion to transfer venue
to the Central District of California. Plaintiff’s complaint stated causes of action for, among other
things, false advertising in violation of the Lanham Act, deceptive trade practices in violation of
Minnesota’s consumer protection statute, and unfair competition under Minnesota common law. In
granting the motion to transfer, the court held, in part, that, to the extent that the plaintiff could
properly pursue the Lanham Act and unfair competition claims, third-party buyers of the product at
issue would be “potentially significant sources of discovery.” Because there was only one such
buyer of the product in Minnesota and 28 in California and the surrounding states, the court held that
this was a factor weighing heavily in favor of transfer. (WhatRU Holding, LLC v. Bouncing Angels,
Inc., No. 13–2745, 2014 WL 2986657 (D. Minn. July 1, 2014)).
State Consumer Protection Laws
The U.S. Court of Appeals for the Ninth Circuit affirms the district court’s dismissal of a complaint
for violation of the California Unfair Competition Law (“UCL”) by three business owners against
YELP!, Inc., which operates a popular web-based company ratings system based on consumer
reviews. The business owners alleged that YELP utilized extortion to compel the purchase of
advertising from YELP, by threatening to take actions, including removal of positive reviews,
increasing prominence of negative reviews, and creating false reviews unless the business owners
purchased advertising from YELP. The district court dismissed the case, holding that the allegations
did not set forth a plausible claim. The Ninth Circuit affirmed, holding that the business owners
failed to allege a “wrongful” act, because the business owners had no preexisting right to positive
reviews on YELP’s website, and the business owners had no pre-existing right to be free of
prominent negative reviews. In addition, the Ninth Circuit held that the business owners’ allegations
regarding YELP’s purported authoring of false negative ads failed to reach the plausibility standard,
because the allegations did not make the possible authoring of reviews by YELP any more likely
than the possibility that the negative ads were made by disgruntled customer, neighbor, or other
person. Therefore, the Ninth Circuit affirmed the dismissal. In footnotes, the Ninth Circuit made
clear that it was not holding that no remedy existed for the alleged wrongful activity, only that it did
not reach the level of extortion and, therefore, did not violate the UCL. (Levitt v. YELP! INC., No.
11-17676, 2014 WL 4290615 (9th Cir. Sept. 2, 2014)).
The U.S. District Court for the Northern District of California Division grants in part and denies in
part defendant Apple, Inc.’s motion for judgment on the pleadings in putative class action alleging
violations of, among other things, California’s Consumer Legal Remedies Act and Unfair
Competition Law. Plaintiff alleged that the defendant falsely represented that the offering of a
“Season Pass” for Season 5 of the television show “Breaking Bad” included all 16 episodes for that
season, when, in fact, it included only half of them. Defendant claimed that the second half of
Season 5 was the “Final Season” and, therefore, was not included as part of Season 5. According to
the complaint, the defendant advertised the Season Pass as including “every episode in [Season 5]
and at a better price than if you were to purchase it one at a time.” The court granted the defendant’s
motion as to all claims except for the alleged violation of California’s Unfair Competition Law,
citing to the reasonable interpretation by consumers that their Season Pass purchase would include
all 16 episodes of Season 5. (Lazebnik v. Apple, Inc., No. 5:13-CV-04145, 2014 WL 4275008 (N.D.
Cal. Aug. 29, 2014)).
9
The U.S. District Court for the Northern District of California grants Defendant Apple, Inc.’s motion
to dismiss a putative class action alleging seven causes of action, including violations of the
Magnuson-Moss Warranty Act, and California’s Consumer Legal Remedies Act and Unfair
Competition Law, related to the defendant’s iPhone app, “Apple Maps.” Plaintiff claimed that, had
she known Apple Maps was “defective,” she would not have purchased her iPhone 5. The court
granted dismissal on all counts, holding that plaintiff’s dissatisfaction of the product was not a legal
claim because the defendant had not made any representations that its Maps app would operate
without fail. Further, the court found that the plaintiff had not identified with particularity the actual
defect she experienced, alleging only that the app led her to incorrect locations. As a result, the
court held the plaintiff failed to meet the Fed. R. Civ. P. 9(b) pleading standards for her claims
sounding in fraud. (Minkler v. Apple, Inc., No. 5:13-CV-05332, 2014 WL 4100613 (N.D. Cal. Aug.
20, 2014)).
The U.S. District Court for the District of New Jersey denies defendant MonaVie’s motion to
dismiss claims alleging false and deceptive advertising under the New Jersey Consumer Fraud Act.
Plaintiffs allege that the defendant posted a deceptive video online where an individual purporting to
be a doctor testifies that MonaVie’s juice product can ease cancer pain, along with customer
statements in brochures representing that consumption of the juice allowed them to cease other
medications. According to the plaintiffs’ allegations, the defendant knew that its product did not
provide these health benefits. Because all the statements were made by unrelated third parties, the
defendant claimed that it could not be held liable. The court determined that MonaVie could be
found vicariously liable for these misrepresentations because individuals contract with the defendant
to sell their products, a fact demonstrating that the defendant has control over the advertisements
used by distributors. The court also determined that the plaintiffs satisfied the heightened pleading
requirement under the New Jersey Consumer Fraud Act because the pleadings were adequate to
place the defendant on notice. Finally, the plaintiffs successfully pled a claim under the New Jersey
Consumer Fraud Act by alleging that the defendant’s statements about its product were false, that the
plaintiffs paid a premium for the product based on these allegations and thereby suffered an
ascertainable loss, and that the plaintiffs would not have paid a premium for the products if they did
not provide the advertised health benefits. (Pontrelli v. MonaVie, Inc., No. 13-CV-4649, 2014 WL
4105417 (D.N.J. Aug. 19, 2014)).
The U.S. District Court for the District of Massachusetts denies the plaintiff’s partial motion for
summary judgment and grants the defendants’ motion for summary judgment in an action based on
allegations that the drug “Celexa” was represented to be safe and effective for minor children.
Plaintiff brought individual claims under California’s Unfair Competition Law (“UCL”) and False
Advertising Law (“FAL”) after his motion to certify a class was denied. In denying the plaintiffs’
motion for summary judgment on materiality under the UCL, the court held that the defendants’
concealment of a negative study from the public was insufficient to establish materiality as a matter
of law. While a jury may infer such a fact, the defendants’ “belief as to materiality does not establish
that the study was, in fact, material to a reasonable physician or consumer.” (In re Celexa and
Lexapro Mktg. and Sales Practices Litig., No. MDL 09-2067, 2014 WL 3908126 (D. Mass. Aug. 8,
2014 )).
10
The California Court of Appeal reverses the trial court’s order granting defendant Yelp’s anti-
strategic lawsuit against public participation (“SLAPP”) motion to strike the plaintiff’s complaint.
Plaintiff’s complaint, which sought injunctive relief under California’s Unfair Competition Law and
False Advertising Law, was aimed at preventing Yelp from making claims about the accuracy and
efficacy of the filter it used to separate out unreliable and/or biased reviews. In granting Yelp’s
motion to strike, the trial court found that Yelp’s statements about filtering were matters of public
interest and that the public interest exemption did not apply. In reversing the trial court’s decision,
the Court of Appeal concluded that the commercial speech exemption did apply to Yelp’s statements
concerning the accuracy and efficacy of its review filter because such statements were about the
quality of its product and were intended to reach third parties to induce them to engage in a
commercial transaction. (Demetriades v. Yelp, Inc., No. B247151, 2014 WL 3661491 (Cal. App.
July 24, 2014)).
The U.S. District Court for the Western District of Pennsylvania grants in part and denies in part
defendant Capella University’s motion to dismiss the plaintiff’s complaint, which arose out of her
purchase of educational services from the university. Addressing the plaintiff’s claim under the
Pennsylvania Unfair Trade Practices Consumer Protection Law (“UTPCPL”), the court held that the
plaintiff’s purchase of educational services were for personal and not business use. The court further
explained that the defendant’s position effectively asked the court to conclude as a “categorical and
definitional matter” that educational services could never be covered by the UTPCPL as a matter of
law, “no matter the facts.” The court expressly stated that, at the dismissal stage, it could not make
such a ruling, but would be willing to revisit the issue at summary judgment. (Sibeto v. Capella
Univ., No. 2:13-CV-1674, 2014 WL 3547344 (W.D. Pa. July 17, 2014)).
The U.S. Court of Appeal for the Fifth Circuit affirms the district court’s decision granting summary
judgment in favor of defendant Marvin Lumber and Cedar Company. Plaintiff sued the defendant
under the Texas Deceptive Trade Practices Act for false representations, breach of warranty, and
negligence relating to the manufacture and installation of leaking windows. The court determined
that the plaintiff produced no evidence proving that the allegedly deceptive practices were “in
connection” with the purchase of the plaintiff’s home, as required by the statute. (Klein v. Marvin
Lumber and Cedar Co., No. 13-20754, 2014 WL 3412979 (5th Cir. July 15, 2014)).
The U.S. District Court for the Middle District of Florida grants the defendant-drug manufacturer’s
motion to dismiss, after removal of the litigation from Florida state court. Plaintiff alleged that the
defendant designed, manufactured, and marketed a prescription drug for acne, and represented that
the drug was safe for treatment of acne, when in reality, the drug caused hair loss. Plaintiff alleged
that the defendant failed to provide a warning regarding the hair loss. Plaintiff alleged that he
experienced significant hair loss as a result of taking the drug, and the seven count complaint
asserted claims for, among other things, breach of warranty, misrepresentation, and fraud. The court
dismissed all counts based on the learned intermediary doctrine coupled with the plaintiff’s failure to
provide any allegations of fact regarding the manufacturer’s failure to warn the doctor, privity with
the manufacturer (required for Florida breach of warranty claims), or any details regarding the fraud
sufficient to meet the requirements of Fed. R. Civ. P. 9(b). (Dimieri v. Medicis Pharms. Corp., No.
2:14-cv-176, 2014 WL 3417364 (M.D. Fla. July 14, 2014)).
11
The U.S. District Court for the Eastern District of North Carolina grants in part and denies in part
defendant-bakery’s motion to dismiss fraud and consumer protection violation claims. The plaintiff
purchased a distribution route, which granted him exclusive rights to purchase bakery products from
the defendant and sell those products to grocery chains in a designated area. The defendant
terminated the agreement citing to various “material breaches” of the agreement made by the
plaintiff. The plaintiff brought suit alleging breach of contract, fraud, and violation of the state
consumer protection statute based on the alleged false “material breaches” identified in the notice of
termination. The court granted the defendant’s motion to dismiss the fraud claim finding that the
plaintiff was not, in fact, deceived by any statement in the notice because the plaintiff challenged the
notice of termination immediately. The court denied the motion to dismiss the statutory claim
finding that, although a mere breach of contract is not a statutory violation, the plaintiff alleged
sufficient facts that the defendant acted unfairly and deceptively by pretextually terminating the
agreement. (Martin v. Bimbo Foods Bakeries Distrib., Inc., No. 5:14-CV-17, 2014 WL 3487618
(E.D.N.C. July 11, 2014)).
The Texas Court of Appeals reverses a jury verdict that found defendant Patrick Cox liable under the
Texas Deceptive Trade Practices Act for misrepresentations made by sales associates employed by
his tax resolution company. The court found that even though his company violated the statute, no
findings justified piercing the corporate veil; therefore, Cox could not be found personally liable.
The court, then, examined whether the State of Texas presented sufficient evidence of Cox’s
personal conduct to uphold liability. The jury previously found that Cox had violated five “laundry
list” items under the statute. Because there was no evidence that Cox accepted payment from
consumers, represented another entity that was endorsed or affiliated with his company, spoke with
consumers, or advertised his company’s services directly, the court reversed the jury’s findings.
While Cox did state he would solve the consumers’ tax problems by settling debts for “pennies on
the dollar” with employees who were former IRS agents, the court found these declarations were not
false or misleading. After reversing on the merits, the appellate court also reversed the trial court’s
permanent injunction and award of attorney’s fees. (Cox v. State, No. 07-12-00453-CV, 2014 WL
2965420 (Tex. App. July 1, 2014)).
Consumer Class Actions
The California Court of Appeal affirms the denial of class certification to a putative class action
against Hasbro, Inc., asserting unfair competition and false advertising claims related to Hasbro’s
“Tinkertoy” construction set. The plaintiff alleged that the models on the pictures in the toy’s
packaging could not be constructed with the pieces contained in the set, and the disclaimer “some
pictures show pieces not included with this set” was false and misleading because none of the
pictured models could be constructed using only pieces contained in the set. Additionally, the
plaintiff alleged that no design guide was included in the set. The court noted that the plaintiff
purchased the set from an online reseller, instead of an authorized retailer, and online resellers’
packaging varied from one another. In addition, non-contradicted evidence showed that all five
models indistinguishable from pictures on the set could be constructed using only pieces from the
set. Design guides, which were not included in shipments made to Sam’s Club, were included in
sets shipped to Toys “R” Us, and were made available to consumers who did not receive one. The
court upheld the denial of certification, finding common issues of fact do not predominate regarding
the design guide because not all customers could see the part of the label when purchasing the set
12
online. In addition, every set purchased from Toys “R” Us contained a design guide, so many
members of the proposed class were not exposed to the representation, or the representation was not
false or misleading to them because a design guide was enclosed. Common issues of fact also did
not predominate regarding claims surrounding the disclaimer that some pictures show pieces not
included with the set, because not all consumers could see that part of the label when purchasing the
set online. Finally, the plaintiff did not prove how the label’s depiction of five models was
misleading, because she did not identify how they were visually distinguishable from models that
could be constructed with pieces in the set. As a result, the plaintiff failed to carry her burden of
establishing a community of interest because she introduced no evidence that Hasbro “engaged in
uniform conduct likely to mislead the entire class.” (O’Brien v. Hasbro, Inc., No. B247434, 2014
WL 4896388 (Cal. Ct. App. Sept. 29, 2014)).
The U.S. Court of Appeals for the Third Circuit affirms the district court’s approval of a class action
settlement, the related attorneys’ fees award, and the imposition of the appellate bond. Plaintiffs
brought claims asserting, among other things, violations of the New Jersey Consumer Fraud Act,
negligent misrepresentation, and intentional misrepresentation. The case was resolved through a
nationwide settlement. On appeal, objectors to the settlement argued it was an abuse of discretion
for the court to award class counsel a fee relating to the injunctive relief from the settlement fund.
The Third Circuit rejected this argument because, under the common fund doctrine, the plaintiff
class bears the burden of attorneys’ fees. With respect to the appellate bond, the Third Circuit held
that the lower court did not abuse its direction in imposing an appeal bond because: (1) the objectors
did not meaningfully respond to claims that their appeals were meritless, and (2) the objectors were a
geographically diverse group that failed to represent they could pay the costs of the appeal. The
Third Circuit further affirmed the imposition of an appeal bond of $22,500 to cover the costs of
briefing and the administrative costs of the settlement fund while the case was on appeal. (In re
Nutella Mktg. and Sales Practices Litig., -- Fed. App’x. --, No. 12-3456, 2014 WL 4801262 (3d Cir.
Sept. 29, 2014)).
The U.S. District Court for the Northern District of California denies the defendant’s motion to
dismiss claims alleging violations of California’s Consumer Legal Remedies Act and False
Advertising Law, among other things. Plaintiff brought a class action lawsuit alleging that she
purchased defendant Triple Leaf Tea Inc.’s “Dieter’s Green” herbal tea in reliance on purportedly
false and misleading statements on the packaging, which included statements that led her to believe
that the tea would help her diet and to lose weight. The court rejected all of the defendant’s
arguments in support of dismissal and decided to let the case proceed with all five claims. The court
held that the plaintiff had standing to proceed on both her individual claims and on behalf of a class
consisting of persons who purchased Dieter’s Green and two other teas sold by the defendant,
because the plaintiff would not have purchased the tea but for the defendant’s labeling claims and
there is sufficient similarity between the products she purchased and did not purchase. In addition,
the court held that the claims are not subject to dismissal for failure to state a claim because the
statements challenged here are not merely general assertions of superiority (puffer) but are
characterized more properly as factual representations. The court also noted that whether a
reasonable consumer is likely to interpret the challenged statements in the manner alleged by the
plaintiff is not a finding appropriate for the pleading stage; it is an issue more appropriate for the
summary judgment stage. The court further held that a plaintiff can assert breach of an implied
warranty claim if the plaintiff relies on written labels or advertisements of a manufacturer, even if
13
the plaintiff is not in vertical privity with the defendant. (Johnson v. Triple Leaf Tea Inc., No. C-14-
1570, 2014 WL 4744558 (N.D. Cal. Sept. 23, 2014)).
The U.S. District Court for the Northern District of California grants in part and denies in part
defendant Uber Technologies, Inc.’s motion to dismiss a class action complaint. The basis for the
complaint, which asserted claims under the California Unfair Competition Law (“UCL”) and
Consumer Legal Remedies Act (“CLRA”), and for breach of contract, was that Uber misrepresented
that a 20% fee that is charged above the metered fare was for the driver when, in fact, a significant
portion of this fee was actually taken by Uber as additional revenue. In denying the motion to
dismiss in part, the court held that the plaintiff sufficiently had pled her UCL and CLRA causes of
action. In so holding, the court further found that the plaintiff: (1) had alleged a sufficient nexus
between California and the misrepresentations, which formed the basis of the complaint; (2)
adequately alleged economic harm by alleging that, but for Uber’s misrepresentation, she would not
have agreed to or paid Uber the full amount charged; (3) stated a claim under the UCL’s fraudulent
and unfairness prongs because the court could not conclude, at this early stage, that the alleged cost
of the misrepresentation was justified by Uber’s reasons and motives behind it; and (4) stated a claim
under CLRA sections 1770(a)(5) and (a)(9). In granting the motion to dismiss in part, the court
found that the plaintiff failed to state a claim under CLRA sections 1770(a)(13) and (a)(16) because
she did not allege necessary facts. (Ehret v. Uber Techs., Inc., No. C-14-0113, 2014 WL 4640170
(N.D. Cal. Sept. 17, 2014)).
The U.S. District Court for the Northern District of California grants the plaintiffs’ motion for
certification of liability issues – though not damages issues – for a California consumer class on
claims that Jamba Juice smoothie products are falsely marketed as “all natural.” Plaintiffs alleged
that the “all natural” statement was misleading because the products, made in five flavors, contained
several synthetic ingredients. Plaintiffs sued Jamba Juice Co. and Inventure Foods Inc., alleging
violations of California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair
Competition Law, as well as for breach of warranty. The court determined that the case meets all
Fed. R. Civ. P. 23 requirements to litigate “natural” issues on a class-wide basis, including
ascertaining class members. The court rejected the Third Circuit’s ascertainability decision in
Carrera v. Bayer Corp. (i.e., requiring objective, contemporaneous evidence of purchases) as not
being the law in the Ninth Circuit. The court further determined that the meaning and impact of
“natural” labeling on a food product may be litigated on a class-wide basis. The court ruled,
however, that the plaintiffs failed to meet the Comcast standard requiring a sufficient record that
damages could be feasibly and efficiently calculated on a class wide basis consistent with their
theory of liability. Among other things, the plaintiffs submitted no expert report or detailed analysis
of a damages theory. “With no evidence in the record demonstrating that these damages models can
be feasibly and efficiently calculated, a class cannot be certified for the purpose of seeking
damages.” Finally, the court ruled that it will address an injunctive relief class by separate order
(that issue was the subject of a separate round of briefing). (Lilly v. Jamba Juice Co., No.
3:13cv2998, 2014 WL 4652283 (N.D. Cal. Sept. 18, 2014)).
The U.S. District Court for the Southern District of New York grants in part and denies in part the
defendants’ motion to dismiss, and grants the plaintiff’s motion for class certification in a consumer
class action against the sellers of “Capatriti” brand olive oil. The olive oil was labeled “100% Pure
Olive Oil,” but the plaintiff alleges that it contained olive-pomace oil. Plaintiff asserted claims of
14
deceptive acts and practices under New York General Business Law § 349. Defendants argued that
there could be no liability for two of the three individual defendants except under a veil-piercing
theory. The court agreed, dismissing the individual claims against the two individuals, but allowing
the direct claims against the other individual and the company to proceed. As for the class
certification motion, the court rejected the defendants’ theory that the class was not ascertainable
because the company sold only to retailers; the court held that whether an individual purchased the
product was “about as objectively determinable [a] question as one can ask.” The court also held
that, while some fraud claims are inappropriate for class resolution, this case was appropriate for
certification because everyone who purchased the product relied on the label that it was 100% pure
olive oil, “since otherwise the individual would merely be purchasing a random tin of unknown
fluid.” (Ebin v. Kangadis Family Mgmt., No. 14-cv-1324, 2014 WL 4638700 (S.D.N.Y. Sept. 18,
2014)).
The U.S. District Court for the Southern District of California largely denies the defendant-
supplement company’s motion to dismiss a nationwide consumer class action. Defendant
Infinitelabs, LLC was sued under California consumer protection laws for falsely advertising its
product as helping build lean muscle and supporting testosterone production. The court dismissed
claims for injunctive relief, ruling that the plaintiff – who has no interest in purchasing the product
again – did not have Article III standing for injunctive relief because there is not a likelihood he will
suffer future harm from the defendant’s conduct. In all other respects, the defendant’s motion was
denied. The court rejected the defendant’s argument that the plaintiff was asserting that the
challenged advertising lacked substantiation (a theory the defendant argued was not cognizable).
The court ruled that the plaintiff’s theory was that the labeling claims were false (not merely
unsubstantiated) and that there was scientific evidence “directly refuting” the advertised attributes.
The court concluded that these allegations assert the existence of evidence showing that the
defendant’s claims are false and misleading. The court also rejected the defendant’s argument that a
reasonable consumer would not be misled in the manner alleged. The court ruled that the complaint
sufficiently pled that the labeling contains misrepresentations, and that whether a reasonable
consumer would be misled is a question of fact that should not be decided on a motion to dismiss.
The court agreed with the defendant, however, that the plaintiff’s claims sound in fraud and,
therefore, must meet the heightened pleading requirement of Fed. R. Civ. P. 9(b), but the court
concluded that the plaintiff met that standard. “In sum, Plaintiff has alleged the who, what, when,
where and how of the misconduct, and has pled sufficient facts to allow Defendant an adequate
opportunity to defend.” (Dabish v. Infinitelabs, LLC, No. 3:13cv2048, 2014 WL 4658754 (S.D. Cal.
Sept. 17, 2014)).
The California Court of Appeal affirms the trial court’s judgment following a bench trial that the
plaintiffs, on behalf of themselves and a class, failed to prove that a significant portion of targeted
consumers, acting reasonably, would have been misled by the defendants’ gym enrollment
agreement. Plaintiffs went to trial under California’s Unfair Competition Law challenging whether
the defendant’s gym enrollment contract was facially deceptive as to whether the class could keep
their dues at the same rate for a period longer than a year if they renewed their membership when the
initial multi-year term expired. The appellate court affirmed that the plaintiffs failed to carry their
burden because the contract in question was silent on the key point. In doing so, the appellate court
approved of the trial court’s reliance on class survey/statistical evidence demonstrating that an
overwhelming majority of class members renewed on an annual basis without complaint. (Harper v.
24 Hour Fitness, Inc., No. B243322, 2014 WL 4634982 (Cal. Ct. App. Sept. 17, 2014)).
15
The U.S. District Court for the District of Maryland denies the plaintiffs’ Fed. R. Civ. P. 60(b)
motion to reconsider the court’s order dismissing their class action complaint with leave to amend.
Plaintiffs alleged under various state laws that, despite the defendants’ representations to the
contrary, the defendants’ products containing glucosamine hydrochloride and chondroitin sulfate,
when ingested orally, had only a negligible effect on treating joint discomfort. The court dismissed
the plaintiffs’ complaint with leave to amend to include an allegation “that no reasonable expert
could conclude that glucosamine and chondroitin do not improve joint health in non-arthritic
consumers.” In denying the plaintiffs’ Rule 60 motion, the court elaborated on its prior order that
the osteoarthritic studies that the plaintiffs cited in their complaint could not be extrapolated to
support their broader allegation that the pills were ineffective for non-arthritic users. (In re GNC
Corp. Triflex Prods. Mktg. and Sales Practices Litig., No. 14-2491, 2014 WL 4447113, (D. Md.
Sept. 9, 2014)).
The U.S. District Court for the Southern District of Florida grants in part and denies in part the
defendant-food manufacturers’ motion to dismiss a consolidated class action complaint. The
plaintiffs alleged they were induced to buy the defendants’ products because of the “all natural”
label on the package, and that label was deceptive and likely to mislead the public because the
defendants’ products contain genetically modified organisms (“GMOs”) which do not meet the
definition of “all natural.” The claims were brought under the consumer protection statutes of
Florida and California. The defendants, first, moved for dismissal, claiming that the plaintiffs’
claims were preempted by federal labeling requirements. The court found that the plaintiffs’ claims
were not expressly or impliedly preempted by the FDA policy or regulation. The defendants also
argued that the claims were subject to dismissal pursuant to the primary jurisdiction doctrine. The
court held, however, that the issue of whether the label “all natural” is misleading is not a technical
area where the FDA has more expertise than the court. It also found that the complaint met the
heightened pleading requirements of Fed. R. Civ. P. 9(b) and that the plaintiffs’ claims stated a cause
of action under the state consumer protection statutes. The court did grant the defendants’ motion to
the extent that the plaintiffs lacked standing to bring claims for products they did not purchase. The
court also dismissed the claims against defendant Kellogg because the plaintiff failed to allege
sufficiently that defendant Kashi was a mere instrumentality or alter ego of Kellogg. (Garcia v.
Kashi Co., No. 12-21678, 2014 WL 4392163 (S.D. Fla. Sept. 5, 2014)).
The U.S. District Court for the Southern District of Florida grants in part and denies in part the
defendant-beer manufacturer’s motion to dismiss the plaintiffs’ putative class-action complaint,
which alleged that the manufacturer’s beer was deceptively labeled and the labeling misled
consumers into believing that the beer was brewed in Germany, when in fact, the beer was brewed in
Saint Louis, Missouri. The defendant argued that the complaint should be dismissed because the
packaging clearly stated that the beer was a product of the United States and listed the brewery’s
address in Missouri. However, the court found that the purported language was not readily visible
because of font and coloring choices for the packaging. Further, the it held that, in order to see the
language, the beer bottles would have to be removed from the package or the consumer had to pick
up the package and look at the bottom. The court found that a reasonable consumer could not be
expected to do either before purchasing the beer. In addition, the court found the fact that the beer
brand in question had been brewed in Germany for more than a hundred years as contributing to the
deceptive nature of the statements on the package. The court, however, did dismiss the claims for
16
injunctive relief because the plaintiffs implied that they had stopped purchasing the beer and,
therefore, faced no significant risk of future harm. (Marty v. Anheuser-Busch Cos., LLC, No. 13-
23656-CIV, 2014 WL 4388415 (S.D. Fla. Sept. 5, 2014)).
The U.S. District Court for the Northern District of California dismisses with prejudice a consumer’s
first amended complaint, asserting claims based on alleged false advertising by a drug manufacturer,
and holds that the consumer’s claims were barred by the statute of limitations for the asserted claims.
The consumer asserted claims on her own behalf and that of a putative class against a drug
manufacturer for violations of California’s Consumer Legal Remedies Act (“CLRA”), Unfair
Competition Law (“UCL”), and False Advertising Law (“FAL”) based on alleged false and
misleading label and advertisements as to the efficacy of the drug for the treatment of depression.
The plaintiff alleged that she specifically saw and relied upon the statements of the drug’s efficacy
and that, had she known it was not effective, she never would have purchased it. She further alleged
that she had ceased taking the brand drug in 2006, but continued to take a generic version of the drug
until June 2008. She alleged that she stopped taking the drug because it did not work for her.
However, she did not file suit until January 2013, more than four years after she admitted to stopping
treatment with the drug. The consumer attempted to rely on the delayed discovery doctrine to toll
the statute of limitations, but she failed to allege that she took any diligent action to discover the
cause of her harm. The court took judicial notice of numerous articles and other media, which were
available to the consumer had she looked, and determined that the consumer had failed to
demonstrate diligence in pursuing her claims, which barred the application of the delayed discovery
doctrine. The court dismissed the case with prejudice, because it had already provided the plaintiff
with an opportunity to amend and specifically warned that if facts demonstrating diligence were not
present in the new complaint, dismissal with prejudice would result. (Plumlee v. Pfizer, Inc., No.
13-CV-00414, 2014 WL 4275519 (N.D. Cal. Aug. 29, 2014)).
The U.S. District Court for the Northern District of California grants, in part, and denies, in part,
defendant Tetley USA, Inc.’s motion to dismiss a second amended consumer class action complaint,
alleging that the tea company falsely advertises its “British Blend Premium Black Tea” and “Green
Tea” products, and more than 80 additional substantially-similar products across nine product lines.
Plaintiff alleges violations of California’s Unfair Competition Law (“UCL”), False Advertising Law
(“FAL”), and Consumers Legal Remedies Act (“CLRA”), asserting that the defendant’s labels do
not comply with federal (Food, Drug & Cosmetics Act (“FDCA”)) and state (Sherman Law) labeling
law. Plaintiff claimed that such violations are, themselves, actionable under the “unlawful” prong of
the UCL, without allegations of deceptions or reliance. Plaintiff separately asserted that the same
violations render the labels false or misleading under the “fraud” or “unfair” prongs of the UCL.
The court ruled that reliance and deception are required elements of all of the plaintiff’s claims under
the UCL because “the predicate unlawfulness is misrepresentation and deception,” i.e., “[t]he federal
and state [food labeling] statutes relied on by Plaintiff prohibit a particular type of consumer
deception, the mislabeling of food products.” The court, therefore, dismissed the plaintiff’s
“unlawful,” strict-liability-type claim (without prejudice). The court also ruled that the plaintiff did
have standing to sue over the non-purchased products because substantial similarity to the purchased
products is sufficient and the plaintiff showed that the various product lines are identical in material
respects (ingredients, manufacturing facility, and challenged labeling statements). The court rejected
the defendant’s express federal preemption and Buckman/Perez implied preemption arguments. The
court ruled that plaintiff is attempting to enforce California’s Sherman Law, not the FDCA, and that
17
the Sherman Law imposes labeling requirements identical to the FDCA. Accordingly, the state-law
claims do not fall within the FDCA’s express preemption provision, which bars certain non-identical
state-law labeling requirements, and are not impliedly preempted as back-door attempts to enforce
the FDCA. The court also rejected the defendant’s argument that the complaint should be dismissed
in favor of the primary jurisdiction of the FDA, ruling that the complaint does not raise issues of first
impression or of particular complexity that requires FDA’s handling. The court found that the
complaint’s allegations satisfied Fed. R. Civ. P 9’s particularity requirement as to challenges to
label-based statements, but struck references to the defendant’s website because the plaintiff did not
allege sufficient facts to support challenges to the website. (De Keczer v. Tetley USA, Inc., No.
5:12cv2409, 2014 WL 4288547 (N.D. Cal. Aug. 28, 2014)).
The U.S. District Court for the District of New Jersey grants the plaintiff’s motion to certify a class
and denies defendant Avis’s Daubert motion to exclude the plaintiff’s expert. Plaintiff sued Avis for
charging consumers 75 cents per rental day to participate in Avis’s “Travel Partner Program,” which
allows consumers to earn frequent flyer and other reward points for car rentals. Plaintiff argued that
Avis’s failure to disclose this fee on his rental confirmation email violated the New Jersey Consumer
Fraud Act. Plaintiff’s expert opined that virtually none of Avis’s customer could have known about
the surcharge. Among other arguments, Avis argued that the expert should have conducted a
survey. However, the court held that she was not required to do so, because she instead reviewed
records of activity on Avis’s website and determined that less than 1% of website visitors clicked the
link where Avis’s disclosures were located. The court also rejected Avis’s arguments that the expert
should have asked consumers if they read their receipts and knew what “FTP SUR” meant, and that,
because many car renters are repeat customers, the expert should have examined website data going
further back than 2009. At best, the court held, Avis’s points go to the weight, not the admissibility,
of the expert’s testimony. The court also held that the expert’s testimony on the surcharge’s
materiality was admissible. To the extent that Avis’s expert’s survey showed that roughly the same
number of consumers opted for the frequent flyer miles whether or not the surcharge was disclosed,
the court held that was a potential basis to impeach the plaintiff’s expert, not to exclude her. As for
the class certification motion, Avis did not challenge the numerosity and commonality prongs, but
argued that the plaintiff’s claim was not typical because he had not argued an injury-in-fact; that
plaintiff and his counsel “may not” meet the adequacy of representation requirement because
plaintiff might have learned from counsel that he was charged for frequent flyer miles; that
individual issues predominated over class issues; and that a class action was not a superior method
for the adjudication of the case. The court rejected all of these arguments. (Schwartz v. Avis Rent a
Car System, LLC, No. 11-cv-4052, 2014 WL 4272018, (D.N.J. Aug. 28, 2014)).
The U.S. District Court for the Northern District of California grants in part and denies in part the
defendant-food manufacturers’ motion to dismiss. Plaintiff filed a purported class action on behalf
of a class of consumers of eight different “Lipton” brand beverage products that she purchased
(“purchased products”) and a class of consumers of 83 different food products sold by the
defendants that she did not purchase (“non-purchased products”). Plaintiff argued that the
defendants’ labeling practices for their food products were unlawful (1) by representing “all natural”
or “natural” when they contain chemical preservatives, synthetic chemicals, added artificial color
and other artificial ingredients; (2) by failing to disclose the presence of chemical preservatives,
artificial flavorings, or artificial added colors; (3) by making nutrient content claims on the labels of
food products that fail to meet the minimum nutritional requirements legally required for the nutrient
content claims being made; (4) by making antioxidant claims on the labels of food products that fail
18
to meet the minimum nutritional requirements legally required for the antioxidant claims being
made; and (5) by making health claims about its products on the defendants’ website that are
prohibited by law. Plaintiff alleged violations of California’s Unfair Competition Law (“UCL”),
False Advertising Law (“FAL”), and Consumers Legal Remedies Act (“CLRA”), and that the
defendant’s conduct was unlawful under the California Sherman Food, Drug, and Cosmetic Law.
Defendant moved to dismiss the plaintiff’s second amended complaint on the grounds that the
plaintiff lacked of standing; the plaintiff failed to state a claim; and that the plaintiff’s state law
claims were preempted. Defendant argued that the plaintiff lacked standing to pursue claims based
on products she did not purchase because she failed to explain how the 83 products with different
labels and ingredients, across different product lines, are “substantially similar” to the eight products
she bought. The court held that the plaintiff failed to allege substantial similarity among the
purchased products and the non-purchased products, noting that the defendants showed in their
motion numerous examples where the products had considerable differences among the labels.
Moreover, the court rejected the plaintiff’s argument that the purchased and non-purchased products
are substantially similar simply because they share an alleged Sherman Law violation. The court
dismissed the plaintiff’s claims involving non-purchased products without prejudice. Defendants
argued that the plaintiff’s causes of action predicated upon state law are preempted by the FDCA.
Defendants contended that the language in federal law explicitly precludes the plaintiff, a private
actor, from enforcing the FDCA and the FDA regulations, and the plaintiff cannot use the Sherman
Law as a way to sidestep preemption. Defendants further argued that such enforcement is expressly
preempted because a judgment in the plaintiff’s favor would impose requirements different from or
in addition to the exhaustive federal laws and regulations. Citing recent California district court
decisions, the court found that, whether the challenged “natural” labels in this case would deceive a
reasonable consumer is not akin to defining FDA policy, but rather a factual determination better left
to triers of fact. The court granted the defendants’ motion to dismiss Plaintiff’s unlawful claims
under the UCL without prejudice because the plaintiff failed to plead reliance on the alleged
“misbranding” violations. The court held that actual reliance applies to claims under the unlawful
prong of the UCL. Plaintiff could not circumvent the reliance requirement by simply pointing to a
regulation or code provision that was violated by the alleged label misrepresentation, summarily
claiming that the product is illegal to sell and therefore negating the need to plead reliance.
However, with respect to the plaintiff’s “fraudulent” prong UCL claims, those claims for nutrient
content, antioxidant content, nutritional value claims, and natural representations are properly pled,
may deceive a reasonable consumer, and are inappropriate to resolve at the motion to dismiss stage.
(Maxwell v. Unilever United States, Inc., No. 5:12-CV-01736, 2014 WL 4275712 (N.D. Cal. Aug.
28, 2014)).
The U.S. District Court for the Eastern District of New York grants defendants, The Estee Lauder
Companies Inc.’s, Estee Lauder, LLC’s, and Estee Lauder Inc.’s (collectively, “Estee Lauder”)
motion to dismiss the plaintiff’s amended class action complaint, alleging violation of Sections 349
and 350 of the New York General Business Law, breach of express warranty and the implied
warranty of merchantability, and unjust enrichment, seeking both injunctive relief and damages.
Plaintiff’s allegations arose out of Estee Lauder’s marketing of five cosmetic products from its
“Advanced Night Repair Collection.” Plaintiff alleges that Estee Lauder made false efficacy claims
and misrepresented the products in their advertisements. The court dismissed her claims for
injunctive relief because the plaintiff had not alleged a sufficient future injury to establish standing
to assert such claims. The court, then, dismissed New York General Business Law claims and the
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breach of warranty claims because the plaintiff failed to plead with the requisite plausibility that any
of the defendants’ claims were materially misleading, and failed to provide the defendants with
timely notice of the alleged breach of warranty claims. The court also dismissed the unjust
enrichment claim and noted that “[w]here an express contract is conceded, as it is here, a plaintiff
may not proceed also on a quasi-contract theory because it is foreclosed by the very existence of the
express contract.” (Tomasine v. Estee Lauder Cos. Inc., No. 13-CV-4692, 2014 WL 4244329
(E.D.N.Y. Aug. 26, 2014)).
The U.S. District Court for the Southern District of California, in a consumer fraud class action
brought under California law, grants the class plaintiff’s motion to withdraw and to substitute
another class member as class representative. The court observed that the defendant’s objections to
the plaintiff’s substitution motion were based mostly on its view that the case is “a sham lawsuit of
sorts, driven more by lawyers’ interest in attorney’s fees than meaningful relief for consumers.”
Although the court acknowledged that this belief was a “standard view of cases of this kind,” it
nonetheless, permitted substitution of the new class representative on the grounds that the original
plaintiff sought substitution diligently and without undue delay upon learning he would need to
move away from the district to care for a sick relative. Also, the court determined that the defendant
would not be prejudiced by the substitution because it presented no threat of negating work that had
already been done in the case or giving the plaintiff a tactical advantage. (Nilon v. Natural-
Immunogenics Corp., No. 3:12-cv-930, 2014 WL 4197555 (S.D. Cal. Aug. 22, 2014)).
The U.S. Court of Appeals for the Seventh Circuit reverses the district court’s decision granting
summary judgment to defendant Sturm Foods, Inc., and denying class certification. Defendant
introduced a coffee product to compete directly with the “K-Cup,” a small plastic cartridge
containing fresh coffee grounds designed to be used exclusively with Keurig coffee machines.
Keurig held a patent over the K-Cup’s filter technology until 2012, when the patent expired and
similar products began entering the market. Dissimilar to the K-Cup, the defendant’s product
contained instant coffee, which was marketed as “naturally roasted soluble and microground Arabica
coffee.” Plaintiffs claimed this representation was deceptive and in violation of the consumer
protection laws of a number of states. In reversing the district court’s denial of class certification,
the Seventh Circuit found that the lower court failed to recognize the question common to the claims
of all putative class members: whether the defendant’s packaging was likely to mislead a reasonable
consumer. Further, the lower court had applied too strict a test when it considered whether common
questions predominate over individual questions. In reversing the award of summary judgment, the
Seventh Circuit held that the lower court failed to take the disputed facts in the light most favorable
to the plaintiffs, the non-moving parties, and found that its own de novo review indicated that there
were genuine questions of material fact regarding whether the product packaging was likely to
mislead a reasonable consumer. (Suchanek v. Sturm Foods, Inc., No. 13-3843, 2014 WL 4116493
(7th Cir. Aug. 22, 2014)).
The U.S. District Court for the Northern District of California grants in part and denies in part
defendant Coca-Cola Company’s motion to dismiss a consumer class action complaint, which
alleged that the defendant mislabeled its Coca-Cola beverage product in violation of, among other
things, California’s Unfair Competition Law, False Advertising Law, and Consumers Legal
Remedies Act. Plaintiffs challenged the ingredients label on the defendant’s Coca-Cola product,
claiming the ingredient “phosphoric acid” was falsely labeled in accordance with applicable
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regulations. With respect to the false advertising claims, the court held that the plaintiffs had
sufficiently pled that they did not know that phosphoric acid was an artificial flavor or a chemical
preservative, that they would not have purchased the product had they known, and that they had
relied on the product labels. Therefore, the court denied the defendant’s motion to dismiss as to the
false advertising claims. (Engurasoff v. Coca-Cola Co., No. 4:13cv3990, 2014 WL 4145409 (N.D.
Cal. Aug. 21, 2014)).
The U.S. District Court in the Southern District of Ohio grants in part and denies in part defendant
Jos. A. Bank Clothiers’ motion to dismiss a consumer class action complaint brought under the Ohio
Consumer Sales Practices Act. Plaintiffs purchased a suit at the “regular price” of $795, based on
the advertisement at the time that stated they each would receive three “free suits” after their original
purchase. Plaintiffs alleged that the “regular price” was inflated high above the usual price paid for
the defendant’s suits. The court held these factual allegations were sufficient to properly assert a
claim under the Ohio Consumer Sales Practices Act. However, the court also determined the claims
could not proceed as a class because the complaint did not include factual allegations to support
actual damages. Plaintiffs’ pleading based damages on the loss of the benefit of the advertised
bargain; however, their pleadings were insufficient because they lacked a claim that the products
obtained were worth less than the paid amount, or that four of the defendants’ suits were worth less
than $795 combined. (Johnson v. Jos. A. Bank Clothiers, Inc., No. 2:13-CV-756, 2014 WL 4129576
(S.D. Ohio Aug. 19, 2014)).
The U.S. District Court for the Northern District of California grants in part and denies in part
defendant Frito-Lay North America Inc.’s motion to dismiss a class action lawsuit asserting claims
under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies
Act. Plaintiffs claimed that the labeling of three varieties of “Rold Gold Pretzels” contained false
and misleading statements that the products were “Made with All Natural Ingredients” and were
“LOW FAT” or “FAT FREE” (and, thus, allegedly healthy – when they actually contained a large
amount of sodium). Plaintiffs also claimed that the products were misbranded (and, therefore,
unsaleable and “legally worthless) because they failed to include the statement “See nutrition
information for [sodium] content,” despite containing more than 480 milligrams of sodium per
serving. Frito-Lay moved to dismiss on multiple grounds, including that (1) the named plaintiffs
lacked standing as to products they had not purchased; (2) plaintiffs had no standing to seek
injunctive relief as to statements that had been removed from package labeling before the lawsuit
was filed; (3) plaintiffs sought to apply California law to products bought outside California from a
Texas company; (4) plaintiffs’ misbranding claims failed to allege reliance and injury sufficiently;
and (5) plaintiffs’ other claims failed to sufficiently allege deception and reasonable reliance. The
court found that the purchased and unpurchased products were substantially similar, and, thus, the
plaintiffs had standing as to all three varieties of pretzels. They also had standing to seek injunctive
relief to the extent that Frito-Lay continued to sell its existing stock of product with the old labeling.
Because the plaintiffs had alleged a nationwide class and had not alleged a California-specific
subclass, however, the court dismissed all of their claims without prejudice and with leave to amend
because California law did not apply extraterritorially. As to the misbranding claim, the plaintiffs
argued that they did not need to plead reliance except for a customer’s general reliance that the
products they purchase are saleable. The court disagreed, holding that the plaintiffs were required to
plead actual reliance, and dismissed the claim with prejudice (but gave them the opportunity to plead
alternate theories of reliance). The court dismissed with leave to amend the allegations regarding the
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“all-natural” claims because the plaintiffs failed to allege with the specificity required under Fed. R.
Civ. P. 9(b) why the ingredients were “unnatural.” As for the “LOW FAT” and “FAT FREE”
claims, the court agreed with Frito-Lay that it was implausible that consumers who read labels
carefully – as plaintiffs alleged they did – would take “LOW FAT” or “FAT FREE” to make a
statement about sodium content, particularly when the sodium content was clearly listed on the
ingredients panel and pretzels with visible salt crystals could be seen through the clear packaging.
Those claims were also dismissed with leave to amend. Figy v. Frito-Lay North America, Inc., ---
F.Supp.2d ----, No. 13-cv-3988, 2014 WL 3953755 (N.D. Cal., Aug. 12, 2014),
The U.S. District Court for the Southern District of California grants defendant Kashi Company’s
motion and dismisses the food false advertising action without prejudice pursuant to the primary
jurisdiction of the U.S. Food and Drug Administration. Plaintiffs filed a nationwide consumer class
action under California and New Jersey consumer protection and warranty laws against the
defendant-food manufacturer, challenging more than 75 of its products as being misbranded because
the products listed evaporated cane juice (“ECJ”) as an ingredient. Plaintiffs alleged that ECJ is
ordinary sugar and that Kashi uses the name ECJ to conceal the presence of sugar in the products.
Defendant argued that the precise issue – i.e., whether ECJ is the common or usual name for the
sugar cane based sweetener ingredient – currently is pending before FDA as the subject of draft
guidance. The FDA draft guidance was issued in October 2009 and, in March 2014, FDA published
notice inviting additional comments and confirming that it has not reached a final decision on the
issue, but intends to do so. Defendant moved to dismiss or stay the action pursuant to the FDA’s
primary jurisdiction over the issue. Plaintiffs argued that the 2009 draft guidance, as well as several
subsequent FDA Warning Letters, clearly indicate the FDA’s rejection of the name ECJ, and neither
the pending draft guidance proceeding nor the March 2014 notice re-opening the comment period
changes that. The court disagreed, ruling that food labeling is within the FDA’s special competence,
“a determination as to the propriety of using the term ‘evaporated cane juice’ . . . involves highly
technical considerations,” FDA is currently and actively engaged in that very issue, and “FDA’s
articulation of its considered view on this matter will undoubtedly affect issues being litigated in this
action.” The court found it compelling that “[a]llowing the FDA to resolve this matter in the first
instance would permit the Court to benefit from the agency’s technical expertise and would also
provide for uniformity in administration of the agency’s food labeling requirements.” Plaintiffs’
complaint that the FDA has not set a time-table for a decision was rejected in light of the FDA’s
March 2014 notice that indicates that the FDA will issue the guidance in final form consistent with
its regulations. Finally, the court rejected the plaintiffs’ argument that the U.S. Supreme Court’s
recent decision in Pom Wonderful LLC v. Coca-Cola Co. disapproves of deferring to FDA on the
issues of whether a food label is deceptive. “Pom Wonderful makes no mention of the primary
jurisdiction doctrine and stands principally for the proposition that Lanham Act unfair competition
claims brought by a competitor are not precluded by the regulatory scheme of the [FDCA].”
(Saubers v. Kashi Company, -- F. Supp. 2d --, No. 3:13cv899, 2014 WL 3908595 (S.D. Cal. Aug.
11, 2014)).
The U.S. District Court for the Northern District of California, in a nationwide consumer class action
brought under the California consumer protection statutes, denies defendant Trader Joe’s motion to
strike the plaintiffs’ nationwide class claims; denies the defendant’s motion for interlocutory appeal
on the issue of the plaintiffs’ standing to assert claims based on products they did not purchase; and
stays the litigation on primary jurisdiction grounds pending an FDA decision regarding the use of the
term “evaporate cane juice.” With respect to the defendant’s motion to strike, the court ruled that,
22
despite substantial differences among state consumer protection laws, it was at least plausible for the
plaintiffs to demonstrate a suitable and realistic plan for trial of nationwide class claims. With
respect to the interlocutory appeal issue, the court determined that the key questions regarding the
products that the plaintiffs did purchase were the same as the questions regarding the products they
did not purchase, so an interlocutory decision by the Ninth Circuit would not materially advance the
lawsuit. Finally, with respect to the litigation stay, the court observed that the FDA had taken up the
issue of “evaporated cane juice” in March 2014, so the court determined that it made “sense to stay
the plaintiffs’ claims to see if the agency does, in fact, issue final guidance on the issue.” (Gitson v.
Trade Joe’s Co., No. 13-cv-1333, 2014 WL 3933921 (N.D. Cal. Aug. 8, 2014)).
The U.S. District Court for the Northern District of California grants in part and denies in part, he
defendant’s motion to dismiss and motion to strike portions of the complaint. Plaintiff filed a class
action complaint, alleging that defendants Kimberly-Clark Corporation, Kimberly-Clark Worldwide,
Inc., and Kimberly-Clark Global Sales LLC falsely advertised their “Cottonelle® Fresh Care
Flushable Wipes and Cleansing Cloths,” “Scott Naturals® Flushable Moist Wipes,” “Huggies®
Pull-Ups® Flushable Moist Wipes,” and “U by Kotex® Refresh” as “flushable,” when in fact, they
are not. Specifically, the plaintiff claimed that “flushable” should be defined as “suitable for
disposal by flushing down a toilet.” Plaintiff asserted that the defendants’ products are not
“flushable” because, after they are flushed down a toilet, they fail to “disperse,” with the result being
that they may clog municipal sewer systems and septic systems, and/or damage pipes and sewage
pumps. Among other things, the plaintiff pleaded violations of California’s Consumer Legal
Remedies Act (“CLRA”), False Advertising Law (“FAL”), and Unfair Competition Law (“UCL”),
and common law fraud, deceit, and/or misrepresentation. Defendants moved to dismiss the
complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and sought an order striking certain
allegations in the complaint as immaterial, impertinent, or irrelevant. Defendants argued that the
complaint should be dismissed for lack of subject matter jurisdiction because the plaintiff failed to
establish Article III and statutory standing. Defendants asserted that the plaintiff did not allege an
injury-in-fact, and that she lacked standing either to state a claim for prospective injunctive relief, or
to bring a class action relating to products that she did not allege she purchased. Defendants also
argued that the complaint should be dismissed for failure to state a claim, because it lacks the degree
of particularity required by Rule 9(b), and failed to plead facts sufficient to show an actionable
omission. Although the plaintiff did not allege that she actually suffered any damage to her pipes,
septic system, or sewage system, the court held that she had standing to bring her false advertising
claims because she alleged that she suffered economic harm in that she would not have paid a
premium for the wipes had the defendants not misrepresented the product as “flushable.” Noting
that the facts alleged in the complaint as to whether the plaintiff intended to purchase the product in
the future were “sketchy,” the court found that the plaintiff lacked standing to seek prospective
injunctive relief because she failed to allege facts showing that she intends to purchase the “same
product” at issue in the future. Allegations that a defendant’s conduct will subject unnamed class
members to the alleged harm is insufficient to establish standing to seek injunctive relief on behalf of
the class. Finally, with respect to whether the plaintiff could act as a class representative for
products she did not purchase, the court denied that part of the motion without prejudice to raising
the issue again at the class certification stage. The court noted that district courts in the Ninth
Circuit are split on the question whether a plaintiff has standing to sue on behalf of purchasers of a
product that the plaintiff himself/herself did not purchase. In general, a plaintiff may bring claims
regarding products that she did not purchase where “common misrepresentations are the crux of [the
23
plaintiff’s] case.” The court, however, agreed with the defendants that the plaintiff failed to plead
the requisite “who, what, when, where, and how” of the alleged misconduct by failing to plead the
specific advertisements she viewed and facts showing how she came to believe that the wipes were
not “flushable.” The court denied the defendants’ motion to dismiss the plaintiff’s omissions claim.
Because of the dispute regarding the definition of “flushable,” the court was unable to determine
whether the omissions claim was or was not viable at the pleading stage of the litigation. Lastly, the
court denied the defendants’ motion to strike portions of the complaint with the exception of the
allegations regarding on-line reports/articles and websites regarding problems caused by disposable
or “flushable” wipes at various municipal waste-water treatment plants and sewage systems.
(Davidson v. Kimberly-Clark Corp., No. CV-14-1783, 2014 WL 3919857 (N.D. Cal. Aug. 8, 2014)).
The U.S. Judicial Panel on Multidistrict Litigation grants defendant Coca-Cola’s request for
centralization of six actions, which each concern the alleged deceptive labeling of “Coca-Cola” soft
drink (particularly regarding the identification of phosphoric acid on the labels), in the Northern
District of California. Plaintiffs opposed the request for centralization on the grounds that the
allegations of each action were fairly straightforward. Alternatively, the plaintiffs requested that the
Northern District of Illinois or the Eastern District of New York, which each had one case pending,
be chosen for centralization. In ordering that the cases be centralized, the Panel found that the
actions, if they proceeded to discovery, could involve “numerous and complex issues of fact” and
stated that the cases “resemble[d]” food misbranding litigation regarding whether a product is
“natural,” which the panel had transferred in the past. In choosing the Northern District of
California, the Panel stated that it was an appropriate court because four of the six cases were
pending there and Judge Jeffrey S. White, who was presiding over those four actions, is well-versed
in multidistrict litigation. (In re Coca-Cola Prods. Mktg. and Sales Practices Litig., MDL No. 2555,
2014 WL 3896027 (U.S. Jud. Pan. Mult. Lit. Aug. 7, 2014)).
The U.S. Court of Appeal for the Seventh Circuit affirms the dismissal with prejudice of an Illinois
consumer’s class action claims alleging that Jos. A. Bank violated the Illinois consumer protection
statutes by advertising the normal retail prices of its products as temporary price reductions. The
court agreed with the district court’s finding that the plaintiff’s claims “sounded in fraud,” and, thus,
were to subject to Fed. R. Civ. P. 9(b)’s heightened pleading requirement even though they were cast
as “unfair practices” claims. The court also agreed that the plaintiff failed to identify adequately the
advertisements at issue by alleging only that “merchandise was offered at ‘sales prices,’” and failed
to allege how he subjectively learned that the sales were not temporary price reductions. Apart from
the truthfulness of the advertising at issue, the court also concluded that the plaintiff failed to allege
actual damages in the form of paying more than the value of the merchandise received or being able
to find cheaper options elsewhere. (Camasta v. Jos. A. Bank Clothiers, Inc., No. 13-2831, 2014 WL
3765935 (7th Cir. Aug. 1, 2014)).
The U.S. District Court for the Southern District of California grants in part and denies in part
defendant ConAgra Foods, Inc.’s motion to dismiss the plaintiff’s class action complaint arising out
of the marketing for the defendant’s “Chef Boyardee Mac & Cheese” product. Plaintiff alleged that
the defendant misrepresented that the product contained “No MSG” or had “No MSG Added” in
violation of California’s Consumers Legal Remedies Act, False Advertising Law, Unfair
Competition Law, and common law express warranty. In its motion to dismiss, the defendant argued
that the plaintiff’s state claims were preempted entirely by the FDA’s issuance on November 19,
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2012, of an informal ruling on MSG labeling. In granting the defendant’s motion to dismiss in part,
the court found the state labeling requirements mirrored the FDA regulations after November 19,
2012. Therefore, the plaintiff’s claims predating November 19, 2012 were preempted by the FDA,
but the claims post-dating that time period were not. (Peterson v. ConAgra Foods, Inc., No. 13-CV-
3158, 2014 WL 3741853 (S.D. Cal. July 29, 2014)).
The U.S. District Court for the Northern District of California denies a motion for class certification
in a case involving allegedly false statements Clorox made about its “Fresh Step” cat litter.
Plaintiffs alleged that Clorox made false statements that Fresh Step, which uses carbon instead of
baking soda, is more effective at eliminating odors than cat litters that use baking soda. The court
denied the motion for class certification, finding that the class was not ascertainable and common
questions did not predominate, as required by Fed. R. Civ. P. 23(b)(3). The court also found that the
plaintiffs were required provide sufficient evidence that retailer records could be be used to identify
the class but failed to do so; consumer affidavits alone are insufficient to identify members of the
class. In addition, the court found that individual questions predominated, specifically whether
members of the proposed class saw and relied upon the allegedly misleading claims. Finally, the
court found that the problems with ascertainability and predominance would affect superiority, by
rendering the management of the class extremely complicated. (In re Clorox Consumer Litig., 12-
00280, 2014 WL 3728469 (N.D. Cal. July 28, 2014)).
The U.S. District Court for the Southern District of California grants defendant Tristar’s motion to
dismiss the plaintiff’s claims for injunctive relief. Plaintiff filed a putative class action complaint,
alleging that Tristar marketed and distributed its “Flex-Able Hose” product in California with claims
that the product is a “durable and strong garden hose.” Plaintiff alleged that the Flex-Able Hose
packaging and infomercial touted the product as having “a tough double construction,” and being
“designed like a fire-hose for speed, storage and strength, to last a really long time.” Plaintiff
alleged that Tristar’s advertising claims are false because Tristar concealed the existence and nature
of inherent defects that the hose quickly leaks and ruptures. Plaintiff further alleged that, had she
known that the Flex-Able Hose was a flimsy hose with a propensity to leak and rupture, she would
not have purchased the product. Plaintiff brought claims for, among other things, violations of
California’s Consumers Legal Remedies Act, Unfair Competition Law (“UCL”), and False
Advertising Law, and fraud by omission. Tristar argued that the plaintiff lacked Article III standing
to pursue her injunctive relief claims because there is no threat of a repeated injury. Plaintiff
opposed the motion, arguing that recent California district court decisions have held that plaintiffs in
false advertising class actions retain standing to pursue injunctive relief so long as the products
continue to be marketed deceptively and sold by the defendant. Those courts reasoned that to hold
otherwise would severely undermine the objective of California’s consumer protection laws to
protect both consumers and competitors by promoting fair competition in commercial markets for
goods and services. The court agreed with Tristar, reasoning that the Supreme Court and Ninth
Circuit are clear that, for a plaintiff to have standing to pursue injunctive relief, there must be a “real
and immediate threat of repeated injury.” According to the court, other cases that purport to create a
public-policy exception to the standing requirement, that exception does not square with Article III's
mandate. Here, the plaintiff failed to allege any facts that plausibly suggest that her alleged injury
will occur again. Plaintiff emphasized multiple times in her complaint that, had she known the
quality of the product – that it is allegedly prone to leaks and ruptures – she would not have
purchased the Flex-Able Hose. Given those allegations, the plaintiff was determined to lack Article
III standing to pursue her claims for injunctive relief. Therefore, the court dismissed the claims for
25
injunctive relief without prejudice because it is possible that another plaintiff could be added that
would have standing to pursue injunctive relief. The court, however, denied the plaintiff’s request to
remand her claims for injunctive relief to state court because she failed to adequately justify such
relief, and the plaintiff could commence a separate action for injunctive relief in state court in any
event. (Burns v. Tristar Prods., Inc., No. 14-CV-749, 2014 WL 3728115 (S.D. Cal. July 25, 2014)).
The U.S. District Court for the Middle District of Florida grants in part and denies in part defendant
Chattam, Inc.’s motion to dismiss a putative Florida-only consumer class action relating to
mouthwash that was advertised as being able to “rebuild[] tooth enamel.” Plaintiff claimed that the
advertising campaign violated various Florida consumer protection laws, and state and federal
warranty laws because Fluoride, the main ingredient in the mouthwash, worked by “remineralizing”
teeth rather than rebuilding enable. Defendant argued that customers would not have made a
distinction between the terms “remineralizing” and “rebuilding,” but the court found that argument
to be a factual issue beyond the scope of a motion to dismiss. Further, the court ruled that the
plaintiff has pled plausible alternative theories of recovery, including that the product was valueless
because it was misbranded or that it was worth less than she paid. However, the court dismissed
without prejudice state and federal implied warranty claims because the plaintiff was not in privity
with defendant. (Foster v. Chattem, Inc., No. 6:14cv346, 2014 WL 3687129 (M.D. Fla. July 24,
2014)).
The U.S. District Court for the Western District of Washington denies the plaintiffs’ amended
motion for class certification. Plaintiffs asserted a single claim for violation of Washington’s
Consumer Protection Act (“CPA”) by defendant, Shea Homes, Inc., for alleged construction defects
in homes at the “Trilogy at Redmond Ridge” housing development, an “affluent” planned
community for persons age 55 and over. Plaintiffs alleged that Shea Homes failed to deliver the
high quality construction it represented in its marketing and promotional materials, and that Shea
Homes failed to disclose its noncompliance with geotechnical engineering requirements, architects’
plans, and building codes. Plaintiffs sought to certify a Fed. R. Civ. P. 23(b)(3) class composed of
“[a]ll persons who purchased homes at Trilogy at Redmond Ridge,” and further divided the class
into subclasses based on different things that were missing from the homes. The court first denied
the plaintiffs and the defendant’s respective motions to strike expert reports and held that “[a]t the
class certification stage, district courts are not required to conduct a full Daubert analysis. Rather
the court must conduct an analysis tailored to whether an expert’s opinion was sufficiently reliable to
admit for the purpose of proving or disproving Rule 23 criteria, such as commonality and
predominance.” The court, then, denied the plaintiffs’ class certification motion, holding that a court
must conduct a rigorous analysis to determine whether the party seeking class certification has
satisfied all the necessary Rule 23 elements before certifying a class. The court analyzed all the Rule
23 elements in this case, and held that plaintiffs met the numerosity, commonality, typicality, and
adequacy requirements, but failed to meet Rule 23(b)(3)’s predominance requirement because
individualized inquiries would be required with respect to the causation and injury prongs of
plaintiffs’ CPA claim. The court explained that, given the substantial variation within the class,
determining damages in this case likely would devolve into as many individualized showings as
there are homes of class members and would fracture the class action into an unmanageable number
of mini-trials. (Blough v. Shea Homes, Inc., No. 2:12-cv-01493, 2014 WL 3694231 (W.D. Wash.
July 23, 2014)).
26
The U.S. District Court for the Southern District of Florida denies the plaintiff’s motion to
reconsider the court’s denial of his motion to certify a nationwide class of purchasers of the
defendant’s weight loss product, “VPX Meltdown,” and a subclass of New York, purchasers against
the product’s manufacturer. The plaintiff argued in support of reconsideration that newly discovered
evidence demonstrated that various retailers may have credit card purchase information, which
would allow the parties to determine the members of the class without resort to evidentiary hearings.
The court rejected this argument because the plaintiff was aware of the fact that the defendant sold
its products through retailers. The court also determined that it did not commit clear error on the
issue of ascertainability, reasoning that under the Eleventh Circuit law, the ascertainability of class
members is dependent upon identification of class members in an administratively feasible manner.
The court also concluded that the plaintiff failed to establish the appropriateness of a New York
subclass because the plaintiff failed to conduct a meaningful analysis of the substantive variations in
state laws as was his burden. The court emphasized that New York law appears to require
individualized inquiries that would weigh against class certification. (Karhu v. Vital Pharms., Inc.,
No. 13-60758-CIV, 2014 WL 3540811 (S. D. Fla. July 17, 2014)).
The U.S. District Court for the Middle District of Pennsylvania grants in part and denies in part the
defendants’ motion to dismiss the plaintiffs’ class action complaint alleging representations about
the peak horsepower and tank capacity of Shop-Vac vacuums. Plaintiffs brought claims for, among
other things, breach of warranty, violation of the Magnuson-Moss Warranty Act, and consumer
fraud. Seeking to dismiss the plaintiffs’ breach of warranty claim, the defendants argued that the
representation of “peak horsepower” was a term of art that referred to the horsepower level achieved
in laboratory conditions, not during actual consumer use, and that use of the term on the packaging
was, therefore, true and standard in the industry. Because that argument relied on information
outside of the pleadings, including the product packaging, of which the court declined to take
judicial notice due to an authenticity dispute, the court held it would be improper to consider such
materials at the motion to dismiss stage. (In re Shop-Vac Mktg. and Sales Practices Litig., No. 4:12-
MD-2380, 2014 WL 3557189 (M.D. Pa. July 17, 2014)).
The U.S. Court of Appeals for the Ninth Circuit affirms the district court’s final settlement approval
in a California consumer class action challenging the truthfulness of advertising for “Nutella”
spread. The final approved settlement created a $550,000 monetary fund for class members,
awarded $900,000 in fees to class counsel, and provided substantial injunctive relief requiring the
defendant to revise its advertising campaign and supply more nutritional information on Nutella’s
label. The Ninth Circuit affirmed the settlement over the objections of three class members who
claimed that notice was inadequate, the injunctive relief did not justify the fee award, and class
counsel failed to represent the class adequately. (In re Ferrero Litig., Nos. 12-56469, 12-56478,
2014 WL 3465685 (9th Cir. July 16, 2014)).
The U.S. District Court for the Northern District of Illinois grants in part and denies in part
defendant Uber Technologies, Inc.’s motion to dismiss plaintiffs-taxi and livery drivers’ class action
complaint, which alleges that Uber violated the Illinois Consumer Fraud and Deceptive Business
Practices Act, and the Illinois Uniform Deceptive Trade Practices Act by misrepresenting its rates
and misidentifying itself as a “transportation company.” In denying the motion, the court found that
plaintiffs had stated a valid claim that Uber misrepresented the cost of its services, the nature of the
gratuity, and its status as a transportation provider. The court granted the motion, however, as it
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related to allegations that Uber violated Chicago Municipal Code provisions regulating taxi and
livery services, finding that under Dial A Car, Inc. v. Transportation, Inc., a plaintiff-livery service
cannot bring a Lanham Act claim against a competing taxicab company when the plaintiff seeks
only to declare the defendant’s conduct illegal under local taxicab ordinances and regulations. With
regard to the allegation that Uber misrepresented its livery fare as being at or below fares charged by
other livery services, the court denied the motion and held that, while Dial A Car bars claims
premised merely on Uber’s illegality, it does not warrant dismissing the allegations of actual
misrepresentations that independently create a cause of action. (Manzo v. Uber Techs., Inc., No. 13
C 2407, 2014 WL 3495401 (N.D. Ill. July 14, 2014)).
The U.S. District Court for the Northern District of Illinois grants defendant snack bar manufacturer
KIND, LLC’s motion to dismiss a consumer class action complaint without prejudice. Plaintiff
alleged that the defendant’s practice of labeling its products as containing “no refined sugar” and
identifying an ingredient as “evaporated cane juice” deceptively hid the fact that the ingredient is
actually sugar. The court granted the defendant’s motion, ruling that the plaintiff did not adequately
allege that she was injured or deceived. The court found it very persuasive that the product labeling
disclosed the sugar content per serving to the gram and that the plaintiff did not allege that she
believed the product had no sugar. Moreover, the court ruled that that it was not plausible that the
plaintiff was deceived given that she did not have an understanding of what evaporated cane juice
was if not a sugar. The court declined to rule at the pleading stage on whether the plaintiff had
standing to sue for products not purchased, and refrained from substantively considering the
defendant’s primary jurisdiction argument. (Ibarrola v. KIND, LLC, No. 3:13cv50377, 2014 WL
3509790 (N.D. Ill. July 14, 2014)).
The U.S. District Court for the District of New Jersey grants, without prejudice, defendant Gerber
Products Company’s motion to dismiss the New Jersey Consumer Fraud Act (“NJCFA”) claim
contained in a third amended consolidated complaint filed in a consumer class action alleging false
advertising relating to baby food products. The court ruled that, under the NJCFA, plaintiffs must
allege specific facts setting forth an ascertainable loss. Plaintiffs attempted to allege an ascertainable
loss by alleging “the full retail price, as well as the difference between the amount paid and the
reasonable value of what Plaintiffs received.” But, because the plaintiffs did not allege that the
product was worthless (nor could they) or that they bought a product they did not want or need, they
were not allowed to rely on the purchase price as the ascertainable loss. And, as to the benefit of the
bargain theory, the plaintiffs failed to allege a specific difference in value between what was
promised and what they received. The difference in price must be specific and certain, and may not
by hypothetical or illusory. Plaintiffs’ allegations failed these requirements. Defendant also moved
to strike plaintiffs’ punitive damages claim brought under the California Consumers Legal Remedies
Act cause of action, but the court ruled that the plaintiffs adequately pleaded the punitive damages
allegations by claiming malice and fraud, though not oppression. (In re Gerber Probiotic Sales
Practices Litig., No. 2:13cv835, 2014 WL 3446667 (D.N.J. July 11, 2104)).
The U.S. Court of Appeals for the Second Circuit affirms the district court’s judgment dismissing
the plaintiffs’ class action complaint for false advertising and related claims. Plaintiffs alleged that
Clinique’s marketing of seven different “Repairwear” skin products containing false and misleading
claims about their efficacy. The Second Circuit affirmed the district court’s dismissal of claims
related to four of the seven products due to a lack of standing because the plaintiffs only bought
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three of the products at issue. In so doing the court rejected the plaintiff’s argument that the court’s
decision in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 162 (2d
Cir. 2012) was binding in this case. The NECA court held that the plaintiff-purchasers of securities
could bring claims on behalf of purchasers of other related securities where the allegedly fraudulent
conduct was a “nearly identical misrepresentation[] . . . common to every Certificate’s registration
statement.” Here, the court found that because all seven products had different ingredients and
involved entirely different allegedly false advertising claims, there was no basis for claiming a
“nearly identical misrepresentation” common to all products. The district court’s dismissal of the
plaintiffs’ claims concerning the allegedly false advertising statements on the remaining three
products also was affirmed because the complaint failed to plead them with particularity. The
Second Circuit found that the plaintiffs failed to allege (1) which ingredients in which product lack
the ability to improve skin appearance; (2) that they ever even used the products, let alone as
directed; (3) which statement(s) they allegedly relied on in purchasing which products; and (4) the
benefits they expected to receive but did not. (DiMuro v. Clinique Labs., LLC, No. 13-4551-cv,
2014 WL 3360586 (2d. Cir. July 10, 2014)).
The U.S. District Court for the District of New Jersey, in a class action lawsuit brought by a New
Jersey attorney on behalf of himself and a proposed class under the New Jersey Consumer Fraud
Act, grants in part and denies in part the defendant-dietary supplement manufacturer’s motion for
judgment on the pleadings. The plaintiff accused the defendant of misrepresenting the glucosamine
content of its canine nutritional supplement. The court refused to dismiss the plaintiff’s statutory
fraud claim on the grounds that the plaintiff had adequately alleged a misrepresentation (i.e.,
misstating the amount of chondroitin in the product), an ascertainable loss (i.e., the product had a
measurable amount of chondroitin less than advertised), and a causal connection (i.e., the plaintiff
relied on the chondroitin claim when purchasing the product). In doing so, the court rejected the
defendant’s “collectivized pleading” defense because it found that the plaintiff’s allegations were
sufficient to notify the defendant of the alleged counts. However, the court dismissed without
prejudice the plaintiff’s common law fraud claim for failure to adequately plead the elements of
knowledge and reasonable reliance, and it dismissed with prejudice the plaintiff’s unjust enrichment
claim upon concluding that indirect purchasers cannot bring such claims under New Jersey law. The
court also dismissed with prejudice all claims against the manufacturer’s web designer for lack of
personal jurisdiction because he was a California resident with no contacts in New Jersey. (Hoffman
v. Liquid Health Inc., No. 14-01838, 2014 WL 2999280 (D.N.J. July 2, 2014)).
The U.S. District Court for the Northern District of California denies the plaintiffs’ motion to alter a
judgment insofar as relates to the court’s application of the primary jurisdiction doctrine, but grants
the motion insofar as it seeks to convert the dismissal to a stay. Plaintiffs, on behalf of themselves
and a nationwide consumer class, sued defendant Santa Cruz Natural, a soda and juice manufacturer,
for false advertising under California consumer protections laws based on the defendant’s use of
“evaporated cane juice” as the name of a cane-based sweetener ingredient in its products. Defendant
moved to dismiss on, among other grounds, the primary jurisdiction of the Food and Drug
Administration based on FDA’s ongoing, formal process of issuing guidance as to whether
evaporated cane juice is the common or usual name of the ingredient. On April 2, 2014 – and based
largely on a March 5, 2014 notice by FDA confirming that it was still engaged in its formal review
of the issue – the court granted the defendant’s motion, dismissed the case without prejudice, and
entered judgment on the basis of FDA’s primary jurisdiction. Plaintiffs moved to alter, amend, or be
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relieved from the judgment under Fed. R. Civ. P. 59(e) (correct manifest error and prevent manifest
injustice) and 60(e) (correct a mistake). The court denied the plaintiffs’ motion regarding the
underlying primary jurisdiction ruling, finding that they simply were re-litigating issues considered
(or that could have been considered) in the motion to dismiss proceedings. The court also noted that
multiple similar primary jurisdiction rulings had issued in numerous other evaporated cane juice
cases since the court issued its April 2 order. The court, however, granted the plaintiffs’ request to
convert the dismissal without prejudice to a stay “based on the unique circumstances of th[e] case,
the potential prejudice to plaintiffs, and the apparent lack of prejudice to defendant.” The court
accepted the plaintiffs’ argument that a stay (as opposed to a dismissal without prejudice) was
appropriate because further judicial proceedings were contemplated following the completion of
FDA’s review, and because of the potential that the plaintiffs may confront a statute of limitations
issue if the case were dismissed and they were later forced to re-file it. (Swearingen v. Santa Cruz
Natural Inc., No. 3:13-cv-4291, 2014 WL 2967585, (N.D. Cal. July 1, 2014)).
State Attorneys General Litigation Decisions
The U.S. District Court in the Middle District of Louisiana grants the plaintiff’s motion to remand its
suit brought against numerous pharmaceutical companies asserting violations of the Louisiana
Unfair Trade Practices Act for allegedly marketing false information that caused the submittal of
ineligible and unapproved prescription drugs to the Louisiana Medicaid Agency. Plaintiff, the State
of Louisiana alleged that the defendants intentionally falsified FDA approval information, which
influenced the State’s Medicaid agency to reimburse millions of dollars for unapproved drugs.
Defendants argued removal was proper, claiming federal question jurisdiction was based on the
interpretation of the Food, Drug and Cosmetic Act and Medicaid legislation. The court rejected the
defendants’ argument, placing emphasis on the fact that the plaintiff’s claims were fact specific,
based in state law, and did not give rise to a significant federal issue. Because the defendants did not
establish a dispute based in federal law, remand was proper. (Louisiana v. Abbott Labs., No. 3:13-
CV-00681, 2014 WL 4924329 (M.D. La. Sept. 30, 2014)).
The U.S. District Court in the Middle District of Louisiana grants a motion to remand filed by the
Office of the Louisiana Attorney General. The Attorney General sued defendants Abbott
Laboratories, PharMerica, and Omnicare for deceptive, false, misleading, and fraudulent practices in
the distribution, advertising, and pricing of the prescription drug, “Depakote.” The complaint
alleged that the defendants marketed the drug for non-FDA approved uses that improperly
influenced proscribing doctors, which violated Louisiana’s Medical Assistance Programs Integrity
Law and Louisiana’s Unfair Trade Practices and Consumer Protection Law. After the case was
removed to federal court, the Attorney General sought remand, alleging the suit only sought
judgment in favor of the state under state laws, therefore, federal question jurisdiction was lacking.
The court agreed, finding the mere fact that the court may examine whether the proscribed drug’s
use was supported by federal regulations does not give rise to a federal issue. The court also
determined that diversity jurisdiction was lacking, because the only named plaintiff was the state of
Louisiana, which was not a citizen under the diversity statute. (Caldwell v. Abbott Labs., No. 3:13-
CV-00561, 2014 WL 4726271 (M.D. La. Sept. 23, 2014)).
The U.S. District Court for the Northern District of Illinois denies defendants Alta Colleges and
Westwood College, Inc.s’ motion to dismiss, sever, and remand claims that the State of Illinois
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brought under the Illinois Consumer Fraud and Deceptive Business Practices Act. Plaintiff later
amended its complaint to include a claim under the federal Consumer Financial Protection Act.
Plaintiff alleged that the defendants offered fraudulent loans, misrepresented their accreditations, and
misled students by exaggerating future employment prospects. The court denied the defendants’
motion to dismiss, finding the case was sufficiently pled in the initial complaint, and the state court
applied the appropriate heightened pleading standard. Although the defendants argued that the state
and federal claims were separate and distinct, the court continued to exercise supplement jurisdiction
over the state claims because the actions involved the same transactions and it was more efficient to
litigate them together. Even though the case addresses the novel issue of whether extending loans to
borrowers without determining their ability to pay is an unfair practice under the state act, this alone
was insufficient to deny supplemental jurisdiction. (Illinois v. Alta Colleges, Inc., No. 14-C-3786,
2014 WL 4377579 (N.D. Ill. Sept. 4, 1014)).
The U.S. District Court for the Northern District of Indiana approves the magistrate judge’s report
and remands to Louisiana state court an action in which the Louisiana Attorney General alleged that
defendant Pfizer engaged in false, misleading, unfair, and deceptive acts in marketing “Zoloft,” an
antidepressant. The State alleged that Pfizer deceptively concealed test results regarding Zoloft’s
efficacy. Pfizer argued that remand was improper because Congress gave federal courts jurisdiction
over FDA decisions regarding the efficacy of prescription drugs, and the State’s claims raise
substantial, disputed federal issues concerning the FDA’s approval of Zoloft as effective for treating
depression. Pfizer argued that the federal Food Drug and Cosmetic Act (“FDCA”) preempted state
law; the court found that there was no complete preemption under the FDCA, because the FDCA
does not contain a civil enforcement provision. Thus, the court did not have subject matter
jurisdiction over the action under the federal question statute. (Louisiana v. Pfizer, Inc., 3:13-CV-
00727, 2014 WL 3541057 (N.D. Ind. July 17, 2014)).
Federal Trade Commission (FTC) Litigation Decisions
The U.S. District Court for the District of Columbia grants in part and denies in part FTC’s motion
for summary judgment in an action brought by a group of charities under the Freedom of
Information Act (“FOIA”) to compel disclosure of consumer complaint information held in the
FTC’s “Consumer Sentinel Network” database for the stated purpose of converting the database into
a publicly-accessible consumer review tool. Prior to filing suit, the charities had submitted and
appealed three separate FOIA requests, which the FTC mostly denied. Before the district court, the
charities contended that the FTC should be forced to produce the withheld information because
disclosure of the Consumer Sentinel database would educate consumers about businesses they might
patronize, would allow businesses to identify and correct possible unlawful practices, and would
permit the public to monitor and verify the effectiveness of the FTC’s consumer protection efforts
and statistical conclusions. In response, the FTC argued that it correctly denied the charities’
requests under FOIA Exemptions 6 and 7(C), which bar disclosure of personal information that
would constitute an “unwarranted invasion of personal privacy.” According to the FTC, the data
fields requested were likely to contain personal identifying information because consumers often
mistakenly insert personal information about themselves into “free form” data fields or include
information about alleged individual wrongdoers, as opposed to corporate wrongdoers, when
describing alleged conduct. However, the FTC argued it could not realistically redact the exempt
personal information because manual redaction of the roughly 20 million complaints in the
Consumer Sentinel database would take approximately 8,000 hours of labor, thereby imposing an
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undue burden on the agency. The court granted summary judgment in the FTC’s favor based on
undisputed evidence that the information sought was likely to contain exempt personal information
and that manual redaction would be unduly burdensome for the agency. However, in so doing, the
court observed that it would have likely ordered the FTC to simply redact the exempt information if
the charities had sought disclosure of a smaller subset of Consumer Sentinel complaints. Finally, the
FTC granted summary judgment in the charities’ favor with respect to disclosure of the
complainants’ zip code information. (Ayuda, Inc. v. FTC, -- F. Supp. 3d --, No. CV 13-1266, 2014
WL 4829574 (D.D.C. Sept. 30, 2014)).
The U.S. District Court for the Central District of California grants the United States’ motion for
summary judgment on its complaint against Zaken Corporation, related entities, and its president,
Tiran Zaken, for misleading consumers concerning Zaken’s “quick-sell” liquidation program. Zaken
promised customers who wanted to work at home that they could make $4,000 by purchasing
defendants’ quick-sell liquidation kit for $148.00. The representations included assurances that an
average consumer would make $3,000-$6,000 by working two-to-four hours a week. Zaken
promised to repurchase merchandise that consumers purchased by using Zaken’s sales program.
Over 110,000 consumers purchased the $148.00 kits form Zaken from 2003 to 2013 and many
consumers purchased additional services from the defendants. Consumers spent about $25,666,437
buying services from Zaken. Unfortunately, Zaken’s estimates of sales for customers proved to be
somewhat optimistic. Ninety-nine point eight percent (99.8%) of all customers never made any
sales, and less than 9,000 received refunds. The court held that the defendants’ conduct was a
violation of the FTC’s Business Opportunities Rule, 16 C.F.R. § 437.0, which had been amended in
2012 to apply to deceptive home sales schemes even if certain costs was not imposed by the seller.
The court held that the advertising of the sales scheme violated the Business Opportunity Rule and
Section 5(a) of the FTC Act. The court held that consumers only could earn money from Zaken, so
the rule applied, and alternatively, Zaken was the sole outlet to resell the merchandise, or at the very
least, the defendants promised that they would provide outlets to consumers. The earnings’ claims
were held to be deceptive. Regarding relief, the court ordered the defendants to pay more than
$25,000,000 which was based on gross sales minus refunds or commissions earned by consumers.
The court held that the Government need only provide a reasonable estimate of consumer injury and,
then, the burden shifted to the defendants to show that the amount should be reduced. Based on the
long term misconduct of Zaken and his lack of remorse, the court entered a lifetime ban prohibiting
Zaken from marketing work at home business opportunities. (United States v. Zaken Corp., No. CV
12-09631, 2014 WL 4666965 (C.D. Cal. Sept. 18, 2014)).
The U.S. Court of Appeals for the Sixth Circuit affirms a summary judgment order in favor of the
FTC in a case filed against James Benhaim and Daniel Michaels, and a series of corporations that
they controlled. The Sixth Circuit found that the defendants’ statements to consumers with serious
debt problems about their association with lenders and/or the government, as well as other
statements concerning the defendants’ ability to obtain significant debt reduction were misleading.
Notably, the Sixth Circuit formally adopted the “common enterprise” theory of liability against the
defendants. Benhaim and Michaels operated a series of interrelated Canadian and American entities
that were used to solicit consumers in debt by “cold calls” in order to sell debt relief services. The
district court had found that the defendants (1) misrepresented their relationship with lenders; (2)
falsely suggested that the lenders could reduce their debt by 50% to 70%; (3) claimed that their fees
were only nominal; and (4) instructed debtors not to speak to creditors, but instead, stop making
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payments to the creditor who then would be forced to negotiate. The defendants told consumers to
send them the payments and claimed that they would retain only a small percentage of these funds
for fees for their services. Defendants eventually sent consumers a contract that more accurately
described their services and their fees. The defendants also failed to notify consumers that their
contracts would be assigned to third-parties who would charge additional fees. The Sixth Circuit
held that the record supported the trial court’s order granting the FTC’s motion for summary
judgment and the defendants’ conduct in misrepresenting their services was sufficient to find
liability under Section 5 of the FTC Act. Further, the Sixth Circuit held that the defendants violated
the Telemarketing Sales Rule’s “Do Not Call registry” provision by failing to purchase the federal
Do Not Call list. The court also concluded that the defendants’ violated the MARS (Mortgage
Service Relief Services) Rules (1) by telling consumers not to communicate with creditors; (2)
misrepresenting results; (3) misrepresenting the defendants’ affiliations; and (4) obtaining
compensation prior to execution of a written contract. The Sixth Circuit found that a subsequent
contract that more accurately described the defendants’ services was not a defense to the FTC’s
allegations. The defendants, first, were found jointly and severally liable because they were on
notice of the deceptive acts, and the statements were in fact misleading. The fact that they received
complaints established their knowledge of the defendant-corporation’s conduct. Alternatively, the
Sixth Circuit found the defendants liable under the “Common Enterprise Doctrine,” which requires
proof of a structure of integrated business entities that carry on the challenged acts and practices.
(FTC v. E.M.A. Nationwide, Inc., No. 13-4169, 2014 WL 4401247 (6th Cir. Sept. 8, 2014)).
The U.S. District Court for the Western District of Oklahoma grants the FTC’s Motion for the Entry
of a Preliminary Injunction and Asset Freeze against an Oklahoma corporation, and two current
officers of Your Yellow Book, Inc. The FTC alleged that the defendants made false representations
to businesses by sending “proposals” to provide a yellow book Internet service that were deceptively
drafted to appear to be an invoice for services already rendered. The FTC previously had obtained
an ex parte TRO and asset freeze. The allegations against the defendants included
misrepresentations of (1) a pre-existing business relationship, (2) a previous agreement to purchase
the listings, and (3) money owed to defendants. The court found that the defendants had adopted a
new solicitation that used the term “current list information” and also stated “total amount to be
paid” that “could be cancelled without any penalty, except for pro rata payment for services
rendered,” suggesting that a prior agreement existed and services already had been provided. The
court characterized the defendants’ collection efforts “as crossing into the realm of the outrageous,”
based on the affidavits of businesses that they were threatened with collection efforts for non-
existent debt. The court entered a preliminary injunction prohibiting future deceptive or unfair
conduct, requiring that the defendants post information about the FTC lawsuit on the YYB’s
website, and ordering third parties not to transfer assets in which the defendants had a beneficial
interest. (FTC v. Your Yellow book, Inc., No. CIV-14-786-D, 2014 WL 4187012 (W.D. Okla. Aug.
21, 2014)).
The U.S. Court of Appeals for the Second Circuit reverses the order of the district court denying in
part the FTC's motion for contempt damages against defendant BlueHippo Funding LLC. In 2008,
the FTC brought suit against the credit company, alleging that the company failed to disclose
information about its return and store credit policy to customers who purchased computers and other
electronic products in violation of Section 5 of the FTC Act. The parties entered into a consent order
to settle the claims, after which the company continued to deceive customers about its policies. In
33
July 2010, the district court found the defendant in contempt of the consent order, but refused the
FTC’s request for over $14 million in contempt damages, an amount equal to the defendants’ gross
receipts. On appeal, the Second Circuit reversed the district court’s damages order, holding that the
baseline for assessing contempt damages was gross sales. The court held that the FTC was entitled
to a presumption that consumers relied on the defendants’ representations and omissions when
deciding to purchase the defendant’s products,. (FTC v. BlueHippo Funding, LLC, No. 11-374, 2014
WL 3907017 (2d Cir. Aug. 12, 2014)).
The U.S. District Court for the Eastern District of New York affirms a magistrate’s report and
recommendation, which recommended entry of a default judgment and a permanent injunction in a
case brought by the FTC against The Cuban Exchange, Inc., and the owner and an officer of the
company, Suhayaylee Rivera. The FTC charged the defendants with violations of Section 5(a) of
the FTC Act and the Telemarketing Sales Rule (“TSR”) by lying to consumers in order to obtain
confidential financial information. Specifically, the defendant advertised on the Internet, and made
robocalls to consumers with falsified caller I.D. information to make it appear that the calls came
from the FTC itself. (This last sentence is not a misprint.) The defendants misled consumers by
indicating that they were eligible for consumer redress from the FTC and, in order to expedite
receipt of a refund, the consumers should supply their confidential financial information. In fact, the
consumers were not eligible for any redress and the defendants had no connection with the FTC.
The court entered the FTC’s proposed injunction, reasoning that when a default is entered, all well-
pleaded allegations in the complaint pertaining to liability are deemed admitted. The magistrate
judge also concluded that the compliance monitoring provisions were similar to those that had been
included in similar circumstances by the courts in the Second Circuit. (FTC v. Cuban Exchange,
Inc., No. 12-CV-5890, 2014 WL 3756358 (E.D.N.Y. July 30, 2014)).
The U.S. District Court for the Western District of Washington grants in part the FTC’s motion for a
temporary restraining order. The FTC sued four entities and the owner alleging that the defendants
were misleading purchasers by asserting that their companies previously had agreed to advertise in
the defendants’ business directory, and through unsolicited telephone calls, told customers that they
were simply confirming their business addresses and contact information. Then defendants would
attempt to bill the “customers” at least $479.95, and sometimes threaten suit, using the recordings to
induce the “customers” to pay for the ad placement in the business directory. The court granted the
FTC’s motion for a temporary restraining order, but limited the relief in several respects. First, the
court held that the FTC only had to prove likelihood of success and the balance of the equities, with
greater weight being provided to the public interest, compared to private interests. However, the
court denied the FTC’s request for an asset freeze, holding that the FTC must present evidence
showing a likelihood of dissipation of the claimed assets or other inability to recover monetary
damages. The court also denied the FTC any relief sought in their proposed temporary restraining
order, but not addressed in its motion for entry of the temporary restraining order. (FTC v.
Onlineyellowpagestoday.com, Inc., No. C14-838, 2014 WL 3051196 (W.D. Wash. July 3, 2014)).
National Advertising Division (NAD) Decisions
The NAD has determined that evidence offered by The Procter & Gamble Company (“P&G”) was
sufficient to support some claims challenged by Kimberly-Clark Global Sales LLC, the maker of
“Huggies” brand diapers, for the company’s “Luvs with Nightlock.” However, NAD recommended
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that P&G discontinue use of a product demonstration that featured a rubber duck weighted with lead
beads. The challenger took issue with P&G’s claim that Luvs “locks away wetness better than
Huggies, even overnight” as compared to Huggies and with a side-by-side demonstration. The
challenger also objected to the name “Luvs with NightLock,” including an accompanying lock and
key logo, which it contended contributed to the misleading impression of absolute protection from
wetness overnight. Following its review of the scientific evidence provided by the parties, NAD
determined that P&G provided a reasonable basis for its claim that Luvs “locks away wetness better
than Huggies, even overnight” and found that P&G provided a reasonable basis for the message
conveyed by the product name – Luvs with NightLock – in the context of the challenged advertising.
However, NAD recommended that P&G discontinue the use of a side-by-side product
demonstration. In the advertising video, blue liquid was poured on both diapers, and then blotter
paper was placed on top of the wet spot, followed by a rubber ducky. The rubber ducky was
removed and the blotter papers were displayed to the camera, revealing different sized stains on each
diapers’ blotters. NAD noted in its decision that “the use of a familiar object that consumers
recognize as being very light (but which in fact had been artificially weighted with metal balls)
implies that even a slight pressure will makes wetness seep out of Huggies’ core – a message which
is unsupported by the results of P&G’s underlying . . . testing.” (The Procter & Gamble Company
(Luvs with NightLock), NAD Report No. 5767 (Sept. 30, 2014)).
The NAD has recommended that Philosophy, Inc. discontinue certain advertising claims for the
company’s “Time in a Bottle Age-Defying Serum.” The advertiser has said it will appeal NAD’s
determination to the National Advertising Review Board. The claims at issue included, “Women
told us their skin looked 730 days younger*, that’s 2 years on your side with our age-defying serum.
*In an 8 week study of 56 women, 60% indicated their skin looked at least 2 years younger after 60
days,” and “82% showed improvement in signs of aging not yet visible on the surface after 4 weeks.
95% showed significant reduction in visible signs of aging after 8 weeks. *clinical study, 120
women ages 25-55, once daily use. Measurement of aging not yet visible on the surface using cross-
polarized light to reveal sub-surface signs of aging in the epidermal layer.” The advertiser’s primary
support in this case was an independent, blinded, clinical study of the product. The purpose of the
six-month study was to determine “changes to facial skin appearance and hydration as a function of
time and product use.” NAD questioned the reliability of the study. It noted that the advertiser did
not adequately account for change in environmental factors (i.e., the change from winter to summer
during the course of the study) and that that skin-imaging analysis was conducted on only a small
subset of the study’s participants (26 out of 117 subjects). Further, NAD criticized the study’s
failure to use trained experts to conduct visual grading of the skin. While the use of self-assessments
based on a visual analog scale is appropriate in a number of clinical settings, NAD’s prior cases
reviewing anti-aging claims involved visual grading of anti-aging parameters by clinicians. NAD
also noted that the actual improvements in the identified anti-aging parameters were far more modest
than the claims suggest. Finally, NAD questioned the reliability of the self-assessment questionnaire
used in the study that formed the basis for the claim, “Women told us their skin looked 730 days
younger*, that’s 2 years on your side with our age-defying serum.” The questionnaire was lengthy
and elicited arbitrary responses from the subjects (e.g., asking subjects to fill in, “Skin appears __
years younger”). Based on the lack of supporting evidence in the record, NAD recommended that
all of the challenged claims and accompanying visuals be discontinued. (Philosphy, Inc. (Time in a
Bottle Age-Defying Serum), NAD Report No. 5765 (Sept. 15, 2014)).
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American Express, which operates the “OPENForum.com” website, has informed the NAD that it
has modified its native advertising practices to assure that consumers who click on OPENForum
images-plus-text “ad units” are aware that the content is sponsored by American Express. The
OPENForum website is designed for small business owners and offers links to American Express
cards and services. American Express advertises the OPENForum site on the Internet through the
use of content “recommendation widgets.” In its initial review, NAD was concerned that the links
to OPENForum placed in recommendation widgets could be understood by consumers to be links to
independent editorial content, rather than sponsored content created by an advertiser. The links
consisted of a small picture, the title of the article, and a label, which read “OPENForum” but did
not include “American Express” or “AmEx.” The advertiser explained that “OPEN” is an American
Express brand geared to small business owners, that the OPEN brand was clearly labeled on the
links, and that the links brought users to the OPENForum site for articles containing advice for small
business owners. American Express further advised NAD that its labeling of links to articles on its
OPENForum website has been modified permanently and such links are now labeled as either
presented by “American Express OPEN” or “American Express OPEN Forum.” NAD appreciated
that American Express voluntarily made changes to the label on links to its OPENForum website,
and that the changes provided greater transparency to consumers regarding the website to which
consumers would be directed, an action NAD deemed necessary and appropriate. (American
Express Compnay (OPEN Forum Sponsored Content), NAD Report No. 5760 (Sept. 15, 2014)).
The NAD has recommended that Cerebral Success, maker of the dietary supplement “SmartX,”
discontinue a wide range of product performance claims, ingredient claims, and consumer
testimonials challenged by the Council for Responsible Nutrition (“CRN”). The advertiser had
presented evidence about certain SmartX ingredients. NAD noted in its decision that, while there
may be limited circumstances under which health performance claims can be substantiated without
clinical studies on the actual product, in such cases, the advertiser must demonstrate that it is
scientifically sound to extrapolate conclusions drawn about ingredients and apply them to the
performance of the product in question. In this case, NAD noted that the data submitted by the
advertiser did not support many of its performance claims because the studies provided by the
advertiser did not test formulas similar to SmartX’s combination of ingredients and the studies’
findings were limited to individual ingredients. Following its review, NAD recommended that the
advertiser discontinue product performance claims for SmartX, including: “Designed to enhance
memory, focus & mental agility: boost focus & concentration; stimulate mental energy & agility;
enhance memory & recall; improve brain health & function; and reduce anxiety;” and “. . . Cerebral
Success was specifically designed as a study pill to provide an Adderall alternative for students who
are taking the drug without a prescription. It is not, however, designed to treat the condition. Along
with focus and mental energy (the hallmarks of Adderall), Cerebral Success was designed to
increase memory and strengthen and protect the brain, which Adderall does not do.” While NAD
determined that the advertiser provided a reasonable basis for certain limited claims regarding the
benefits of particular ingredients, it recommended that, in the absence of competent and reliable
scientific evidence, the advertiser discontinue other claims about the benefits of various ingredients,
such as that Huperzine A “has been proven useful in improving short term memory as well as
preventing long term memory loss as a result of aging,” and that the ingredients contained within
SmartX “are intended to strengthen brain cell walls,” “increase blood flow & oxygenation to the
brain; stimulate protein synthesis; and boost production of acetylcholine.” NAD further
recommended that the advertiser discontinue the use of consumer testimonials that contain
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unsupported product performance claims. (Cerebral Success (SmartX Premium Brain Supplement,
Now with Cognizin), NAD Report No. 5761 (Sept. 10, 2014)).
The NAD has recommended that Alcon Laboratories, Inc., discontinue certain comparative
superiority claims for the company’s “Air Optix Aqua Contact Lenses,” following a challenge from
Johnson & Johnson Vision Care, Inc. (“JJVC”), the maker of “Acuvue OASYS.” The claims at
issue in JJVC’s challenge included claims made in advertisements directed to eye care professionals,
including claims that Air Optix Aqua lenses provide “superior surface deposit resistance,” “Acuvue
OASYS contact lenses attract up to 31x more lipid deposits,” and “Superior Surface with Moisture
and Consistent Comfort.” At issue in this case was whether Alcon could support claims that its Air
Optix Aqua contact lenses were better at resisting deposits of lipids, which are present in one’s tears,
on the surface of the lens, and better at resisting the absorption of lipids into the matrix of the lens.
Alcon asserted that the challenged claims for its contact lenses were truthful and wholly
substantiated by reliable studies and data, and via multiple reputable scientific authorities and
sources. JJVC maintained that the testing on which Alcon based its superior surface deposition-
resistance claims did not measure deposits on the contact lens surface and argued that JJVC’s own
head-to-head clinical testing showed that Alcon’s “31x claim” was without clinical relevance.
Following its review of the evidence presented by the advertiser and challenger, NAD determined
that Alcon could not support the challenged claims and recommended that the claims at issue be
discontinued. However, NAD noted that nothing in its decision precludes the advertiser from claims
– in a stand-alone context – that Air Optix Aqua lenses possess unique plasma surface technology
that resists lipids and deposits, offering clear vision and consistent comfort. (Alcon Laboratories,
Inc. (Air Optix Aqua Contact Lenses), NAD Report No. 5758 (Sept. 8, 2014)).
The NAD has recommended that The Procter & Gamble Company, maker of “Olay Sensitive Body
Wash,” discontinue claims that convey the unsupported message that the challenger’s Dove
Sensitive Skin Body Wash, made by Unilever United States, Inc., is “harsh.” Further, NAD
recommended that the advertiser modify claims that the Dove product can dry one’s skin over time.
NAD noted that a recent National Advertising Review Board decision addressed unqualified
comparative “harshness” claims, recommending that an advertiser discontinue claims that used the
image of barbed wire to illustrate the harshness of competing products. It concluded that one body
wash being “less mild” is not the same as it being “harsh,” as far as consumers understand the term.
In this case, NAD noted that the claims and visual were more muted, but the same principles apply.
It stated that, even if the evidence demonstrated that the challenger’s competing body wash was
more drying than a water control, the evidence would not necessarily provide a reasonable basis for
a claim that it was “harsh” or significantly “harsher” than the advertiser’s product. In support of its
claim, the advertiser submitted an independent “leg controlled application test” (LCAT) of subjects
with dry skin. During the 12-day test, the challenger’s “Dove Sensitive Skin Body Wash” and the
advertiser’s Olay Sensitive were tested against a water control. The results indicated that Dove
Sensitive Skin was directionally more drying than water at most of the reported time points and
statistically significantly more drying than water at the last time point of the study. Following its
review of the evidence in the record, NAD recommended that the advertiser discontinue its
“harshness” claims and modify its claim that “Dove Sensitive Skin Body Wash dries out your skin
over time” to more accurately reflect the LCAT results. Finally, NAD recommended that the
advertiser modify its advertising to avoid conveying the unsupported messages that consumers who
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use Dove Sensitive Skin Body Wash will have noticeably drier skin with continued use. (The
Proctor & Gamble Company (Olay Sensitive Body Wash), NAD Report No. 5755 (Sept. 2, 2014)).
The NAD has recommended that Virtua Health System discontinue certain advertising claims for the
hospital chain’s minimally invasive, “quad-sparing” knee-replacement surgery. The claims,
challenged by The Rothman Institute, a competing provider of orthopedic surgery services, appeared
in print, radio, and video advertisements and promotional literature, and were posted at Virtua’s
website. The challenged claims included: “It’s what we don’t cut that counts” and “Because we
don’t cut the quadriceps tendon, patients have a significantly reduced recovery time.” While
surgeons at both Virtua and Rothman use minimally invasive techniques when performing knee
replacement surgery, the parties dispute the purported reduced recovery time of the “quad-sparing
technique” as compared to other surgical approaches to knee replacement. The advertiser relied on
clinical research studies, abstracts, and meta-analyses to support its “faster recovery” claims, the
results of a federal patient satisfaction survey (Hospital Consumer Assessment of Healthcare
Providers and Systems or “HCAHPS”), and its own survey of patients who had surgery at the Virtua
Joint Replacement Institute (“VJRI”), compared to those who had surgery at other Virtua facilities.
Following its review of the evidence in the record, however, NAD determined that the meta-analyses
and their conclusions with respect to the superiority of minimally-invasive surgery in general, were
not adequately tailored to the specific claims at issue, which relate only to quad-sparing surgery.
NAD noted in its decision that, while it appreciated that patients at the VJRI have consistently high
satisfaction scores, such evidence was not reliable support for the advertiser’s claims that the
minimally invasive, quad-sparing knee-replacement technique provided patients with demonstrably
faster recovery than those who underwent other types of knee replacement surgery. NAD
determined that the advertiser’s evidence was insufficient to support its faster recovery claims and
recommended that the challenged claims be discontinued. It also noted, however, that nothing in its
decision precludes the advertiser from accurately communicating to consumers the benefits of the
minimally invasive, quad-sparing knee-replacement technique, as long as the advertiser avoids
conveying the unsupported message that the technique provides faster recovery than other types of
knee replacement procedures. (Virtua Health System (Quadriceps-Sparing Knee Replacement
Surgery), NAD Report No. 5753 (Aug. 14, 2014)).
The NAD has recommended that Verizon Communications, Inc. modify certain advertising claims,
including claims that are based on PC Magazine surveys, to better disclose the basis for the claims.
CSC Holdings, LLC, which operates Cablevision, a competing internet services provider, challenged
claims that appeared in two Verizon commercials and in print advertising. Verizon permanently had
discontinued some of the subject advertising prior to the onset of the challenge. The advertiser
argued that the challenged claims that remained in the marketplace – superior speed claims and a
“Rated #1” by PC Magazine claim – were fully supported. Cablevision challenged the claim that a
FiOS consumer could download an HDTV video in 10 seconds compared to a 45-seconds cable
download time, four times faster than cable. The claim was accompanied by a disclosure that read:
“Comparison based on simulated FiOS 500/100 Mbps speeds and Cable Internet 101/35 Mbps
speeds.” NAD noted in its decision that the claim is literally true. However, NAD was concerned
that Verizon did not clearly communicate that the claims referred to the top tiers offered by the ISPs.
NAD determined that a reasonable consumer takeaway from the comparative speed claims that
Verizon FiOS was four times faster than cable for downloading video in any service tier. NAD
determined that Verizon should clearly and conspicuously communicate that a specific service tier is
38
being compared and identify the service tier in a way that is meaningful to consumers. NAD also
noted that Verizon made several claims attributed to a PC Magazine study including, “Rated #1” for
“speed, customer satisfaction, and reliability.” In prior decisions NAD had determined that the PC
Magazine “Reader’s Choice Awards” was “relevant to demonstrate ‘consumer satisfaction’ with a
particular service provider.” In this case, NAD recommended that the advertiser modify its “Rated
#1 for Speed, Reliability and Customer Satisfaction” claim to make clear that the claim is based on a
customer satisfaction survey of consumers’ rating of their own ISPs’ performance. (Verizon
Communications, Inc. (FiOS Internet Service), NAD Report No. 5750 (Aug. 7, 2014)).
The NAD has recommended that Chobani, Inc. discontinue its “Farmland” commercials – the
centerpiece of the company’s campaign to promote its “Simply 100” Greek yogurt – and modify
other online adverting. NAD noted, however, that the advertiser was entitled to promote its use of
natural sweeteners as compared to the artificial sweeteners used by some other yogurt brands. The
claims were challenged by General Mills, Inc., the maker of “Yoplait” yogurt products. General
Mills explained that its “Yoplait Greek 100” is the best-selling 100-calorie Greek yogurt on the
market and contended that Chobani’s advertising campaign communicated that Yoplait Greek 100
yogurts contain no real fruit and are made with artificial flavors and colors instead of fruit. The
advertiser argued that reasonable consumers would not perceive its “Farmland” commercial as
referring specifically or exclusively to Yoplait Greek 100. The advertising did not reference Yoplait
Greek 100, instead referencing “100-calorie yogurts,” “some yogurts,” and “some companies.”
Chobani maintained that its claims were substantiated against some or most competitors, including
Yoplait Greek 100. Following its review, however, NAD determined that the commercial conveyed
a broad, comparative message that competing Greek yogurts – whether construed narrowly as 100-
calorie Greek yogurts, or more broadly – are made with artificial coloring, artificial fruit flavoring,
and possibly artificial milk. Further, NAD noted, Yoplait Greek 100 is not made with artificial
flavors, artificial colors, or artificial (or even powdered) milk. NAD has long held that claims that
expressly or implicitly disparage a competing product must be truthful, accurate, and narrowly
drawn. Consequently, NAD recommended that the advertiser discontinue the commercial. NAD
also recommended that Chobani revise its Facebook advertising so that it no longer suggests that
most competing 100-calorie products use aspartame. However, NAD noted that the advertiser may
promote its use of natural sweeteners as compared with the artificial sweeteners used by Yoplait and
other brands. (Chobani, Inc. (Simply 100 Greek Yogurt), NAD Report No. 5744 (July 28, 2014)).
RECENT FILINGS
Lanham Act and Other Competitor Actions
Euro-Pro Operating LLC filed a complaint against rival vacuum manufacturer Dyson, Inc. in the
U.S. District Court for the District of Massachusetts, requesting injunctive relief and damages under
the Lanham Act and Massachusetts False Advertising Law. Euro-Pro challenges Dyson’s “Twice
the Suction” advertising claims on the grounds that Euro-Pro recently introduced a new vacuum
which renders the claim false and misleading based on third-party independent laboratory testing.
(Euro-Pro Operating LLC v. Dyson, Inc., No. 14-CV-13720 (D. Mass complaint filed on Sept. 26,
2014)).
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State Consumer Protection Law Litigation
Private Attorney General action filed in California Superior Court (Los Angeles County) against
Costco Wholesale Corporation and Apotex Corporation, alleging violations of the California Unfair
Competition Law and False Advertising Law arising out of defendant’s failure to declare the country
of origin on certain drug products such as “avorstatin,” removed to the U.S. District Court for the
Central District of California,. According to the complaint, the failure to declare the country of
origin caused the plaintiff to believe that the drug was made in the United States when in fact it was
not. (Joseph v. Costco Wholesale Corp., No. 14-CV-06899 (Cal. Super. Ct. filed on Sept. 4, 2014)).
Consumer Class Actions
Putative class action filed against various Colgate-Palmolive entities in the U.S. District Court for
the Eastern District of New York, alleging that they engage in deceptive and improper business
practices because the packaging of their “Speed Stick” deodorants make its appear to a reasonable
consumer that consumers are buying more than what is actually being sold. According to the
complaint, the deodorants come in 3.0 ounce sticks and have non-functional slack-fill in violation of
the federal Food, Drug & Cosmetic Act and New York General Business Code Section 349.
(Alberto, et al v. Colgate-Palmolive Co., et al., No. 1:14-CV-05649 (E.D.N.Y. complaint filed on
Sept. 25, 2014)).
Putative nationwide class action filed in the U.S. District Court for the Southern District of New
York against Unilever United States Inc., alleging violations of New York’s General Business Law
based on the defendant’s packaging of its “Degree Dry Protection” and “AXE Gold Temptation”
antiperspirants and deodorants. According to the complaint, Unilever sold the products in packaging
that made it appear that the consumer was buying more product than was actually being sold because
the packaging contained nearly 3 inches of slack-fill in height. (Bimont, et al. v. Unilever United
States, Inc., No. 14-CV-07749 (S.D.N.Y. complaint filed on Sept. 24, 2014)).
Putative class action filed against the New York State Gaming Commission in the U.S. District
Court for the Eastern District of New York. The plaintiffs claim that the defendant engaged in
deceptive practices in its marketing, advertising, and promotion of its “Franklin’s Fortunes”
scratchcard lottery game. According to the plaintiffs, the defendant used “unreliable and ambiguous
language” to describe the available scratchcard lottery game prizes, leading reasonable consumers to
believe that the minimum monetary prize they could win from the game was much larger than it
actually was. More specifically, the plaintiffs noted that they only received a prize of $10 from
playing the Franklin’s Fortunes game, even though the language on the scratchcard claimed the card
was “loaded with pries from $50 to $500.” This alleged misconduct, according to the plaintiffs,
violates New York’s General Business Law, constitutes common law fraud and a negligent
misrepresentation, and results in unjust enrichment. (Zaika, et al. v. N.Y. State Gaming Comm’n,
No. 1:14-cv-05576 (E.D.N.Y. complaint filed on Sept. 23, 2014)).
Putative class action filed against Avon Products Inc. in the U.S. District Court for the Southern
District of New York, alleging that Avon uses aggressive marketing to mislead consumers into
believing that its “Anew” product line has “fountain of youth properties.” Plaintiff claims that the
scientific research and studies, and clinical and consumer tests that permeate Avon’s marketing for
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its Anew product line are false, misleading and/or deceptive. Plaintiff is pursuing claims for
violations of, among other things, Nebraska’s Consumer Protection Act and New York’s General
Business Law. (Tillman, et al. v. Avon Products, Inc., No. 1:14-CV-07625 (S.D.N.Y. complaint
filed on Sept. 19, 2014).
Putative class action filed against Peg Perego, U.S.A., Inc. in California Superior Court (San Diego
County), removed to the U.S. District Court for the Southern District of California. The plaintiffs
claim that the defendant manufactured, marketed, and sold a variety of its “PEG PEREGO” vehicles
with the untrue designation and representation that the vehicles were “Made in the USA.”
According to the plaintiffs, the vehicles were manufactured or produced from component parts that
were manufactured outside of the United States, in violation of California law governing “Made in
USA” claims. For example, the plaintiffs allege the foreign-made component parts in the John
Deere Farm Power Brand 12 Volt Riding Vehicle include the battery, wiring harnesses, electric
battery charger, electric motors, decals (including two “Made in the USA” decals for prominent
display on the toy itself), wiring connectors, fuses, thermo protector, switches, gearing, screws,
rivets, bolts, lock washers, and/or washers. This alleged conduct, according to the plaintiffs, violates
California’s Unfair Competition Law, its law addressing “Made in USA” claims, and the state’s
Consumer Legal Remedies Act. (Hoffmann, et al. v. Peg Perego USA, Inc., No. 3:14-CV-02227
(S.D. Cal. complaint removed on Sept. 18, 2014)).
Putative nationwide class action filed against Johnson & Johnson, which alleges violations of
California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act,
as well as the consumer fraud statutes of 39 additional states and D.C., removed from California
Superior Court (Ventura County) to the U.S. District Court for the Central District of California.
Plaintiff claims that Johnson & Johnson falsely advertises that its “Nectresse” no-calorie sweetener
is “natural” and “100% natural” when, in reality, the product’s main ingredient – erythritol – is
synthetically made. (Viggiano, et al. v. Johnson & Johnson, No. 2:14-cv-7250 (C.D. Cal. complaint
removed on Sept. 17, 2014)).
Putative California-only class action filed against R.A.B. Food Group, LLC in the U.S. District
Court for the Northern District of California, alleging violation of California’s Unfair Competition
Law, False Advertising Law, and Consumer Legal Remedies Act. Plaintiffs claim that R.A.B. Food
Group falsely advertises that several of its “Manischewitz” line of products, including kettle chips
and matzo ball chicken soup, are “all natural” when, in reality, the products contain genetically
modified organisms (GMOs). (Pekarsky, et al. v. R.A.B. Food Grp., LLC, No. 3:14-cv-4173 (N.D.
Cal. complaint filed on Sept. 16, 2014)).
Putative California-only class action filed against The Neiman Marcus Group LLC alleging violation
of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act
removed from California Superior Court (Los Angeles County) to the U.S. District Court for the
Central District of California. Plaintiff claims that Neiman Marcus falsely advertises, through price
comparisons, that clothing sold at its “Last Call” stores is authentic “Neiman Marcus” clothing
previously sold at the company’s retail department stores but offered at a substantial discount.
(Rubenstein, et al. v. Neiman Marcus Group LLC, No. 2:14-cv-7155 (C.D. Cal. complaint removed
on Sept. 12, 2014)).
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Putative statewide class action filed in the U.S. District Court for the District of Massachusetts
against Blue Diamond Growers, alleging violations of Massachusetts law defining “natural” and
Massachusetts law prohibiting false and misleading labeling based on representations made for the
defendant’s “Almond Breeze” almond milk products. According to the complaint, the defendant
violated these laws by deceiving its customers into believing that Blue Diamond products are
naturally sweetened by using the term “Evaporated Cane Juice,” when the products actually contain
artificial ingredients and synthetic additives, and are sweetened with sugar and not the healthier
sounding “juice.” (Vass, et al. v. Blue Diamond Growers, No. 14-CV-13610 (D. Mass complaint
filed on Sept. 11, 2014)).
Putative class action filed against B&G Foods, Inc. in the U.S. District Court for the Southern
District of Florida, alleging violations of Florida’s Deceptive and Unfair Trade Practices Act and the
federal Magnusson-Moss Warranty Act, and common law negligent misrepresentation. The
plaintiffs claim that the defendant has “negligently, unlawfully, unfairly, misleadingly, and/or
deceptively represented” that a number of its products are “all natural,” even though they contain
synthetic ingredients. According to the plaintiffs, the defendant’s “Maple Grove Farms All Natural
Gluten Free Pancake & Waffle Mix,” “Old London All Natural Sourdough Melba Toast,” “New
York Style All Natural Sea Salt Mini Bagel Crips,” “New York Style All Natural Parmesan, Garlic
& Herb Pita Chips,” and “Mrs. Dash All Natural Taco Seasoning Mix,” despite their names, contain
unnatural, synthetic, and/or artificial ingredients, including soy flour, dextrose, corn starch, xanthan
gum, soy lecithin, maltodextrin, yellow corn flour, and citric acid. (Pettinga, et al. v. B&G Foods,
Inc., No. 9:14-CV-81159 (S.D. Fla. complaint filed on Sept. 9, 2014)).
Putative class action filed against Knudsen & Sons, Inc. in California Superior Court (Los Angeles
County). The plaintiffs claim that the defendant has placed a “No Sugar Added” statement on the
label of a number of its juice products in violation of FDA regulations regarding the use of “No
Sugar Added” statements, including, but not limited to, the requirement that such statements must be
accompanied by language that indicates that the food is not a “low calorie” or “calorie reduced”
food, and that directs consumers to read the nutrition label. The plaintiffs note that under
California’s Sherman Law, California has incorporated “[a]ll [federal] food labeling regulations and
any amendments to those regulations.” As such, according to the plaintiffs, the defendant’s alleged
failure to comply with applicable FDA regulations violates California’s Unfair Competition Law,
False Advertising Law, and Consumer Legal Remedies Act, and also constitutes negligent
misrepresentation and a breach of quasi-contract. (Park, et al. v. Knudsen & Sons, Inc., No.
BC556802 (Cal. Super. Ct. complaint filed on Sept. 5, 2014)).
Putative California-only class action filed against Ralph Lauren Corp. in the U.S. District Court for
the Southern District of New York, alleging violation of California’s Unfair Competition Law, False
Advertising Law, and Consumer Legal Remedies Act. Plaintiff claims that Ralph Lauren
deceptively prices merchandise at Polo Ralph Lauren Factory stores because the listed former price
(the “Value Was” price) – from which the store allegedly is offering a steep discount – does not
represent the bona fide price at which Ralph Lauren sold Polo Factory Products. (Branca, et al. v.
Ralph Lauren Corp., No. 1:14-cv-7097 (S.D.N.Y. complaint filed on Sept. 3, 2014)).
Putative nationwide class action filed in the U.S. District Court for the Southern District of Florida
against Whole Foods Market, Inc., alleging, among other things, negligent misrepresentation, and
42
violations of the Florida Deceptive and Unfair Trade Practices Act arising out of the defendant’s
marketing of homeopathic drugs under its “365 Be Well” brand line, including “Cough Ease,” “Flu
Ease,” and “Arnica Montana 30C.” According to the complaint, the products were deceptively
marketed as relieving coughs, flu symptoms, and muscles aches and pains, despite the fact that the
products had no such alleviating effects. Further, the plaintiff alleges that the products actually
contain no active ingredients and the “serial dilution le[ft] ingredients non-existent and incapable of
producing any biological effect in humans.” (Herazo, et al. v. Whole Foods Market, Inc., No. 14-
CV-61909 (S.D. Fla. complaint filed on Aug. 21, 2014)).
Putative class action filed against Ambir Energy, L.P. and Ambit Texas, LLC in the U.S. District
Court for the District of New Jersey, alleging violations of the New Jersey Consumer Fraud Act.
Plaintiffs claim that the Texas-based power reseller made false promises to customers of low
electricity rates and other rewards. In reality, plaintiffs claimed the rates actually charged to
customers were not competitive and bore little relation to prevailing market conditions, resulting in
putative class members having been “scammed” out of millions of dollars. (Urbino, et al. v. Ambit
Energy, L.P., No. 3:14-CV-05184 (D.N.J. complaint filed on Aug. 19, 2014)).
Putative class action filed against De Waffelbakkers, LLC in California Superior Court (Alameda
County), alleging violations of California consumer protection laws, common law fraud, and
negligent misrepresentation. Plaintiffs claim that the defendants knowingly engaged in unlawful,
deceptive, and fraudulent practices by falsely advertising certain products as “all natural” even
though they contained the chemical Calcium Acid Pyrophosphate. (Ham, et al. v. De Wafelbakkers,
LLC, No. RG14737405 (Cal. Super. Ct. complaint filed on Aug. 19, 2014)).
Putative class action filed against Pharmavite, LLC, in the U.S. District Court for the Central District
of California, alleging violations of California’s consumer protection statutes. The plaintiffs alleged
that the defendant engaged in a nationwide marketing campaign to advertise that its “Nature Made®
Vitamin E” products would help maintain a healthy heart. According to the plaintiffs, however, the
defendant’s Vitamin E products did not help consumers maintain a healthy heart and the defendant
lacked any substantiation to prove that Vitamin E supplements have any effect on heart health.
(Bradach, et al. v. Pharmavite, LLC, No. 2:14-CV-06337 (C.D. Cal. complaint filed on Aug. 12,
2014)).
Putative class action filed in California Superior Court (Los Angeles County) against Lechat Nail
Care Products, alleging violations of the California Consumer Legal Remedies Act and Unfair
Competition Law. The plaintiffs alleged that the defendant engaged in deceptive marketing of its
nail lacquer products by touting them as “free of DBP, Toluene and Formaldehyde” when the
California Environmental Protection Agency, Department of Toxic Substance Control found that the
defendant’s products actually contained those components. (Mehrazar, et al. v. Lechat Nail Care
Prods., No. BC-554341 (Cal. Super. Ct. complaint filed on Aug. 11, 2014)).
Putative class action filed against Aliphcom in the U.S. District Court for the Northern District of
California, alleging violations of various California consumer protection laws. The plaintiff alleged
that the defendant falsely marketed its fitness-tracking device as having the ability to track users as
they slept and as they moved throughout the day, thereby allowing them to “make smarter choices
and feel [their] best.” According to the complaint, however, the product was defective and failed to
43
maintain a charge for the advertised number of days or to sync to the mobile application. (Frenzel,
et al. v. Aliphcom, Case No. 3:14-cv-03587 (N.D. Cal. complaint filed on Aug. 7, 2014)).
Putative nationwide class action filed against Sony Computer Entertainment America, LLC in the
U.S. District Court for the Northern District of California, alleging, among other things, fraud in the
inducement, negligent misrepresentation, and violations of California’s Unfair Competition Law,
False Advertising Law, and Consumers Legal Remedies Act. The plaintiff claimed that, in order to
promote the technological capabilities of the newly-launched “PlayStation 4” video game console,
the defendant falsely advertised and deceptively marketed its marquee game for the console,
“Killzone: Shadow Fall,” as capable of displaying high-resolution 1080p multiplayer graphics.
According to the complaint, the defendant released an official statement conceding that it had not
designed the game to display 1080p multiplayer graphics, but rather used a technological shortcut
that provided “subjectively similar’ results.” (Ladore, et al. v. Sony Computer Entm’t Am., LLC, No.
3:14-cv-03530 (N.D. Cal. complaint filed on Aug. 5, 2014)).
Putative nationwide class action filed in the U.S. District Court for Massachusetts against Whole
Foods Market, Inc. alleging breach of warranty and unjust enrichment based on defendant’s labeling
of its “Whole Foods 365 Every Day Value Plain Greek Yogurt” as containing only 2 grams of sugar
per serving. According to the complaint, testing from the consumer publication Consumer Reports
shows that the product actually contains 11.4 grams of sugar per serving on average, and the
plaintiffs suffered material harms by the false representations regarding sugar content. (Knox, et al.
v. Whole Foods Market, Inc., No. 14-cv-13185 (D. Mass. complaint filed on Aug. 1, 2014)).
Putative nationwide class action filed against Guthy-Renker LLC in the U.S. District Court for the
Central District of California, alleging violations of, among other things, California and Florida
consumer protection statutes. Plaintiff alleged that the defendant’s “WEN Cleansing Conditioner”
hair care products contain an inherent design and/or manufacturing defect that causes significant hair
loss. Plaintiff further alleged that, despite the defendant’s longstanding knowledge of the alleged
defect, it: (1) failed to warn consumers that the products would cause substantial hair loss; and (2)
actively concealed customers’ comments concerning hair loss by blocking and/or erasing such
comments from the WEN Facebook page. (Friedman, et al. v. Guthy-Renker LLC, No. 2:14-CV-
06009 (C.D. Cal. complaint filed July 31, 2014)).
Putative class action filed against Novex Biotech, LLC, Sierra Research Group, LLC, and GNC
Corporation in the U.S. District Court for the Northern District of California, alleging violations of
California’s Unfair Competition Law and Consumers Legal Remedies Act. The plaintiffs claim that
the defendants promise that “Growth Factor-9,” an amino acid supplement manufactured, marketed,
sold, and distributed by the defendants, is “clinically tested” to boost human growth hormone by a
mean of 682% for those who take it. According to the plaintiffs, however, the defendants’ growth
hormone representations are false, misleading, and reasonably likely to deceive the public. The
plaintiffs allege that the clinically tested representation is false because the study the defendants cite
to is flawed, and does not and cannot serve as the basis for the representations made by the
defendants. (Engel et al. v. Novex Biotech, LLC, No. 14-cv-03457 (N.D. Cal. complaint filed on
July 30, 2014)).
Putative nationwide class action filed in the U.S. District Court for the Central District of California
against U-Haul International, Inc., alleging violations of California law regulating rental rates (Cal.
44
Civil Code § 1936.01) based on the defendant’s alleged failure to disclose its mandatory
environmental fee as part of its advertising of daily rental rates for its U-Haul trucks. (Arevalo, et
al. v. U-Haul Int’l, Inc., No. 14-cv-01179 (C.D. Cal. complaint filed on July 25, 2014)).
Putative California-only class action filed against Michael Kors (USA), Inc. in the U.S. District
Court for the Southern District of New York, alleging violations of California’s Unfair Competition
Law, False Advertising Law, and Consumer Legal Remedies Act. Plaintiff claims that the
defendant’s practice of listing a Manufacturer’s Suggested Retail Price (MSRP) and a lower, outlet
store price on product hang tags misrepresents that outlet customers are receiving a discount or
bargain on their purchase. According to the complaint, the defendant manufactured these products
for sale exclusively at its outlet stores and never intended that they be sold at the listed MSRP.
(Gattinella, et al. v. Michael Kors (USA), Inc., No. 1:14-cv-5731 (S.D.N.Y. complaint filed on July
25, 2014)).
Putative Florida-only class action filed against That’s How We Roll, LLC in the U.S. District Court
for the Southern District of Florida, alleging violations of the Florida Deceptive and Unfair Trade
Practices Act. Plaintiff claims that defendant falsely advertised at least three flavor varieties of its
“Party’tizers Dippin’ Chips” products were are “All Natural,” when, in fact, they contain unnatural,
synthetic, and/or genetically modified ingredients, such as white corn, corn oil, and toasted corn
germ. (Scarola, et al. v. That’s How We Roll, LLC, No. 9:14-cv-80983 (S.D. Fla. complaint filed on
July 25, 2014)).
Putative class action filed against Best Buy Co., Inc. BestBuy Stores, L.P., and Bestbuy.com, LLC in
the U.S. District Court for the District of Minnesota, alleging violations of Minnesota’s Prevention
of Consumer Fraud Act and Uniform Deceptive Trade Practices Act, and Massachusetts General
Laws, Chapter 93A §§ 2 and 9 The plaintiffs claim that the defendants falsely marketed and
advertised “Insignia”-brand televisions as “LED TVs,” “LED HDTVs” and “LED” televisions.
According to the plaintiffs, the televisions are not LED TVS but instead are LCD televisions that use
light emitting diodes (“LEDs”) instead of cold cathode fluorescent lights (“CCFLs”) to light the
liquid crystal display (“LCD”) panel that is present in each of the televisions at issue. The plaintiffs
allege that the defendants’ failure to disclose that its references to LED refer to the light source that
illuminates the LCD panel, instead of the display technology itself, and its nondisclosure and
concealment that each of the televisions is otherwise functionally identical to televisions that are
advertised and sold as “LCD TVs,” were at all times knowing, intentional, and intended to mislead
consumers. (Ferrari, et al. v. Best Buy Co., Inc., et al., No. 0:14-cv-02956 (D. Minn. complaint filed
on July 21, 2014)).
Putative statewide class action filed in the Ohio Court of Common Pleas alleging that defendant
Allstar Products, Group LLC violated the Ohio Consumer Sales Practices Act by representing that
its children’s toy, “Juggle Bubbles,” “do not pop” and easily can be used for hours of bubble tossing,
bouncing, and juggling. According to the complaint, these claims are false because “many or most
of the children who obtain Juggle Bubbles become frustrated and disappointed when Juggle Bubbles
do not perform as advertised.” (Culotta, et al. v. Allstar Products Group, LLC, No. CV-14-829906
(Ohio Ct. C.P. complaint filed on July 17, 2014)).
Putative class action filed against Revolution Laboratories L.L.C. and others in the U.S. District
Court for the Southern District of Illinois, alleging violations of the Illinois Consumer Fraud Act and
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the Illinois Uniform Deceptive Trade Practices Act. Plaintiff’s claims arise out of the defendants’
sale of “Green Coffee Bean Extract” pills to the plaintiff and failing to disclose material information
about the true length of its 14-day free trial program; for enrolling the plaintiff in a negative option
60-month purchase commitment without her consent; and for making five unauthorized charges to
her credit/debit card on a recurring basis without providing her with a copy of a signed, written
authorization signed or similarly authenticated authorization for pre-authorized electronic fund
transfers from her account. (Goeke, et al. v. Revolution Labs., et al., No. 3:14-cv-00806 (S.D. Ill.
complaint filed on July 16, 2014)).
Putative nationwide class action filed against Wellness and Health, LLC and its executive officer
and co-founder, Bruce Gezon, in the U.S. District Court for the Southern District of Illinois, alleging
violations of the Illinois Consumer Fraud and Deceptive Practices Act, the Illinois Uniform
Deceptive Trade Practices Act, and the federal Electronic Funds Transfer Act. Plaintiff alleges that
the defendants failed to disclose material information concerning an advertised 15-day no-risk free
trial program for their “Max Detox” weight-loss dietary supplements. Specifically, the plaintiff
asserts that the defendants’ risk-free trial offer is illusory, deceptive, and fraudulent because the
defendants (1) measure the 15-day trial period from the date consumers place (rather than receive)
the order without disclosing this to consumers at the point of sale, (2) require that consumers return
the product unopened and obtain a “return merchandise authorization” (“RMA”) number with which
the returned merchandise must be marked, and (3) use procedures that make it difficult for
consumers to obtain the requisite RMA numbers in time to return the product within the trial period.
According to the plaintiff, the defendants also maintain a website for their “Max Detox”
supplements on which they represent that consumers may lose a substantial amount of weight by
using that product and that the product promotes weight loss and provides “all-natural solution” to
help dissolve carbohydrates, metabolize fat and “gently flush pounds away.” In actuality, the
product does not cause substantial weight loss and defendants allegedly lack a reasonable basis to
substantiate these weight-loss claims. Plaintiff also asserts that the defendants enrolled her and other
consumers in a negative option auto-shipment purchase program without their consent and made
unauthorized charges to the plaintiff’s and other consumers’ credit/debit cards on a recurring basis.
Plaintiff alleges that the defendants fail clearly and conspicuously to disclose that consumers
participating in the purported “no commitments” risk-free product trial are agreeing to receive and
pay for additional product via this auto-shipment program. (Goeke, et al. v. Wellness & Health,
LLC, et al., No. 3:14-cv-00807 (S.D. Ill. complaint filed on July 16, 2014)).
Putative nationwide class action filed against Expedia, Inc. in Washington Superior Court (King
County), alleging violation of Washington’s Sellers of Travel Act and Consumer Protection Act.
Plaintiff claims that Expedia falsely advertises that an airline does not impose baggage fees or that
those fees are lower than they actually are, in violation of Washington law and the U.S. Department
of Transportation’s airline fare advertising and notice of baggage fee rules. (Weidenhamer, et al. v.
Expedia, Inc., No. 14-2-19097-2 (Wash. Super. Ct. complaint filed July 11, 2014)).
Putative California-only class action filed against Jos. A. Bank Clothiers, Inc. (“JAB”) in the U.S.
District Court for the Southern District of California, alleging violation of California’s Unfair
Competition Law and Consumer Legal Remedies Act. Plaintiffs claim that the “regular prices”
advertised in JAB’s “buy one [regular priced item] get one [or more] free” suit offers, and percent
off sales are fabricated, inflated, and not representative of the true former price, within the preceding
three months, for the product. The plaintiffs further allege that no consumer actually ever has paid
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the “regular price” for a suit outside of a promotion and that JAB products are perpetually on sale.
(Lucas, et al. v. Jos. A. Bank Clothiers, Inc., No. 3:14-cv-1631 (S.D. Cal. complaint filed on July 9,
2014)).
Putative class action filed against Fuhu, Inc. and Fuhu Holdings in California Superior Court (Los
Angeles County), alleging violation of the California Legal Remedies Act, false advertising, unfair
trade practices, breach of express and implied warranty, fraud, deceit and/or misrepresentation.
According to the allegations in the complaint, the defendants manufacture, distribute, and sell
“Nabi” brand electronic tablets for children and represent to consumers that the Nabi tablets are
“rechargeable” and include a “power adapter.” According to the complaint, however, the power
adapters included with the Nabi tablets do not reliably recharge the tablets and do not permit the
tablet to be operated while plugged into a power source. The complaint further alleges that, because
the Fuhu defendants sell the Nabi tablets with proprietary power adapters, consumers cannot use any
alternative power adapters to provide power to or to recharge the batteries of the Nabi tablets.
(Miller, et al. v. Fuhu, Inc., et al., No. BC550858 (Cal. Super. Ct. complaint filed on July 7, 2014)).
Putative class action filed against ASA College, Inc. and its officers in the U.S. District Court for the
Southern District of New York, alleging violations of New York General Business Law § 349. ASA
College is a privately owned, for-profit career college located in New York City. Plaintiffs allege
that ASA College students have been “victimized by a massive scheme to draw millions of dollars of
federal and state financial aid to ASA at the students’ expense and detriment by systematically and
fraudulently misrepresenting the nature of ASA’s certificate and degree programs to past, current,
and prospective students” and various state and federal agencies. According to the plaintiffs, the
defendants represent that ASA College programs provide occupational training that leads to specific
types of employment; that ASA will place its students in externships that will lead to its students
obtaining jobs in their fields; that ASA will provide its students with effective job placement
assistance; that ASA graduates have a proven track record of obtaining jobs in their fields; and that
an ASA degree is a fast and affordable route to obtaining a job. In reality, however, ASA
purportedly conceals from students that its programs do not provide relevant or necessary
occupational training; that the programs cannot be completed in the short amount of time
represented; that ASA does not provide meaningful externships or job placement assistance; that the
large majority of ASA students never graduate; that the vast majority of those who do graduate are
unable to find work; and that all students gain from enrolling in ASA is crippling student loan debt
that they are unable to afford and lost eligibility for future federal and state educational loans and
grants. (Sanchez, et al. v. ASA College, Inc., No. 1:14-CV-05006 (S.D.N.Y, complaint filed on July
3, 2014)).
Putative nationwide class action filed in the U.S. District Court for the Southern District of New
York against Hain Celestial Group, Inc., alleging violations of the California Organic Products Act,
Consumers Legal Remedies Act, False Advertising Law and Unfair Competition Law based on
“organic” and “all natural” claims made for Hain Celestial’s “Earth’s Best” brand infant foods, baby
foods, kids’ food, baby care products, and home care products. According to the complaint, the
products were deceptively labeled as “organic” and “all natural” because they allegedly contained a
multitude of non-organic, synthetic compounds, such as benzyl alcohol, dimethicone, ethylhexyl
palmitate, magnesium sulfate, panthenol, and phenoxyethanol. (Segedie, et al. v. Hain Celestial
Group, Inc., No. 7:14-CV-05029 (S.D.N.Y. complaint filed on July 3, 2014)).