The Advertising Disputes & Litigation and Consumer Protection Committees. RECENT LITIGATION DEVELOPMENTS Quarterly Report

The Advertising Disputes & Litigation and Consumer Protection Committees’ RECENT LITIGATION DEVELOPMENTS Quarterly Report [Cases from October 1 to De...
11 downloads 2 Views 711KB Size
The Advertising Disputes & Litigation and Consumer Protection Committees’ RECENT LITIGATION DEVELOPMENTS Quarterly Report [Cases from October 1 to December 31, 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 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.; 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; 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 Central District of California, in a Lanham Act false advertising action between competitors in the field of adding gold and other precious metals to individual retirement accounts, grants, in part, the defendant’s motion for reconsideration of the court’s November 17, 2014 preliminary injunction order and modifies that order for purposes of clarity. The court concluded that the defendant had raised a colorable argument that a provision limiting the types of photographs that could be placed upon the defendant’s affiliate marketers’ websites was not sufficiently clear. The court also found that other minor modifications were appropriate, including the substitution of more qualified language regarding the neutrality of affiliate website content. (Am. Bullion, Inc. v. Regal Assets, LLC, No. CV 14-01873, 2014 WL 7404597 (C.D. Cal. Dec. 30, 2014)). The U.S. Court of Appeals for the Fifth Circuit affirms the district court’s ruling that the appellant violated the Lanham Act through false and misleading statements regarding the appelleecompetitor’s products. Appellant, a plastics manufacturer, distributed a brochure directed to potential consumers stating that the BPA in the appellee’s plastic product caused high hormone levels harmful to humans. The district court enjoined the appellant from using these brochures, which the appellant argued was in error because there statements were not actionable under the Lanham Act as they were scientific opinions rather than facts. Appellant argued that the First Amendment protected these statements and subjecting issues of scientific debate to Lanham Act scrutiny would restrict academic growth. The Fifth Circuit disagreed, finding that, because the statements were published in a commercial advertisement that was given to consumers as opposed to a peer reviewed journal, they were not immune from the Lanham Act. The Fifth Circuit, then, affirmed the jury’s verdict finding the appellant liable, concluding that a reasonable juror could have found the statements false after hearing all the evidence and expert testimony regarding the reliability of the appellant’s testing. (Eastman Chem. Co. v. Plastipure, Inc., No. 13-51087, 2014 WL 7271384 (5th Cir. Dec. 22, 2014)).

1

The U.S. Court of Appeals for the Third Circuit Court affirms the district court’s award of a preliminary injunction to plaintiff Groupe SEB USA, Inc. Groupe SEB alleged that Euro-Pro Operating LLC violated the Lanham Act by making false claims on the packaging and hang tags for its “Shark” steam irons that the Shark irons provided “more powerful” steam than the plaintiff’s “Rowenta” steam irons at half the price. Fine-print disclosures stated that the claim was based on independent testing, and defined “more powerful” steam as “more grams per minute (maximum steam setting while bursting before water spots appear).” After learning of the claims, the plaintiff conducted internal testing, which showed that the Rowenta irons equaled or outperformed the Shark irons in steam production. Independent testing commissioned by the plaintiff confirmed these results. At an evidentiary hearing, the plaintiff submitted its testing. The defendant introduced an expert report defining steam power differently, as “the kinetic energy of a steam burst divided by the duration of the burst,” and showing that under that definition, the Shark irons deliver more powerful steam; and a consumer survey showing that consumers do not have a uniform understanding of the phrase “more powerful steam.” The district court found that Groupe SEB had established a likelihood of success on the merits because the claims were literally false, and had demonstrated the likelihood of irreparable harm. The Third Circuit agreed that the “more powerful” steam claim was clear and unambiguous because it was defined in the advertisement itself, and was literally false because all of the relevant evidence refuted the defendant’s claim of superiority. The consumer survey was irrelevant because the term “more powerful” steam was defined in the defendant’s advertising, and the defendant’s expert report, which demonstrated Shark’s superiority using an entirely different definition of steam power, was irrelevant to the claim actually made. The Third Circuit also found that the district court had not applied a presumption of irreparable harm. Finally, Euro-Pro asserted that the injunction was overbroad because it required it to use stickers to cover the entire advertising claim, not merely the definition that made the claim false. The Third Circuit disagreed, because the literally false claim included both the definition and the “more powerful” steam claim. (Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, No. 14–2767, 2014 WL 7172253 (3d Cir. Dec. 17, 2014)). The U.S. District Court for the Northern District of California grants in part and denies in part the plaintiff-deodorant manufacturer’s motion to dismiss the defendant-competitor’s counterclaim. The plaintiff brought federal and state law claims for false advertising against its competitor based on alleged false and misleading labels. The defendant counterclaimed, alleging that the plaintiff’s labels also violated federal and state false advertising laws because its statement that its products were “Made in the U.S.A. of U.S. and/or imported ingredients” was false and misleading as it gave the impression that only a de minimis amount of foreign products were used. The court granted the motion to dismiss the “U.S. Origin” claims, finding that the defendant did not sufficiently allege “some evidence” suggesting that actual customer confusion could be proven. The court denied the motion with respect to the unfair competition claim finding that the defendant sufficiently alleged competitive injury. (A.P. Deauville, LLC v. Arion Perfume and Beauty, Inc., No. C14-03343, 2014 WL 7140041 (N.D. Cal. Dec. 12, 2014)). The U.S. Court of Appeals for the Third Circuit vacates the district court’s order dismissing the plaintiff’s false advertising complaint on grounds of abstention based on a purported lack of primary jurisdiction. Plaintiff manufactured an FDA-approved drug in non-crushable form; the defendant manufactured an FDA-approved, bio-equivalent, generic version of the plaintiff’s drug, which it marketed as such. After the plaintiff began manufacturing and marketing a crushable form of the drug, it discontinued production of the non-crushable form and petitioned the FDA to determine that

2

the plaintiff withdrew the non-crushable version from the market for safety reasons and also asked the FDA to withdraw any prior or pending approvals of generic versions of the drug in noncrushable form. Before the FDA could reach a determination on the plaintiff’s request, the plaintiff filed suit against the defendant for falsely stating that its drug was an FDA-approved version of the plaintiff’s drug when the only FDA-approved version of the plaintiff’s drug actually on the market was the crushable form, which was not what the defendant’s FDA-approval was based upon. Defendant argued and the district court was correct in abstaining from hearing the case on primary jurisdiction grounds on the basis that the FDA first should determine whether the non-crushable drug that the defendant marketed was, in fact, unsafe for consumers. The FDA subsequently determined that the non-crushable form of the drug was not a safety concern and that it would not withdraw approval of generic forms of the non-crushable form on that basis. Based on the FDA’s determination, the Third Circuit found that the basis for the district court’s dismissal was moot and, as such, vacated the order and remanded. (Endo Pharms. Inc. v. Actavis Inc., --Fed. Appx.--, No. 13-4096, 2014 WL6844812 (3d Cir. Dec. 5, 2014)). The U.S. District Court for the Central District of California grants the plaintiff’s motion for a preliminary injunction. The parties are competing services that add investments in precious metals to investors’ individual retirement accounts. Plaintiff American Bullion alleged that defendant Regal Assets and two operators of affiliate websites were posting false and misleading advertising – specifically, “independent” consumer reviews that praised Regal and disparaged American Bullion. Plaintiff claimed the reviews were not, in fact, independent and that the websites did not disclose their connection to Regal. American Bullion alleged claims under the Lanham Act and various state statutes. Defendants argued that they were not responsible for the contents of the affiliate websites, but the plaintiff produced evidence that Regal provided a template for reviews of American Bullion, which included a recommendation that consumers use Regal instead. Regal also promised to create an entire custom-made website for its affiliates, including content and consumer narratives from fictitious consumers. The court concluded there was very little dispute that Lanham Act violations had occurred and that Regal controlled the actions of its affiliates. Given American Bullion’s likelihood of success on the merits and proof of irreparable harm in the form of lost sales and feedback from consumes who chose Regal over American Bullion because of bad reviews, the court granted a preliminary injunction preventing deceptive or confusing advertising. The court emphasized, however, that there is nothing inherently wrong with affiliate marketing arrangements. (American Bullion, Inc. v. Regal Assets, LLC, No. CV 14-01873, 2014 WL 6453783 (C.D. Cal. Nov. 17, 2014)). The U.S. District Court for the District of New Jersey, in a competitor challenge arising out of the sale of an automated testing system without necessary regulatory approvals, dismisses all of the plaintiff’s claims for failure to satisfy Fed. R. Civ. P. 9(b)’s heightened particularity requirement and for failure to provide seasonable notice of breach of warranty. The court dismissed without prejudice the plaintiff’s claims for common law fraud, negligent misrepresentation, and violations of the New Jersey Consumer Fraud Act on the grounds that the plaintiff failed to allege when the purported misrepresentations were made and to whom, as required by Rule 9(b). The court dismissed with prejudice the plaintiff’s breach of express warranty and implied warranty claims because it had failed to allege that it provided the defendant with notice of the alleged breaches prior to initiating the action. (Sani-Pure Food Labs, LLC v. Biomerieux, Inc., No. 13-cv-6643, 2014 WL 6386803 (D.N.J. Nov. 13, 2014)).

3

The U.S. Court of Appeals for the Eighth Circuit exercises its discretion to remand a Lanham Act false advertising claim to the district court for a determination of whether the plaintiff, a biotechnology company offering genetically-modified seed, has Lanham Act standing in a lawsuit it filed against a transportation company, in light of the Supreme Court’s recent Lexmark decision establishing the controlling standard for Lanham Act standing. The district court previously had granted summary judgment for the defendant on the ground that the plaintiff failed to establish Lanham Act standing under the Eighth Circuit’s then-controlling standard. Because the Supreme Court decided Lexmark while the case was before the Eighth Circuit, the appeals court decided to remand to the district court to allow it to apply the Supreme Court’s new standard. (Syngenta Seeds, Inc. v. Bunge N. Am., Inc., No. 13-1391, 2014 WL 5315104 (8th Cir. Oct. 20, 2014)). The U.S. District Court for the Central District of California grants in part and denies in part defendant Hospira, Inc.’s motion to dismiss JHP Pharmaceuticals’ complaint alleging false or misleading advertising and labeling under the Lanham Act and equivalent state statues. The parties are competing manufacturers of injectable epinephrine products. The plaintiff alleged that the defendant misled the public by: (1) representing that its products were FDA-approved, when they are not; (2) misleadingly advertising its products as safe and effective; (3) misleading wholesalers and the public as to the legality of its products; and (4) omitting from its product labels certain information. In moving to dismiss the complaint, the defendant argued, among other things, that the claims were precluded by the federal Food, Drug, and Cosmetic Act (“FDCA”), and thus, the FDA had primary jurisdiction over the claims. The court granted dismissal of the misleading FDA-related advertising claims, finding that the plaintiff had alleged no facts to show that the defendants’ products were either unsafe or ineffective. However, the court allowed false advertising claims to proceed, citing the U.S. Supreme Court’s ruling in POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228 (2014), which found that FDA regulations do not preclude Lanham Act claims. (JHP Pharms., LLC v. Hospira, Inc., No. CV 13-07460, 2014 WL 4988016 (C.D. Cal. Oct. 7, 2014)). State Consumer Protection Laws The U.S. District Court for the District of Minnesota grants defendant-shopping network’s motion for summary judgment. The plaintiff purchased jewelry from the defendant with the idea that she would be able to resell the jewelry for a profit. She was unable to make a profit and brought state consumer protection claims against the defendant based on alleged misrepresentations and deceptive conduct, such as listing misleading appraisal values and a customer service representative’s statement to the plaintiff that another customer resold the jewelry as a side business. The Minnesota Unfair Trade Practices Act claim failed because it does not apply to persons engaged in the sale of merchandise. The deception claim failed because there was no allegation of future harm. The consumer fraud claim failed because the plaintiff was not the state attorney general and she could not show a public benefit. The misrepresentation claims failed because the alleged misrepresentations were either puffery or the plaintiff had no evidence that the defendant knew the statements were false at the time they were made. (Klinge v. GEM Shopping Network, Inc., No. 12-cv-2392, 2014 WL 7409580 (D. Minn. Dec. 31, 2014)). The U.S. District Court for the District of Arizona grants the defendant’s motion to dismiss claims of consumer fraud under Arizona’s consumer protection statute. The lawsuit stemmed from the plaintiff’s purchase of a cellular phone from the defendant, Cricket Communications, Inc., in 2013.

4

Plaintiff and his wife have a history of litigation against the defendant in both state and federal court. The defendant moved to dismiss in lawsuit for failure to state a claim and for dismissal based on res judicata. The court dismissed the plaintiff’s consumer fraud claim, explaining that the plaintiff failed to plead a specific time as required by Fed. R. Civ. P. 9(b) for fraud claims, and given his history of litigation, there is no set of facts in the range of possibility in which the plaintiff could have known that the defendant’s representations were false. Yet he still relied upon on them, causing him injury. The court also addressed the res judicata issue and held that, although this lawsuit operates on the same nucleus of facts as the plaintiff’s prior case and the parties are in privity to one another, the claims cannot be precluded due to res judicata because the prior action was not adjudicated on the merits as it was dismissed without prejudice. (Shupe v. Cricket Communications, Inc., No. CV 13-1052, 2014 WL 6983245 (D. Ariz. Dec. 10, 2014)). The U.S. Court of Appeals for the Fourth Circuit affirms the dismissal of the plaintiff’s claims under the Virginia consumer protection laws, alleging that a for-profit university misled him into seeking a Ph.D. degree only to deny him a diploma after he repeatedly failed his comprehensive exams. In a per curiam decision, the Fourth Circuit agreed with the district court’s conclusion that the plaintiff had failed to satisfy the heightened particularity pleading requirements under Fed. R. Civ. P. 9(b). In particular, the plaintiff failed to identify anyone at the for-profit university who had assured him that he would pass his comprehensive exams, that he would complete the program, or that he would receive a degree. (Murphy v. Capella Educ., No. 13-2265, 2014 WL 6844975 (4th Cir. Dec. 5, 2014)). The U.S. District Court for the Western District of Pennsylvania grants in part and denies in part the defendants’ motion for partial dismissal of the plaintiffs’ third amended complaint or, in the alternative, for summary judgment. Plaintiffs sued for damages arising out of the defendants’ construction of a home for the plaintiffs, which allegedly was defectively designed and constructed. Plaintiffs also brought a claim under Pennsylvania’s Unfair Competition Law, alleging that an employee of defendant Mountaineer Log and Siding Company had misrepresented defendant Vail Home LLC’s “competency, experience and/or workmanship” as a builder, and had disparaged the builder that the plaintiffs had intended to use. The court found that, because the contract between the plaintiffs and Mountaineer Log and Siding explicitly disclaimed recommendations as to the contract with any builder and contained an integration clause, the plaintiffs could not claim that they relied on the employee’s recommendation of Vail Homes as an inducement to sign the contract. Claims as to these alleged pre-contract misrepresentations were dismissed. However, any representations made by the Mountaineer Log and Siding employee after the contract was signed were not limited by the parol evidence rule, and the court declined to dismiss the plaintiffs’ claims as to these statements. (Polansky v. Vail Homes, LLC, No. CIV.A. 13-2962014, WL 6682473 (W.D. Pa. Nov. 25, 2014)). The Michigan Court of Appeals upholds dismissal of the plaintiff’s claims that the defendant Better Business Bureau of West Michigan (“BBBWM”) violated the Michigan Consumer Protection Act. The BBBWM gave a window installation company an “A+” rating, which the plaintiff claimed he relied upon when purchasing windows. When the windows were unsuccessfully installed, the plaintiff filed suit against the window installer, and, then, filed a separate action against the BBBWM. The court upheld the trial court’s dismissal, finding that there had been no “transaction” between the BBBWM and the plaintiff, as required under the Michigan Consumer Protection Act. The court found no agreement had been made and the BBBWM had derived no benefit from the

5

plaintiff’s consultation of its website. (DiPiero v. Better Bus. Bureau of W. Michigan, Inc., No. 316308, 2014 WL 6679406, (Mich. Ct. App. Nov. 25, 2014)). The Georgia Supreme Court reverses a judgment on the pleadings granted in favor of defendant-car dealer. The plaintiff purchased a Honda minivan from the dealer after consulting with one of the dealer’s salespersons about the vehicle’s history. Specifically, the plaintiff asked the salesperson whether the minivan ever had been in a wreck or was damaged in any way. The salesperson stated “‘nothing was wrong with the [minivan]’ and that it was ‘clean’ and ‘undamaged.’” Plaintiff requested a Carfax report, which was provided by the salesman and appeared to confirm that the minivan had not been damaged or been in any accidents. Plaintiff purchased the vehicle based on these representations but, later, learned that the vehicle, in fact, had suffered damage, including a bent frame. When the plaintiff tried to return the vehicle, the dealer refused and the plaintiff sued for fraud and violations of the Georgia Fair Business Practices Act (“GFBPA”). In Georgia, both common law fraud and the GFBPA require proof of reasonable reliance by a plaintiff. The trial court granted judgment on the pleadings in favor of the dealer based on contractual language declaring that the dealer was not bound by any “verbal” representations of a salesman, that the minivan came “as is” with no warranty, that the customer should have the vehicle inspected by the customer’s own mechanic, and that the vehicle was “announced having unibody damage at the auction.” The dealer argued that these disclosures made any reliance on salesperson’s alleged misrepresentations unreasonable as a matter of law. The court of appeals affirmed. In reversing, the Georgia Supreme Court recognized that unequivocal complete merger clauses and clear and unequivocal disclaimers covering the precise misrepresentations alleged to be the cause of harm can make reliance on those misrepresentations unreasonable as a matter of law. But, in this case, the court found that the contractual language fell far short of this standard. First, the court noted that the disclaimer of liability for representations by a salesman only related to “verbal” representations and that, here, the plaintiff alleged that he was provided a written Carfax report upon which he also relied. The court also found that the broad “as is” language was limited by following sentences, which referred to prior repairs and “verbal” representations of salesmen. Finally, the court found that the statement that the vehicle had been announced with “unibody” damage at an auction was short of an equivocal statement that the car, in fact, was damaged, and that the position of the statement in the middle of many other provisions in the same font and “all caps” style prevented the court from finding that the provision was conspicuous or sufficiently definite to establish as a matter of law that the plaintiff could not rely on written Carfax report provided by the salesman. (Raysoni v. Payless Auto Deals, LLC, No. S13G1826, 2014 WL 6090438 (Ga. Nov. 17, 2014)). The California Court of Appeal reverses judgment in favor of the defendant-alcoholic beverage manufacturer, City Brewing Company, LLC. Plaintiff, the father of the decedent, who was shot to death by police, brought negligence and strict liability claims against several defendants, including the manufacturer of the “Four Loko” brand beverage that the decedent consumed before the shooting. The complaint alleged that the combination of high levels of alcohol with caffeine and other stimulants in Four Loko resulted in a product that had unreasonably dangerous propensities. The trial court granted City Brewing’s motion for judgment on the pleadings and dismissed the claims with prejudice. In reversing, the Court of Appeal determined, among other things, that judgment on the pleadings could not be upheld based on the statutory immunity that bars product liability claims for certain inherently unsafe common consumer products. The court noted that parties’ arguments centered on an implicit dispute about the proper method for analyzing a multi-

6

ingredient product to determine whether it qualifies as a “common consumer product” for purposes of statutory immunity. On this point, the court instructed that, in the analysis of whether a multiingredient product is a “common consumer product” and the ingredients have an interactive effect, the product and its inherent dangers must be considered as a whole so that the interactive effects of its ingredients are not overlooked or trivialized. Thus, while that statute lists alcohol as a common consumer product, the plaintiff alleged that Four Loko was unreasonably dangerous due to its combination of high levels of alcohol and stimulants, and the risk posed by stimulants that mask the intoxicating effect of the alcohol. The allegations about the interactive effect of Four Loko’s ingredients precluded the court from finding, as a matter of law, that Four Loko’s combination of alcohol and stimulants constitutes a “common consumer product” within the meaning of the California Civil Code. Moreover, the regulatory actions by the FDA and FTC did not establish that premixed caffeinated alcoholic beverages, such as Four Loko, are common consumer products for purposes of the California law. The regulatory actions were not a final adjudication of the application of federal law, and the legal standards discussed by the FDA and FTC were not identical to those used determine if a beverage is a “common consumer product” under California law. (Fiorini v. City Brewing Co., LLC, -- Cal. Rptr. 3d --, No. F067046, 2014 WL 5743133 (Cal. Ct. App. Nov. 6, 2014)). The U.S. District Court for the Northern District of California grants the defendant’s motion for summary judgment on all the plaintiff's claims, which alleged violations of California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, and unjust enrichment. Plaintiff's complaint alleged that defendant Walmart’s oil change stickers were misleading and caused her to change her car’s oil more frequently than the manufacturer’s recommendation. In granting summary judgment, the court found that the plaintiff’s theory of damages (i.e., that she was forced to pay for premature oil changes) was lacking and that no reasonable fact finder could conclude that she suffered an injury in fact as a result of the defendant’s conduct. (Krouch v. WalMart Stores, Inc., No. 12-cv-02217, 2014 WL 5463333 (N.D. Cal. Oct. 28, 2014)). The U.S. District Court for the Central District of California grants the defendant-hip-hop artists’ motion to compel arbitration. Plaintiffs’ first amended complaint asserted fourteen causes of action against the defendants alleging that they engaged in a “persistent pattern” of performing under the “Pharcyde” name and using the “Pharcyde” and “Bizarre Ride II the Pharcyde” marks in promotional materials for live performances in violation of the hip-hop group’s Settlement and Dissociation Agreement. Defendants filed a motion to compel arbitration of the claims asserted against them pursuant to the terms of the Settlement and Dissociation Agreement. The court held that the defendants did not waive their right to arbitrate by, among other things, responding to the plaintiffs’ discovery requests and opposing the plaintiffs’ motion for preliminary injunction because such efforts did not constitute the sort of invocation of the machinery of litigation necessary to support a finding of waiver. Moreover, there was no prejudice to the plaintiffs in compelling arbitration because they only asserted that they would face “financial prejudice” if forced to arbitrate and the court was not convinced that compelling the plaintiffs to arbitrate would lead to inconsistent rulings. The court also held that the claims asserted against the defendant were within the scope of the arbitration clause because the provision was “broadly worded,” indicating a strong presumption in favor of arbitability, and that the claims at issue either “arise under” or are “related to the terms” the Settlement and Dissociation Agreement insofar as they “touch matters” covered by the contract.

7

(Robinson v. Delicious Vinyl Records Inc., Case No. 2:13-CV-04111, 2014 WL 5332837 (C.D. Cal. Oct. 20, 2014)). Consumer Class Actions The California Court of Appeal affirms the trial court’s dismissal of a consumer class action complaint without leave to amend. Plaintiffs filed a putative class action against Jack in the Box, Inc. (corporate restaurants and franchises), alleging that the defendants overcharged customers for a particular “small combo meal” that was upgraded to a “large combo meal,” and that the defendants, thus, violated California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. Specifically, the plaintiffs alleged that defendants advertised a small combo meal consisting of a “Jr. Jack” sandwich, five chicken nuggets, small fries, and a small drink for $3.99 before tax. Plaintiffs further alleged that the defendants had a policy of charging 89 cents to upgrade any small combo meal to a large combo meal – an upgrade that allegedly consisted of substituting large fries and a large drink for small fries and a small drink. Plaintiffs claimed that the defendants charged more than 89 cents for upgrading the specific small combo at issue to a large combo during the relevant six-month time frame. The trial court sustained the defendants’ demurrer and motion to strike the class allegations. The court explained that the second amended complaint was vague and unintelligible, that the fraud claims were not specifically pleaded, and that the plaintiffs’ other claims were insufficient even given the liberal pleading standard. The court declined to grant leave to amend because the plaintiffs failed to meet their burden of demonstrating how they could amend any cause of action to overcome the deficiencies. The appellate court held that the ruling was not an abuse of discretion. Among other things, the appellate court confirmed that the plaintiffs, as pro se litigants, could not pursue class-wide relief without securing adequate legal representation. Stripped of its class allegations and requests for class-wide relief, the second amended complaint was reduced to individual, fraud-based claims involving trivial amounts of money and claimed damages. Aside from repeating the allegations in the second amended complaint, plaintiffs failed to demonstrate on appeal that they stated a viable individual claim for relief or that they could amend the complaint to state a cause of action. (Pratt v. Jack in the Box, Inc., No. A139960, 2014 WL 7463129 (Cal App. Dec. 31, 2014)). The U.S. District Court for the Northern District of California dismisses the plaintiff’s individual and class action claims alleging violations of California’s Consumer Legal Remedies Act (“CLRA”), Unfair Competition Law, and False Advertising Law by AliphCom d/b/a Jawbone, arising out of the defendant’s alleged fraudulent inducement of the plaintiff to buy the defendant’s fitness-tracker wristband. The fitness tracker allegedly did not perform as advertised and eventually “died.” Applying California’s choice of law rules, the court dismissed the plaintiff’s claims because he had not identified the state in which he purchased his Jawbone fitness tracker. The court also rejected the plaintiff’s fraud theories, finding that vague statements about general functionality are not actionable under California’s consumer protection statutes. The court further found that the plaintiff’s CLRA notice was deficient because he did not clearly notify the defendant that his claim extended to the first generation of the fitness tracker, but the court granted leave to amend. (Frenzel v. AliphCom, No. 14-CV-03587, 2014 WL 7387150 (N.D. Cal. Dec. 29, 2014)). The U.S. District Court for the Southern District of New York denies defendant New York energy company, Hiko Energy, LLC’s, motion to dismiss the plaintiffs’ claims for violations of Sections 349 and 349-d (which exists specifically to address unfair practices by energy companies) of New

8

York’s General Business Law (“GBL”). Plaintiff-New Jersey residents brought suit against the defendant for falsely claiming that New Jersey consumers would (i) pay wholesale costs for electricity and gas; and (ii) enjoy guaranteed savings for the first six months of service, as compared to the New Jersey energy utility consumers were being asked to leave, namely PSE & G. The defendant moved to dismiss the claims for lack of standing, arguing that the GBL was not intended to police out-of-state transactions of New York companies. The court, however, held that only “some part” of the allegedly deceptive transaction must occur in New York. Because the plaintiffs paid the defendant in New York, “some part” of the allegedly deceptive transaction was sufficiently alleged to have occurred in New York for purposes of establishing standing under the statute. The defendant also argued that there was no actionable injury under the GBL because the same injury – i.e., paying more than they should have for electricity and gas service – was also the basis for a breach of contract claim; therefore, the plaintiffs could not allege the same injury under both causes of action. Again, however, the court disagreed, finding that the injury alleged for breach of contract was the difference between what the contract said the plaintiffs would be charged and what the plaintiffs were actually charged, whereas the injury alleged for violation of the GBL was the difference between what the plaintiffs paid the defendant and what plaintiffs would have otherwise paid PSE & G (because the plaintiffs never would have left PSE & G but for the deceptive advertising claims). Finally, because the parties agreed that the analysis for standing and independent injury were the same for § 349-d as for § 349, dismissal of the § 349-d claims also was denied. (Chen v. Hiko Energy, LLC, Nos. 14 CV 1771, 14 CV 2042), 2014 WL 7389011 (S.D.N.Y. Dec. 29, 2014)). The U.S. District Court for the Southern District of Florida denies a plaintiff-consumers’ motion to certify a class of purchasers of “Crisco” brand cooking oil products, because the plaintiff failed to demonstrate ascertainability of the proposed class and satisfy the predominance element of Fed. R. Civ. P. 23(b)(3). The plaintiff alleged that Crisco violated Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”) by labeling some of its cooking oil products with the phrase “all natural” when the products were not all natural. Plaintiff claimed that the products were not all natural because they were made from genetically modified plants and processed with harsh chemicals. However, it was undisputed that of the nine different varieties of Crisco brand cooking oils, only four of those brands actually contained the alleged misrepresentation. In addition, these four brands did not uniformly and continuously contain the alleged misrepresentation throughout the proposed class period. Thus, a class member would have to demonstrate that they purchased one of the four products and the exact date upon which they purchased the product in order to determine whether they had actually purchased an allegedly mislabeled product. The court held that this rendered the class not reasonably ascertainable, because no administratively feasible objective criteria existed for determining which consumers were members of the class. In addition, the court held that the plaintiff failed to demonstrate predominance of the classwide issue of whether “all natural” was deceptive to a reasonable objective consumer, because the plaintiff only presented evidence that the definition of “all natural” was hotly disputed and not uniform. Further, the plaintiff failed to present evidence on the practicality or feasibility of determining what portion of an alleged premium price was attributable to the alleged misrepresentation. Therefore, the court denied the motion for class certification without prejudice. (Randolph v. J.M. Smucker Co., No. 13-CIV-80581, 2014 WL 7330430 (S.D. Fla. Dec. 23, 2014)). The U.S. District Court for the Southern District of California grants in part and denies in part the defendant’s motion to dismiss and motion to strike the plaintiff’s class action complaint. Plaintiff

9

alleged that he relied upon defendant State Farm Mutual Automobile Insurance Company’s representations and sales presentation in deciding to purchase long-term care insurance from it. Plaintiff brought class action claims for violation of California’s Unfair Competition Law and False Advertising Law, and individual claims of breach of contract, breach of the implied covenant of good faith and fair dealing, intentional misrepresentation, and negligent misrepresentation. Defendant moved to dismiss the unfair competition, false advertising and misrepresentation causes of action for failure to state a claim and to strike the class definitions set forth in the plaintiff’s complaint. The court dismissed the unfair competition claim because the complaint failed to plead a predicate violation of fraudulent activity adequately, failed to state any factual allegations under the unfair prong, and failed to state a predicate unlawful act under any of the identified statutes. The court dismissed the false advertising claim because the plaintiff’s allegations are generic in nature and provided no basis from which the court could conclude what representations the defendant allegedly made. The court dismissed the misrepresentation causes of action because the claims are barred by the economic loss doctrine. The court denied the motion to strike the class allegations and explained that a motion for class certification is a more appropriate time to consider the class allegations. (Silcox v. State Farm Mut. Auto. Ins. Co., No. 14cv2345, 2014 WL 7335741 (S.D. Cal. Dec. 22, 2014)). The U.S. District Court for the Western District of Arkansas denies defendant Frito-Lay’s motion to transfer or stay a consumer class action lawsuit alleging misbranding of several of the defendant’s food products. The lawsuit was filed on behalf of a putative Arkansas consumer class for violation of Arkansas laws. Defendant’s motion was based on the existence of a pending, similar consumer class action lawsuit filed two years earlier in the Northern District of California (Wilson v. FritoLay). In Wilson, a case brought under California laws, the court already had dismissed parts of the complaint and limited the putative class to California consumers. Defendant sought a transfer or stay under the first-filed rule and 28 U.S.C. § 1404(a). The court rejected transfer under the firstfiled rule because “neither the parties nor the issues are substantially the same” and “a plaintiff’s claims in one lawsuit would [not] be precluded by a decision in the other.” Although the court recognized that the defendant’s nationwide behavior may be identical and both this case and Wilson will require interpretation of FDA’s labeling regulations, the court held that the claims in this case arise under Arkansas law and the class is limited to Arkansas consumers. The court did acknowledge that “[r]ulings in Wilson will doubtless be informative and persuasive on the issue of interpreting the FDA regulations.” The court also denied transfer under section 1404(a) because the defendant did not demonstrate “that California courts have ever had personal jurisdiction over it for sales affecting Arkansas purchasers, and it is not clear that th[e] dispute ‘might have been brought’ in the Northern District of California” in the first instance. Defendant’s consent to jurisdiction in California after this case was filed was ineffective for section 1404(a) purposes, because it did not establish that this suit could have been brought in California in the first instance. Finally, the court ruled that the defendant “has not met its burden to demonstrate that a stay is necessary in this case.” Having to litigate two suits at the same time is not sufficient. Moreover, scheduling extensions in Wilson – which will delay completion of that action – undermined the defendant’s argument that the plaintiff would not be prejudiced by a stay of this case. (Welsher v. Frito-Lay N. Am., Inc., No. 5:14-cv-05154, 2014 WL 7331017 (W.D. Ark. Dec. 19, 2014)). The U.S. District Court for the Northern District of California grants defendant Gerber Products Co.’s motion for summary judgment because of insufficient evidence that the challenged

10

representations were likely to mislead reasonable consumers. Plaintiff brought claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. The summary judgment motion was brought after the court denied the plaintiff’s motion for class certification. The court held that plaintiff’s personal testimony of the labeling being misleading, without more, was not enough to survive summary judgment. Moreover, one of the plaintiff’s experts testified that many of Gerber’s label statements were not misleading. (Bruton v. Gerber Prods. Co., No. 12-CV-02412, 2014 WL 7206633 (N.D. Cal., Dec. 18, 2014)). The U.S. District Court for the Northern District of California denies in large part and grants in part the defendant’s motion to dismiss the plaintiff’s class action complaint, which alleged that the defendant falsely represented that its video game’s multiplayer mode would render graphics in 1080p. Plaintiff’s complaint alleged seven causes of action, including, among other things, violation California’s Legal Remedies Act, Unfair Competition Law, and False Advertising Law, and negligent misrepresentation. Only the negligent misrepresentation claim dismissed. In granting the defendant’s motion to dismiss that claim, the court held that the claim was not adequately pled because the plaintiff alleged no non-economic losses suffered as a result of his purchase. In denying the defendant’s motion to dismiss the other causes of action, the court found that the defendant’s arguments either ignored well-pleaded factual allegations or would require the court to construe the complaint in favor of it, rather than the plaintiff. (Ladore v. Sony Computer Entm’t, No. C-14-3530, 2014 WL 7187159 (N.D. Cal. Dec. 16, 2014)). The U.S. District Court for the Northern District of California grants defendant Blue Diamond Growers’ motion to decertify a consumer class in a false advertising action challenging the labeling of almond milk and “eighteen substantially similar” products. On May 23, 2014, the court issued an order denying an injunctive class, but granting a Fed. R. Civ. P. 23(b)(3) damages class covering California consumers. In doing so, the court accepted a regression damages model, one of three damages models the plaintiff proposed. Though the regression analysis had not yet been attempted, the plaintiff’s expert indicated it “would control for factors” that may impact price other than the challenged labeling statements, and “would provide a ‘quantitative measure of damages.’” Five months later – and after the plaintiff’s expert served the first of two regression analyses – the defendant filed a motion to decertify the damages class. The court recognized that “[o]n a motion for decertification, the burden remains on the plaintiffs to demonstrate” that Rule 23’s requirements are met. Under Fed. R. Civ. P. 37(c), the court excluded the plaintiff’s expert’s untimely supplemental report because it reflected a fundamentally-different methodology than the initial damages report even thought it was based on information available to the expert at the time of his opening report. The court, then, ruled that the initial damage report did not satisfy the Comcast standard, because the modeled damages were not consistent with the theory of liability, i.e., the model did not isolate the portions of the purchase price attributable to the challenged, unlawful mislabeling. The court found that the damages model conflated the effect of the alleged mislabeling with the value of the defendant’s brand and the model failed to control for other key factors impacting price. The court also rejected the expert’s alternative damage theory that was borrowed wholesale from a 2007 study by another expert regarding a different product and label, because that study did not purport to measure the price premium of the challenged labeling statements of the products at issue in this case. (Werdebaugh v. Blue Diamond Growers, No. 5:12-cv-02724, 2014 WL 7148923 (N.D. Cal. Dec. 15, 2014)).

11

The U.S. District Court for the Northern District of Florida grants defendant-soup manufacturer’s motion to dismiss a class action complaint. The purported class action alleged that labels on the defendant’s fruit and vegetable juices were misleading because the front of the bottle has a primary display panel showing blueberries and pomegranate and states that the product is “100% juice.” Plaintiffs argued that this representation is misleading because it suggests the product is made of 100% blueberry and pomegranate juice, but in fact it contains less than 1% of those juices. The court found the label satisfied a federal labeling statute and, therefore, the plaintiff did not state a cause of action. (Bell v. Campbell Soup Co., No. 4:14cv291, 2014 WL 6997611 (N.D. Fla. Dec. 11, 2014)). The U.S. Judicial Panel on Multidistrict Litigation orders that four putative class actions, all arising from highly similar allegations that Whole Foods falsely labeled the sugar content of its “365 Greek Yogurt” product, be consolidated in the Western District of Texas, in order to “eliminate duplicative discovery, prevent inconsistent pretrial rulings on class certification and other issues, and conserve the resources of the parties, their counsel, and the judiciary.” (In re Whole Foods Market, Inc., Greek Yogurt Mktg. and Sales Practices Litig., -- F. Supp. 3d --, MDL No. 2588, 2014 WL 7006973 (J.P.M.L. Dec. 10, 2014)). The U.S. District Court for the Northern District of California grants defendant Mars, Inc.’s motion to stay the action pending the Ninth Circuit’s decision in Jones v. ConAgra Foods, Inc., No. 1416327 (9th Cir. filed July 14, 2014). Plaintiff filed a putative class action complaint alleging that the defendant misleads consumers by making unlawful and misleading calorie claims. Plaintiff alleged that five chocolate products that she purchased and 44 “substantially similar products” are “misbranded” in violation of federal and California law, and are deceptively packaged and labeled. Defendant filed a motion for stay pending the Ninth Circuit’s resolution of Jones v. ConAgra Foods, Inc. The plaintiff in Jones appealed the trial court’s denial of class certification of claims that multiple lines of ConAgra’s food products are mislabeled and misbranded. Defendant argued that the Ninth Circuit’s review in Jones of the “ascertainability” requirement of Fed. R. Civ. P. 23, the predominance analysis, proposed damages models, and the standing requirements for injunctive relief under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, may address controlling issues of law and provide substantial guidance in the resolution of the plaintiff’s claims against Mars. The court granted the motion, holding that the early stage of the proceedings and the likelihood that the Ninth Circuit will provide substantial guidance in its decision in Jones demonstrated that it would best serve the interests of the parties and judicial economy to stay the proceedings. In doing so, the court rejected the plaintiff’s arguments that a stay would prejudice the plaintiff with additional procedural delays and delay any recovery of damages or injunctive relief. (Gustavson v. Mars, Inc., No. 13-CV-04537, 2014 WL 6986421 (N.D. Cal. Dec. 10, 2014)). The U.S. District Court for the District of Hawaii grants the plaintiff’s motion for final approval of a class action settlement and request for entry of final judgment, and motion for approval of attorneys’ fee award, expense reimbursement, and incentive awards. Plaintiffs alleged that the defendant misled consumers by advertising “Truvia Natural Sweetener” as a natural sweetener, when in actuality it is largely synthetic and chemically-produced. Plaintiffs claimed that consumers were injured because they purchased Truvia on that basis and because Truvia is more expensive than its sugar-alternative competitors, like “Sweet ‘N Low” and “Splenda.” Plaintiffs filed their class action

12

lawsuit contending that this misconduct constitutes unjust enrichment, breach of express and implied warranties, and violates various states’ deceptive acts and practices, and consumer fraud laws. Plaintiffs sought class certification, preliminary and permanent injunctions, corrective advertising and information campaigns, restitution, disgorgement, damages compensating the classes, and attorneys’ fees and costs. The court approved the plaintiffs’ motion for preliminary approval of the class action settlement, which required the defendant to establish a settlement fund, make changes to its Truvia labeling within 90 days, and provide more information to consumers about the ingredients in the product. On motion for final approval, the court explained that it must examine the parties’ settlement as a whole and must balance the following factors: the strength of the plaintiffs’ case, the risk, expense, complexity, and likely duration of further litigation, the risk of maintaining class action status throughout the trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement. The court found the settlement agreement to be fair, reasonable, and adequate, and found the proposed allocation of thirty percent of the settlement for an award of plaintiffs’ attorneys’ fees and expenses to be reasonable. (Howerton v. Cargill, Inc., Nos. 13-00336, 13-00685, 13-00218, 2014 WL 6976041 (W.D. Hawaii Dec. 8, 2014)). The U.S. District Court for the Northern District of California denies the plaintiff’s motion for class certification in a false advertising action against Mott’s challenging a product labeled as having “No Sugar Added.” Plaintiff, who bought Mott’s “Original 100% Apple Juice” after reading and relying on the “No Sugar Added” labeling statement, sued under California law, alleging that the labeling statement violated California’s labeling law and was false and misleading. On the ascertainability issue, the court declined to follow the Third Circuit’s decision in Carrera v. Bayer Corp. (requiring contemporaneous, written records of purchases of the challenged product), consistent with many district courts in the Ninth Circuit. The court also rejected the defendant’s argument that the “No Sugar Added” statement was not on the product label during the entire class period. That issue “can be cured by redefining the class to exclude any individuals who purchased Mott’s” when “No Sugar Added” did not appear on the label. The court found that the case raised common questions of law and fact, that the plaintiff and his counsel are adequate, and that the plaintiff’s claims are typical of the class even though triable issues of fact existed as to whether the plaintiff relied on the challenged labeling statement, the plaintiff’s disclaimer of a desire to obtain damages in his deposition, and whether the plaintiff is a Type 2 diabetic and closely reads food labels. The court found that the plaintiff satisfied the predominance requirement as to issues of liability. But, the court ruled that the plaintiff “failed to show predominance as to damages because he has introduced no evidence showing that restitution ‘damages [can] feasibly and efficiently be calculated once the common liability questions are adjudicated.’” The court also denied the plaintiff’s request for a liability-only class, holding that the plaintiff “chose not to” produce evidence necessary to satisfy the requisites of Comcast, and certifying a liability class only “will not materially advance the resolution of this case.” Finally, the court denied the defendant’s motion for reconsideration of the court’s summary judgment ruling that the plaintiff had presented sufficient evidence to show restitution damages. (Rahman v. Mott’s LLP, No. 13-cv-03482, 2014 WL 6815779 (N.D. Cal. Dec. 3, 2014)). The U.S. District Court for the Eastern District of California grants the defendant’s motion to dismiss, but grants leave to amend. Plaintiff’s First Amended complaint (“FAC”) alleged that defendant CarMax Auto Superstores California LLC advertised via television, radio, and the Internet

13

that it sold quality, “certified” vehicles. Based on the representation that the defendant’s vehicles were “certified,” the plaintiff purchased a vehicle from the defendant. At some point either before or after the sale, the plaintiff was in receipt of a certificate purporting to show a list of the vehicle components inspected prior to sale. Plaintiff alleged that this certificate is a generic list of components inspected, numbering approximately 125 items and does not contain the authentic record of the defendant’s inspection process. Plaintiff asserted that the actual list of inspected items contains approximately 230 items, and the results of this inspection are destroyed. Plaintiff states that, if the defendant had not advertised, sold, or labeled the vehicle as “certified,” he would not have purchased the vehicle. Plaintiff alleged violations of California’s Consumers Legal Remedies Act (“CLRA”), Unfair Competition law (“UCL”), and Vehicle Code § 11713.18. The court reserved ruling on the issue of whether the defendant’s generic sheet violated Cal. Veh. Code § 11713.18(a)(6)’s requirement to provide a “completed inspection report” to consumers. However, the court dismissed, with leave to amend, the plaintiff’s CLRA and UCL claims, finding that he failed to plead an individualized injury in the FAC. The court noted that the plaintiff failed to plead any allegation of even minor pecuniary damage in the FAC. Although the plaintiff concluded that she paid more for the vehicle because it was labeled as “certified,” she provided no support for the claim that an equivalent vehicle actually would be available for less money, by virtue of not bearing the label “certified.” (Chulick-Perez v. CarMax Auto Superstores California, LLC, No. 2:13-CV2329, 2014 WL 6819710 (E.D. Cal. Dec. 2, 2014)). The U.S. District Court for the Southern District of California grants in part and denies in part the defendant’s motion to dismiss, with leave for the plaintiff to amend. Plaintiff’s first amended complaint alleged that she purchased a 2007 Volkswagen “Passat” from Defendant CarMax Auto Superstores, LLC, because the saleswoman stated that “all CarMax vehicles are good quality certified vehicles.” Plaintiff alleged, however, that CarMax did not provide the plaintiff with a “completed inspection report” prior to, during, or after the sale. Plaintiff alleged that it is CarMax’s stated corporate policy to hide a generic list of components that purportedly were inspected in the glove box of the vehicle, without disclosing the results of the actual inspection. Plaintiff alleged that the generic list is not a “completed inspection report” because it is not a full list of all components inspected, and many items listed were not applicable to the plaintiff’s vehicle. Instead, according to the plaintiff, CarMax destroyed the “real checklist” for the plaintiff’s specific vehicle. Plaintiff alleged that CarMax violated Cal. Vehicle Code § 11713.18, and the state’s Consumers Legal Remedies Act (“CLRA”) and Unfair Competition law (“UCL”). The court found that the plaintiff alleged sufficient facts to permit the inference that CarMax violated California Vehicle Code section 11713.18(a). Likewise, it found that the plaintiff sufficiently had alleged a loss of money or property as the result of UCL and CLRA violations by alleging that CarMax advertised a vehicle as “Certified” when it was not legally permitted to do so. The court concluded that the plaintiff had standing to pursue UCL and CLRA claims based on CarMax’s allegedly unlawful use of the term “Certified” in its advertising of the Volkswagen Passat. However, the court held that the plaintiff’s alleged injury stemming from the alleged destruction of the “real checklist” was insufficient to confer standing under the UCL or CLRA because the plaintiff failed to allege sufficient facts to make plausible the allegation that the “actual inspection report” would have changed her purchasing decision. The court denied the defendant’s motion to dismiss and strike the plaintiff’s claim for punitive damages and attorneys’ fees. (Zambrano v. CarMax Auto Superstores, LLC, No. 13-CV2107, 2014 WL 751065, (S.D. Cal. Dec. 1, 2014)).

14

The U.S. District Court for the Western District of Missouri denies the plaintiff’s motion to remand and denies the defendant’s motion to dismiss a count from the plaintiff’s complaint. Plaintiff filed a class action lawsuit alleging that the defendant sold unleaded gasoline that improperly contained diesel fuel and claiming violation of, among other things, the Missouri Merchandising Practice Act (“MMPA”). The court denied the plaintiff’s motion to remand and held that the defendant’s notice of removal presented sufficient facts and evidence to prove diversity jurisdiction by a preponderance of the evidence. The court denied defendant’s motion to dismiss the MMPA claim for failure to plead the claim with specificity, holding that the amended complaint stated a plausible claim as it alleged that the plaintiff (1) purchased or leased merchandise from the defendant, (2) for personal, family or household purposes, and (3) suffered an ascertainable loss of money or property as a result of an act declared unlawful by the section. The court further held that the MMPA was drafted broadly in order to evade overly meticulous definitions and in order to supplement the definition of common law fraud by eliminating the need to prove intent to defraud or reliance. The court explained that the MMPA does not put forth a scienter requirement for civil liability as “it is the defendant’s conduct, not his intent, which determines whether a violation has occurred.” (Claxton v. Kum & Go, L.C., No. 6:14-cv-03385, 2014 WL 6685816 (W.D. Mo. Nov. 26, 2014)). The U.S. District Court for the District of New Jersey grants defendant Novartis Consumer Health’s motion to dismiss the plaintiffs’ putative class action complaint, which alleged violations of the New Jersey Consumer Fraud Act (“NJCFA”) and unjust enrichment. Plaintiff alleged that Novartis committed an unfair or unconscionable act by charging more for its “Excedrin Migraine” than it charged for “Excedrin Extra Strength” even though the two drugs were pharmacologically identical in chemical composition and strength. The court held that charging more for an identical product, by itself, where there is no misleading or deceptive statement made about the products does not reach the level of unconscionable conduct necessary to state acclaim under the NJCFA. Therefore, the Court dismissed the complaint without prejudice. (Yingst v. Novartis AG, No. 13-7919, 2014 WL 6791423 (D.N.J. Nov. 24, 2014)). The U.S. District Court for the Northern District of California grants in part and denies in part the defendant-food manufacturer’s motion to dismiss a class action complaint. The plaintiff brought a putative class action based on various theories of misbranding and misleading labeling of the defendant’s food products under California’s consumer protection statutes. The court granted the motion to dismiss with respect to products not purchased by the plaintiff finding that there was no Article III standing. The court also granted the motion to dismiss with respect to the misbranding claims, claims found on the defendant’s website which the plaintiff did not view, and alleged health benefit claims that were not pled with particularity. The court stayed the claims regarding evaporated cane juice pending final FDA guidance. The court denied the defendant’s motion with respect to plaintiff’s “slack fill” claim where she alleged the package was misleading because it appeared there was more product in the package than there actually was. (Leonhart v. Nature’s Path Foods, Inc., No. 13-cv-00492, 2014 WL 6657809 (N.D. Cal. Nov. 21, 2014)). The U.S. District Court for the Northern District of California certifies two damages classes of California consumers under Fed. R. Civ. P. 23(b)(3), with one class for each of two product lines. Plaintiffs, purchasers of eight of the 326 discrete products in the two lines, sued defendant Hain Celestial, alleging it advertised the subject cosmetics as organic when they were not, in violation of the California Organic Products Act of 2003 (“COPA”) and California consumer protection laws.

15

Defendant challenged the plaintiffs’ class definitions as materially differing from the class definitions in the operable complaint, and argued that membership in the class is not ascertainable because consumers are unlikely to keep receipts of their purchases. The court found it “unremarkable” – and certainly not grounds to deny certification – that the class definitions were refined as the litigation progressed. As to ascertainability, the court ruled that the Third Circuit’s Carrera verifiable records requirement is not the law in the Ninth Circuit and self-identification via declaration is permissible on a case-by-case basis. Here, the label changes during the class period did not cause a situation where consumers would not be able to recall whether they bought a product with a challenged labeling statement. The court also ruled that the proposed class met the numerosity, commonality, and typicality requirements, rejecting the defendant’s arguments that plaintiffs are not typical of consumers who purchased products different than the plaintiffs, are not typical of consumers who purchased the products based on other, non-challenged labeling statements, and are not typical of other consumers because they did not suffer the same injury as them. The court further ruled that class counsel and the named plaintiffs were adequate. In summing up the Rule 23(a) requirements, the court said that “plaintiffs’ claims . . . are simple and uniform: the products were presented as organic when, under COPA, there were not.” As to Rule 23(b) factors, the court found that common questions of law and fact predominate over individual issues and that the class device is the superior method for handling the dispute. Among other things, any differences among consumers as to why they purchased the products is resolved by use of the objective “reasonable consumer” test to determine materiality, reliance, and causation. And, the court observed, there can be more than one material reason a consumer purchases a product. Finally, the court ruled that plaintiffs’ damage model approach (actual calculations had not yet been performed by plaintiffs’ expert) appropriately tied damages to their theory of liability, and allowed defendant to raise individual defenses at the damages phase. The court denied the plaintiffs’ alternative request for an injunction class under Rule 23(b)(2) because an injunction class is not appropriate where a monetary reward is more than merely incidental to the desired injunction. Acknowledging the serious issue of “one-way intervention” – where merits issues are decided before a class is certified – the court suspended ruling on plaintiffs’ concurrent motion for summary judgment that defendant violated COPA. (Brown v. Hain Celestial Group, Inc., No. 3:11-cv-03082, 2014 WL 6483216 (N.D. Cal., Nov. 18, 2014) (amending and superseding Nov. 14, 2014 order)). The U.S. Court of Appeals for the Eleventh Circuit affirms the district court’s decision granting the plaintiff’s motion to remand to state court after defendant MetroPCS removed pursuant to the Class Action Fairness Act (“CAFA”). Plaintiff filed a putative Florida class action against defendant for alleged violations of the Florida Deceptive and Unfair Trade Practice Act related to advertisements that promoted MetroPCS “no contract” advertising campaign. The Eleventh Circuit affirmed the trial court’s remand order on grounds that the defendant’s theory of damages was speculative because the rescission model was based on the defendant’s entire revenue in Florida and did not disclose the components of its estimates that would have permitted the court to determine if the properly allocated revenue subject to rescission exceeded the jurisdictional limit – $5 million under CAFA. Because of this failure, the defendant did not have a basis to calculate recoverable attorneys’ fees (estimated at 30% of the recovery) or potential punitive damages up to nine times the amount of compensatory damages, or the value of the injunctive relief. (Porter v. MetroPCS Comms., Inc., No. 14-14239, 2014 WL 5933661 (11th Cir. Nov. 14, 2014)).

16

The U.S. District Court for the Eastern District of Missouri grants defendant Johnson & Johnson’s motion to dismiss in a putative class action alleging violations of the Missouri Merchandising Practices Act. Plaintiffs alleged that the defendant failed to reveal that use of its product, “Johnson’s Baby Powder,” on the genital area would result in a 33% increased risk of ovarian cancer. While Plaintiffs were not physically harmed, they alleged financial damage based on the defendant’s failure to disclose this risk. Defendant argued that the plaintiffs lacked standing or should be barred from stating a claim because they suffered no injury from their purchase of the baby powder. The court agreed, holding that, because no physical injury was suffered, the plaintiffs received all of the benefit and use from the product with no quantifiable damages. Because there are no damages, the court held that the plaintiffs failed to state a claim as a matter of law, and dismissed the case. (Mikhlin v. Johnson & Johnson, No. 4:14-CV-881, 2014 WL 6084004 (E.D. Mo. Nov. 13, 2014)). The U.S. District Court for the Northern District of California grants defendant Costco’s partial motion to dismiss and motion to stay, and defers ruling on the defendant’s motion for partial summary judgment. Plaintiff filed a purported class action suit against the defendant, alleging that the labels on the defendant’s “Kirkland Signature” food products contained various misrepresentations that were misleading and deceptive to consumers, including misrepresenting sugar as “Evaporated Cane Juice” (“ECJ”), and non-natural products as “natural.” Among other things, the defendant sought partial summary judgment as to the plaintiff’s claims relating to six of the eight products at issue, contending that the safe harbor provisions of California’s Sherman Act and the federal Food, Drug, and Cosmetic Act shielded it from liability with regard to any product for which it received certain vendor guarantees. The court found this motion premature and, instead, ordered the parties to create a discovery plan for proceeding on the motion, and provided the parties the opportunity to submit supplemental briefing after completion of discovery. Despite noting that the plaintiff’s ECJ claims “seem implausible,” the court granted the plaintiff’s request to stay the ECJ claims pursuant to the primary jurisdiction doctrine. Citing the trend in the Northern District to stay ECJ claims under the primary jurisdiction doctrine, the court determined that staying the ECJ allegations until the FDA issues final guidance (after recently reopening the comment period on its draft ECJ guidance) would provide the court and the parties necessary clarity on the propriety, if any, of using ECJ on product labels. (Thomas v. Costco Wholesale Corp., Case No. 12-CV-02908, 2014 WL 5872808 (N.D. Cal. Nov. 12, 2014)). The U.S. District Court for the Southern District of Florida grants the defendant-supplement manufacturer’s motion to dismiss a class action complaint. Plaintiff alleged that the defendant’s representation that its supplement “promotes heart health” was false and misleading and, among other things, constituted a breach of warranty and violated the Florida Deceptive and Unfair Trade Practices Act and the federal Magnuson-Moss Warranty Act. The court dismissed with prejudice the breach of warranty claim finding there was no privity of contract because the plaintiff purchased the supplement from a pharmacy, not the defendant. The court dismissed all other claims without prejudice, finding that the plaintiff failed to allege how the statement “promotes heart health” was false or misleading. The court found conclusory allegations were insufficient. (Mazzeo v. Nature’s Bounty, Inc., No. 14-60580-CIV, 2014 WL 5846735 (S.D. Fla. Nov. 12, 2014)). The California Court of Appeal for the Fourth District affirms the trial court’s award of summary judgment in an action alleging that Nissan North America, Inc. committed fraud and misrepresentation. Plaintiff also included a claim for unfair business practices, which was based

17

upon the same misrepresentations claims. Plaintiff was the purchaser of an existing Nissan dealership, and entered contracts to purchase the dealership and the real property on which it was located. Plaintiff also entered a dealership agreement with Nissan. Plaintiff alleged that Nissan made specific representations to him that the dealership was adequate and that it had not made money in the past because of poor management, and that these statements were false because Nissan had commissioned a market study by a non-party vendor to determine the suitability of current dealer locations. The study results, obtained shortly after the plaintiff closed on the purchase of the dealership, stated that the dealership should be moved to another location seven miles away. Nissan did not disclose this study to the plaintiff until over a year later. Plaintiff alleged that Nissan knew that the dealership location was insufficient and that Nissan had a duty to disclose the pending market suitability study. The trial court granted summary judgment because the plaintiff actually admitted that the statements about the prior business performance of the dealership and the suitability of the dealership were true and that Nissan did not have any duty prior to executing a dealership agreement with the plaintiff to disclose the study. In addition, the plaintiff failed to submit any evidence that he was damaged by the failure to disclose the study for a year and a half after the purchase. Because the unfair business practices claims were based on the misrepresentation claims, the trial court granted judgment in favor of Nissan on these claims as well. The Court of Appeal agreed and affirmed the trial court ruling based on the same reasoning. (Boese v. Nissan N. Am., Inc., No. D065778, 2014 WL 5765438 (Cal. App. Nov. 6, 2014)). The U.S. District Court for the District of New Jersey grants in part and denies in part the defendant’s motion to dismiss a class action complaint alleging that the defendant’s advertising, which represented that its over-the-counter colon health product containing probiotics is scientifically proven to provide digestive and immune system health benefits is false and misleading in violation of the unfair competition statutes and common law of New Jersey, California, and Illinois. Because the named plaintiffs were not from New Jersey and did not purchase the product at issue in New Jersey (but rather California and Illinois), the court determined that, pursuant to New Jersey choice of law principles, California and Illinois, not New Jersey, had the most significant relationship to the claims and, thus, dismissed the claims brought under New Jersey law. Defendant argued that claims brought under the statutes of California and Illinois also should be dismissed because both statutes require the plaintiffs to prove that the defendant’s advertising was false not merely unsubstantiated. Defendant argued that the plaintiffs’ evidence of medical studies concerning the ingredients in the defendant’s colon health product did not prove that the claims were false but, at best, challenged the defendant’s substantiation. The court disagreed on this point finding that, at the motion to dismiss stage, whether the plaintiffs ultimately can prove that the defendant’s advertising is false is not the inquiry and refused to dismiss those claims because the medical studies were sufficient to allow the court to infer that the defendant’s product does not deliver on its claims. (In re Bayer Phillips Colon Health Probiotic Sales Practices Litig., No. 113017, 2014 WL5776153 (D.N.J. Nov. 6, 2014)). The U.S. District Court for the Northern District of California grants the defendants’ motion to dismiss the plaintiff’s class action complaint, which alleged violations of California’s Unfair Competition Law and Consumer Legal Remedies Act. Plaintiff alleged that defendant Novex Biotech distributed, marketed, and sold “Growth Factor-9” and that defendant GNC promoted, marketed, and sold the supplement to consumers nationwide with misrepresentations appearing on the label regarding the product’s performance, testing done on the product, and extent of clinical

18

trials held. In granting the motion to dismiss, the court found that the complaint alleged substantiation claims and not claims for false or misleading advertising, and, therefore, could not be brought as a private action. In granting the motion, the court also granted the plaintiff leave to amend the complaint in order to allege facts showing that the defendants’ representations were false. (Engel v. Novex Biotech LLC, Case No. 14-cv-03457, 2014 WL 5794608 (N.D. Cal. Nov. 6, 2014)). The U.S. District Court for the District of New Jersey grants defendant Vivint, Inc.’s motion to dismiss. Plaintiff Venditto bought a home alarm and monitoring system from the defendant. The contract called for an activation fee and a monthly services fee payable over 39 months. There was no cost for the equipment or the installation. Towards the end of the contract period, the defendant offered the plaintiff a new contract for 42 months but failed to send a new contract. After the 39month contract period ended, the plaintiff attempted repeatedly to cancel the service but was told she had agreed to a new contract and could not cancel. Plaintiff brought a class action on behalf of herself and other New Jersey residents who entered into alarm contracts with the defendant under the same terms. Plaintiff alleged violation of various New Jersey statutes, including the Retail Installment Sales Act, the Consumer Fraud Act, the Door-to-Door Retail Installment Sales Act, the Home Improvement Practices Regulations, and the Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). Defendant moved to dismiss. The court dismissed all of the plaintiff’s claims without prejudice except for a small portion of the TCCWNA claim. The court found that the complaint failed to properly allege information important to the claims, such as whether the alarm equipment belonged to the plaintiff or defendant at the end of the initial contract term; whether the plaintiff suffered an ascertainable loss; and why the challenged exculpatory language in the contract was unenforceable. As to the fraud claim, the court ruled that the plaintiff had failed to plead what misrepresentations were made to her or the date, time, and/or place of the alleged fraud. Plaintiff was given leave to amend her complaint to address these issues. (Venditto v. Vivint, Inc., No. CIV. A. 14-4357, 2014 WL 5702901 (D.N.J. Nov. 5, 2014)). The U.S. District Court for the Central District of California largely grants the plaintiffs’ motion to compel discovery against defendants Nature’s Way Products and Schwabe, North America, Inc., in a putative nationwide consumer class action challenging the labeling and advertising of the defendants’ homeopathic products. Plaintiffs allege that the defendants violate California consumer protection laws by making various representations, including “efficacy” statements where there was no disclosure that they were not evaluated by a governmental agency, and “natural” statements where the products contain non-natural ingredients. Defendants had moved to dismiss the complaint to the extent it challenged products that the plaintiffs never purchased. The court rejected the argument, ruling that the issue was better suited for class certification proceedings. Thereafter, the defendants repeatedly refused to provide discovery related to products that plaintiffs did not purchase. Plaintiffs moved to compel, challenging the defendants’ attempts to limit discovery to purchased products only. The court agreed with the plaintiff that – because the court has not dismissed claims relating to non-purchased products – discovery relating to those products is permissible, even though the court intends to take up the propriety of those claims in class certification proceedings. Accordingly, the defendants were ordered to provide supplemental document request and interrogatory responses to the extent they previously had limited their responses to purchased products. The requested information included communications between the defendants and non-party vendors, and between the defendants and the FDA. Plaintiffs also moved to compel discovery relating to the defendants’ financial information, including product research and

19

development costs, marketing costs, advertising budgets, and sales. Plaintiffs argued that the information was necessary to meet their burden under Comcast for class certification. The court rejected the argument based on the plaintiffs’ own briefing, which admitted that calculating damages under their primary theory will be a “facile achievement.” Plaintiffs also argued the information was discoverable for damages and punitive damages issues. The court agreed, and ordered the defendants to produce the information. Finally, the plaintiffs moved to compel documents relating to defendants’ distribution of its products in California, arguing that such documents are “highly relevant” to damages and class certification issues. The court disagreed, ruling that plaintiffs failed to explain, and likely cannot explain, the relevance of the documents on those topics. (Nadler v. Nature’s Way Prods., LLC, No: 13-cv-100, 2014 WL 5761122 (C.D. Cal. Nov. 5, 2014)). The U.S. District Court for the Northern District of Illinois denies the plaintiff’s motion for class certification. Plaintiff filed suit against makers and promoters of “Skinnygirl Margarita,” a premixed alcoholic beverage, alleging that the text “all natural” on the label of the beverage is false and misleading, as the beverage contains the non-natural preservative sodium benzoate. Plaintiff asserted claims under (1) the Illinois Consumer Fraud and Deceptive Business Practices Act; (2) Illinois statutes concerning express and implied warranties; and (3) breach of contract, unjust enrichment, and promissory estoppels theories. Plaintiff sought to certify a class that consists of “any and all persons who purchased “Skinnygirl” Margarita spirits in Illinois from March 1, 2009 until the date notice is disseminated.” The court denied the motion for class certification and held that the plaintiff failed to demonstrate how one would go about using the objective criteria to ascertain the class members, failed to carry her burden of proving by a preponderance of the evidence that the putative class members would be adequately represented, and failed to show that common issues predominated so as to make class action superior to other adjudication methods. (Langendorf v. Skinnygirl Cocktails, LLC, No. 11 CV 7060, 2014 WL 5487670 (N.D. Ill. Oct. 30, 2014)). The U.S. District Court for the Southern District of California denies defendants Nordstrom’s and jeans manufacturer, AG Adriano Goldschmeid’s motion to dismiss a complaint alleging that a “Made in the U.S.A.” label on the defendants’ jeans violated California’s Consumer Legal Remedies Act, Unfair Business Practices Act, and statute governing “Made in the U.S.A.” labels. The defendants manufactured and sold jeans that, plaintiffs argued, contained component parts made outside of the United States, then labeled them “Made in the U.S.A.” in violation of California law. The defendants argued that the California statute was preempted by the FTC Act and Textile Fiber Products Identification Act (“TFPIA”) because California law prohibits a “Made in the U.S.A.” representation unless the product and all articles, units, and parts are entirely or substantially made, manufactured, or produced in the U.S., which is a different standard than that under the FTC Act and TFPIA. The FTC Act states that an advertiser may make a “Made in the U.S.A.” representation if “all significant parts and processing that go into the product are of U.S. origin, i.e., where there is only a de minimus, or negligible amount of foreign content.” The court found that, although the laws set out different standards for the use of “Made in U.S.A.” representations, it would not be impossible for defendants to comply with both laws, by, for example, using the labels only outside of California. The court also rejected the defendants’ argument that the claims were preempted by the TFPIA. Specifically, the defendants argued that the TFPIA requires them to use a “Made in the U.S.A.” label even if the garment includes foreign-made materials, while California law prohibits the label unless the entire garment is made entirely or substantially in the U.S. The court held that it

20

was possible to comply with both laws, through qualified labels such as “Made in U.S.A. of imported fabric and components.” (Paz v. AG Goldschmeid, Inc., No. 14-cv-1372 DMS DHB, 2014 WL 5561024 (S.D. Cal. Oct. 27, 2014)). The U.S. District Court for the Northern District of California denies defendant Diamond Food, Inc.’s motion to dismiss a false advertising class action, alleging violations of various California consumer protection laws. The plaintiff alleged that the packaging for the defendant’s snack product, “Reduced Fat Sea Salt Chips,” falsely claimed that the product was “40% reduced fat potato chips.” According to the plaintiff, the product was only reduced in fat by 33% when compared to “regular Kettle Brand chips.” In moving to dismiss, the defendant argued, among other things, that the plaintiff failed to allege sufficient facts to support a finding that members of the public were likely to be deceived by the labeling at issue. The court rejected the defendant’s arguments, finding them to be either premature or a question of fact not appropriate for a decision at the dismissal stage. (Hall v. Diamond Foods, Inc., No. 14-cv-2148, 2014 WL 5364122, (N.D. Cal., Oct. 21, 2014)). The U.S. District Court for the Northern District of California grants in part and denies in part defendant Mott’s LLP’s motion for summary judgment on the plaintiff’s class action complaint, alleging violations of California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), and Consumer Legal Remedies Act (“CLRA”). The plaintiff alleged that the defendant’s product, “Mott’s 100% Apple Juice,” was not in compliance with FDA regulations on the use of the phrase, “No Sugar Added.” As a result, the plaintiff allegedly was misled into thinking that the product was lower in sugar and calories than comparable brands. The court granted summary judgment on claims that the defendant violated the FAL, the CLRA, and the fraud and unfair prongs of the UCL, finding that the plaintiff had failed to show that the labeling was misleading to a reasonable consumer. The court, however, found that triable issues of fact existed with respect to whether the plaintiff suffered damages as a result of purchasing the apple juice, and whether he relied on the labeling when choosing to purchase the product. It, therefore, denied the defendant’s motion as to the plaintiff’s claims under the unlawful prong of the UCL and for breach of quasicontract. (Rahman v. Mott’s LLP, No. CV 13-3482, 2014 WL 5282106 (N.D. Cal., Oct. 15, 2014)). The U.S. District Court for the Northern District of Ohio grants the putative class action plaintiff’s “Suggestion the Court Lacks Subject Matter Jurisdiction” filed against the defendant, L’Oreal USA S/D, and remands the matter back to the Ohio Court of Common Pleas of Cuyahoga County. The plaintiff alleged that the defendant’s liquid foundation makeup was falsely advertised as being scientifically proven to last for 24 hours. The plaintiff had sought an injunction on behalf of a putative class against the defendant in state court, which the defendant successfully removed to federal court on the basis of diversity. In response to the removal, the plaintiff argued that she lacked standing to seek an injunction in federal court because she planned never to purchase the product again. The court agreed with the plaintiff’s position, holding that a plaintiff who suffered no risk of future injury lacked Article III standing to seek an injunction. In remanding the matter, the court noted that the plaintiff could pursue injunctive relief in state court because such courts were not bound by Article III’s strictures. (Neuman v L’Oreal USA S/D, Inc., No. 1:14-CV-01615, 2014 WL 5149288 (N.D. Ohio, Oct. 14, 2014)). The U.S. District Court for the Northern District of California denies the defendant-vinegar manufacturer’s motion to transfer venue because the defendant failed to make a case that the transfer would be for the benefit or convenience of the parties or the witnesses. The defendant argued that

21

the plaintiff’s complaint was identical to another complaint previously filed in the Central District of California, and that the case should be transferred to that court to avoid improper forum shopping by the plaintiff. Plaintiff’s complaint alleged that the defendant’s “all natural” claims for its white vinegar were false or misleading because genetically altered crops were used in the production of the vinegar. The court denied the motion because of the lack of a showing and an admission by the defendant that the convenience of the parties was neither in favor of or against transfer, and the local rule relied upon by the defendant did not allow transfer from one district to another district. (Stez v. J. Heinz Co., No. C 14-1871 PJH, 2014 WL 5020573 (N.D. Cal. Oct. 7, 2014)). The U.S. District Court for the Northern District of California grants in part and denies in part the defendant-waffle manufacturer’s motion to dismiss. The plaintiff alleged that the defendant’s “all natural” label was false and misleading because the waffles contained sodium acid pyrophosphate. She alleged violations of the California consumer protection statutes, breach of contract, breach of express warranty, and unjust enrichment. The court dismissed the plaintiff’s breach of contract claim because there was no privity, and dismissed the unjust enrichment claim because there is no separate cause of action for unjust enrichment. The court denied the defendant’s motion with respect to the consumer protection statute and breach of express warranty claims because it was plausible that a reasonable consumer could be deceived by the “all natural” labeling. The court dismissed the claim for injunctive relief finding that the plaintiff is now aware of the ingredient she claims is not all natural. The court also found that the plaintiff did not have standing to challenge representations on the defendant’s website or Facebook page that she did not see. (Ham v. Hain Celestial Grp., Inc., No. 14-cv-02044-WHO, 2014 WL 4965959 (N.D. Cal. Oct. 3, 2014)). The U.S. District Court for the Northern District of California grants the plaintiffs’ unopposed motion to conditionally a certify settlement class, provisionally appoint class counsel and class representatives, and preliminarily approve a settlement in a consumer class action alleging that defendant Ghirardelli Chocolate Company falsely advertised its white chips and other products as being “all natural.” Under the settlement, the defendant will pay $5.25 million, which covers all notice and administration costs, fee awards ($1.575 million on a “quick pay” basis), incentive awards to the named plaintiffs ($5,000 each), and claims by class members ($1.50 per purchase of white chips and $.75 per purchase of other products labeled as “all natural”). Any remaining funds will be donated cy pres to four charities focusing on consumes and food science. Defendant also agreed to maintain label changes it already has implemented. Recognizing that the court “must pay ‘undiluted, even heightened, attention’ to class certification” in the settlement context, the court found that the proposed class met the requirements of Fed. R. Civ. P. 23(a) and (b). The court ruled that appointment of the named plaintiffs was appropriate as their claims are typical of the class and they are adequate representatives of the absent class members. Likewise, the plaintiffs’ counsel has sufficient qualifications, experience, and expertise. The court concluded that the proposed settlement is appropriate following evaluation of the terms under the factors set out in the Ninth Circuit’s Hanlon v. Chrysler Corp. decision, including that continuing the litigation poses risk for the plaintiffs and that the settlement treats class members fairly. The court also approved the content and manner of the proposed class notice, but noted that the record is not sufficient at this time for the court to rule on the fairness of the proposed attorneys’ fee award. The court will address that issue at the final approval hearing once some claim rate information is known. Finally, the court approved the filing of a stipulated third amended complaint to facilitate accomplishment of the

22

settlement. The final fairness hearing is scheduled for February 19, 2015. (Miller v. Ghirardelli Chocolate Co., No. 3:12cv4936, 2014 WL 4978433 (N.D. Cal. Oct. 2, 2104)). State Attorneys General Litigation Decisions The Texas Court of Appeals reverses the trial court’s denial of the State’s plea to the jurisdiction on an interlocutory appeal. The State of Texas filed suit against Valerie Saxion and her corporation, alleging violations of the Texas Food, Drug and Cosmetic Act and the Deceptive Trade Practices Act, arising out of the advertising and labeling of her dietary supplements with respect to their ability to cure and prevent diseases. Ms. Saxion also called herself a “naturopathic doctor,” which is not recognized in Texas as an official medical doctor with the ability to proscribe medicine. Ms. Saxion asserted that her statements were based on religious beliefs and that the State attempted to violate her free speech and exercise rights under the state constitution. The court determined that it was a proper restraint of commercial speech to regulate the sale and advertising of these products. Because Ms. Saxion could separate the promotion of her dietary supplements from her religious doctrine, the court determined that her free exercise claim was barred because she failed to allege a valid ultra vires claim against a state official. The suit was remanded for further proceedings. (State v. Valerie Saxion, Inc., No. 02-13-00227-CV, 2014 WL 6839970 (Tex. App. Dec. 4, 2014)). The U.S. District Court for the Central District of California grants the State’s motion to remand its complaint, which alleged that defendant-pharmaceutical manufacturer Purdue Pharma LP deceptively marketed opioid pharmaceuticals in violation of California’s False Advertising Law (“FAL”) and Unfair Competition Law (“UCL”), to the California Superior Court (Orange County). In granting the motion, the court held that diversity jurisdiction did not exist because: (i) a state was not a citizen of itself and could not be a party to a diversity action; (ii) the State of California, itself, was the real party in interest because FAL and UCL actions were brought in the name of the people of the state; (iii) the state’s interest in the outcome was not remote because the plaintiff alleged that the defendants created an epidemic jeopardizing the health and safety of all Californians; and (iv) the plaintiff was seeking remedies available only to the State of California. (California v. Purdue Pharma L.P., No. 14-1080, 2014 WL 6065907 (C.D. Cal. Nov. 12, 2014)). The U.S. Court of Appeals for the Ninth Circuit affirms the district court’s denial of a motion to enjoin the entirety of the State’s action under California’s Unfair Competition Law, but reverses the district court’s denial of the defendant’s motion to enjoin only the restitution claims. Defendant sold the “IntelliGender Prediction Test,” which was advertised as an accurate predictor of a fetus’s gender. The district court approved a Class Action Fairness Act (“CAFA”) settlement involving a nationwide class of purchasers. The State subsequently brought an enforcement action based on the same claims as the CAFA class action. The Ninth Circuit held that a CAFA class action settlement does not act as complete res judicata against a State in its sovereign capacity because, while the state’s action is brought on behalf of the people, it implicates both the public’s interest and private interests with broader remedial provisions. However, because states are provided notice under CAFA to prevent inequitable settlements and California opted not to participate, California was precluded from seeking the same relief sought in the CAFA class action. (California v. IntelliGender, LLC, -- F.3d --, No. 13-56806, 2014 WL 5786718 (9th Cir. Nov. 7, 2014)).

23

Federal Trade Commission (FTC) Litigation Decisions The U.S. District Court for Colorado considered the motion of two individual defendants that challenged the positions of the FTC and Colorado Attorney General regarding their “maximum ability to pay” under an amended stipulated judgment. The underlying action related to a business operated by the defendants in which they claimed they could teach consumers how to make quick money by brokering promissory notes. According to the district court, over 900,000 consumers were “bilked” out of hundreds of millions of dollars and the individual defendants received approximately $60 million from the various corporate entities “that they used to perpetrate the massive fraud.” The stipulated amount of equitable monetary relief representing “consumer injury” and disgorgement was over $330 million. Payment of the $330 million was suspended by stipulation until the defendants made financial disclosures and there was a determination by the FTC of the defendants’ “maximum ability to pay” under an objective standard. Further, there would be no reduction of the $330 million judgment to the extent that any actions by the defendants made it more difficult to pay the judgment or if the defendants failed to disclose their financial assets. The government argued that the defendants could pay about $1.7 million, while the defendants claimed that they could only afford about $9,000. The court concluded that the husband and wife defendants lacked credibility and noted that they had never appeared in court to testify. The court identified a significant number of transfers of assets to friends or relatives without adequate justification. However, the court found that defendants did not have control over certain assets and held that the maximum ability to pay was of $858,665, plus 50% of any future tax refund. (FTC v. Dalbey, No. 11-cv-1396, 2014 WL 7403281 (D. Colo. Dec. 29, 2014)). The U.S. District Court for the Western District of Missouri denies the FTC’s motion for a preliminary injunction against BF Labs, Inc. and several of its key officers in an action alleging that the defendants had deceptively marketed Bitcoins and “Monarch” machines that mine Bitcoins by charging customers “up-front” for the total price for the mining machines even though the delivery dates were consistently late. Bitcoins are not government authorized currency, but, instead, are a form of transactional currency earned by solving computation problems. Defendants offered for sale 12 month “mining” contracts that sold for an average price of $10/GH. Defendants also offered a “rate of return” calculator, which required the user to plug in the significant variables to determine the rate of return. When the case was filed initially, the court granted the FTC’s motion for a temporary restraining order (TRO) and appointment of a receiver. The parties stipulated to a continuation of the TRO until the two-day preliminary injunction hearing was completed. The court denied the FTC’s motion for a preliminary injunction, but required the defendants to submit various reports that they had agreed to submit. The court based its decision, in part, on the more rigorous standard required in the Eighth Circuit that the party moving for the injunction must establish “questions going to the merits so serious, substantial, difficult, and doubtful as to make them fair grounds for thorough investigation, study, deliberation, and determination” by the trial court and eventually the court of appeal. Further, the court held that the plaintiff must show a likelihood that the alleged bad acts would be resumed and, under the express language of Section 13(b), prove that the defendant “is violating or about to violate” any statute enforced by the FTC. The court first determined that the FTC failed to meet its burden of establishing a serious issue that the defendants had committed a deceptive act or practice. The court reasoned that the failure to deliver products in time was not deceptive unless the government could establish an intention not to perform or that the defendant had no basis to believe it could perform. In other words, the statement had to be deceptive

24

when made. The court determined that, while some evidence was troubling, the FTC had not carried its burden on that issue. Regarding the FTC’s claim regarding deceptive profitability claims, the court concluded that those claims were simply a repackaging of the claims based on the late deliveries. The court also held that the FTC had failed to meet its burden of proof that the profitability claims were widespread or systematically made so that they were seen by all or most of the purchasers. Therefore, the government failed to meet its burden to demonstrate a substantial serious issue that had to be resolved at this initial stage. The court also noted that the pre-order business plan had been discontinued and the defendants represented that it would not be reinstituted. Finally, the court concluded that the balancing of the equities did not require that the injunction be continued under the circumstances. (FTC v. BF Labs Inc., No. 14CV00815, 2014 WL 7238080 (W.D. Mo. Dec. 12, 2014)). The U.S. District Court for the Northern District of Illinois grants the motion of several individuals to vacate a default judgment entered against them in a deceptive practices act claim brought by the FTC, which challenged the activities of the defendants in charging businesses and non-profits in the United States and in other countries listed in Internet directories for trade shows. The FTC alleged that the defendants’ marketing and advertising falsely stated that consumers had a pre-existing business relationship with consumers, and/or they had relationships with trade shows or exhibitors. A temporary restraining order and asset freeze initially was entered that allowed the defendants to use some funds for personal living expenses. The defendants’ counsel moved to withdraw and informed the court that the defendants did not want new counsel, but rather wanted to concede the issues. The trial court entered a default judgment in the amount of $9.1 million, apparently based on the defendants’ gross international revenue. The motion to vacate the judgment asserted that the court had no personal jurisdiction against the individual defendants and alternatively sought to vacate the default judgment under Fed. R. Civ. P. 60(b) on the grounds that they could establish good cause, quick action in seeking relief, and a meritorious defense. The court rejected the defendants’ arguments based on lack of personal jurisdiction on the basis that the FTC established specific jurisdiction based upon the relationship of defendants’ conduct in the United States, including orchestrating a mailing campaign that included the alleged misrepresentations; the court also found that the defendants had been sued before so they were aware of the possibility of suit in the United States. Further, the individual defendants caused MicroDynamics to distribute marketing material and the fact that it was a “non-victim” was not dispositive of the personal jurisdiction issue. However, the court granted the Rule 60(b) motion, reasoning that under Seventh Circuit authority, “good cause” did not mean “excusable neglect,” only that there was a good reason to vacate the default. The court noted that there was allegedly poor communications between the defendants and their counsel, and the defendants asserted that they did not understand the consequences of the default. The defendants’ motion was timely because it was filed about 30 days after entry of the default. Critical to the decision was the fact that the defendants established the possibility of meritorious defenses – the $9.1 million was based on gross international sales, and the court suggested that there was a serious issue relating to the inclusion of sales outside of the United States. Further, some mailings included language informing customers that they would be charged. The court noted that the FTC was not prejudiced by the short delay, and it authorized the FTC to move for a lesser sanction based on the fees incurred responding to the motion to vacate default. The court also indicated that it would consider modifying the asset freeze so the defendants could pay their lawyers and living expenses. However, the defendants first would have to comply with the detailed

25

accounting required in the preliminary injunction. (FTC v. Construct Data Publishers, No. 13-CV01999, 2014 WL 7004999 (N.D. Ill. Dec. 11, 2014)). The U.S. District Court for the Western District of Washington denies defendant Amazon’s motion to dismiss a complaint filed by the FTC asserting an unfairness claim based on Amazon’s practice of billing accounts for “Kindle Fire” applications ordered by children. The FTC alleged that Amazon offered for sale various “Apps” designed to appeal to children without having obtained the account holder’s expressed informed consent. As an example of the challenged practices, the FTC alleged that a child may be prompted to use or acquire seemingly fictitious currency to advance his or her progress in a game, but, in reality, is making a purchase. Amazon moved to dismiss arguing that the FTC was improperly imposing a new “informed consent” standard to create a new obligation and alternatively, the children had actual or express authority to make the purchase. The court denied the motion to dismiss noting the Commission’s authority under the FTC Act’s “unfairness doctrine” to challenge Amazon’s conduct, and holding that the agency had pled a plausible theory of liability. First, the court held that “informed consent” did not constitute a new legal standard. However, the court emphasized that the more fundamental issue was whether the FTC stated a plausible claim under the three prong unfairness test: (1) substantial injury, (2) that could be not reasonably avoided by consumers, and (3) any consumer injury is not outweighed by benefits to consumers or competition. The court reasoned that Section 5 claims for unfairness have been applied to situations where customers were billed without permission. Further, the court noted that “apparent authority” is rarely a defense to an FTC enforcement proceeding on the consumer side. The court also concluded that, at the pleading stage, Amazon had not established authorization and the Commission had alleged that consumers would not reasonably avoid the injury because there was no informed choice to submit themselves to the risk of app purchases. The court further held that the complaint stated a cause of action even if it did not address the countervailing benefits prong of the unfairness doctrine because the overall substantial injury was sufficiently alleged. (FTC v. Amazon.com, Inc., No. C14-1038, 2014 WL 6750494 (W.D. Wash. Dec. 1, 2014)). The U.S. District Court for the District of Nevada grants the FTC’s motion to admit as substantive evidence unsworn consumer complaints and declarations executed under penalty of perjury created contemporaneously with the promotional activities that the FTC challenged. The complaints and declarations supported the FTC’s allegations that the defendants operated a fraudulent prize promotion program. The FTC sought to introduce these complaints to support a contempt motion against the defendants for violating a stipulated consent order and permanent injunction. The court held that the affidavits were admissible under Federal Rule of Evidence 807 because the complaints and declarations had circumstantial guarantees of trustworthiness because the unrelated complaints were executed much closer in the time than live testimony would be offered, and the details of the transactions found in the complaints were more likely to be accurate than testimony provided as much as six years after the fact. The court seemed particularly persuaded by the fact that unrelated consumers all had consistent experiences which provide the key element of “trustworthiness” that the proffered evidence was equivalent in reliability to the enumerated hearsay exceptions. The court also admitted the unsworn complaints because of the volume of these complaints. The court found the statements in the proffered testimony were material because the customers believed that they had won substantial prizes. The court also concluded that the complaints and declarations were a reasonable means to present evidence rather than calling 160 witnesses at trial. Finally, the court concluded that in the interest of justice it would serve the admission of both the consumer

26

complaints and declarations. (FTC v. Ewing, No. 2:07-cv-00479, 2014 WL 5489210 (D. Nev. Oct. 29, 2014)). Administrative Procedures Act Litigation The U.S. District Court for the Northern District of California denies the plaintiffs’ motion for summary judgment and grants the defendants’ cross-motion for summary judgment. Plaintiffs, a coalition of individuals and animal rights organizations, filed this lawsuit, seeking a court order forcing the federal government to adopt regulations requiring egg producers to label their egg cartons according to the way they treat their hens. Prior to filing the lawsuit, the plaintiffs submitted petitions to the Food and Drug Administration, the Federal Trade Commission, and two agencies within the United States Department of Agriculture – the Agriculture Marketing Service and the Food Safety Inspection Service, requesting that the relevant agency initiate rulemaking to revise existing labeling requirements or impose new regulations requiring egg producers to identify on the label the method used in producing the eggs. Each agency denied the respective petition and the plaintiffs filed this suit, alleging that each agency’s denial was arbitrary and capricious in violation of the Administrative Procedure Act. In denying the plaintiffs’ motion for summary judgment, the court explained that courts must afford an agency’s discretionary decision not to initiate rulemaking the highest possible level of deference and an agency’s decision may be disturbed only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” In light of this high standard, the court upheld the denial of respective petition by each agency as each decision was not arbitrary or capricious. (Compassion over Killing v. FDA, No. 13-cv-01385, 2014 WL 7336231 (N.D. Cal. Dec. 23, 2014)). National Advertising Division (NAD) Decisions The NAD has recommended that Sawyer Products, Inc., maker of point-of-use water filter products, discontinue a series of claims, including its “1,000,000 gallon” capacity claims. It also determined that the company could support the claim that its product “exceeds EPA recommendations for removal rates” of bacteria and protozoa. The claims were challenged by Katadyn North America, Inc., maker of competing products. NAD noted that the products at issue – portable and hand-held point-of-use water filters – are marketed for use while camping or hiking, emergency and disaster response, and travel to locations where the healthfulness of local water is in question. The products remove harmful bacteria or organisms that otherwise could make people ill. As such, claims regarding the performance of these products are health and safety claims that should be supported by reliable, competent scientific evidence. NAD found that the million-gallon claims conveyed a message of indestructability and longevity that was not supported by the evidence in the record. NAD acknowledged that the mechanism of action of the advertiser’s filter may be different from other competing filters, but noted that an explanation of the technology behind the product does not relieve an advertiser of its obligation to provide reliable support for its health-related product longevity claims. NAD recommended the advertiser discontinue such claims. NAD also determined that the advertiser’s testing did show that more bacteria and protozoa were removed from water than that required by the Environmental Protection Agency’s (EPA) “Guide Standard and Protocol for Testing Microbiological Water Purifiers.” NAD found these results to be a reasonable basis for its claim that its filters “exceed[] EPA recommendations.” (Sawyer Products, Inc. (Hollow Fiber Membrane Water Filters), NAD Report No. 5797 (Dec. 30, 2014)).

27

The NAD has recommended that The Procter & Gamble Company, maker of “Swiffer Sweeper” products, discontinue superior performance claims challenged by The Libman Company, maker of “Libman”-branded brooms. The challenged claims included, “Swiffer Sweeper Leaves your floors up to 3X cleaner than a broom* *on dirt, dust and hair,” and “Thicker cloths leave floors up to 3X cleaner. * *Than a broom on dirt, dust and hair.” The challenger contended that the advertiser’s claims that its Swiffer Sweeper “leaves floors up to 3X cleaner” than brooms on “dirt, dust and hair” were unsupported, and argued that the advertiser’s testing was flawed. The advertiser argued that it tailored its comparative claims to the specific smaller debris on which the Sweeper purportedly performed better than a broom – dirt, dust and hair. Following its review of the evidence in the record, NAD determined that the challenged claims conveyed the unsupported message that the Swiffer Sweeper significantly outperforms all brooms on all household surfaces, a message that was not supported by the evidence in the record. The advertiser, NAD noted, attempted to qualify this with the disclosure “on dirt, dust & hair,” but the testing offered to support the claim, even with the qualification, was too limited. Notably, NAD said, the advertiser tested only two brooms. There was no evidence in the record that the two brooms represent or perform similarly to the vast majority of the brooms in the marketplace. Further, the advertiser tested only hardwood, vinyl, and ceramic tile. While Swiffer Sweeper may not be intended to be used on all surfaces, the challenged advertising failed to limit the claim to any of the tested surfaces. Additionally, NAD had concerns that consumers would not understand the material characteristics of the advertiser’s test soil, which was sifted to eliminate larger particles, and was troubled by the small size of the test area used in the advertiser’s comparative performance study – nine square feet. Accordingly, NAD found the advertiser’s evidence to be materially flawed and recommended that Procter & Gamble discontinue the challenged claims. (The Procter & Gamble Company (Swiffer Sweeper), NAD Report No. 5795 (Dec. 23, 2014)). The NAD has determined that Lifes2Good, Inc., can support certain claims for the company’s “Viviscal” dietary supplement, a product targeted towards women with thinning hair. Claims for the product that were reviewed as part of NAD’s routine monitoring program include, “Discover the clinically proven answer to thicker, fuller hair,” “91% of women noticed thicker hair,” and “Viviscal is grounded in over 20 years of continuous research and development. The efficacy of Viviscal vitamins for hair growth is supported by 7 clinical studies.” The advertiser explained that Viviscal is an oral marine protein supplement designed to promote hair growth in consumers suffering from temporary thinning hair. The key ingredient in Viviscal is “AminoMar,” a proprietary blend of shark and mollusk powder derived from sustainable marine sources, which provides essential nutrients to nourish hair. Following its review of the evidence in the record, NAD determined that the four clinical studies presented by the advertiser provided a reasonable basis for the claim that Viviscal is the “clinically proven answer to thicker, fuller hair.” While NAD determined that one of the studies – the Bloch Study – would not, standing alone, support an establishment claim, it found that all of the provided studies, in total, supported the claims. However, in considering the claim that “91% of women noticed thicker hair,” NAD determined that consumers might reasonably take away the message that the claim was supported by a clinical study or that 91% of women experienced noticeably thicker hair. NAD recommended that the advertiser discontinue the claim. (Lifes2Good, Inc. (Viviscal), NAD Report No. 5794 (Dec. 22, 2014)).

28

The NAD has recommended that Novartis Consumer Health Inc. discontinue the advertising claim that “Theraflu Multi-Symptom Severe Cold” “starts to get to work in your body in 5 minutes.” The claim was challenged by Pfizer Consumer Healthcare, a competing manufacturer of cold and cough relief products. The challenger argued that the active ingredients in a variety of over-the-counter severe-cold remedies are standard and took issue with Novartis’s claims that its product relieves cold and flu symptoms especially quickly. The advertiser contended that “starts to get to work in your body in 5 minutes” is fully supported by clinical data and is an accurate absorption claim that does not expressly state or imply that the product starts to provide symptom relief in five minutes. The issue for NAD was whether the challenged claim was an onset-of-action claim, as the challenger contended, or an absorption claim, as the advertiser argued. Following its review of the advertiser’s evidence, NAD determined that the claim “Starts to get to work in your body in 5 minutes” conveyed an unsupported onset-of-action message that Theraflu starts to provide perceptible flu symptom relief in five minutes. The sole evidence in the record – a study conducted by Novartis – reliably demonstrated that acetaminophen could be observed in the bloodstream five minutes after product administration, but specifically stated that there was no correlation between the rapid absorption of acetaminophen and symptom relief. NAD recommended that the claim be discontinued, and that, in future advertising, Novartis avoid conveying the message that its Theraflu product starts to provide flu symptom relief in five minutes. (Novartis Consumer Health, Inc. (Theraflu Multi-Symptom Severe Cold), NAD Report No. 5792 (Dec. 15, 2014)). The NAD has recommended that online travel agent Fareportal Inc. – operator of the “CheapOair.com” and “OneTravel.com” sites – discontinue certain claims in its search engine marketing because the claims potentially could mislead consumers when they appear in response to consumer searches. In this case of first impression, the claims at issue were challenged by Expedia Inc., a competing provider of online travel agency services. The challenger argued that the advertiser’s SEM advertising is misleading because it provides price information for flight destinations, but does not offer that price from the origin location searched by consumers. For example, the challenger argued that when a consumer searches for “flights from Miami to Houston” they are served an ad stating “Houston $149 Airfares – CheapOair.com.” Upon clicking the ad, the consumer would not find references to flights to Houston at $149 or references to flights from Miami to Houston. According to the challenger, there might not be a single flight listed from Miami to Houston at the advertised price of $149. The advertiser argued that, because it offers flights to the destination (albeit not necessarily from the searched starting point) searched at the advertised price, its paid search results are truthful. In its decision, the NAD noted that a consumer searching for flights from Miami to Houston might take away the message from the claim, “Houston $171 Airfares – CheapOair.com,” that CheapOair.com offers flights from Miami to Houston for $171. NAD further determined that a claim in SEM with a specific price to a destination is distinguishable from a claim that “cheap flights” to a destination are available. NAD also considered the advertiser’s “Best Price Guarantee,” which gives Fareportal – not the consumer – the option of refunding the price difference or refunding the entire ticket price to consumers who find a lower fare within 24 hours after booking on its websites. NAD noted in its decision that airfare prices can change quickly and an offer to refund a consumer’s ticket price may not provide the consumer with the benefit of the guarantee. As a result, the NAD recommended that the advertiser either modify the terms of its “Best Price Guarantee” so that consumers, at their option, can receive either a full refund or require the advertiser to match the competitive price when exercising their rights under the

29

guarantee, or discontinue its “Best Price Guarantee” claim. (Fareportal, Inc. (CheapOair.com and OneTravel.com), NAD Report No. 5789 (Dec. 8, 2014)). The NAD has recommended that ADD-care, the maker of the dietary supplement of the same name, discontinue all of the advertising claims that were challenged by the Council for Responsible Nutrition. The claims appeared on product labels and the company’s website, and included representations that the dietary supplement “may help people with symptoms consistent with ADD and ADHD,” and relieve symptoms such as impulsiveness, inattention, forgetfulness, and anxiety “without negative side effects.” The claims included testimonials claiming that the supplement was used successfully as a substitute for conventional ADD medications. ADD-care is a dietary supplement comprised of L-tyrosine, GABA (Gamma-aminobutyric Acid) and a proprietary homeopathic blend. While certain claims were voluntarily revised by the advertiser upon receipt of the NAD’s opening letter, the advertiser contended that its remaining claims were truthful. The advertiser said that its claims were based on research done at the Amen Clinic, which has performed twenty years of research on SPECT brain imaging scans, and involved four subjects who each took one dose of ADD-care and then took a standardized test that measured impulsivity. Following its review of the advertiser’s evidence, the NAD determined that brain scan imaging and impulsivity test results on four subjects, without a placebo group against which to measure changes in the brain and test results, is equivalent to anecdotal evidence. Further, the NAD found that the testing and SPECT imaging of a small population on a single day, after a single dosage of ADD-Care stimulant was not sufficient to detect the effect, if any, ADD-care might have on focus or attention, nor was there any evidence that the study’s outcomes achieved statistical significance as against a placebo. Accordingly, the NAD recommended the advertiser discontinue all revised express claims and testimonials. (ADD-Care, LLC (ADD-Care Dietary Supplements), NAD Report No. 5785 (Nov. 12, 2014)). The NAD has recommended that LifeCaps Neutraceuticals, LLC, discontinue all challenged advertising claims for the company’s “LifeCaps,” a dietary supplement promoted as a “survival pill.” The claims, which were challenged by the Council for Responsible Nutrition, included claims that LifeCaps’ ingredients may help suppress/curb appetite, alleviate hunger pangs, maintain high energy levels, and may increase the mobilization and burning of fat reserves for energy. Also included were claims that LifeCaps were safe for children over four years of age. The advertiser stated that its LifeCaps product is designed to provide vitamins and minerals conveniently in a manner easily absorbed by the body in the event food is temporarily unavailable. The ingredients include Hoodia Gordonii extract, cane sugar, and chromium. The advertiser submitted various documents, which, it argued, demonstrated the effectiveness of hoodia, sugar, and chromium in providing claimed benefits in the short-term absence of conventional food. It further argued that its products are supported by a comprehensive review of scientifically reliable evidence, methodologically sound trials, and credible historic and scientific literature. NAD was troubled by the complete absence of competent and reliable product testing for the product itself. NAD noted that the articles and citations presented do not take the place of well-controlled, reliable, clinical testing and are, by themselves, insufficient to serve as substantiation for the specific claims made by the advertiser, which promise specific results for adults and for children. Following its review, the NAD determined that the advertiser had not provided a reasonable basis for any of its efficacy and performance claims, and recommended that all challenged claims and testimonials be discontinued. (LifeCaps Nutraceuticals, LLC (LifeCaps), NAD Report No. 5784 (Nov. 6, 2014)).

30

The NAD has recommended that MOM Brands Company discontinue certain taste-test based claims for the company’s “Malt-O-Meal” brand cereals, following the NAD’s finding that the testing was flawed. MOM has said it will appeal the finding to the National Advertising Review Board (NARB). The claims, made on product packaging and in point-of-sale, Internet, and television advertisements, were challenged by Post Foods, LLC, maker of competing cereals. NAD noted that many aspects of the advertiser’s taste test methodology were proper, including the use of simple paired-comparisons of blinded products and providing the opportunity for test subjects to cleanse their palates between products. The test also included a sufficiently large sample size to elicit statistically significant results. NAD was concerned, however, about the universe from which the advertiser drew its taste test subjects. The advertiser utilized only one testing center in the Northeast census region, a deviation from industry standards that affects consumer relevance, as taste preferences can be significantly impacted by geographic variance. Further, the NAD questioned the selected age range of taste test subjects (ages 30 to 64). The advertiser, NAD noted, sampled from the population to whom it targets its marketing – adult purchasers of breakfast cereal – not from the population that necessarily uses the products. By selecting a specific type of breakfast cereal purchaser for its taste test, the advertiser excluded more than half of actual product users in the product category. NAD did conclude that the advertiser provided a reasonable basis for other challenged claims regarding product volume comparisons. It noted that the claims did not reasonably convey the message that the challenger does not offer a larger sized version of the products. (MOM Brands Company (Malt-O-Meal Brand Cereals), NAD Report No. 5782 (Nov. 5, 2014)). The NAD has recommended that AT&T Services, Inc. modify disclosures that accompany certain advertised Internet speed claims made for the company’s “U-verse” service. The advertising claims at issue were challenged by Comcast Cable Communications, LLC, and included: “Up to 45 Mbps,” “Reliable,” and “Fastest Internet for the Price.” NAD also considered whether the claims at issue implied that the advertised speed tiers are not subject to speed degradation when consumers in a Uverse home are watching two or more high-definition (HD) channels. When reviewing “up to” claims about Internet speed, the NAD previously has noted that advertisers must demonstrate that the maximum level of performance claimed can be achieved by an “appreciable number” of consumers under circumstances that are typically encountered. In this case, AT&T provided the NAD with data that showed that an appreciable number of consumers, indeed, do receive its 45 Mbps tier of service under typical-use scenarios. NAD determined that the advertiser had provided a reasonable basis for its claim. However, the NAD noted that there are material limitations to the availability of this service. Specifically, in some markets where the challenged advertisements appeared, the 45 Mbps tier of service is not available to a majority of consumers. NAD recommended that, where the advertised tier of service is available to less than 50 percent of the consumers in the geographical area where the advertising appears, AT&T should modify its advertising to clearly and conspicuously disclose such limitations through the use of explicit qualifying language. NAD also considered whether AT&T’s various speed tiers are subject to speed degradation in certain circumstances, and if so, whether AT&T’s advertising fails to disclose such speed degradation. Following its review, the NAD recommended that, when claiming to offer speeds of “up to” a particular speed, the advertiser clearly and conspicuously disclose that consumers may not receive the advertised maximum speeds when two or more HD streams are being viewed in the household. (AT&T Services, Inc. (U-Verse), NAD Report No. 5781 (Nov. 3, 2014)).

31

The NAD has determined that website advertising featuring comparative maps of the 4G LTE service offered by Verizon Wireless and some competitors is not likely to mislead consumers. However, NAD recommended that the advertiser discontinue a television commercial that features the maps. The claims at issue were challenged by T-Mobile USA, Inc. NAD considered whether Verizon’s coverage maps implied, among other messages, that T-Mobile has no coverage at all in areas delineated in white. In reviewing Verizon’s website advertising, NAD observed that the page featuring the challenged maps carried the headline: “Connect with AMERICA’S LARGEST 4G LTE NETWORK” and references to 4G LTE were repeated 15 times. The page at issue featured the maps of three competitors’ “4G LTE COVERAGE.” On each map, areas where 4G LTE is available were colored to correspond to each company’s branding color and areas where 4G LTE service is not available were left white. NAD concluded that the advertiser provided a reasonable basis for its comparative 4G LTE coverage maps and determined that, in the 4G LTE context presented on its website and print advertisements, areas of these maps depicted in white were unlikely to convey the message that Verizon’s competitors offered no coverage of any kind in these parts of the country. However, the NAD came to a different conclusion when reviewing Verizon’s television advertising. In the challenged commercial, the advertiser makes the claim, “MORE NETWORK STRENGTH” immediately before the challenged coverage maps appeared, each for a split second. Although the legend below each map stated “4G LTE,” NAD determined that the overall message conveyed by this portion of the commercial was not adequately limited to a comparison of 4G LTE coverage. NAD recommended that this commercial be discontinued and advised Verizon to clearly and conspicuously disclose in future television advertising that the comparative 4G LTE coverage maps and “networks” are limited solely to 4G LTE coverage. (Verizon Wireless, Inc. (Wireless Services and 4G LTE Network), NAD Report No. 5778 (Oct. 28, 2014)). The National Advertising Division has recommended that Dyson, Inc. modify or discontinue certain advertising claims for the company’s “DC65” corded upright vacuum. The claims at issue were challenged by Euro-Pro Operating LLC, the maker of competing vacuum products, which argued that Dyson misrepresented the comparative performance of its vacuums as compared to other vacuums in the marketplace. Specifically, Euro-Pro challenged claims that the DC65, “cleans better than any other vacuum across carpets and hard floors.” and “Twice the suction of any other vacuum.” Dyson argued that its advertisements focused on the importance of multi-floor cleaning performance, and maintained that the express language and the associated imagery in its advertisements made clear that it was promoting overall, multi-surface performance. The claim was based on aggregated performance scores across testing on six floor surface types. NAD considered whether the aggregate results of standardized tests could support Dyson’s superiority claims and whether a disclosure, identifying the industry tests used by Dyson to calculate its geometric average, or “geomean,” provided adequate information to consumers. Following its review of the evidence in the record, the NAD determined that the claim, “cleans better than any other vacuum across carpets and hard floors,” could reasonably be understood to mean that the Dyson DC65 performed better than all other vacuums on every surface tested. NAD determined the advertiser’s evidence did not support this broad “superior cleaning on all surfaces” message and recommended the claim be discontinued. (Dyson, Inc. (DC65 and DC59 Vacuum Cleaners), NAD Report No. 5776 (Oct. 23, 2014)).

32

The NAD has recommended that Neogenesis Laboratories, LLC, maker of the “Neo40 Daily” dietary supplement, discontinue certain claims challenged by the Council for Responsible Nutrition (CRN). The company has said it will appeal the NAD’s findings to the National Advertising Review Board (NARB). The challenged claims include “Neo40 Daily is proven to help the body naturally increase its nitric oxide(“NO”) level, (which helps support): Blood Pressure, Triglycerides, Energy Levels, Workout Endurance, [and] Sexual Function.” The challenger noted that it does not dispute the important role of NO. However, it argued that the core issue was whether the advertiser’s evidence regarding the physiology of NO in healthy individuals could be reproduced in individuals supplementing with Neo40 Daily. The advertiser contended that NO is a well-studied molecule and produced several studies conducted with the actual Neo40 Daily product, which it argued supported all of its performance and mechanism of action claims. NAD determined that, in the context that the advertising claims appear, the advertiser provided a reasonable basis for a number of the challenged claims regarding the role of NO in the body’s functions. Regarding the remaining claims, the NAD noted that the question for the NAD was whether supplementation with Neo40 Daily led to the promised health outcomes. NAD noted that, generally speaking, health-related performance claims must be supported by competent and reliable scientific evidence – specifically, human clinical trials that are methodologically sound with statistically significant results to at least the 95% confidence level. The results should also translate into meaningful benefits for consumers that relate directly to the performance attributes promised by advertising. NAD determined that the studies conducted with the Neo40 Daily supplements submitted by the advertiser did not rise to the required level of competent and reliable scientific evidence. It pointed to methodological flaws in the studies and that the results from the trials did not necessarily support the advertiser’s claims. (Neogenesis, LLC (Neo40 Daily Dietary Supplements), NAD Report No. 5770 (Oct. 7, 2014)). The NAD has determined that Church & Dwight Co., Inc., maker of “OxiClean White Revive Laundry Stain Remover,” can support performance claims challenged by The Clorox Company, the maker of competing laundry products. However, the NAD recommended that it modify disclosures to better inform consumers that the promised whitening performance requires that clothing be presoaked in the OxiClean White Revive product. Clorox challenged express claims, including, “It works on whites and colors and gets out messy stains without the fear of chlorine spills” and “Whiter Whites without the damage of chlorine bleach.” Also at issue was the implied claim that OxiClean WR provides whitening and stain removal benefits superior to all leading chlorine bleaches when used through-the-wash and that chlorine bleach products may damage clothes when used as directed. Following its review of the evidence in the record, the NAD determined that Church & Dwight could support certain claims for OxiClean WR regarding its ability to “get the tough stains out” and “get whiter whites.” It also determined that the advertiser’s testing provides a reasonable basis for the implied claim that OxiClean WR provides superior whitening and stain removal benefits than all leading chlorine bleaches. However, to ensure that consumers understand the basis of the performance comparison, the NAD recommended that the supers, “after a 6-hour soak and wash” and “Wash as Directed” in the challenged commercial be modified in size and placement to make them easy for consumers to notice, read, and understand. NAD further recommended that the advertiser modify the super, “Washed as directed” that appears in connection with a split-screen comparison to state that the “wash” includes a five-minute pre-soak. However, the NAD recommended that the advertiser discontinue the claims “Whiter Whites without the damage of chlorine bleach,” “without the worry of chlorine damage,” and similar claims which appear in connection with whites because they convey the unsupported message that chlorine bleach will

33

damage white fabrics. (Church & Dwight Co., Inc. (OxiClean White Revive Laundry Stain Remover), NAD Report No. 5771 (Oct. 7, 2014)). The NAD has recommended that Euro-Pro Operating, LLC modify or discontinue certain claims for the company’s “Ninja Ultima” blender, including claims that the Ninja Ultima is the “#1 Most Powerful Blender.” NAD determined, however, that the company could support other challenged claims. The advertising claims at issue in this case were challenged by Vita-Mix Corporation, the maker of “Vitamix” blenders. The challenger argued that the most powerful blender claim was made against blenders in general, while the advertiser – pointing to its disclosure – maintained that the claim referred exclusively blenders that retail at less than $250. NAD noted in its decision that, although Euro-Pro’s advertising includes a disclosure that purports to limit the claim to blenders that cost less than $250, the disclosure was insufficiently clear and conspicuous. For example, NAD noted, the “#1” statement appears on the top corner of the front of the box, while the disclaimer appears in a tiny font on a different side panel of the box. Additionally, NAD noted that the Ninja Ultima packaging is replete with comparisons to the Vitamix 750 blender – a machine that retails for far more than $250. “In light of this overwhelmingly comparative, Vitamix-oriented advertising campaign,” NAD said, “a consumer would be reasonable to construe the ‘#1 Most Powerful Blender’ as a claim made in comparison to the Vitamix 750, and/or Vitamix blenders in general.” NAD determined, however, that other challenged claims, including “Single Serving Blending,” “Dual stage blending,” “beyond professional,” and a comparison chart, which NAD found did not convey the message that the Ninja Ultima is superior to the Vitamix 750 in all respects, were not misleading. (Euro-Pro Operating, LLC (Ninja Ultima Blender), NAD Report No. 5768 (Oct. 2, 2014)).

RECENT FILINGS Lanham Act and Other Competitor Actions Putative class action seeking certification of nationwide and California-only classes filed against Lands’ End, Inc. in the U.S. District Court for the Southern District of California, alleging violation of the Lanham Act and California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law. Plaintiff claims that Lands’ End falsely labels its apparel products as “Made in the U.S.A.,” as the products were made, or contain component parts that were made, outside of the United States. (Oxina, et al. v. Lands’ End, Inc., No. 3:14-cv-2577 (S.D. Cal. complaint filed on Oct. 29, 2014)). Consumer Class Actions Putative class action filed against Gencor Nutrients, Inc., GE Nutrients, Inc., Jith Veeravalli, General Nutrition Corporation, GNC Corporation, General Nutrition Centers, Inc., S&G Properties, LLC, Direct Digital, LLC, Turderma LLC, Force Factor LLC, NAC Marketing Company, LLC, Kingfisher Media, LLC, Dreambrands, Inc., Pharmafreak Holdings Inc., NDS Nutrition Products, Inc., Medical Research Institute, Inc., Prevention, LLC, and Premium Nutraceuticals, LLC in the U.S. District Court for the Northern District of California, alleging violations of, among other things, California, Pennsylvania’s, and Arizona’s consumer protection laws. Plaintiffs claim that the

34

defendants falsely advertise and market “Testofen” and nutritional supplements containing Testofen as “testosterone boosters,” including making claims that Testofen has been “clinically proven” to increase free testosterone levels. According to the plaintiffs, however, there is little to no scientific evidence to support these claims. (Ryan, et al. v. Gencor Nutrients, Inc., No. 3:14-CV-05682 (N.D. Cal., complaint filed on Dec. 31, 2014)). Putative class action seeking certification of nationwide, multistate, and Massachusetts-only classes filed against Utz Quality Foods, Inc. in the U.S. District Court for the District of Massachusetts, alleging violation of Massachusetts General Law ch. 266, § 91 and the state consumer fraud statutes of the ten states in the multistate class. Plaintiffs claim that Utz falsely advertises its “Utz”- and “Bachman”-branded snack foods as “All Natural” when, in reality, the products contain synthetic and genetically modified ingredients. (DiFrancesco, et al. v. Utz Quality Foods, Inc., No. 1:14-cv14744 (D. Mass. complaint filed on Dec. 30, 2014)). Putative nationwide class action filed in the U.S. District Court for the Central District of California against Soberlink, Inc., alleging violations of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. According to the complaint, the defendant made marketing claims falsely suggested that the results from its breath alcohol testing devices were admissible in court and certified as accurate by the U.S. Department of Transportation (DOT) when, in fact, courts often have deemed them unreliable and DOT has never certified the devices. Plaintiffs further alleged that the defendant misrepresented the devices as “reliable, user-friendly and convenient” when they frequently return error messages or otherwise malfunction. (Lomonaco, et al. v. Soberlink, Inc., No. 15-CV-0015 (C.D. Cal. complaint filed Jan. 6, 2015)). Putative nationwide class action filed in the U.S. District Court for the Northern District of California against Apple Inc., alleging violations of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. According to the complaint, the defendant misrepresented that its Apple “iPhone,” “iPad,” and “iPod” products featured a specified amount of storage capacity, and failed to disclose that the operating system and other pre-installed software consume a substantial portion of the represented storage capacity. Plaintiff alleged that a consumer who purchased a 16 GB iPhone, iPad, or iPod with iOS 8 would have as much as 23.1% of the represented storage capacity inaccessible and unusable. (Orshan, et al. v. Apple Inc., No. 14-cv5659 (N.D. Cal. complaint filed on Dec. 30, 2014)). Putative class action seeking certification of nationwide and California-only classes filed against Anheuser-Busch, LLC, alleging violation of California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law, removed from California Superior Court (Los Angeles County) to the U.S. District Court for the Central District of California. Plaintiff claims that Anheuser-Busch misrepresents that its “Bud Light Lime-A-Rita” products are “light” alcoholic beverages low in calories and carbohydrates, as the products contain between 192 and 220 calories and 22.8 and 23.6 grams of carbohydrates per 8 fluid ounces. (Cruz, et al. v. Anheuser-Busch, LLC, No. 2:14-cv-9670 (C.D. Cal. complaint removed on Dec. 18, 2014)). Putative class action filed against Lumber Liquidators, Inc. in California Superior Court (Alameda County), alleging violations of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. Plaintiffs claim that the defendant engaged in deceptive and unfair business practices by falsely representing on its laminate wood flooring product labels that its

35

products comply with the formaldehyde emission standards promulgated by the California Air Resources Board and enumerated in California’s Airborne Toxic Control Measure to Reduce Formaldehyde Emission from Composite Wood Products. Plaintiffs argue that the defendant’s wood flooring products, which are manufactured in China, emit formaldehyde gas at levels that exceed the amounts permitted under California law and that the defendant makes false and misleading statements when it represents that its flooring products comply with formaldehyde standards. (Balero, et al. v. Lumber Liquidators, Inc., No. RG14751116 (Cal. Sup. Ct. complaint filed on Dec. 11, 2014)). Putative class action filed against Popcorn, Indiana LLC in the Missouri Circuit Court (Jackson County) alleging violations of the Missouri Merchandising Practices Act, removed to the U.S. District Court for the Western District of Missouri. The plaintiffs claim that the defendant falsely, deceptively, and misleadingly markets, advertises, and labels its snack products when it claims the products are “all natural.” Plaintiffs claim that a number of the defendant’s “all natural” products contain “unnatural” ingredients such as canola oil, corn syrup, soy lecithin, maltodextrin, and dextrose that are sourced or derived from crops grown from genetically modified or engineered seeds or plants. Plaintiffs also allege that the defendant’s products contain artificial and/or synthetic ingredients such as citric acid, lactic acid, and ascorbic acid as well as ingredients used to artificially color the products, like beet powder, red cabbage extract, etc. Plaintiffs also claim that a number of the ingredients in the products have been so heavily processed as to render them synthetic or manmade. (Wright, et al. v. Popcorn, Indiana, LLC, No. 4:14-cv-01103 (W.D. Mo. complaint filed on Dec. 10, 2014)). Putative nationwide class action filed in the U.S. District Court for the Eastern District of Pennsylvania against Performance Sports Group, Ltd. and Cascade Lacrosse, alleging violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. According to the complaint, the defendants misrepresented their “Cascade Model R” lacrosse helmet as “the most advanced impact management system Cascade has ever created” and as compliant with all applicable National Operating Committee on Standards for Athletic Equipment (“NOCSAE”) standards even though NOCSAE subsequently determined that the helmet did not meet its standards and decertified the helmets. (Hemberger, et al. v. Performance Sports Group, Ltd., et al., No. 14-cv-6981 (E.D. Pa. complaint filed on Dec. 9, 2014)). Putative nationwide class action filed in the U.S. District Court for the Northern District of Illinois against Earth Inc., alleging violations of the Illinois Consumer Fraud Act. According to the complaint, the defendant deceptively marketed its “Earth Exer-Walk” shoe as providing significant health benefits with claims such as “better walking motion helps improve posture and reduce joint stress” and “strengthen core muscles.” Plaintiffs allege that the defendant also made deceptive claims concerning the calorie and fat burning effects of the shoe, notwithstanding that scientific tests show that wearing the shoes provide no additional health benefits and do not increase the number of calories or fat burned compared to normal shoes. (Hedges, et al. v. Earth Inc., No. 14-CV-9858 (N.D. Ill. complaint filed Dec. 9, 2014)). Putative nationwide class action filed in the U.S. District Court for the Southern District of New York against FanDuel, Inc., alleging deceptive acts in violation of New York General Business Law §§ 349 and 350. According to the complaint, the defendant made a series of false and misleading statements in advertisements suggesting that FanDuel would match the amount of customers’

36

deposits in their FanDuel accounts, which permit customers to pay entry fees to participate in fantasy sports games. Plaintiffs alleged that FanDuel does not actually match deposits as represented in the advertisements, but, rather, uses an intricate formula that requires customers to continue to play and invest well beyond their initial deposit to actually receive the advertised matching bonuses. (Buzin, et al. v. FanDuel, Inc., No. 14-CV-9517 (S.D.N.Y. complaint filed Dec. 2, 2014)). Putative nationwide class action filed in the U.S. District Court for the Southern District of New York against TimberTech and CPG International Inc., alleging unfair and deceptive acts in violation of New York General Business Law § 349. According to the complaint, the defendant allegedly misrepresented that its “TimberTech Decking” products were suitable for replacing traditional wooden decks and would require “[l]ess work” with “[m]ore life” than wooden decks. Plaintiffs alleged that, in actuality, TimberTech Decking is subject to major discoloration and failure and is not fit to replace wooden decks. (Rogers, et al. v. TimberTech, et al., No. 14-cv-9403 (S.D.N.Y. complaint filed on Nov. 25, 2014)). Putative California-only class action filed in California Superior Court (San Diego County) against Amazon.com, Inc., alleging violation of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. Plaintiff claims that the “savings” Amazon offers to consumers are illusory or grossly overstated because the “list” price to which Amazon’s lower price is compared is not the prevailing market price for the product, but, rather, the highest price that has ever been listed for the product. (Fagerstrom et al. v. Amazon.com, Inc., No. 37-2014-00040303 (Cal. Super. Ct. complaint filed on Nov. 25, 2014)). Putative California-only class action filed in California Superior Court (San Diego County) against Blue Diamond Growers, alleging violation of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. Plaintiff claims that Blue Diamond falsely advertises its “Natural Nut Thins” products as “natural” when, in reality, the products contain nonnatural, processed ingredients such as Xanthan Gum, Maltodextrin, and/or Ascorbyl Palmitate. (Mitchell, et al. v. Blue Diamond Growers, No. 37-2014-00039914 (Cal. Super. Ct. complaint filed on Nov. 21, 2014)). Putative nationwide and California-only class actions filed against Blue Gentian, LLC in California Superior Court (Los Angeles County), alleging violations of California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law. Plaintiff claims that Blue Gentian misrepresents the quality of its “DAP X-Hose Pro” – specifically, that the hose is tough, multilayered, covered with durable, super-strong webbing, and never kinks – and fails to honor the advertised money-back and lifetime guarantees. (Dumone, et al. v. Blue Gentian, LLC, No. BC564465 (Cal. Super. Ct. complaint filed on Nov. 19, 2014)). Putative nationwide and Illinois-only class action filed against Whistlepig, LLC in Illinois Circuit Court (Cook County), alleging violations of the Vermont Consumer Fraud Act, Illinois Consumer Fraud and Deceptive Business Practices Act, and Illinois Uniform Deceptive Trade Practices Act. Plaintiff claims that Whistlepig falsely advertises that its straight rye whiskey is hand-crafted at Whistlepig Farm in Vermont, when, in fact, the company actually purchases and then re-sells whiskey that is distilled, aged, and mass-produced at a factory in Alberta, Canada. (Aliano, et al. v. Whistlepig, LLC, No. 2014-CH-18519 (Ill. Cir. Ct. complaint filed on Nov. 17, 2014)).

37

Putative class action filed against The Blue Buffalo Company Ltd. in the U.S. District Court for the Eastern District of Missouri, alleging violations of the Missouri Merchandising Practices Act and other state laws prohibiting unfair and deceptive practices. Plaintiffs claim that the defendant engaged in deceptive practices in the marketing, advertising, and promotion of its pet food by representing that it contained “NO Chicken/Poultry By-Product Meals,” no corn, no grain, no artificial preservatives, and superior nutrition as compared to those of competitor products. According to the plaintiffs, the defendant’s pet food does contain significant amounts of chicken/poultry by-product meals, corn, other grains, and artificial preservatives, and does not have any superior nutritional value as compared to competitor products. (Inman, et al. v. Blue Buffalo Co., No. 4:14-cv-01923 (E.D. Mo. complaint filed on Nov. 14, 2014)). Putative nationwide class action filed against Seventh Generation, Inc., in the U.S. District Court for the Southern District of New York, alleging violations of New York consumer protection laws, breach of express warranty, breach of implied warranty of fitness for a particular purpose, and unjust enrichment with respect to the defendant’s marketing of the safety and content of its laundry detergent and dish liquid products. According to the plaintiff, the defendant falsely markets its products as “natural,” “non-toxic,” and “hypoallergenic,” when, in fact, they contain the synthetic preservatives Benzisothiazolinone and Methylisothiazolinone, which have been associated with skin toxicity, immune system toxicity, allergic reactions, and have been identified as possible neurotoxins. (Rapoport-Hecht, et al. v. Seventh Generation, Inc., No. 14-cv-9087 (S.D.N.Y. complaint filed on Nov. 14, 2014)). Putative nationwide class action filed against Isopure Company, LLC (d/b/a Nature’s Best) and General Nutrition Corp. (“GNC”) in the U.S. District Court for the Southern District of New York, alleging violations of New York’s consumer protection statutes. According to the complaint, the defendants misrepresented that “Isopure Zero-Carb” and “Low-Carb Protein Powder” products were “100% Whey Protein Isolate” and had “50 Grams of Protein from 100% Whey Protein Isolate.” Plaintiffs allege that Isopure actually “spiked” the products with additional sources of protein in the form of free-form amino acids, non-protein amino acids, and other non-whey ingredients, thus rendering the “100% Whey Protein Isolate” claims false and misleading. (Tocci, et al. v. Isopure Co., et al., No. 14-CV-9097 (S.D.N.Y. complaint filed on Nov. 14, 2014)). Putative class action filed against Vital Pharmaceuticals, Inc. in the U.S. District Court for the District of Massachusetts, alleging violations of the Massachusetts Consumer Protection Act. Plaintiffs claim that the defendant engaged in deceptive and misleading practices in its advertisements and marketing for its “Redline Xtreme Energy Drink.” According to the plaintiffs, adverse reactions have been reported from consumers who have ingested the Xtreme Energy Drink, including, but not limited to, chills, excessive sweating, vomiting, convulsions, chest pain, and rapid heartbeat, and consumers who have ingested the product have been hospitalized after consumption. Plaintiffs note that, despite these adverse effects, the defendant has failed to adequately warn consumers of the “unfitness” of the product and the “extreme side effects associated with the product,” and has failed to modify the product’s ingredients or label accordingly. (Mark, et al. v. Vital Pharm., Inc., No. 1:14-cv-14148 (D. Mass. complaint filed on Nov. 12, 2014)). Putative nationwide class action filed against TP-Link USA Corporation and TP-Link Research Institute USA Corp. in the U.S. District Court for the Northern District of California, alleging

38

violations of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. According to the complaint, the defendant misrepresented that its “AV500 PowerLine” network adapters could create computer networks over a home’s existing electrical power lines and that those networks operate at speeds of 500 Mbps. Plaintiffs allege that a number of studies have demonstrated that such adapters do not operate at the advertised speed and instead will operate most at 100 Mbps. (Arroyo, et al. v. TP-Link USA Corp., et al., No. 14-cv-4999 (N.D. Cal. complaint filed on Nov. 12, 2014)). Putative California-only class action filed against Campbell Soup Co., which alleged violations of California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, removed from California Superior Court (San Diego County) to the U.S. District Court for the Southern District of California. Plaintiff claims that Campbell falsely advertises its “Prego” brand sauces as “100% Natural,” when, in reality, the products contain one or more genetically modified ingredients. (Nelson, et al. v. Campbell Soup Co., No. 3:14-cv-2647 (S.D. Cal. complaint removed on Nov. 6, 2014)). Putative class action filed against Rust-Oleum Corporation in the U.S. District Court for the Eastern District of North Carolina, alleging violations of, among other things, the North Carolina Unfair and Deceptive Trade Practices Act. The plaintiffs claim that the defendant engaged in deceptive practices in its marketing, advertising, and promotion of its “Rust-Oleum Restore” paint products, which are used as a resurfacing finish on outdoor decks and related structures. According to the plaintiffs, the defendant warrants that Restore paint is designed to “resiliently protect a consumer’s existing decking and related structures with minimal maintenance.” In addition, the plaintiffs allege that the defendant represents that its paint is “ten (10) times thicker than ordinary paint, giving it superior coverage qualities with the ability to mask imperfections such as cracks on decks and patios.” Despite these claims, however, the plaintiffs claim that the defendant’s Restore product contains “serious design and manufacturing defects, making it susceptible to separating, cracking, bubbling, flaking, chipping and general degradation after application and causing damage to other building components.” (Leonard, et al. v. Rust-Oleum Corp., No. 7:14-CV-00259 (E.D.N.C., complaint filed on Nov. 6, 2014)). Putative class action filed against NBTY, Inc. and Nature’s Bounty, Inc. in the U.S. District Court for the Southern District of California, alleging violations of California’s Unfair Competition Law and Consumer Legal Remedies Act. Plaintiff alleges that the defendants falsely represent that their Ginkgo Biloba supplement “supports healthy brain function,” “helps support memory, especially occasional mild memory problems associated with aging,” and “helps support mental alertness,” when, in fact, the scientific evidence regarding the use of Ginko Biloba shows that the ingredient does not provide any of the cognitive health benefits represented by the defendants. Plaintiff alleges that she relied on the defendants’ representations in purchasing the Ginko Biloba product, and suffered injury in fact and lost money because she did not receive any of the advertised benefits. (Petkevicius, et al. v. NBTY, Inc., No. 3:14-cv-02616 (S.D. Cal. complaint filed on Nov. 3, 2014)). Putative class action filed against Giant Sports Products, LLC in the U.S. District Court for the Central District of California, alleging violations of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. Plaintiffs claim that the defendant misrepresented the amount of protein available in its “Giant Sports Delicious Protein” product in its advertising and marketing materials, including the product label. According to the plaintiffs, as part

39

of an effort to reduce the costs associated with producing the Giant Sports Delicious Protein product, the defendant engaged in “protein spiking” by adding “cheaper free form amino acids and nonprotein ingredients to increase the nitrogen content of the product’s protein powder.” As a result of this alleged practice, the plaintiffs maintain that consumers are left with a product that contains approximately 60% less whey protein than the defendant represents in its advertising and marketing materials for the product. (Rodriguez, et al. v. Giant Sports Prods., LLC, No. 2:14-CV-08378 (C.D. Cal. complaint filed on Oct. 29, 2014)). Putative class action filed against Louisville Distilling Co., LLC in Illinois Circuit Court (Cook County), alleging violations of the Kentucky Consumer Protections Act, Illinois Consumer Fraud Act, and Illinois Uniform Deceptive Trade Practices Act. Plaintiff alleges that the defendant advertises its “Angel’s Envy Rye” whisky as “highest quality,” “small batch,” “hand crafted and bottled by Louisville Spirits Group, Bardstown, Kentucky,” and made with “painstaking attention to detail.” According to the complaint, these representations are false because Angel’s Envy is not produced in Bardstown, Kentucky and it is not of “small batch.” Instead, Angel’s Envy is distilled and aged at a massive factory in Lawrenceburg, Indiana that produces and distills industrial-sized quantities of beverage-grade alcohol, including whiskey from numerous other brands. (Aliano, et al. v. Louisville Distilling Co., LLC, No. 2014CH17428 (Ill. Cir. Ct. complaint filed on Oct. 28, 2014)). Putative statewide class action filed against Proximo Spirits, Inc. in Illinois Circuit Court (Cook County), alleging violations of the New Jersey Consumer Fraud Act and the Illinois Consumer Fraud and Deceptive Trade Practices Act. According to the complaint, the defendant misrepresented in its labeling and marketing for “Tincup” whiskey that the product was made in a craft distillery in Colorado when it actually is made in a “massive complex” in Lawrenceburg, Indiana. The complaint also alleges that Tincup’s marketing deceptively implies that Tincup is made from a unique recipe. (Aliano, et al. v. Proximo Spirits, Inc., No. 14-CHI-7429 (Ill. Cir. Ct. complaint filed on Oct. 28, 2014)). Putative nationwide class action filed against Fifth Generation, Inc. alleging violations of California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, removed from the California Superior Court (San Diego County) to the District Court for the Southern District of California. According to the complaint, the defendant misrepresented that “Tito’s Handmade Vodka” was homemade when it is actually made from a “highly-mechanized process that is devoid of human hands.” (Hofmann, et al. v. Fifth Generation, Inc., No. 14-CV-2569 (S.D. Cal. complaint removed on Oct. 28, 2014)). Putative class action filed against Sharp Electronics Corporation in the U.S. District Court for the District of New Jersey, alleging violations of New Jersey’s Consumer Fraud Act, California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act, and North Carolina’s and Massachusetts respective consumer protection statutes. The plaintiffs claim that the defendant falsely marketed and advertised its “LED TVs,” “LED HDTVs,” and “LED televisions.” According to the plaintiffs, the televisions at issue are not “LED TVs,” but instead are LCD TVs that use light emitting diodes (LEDs) instead of cold cathode fluorescent lights (CCFLs) as a light source to illuminate the liquid crystal display (LCD) panel. The plaintiffs allege that the defendant’s “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

40

TVs,’ were at all times knowing, intentional, and intended to mislead consumers.” (Popejoy, et al. v. Sharp Elecs. Corp., No. 2:14-cv-06426 (D.N.J, complaint filed on Oct. 17, 2014)). Putative nationwide class action complaint filed in the Superior Court of California (Los Angeles County), alleging violations of California’s Unfair Competition Law and Consumer Legal Remedies Act, and breach of express warranty. Plaintiff alleges that the defendant, Applied Nutrition, Inc., distributes a line of over-the-counter dietary supplements called “Libido-Max,” which it claims in its marketing materials will enhance the sexual performance of its users. According to the plaintiff, all available, reliable, scientific evidence, however, demonstrates that Libido-Max products have no efficacy at all regarding the sexual health and performance benefits of consuming Libido-Max, and in fact, multiple valid scientific studies have demonstrated that the primary ingredients in LibidoMax are not reliable for strengthening libido, or promoting sexual performance and enjoyment. (Vigil, et al. v. Applied Nutrition, Inc., No. BC 560924 (Cal. Super. Ct. complaint filed on Oct. 17, 2014)). Putative nationwide class action complaint filed in the U.S. District Court for the Northern District of California against Tyson Food, Inc. related to the defendant’s chicken products, including but not limited to “Tysons Chicken Nuggets,” “Tyson Fun Nuggets,” “Tysons Crispy Chicken Strips,” “Tysons Chicken Patties,” “Tysons Chicken Breast Filets,” “Tysons Southern Breast Tenderloins,” and “Tysons Southern Patties.” Plaintiff alleges that the defendant’s marketing campaign is centered on false and misleading representations that are intended to, and do convey to consumers, that the products are either “100% all natural” or made with “100% all natural ingredients.” According to the complaint, the chicken products and/or other ingredients are not 100% all natural because the corn and/or soybeans used in the products’ breading and flour and the feed given to the chickens from which the products are derived are genetically modified crops, which are unnatural man-made crops whose genetic material has been altered by humans employing genetic engineering. (Pekevicius, et al. v. Tyson Foods, Inc., No. 14-cv-046555 (N.D. Cal. complaint filed on Oct. 17, 2014)). Putative nationwide class action filed against Laclede, Inc. 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. Plaintiffs claim that Laclede falsely advertises that its “Luvena Prebiotic” vaginal health care products are “certified” as “natural” and/or “prebiotic” when, in reality, the products are not certified by a third party and contain the synthetic compound polyethylene glycol. (Cerreta, et al. v. Laclede, Inc., No. 2:14-cv-8066 (C.D. Cal. complaint removed on Oct. 17, 2014)). Putative class action seeking certification of New York- and Wisconsin-only classes filed against Xochitl, Inc. in the U.S. District Court for the Eastern District of New York, alleging violation of Section 349 of the New York General Business Law and the Wisconsin Deceptive Trade Practices Act. Plaintiffs claim that Xochitl falsely advertises that its corn chips are all natural and contain no genetically modified organisms (GMOs) when, in reality, 75 percent of the corn used in the chips is genetically modified. (Daly, et al. v. Xochitl, Inc., No. 1:14-cv-6112 (E.D.N.Y. complaint filed on Oct. 17, 2014)).

41

Putative nationwide class action filed in the U.S. District Court for New Jersey against Ocwen Loan Servicing, LLC, Ocwen Financial Corporation, and Cross Country Home Services, Inc., alleging, among other things, violations of the New Jersey Consumer Fraud Act arising out of the defendants’ joint marketing of home warranty and service plans to Ocwen mortgage customers. According to the complaint, the defendants engaged in deceptive marketing by using fine print and vaguely worded disclosures to enroll unwitting consumers in home warranty plans. (Fox, et al. v. Ocwen Loan Servicing, LLC, et al., No. CV-00001 (D.N.J. complaint filed on Oct. 16, 2014)). Putative nationwide class action filed in the U.S. District Court for the Northern District of Illinois against Bayer Healthcare, LLC, alleging violations of the Illinois Consumer Fraud Act. According to the complaint, the defendants deceptively marketed their “Flintstones Healthy Brain Support” product, a gummy-chewable Omega-3 DHA dietary supplement, by claiming it would “Support Healthy Brain Function.” However, the plaintiffs claim that five randomized controlled trials found no causal link between the DHA algal oil supplementation contained in the product and improvements in brain function. The plaintiffs alleged that, even if there was a causal link in some populations, the claim still would be misleading because American children and adults already consumed adequate amounts of DHA. (Porter, et al. v. Bayer Healthcare, LLC, No. 14-CV-08005 (N.D. Ill. complaint filed on Oct. 14, 2014)). Putative class action filed against Samsung Electronics America, Inc. in the U.S. District Court for the Northern District of California and transferred to the District of New Jersey on October 14, 2014, alleging violations of New Jersey’s Consumer Fraud Act, California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, Massachusetts General Laws, Chapter 93A §§ 2 and 9, the Michigan Consumer Protection Act, and Florida’s Deceptive and Unfair Trade Practices Act. The plaintiffs claim the defendants’ Samsung-brand televisions were falsely marketed and advertised by Samsung as “LED TVs,” “LED HDTVs” or “LED televisions.” According to the plaintiffs, the televisions at issue are not “LED TVs,” but instead are LCD TVs 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 claim that Samsung’s 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.” (Rabinowitz, et al. v. Samsung Elecs. Am., Inc., No. 2:14-cv-06356 (D.N.J. case transferred on Oct. 14, 2014)). Putative nationwide class action filed against Whole Foods Market Rocky Mountain/Southwest, L.P. and WFM Private Label, L.P. in the U.S. District Court for the Western District of Texas, alleging violations of the Texas Deceptive Trade Practices Act. Plaintiffs claim that Whole Foods deceptively labeled its “Whole Foods 365 Everyday Value Plain Greek Yogurt” by stating in the Nutrition Facts panel that the product contained 2 grams of sugar per 170 gram serving, when, in fact, recent tests conducted by Consumer Reports indicate that the yogurt contained 11.4 grams per serving. (Steeley, et al. v. Whole Foods Mkt. Rocky Mountain/Southwest, L.P., No. 14-cv-00932 (W.D. Tex. complaint filed on Oct. 10, 2014)).

42

Putative class action filed against Optimum Nutrition, Inc. in the U.S. District Court for the Southern District of California, alleging violations of, among others, California’s Unfair Competition Law False Advertising Law, and Consumer Legal Remedies Act. According to the complaint, the defendant falsely advertises that its line of “Gold Standard” powdered protein supplements contain 100% whey, soy, egg, and casein proteins. The plaintiffs allege that, contrary to such representations, the defendant’s products do not comprise 100% protein and in fact contain additional non-protein ingredients. (Bobo, et. al. v. Optimum Nutrition, Inc., No. 14-cv-2408 (S.D. Cal. complaint filed on Oct. 9, 2014)). Putative class action against Publix Super Markets, Inc. in Florida Circuit Court (Leon County), alleging violations of, among others, the Florida Deceptive and Unfair Trade Practice Act, removed to the U.S. District Court for the Northern District of Florida. The case arose out of the labeling for the defendant’s “100% Cranberry Pomegranate Juice.” Plaintiffs allege that, contrary to product labeling, the primary ingredients are grape and apple juice, and the juice in fact contained very little pomegranate juice when compared to the apple juice and grape juice concentrates. According to the complaint, the defendant’s advertising is false and deceives consumers into believing that the product primarily contains pomegranate juice. (Barker, et al. v. Publix Super Mkts., Inc., No. 14-cv00522 (N.D. Fla. case removed on Oct. 9, 2014)). Putative nation-wide and Oregon class action filed against Cosmetic Dermatology, Inc., in Oregon Circuit Court (County of Multnomah), alleging false advertising under Oregon and Florida law relating to the defendant’s “Dr. Brandt’s Pores No More Anti-Aging Mattifying Lotion,” removed to the U.S. District Court in the District of Oregon. Plaintiff alleges that the defendant misrepresents that the lotion is “oil free” and that it “delayed the natural signs of aging by maintaining the longevity and activity of stem cells in the skin.” (Hilary Andriesian v. Cosmetic Dermatology, Inc., Case No. 3:14-cv-01600-ST (D. Or. case removed on Oct. 9, 2014)). Putative New Jersey-only class action filed against Whole Foods Market Group, Inc. removed from New Jersey Superior Court (Burlington County) to the U.S. District Court for the District of New Jersey, alleging violations of the New Jersey Consumer Fraud Act. The plaintiff claims that Whole Foods falsely labels its private label “365 Everyday Value Plain Greek Yogurt” as having 2 grams of sugar per 170 gram serving, when at least six Consumer Reports tests have confirmed the product actually contains at least six times that amount – 11.4 grams – per 170 gram serving. (Bilder v. Whole Foods Mkt. Grp., Inc., No. 1:14-cv-6146 (D.N.J. complaint removed on Oct. 2, 2014)). [A putative Pennsylvania-only class action, making identical allegations under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, was removed from the Pennsylvania Court of Common Pleas (Philadelphia County) to the U.S. District Court for the Eastern District of Pennsylvania. Both cases are stayed pending a ruling on a Motion to Transfer by the Judicial Panel on Multidistrict Litigation. (Clemente, et al. v. Whole Foods Mkt. Grp., Inc., No. 2:14-cv-5652 (E.D. Pa. complaint removed on Oct. 3, 2014)).]

43

Suggest Documents