Proskauer on Advertising Law
Proskauer on Advertising Law

Supreme Court: Class Action Plaintiffs Must Show ‘Concrete’ Harm to Satisfy Article III

In a 6-2 decision, the Supreme Court, in an opinion authored by Justice Alito, held that the Ninth Circuit’s Article III standing analysis in Robins v. Spokeo was incomplete because it focused solely on whether the plaintiff had alleged a particularized injury, and failed to assess whether the alleged injury was “concrete”.  Although Spokeo was not a false advertising case, the majority’s decision may have ramifications in false advertising class actions.

Spokeo operates a website that allows users to search for information about individuals by inputting their name, email address or phone number. Spokeo searches a number of databases and returns information such as the individual’s address, phone number, marital status, approximate age, occupation, finances, shopping habits and musical preferences.  Spokeo’s profile for the plaintiff, Thomas Robins, stated that he was married, has children, is in his 50’s, has a job and is relatively affluent – none of which is correct, according to Robins.  Miffed, Robins sued Spokeo on behalf of himself and a purported class of similarly situated individuals for violating the Fair Credit Reporting Act (FCRA), which requires, among other things, that consumer reporting agencies “follow reasonable procedures to assure maximum possible accuracy” of consumer reports.

The district court dismissed Robins’ complaint with prejudice, finding that he had not adequately pled an injury in fact under Article III. The Ninth Circuit reversed, citing its precedent and observing that “the violation of a statutory right is usually a sufficient injury in fact to confer standing.”  The Ninth Circuit concluded that Robins satisfied the injury in fact requirements of Article III because he alleged that “Spokeo violated his statutory rights, not just the statutory rights of other people,” and because Robins’ “personal interests in the handling of his credit information [were] individualized rather than collective.”  (Emphasis in original).

Justice Alito first reiterated, based on prior Supreme Court decisions, that to establish injury in fact, an injury both must be particularized, in that it affects the plaintiff in a personal and individual way, and concrete, in that it actually exists.  The Court concluded that the Ninth Circuit’s analysis improperly focused on the particularity requirement to the exclusion of the concreteness requirement.  Robins’ allegation that he suffered a violation of his statutory right went to particularity but not concreteness.  So, too, did the Ninth Circuit’s finding that the alleged FCRA violation implicated Robins’ personal interests in the handling of his credit information.

The Supreme Court elaborated that “a plaintiff [does not] automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Justice Alito observed that if, for example, Spokeo had disseminated an inaccurate zip code, while this might amount to a technical violation of the FCRA it would be difficult to imagine such a violation resulting in any concrete harm.  Accordingly, the Court held, the Ninth Circuit should have considered whether the procedural violations of the FCRA alleged by Robins entailed a degree of risk sufficient to meet Article III’s concreteness requirement.

The “quick read” of Spokeo by some other commentators is that the decision’s practical impact will be minimal.  We are not so sure; we think Spokeo may have repercussions for false advertising class action litigants, especially in the Ninth Circuit where plaintiffs can no longer get away with pleading only a particularized injury.  As a result of this decision, class action plaintiffs may feel pressure to articulate a theory of concrete harm beyond the usual allegation that they would not have bought the product but for the alleged false representation (an allegation that, even if accepted as true at the pleading stage, does not necessarily reflect any concrete injury).  For their part, class action defendants should be on the lookout for situations where, despite having pled reliance on the alleged false representation, the plaintiff has not alleged, or cannot prove, that she or he suffered any concrete injury as a result of buying the product.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

The Promise & Peril of Comparative Advertising — Webinar Held on May 17

Comparative advertisements can be powerful drivers of consumer purchasing decisions. However, such ads are also highly unpopular with the competitor that is the subject of the comparison, and therefore are among the most frequently challenged advertisements both in Lanham Act false advertising suits and at NAD.

In this webinar, Proskauer partner Larry Weinstein discussed best practices for defending and challenging comparative advertisements, including:

  • The different standards Lanham Act courts and the NAD apply to comparative advertisements;
  • Proper and improper test methods for substantiating comparative advertising claims;
  • Avoiding bias in comparative testing;
  • Statistical methods applicable to comparative advertising claim substantiation studies; and
  • Common pitfalls that doom comparative advertising campaigns.

The FTC Trims the Fat Off Even More Companies Selling Weight Loss Products

Hungry to prevent more companies from selling allegedly bogus weight loss products, the FTC has settled yet another false advertising suit against various sellers of diet pills, in a case similar to February’s Sale Slash settlement blogged about here.  The FTC’s latest diet pill settlement enjoins distributors of the dietary supplement known as Pure Green Coffee from claiming, among other things, that any dietary supplement, food or drug causes or assists in causing weight loss or fat loss, unless such claims are not misleading and are substantiated by competent and reliable scientific evidence.

According to the FTC’s amended complaint filed in the Middle District of Florida in February of 2015, Defendants began selling Pure Green Coffee shortly after an April 2012 episode of “The Dr. Oz Show” aired, in which Dr. Oz featured a segment highlighting the possible weight loss benefits of green coffee bean extract. Dr. Oz told his viewers that this green coffee extract “may hold the secret to weight loss that you’ve been waiting for,” citing a study where participants who took the extract lost 17 pounds in 22 weeks by “doing absolutely nothing extra in their day.”  Just weeks after this episode aired, defendants launched Pure Green Coffee, a dietary supplement that purports to contain green coffee bean extract, and advertised its effectiveness in causing weight loss.  These ads included statements such as: “Cut Pounds of Stomach Fat Every Week By Using This 1 Weird Old Trick,” “Drop 3 Dress Sizes, Buy Pure Green Coffee,  Discover the Shocking Truth About AMERICA’s Hottest Diet,” and “Lose 20 pounds in just 4 weeks.”  Defendants also included the video footage from The Dr. Oz Show on the Pure Green Coffee website.

The FTC took issue with these claims, giving little weight to the clinical study on which defendants were basing the claims. First, the FTC noted that this study was funded by another manufacturer of a dietary supplement containing ingredients derived from green coffee beans.  The FTC also criticized the study for, among other things, failing to document how the subjects and administrators were blinded, and for failing to disclose whether the subjects exercised during the study.

Defendants’ weight loss claims were not the only thing the FTC took issue with. The FTC also weighed in on Pure Green Coffee’s use of allegedly fake testimonials and fake news sites or blogs that were, according to the FTC, actually paid advertisements.  The FTC alleged that the video testimonials on Pure Green Coffee’s websites were not by neutral, disinterested users, but rather by individuals who were paid $200 and received a free thirty-day supply of product in exchange for providing video testimony, while this compensation was nowhere disclosed.  In addition, the Defendants allegedly created websites designed to resemble legitimate and objective consumer news sites, with domain names such as dailyconsumeralert.org and healthylivingreviewed.com, which featured what appeared to be mastheads for news organizations like Women’s Health Journal and Healthy Living Reviewed, and which included logos of actual news organizations such as CNN and MSNBC.  What’s more, according to the FTC, Defendants hired affiliate marketers that also used fake-news format advertisements to lure consumers to Pure Green Coffee sites, without disclosing that these affiliates were being compensated to promote these products.

Recently, Judge Steven Merryday of the Middle District of Florida signed an order settling the FTC’s claims against the majority of the defendants. The order enjoins the settling defendants not only from making any representations that a dietary supplement, food, or drug causes or assists in causing weight loss, unless the representation is not misleading and is supported by competent and reliable evidence, but also from making claims regarding any benefits, performance or efficacy of any product, service or program that they manufacture, market or sell in the future, unless the claim is non-misleading and supported by competent and reliable substantiating evidence.  In addition, the order sets forth various provisions addressing the use of fake news websites, fake consumer testimonials by non-independent consumers, and affiliate marketing. While a judgment of $30 million was also entered in favor of the FTC, the order suspended payment of this total amount if the settling defendants paid the FTC $160,800 and fulfilled a list of other conditions.

The FTC has made clear that it does not take unsubstantiated weight loss supplement claims lightly. Watch this space for more ongoing coverage of these claims.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Stars Fail to Align for P&G, as Supreme Court Rejects Class Certification Appeal

Readers may recall our coverage in recent months of the challenge by Procter & Gamble (P&G) to an order certifying a multi-state consumer class in a case asserting that P&G falsely advertised its probiotic supplement Align. Last August, a divided panel of the Sixth Circuit affirmed class certification. In October, the Sixth Circuit stayed its decision pending P&G’s petition to the Supreme Court for certiorari, which the Supreme Court recently denied.

Align is an over-the-counter probiotic marketed to the general public as a supplement that “naturally helps build and support a healthy digestive system, maintains digestive balance, and fortif[ies] your digestive system with healthy bacteria.” P&G began selling Align in 2005, and launched a widespread promotional campaign for the product in 2009. The complaint asserts that Align is nothing more than “snake oil” because it does not provide any legitimate health benefits, but rather produces only a placebo effect.

In its opposition to class certification, P&G argued that class members had presented insufficient evidence to show they had suffered a common injury. Furthermore, P&G alleged that the named plaintiffs had presented only anecdotal claims that Align was ineffective and had therefore failed to demonstrate they had suffered any injury.

U.S. District Judge Timothy S. Black of the Southern District of Ohio granted plaintiffs’ motion to certify the suit as five single-state class actions. And a split Sixth Circuit panel upheld this decision, holding that, at the class certification stage, all the consumers needed to show was that they could eventually prove a common injury, not that they had already done so.

Sixth Circuit Judge Deborah Cook dissented, observing that the plaintiffs alleged that Align produced only a placebo effect without offering any proof in support of this argument. Moreover, “all the available evidence tends to show the opposite: that consumers benefit more or less from Align based on their individual gastrointestinal health.”

P&G moved to stay the Sixth Circuit panel’s ruling, arguing that it created a circuit split by upholding certification despite a lack of evidence that consumers were actually harmed. This outcome, P&G argued, conflicted with the Seventh Circuit’s decision in Szabo v. Bridgeport Machs., Inc, 249 F.3d 672 (7th Cir. 2001), which held that since an order certifying a class is usually the district judge’s “last word on the subject,” certifying classes on the basis of incontestable allegations in the complaint improperly postpones necessary factual inquiries into issues such as numerosity and commonality. P&G posited that as a result of this circuit split, the Supreme Court was likely to consider the issue. The Sixth Circuit agreed to temporarily stay class certification to allow P&G to petition for certiorari.

P&G filed its cert petition, which was supported by amici including the Chamber of Commerce, Business Roundtable and the International Association of Defense Counsel. However, at the end of last month, the Supreme Court denied cert, deciding not to address the Circuit split and leaving in place the Sixth Circuit’s ruling.

Of course, the denial of cert is not a decision on the merits, and the propriety of the Sixth Circuit’s view of a class certification movant’s burden may be decided by the Supreme Court (or by courts outside the Sixth Circuit) at a future time. Watch this space for subsequent developments in this case and on this class certification issue.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.

Not Sweet Enough: Ninth Circuit Tosses Claims Over Fresh Sugar Lip Balm Labeling and Packaging

Plaintiff Angela Eber filed a putative class action against Fresh, Inc. alleging that the label, design and packaging of its Sugar lip balms deceived consumers about the amount of available product. In a published panel decision, the Ninth Circuit affirmed the district court’s ruling dismissing the plaintiff’s complaint in its entirety.

Sugar lip balm, which comes in a variety of flavors and retails for approximately $22.50–$25 per unit, is sold in a weighty metallic tube dispenser and packaged in a cardboard box. The complaint included claims related to Sugar’s label and its packaging.  With respect to the label, the complaint alleged that although the net weight of the lip balm listed on the product was accurate, it was misleading because only 75% of the product is “reasonably accessible” to the consumer.  The Ninth Circuit found that this claim was barred by the California Safe Harbor Act because the label complied with federal and state law requiring a net weight statement. Continue Reading

California District Court Unplugs Duracell False Advertising Suit

Recently, Judge Lucy H. Koh of the Northern District of California dismissed a putative class action claiming that Procter & Gamble and Gillette deceptively advertised Duracell Coppertop AA and AAA batteries. Defendants advertised the batteries as having “Duralock Power Preserve Technology,” which, according to the challenged advertising, made them “GUARANTEED for 10 YEARS in storage.”  Since mid-2012, the front of the batteries’ packaging has referred to this Duralock technology and the Duralock guarantee.  Similar statements were repeated in a national advertising campaign.

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Fourth Circuit Extends Section 43(a) Lanham Act Standing to Companies Not Selling Their Product or Using Their Mark in the U.S.

Last week, an appellate court held that a plaintiff has standing to bring a false association and false advertising claim under Section 43(a) of the Lanham Act, even though it did not use its mark or sell its competing product in the United States. In Belmora LLC v. Bayer Consumer Care AG, a Fourth Circuit panel reversed a district court’s decision that the Lanham Act did not allow the owner of a foreign mark not registered in the United States and not used in U.S. commerce to assert priority rights over a counterparty’s U.S. registered mark that is used in U.S. commerce. The Fourth Circuit ruled that while a plaintiff in a Lanham Act Section 32 trademark infringement action has standing only if it has used its mark in U.S. commerce, use of the mark in U.S. commerce is not a requirement for a Section 43(a) unfair competition claim.

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