Tuesday, May 05, 2020

Reading List: Greg Klass on false advertising law as private law

Gregory Klass, FalseAdvertising Law and New Private Law, Forthcoming as: False Advertising Law, in Oxford Handbook of New Private Law (Andrew Gold et al. eds., Oxford Univ. Pr.) 

One might reasonably wonder why a chapter on false advertising law appears in a volume on private law theory. In the United States false advertising law lives in statutes and regulations; it is enforced by federal agencies and state attorneys general; and its rules can seem designed more to promote consumer welfare and market efficiency than to enforce interpersonal obligations or compensate for wrongful losses. If one views the divide between public and private law as a fixed border between independent regions, false advertising law appears to fall in the domain of public law.This chapter’s working hypothesis is that that picture is a false one.Although it can be helpful to distinguish private from public law, the line between them is not so sharp. Laws that fall on the private side of the divide can be designed in light of purposes and principles commonly associated with public law, and vice versa. U.S. false advertising law provides an example.Despite the fact that it is commonly classified as public law, one can find in it structures, functions, and values commonly associated with private law. The structural features include horizontal duties, transfer remedies, private enforcement, and judge-made rules. These features are partly remnants of earlier private law causes of action. But as legislators and courts adapted those old actions to the new phenomenon of mass consumer marketing, they imposed on advertisers new types of obligations. Those obligations suggest, to use Henry Smith’s term, an emergent ethics of false advertising. Although it differs from its common law ancestors, false advertising law can be understood within the private law framework.False advertising law is unusual in that it imposes on advertisers one duty owed to two distinct categories of persons. The duty not to engage in deceptive advertising is owed both to consumers, who might be deceived by an advertisement, and to honest competitors, who might lose sales as a result of consumer deception.The content of the duty differs from false advertising law’s common law ancestors. With respect to consumers, common law duties not to lie or negligently make false statements are replaced by the responsibility not to cause consumers to hold false beliefs. Inquiries into meaning and truth thus give way to questions about cause and effect. With respect to competitors, common law duties not to defame are replaced by a duty to adhere to commonly recognized rules of the marketplace. The wrong of calumny is supplanted by the wrong of cheating. Like other areas of private law, there are ethical aspects to these legal obligations. But they differ from those of false advertising law’s common law ancestors.This chapter argues also that although an advertiser’s duties can be understood in private law terms, advertising’s one-to-many structure poses practical challenges to traditional private law mechanisms and the values sometimes associated with them. Despite the fact that U.S. false advertising law includes backward-looking consumer remedies, the small sums at stake, the difficulty of proving causation and individual loss, and the costs of distributing awards make it difficult to fully compensate consumer victims. For some of the same reasons, consumers often do not exercise their power to sue false advertisers. Finally, although the relevant statutes are drafted to invite judges to develop something like a common law of false advertising, courts of general jurisdiction are ill-equipped to make many of the factual determinations false advertising law requires.Part One provides a brief introduction to U.S. false advertising law and identifies several structural features associated with the private law. Part Two analyzes false advertising law’s consumer-oriented duties. Part Three discusses an advertiser’s duties to its competitors. Part Four examines practical impediments to consumer lawsuits, consumer oriented remedies, and adjudicative resolution of false advertising claims. These impediments suggest often unnoticed factual predicates of the traditional private law framework. 

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