court declines to exclude false ad survey despite variance from TM survey practice

Simpson Strong-Tie Co. v. MiTek Inc., 2023 WL 137478, No. 20-cv-06957-VKD (N.D. Cal. Jan. 9, 2023)

Simpson sued MiTek for Lanham Act and state law false advertising/passing off, and for copyright infringement. The court granted in part and denied in part cross-motions to exclude survey-related expert evidence.

Simpson makes structural connectors for use in building construction, and assigns alphanumeric product names for each of its products. Each product name has a “part name” (a letter or combination of letters designating the product line) and a “model number” (additional numbers and letters that distinguish parts with different attributes).

MiTek sells structural connectors that compete with Simpson’s. MiTek allegedly uses product names that are identical or similar to Simpson product names and also uses Simpson’s product names as “reference numbers” for MiTek’s own products. This allegedly deceives consumers into believing that the companies’ products are equivalent or interchangeable when they are not, or that MiTek’s products are actually Simpson’s products.

Simpson’s survey expert Wallace conducted four surveys that examined, inter alia, whether MiTek’s uses led consumers to believe that the products were equivalent and/or have the same attributes; that the sources of these products were the same or affiliated with one another; that Simpson endorses MiTek’s reference to Simpson’s product; and whether confusion regarding these issues affected purchasing decisions. MiTek’s expert Franklyn critiqued this evidence.

MiTek argued that Wallace failed to use an accepted survey methodology; Simpson responded that, in false advertising cases such as this, the Eveready and Squirt methodologies do not necessarily apply, and that the survey used must be tailored to the nature of the advertising claim at issue.

“Where there is no single, generally accepted methodology, the distinction between admissible and inadmissible survey evidence is difficult to make.” But the Ninth Circuit “has repeatedly cautioned district courts against excluding (rather than appropriately weighing) even seriously flawed survey evidence.”

MiTek challenged (1) the universe as overinclusive of people in the construction industry and underinclusive of do-it-yourselfers, (2) the sample (these two criticisms went only to weight), (3) the questions, (4) the reporting of the data, and (5) the statistical analysis of the data.

Questions: In each survey, respondents first got information about the stimulus, e.g.:

“MiTek sells a structural connector called the ADTT-TZ. You are about to view a product label for MiTek’s ADTT-TZ product. Please base your answers to the following questions on the information on the label itself. Please view this label as if you were considering purchasing or specifying this product for your current work.”

They were then asked questions such as:

• Based on this product label above, do you believe that MiTek’s ADTT-TZ product is equivalent to the DTT1Z product?

• Based on this label, do you believe that MiTek’s ADTT-TZ product has the same attributes, such as load capacity, number of required fasteners, and existence of code reports, as the DTT1Z product?

• Based on this label, do you believe that MiTek sells both the ADTT-TZ product and the DTT1Z product?

• Based on this label, do you believe that the company that sells the DTT1Z product endorses or approves of MiTek’s reference to the DTT1Z product?

Additional questions asked how respondents would behave if they learned certain additional information, such as:

• If you learned that the company that sells the DTT1Z does not endorse or approve of MiTek’s reference to the DTT1Z product, would that cause you to specify or purchase the DTT1Z product instead of MiTek’s ADTT-TZ?

• If you learned that the DTT1Z product is not sold by MiTek, would that cause you to specify or purchase the DTT1Z product instead of MiTek’s ADTT-TZ?

• If you learned that MiTek’s ADTT-TZ product has a load capacity of 820 lbs. for Douglas Fir/Southern Pine, while the DTT1Z product has a load capacity of 910 lbs., would that cause you to specify or purchase the DTT1Z product instead of MiTek’s ADTT-TZ product?

• If you learned that MiTek’s ADTT-TZ product requires 10 fasteners to achieve its load capacity while the DTT1Z requires 6 fasteners to achieve its load capacity, would that cause you to specify or purchase the DTT1Z product instead of MiTek’s ADTT-TZ product?

The answers were always presented in the same order; the “Yes” response was always favorable to Simpson and unfavorable to MiTek.

MiTek argued that the use of closed-ended questions instead of an open-ended question asking respondents what “Ref #: DTT1Z” means on the MiTek product label suggested both that DTT1Z was a reference to another company’s product and an equivalence claim. And, where close-ended questions are used, invariant response order is particularly troubling. Although this was a serious problem, “given the flexibility that survey professionals apparently believe is necessary in constructing a survey instrument intended to test for false or misleading advertising, the Court cannot say definitively that Mr. Wallace’s use of these types of questions renders his surveys so unreliable as to permit or require exclusion under Ninth Circuit law.” The flaws would be weighed at the forthcoming bench trial.

Secondary meaning: In each survey, questions about the stimulus were followed directly by questions regarding whether and to what extent respondents associate certain product names with Simpson or MiTek as a source of the product. Respondents were asked if they recognized certain Simpson product names (in random order), and if so, they were given space to write in which company or companies they associated with each product name. MiTek argued that, because the questions immediately followed the sequence of questions designed to test for advertising confusion in which respondents repeatedly were shown stimuli including MiTek’s brand name, the surveys improperly conditioned respondents to mention MiTek.

Simpson argued that there was no authority requiring a separate survey, and the survey results themselves suggest not much leadingness,  as only 21 respondents out of 400 identified MiTek in response to the question regarding the products’ source. But these 21 respondents represent over 20% of the respondents who indicated any awareness of the product names at all, and only 53 respondents recognized Simpson as the source of its own products. Although MiTek’s arguments were persuasive, they again went only to weight.

What about controls? For false advertising, the control group respondents were exposed to the same four MiTek stimuli but with the reference numbers removed. The results were similar to those of the test group. For secondary meaning, the control group respondents were exposed to six fictitious product names instead of actual Simpson product names and were asked the same questions.. Here too, the results were similar. Simpson’s expert argued that this could be “the result of MiTek’s longstanding deceptive marketing practices that have created pre-conceived notions throughout the industry that the MiTek products and Reference Number (Simpson) products are equivalent.” He suggested that “these control respondents truly believe MiTek’s deceptive messaging and ... this deception is so widespread that it persists even when the Simpson product names are removed from MiTek’s communications.” This testimony was unsupported and speculative and would be excluded. The expert “may not speculate as to the reasons for either set of survey results, as his report discloses no basis for the explanations he provides.”

MiTek’s rebuttal expert was not excluded merely because he conducted no survey of his own; that’s fine. Simpson also argued that his methodological concerns apply only to trademark infringement claims and not false advertising claims, and for this reason his opinions were unreliable. The court disagreed. However, because he didn’t have relevant expertise in the construction industry, certain aspects of his proposed testimony would be excluded or would be admitted contingent upon the record at trial, specifically testimony about the commonality of overlapping product names in the industry, about why MiTek chose particular naming or marketing strategies, or about how the relevant consuming public would react to alternative product names.

individual communications to retailer & regulator weren't advertising or promotion

AHBP LLC v. Lynd Co., 2023 WL 139714, No. SA-22-CV-00096-XR (W.D. Tex. Jan. 9, 2023)

Along with updating its previous decision (I didn’t see anything that affected the Lanham Act analysis of the key issue of whether a retailer can sue a supplier for false advertising), the court addressed a motion to dismiss by defendant ViaClean.

In summer 2020, AHBP began negotiating with the Lynd defendants for the exclusive license to market and sell a surface disinfectant/cleaner known as “Bioprotect 500” manufactured by ViaClean in Argentina. Defendants allegedly made false representations about the quality of the product, including that it was effective against the virus that causes COVID-19 and that it would meet the governmental standards for approval by Argentina’s National Administration of Drugs, Foods and Medical Devices (ANMAT), as required to sell the Product in Argentina.

Looking only at ViaClean’s alleged conduct, its officer/GM allegedly provided AHBP with altered information, and the EPA issued a Stop Sale, Use or Removal Order to ViaClean ordering ViaClean to stop marketing the product with claims that it was effective against public health-related pathogens, including the virus that causes COVID-19.

While common-law fraud and negligent misrepresentation claims against ViaClean survived, the Lanham Act claim didn’t. Although ViaClean and AHBP “may properly be considered competitors under the Lanham Act, given that both were—or intended to be—distributors in the market for sanitizing products,” the claim failed for want of commercial advertisement or promotion.

In order to constitute “commercial advertising or promotion,” the challenged communication must have been “disseminated sufficiently to the relevant purchasing public.” But ViaClean’s only alleged false statements concerning the product were included in a report distributed to the plaintiff and to ANMAT. “The distribution of the Report to Plaintiff and to ANMAT was not itself intended to influence customers, nor was it sufficiently disseminated to the purchasing public to constitute ‘advertising’ or ‘promotion’ within that industry.”

Google's Inclusive Copyright Thesis Award

More details here. This contest grants an award to the best master thesis written in English in the field of Copyright Law. Applicants from underrepresented groups (race/ethnic minority groups in countries where that group is minoritized or non-dominant; women; people with disabilities; LGBTQIA2S+) are especially encouraged to apply. The thesis must have been submitted to an institution of higher education in 2022, in the framework of a Master’s degree program. The deadline for submission is January 31, 2023.

Requirements

• The thesis must have been submitted to, and accepted by, an institution of higher education in 2022, in the framework of a Master’s degree program.
• Law students enrolled in a JD program in the United States are eligible for this contest, provided they submit a research paper of publishable quality that was submitted for course credit and are nominated by the professor of that course.

consumer understanding of "non-GMO" plausibly includes "no GMO in animal feed"

Norman v. Gerber Prods. Co., 2023 WL 122910, No. 21-cv-09940-JSW (N.D. Cal. Jan. 6, 2023)

Norman sued Gerber for allegedly falsely advertising its baby food/infant formula products as  “NON GMO Not Made With Genetically Engineered Ingredients” on the front of the package, and also on the back above the ingredients list. She brought the usual California statutory claims, as well as a variety of common-law claims.

Norman failed to allege that she lacked an adequate remedy at law for equitable restitution, but she had standing to seek injunctive relief because she wanted to rely on the labels but couldn’t. She also sufficiently alleged standing to pursue claims on behalf of a class for products she didn’t purchase, since the products were all made in the same factories, the alleged misrepresentations were identical, and the misleading effect was the same across the products in terms of what a reasonable consumer would understand “non-GMO” to mean.

The allegations also satisfied Rule 9(b)’s heightened pleading standard, though not all of her allegations stated a claim.

Norman defined GMOs as organisms that have been altered through genetic modification, “an artificial laboratory-based technique that is specifically designed to enable the transfer of genes between unrelated or distantly related organisms,” and listed ingredients that were allegedly GMOs. There were three categories: (1) ingredients allegedly derived from genetically modified crops or food sources; (2) ingredients allegedly genetically engineered in a laboratory setting through the use of biotechnologies; and (3) ingredients allegedly sourced from animals raised on GMO feed. Category (1) was unproblematic; she failed to sufficiently allege how (2) involved a “transfer of genes,” but was granted leave to amend.

Category (3) is the interesting one to me, because Gerber argued that Norman failed to allege that animals fed GMO feed were themselves genetically modified or produced genetically modified byproducts. Other cases have rejected similar claims. But here, Norman alleged that reasonable consumers would interpret “non-GMO” to mean meat and dairy ingredients from animals that did not consume GMO feed.

She supported this claim with allegations about the prevalence and recognizability of the Non-GMO Project, which uses the same definition of non-GMO as the complaint; the efforts of the federal government; and market research into a reasonable consumer’s interpretation of the term non-GMO. She was not claiming that the animals themselves or their byproducts were genetically modified, but that a reasonable consumer would believe that non-GMO ingredients are not derived from animals fed genetically modified feed. Gerber said that was unreasonable because, under federal law, regulations on bioengineered food “should exclude a bioengineered food solely because the animal consumed feed produced from, containing, or consisting of a bioengineered substance.”

But Norman sufficiently alleged that consumers have a broader understanding of the term “non-GMO”; this was an issue for summary judgment. She further alleged that the inclusion of the statement “not made with genetically engineered ingredients” under the words “non-GMO” would not matter to a reasonable consumer because consumers use these terms interchangeably and understand them to be the same. This plausibly alleged deceptiveness.

Gerber argued that no reasonable consumer would confuse Gerber’s image with the Non-GMO Project’s seal. In Gordon v. Target Corp., No. 20-CV-9589 (KMK), 2022 WL 836773 (S.D.N.Y. Mar. 18, 2022), the plaintiff challenged a graphic labeled “non-GMO” and contained the sub-heading: “ingredients not genetically engineered.” The court found the Non-GMO Project’s seal highly distinctive because it included the organization’s name, the word “verified,” the URL for the Non-GMO Project’s website, and a graphic of an orange butterfly with a blade of grass. The only similarity between the Non-GMO Project’s seal and the product’s non-GMO graphic was the use of the term “non-GMO,” and it was patently implausible and unrealistic for a reasonable consumer to believe the product was verified by the Non-GMO Project.

Here, however, there were more similarities to the Non-GMO Project’s seal, including capitalized “NON GMO” text and a V-shaped leaf-like graphic. These similarities “could give reasonable consumers the impression that Defendants’ products met the Non-GMO Projects’ standards.” (No reference to trademark standards, interestingly.) Moreover, Norman alleged that the work of the Non-GMO Project is well known because the seal is found on over 50,000 food products and the Non-GMO Project website has over 200 million visits a year. A fact finder could conclude that the recognizability of the Non-GMO Project’s seal “could actually be a source of ... confusion” between Defendant’s Image and the Non-GMO Project’s seal.

This, in conjunction with federal efforts to adopt standards for non-GMO labeling and market research into a reasonable consumer’s interpretation of non-GMO supported the claim that a reasonable consumer would be deceived.

Nor could Gerber rely on the ingredient list at this stage. Plausible misleadingness on the front of a package is not necessarily cured by a disclosure somewhere else on the packaging, and the ingredient statement also didn’t clearly dispel the alleged deception.

Did Norman plausibly plead that the animals consumed GMO feed? It wasn’t necessarily enough to allege general statistics, e.g., 92% of corn grown in the United States is genetically modified, and therefore, cows who feed on corn are likely consuming genetically modified corn. But Norman’s other allegations, combined with those, were sufficient: independent testing from GMO Free USA, a nonprofit, confirming the presence of GMOs in at least one of Gerber’s products. Moreover, the “general, but overwhelming, statistic[s] about genetically modified crops in the United States” were plausibly connected to the relevant ingredients.

Seen in the wild: Homo Hut pizza

 From my spouse:

Trademarks and T-shirts on vacation, Jerusalem edition

 A gift given to my daughter (the cat kindly agreed to stop sitting on it for 10 seconds to allow this picture to be taken):

Some other vacation TM T-shirts: 2012, 2014, 2016.

something's plausibly fishy about Target's omega-3 supplement

Rodriguez v. Target, 2022 WL 18027615, No. 22 Civ. 2982 (LGS) (S.D.N.Y. Dec. 30, 2022)

Plaintiffs sued for breach of express warranty under New York and California law, violation of the New York General Business Law (“GBL”) §§ 349 and 350, and the usual California claims. The court made the expected rulings (no standing for injunctive relief; no preemption except to the extent that the UCL “unlawful” claim attempted to borrow the FDA rules directly; UCL unlawfulness created by borrowing California’s Sherman Act, which itself duplicates most of the FDCA, was fine). Thus, most of the claims survived Target’s motion to dismiss (though unjust enrichment/quasi-contract was duplicative).

Allegations: Defendants market a dietary supplement product labeled “100% Wild Alaskan 1000 mg Fish Oil” whose label asserts that it “Contains Fish: Alaskan Walleye Pollock.” The Supplement Facts state that each serving of two 1000-milligram capsules contains 2000 milligrams of “Fish Oil” and 600 milligrams of “Omega-3 Fatty Acids.” The side panel says: “This unique fish oil is sourced from walleye pollock caught wild in Alaskan waters. This oil is extracted within hours to ensure maximum freshness and is pressed and purified by a family-owned American company using advanced processing technology.”

Why does this matter? Because most people don’t eat fatty fish regularly, fish oil supplements are used for health benefits associated with omega-3 fatty acids and several other nutrients. The complaint alleges that traditional fish oil processing requires pressing small fatty fish with several steps to separate the oil from water and remove undesirable components and attributes; this doesn’t change the naturally-occurring chemical structure of the triglycerides formed by the omega-3 fatty acids.

By contrast, the product here comes from walleye pollock, a larger, less fatty fish, and is produced by processing the parts of the fish that remain after the fish is filleted. The oil initially derived from this material is not fit for human consumption, but (after being shipped to Ohio) undergoes a process called “trans-esterification.” The complaint alleges that the fatty acid ethyl esters that result are chemically distinct from natural triglycerides and lack many of the constituent components of natural fish oil. Given their different molecular structures, molecular weights, and chemical names, the compounds have different entries in the United States Pharmacopeia National Formulary, and their mass spectra indicate that they have different compositions. UN and WHO standards recognize a distinction between “fish oils” and “concentrated fish oils ethyl esters,” and the Global Organization for EPA and DHA omega-3s makes a similar distinction. Even U.S. Customs and Border Protection has weighed in, ruling that a trans-esterified product could not be classified under the section of the tariff schedule for “fish-liver oils and their factions, whether or not refined, but not chemically modified.” Of further note, the complaint alleged that these products “are less readily absorbed by the body than natural fish oils, and the compounds may differ in other ways that affect their consumption.”

Plaintiffs plausibly alleged that “fish oil” was not the “common or usual name” of the supplement Target sold, meaning that there was no express preemption, because plaintiffs were challenging conduct that allegedly violated the FDCA but not relying on the FDCA for the right to sue. The alleged differences between this supplement and “fish oil” went beyond mere processing and included material differences/changes in efficacy. Even if dictionary definitions of “fish oil” could be read to encompass the product, that wasn’t relevant at the motion to dismiss stage. While “vanilla” cases find that using the term to describe flavor is not deceptive, “[c]alling a product ‘fish oil,’ by contrast, is plausibly a claim about the provenance of the oil and its nutritive properties. That the Product derives ultimately from fish is not dispositive given the alleged difference in the production process and quality of the product.”

Defendants argued that “a representation about one ingredient actually present in a product does not imply the exclusion of other ingredients.” But so what? “[T]his case is about whether the key identified ingredient -- fish oil -- is what Defendants claim.” The complaint plausibly alleged that “oil from fish” includes only the triglyceride-based oil that exists naturally within fish, not any oily compound derived from fish.

It's not deceptive for the NY Jets and Giants to play in New Jersey

Suero v. NFL, 2022 WL 17985657, 22-CV-31 (AKH) (BCM) (S.D.N.Y. Dec. 16, 2022) (R&R)

Plaintiffs alleged ten falsehoods related to the New York Jets/Giants and their home stadium in New Jersey, where the Giants and the Jets have played for decades.

Plaintiffs demand that the Jets and the Giants remove all references to New York from their names, logos, and advertising, and pay damages to those they deceived. Additionally, plaintiffs demand that MetLife Stadium stop using a logo incorporating the New York City skyline and stop promoting itself as the “number one stadium in the world,” because, they say, it is inferior to many “state-of-the-art NFL venues elsewhere,” particularly those with domes or retractable roofs.

One plaintiff alleged that she was unaware that the Giants have played in New Jersey since 1976, and the Jets since 1984. Both plaintiffs alleged that they purchased tickets and attended at least one NFL game at MetLife Stadium in 2021, which they would not have done but for defendants’ false advertising. This allegedly caused them to incur significant travel costs and inconvenience.

Plaintiffs argued that, while other teams play outside of the “cities for which they are named,” the Jets and the Giants are “the only teams to play in an entirely different state,” and that this was similar to other state-origin cases.  (Footnote: The Washington Commanders play in Maryland, but plaintiffs said that didn’t matter because “D.C. is not a state, and Maryland and Virginia are both stand-in states for our nation’s capital.” “The Court [correctly] suspects that the residents of the District of Columbia, Maryland, and Virginia would disagree with that characterization.” Taxation without representation!)

Plaintiffs failed to allege complete diversity. They also failed under CAFA, even as to the makeup of the putative class, which would have to comprise “persons who, as a result of defendant’s alleged deceptions, personally attended one or more NFL games at MetLife Stadium since 2016, thereby incurring the cost of tickets, concessions, and transportation costs ‘to and from the MetLife Stadium from New York City.’ Common sense suggests that both classes (if certifiable) would prove to be small in size and composed largely of New Yorkers.” Without a price premium theory, the class is only those who were deceived into the journey, and excludes “those who willingly (or even grudgingly) made the trip with full knowledge that they were going to New Jersey.” Likewise, it was difficult to imagine that large numbers of non-New Yorkers were deceived into going to NYC in order to attend games.

But the judge also recommended dismissal on substantive grounds. First, plaintiffs failed to allege wrongdoing by the NFL.

Second, they didn’t plausibly allege deceptive conduct under the GBL. It is “well settled that a court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer.” In context, the retention of the geographic signifier “New York” by the Jets and the Giants, together with the use of a “New York City skyline logo” by MetLife was not plausibly deceptive. “It is common for a professional sports team to name itself after the city it calls its home while playing in the suburbs of that city (or, in some cases, even further away).” [Sports history omitted.] “[N]o reasonable football fan, ‘acting reasonably under the circumstances,’ would conclude from the names and logos of the Jets and the Giants that their stadium is within the five boroughs of New York City.” The MetLife Stadium website informed viewers that there was a “NJ Transit rail station” located in front of the stadium, and included what appeared to be a clickable map link showing the stadium just off the New Jersey Turnpike. “A reasonable consumer (even if she did not click through to Google Maps) would understand that New Jersey Transit goes to New Jersey, and that the New Jersey Turnpike is in New Jersey.”

Statements about stadium quality, e.g., that MetLife Stadium is “the number one stadium in the world,” and that it “sets the standard for venue excellence” were classic puffery. Statements that MetLife Stadium is “under 20 minutes from New York City” and “accessible to Penn Station” were not puffery, but also not plausibly false. The website did not promise a commute of “under 20 minutes”; it estimated travel time of “approximately 20 minutes” from Penn Station. Plaintiffs themselves alleged that they made that trip in 30 minutes on a game day (after first spending 30 minutes looking for the right platform at Penn Station). “Neither the extra ten minutes nor the need to change trains in Secaucus would mean, to a reasonable consumer, that the stadium is not ‘accessible’ from Penn Station, and neither, in any event, is ‘materially misleading,’ particularly given that route information, including actual travel time, is ‘publicly available’ from New Jersey Transit.” [This is an example of how borderline claims lead courts to tell consumers to consult external information, even though in general courts don’t require consumers to double-check information from an advertiser if it would be reasonable to believe them; caveat emptor is not the general rule.]

Separatenly, plaintiffs didn’t allege that they ever saw the MetLife Stadium website, much less that they were exposed to or relied on those statements, independently justifying dismissal.

Similar problems doomed the fraudulent misrepresentation claim. Indeed, you can see the old fraud reasoning both in the above and in what the judge says about the fraud claim:

Thirty seconds on the internet (or a glance at a map) would tell any consumer where the Jets and Giants play, the state in which MetLife Stadium is located, and how far it is from midtown Manhattan. Another thirty seconds, or a glance at a train schedule, would reveal how long it takes to get there from Penn Station. Whether or not plaintiffs did any of these things, they clearly “had the means of ascertaining the validity of the representations,” which is fatal to their fraud claims.

possibly misleading things are afoot at the Circle K: discount class certified

Petterson v. Circle K Stores, Inc., 2022 WL 17974463, No. 3:21-cv-00237-RBM-BGS (S.D. Cal. Nov. 23, 2022)

The court certifies a consumer class action for monetary relief with some observations about the kind of evidence required for certification. Petterson bought a lot of cigarettes at Circle K, expecting discounts from their discount program, but they didn’t give him a discount on cartons when he expected a discount based on buying multiple packs at once (their position was apparently that the discount applied to multiple loose packs, but not full cartons of 10 packs). Although the discounts varied, they regularly offered a discount for buying two packs at once.

“The central issue in this case is whether Circle K’s discount advertisements misled customers into believing that the multi-pack discount applied to purchases of cartons.” Petterson brought claims under California’s UCL and FAL and moved to certify a class of “All persons in California who purchased a carton of cigarettes from a Circle K store in California and did not receive an advertised multi-pack discount from December 4, 2016 to the present.”

Two representative ads:

I’m going to skip the easy parts (e.g., numerosity). Variations in which ads class members saw/what Petterson remembered/that he occasionally got a clerk to give him the discount by opening up a carton did not defeat typicality. “Minor variations in the fact patterns underlying class members’ claims do not defeat typicality where the plaintiff has otherwise shown that he has suffered the same or similar injury as those he seeks to represent.”

Because the claim was based on the objective reasonable consumer standard, both commonality and predominance were present. Variations in the ads/discount programs were not big enough to defeat them, even though some ads were sent only to customers who joined Circle K’s Tobacco Club program and others weren’t. Likewise, it didn’t matter that ads displayed discounts in different ways, for example: (i) a specific discount amount on the cigarettes purchased; (ii) a generalized offer of savings while purchasing multiple items (“Buy 2 packs and save”); and (iii) a specific per-pack price that a customer would expect to pay. They also had different durations, different funding sources (manufacturer discounts vs. Circle K discounts), and were occasionally combined to determine the final customer price. But these variations were not material to “the central issue of whether purchasers of cartons received the multi-pack discount that was advertised. Circle K has produced numerous advertisements that show commonality among Circle K’s discount programs: multi-pack purchases receive discounted prices.”

Reliance: The named plaintiff has to show reliance at the certification stage. Petterson did, even though he didn’t recall seeing certain advertisements at issue. A plaintiff does not “need to demonstrate individualized reliance on specific misrepresentations to satisfy the reliance requirement.” “[W]here, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.” Petterson testified to the general contents of the ads he saw and their locations, which sufficed under these circumstances.

Circle K argued that he would have bought cigarettes there regardless, because sometimes he did even without a discount. But he also testified that “before purchasing an undiscounted carton at Circle K, he would go to a nearby 7-Eleven to determine if that store offered a discount; if neither store offered a discount, he would purchase the undiscounted carton at Circle K.” This testimony established that he would change his behavior based on the presence of a discount, which was enough for materiality. “California case law is clear that reliance does not require that the allegedly misleading statement be the ‘sole or even the predominant or decisive factor influencing his conduct[,]’ rather the misrepresentation must have played a substantial part in influencing his decision.”

What about materiality, and thus reliance, for the class? “[A] presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material.” Because “[q]uestions of materiality and reliance are determined based upon the reasonable consumer standards, not the subjective understandings of individual plaintiffs,” this could be amenable to class treatment. The court agreed with Petterson that materiality “need not be proven at class certification; instead, Plaintiff needs to show only that a ‘common question of materiality and reliance’ exists.”

Circle K criticized plaintiff’s expert for failing to produce any data regarding how consumers interpret the advertisements at issue, conduct a consumer survey, or speak to Circle K customers about the ads. While some courts have found a plaintiff’s motion for class certification to be deficient where the plaintiff’s expert did not conduct a consumer survey, Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 568 U.S. 455 (2013), “ instructed that Rule 23(b)(3) requires a showing that ‘questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class.’” Further, Amgen noted that when materiality is judged on an objective standard, it is a common question for purposes of Rule 23(b)(3). That was the case here.

To generate common answers, plaintiffs can use consumer surveys, expert testimony, Circle K’s Rule 30(b)(6) testimony, and Circle K’s internal documents. Given that materiality is judged on an objective reasonable consumer standard, “the issue is susceptible to generalized, class-wide proof.”

Damages: Petterson argued that he could easily calculate the restitution damages he seeks by multiplying the number of cartons sold by the discount amount offered. This was sufficient at the class certification stage.

 

50 Cents of Endorsement: gossip blog plausibly D's agent for purposes of false endorsement, right of publicity

Jackson v. Kogan, 2022 WL 17582560, No. 22-22972-Civ-Scola (S.D. Fla. Dec. 12, 2022)

Jackson, aka 50 Cent, is a famous artist. Defendant MedSpa is run by defendant Kogan; it offers plastic surgery and minimally invasive procedures such as Botox treatments. In 2020, Jackson “happened to be in the proximity” of MedSpa’s location. “At Kogan’s request, Jackson posed for, and took, a picture with Kogan in front of a backdrop stamped with the words ‘PERFECTION MED SPA’ throughout.”

Jackson allegedly believed that Kogan “simply wanted a photograph with [him] exclusively for her own private enjoyment.” (Um, sure.) Nonetheless, MedSpa then uploaded the photo to one of its public Instagram accounts. The photo’s caption: “Thank you @50cent for stopping by the number one med spa @bh_perfection_medspa [ ] [ ] #50cent #bhperfectionmedspa #perfectionmedspa #medspa #celeb #vip #facial #laser.” Kogan posted a version of that same photo on to her public Instagram account with essentially the same hashtags. MedSpa repeatedly reposted the photo and shared it for articles published by a magazine and an online blog.  

In mid-2022, “a celebrity gossip media outlet known as The Shade Room (TSR)” published an article titled “Penis Enhancements Are More Popular Than Ever & BBLs Are Dying Out: Cosmetic Surgery CEO Angela Kogan Speaks On It.” The article was the result of the efforts of Kogan’s talent agent, who introduced Kogan to TSR representatives. On TSR’s Twitter, the link’s thumbnail image was composed of two side-by-side images: on the left was Kogan’s photo with Jackson, and on the right was a “close-up shot of a medical provider presumably performing a penile enhancement procedure on a patient whose face is not visible and whose genitals are obscured by an eggplant emoji.” Kogan also posted a screen capture video scrolling through the TSR article on her Instagram account.

The video shows a part of the article that quotes Kogan as saying, “At the moment we are seeing a major shift in men getting plastic surgery ... [m]en have really stepped up and are getting more surgery than we think.” Directly beneath that quote is Kogan’s photo with Jackson. “The article includes MedSpa’s phone number, statements entreating readers to call for a free consultation, and offers of promotional discounts on cosmetic surgeries and procedures.”

Kogan’s caption for the Instagram video included hashtags such as #plasticsurgery, #theshaderoom, #celebrity, and #penis. “Users responded to the video with crude commentary such as ‘@50cent Can I see the before and after pics?’, ‘Call him 50 inch [ ]’, and ‘Why they got 50 cent up there talking bout [ ] enlargement[.]’”

The complaint includes some interesting tidbits, including that other posts would include a "not our client" disclaimer (but maybe, based on the discussion, Jackson actually was their client, but not for penile enhancement)--see the images below.

replies implying he was a client, which the complaint doesn't directly controvert

"not our client" example of Instagram post (note that this wouldn't remove ROP liability unless the First Amendment protects against it, cf. In re Elster)

blog claiming 50 Cent as a client

"she paid him" comment with reply "I don't need to pay for advertisement"

Jackson brought claims for unauthorized misappropriation of his likeness under the Florida right of publicity statute; invasion of privacy; Lanham Act false endorsement and false advertising under the same statute; conversion; and unjust enrichment. All the claims survived.

Florida law prohibits the unauthorized publication of a person’s name or likeness for a commercial or advertising purpose without express written or oral consent. Defendants argued only that Jackson consented to the photo being used on Instagram without mentioning “the screen capture video and the promotional value it doubtlessly served.” Anyway, consent was a factual issue.

Invasion of privacy: Jackson’s allegations supported misappropriation and false light theories.

Lanham Act false endorsement: Yep. Jackson’s allegations—particularly those concerning the video—sufficiently alleged false endorsement, including by alleging a comment on one of defendants’ posts “in which an Instagram user deduces that Jackson was the Defendants’ paid promoter. Even more clear are the crude comments connecting Jackson to Defendants’ penile enhancement services, which followed the Defendants’ video publication. Again, Instagram users publicly responded with comments like ‘@50cent Can I see the before and after pics?’, ‘Call him 50 inch [ ]’, and ‘Why they got 50 cent up there talking bout [ ] enlargement[.]’”

No mention of Jackson’s name or explicit link was required. “ [A] picture is worth a thousand words. This one in particular depicts a worldwide celebrity next to Kogan with MedSpa’s name repeated all throughout the background. The promotional value is evident.” [Which, again, is why it defies belief that Jackson didn’t consent to something public, though I agree that his implicit consent shouldn’t extend to the penile enhancement stuff.] This wasn’t an incidental use; the photo’s importance derives from his presence in it and the caption directly promoted defendants’ business: “Thank you @50cent for stopping by the number one med spa @bh_perfection_medspa [ ] [ ] #50cent #bhperfectionmedspa #perfectionmedspa #medspa #celeb #vip #facial #laser.”

There was plausibly a specific implied endorsement of defendants’ plastic surgery services or penile enhancement surgery, given the video and the TSR article itself, “insofar as Kogan or her agent procured its publication.” Both of them surrounded the photo of Jackson with images and text that promote penile enhancement surgery and the defendants’ business. “An implied endorsement is, at minimum, reasonably deducible.”

False advertising: Same.

Conversion: The Eleventh Circuit has recognized conversion claims in the context of intangible property rights.  Jackson alleged he would have never consented to the photo had he known it would be used promotionally, and that was enough. [But what makes that conversion? How did defendants deprive him of property to which he was entitled? He still owns his right of publicity!]

Unjust enrichment also survived because of his alleged lack of consent plus the “surely great” promotional value defendants received from repeatedly sharing the photo; even if he received “free medspa services” in return, that wasn’t enough to show that they weren’t unjustly enriched.

Disclosing auto-renewal may require lots of explicitness, Streamlabs discovers

Leventhal v. Streamlabs LLC, No. 22-cv-01330-LB, 2022 WL 17905111 (N.D. Cal. Dec. 23, 2022)

Leventhal, on behalf of a nationwide class, alleged that Streamlabs LLC deceives consumers into signing up for a subscription product that carries an automatic monthly fee of $5.99. Streamlabs allows streamers collect donations from viewers through third-party payment processors (such as PayPal). Streamlabs Pro allows donors to add GIFs or other effects (such as hearts, stars, or confetti) to the messages that accompany the viewers’ donations. “The plaintiff in this case added a GIF to a donation and contends that Streamlabs’ subsequent disclosure to her — that adding a GIF or effect required joining Streamlabs Pro for $5.99 per month — was deceptive because it suggested that it was a one-time fee and did not disclose that the $5.99 monthly fee would renew automatically, in violation of California’s Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL).” The court found that she’d stated a plausible claim.

California’s Automatic Renewal Law (ARL) requires conspicuous disclosure of subscription terms and a consumer’s affirmative consent to automatic renewal, but Leventhal lives in New York. Nonetheless, the allegations, if true, plausibly plead that Streamlabs deceived consumers with its disclosures about the $5.99 fee.

At the time of her donation, the streamers’ donation page looked like this: 

essentially the same thing but in white

The page has a place to specify a donation amount, a place to send a message to the streamer, the message “Donate at least 1USD to use a GIF,” thumbnail pictures of GIFs and effects (with the word “Pro” next to them), and a green “donate” button to submit the donation. It says nothing about subscription fees.

The current donation page looks like this:

Instead of thumbnail pictures, it has a red box with “Extras Pro $5.99/mo” and slide buttons that allow a viewer to add a GIF or effect.

For both versions of the donation page, when a viewer clicks “Donate,” a “Donation Confirmation” page pops up:

 

In a red box, it shows a $5.99 charge for Streamlabs Pro. Underneath the red box, there is a notice: “You will be charged $5.99 per month by joining Streamlabs Pro …. Click here for more information.” The $5.99 charge and the notice have smaller and lighter font than the bolded font used for the donation amount. It does not say the charge will be renewed automatically each month until the viewer cancels the subscription. If viewers click “Click here for more information,” the resulting page “explains the benefits, monthly cost, [and] cancellation and refund policy of Streamlabs Pro subscription[s],” but it does not explicitly “disclose that Streamlabs will keep charging Streamlabs Pro subscribers $5.99 per month on their credit or debit cards until the subscribers cancel the plan.”

The plaintiff did not discover her recurring monthly charges for ten months, when PayPal emailed her about them. She “did not even have an account with Streamlabs at the time.” She created an account with the email linked to her PayPal account to try to cancel the subscription, but “she could not find a way to cancel the subscription.” Eventually, a Streamlabs representative responded that they would cancel her Streamlabs Pro account, refunded her $5.99 for the most recent subscription month, and refused to refund the rest. The representative also said that “to avoid being automatically signed up for Streamlabs Pro, she should ‘make sure to not toggle on Pro effects or GIFs’ when she donates.”

The complaint further alleged that, by “at the latest[ ] early 2019,” Streamlabs knew about consumer complaints from threads on Twitter, Reddit, and YouTube where customers complained about their unknowing enrollment in the subscription service and Streamlabs’ refusal to contact them about refunds and cancellation of the subscriptions. E.g., one person complained they were charged for two months for “unk[n]owingly [ ] being a Streamlabs Pro member. I didn’t even know it existed at all?! All I have been using Streamlabs for so far has been opening it up, and starting streams. Not even click[ing] anything that allowed me to be charged.” (The court discusses several other such statements as well.)

It is plausible that a reasonable consumer (including tech-savvy consumers) could be deceived by the process illustrated in the Statement and conclude that the $5.99 per month fee was a one-time fee. The disclosures did not say that the fee was an automatic monthly fee. There is evidence of actual consumer confusion, by the plaintiff and the consumer reviews. Similarly, for the standalone fraud claims, the allegations are sufficiently specific that Streamlabs’ process misled consumers that the $5.99 per month fee was a one-time donation, not an automatic monthly fee.

The complaint also plausibly pleaded UCL unfairness. Under the balancing test used in consumer cases, the court “must weigh the utility of the defendant’s conduct against the gravity of the harm to the alleged victim.” The complaint sufficiently alleged that the deception about the subscription outweighs its benefits, given that consumers “don’t believe they are enrolled in and, therefore, don’t use” the subscription. The court allowed her to plead the equitable UCL claim in the alternative to her money damages claim.

New Balance "Made in the USA" claims may overstate US content

Cristostomo v. New Balance Athletics, Inc., No. 1:21-cv-12095-AK, 2022 WL 17904394 (D. Mass. Dec. 23, 2022)

It’s not just the FTC interested in “Made in the USA” claims—here a court sustains a consumer protection complaint. “The plaintiffs purchased shoes from a premium New Balance 'Made in the USA' collection. New Balance admits the shoes in this collection are made of up to 30% foreign content but claims they adequately disclose this detail to consumers.”

Plaintiffs alleged that the line of shoes prominently feature “Made in the USA” claims despite the fact that the shoes’ foreign composition mean they do not meet the “all or virtually all” standard used by the FTC. Several of these shoes feature American flags, the unqualified phrase “Made in the USA” on the outside tongue of the shoes, and/or the word “USA”. Others were part of the “Footwear Made in the USA” collection on the New Balance website. The shoes in the collection also feature the prefix “Made in USA” before their respective names when they appear on the New Balance website. The inside label on the tongues of each shoe bear “Made in USA.” The top of the box features a silhouette of a USA flag with the word “made” written on top of it, and “made in the U.S. for over 75 years” is written on the side. The underside of the box features another small “made” logo next to a flag with a caption that places the “made” collection in the context of “over 75 years of authentic American craftsmanship.”

However, imported parts and foreign labor make up at least 30% of each shoe. New Balance admits that it imports the soles, which are key to the shoes’ functioning, especially for athletic shoes, and is a part of the shoe where the durability and quality matter a great deal.

While the front of the hangtags on its shoes features the “MADE.” logo with the US flag, the rear side of the hangtags says, “New Balance ‘made’ is a premium collection that contains a domestic value of 70% or greater.” Below another larger “made” logo, the same phrase appears on the side of each shoebox. A similar disclaimer about a domestic value of 70% or more appears below the link to the collection on the website, and the disclaimer reappears in some other places on the site. “Domestic value” has no legal definition.

Plaintiffs also alleged materiality/a price premium: “Products described as made in the USA imply to consumers a higher quality product, evoke a sense of patriotism, and provide support for domestic manufacturing jobs.” They alleged that the “made” collection was more expensive than similar shoes sold by New Balance that didn’t make the same claims.

New Balance argued that its qualifications were sufficiently clear and prominent. Plaintiffs disagreed and argued that New Balance regularly makes prominent and unqualified “Made in USA” claims and that several of the plaintiffs purchased the shoes on websites that did not feature the disclaimers.

Under the FTC’s guidelines, for a product to be considered “Made in USA,” it must be “all or virtually all” made in the USA: “all significant parts and processing that go into the product must be of U.S. origin” and the “product should contain no—or negligible—foreign content.” New Balance did not contest that its products didn’t meet that standard; instead, it argued that it was making a “Qualified U.S. Origin Claim” under FTC standards; the FTC does not consider these deceptive if the foreign composition is adequately disclosed. The FTC allows producers to specify the domestic amount, such as saying a product is made of “60% U.S. content,” or indicate generally the existence of foreign content (e.g., “Made in USA of U.S. and imported parts”). However, “because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims.” Plaintiffs sufficiently alleged that New Balance inadequately disclosed the foreign content. Plaintiffs identified several examples in the complaint where a consumer would see the shoes presented as being “Made in the USA” without any qualification—including on the shoes themselves—with any disclaimer featured less prominently elsewhere. Plaintiffs plausibly pled that consumers purchasing these shoes online, whether on New Balance’s “Footwear Made in the USA” collection page or on the websites of third parties like Amazon, “would do so either while missing or while not understanding New Balance’s 70% qualifications stated elsewhere on the website or in the products descriptions.”

Side note: The court rejected New Balance’s argument that the complaint failed to adequately plead the content of the third party websites because it didn’t show screenshots of those sites. The court didn’t require that, because the allegations were that the plaintiffs saw the same claims as were in the “made” collection shoes’ names, on images of shoes themselves, and in the shoes’ descriptions that purchasers on newbalance.com or in brick-and-mortar stores would have seen.

New Balance’s reliance on the disclaimer was insufficient at this stage.  

First, plaintiffs plausibly allege that the disclaimer is too inconspicuous for the qualification to be brought to the consumers attention. Because of the prominent unqualified assertions of “Made in the USA” on the physical shoes and on the website, a reasonable consumer could see the “Made in the USA” statement and not understand it to be qualified by a disclaimer elsewhere on the product. The prominent featuring of unqualified statements creates an expectation that can make consumers less likely to process or understand less prominent qualifiers included elsewhere.

Second, plaintiffs plausibly alleged that “domestic value of 70% or greater” was inherently ambiguous and therefore unsuccessful in avoiding deception.

For shoes purchased in person at brick-and-mortar stores, likewise, the disclaimer was plausibly too ambiguous to be understood or not sufficiently prominent to be seen.

The court rejected New Balance’s reliance on a prior settlement in Dashnaw v. New Balance Athletics, Inc., 2019 WL 3413444 (S.D. Cal. 2019), involving more unqualified “Made in USA” statements in stores and on New Balance’s website. New Balance agreed that it would less prominently advertise “Made in USA” claims regarding its shoes with less than 95% domestic content and that such claims instead be accompanied with the disclosure that the “Made in USA” collection “contains a domestic value of 70% or greater.” The injunction specified that the phrase “Made in the USA” would be removed from the front of the hangtags on the shoes, the hangtag would include the sentence, “New Balance ‘made’ is a premium collection that contains domestic value of 70% or greater”, the phrase “Made in the USA” would be removed from the top of shoe boxes, any representations on the side of shoe boxes would include the 70% domestic value disclaimer, and any claims on New Balance’s website would include the same qualification. Dashnaw didn’t have preclusive effect on the plaintiffs here, who were consumers either outside of California or who purchased the shoes in California after the class period in Dashnaw.

Plaintiffs plausibly pled that New Balance was not in full compliance, including unqualified “Made in USA” claims still in use including on the tongues of shoes, in their inside label, and on the New Balance website. The top of the shoeboxes and front of hangtags no longer bear “Made in the USA” but instead feature the phrase “made” imposed on or positioned by a United States flag on shoeboxes, tags, and online. That may still deceptively imply that the shoes are “Made in the USA.”

"smoked Gouda" plausibly communicates production method, not just flavor

Castle v. Kroger Co., --- F.Supp.3d ----, 2022 WL 4776319 (E.D. Wis. Oct. 3, 2022)

The court declined to dismiss some of Castle’s claims based on alleged false advertising of “smoked Gouda” as having actually been smoked, instead of having “smoke flavor” added. Plaintiff alleged reliance on the representations “Smoked Gouda” and “Distinctive, Smoky Flavor” on the front label as a reference to the cheese having been smoked “over hardwoods” and having its taste as a result of “being smoked on hardwoods.” She alleged that “smoke flavor”—“which is smoke condensed into a liquid form”—does not “supply the rich, layered combination of phenols and other odor-active compounds compared to where a food’s taste is derived entirely from being smoked over wood.” Consumer demand for smoked foods has allegedly increased over the past two decades, a trend recognized by the cheese industry. Also, the European Food Safety Authority allegedly found that smoke flavorings in foods “contain compounds at levels which may pose a toxic risk when consumed.”

In enacting regulations for flavoring, the FDA allegedly considered the term “smoked” to be misleading when “true smoke is absorbed in a liquid or other medium, and that medium is added to food to provide a smoke flavor.” In such cases, the front label of the product allegedly should contain the description “with added smoke flavor,” “[with] natural smoke flavor,” “flavor added,” or “smoke flavored.” The FDA allegedly recently warned companies regarding product labeling and smoked ingredients. Under Wisconsin precedent, Wisconsin law adopts FDA definitions and provides a private right of action for a violation of that law (like California does).

Kroger sort of argued preemption, but really that the FDCA doesn’t provide a private right of action. This is true but irrelevant, since plaintiff was using state consumer protection law, which incorporates FDCA standards but is its own separate source of a right of action.

Under Wisconsin law

[n]o person may sell or distribute a consumer commodity in package form unless each package clearly and conspicuously identifies the commodity contained in that package. The declaration shall identify the commodity by its common or usual name, by its legally required name, if any, or by a generic name or other appropriate description that is readily understood by consumers.

How did that apply to “Smoked Gouda”? The court concluded that the common or usual name of the product was “Gouda,” and so there was no violation.

However, Wisconsin law also provides that “[t]he declaration of identity under sub. (1) may not be false, deceptive, or misleading. Ingredients or components that are not present in the commodity in substantial or significantly effective amounts may not be featured in the declaration of identity.” Claims should survive a motion to dismiss “if they have plausibly alleged that the defendants’ front labels likely lead a significant portion of reasonable consumers to falsely believe something that the back labels belie.”

Other courts have found that “smoked” could deceive consumers. Kroger responded that its package was different because it said that the cheese inside has a “distinctive, smoky flavor” and that it has “smoke flavor” added. The front label contain the words “distinctive, smoky flavor,” but that wording didn’t alert the consumer that this distinctive flavor came from an added flavoring, rather than smoking. “A consumer could read the label and conclude that the package contains Gouda that has been smoked and thus has a ‘distinctive, smoky flavor.’” The small-print ingredient list on the back of the package was insufficient. Although another court rejected claims about Strawberry Pop-Tarts related to overstatement of strawberry content, the court here noted that the Pop-Tart package didn’t claim to contain “crushed” strawberries or “fresh-picked” strawberries, or otherwise “give consumers the impression that the filling’s flavor was the result of a process.” By contrast, “smoked” “could refer either to the flavor of the cheese or to a process (one that the plaintiff alleges alters the chemical composition of the cheese itself).” This was a question of fact.

Although the plaintiff adequately pled negligent misrepresentation and fraud, the economic loss doctrine barred her claims, and warranty claims also failed; unjust enrichment was dismissed as duplicative and she lacked standing to seek injunctive relief.

Italy's #1 Brand of Pasta plausibly communicates geographic origin despite Barilla's argument it's just a TM

Sinatro v. Barilla America, Inc., --- F.Supp.3d ----, 2022 WL 10128276, No. 22-cv-03460-DMR (N.D. Cal. Oct. 17, 2022)

Along with the headline-worthy nature of the claim (“ITALY’S #1 BRAND OF PASTA” plausibly falsely communicates Italian origin), the decision contains an extended discussion of judicial notice on a motion to dismiss v. incorporation of documents into the complaint by reference, both often significant in false advertising cases.

Barilla is now headquartered in Illinois, but originated as a bread and pasta shop in Parma, Italy in the nineteenth century. Plaintiffs alleged that “authentic Italian products, including pastas, hold a certain prestige and [are] generally viewed as a higher quality product,” and that “the general ‘Italianness’ of a product influences consumers[’] overall evaluation of a product” and willingness to pay a price premium. Indeed, “Italian pasta is one of the best and most sought after products in the global market,” and “Italian durum wheat is among some of the ‘best varieties[’]” of wheat. But, because, Italy’s production of durum wheat does not meet worldwide demand, Barilla allegedly “scrambled to manufacture, market, and sell purportedly authentic ‘Italian-made’ pastas, using durum wheat that is not sourced in Italy, in an effort to gain market share and increase sales.”

Barilla allegedly reinforces its representation about the origin of the products by replicating the green, white, and red colors of Italy’s flag surrounding the “Italy’s #1” representation, when the products are manufactured in Barilla’s plants in Iowa and New York using ingredients sourced from countries other than Italy. Barilla’s Italianate campaign allegedly included websites, a Barilla Historical Archive, a Barilla Pasta Museum, and Barilla Academy, which Plaintiffs allege were “all designed to promote the brand and company’s Italian identity” and “convince consumers that Barilla® brand pastas ... come from Italian ingredients, [are] processed and manufactured in Italian factories, and then exported.”

Plaintiffs alleged that there was no “clear, unambiguous, and conspicuously displayed statement, reasonably proximate to the Challenged Representation, that reasonable consumers are likely to notice, read, and understand to mean that ... the Challenged Representation is indeed false as the Products’ ingredients are not sourced in Italy and the Products themselves are not assembled or manufactured in Italy.” Plaintiffs brought the usual California claims.

Barilla asked the court to take judicial notice of front and side-nutrition labels for Barilla-brand pastas as well as documents related to Barilla’s trademark, “Italy’s #1 Brand of Pasta.” Judicial notice deals with essentially uncontrovertible facts, while incorporation by reference is “a judicially-created doctrine that treats certain documents as though they are part of the complaint itself.” This is to prevent “plaintiffs from selecting only portions of documents that support their claims, while omitting portions that weaken—or doom—their claims.” Incorporation by reference is appropriate “if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff’s claim.” But if a document “merely creates a defense to the well-pled allegations in the complaint, then that document did not necessarily form the basis of the complaint.” Further, “the mere mention of the existence of a document is insufficient to incorporate the contents of a document.” So, “while a court “may assume [an incorporated document’s] contents are true for purposes of a motion to dismiss under Rule 12(b)(6) ... it is improper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-pleaded complaint.”

The court declined to take judicial notice of the submitted image exhibits, which were presented as being taken from the same website from which plaintiffs got their screenshots, but which were blown up/annotated, and the text on the images of the packages was sometimes illegible. Nor would the court incorporate them by reference, given the parties’ dispute about whether these were good enough copies.

Barilla didn’t explain why excerpts of the file history for the “Italy’s #1 Brand of Pasta” registration were relevant to plaintiffs’ claims for false, misleading, and deceptive marketing practices, so the request for judicial notice of those excerpts was moot.

Barilla argued that plaintiffs lacked standing to seek damages/restitution because they didn’t plausibly allege they would’ve purchased a cheaper alternative or that Barilla would have charged less without the representations at issue. That flatly contradicted the allegations of the complaint, which expressly alleged that plaintiffs “would not have purchased the Product[s], or would not have overpaid a premium for the Product[s’] purported Italian origin, had [they] known that the Challenged Representation was false” and the products were actually made in the United States, using ingredients from countries other than Italy. A “quintessential injury-in-fact” can occur when a plaintiff alleges that they “spent money that, absent defendants’ actions, they would not have spent.”

Standing for injunctive relief: Plaintiffs alleged that they have “no way of determining whether the Challenged Representation on the Products is true,” and that Plaintiffs are “unable to rely on the truth of the Challenged Representation on the Products’ labels.” But they now know that the products are made in the US. The Ninth Circuit allows standing for injunctive relief where there’s a plausible threat of future harm from desire to purchase the product plus inability to rely on the advertising or labeling. But whether disposable wipes are actually “flushable”—the situation that prompted this ruling—is something that is hard for consumers to know, unlike national origin. And plaintiffs’ allegation that they’d be interested in buying the products if they were actually produced in Italy was insufficient “because it is implausible to expect such facts to come to pass.”

Barilla also challenged whether there was causation for Article III purposes, but the court rejected its argument that plaintiffs needed to do more than allege that they purchased the products and/or paid a premium for the products due to the challenged representation to establish causation. It was also premature to dismiss the nationwide class allegations (unjust enrichment/common law claims) at the pleading stage.

Standing for unpurchased products: The general rule is that “a plaintiff may have standing to assert claims for unnamed class members based on products he or she did not purchase so long as the products and alleged misrepresentations are substantially similar.” Here, plaintiffs challenged “the same basic mislabeling practice” across the Barilla products named in the complaint, including those that they purchased and those that they did not. They alleged that all of the products at issue used the same alleged misrepresentations on the primary display panel; are sold under the same brand name; and are dry pastas that are made from largely the same ingredients or types of ingredients, “milled in the same or similar manner, and manufactured into the finished Products in the same or similar manner.”

Could “ITALY’S #1 BRAND OF PASTA” mislead reasonable consumers? Barilla argued that this was its trademark and served to indicate producer source, not geographic source. Other courts have held that “[t]he mere use of a geographic reference, including a reference to the company’s historical origin, does not convey a representation about a product’s current origin.” Barilla argued that it wasn’t misleading to invoke the company’s “Italian roots.”

Nope. That was a factual issue. Plaintiffs plausibly alleged that the words, in combination with the use of Italian colors and a broader Italianate marketing campaign, deceived consumers about present origins. Prior cases involved labels that “did not explicitly connect their origin to the present day” or “exist against the backdrop of a long-standing marketing strategy expressly connected to a particular geographic location.”

Barilla argued that the products at issue “are conspicuously marked ‘Made in the USA’ with the location of Barilla’s headquarters in Illinois.” But reasonable consumers should not be “expected to look beyond misleading representations on the front of the box to discover the truth ... in small print on the side of the box.”

Lanham Act preemption: Barilla argued that its mark was incontestable under the Lanham Act and that the lawsuit here was “an end-run to attempt to cancel the Registered Trademark and must be dismissed under the doctrine of federal preemption.” “Barilla offers no authority for this argument and minimal analysis. The court cannot analyze an argument that counsel fails to develop.” Hard to imagine this working with more development, insofar as incontestability is no barrier to actual cancellation for use to deceive.

Ability to seek equitable relief under Sonner: The complaint alleged that “no adequate remedy at law exists” in light of varying statutes of limitation, since the limitations period for UCL claims is four years, which is one year longer than the statutes of limitation for the FAL and CLRA. Therefore, they argued, putative class members who purchased products more than three years prior to the filing of the complaint would be barred from recovery if they were not permitted to obtain equitable relief under the UCL.

 The court here agreed with the reasoning of courts holding that Sonner does not impose strict requirements at the pleading stage, because plaintiffs “may allege claims in the alternative at the pleading stage,” and because plaintiffs pled that equitable relief would be the only available remedy for certain timespans.

Update on side puzzle blog: Lumen updated, Google still not giving me details of the DMCA notice

A commenter notes in email that Google is really supposed to give me a copy of the DMCA notice, which it has not, but Lumen at least updated and was able to confirm that the sender was Rusard Ltd. and making a claim on behalf of Unidragon. If Google sent me the notice, I could try to contact the sender, but Lumen (understandably) redacts that information. 

Other useful information: Lumen says the takedown was sent August 30, 2022, which is a long processing time--and it happened before Unidragon reached out offering freebies for my review!