The Advertising Disputes & Litigation and Consumer Protection Committees’
RECENT LITIGATION DEVELOPMENTS
[Cases from July 6 to 27, 2015]
Prepared for the ADL and CP Committees by Dan Blynn of Venable LLP; Dale Giali, Andrea
Weiss, and Elizabeth Crepps of Mayer Brown LLP; Sherrie Schiavetti, Katie Riley, Donnelly
McDowell, and Devon Winkles of Kelley Drye & Warren LLP; Douglas Brown and Samantha
Duke of Rumberger, Kirk & Caldwell, P.A.; Darren McCartney of Chad A. Walters, P.A.;
Lauren Valkenaar of Norton Rose Fulbright LLP; Camille Calman of Davis Wright Tremaine
LLP; Erik King of Lockheed Martin; Tiffany Ge of Frost Brown Todd LLC; Mike Sherling,
Judicial Law Clerk, Maryland Court of Special Appeals; Heather Goldman of Bryan Cave
LLP; Greg Roseboro II, Attorney at Law; and Eugene Benick of NOVA Business Law Group.
RECENT DECISIONS
Lanham Act and Other Competitor Actions
The U.S. District Court for the Western District of Washington grants defendant Hilin Life Products,
Inc.’s motion to transfer venue. Plaintiff Fairhaven Health, LLC filed suit alleging that the
defendant engaged in false, deceptive, and misleading advertising in violation of, among other
things, the Lanham Act and the Washington Consumer Protection Act. Defendant had filed a similar
lawsuit against the plaintiff a month earlier in the District of New Jersey. The separate proceedings
involved the parties’ competing hand-held, saliva-based ovulation detectors. The allegedly
deceptive advertising touted the defendant’s products as the first-to-market ovulation microscope
with virtually 100% accuracy. In granting the defendants’ motion to transfer, the court applied the
first-to-file rule, holding that while the issues were not identical, the accusations of false advertising
were substantially similar, which justified transfer. (Fairhaven Health, LLC v. Hilin Life Prods.,
Inc., 2015 WL 4430492 (W.D. Wash. July 20, 2015)).
The U.S. District Court for the Northern District of California grants in part and denies in part (with
leave to amend) defendant Uber Technologies, Inc.’s motion to dismiss a complaint brought by
plaintiff L.A. Taxi Corporation. Plaintiff claimed that the defendant engaged in false and deceptive
advertising in violation of the Lanham Act, California’s False Advertising Law, and California’s
Unfair Competition Law (“UCL”) by touting the superior safety of rides on Uber’s platform. The
court rejected Uber’s argument that the complaint should be dismissed in its entirety for failure to
plead an actionable statement. Though some of the challenged statements constituted non-actionable
puffery, the court held that other statements could lead a reasonable consumer to conclude that an
Uber ride was “objectively and measurably safer than a ride provided by a taxi or other competitor
service.” The court also rejected Uber’s argument that some statements were not actionable because
they were “aspirational,” finding that where “a challenged statement includes ‘aspirational’
language, a court must still determine whether it ‘is extremely unlikely to induce consumer
reliance’” in order to deem it puffery, which was not the case with respect to the statements at issue.
Further, the court found that statements made by Uber representatives to journalists were not
“commercial speech” actionable under the Lanham Act because such statements were inextricably
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intertwined with the reporter’s coverage of a matter of public concern, and granted the motion to
dismiss as to those statements. However, the court rejected the argument that statements made on
receipts are not “commercial speech,” finding adequate allegations that such statements are made for
the purpose of influencing consumers to use Uber again. The court found that the plaintiff lacked
standing to seek relief under the UCL’s fraud prong because it had not pled its own reliance on the
challenged statements, and that the claims under the unfair and unlawful prongs were similarly
deficient because they are predicated on the same misrepresentation theory. (L.A. Taxi Corp. v.
Uber Techs., Inc., No. 15-cv-01257, 2015 WL 4397706 (N.D. Cal. July 17, 2015)).
State Consumer Protection Laws
The U.S. District Court for the Eastern District of California grants defendant LogMeIn Inc.’s
motion to dismiss with leave to amend. The plaintiff alleged that he purchased an application called
“Ignition” from the defendant, which was advertised as “one app to control all your information,”
manage files, expand an iPad’s possibilities, and “to be more productive.” Plaintiff claimed that,
when he purchased Ignition, he relied upon the defendant’s representations that the purchase would
permit him to use the app uninterrupted and for the foreseeable future without further payment or
additional fees. Plaintiff also used another of the defendant’s products called “LogMeInFree” that
allowed the plaintiff to access files from his work computer from a separate computer. Plaintiff
alleged that the defendant posted notices on its website telling customers that they would no longer
have access to their computers via remote access without purchasing the premium upgraded version,
“LogMeInPro.” Plaintiff alleged that the defendant’s omissions and failure to inform of future
discontinuation of updates mislead consumers into purchasing the premium version of the app.
Plaintiff alleged violations of California’s False Advertising Law (“FAL”) and Unfair Competition
Law (“UCL”). Defendant moved to dismiss for failure to meet the heightened pleading standard for
fraud under Fed. R. Civ. P. 9(b). Defendant successfully argued that the plaintiff failed to
demonstrate any misrepresentation made by it or any omission it was obligated to make. The court
determined that advertisements about Ignition made no assurances about other LogMeIn products
nor was the defendant obligated to do so. Defendant gave notice that its “LogMeInFree” product
could be terminated at any time and terminating the update service does not violate the FAL or the
UCL. The court granted the plaintiff a final chance to amend his complaint. (Handy v. LogMeIn
Inc., No 1:14-cv-01355, 2015 WL 4508669 (C.D. Cal. July 24, 2015)).
The California Court of Appeals affirms the trial court’s dismissal of the plaintiffs’ complaint and
judgment in favor of the defendants in an action brought by recycling centers against beverage
distributors. Plaintiffs sought to enjoin the defendant-beverage distributors from selling their drink
containers, which bear a recycling label stating “CA CRV” that allows for those containers to be
redeemed in California recycling centers for the California redemption value in states other than
California. Plaintiffs claimed that the use of the “CA CRV” label on beverages sold outside
California was false and violated various California common tort laws. The court affirmed the trial
court’s dismissal based on the fact that the plaintiffs were impermissibly trying to hold the
defendants liable under California common law for activities occurring in other states, and such
conduct is protected by the Commerce Clause of the U.S. Constitution. (Alamo Recycling LLC v.
Anheuser Busch Inbev Worldwide, Inc., No. E060392, 2015 WL 4485558 (Cal. App. July 23,
2015)).
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The U.S. District Court for the Central District of California grants the defendant’s motion to
dismiss state law claims in an action in which the plaintiff claimed that the defendant copied content
from his website. Plaintiff brought claims for, among other things, copyright infringement, and
violation of California’s False Advertising Law and Unfair Competition Law. The court dismissed
the state law claims finding they were pre-empted by the federal Copyright Act. (Ryoo Dental, Inc.
v. Han DMD, No. 15-308, 2015 WL 4208580 (C.D. Cal. July 9, 2015)).
Consumer Class Actions
The California Court of Appeal affirms in part and reverses in part the trial court’s award of
summary judgment in favor of the defendant in a consumer class action against a computer
manufacturer, alleging claims for unjust enrichment, breach of express warranty, and for violation of
California’s Unfair Competition Law (“UCL”) and Consumer Legal Remedies Act (“CLRA”).
Plaintiffs alleged that certain notebook computers manufactured by Hewlett-Packard, Inc. (“HP”)
contained inverters that HP knew likely would fail, and cause display screens to dim and darken at
some point before the end of the notebook’s useful life. The Court of Appeal reinstated the
plaintiffs’ claim under the “fraudulent” prong of the UCL as well as the plaintiffs’ CLRA claim,
premised on allegations that HP failed to disclose material information about the product (the faulty
inverters). HP had argued that the plaintiffs did not have a claim for fraudulent concealment because
they received notebooks with inverters that functioned for the one-year warranty period and the
consumers were not damaged by the alleged failure to disclose. The appellate court, however,
reasoned that “a claim for fraudulent business practices ‘reflects the UCL’s focus on the defendant’s
conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting
the general public against unscrupulous business practices.” Thus, the court concluded that the
question under the UCL is as to HP’s conduct, not as to whether the computer functioned for the
warranty period. The court also reaffirmed its 2008 decision where it refused to disturb the trial
court’s certification of a class in the same case, and held that certification should have been granted
of a nationwide class. In doing so, the Court found the record supported a finding that California has
sufficient contacts with the claims such that California has an interest in applying its laws to
nonresident plaintiffs. (Rutledge v. Hewlett-Packard Co., No. H036790, 2015 WL 4480356 (Cal.
App. Jul. 22, 2015)).
The U.S. District Court for the Northern District of Illinois grants in part and denies in part the
defendant’s motion to dismiss class action claims, including violations of the Kentucky Consumer
Protection Act (“KCPA”), the Illinois Consumer Fraud and Deceptive Trade Practices Act
(“ILCFA”), the Illinois Uniform Deceptive Trade Practices Act (“ILDTPA”), and unjust enrichment.
Plaintiffs alleged that the defendant used deceptive trade practices in marketing and advertising its
“Angel’s Envy Rye Whiskey Finished in Caribbean Rum Casks.” The court dismissed the KCPA
claim because the plaintiffs conceded that they could not plead one of the elements. The court also
dismissed the ILDTPA claim, finding that the plaintiffs had not alleged any fact indicating the
likelihood of damage in the future. The court also denied the defendant’s motion to dismiss the
ILCFA and unjust enrichment claims, holding that the plaintiffs adequately alleged that they actually
were deceived and injured by the defendant’s alleged deceptive practices. In addition, the court held
that the ILCFA’s safe harbor rule does not apply here because there is no evidence that the Alcohol
and Tobacco Tax and Trade Bureau authorized the defendant’s use of the deceptive phrase on the
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product. (Aliano v. Louisville Distilling Company, LLC, No. 15 C 00794, 2015 WL 4429202 (N.D.
Ill. July 20, 2015)).
The U.S. District Court for the Northern District of California grants the plaintiffs’ motion to stay a
false advertising consumer class action against defendant Frito-Lay while appeals in other food
labeling false advertising cases are pending. Plaintiffs allege that the defendant’s chip and puffs
products are misbranded via the labeling statements “0g Trans Fat,” “All Natural,” and “No MSG.”
At the time of the plaintiffs’ stay motion, their class certification motion and defendant’s motion for
summary judgment already had been filed. Plaintiffs moved to stay based on the pendency of the
Ninth Circuit appeal of the district court’s decision in Jones v. ConAgra denying class certification.
The court also noted another pending Ninth Circuit appeal in Brazil v. Dole Packaged Foods relating
to a summary judgment ruling in favor of the defendant in that case. The appeals address issues of
general applicability to food false advertising consumer class actions, and the district court decisions
in both cases were cited by Frito-Lay in its summary judgment motion. The court ruled that there
would be little prejudice to the parties from a stay, that efficiencies will be gained from a stay, and
that the court will be “greatly aided by having clear guidance largely if not directly on point to help
it simplify complex issues of law and adequacy of proof.” (Wilson v. Frito-Lay N. Am., Inc., No.
3:12cv1586, 2015 WL 4451424 (N.D. Cal. July 20, 2015)).
The U.S. Court of Appeals for the Eleventh Circuit affirms the approval of a nationwide class
settlement. The complaint alleged that the defendant falsely marketed its “Ultra Advanced” and
“Ultra Power Duracell” batteries as superior to regular copper top batteries in violation of the Florida
Deceptive and Unfair Trade Practices Act (“FDUTPA”). The settlement provided, among other
things, that each eligible class member would receive $3 per package up to four packages with proof
of purchase, and that the defendant would donate six million dollars in batteries to first responders,
Toys for Tots, the American Red Cross, and/or other relevant 501(c)(3) organizations. The
settlement also provided for more than $5 million in attorney fees to class counsel. The district court
had approved the settlement, over the objection of some class members, finding that the settlement
provided substantial equitable benefit to the class. It also held that consideration of the charitable
contribution was appropriate because it provided an indirect benefit to the class. The Eleventh
Circuit affirmed, finding the monetary amount to the class fair because it was more than what an
average class-member would have received after trial. The court also found that the district court’s
consideration of the charitable contribution as part of the settlement reasonable, as it was
independent of the fund for the class members, and the charities were sufficiently identified.
(Poertner v. Gillette Co., No. 14-13882, 2015 WL 4310896 (11th Cir. July 16, 2015)).
The U.S. District Court for the Northern District of California denies defendant Gerber Products
Co.’s motion for reconsideration of the denial of its motion to dismiss an amended consumer class
action false advertising complaint. Plaintiff alleged that the defendant misrepresented its infant
formula as able to reduce the risk of developing atopic dermatitis. Following denial of the
defendant’s motion to dismiss, the Fourth Circuit issued its decision in In re GNC Corp., -- F.3d --,
2015 WL 3798174 (4th Cir. June 19, 2015). That decision affirmed the dismissal of a consumer
class action complaint, holding that if there is any reasonable difference of scientific opinion as to
the merits of a manufacturer’s health claim, an “actual falsehood” claim does not exist under
consumer protection laws, including California’s. In ruling on Gerber’s reconsideration motion, the
court held that In re GNC Corp. is neither binding on courts of the Ninth Circuit nor persuasive.
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First, California decisions do not support In re GNC Corp.’s holding. Second, the allegations
against Gerber are that the baby formula does not reduce the risk of developing atopic dermatitis, not
that all experts agree that the formula lacks a health benefit. Whether an expert believes the formula
does provide a benefit does not defeat this type of allegation at the pleading stage. Third, the
plaintiff’s allegations also include assertions that the defendant misstated the FDA’s support of the
health claims, and allegation that even In re GNC Corp. recognized could be actionable. (Zakaria v.
Gerber Products Co., No. 2:15cv200, 2015 WL 4379743 (C.D. Cal. July 14, 2015)).
The U.S. District Court for the Central District of California denies defendant Yakult U.S.A., Inc.’s.
motion to dismiss and grants, in limited part, the defendant’s motion to strike. Plaintiff filed a class
action on behalf of himself and all others in the state of California alleging a cause of action under
California’s Unfair Competition Law (“UCL”). Plaintiff claimed that the defendant engaged in
unfair business practices by marketing its probiotic beverage “Yakult” as a healthy beverage that
“makes it tough for the bad bacteria to take over and gives you more good bacteria that may balance
your digestive system.” Plaintiff claimed that the probiotics in Yakult could not do as advertised
because by definition, “healthy people already have a stable digestive health balance of trillions of
intestinal bacteria.” The court used the UCL’s “reasonable consumer test” to determine that the
Plaintiff’s claim was valid. The court also found that that the UCL claim met the heightened
pleading standard because the plaintiff gave specific allegations regarding where and how the
representations regarding Yakult’s health benefits were made. Finally, the court determined that the
plaintiff’s class allegation did not meet the ascertainably requirement, which is needed to certify the
class, because it was unclear as to whether a putative class member must have been a California
resident at the time of purchasing Yakult or someone who merely purchased Yakult in California, or
a combination of the two. The court granted the plaintiff the opportunity to amend the complaint
within twenty days. (Torrent v. Yakult U.S.A., Inc., No. 15-00124, 2015 WL 4335076 (C.D. Cal July
14, 2015)).
The U.S. District Court for the Eastern District of New York denies the plaintiff’s discovery
motions, denies the defendant’s motion to reopen a deposition, and grants the defendant’s motion to
compel. Plaintiff brought a putative class action against Seagate based on packaging claims that its
USB hard drives were capable of “shocking speed” up to 10 gigabytes per second. Plaintiff claimed
that the touted speeds were impossible, that the hard drives were no faster than Seagate’s previous
models or competitors’ models, and, therefore the hard drives did not merit the “premium price”
Seagate charged. Plaintiff sued for violations of New York General Business Law §§ 349 and 350
as well as common law fraud. (The fraud claim was dismissed with prejudice in an earlier
decision.) Defendant sought to re-open the plaintiff’s deposition because his testimony about what
other hard drives he owned and used was inconsistent with his interrogatory responses. The court
found that the defendant’s counsel had failed to ask follow-up questions about the other hard drives
at the deposition, and re-opening the deposition would be unnecessarily cumulative, but granted the
defendant’s motion to compel an amended interrogatory response and production of documents
regarding the other hard drives. The court denied plaintiff’s “procedurally improper” motions (1) to
strike the defendant’s motion to compel and (2) to strike the defendant’s discovery requests, because
only pleadings, not motions or discovery requests, can be stricken. Plaintiff also argued that the
discovery requests were improperly served by email without his counsel’s consent, but, because the
parties’ course of dealing throughout the litigation had been to serve by email, the court allowed the
defendant to serve its requests for admission even though the deadline for close of discovery had
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passed. (Dash v. Seagate Tech. (US) Holdings, No. 13-cv-6329, 2015 WL 4257329 (E.D.N.Y. July
14, 2015).
The U.S. District Court for the Central District of California grants in part and denies in part
defendant Kimberly-Clark Corporation’s motion to dismiss the plaintiff’s first amended complaint,
which alleged class action claims for (i) fraud; (ii) fraudulent concealment/non-disclosure; (iii)
negligent misrepresentation; and (iv) violation of the California Unfair Competition Law (“UCL”)
arising out of the defendant’s marketing of it “MICROCOOL* Breathable High Performance
Surgical Gowns.” Plaintiff alleged that the defendant marketed the gowns as providing the highest
level of liquid barrier protection while it “must have known” that the gowns were actually not safe
for their intended uses. Defendant moved to dismiss the complaint on the grounds that the plaintiff
lacked standing, that the plaintiff had not pled fraud with particularity, as required by Fed. R. Civ. P.
9(b), and that the plaintiff failed to state a claim under Fed. R. Civ. P. 12(b)(6). The court granted
the defendant’s motion with respect to the claim for negligent misrepresentation, but denied the
motion as to all other claims. The court held that the plaintiff sufficiently pled injury-in-fact to
confer standing because he allegedly would not have purchased the gowns had he known about the
actual quality. In holding that the plaintiff adequately pled his fraud-based claims under Rule 9(b),
the court found that plaintiff did not need to allege which statements he relied on and that it was
enough that he alleged he relied on various publications. With respect to the claim for fraudulent
concealment, the defendant argued that the plaintiff had not plausibly pled a material safety risk to
trigger a duty to disclose. However, the court found that the alleged misconduct could give rise to a
duty to disclose and held that the plaintiff, therefore, sufficiently alleged a violation. In terms of the
UCL claim, despite the defendant’s argument to the contrary, the court found that the plaintiff had
set forth a theory of restitution. Finally, in granting the motion to dismiss the negligent
misrepresentation claim, the court found that no exception to the economic loss rule applied;
therefore, the plaintiff’s claim was barred to the extent it was based solely on money damages
incurred from the purchase price. The court dismissed this claim with prejudice as to the named
plaintiff only, but not as to the putative class because no class had yet been certified. (Shahinian v.
Kimberly-Clark Corp., No. CV 14-8390, 2015 WL 4264636 (C.D. Cal. July 10, 2015)).
The U.S. District Court for the Northern District of California grants in part and denies in part
defendant Aliphcom (d/b/a “Jawbone”)’s motion to dismiss the plaintiff’s amended class action
complaint for alleged violations of the California’s Consumer Legal Remedies Act, Unfair
Competition Law, and False Advertising Law, along with breach of warranty claims. Plaintiff
bought a “Jawbone UP Fitness Tracker” wristband, which is designed to track a user’s movements
and other fitness information. Plaintiff claimed that, contrary to the defendant’s advertisements
touting a 10-day battery life and the ability to record fitness data, the wristband maintained its charge
only for a few hours or a day, and failed to accurately record his movements, sleep patterns, and
caloric intake. A replacement wristband apparently yielded the same problems. The court allowed
the plaintiff’s battery charge claims to proceed, noting that the phrase “up to” in Jawbone’s
representation of “battery life up to 10 days” did not necessarily preclude the statement from
violating California consumer protection statutes. However, the court granted Jawbone’s motion to
dismiss the plaintiff’s functionality claims, holding that the defendant, in fact, had not advertised that
its product would “accurately” track and record fitness data. The court cited several cases holding
that general statements about a product’s functionality do not become actionable on an affirmative
misrepresentation theory just because the product does not work perfectly. The court also granted
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Jawbone’s motion to dismiss the plaintiff’s warranty claims, but granted leave to amend those
claims. (Frenzel v. Aliphcom, No. 14-cv-03587, 2015 WL 4110811 (N.D. Cal. July 7, 2015)).
Consumer Financial Protection Bureau (CFPB) Litigation Decisions
The U.S. District Court for the Northern District of California denies defendants Nationwide
Biweekly Administration, Inc., and related companies’ motion to transfer a lawsuit filed by the
Consumer Financial Protection Bureau (“CFPB”) alleging that the defendants’ advertising of its
“Interest Minimizer” program was deceptive and violated the Telemarketing Consumer Fraud
Protection Act and Telemarketing Sales Rule. The court rejected the defendants’ argument to
transfer the case to the Southern District of Ohio, where the defendants had their primary place of
business. The court held that the defendants failed to meet their burden to show that the CFPB, as
plaintiff, did not have the same right as a private citizen to choose the forum in which to bring suit.
Further, California had a strong interest in the suit because of the number of consumers living in
California and the inconvenience to the defendants would be minimal because their representatives
would be deposed in Ohio. Finally, the court held the interests of justice would be best served by
retaining the case in the Northern District of California. (Consumer Fin. Prot. Bureau v. Nationwide
Biweekly Admin., Inc., No.: 15-cv-02106-RS, 2015 WL 4463790 (N.D. Cal. July 21, 2015)).
RECENT FILINGS
Consumer Class Actions
Putative class action against Del Sol Food Company, Inc. removed from the Superior Court of
California to the Central District of California. Plaintiffs allege violations of the California
Consumer Legal Remedies Act, Unfair Competition Law, and the False Advertising Law, as well as
breach of express warranty, relating to Del Sol’s marketing of its salad dressing products as “all
natural.” In particular, Plaintiffs allege that the products are not “all natural” because they contain
genetically modified ingredients and ingredients such as maltodextrin, tocopherols, xanthan gum,
dextrose, and citric acid. (Gonzalez, et al. v. Del Sol Food Company, Inc., No. 2:15-CV-05435
(C.D. Cal. complaint removed July 17, 2015)).
Putative California class action filed against Ford Motor Company in California Superior Court (Los
Angeles County), alleging violation of California’s Unfair Competition Law, removed to the U.S.
District Court for the Central District of California. Plaintiff claims that the defendant falsely
advertised the performance of the “Ford Fusion Hybrid” and falsely represented that a software
update would increase the hybrid’s mileage. According to the plaintiff, the Ford Fusion Hybrid does
not meet the advertised mileage performance even when driven under “optimal” conditions.
(Deluca, et al. v. Ford Motor Company, No. 2:15-CV-05432 (C.D. Cal. action removed on July 17,
2015)).
Putative nationwide class action filed against Radiancy, Inc. related to its advertising for its “no!no!”
hair removal device. Plaintiffs allege violations of various states’ consumer protection laws. In
particular, Plaintiffs claim that Defendant falsely and deceptively advertised that its product was
superior to shaving, that clinical results showed that the product was capable of long-term hair
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removal by suppressing hair growth, and that the product was similar to laser hair removal or other
professional treatments. Plaintiffs also allege that Defendant engaged in an organized practice to
post fake consumer endorsements of the product. (Mouzon, et al. v. Radiancy, Inc., No. 1:15-CV01142 (D.D.C. complaint filed July 16, 2015)).
Putative statewide class action filed in the U.S. District Court for Maine against Hudson Clothing,
LLC alleging violations of the Maine Deceptive Trade Practices Act. According to the complaint,
the defendant falsely represented that its jeans were “Made in USA” and “MADE IN LOS
ANGELES, USA,” when, in fact, they are made with component parts such as buttons, rivets,
zippers, threads, and fabrics that were manufactured outside the United States. (Schulert, et al. v.
Hudson Clothing, LLC, No. 15-cv-00276 (D. Me. complaint filed on July 16, 2015)).
Putative statewide class action filed in California Superior Court (Los Angeles County) against Uber
Technologies Inc. alleging violations of California’s Unfair Competition Law based on Uber’s
claims that its prices are “30% lower than cabs” when such claims allegedly were not true. Plaintiff
also alleges that Uber made false and misleading statements concerning the credits it offers to
customers for referring business to Uber. (Devermont, et al. v. Uber Technologies Inc., No. 15BC588096 (Cal. Super. Ct. complaint filed on July 14, 2015)).
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