drug makers face rocky road in making claims against sellers of compounded weight loss drugs

Posted on April 2, 2026 by rtushnet

Three different cases reading Lexmark differently but mostly kicking out claims:

Eli Lilly & Co. v. Aios, Inc., 2026 WL 836624, No.
25-cv-03535-HSG (N.D. Cal. Mar. 26, 2026)

Eli Lilly sells Mounjaro and Zepbound, GLP-1 inhibitors
containing tirzepatide. These are the only FDA-approved medicines containing
tirzepatide in the United States, and the FDA has not approved any tirzepatide
product in oral or compounded form.

Defendant operates telehealth platforms focusing on drugs
for weight loss, including compounded tirzepatide. Eli Lilly alleged that its
Fella telehealth platform engaged in the unlicensed practice of medicine: For
example, the non-physician founder allegedly “frequently tells customers that
he can help increase their dosage amounts of Fella’s knockoff drugs if they
contact him or his non-physician customer success team directly.” Fella also
allegedly changed patient prescriptions “en masse,” based on Fella’s business
needs, rather than individualized patient needs. Many patients allegedly
learned that their prescription now contained an additive “not through their
doctor but rather when their prescription arrived from Fella Health.” Eli Lilly
alleged that these weren’t “personalized prescriptions”—rather, Fella is
offering “an untested, unapproved, one-size-fits-all drug” to patients without
complying with the California Medical Practice Act’s requirement that
prescriptions be made with “an appropriate prior examination and a medical
indication.”

Eli Lilly also alleged deceptive conduct with claims such as
“[o]ur science-backed methodology delivers results that outperform traditional
weight loss methods”; “[o]ral tirzepatide is the same active ingredient as the
compounded injectable (tirzepatide)”; and “[o]ur advanced oral Tirzepatide
treatment, developed through cutting-edge research, offers a safe and effective
solution tailored to support your weight loss journey and overall health.”

Eli Lilly alleged that Fella knew these statements were
false. In a Reddit post, Fella’s Head of Customer Sales wrote that “oral
[tirzepatide] can be fairly ineffective (though not totally ineffective), and
some may experience more GI discomfort due to daily administration.” One of
Fella’s customer success leads wrote that “[t]he oral version is less effective
than the injectables, but it’s still better than not being on the medication at
all.” Fella’s founder wrote on Reddit that “oral [tirzepatide] is slightly less
effective than subcutaneous.”

But Fella’s website states that oral tirzepatide is
“science-backed” and that Fella uses a “science-backed methodology,” while its
Head of Customer Sales wrote that patients generally lose 15% of their body
weight in one year on oral tirzepatide. Eli Lilly alleged that oral tirzepatide
has never been studied in clinical trials and that Fella has no science at all
supporting its oral product. The statistic cited by Fella on its
female-targeted Delilah website, that patients using oral tirzepatide experience
a weight loss average of “22.5%,” was derived from Eli Lilly’s clinical trial
on injectable tirzepatide, not oral or compounded tirzepatide.

Eli Lilly sued for violations of the UCL, FAL, and Lanham
Act, along with civil conspiracy.

Fella argued that Lilly lacked standing because they weren’t
competitors and Eli Lilly couldn’t allege “something very close to a 1:1
relationship between [Eli Lilly’s] lost sales and the sales diverted to a
defendant.” The court disagreed: Lexmark directed the court to use the zone of
interests test and proximate cause, both of which Lilly properly alleged.

Lilly alleged that “Fella’s unfair, deceptive, misleading,
and false practices, including its false and misleading statements, cause
irreparable harm to Lilly’s brand and customer goodwill by promising results
that consumers cannot obtain from Fella’s product,” and, because Fella relied
on Lilly’s studies on its product, consumers would also think that Lilly’s
product would be that bad. Plus, Lilly alleged injury to its commercial
interest in sales. E.g., on Reddit, one of Fella’s customers said he “was on zepbound”
until mid-November 2024, but “stopped” when the medicine became too expensive
and eventually switched to Fella. Lilly also had standing under the UCL and
FAL, but only as to false advertising, not to the UCL claim based on allegedly
unlawful corporate practice of medicine. “Eli Lilly does not plausibly allege
how Defendants’ claimed lack of authorization to practice in itself causes it
any injury.”

Commercial advertising or promotion: It was plausible that
the Reddit posts were made for the purpose of influencing customers to buy
Fella’s products. Although this was a closer question than statements on
Fella’s own website, the Reddit statements “tout Fella’s success with
statistics, refer to Fella’s oral and injectable tirzepatide products, and
adequately reflect an economic motivation, such that the allegations support a
reasonable inference that ‘the economic benefit was the primary purpose for speaking.’”

However, Lilly struggled with its literal falsity arguments,
since “lack of substantiation” is not itself a valid theory under state or
federal law. For example, Lilly alleged that Fella’s statements regarding its
patients typically losing 15-22.5% of their body weight were false because
those statements are in reality based on the results of Eli Lilly’s clinical
trials, which were performed on injectable and non-compounded tirzepatide. And
it’s true that a plaintiff can show falsity by showing that even reliable tests
do not establish the proposition asserted by the defendant. “But here, Eli
Lilly has not alleged that Fella made any representation regarding the specific
basis for its statements about the weight loss results typically achieved for
its patients, and Eli Lilly does not allege any contrary facts (as opposed to
the purported lack of supporting facts).” Lilly didn’t plausibly allege that
Fella’s statements about the existence of rigorous “research” and “testing”
were false just because oral tirzepatide has never been subject to the
particular mechanism of a clinical trial or study. [Seems like a consumer
survey should be relatively easy to do to find deceptiveness even if not
literal falsity.]

The only allegedly false statements sufficiently pled were
those made in connection with Fella’s promotion of “personalized treatment
plans.” Whether defendants actually personalize customers’ treatment was
capable of being proven true or false, not puffery.

Novo Nordisk A/S v. Amble Health, Inc., No. 4:25-CV-01048, 2026
WL 776100 (N.D. Ohio Mar. 19, 2026)

The parties allegedly are competitors in the sale of drug
products containing semaglutide. Novo Nordisk sells the only FDA-approved
medicines containing semaglutide in the United States, Amble is a telehealth
company that sells drugs purportedly containing semaglutide, produced at
compounding facilities. Novo Nordisk alleged that these compounded drug
products are mass produced and create a higher risk to patients than Novo
Nordisk’s medicines, because the FDA does not conduct pre-market reviews of compounded
drugs for safety, quality, or effectiveness.

The complaint also alleged that Amble’s ads falsely claims
that its drugs are personalized: “tailored to you,” and are “tailored to your
personal goals,” with “personalization” of “active ingredients, dosage, and
form of a medication to meet an individual’s personal needs.” The complaint
alleged that, to the contrary, the compounded drugs were “ordered in bulk and
sold to patients off the shelf.”

The court found that Novo Nordisk didn’t plausibly allege
injury in fact. The complaint alleged sales diversion as well as reputational
harm because compounded drugs might “undermine the reputation for quality and
safety established on Novo Nordisk’s FDA-approved medicines.”

But defendants’ use of “personalized” didn’t plausibly threaten
to harm Novo Nordisk’s reputation. “At base, [Plaintiff] appears to argue the
mere fact a medication is compounded makes it an inferior version of an
FDA-approved product with the same active pharmaceutical ingredients. But
compounding is a federally recognized and regulated pharmaceutical practice ….”
Novo Nordisk needed at least facts supporting an inference that Amble’s compounded
medication fails to meet consumer expectations, which it didn’t. Nor did it
plausibly allege that any of Amble’s customers were harmed by the compounded
medication “such that they could draw unwarranted conclusions about the safety
and efficacy” of Novo Nordisk’s drugs.  Although Novo Nordisk pled that “the FDA has
received reports of adverse events, some requiring hospitalization related to
overdoses from dosing errors associated with compounded ‘semaglutide’ products,”
dosing errors don’t show that the term “personalized” in and of itself has led
to any patient diversion. [The court is weirdly going back and forth between
reputation and sales diversion.]

Even with Article III standing, Novo Nordisk didn’t properly
allege statutory standing via the proximate cause element: The “personalized”
message didn’t plausibly cause the harm. Compounded medications require prescriptions,
and the physician’s prescribing decision, not the ads, was the proximate cause
of the patient using the compounded medication instead of Novo Nordisk’s
product.

Eli Lilly & Co. v. Willow Health Services, Inc., No.:
2:25–cv–03570–AB–MAR, 2026 WL 639976 (C.D. Cal. Feb. 3, 2026)

Eli Lilly alleged its medicines are backed by rigorous
science and quality controls. It has FDA approval for two injectable tirzepatide-based
medicines. At the time of the complaint, there was no FDA-approved oral
tirzepatide. Willow operates a telehealth platform that markets and sells
weight-loss treatments directly to consumers. Willow offers compounded
tirzepatide products, including an injectable formulation and an oral
formulation.

The FDA allegedly has expressed particular concern about
compounded GLP-1 drugs, many of whose components are manufactured by facilities
that are not subject to the same regulatory oversight as domestic
manufacturers. It has warned about dosing errors, adverse events, and the use
of unapproved salt forms in compounded tirzepatide products. 

Willow allegedly marketed its products as clinically
validated and comparable to, or superior to, Lilly’s FDA-approved medicines: that
its tirzepatide treatment has undergone “extensive testing,” is supported by
“science,” and produces significant weight loss outcomes. Imagery of physicians
and references to board-certified doctors allegedly reinforced the impression
of medical endorsement.

Willow also allegedly claimed that its product is a
“premium” blend that delivers “better results” than tirzepatide generally. Then
it reiterates that its medication undergoes extensive testing. Lilly alleged
that, in fact, Willow has no clinical studies supporting these claims, and no
testing has been conducted on Willow’s compounded products to demonstrate
safety or effectiveness. 

Willow allegedly marketed its drops as effective and, at
times, superior to injections, but no clinical data supported the effectiveness
of any oral tirzepatide product.

And Willow allegedly misrepresented that its medications were
custom, “personalized,” and tailored to each patient’s unique needs, rather
than standardized formulations delivered to all patients. Willow’s intake
questionnaire “purports to assess whether Willow’s treatment is appropriate”
but recommends its medication to all users regardless of the information
provided.

After Lilly sued, Willow added a disclaimer to its website
stating that its products are not FDA-approved and have not undergone clinical
trials, but Lilly alleged that this bottom-of-page statement didn’t affect the
overall message. Lilly also alleged that survey conducted by the National
Consumers League found that many consumers incorrectly believe  thatcompounded GLP-1 drugs are FDA-approved
and clinically tested. Willow’s advertising allegedly mirrored the types of
statements the FDA has identified as false and misleading in warning letters
sent to compounders and telehealth companies: “clinically proven,” “backed by
extensive clinical research,” and “personalized.”

Lilly alleged that Willow’s marketing falsely equates its
untested compounded products with FDA-approved medicines, diverting sales and
harming Lilly’s reputation. It further alleged that adverse events associated
with compounded tirzepatide products are often mistakenly attributed to Lilly’s
medicines, further damaging its goodwill.

Statutory standing: “[T]he test forecloses suit only when a
plaintiff’s interests are so marginally related to or inconsistent with the
purposes implicit in the statute that it cannot reasonably be assumed that
Congress authorized the plaintiff to sue.”

“If the plaintiff can demonstrate that the defendant is a
direct competitor, there is a presumption of a commercial injury to plaintiff
sufficient to establish standing.” Willow argued that wasn’t a direct
competitor of Lilly evidenced by the fact that Lilly didn’t have direct
evidence of lost sales and it actually had an increase in sales of Mounjaro and
Zepbound. Lilly argued that the presumption of commercial injury conferred by
direct competition couldn’t be rebutted. [Gotta say, that seems correct for the
motion to dismiss stage.]

The court recognized “a split of authority in the Ninth
Circuit on whether a presumption of commercial injury arising from direct
competition is sufficient on its own to establish standing, or whether a
plaintiff must also allege concrete facts demonstrating lost or diverted sales.”

Lilly alleged that Willow’s conduct “results in potential
patients being lured away” and that “Willow[’s] … materially false statements
… influence consumers’ … decision to purchase Willow’s [drugs] instead of
Lilly’s FDA-approved medicines.” Lilly also alleged that the products compete
at “similar prices” causing consumers make purchasing decisions “based on
factors other than pricing, including comparative safety and effectiveness.” These
allegations, together with the presumption arising from direct competition, were
sufficient to plead commercial injury.

What about proximate cause? A plaintiff “ordinarily must
show economic or reputational injury flowing directly from the deception
wrought by the defendant’s advertising; and that that occurs when deception of
consumers causes them to withhold trade from the plaintiff.” Proximate
causation may be adequately alleged when “there is likely to be something very
close to a 1:1 relationship between” a plaintiff’s lost sales and the sales
diverted to a defendant.

The court seems to read this Lexmark quote as a requirement
rather than an example. But if I plausibly allege that my competitor & I
would likely have split the sales garnered by a competing false advertiser, it’s
got to be the case that I have standing. It’s not the 1:1 relationship that
creates proximate causation but that, although the parties are at distinct
parts of the value chain (as the parties were in Lexmark), a 1:1 sales
relationship can justify finding proximate causation—a legal rather than
factual conclusion—at a greater competitive distance than a more unbalanced/hard-to-prove
loss ratio would have.

Reading Lexmark that restrictively, Lilly still
failed to plead “a direct causal link between any advertisement by Willow and a
patient choosing a compounded medication over Lilly’s product.” “Critically,
regardless of advertising or patient intent, obtaining a prescription
medication requires a physician to prescribe it. The physician’s prescribing
decision, not Willow’s advertisements, is the proximate cause of the patient
using the compounded medication instead of Lilly’s product.”

Lilly objected in vain that this ruling would categorically
eliminate Lanham Act claims for prescription drugs. You still need “allegations
showing a direct link between advertising and lost sales,” taking into account “the
fact that prescriptions, a foreseeable and legally required step, determine
whether a patient can actually obtain the product.” [Honestly, I’m not sure how
hard this would be for Lilly to plead. The whole point of these services is
that they contract with doctors to prescribe exactly what the services offer. A
patient who contacts a doctor through one of these services is extremely likely
to end up with their products. I don’t think Lilly should have to plead it, but
it seems very plausible.]

from Blogger https://tushnet.blogspot.com/2026/04/drug-makers-face-rocky-road-in-making.html

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CEO/sole owner is liable to bankruptcy estate for deliberate false advertising campaign that ended in bankruptcy

Posted on April 2, 2026 by rtushnet

In re Vital Pharmaceuticals, Inc. (VPX Liquidating Trust v.
Owoc), 2026 WL 822473, No. 22-17842-PDR, Adv. Pro. No. 24-01009-PDR (Bkrcy.
S.D. Fla. Mar. 24, 2026)

This is an interesting case about false advertising and
individual officer liability in bankruptcy. The court begins:

Corporate officers who breach their
fiduciary duties do not become immune from accountability simply because they
are also the only stockholders. Florida law imposes fiduciary obligations on
directors and officers for the protection of the corporation itself—not for the
benefit of any particular class of shareholders, and not subject to waiver by a
sole owner who later finds it convenient to argue that no one was harmed but
himself. When those obligations are breached and the corporation is driven into
bankruptcy, the right to enforce them passes to the trustee or liquidating
trust.

Owoc was VPX’s founder, sole shareholder, sole director, and
CEO. A jury found that his and VPX’s false advertising of energy drinks was willful
and deliberate, resulting in a judgment approaching $300 million.

At its peak, VPK generated over $1 billion in annual revenue,
but its commercial success was based on claims about a proprietary ingredient that
Owoc called “Super Creatine.” VPX falsely advertised that it offered
significant physical and mental health benefits. VPX had “no corporate will
separate from Mr. Owoc’s own.”

Because the jury was instructed that “VPX and/or Mr. Owoc
acted willfully if they knew that their advertising was false or misleading or
if they acted with indifference to whether their advertising was false or
misleading,” its willfulness finding “necessarily encompassed a determination
that Mr. Owoc either knew that the advertising was false or acted with
indifference to whether it was.”

The judgment was one of the principal reasons for VPX’s
bankruptcy filing; the resulting trust sought to hold Owoc liable for breach of
fiduciary duty arising from the false advertising.

This claim requires: (1) the existence of a fiduciary duty;
(2) a breach of that duty; and (3) damages proximately caused by the breach.
Collateral estoppel applied to prevent Owoc from relitigating whether he
willfully and deliberately engaged in false advertising of Super Creatine.

As VPX’s sole director and CEO, Owoc owed VPX fiduciary
duties of care, loyalty, and good faith. A breach under Florida law requires at
least gross negligence, which is “synonymous with engaging in an irrational
decision making process.” The false advertising jury’s findings were
preclusive: “A director who causes the corporation to engage in a years-long
false advertising campaign that he knew was false, or acted with indifference
to whether it was false, is the precise ‘knowing and deliberate indifference to
the potential risk of harm to the Company’ that … breaches the fiduciary duty
of care.” The damages were the judgment entered against VPX. Thus, there was
liability (quantification of damages was for later).

The court rejected Owoc’s arguments, including that VPX was in
pari delicto (equal fault) with him and thus barred from making the breach
claim. The court disagreed: the doctrine “is not a tool for the powerful to
insulate themselves from the consequences of their own misconduct.” It was
designed for situations when two parties were independently at fault,
voluntarily engaged in the same wrongdoing, and then fought about their
relative entitlements arising from that shared wrongdoing. “In that situation,
a court steps back and says: we will not sort this out.” It follows that, “when
the parties were not independently at fault, when the plaintiff was not a
voluntary wrongdoer, or when the very nature of the claim is that the defendant
wronged the plaintiff rather than that both wronged each other,” the doctrine
doesn’t apply. That was the case here.

While a bankruptcy trustee cannot sue third parties for
their role in wrongdoing if the corporation itself was an equal participant
(given that corporations can’t act without individual humans so the humans’ wrongdoing
is attributed to the corporation), “an agent’s misconduct is not imputed to the
principal if the agent was acting entirely in his own interest and adversely to
the interest of the corporation.” “VPX’s liability in the Monster False
Advertising Litigation was the legal consequence of Mr. Owoc’s own conduct
being attributed to the entity he wholly controlled. The jury’s finding of
willfulness against VPX reflects Mr. Owoc’s willfulness, not some independent
institutional decision by VPX to deceive.”

Allowing Owoc to point to the fact that the law attributed
his acts to VPX as a shield against accountability to VPX would be “to let
fiduciaries immunize themselves through their own wrongful, disloyal acts—a
“transparently silly result.” And if Owoc could do it here, so could every sole
owner-operator, which would “systematically immunize the most powerful actors
in closely held corporations from the most fundamental obligations corporate
law imposes on them.”

Nor did the business judgment rule protect Owoc because of
the breach of fiduciary duty. “This is not a case of a business judgment gone
wrong — a risky but good-faith marketing strategy that backfired. It is a case
of a director who caused his corporation to make claims he knew were false or
misleading, or acted with indifference to whether they were false or
misleading. The rule was not designed to shield such behavior.”

from Blogger https://tushnet.blogspot.com/2026/04/ceosole-owner-is-liable-to-bankruptcy.html

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court dismisses vague false advertising counterclaims but allows challenge to Wonderful’s pistachio trade dress

Posted on April 2, 2026 by rtushnet

Wonderful Co. v. Nut Cravings Inc., No. 1:21-cv-03960 (MKV),
2026 WL 818073 (S.D.N.Y. Mar. 24, 2026)

Wonderful sued Nut Cravings for infringing its pistachio package
trade dress. This opinion deals only with Nut Cravings’ counterclaims, which
mostly survive except for false advertising.

Wonderful has a registration for its packaging: a design
“consist[ing] of black three-dimensional product packaging having a rectangular
shape with transparent semi-circular curved sides, the word ‘WONDERFUL’ in
white with a design of a ‘heart’ in place of the letter ‘O’ appearing across
the top of the packaging and the word ‘PISTACHIOS’ in green appearing
vertically in the middle of the packaging” for “processed nuts.”

It also claimed unregistered trade dress in: (1) “a
predominantly black package”; (2) “a bright green accent color”; (3) “use of
sans serif font for the word ‘PISTACHIOS’ ”; (4) “use of capital letters for
the word ‘PISTACHIOS’ ”; (5) “semi-circular curved ‘window’ cut outs showing
pistachios”; and (6) “the WONDERFUL mark.”

Nut Cravings uses a black and green color scheme for its
pistachios, has the phrase “roasted salted pistachios” written in all capital
letters, a sans-serif typeface, and a rectangular simulated-window on the front
of its package. It alleged that each of the elements that overlap with Wonderful’s
is generic and functional for packaging of processed nuts.

Nut Cravings plausibly alleged that the trade dress
(registered and unregistered) was functional, thus stating a claim for
invalidity of the registered mark. Although a combination of functional
elements can in theory be nonfunctional, “the fact that a trade dress is
composed exclusively of commonly used or functional elements might suggest that
that dress should be regarded as unprotectable or ‘generic,’ to avoid tying up
a product or marketing idea” (also citing Laurel Road Bank v. CommonBond, Inc.,
18-cv-7797 (ER), 2019 WL 1034188, at *6 (S.D.N.Y. Mar. 5, 20219) (noting that
“where each element is functional and the elements work in tandem to create an
advertisement that is readable and eye-catching, [plaintiff] is not likely to
meet its burden that the Trade Dress is nonfunctional”)).  

The counterclaim plausibly alleged that only the Wonderful
mark was nonfunctional. The presumption of nonfunctionality afforded by
registration is rebuttable. Nut Cravings alleged that black and green provide a
non-reputation related benefit of an aesthetically pleasing appearance, with
black separately indicating high quality and green separately indicating the
product is related to “nature, health and/or pistachios.” It cited pleading
numerous reports and publications explaining the benefits of the use of these
colors for food packaging. It further alleged that numerous other processed nut
products use green and black for their packaging and provided 36 specific
examples.  “[A] color on packaging may be
functional in a given industry.”

Nut Cravings also alleged that the other elements—capital
letters, sans-serif font, and transparent windows on the package—are functional
and provide non-reputation related benefits for food packaging. All-caps is
allegedly commonly used to denote simplicity and/or premium quality; sans-serif
font is allegedly commonly used to assist readability; transparent windows are allegedly
commonly used to “entic[e] customers, enhance[e] product visibility, and/or
display[ ] the freshness of items inside.” These are all non-reputation-related
benefits that courts have found to be functional in similar contexts. E.g., Laurel
Road Bank found the use of sans serif font in advertising campaign to be
functional as it “enhanced legibility and readability” and that the use of
“large text catches a viewer’s attention” and is also functional, and Kind LLC
v. Clif Bar & Co., 2014 WL 2619817, (S.D.N.Y. June 12, 2014), held that the
use of a transparent window on food packaging for food bars serves a functional
purpose “of revealing the bar within.” In reversing the dismissal of Wonderful’s
claims in this case and finding nonfunctionality plausible, the Second Circuit even
noted that “the transparent windows in the packaging [ ] arguably serve the
functional purpose of allowing a consumer to view the pistachios being sold.”  

So too with genericity, although the allegations were
thinner. That’s what discovery is for.

False advertising: Nut Cravings alleged that Wonderful misrepresented
that the packages contain more edible pistachios than actually included. It pointed
to nineteen online consumer reviews complaining of a significant number of
empty shells in Wonderful pistachio products. Nut Cravings alleged that
consumers expect that packages of in-shell processed nuts will include
substantially only editable nuts within shells, and that “almost all of the
advertised weight” is edible, and that the deception here caused consumers to
pick Wonderful over Nut Cravings.

But conclusory allegations that false advertisements caused a
claimant to lose sales are insufficient. None of the cited customer reviews
mentions Nut Cravings or says that the customer otherwise would have purchased
from them absent the allegedly false statements.  Nut Cravings didn’t even allege that every bag
misrepresents its net weight due to a significant number of empty shells. The
court wasn’t willing to give every pistachio producer a claim against Wonderful
without more allegations.

from Blogger https://tushnet.blogspot.com/2026/04/court-dismisses-vague-false-advertising.html

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Meta’s AI assistance to advertisers defeats Section 230, court says

Posted on April 2, 2026 by rtushnet

Bouck v. Meta Platforms, Inc., No. 25-cv-05194-RS (N.D. Cal.
Mar. 24, 2026) 

Does offering AI enhancements to deceptive ads constitute
participating in what makes them illegal for purposes of avoiding section 230?
This case answers “yes, relatively easily” and it should be raising flags in a lot of
boardrooms.

Plaintiffs here are victims of a pump-and-dump scheme
involving shares of a Chinese penny stock. The scammers initially targeted them
on Facebook and Instagram through advertisements for investment groups
promising handsome returns. For example, in one ad, Kevin O’Leary— “a
businessman well-known for his role on Shark Tank”—appears to advertise a
private group in which stock tips are shared. In another, Savita
Subramanian—Bank of America’s head of U.S. equity and quantitative strategy—
“looks to be promoting” spots in a “free trading training” group that boasts
“95% accuracy” and 30-40% daily returns. 

Plaintiffs sued Meta for aiding and abetting fraud;
negligence; breach of contract; violation of the California Unruh Civil Rights
Act, Cal Civ Code § 51; and unjust enrichment, along with promissory estoppel
and breach of the covenant of good faith and fair dealing as alternatives to
their breach of contract claim. The court allowed the claims for aiding and
abetting fraud, negligence, and unjust enrichment to proceed.

Section 230: An “information content provider” is “any
person or entity that is responsible, in whole or in part, for the creation or
development of information provided through . . . any other interactive
computer service.” If Meta was sufficiently involved in the “creation or
development” of the fraudulent ads, the court reasons, then those ads were not
just “provided by” the scammers—they were also provided by Meta. Under 9th
Circuit precedent, a website helps to develop unlawful content “if it contributes
materially to the alleged illegality of the conduct.”

Plaintiffs’ allegations of material contribution depended on
three tools Meta offers to advertisers. (1) Flexible Format: “Meta
automatically optimizes the ad and shows it in the format that Meta predicts
may perform best” by “selecting the specific images and other content that will
be included, the layout, the platform (Facebook or Instagram), and how the ad
will be displayed to a particular user (e.g., in the user’s feed, as a story,
etc.).” (2) Dynamic Creative: This tool “takes multiple media, such as images
and videos, and multiple ad components, such as images, videos, text, audio,
and calls-to-action, and then mixes and matches them in new ways to improve . .
. ad performance.” This “allows the advertiser to automatically create
personalized creative variations for each person who views the ad, with results
that are scalable.” (3) Advantage+ Creative: Meta uses generative AI to apply
“creative enhancements” to optimize advertisements, including AI-generated text
and images. “The alterations may include modifications to images (such as
applying different text overlays or modifying the image background), generating
variations of the ad’s text to target different audiences, and inserting ‘Call
to Action’ buttons, such as a link to purchase a product or join a WhatsApp
group.”

The complaint alleged that scammers used these tools at
least to create different variations of ads featuring Ms. Subramanian. That was
enough to plead the existence of a dispute over whether Meta “contribute[d]
materially to the alleged illegality of the advertisements.” “Plaintiffs have
averred that Meta participated in the construction of the ads by literally
generating, using artificial intelligence, the images and text in the
advertisements. That degree of participation is not protected by section 230.”
In other words, “optimizing the appearance of an ad to drive engagement” was
enough of a contribution to the ads’ illegality to preclude section 230
immunity. Pleading the ability to create “AI- generated text and images” “is
more than enough to aver ‘that the tools affect ad content in a manner that
could at least potentially contribute to their illegality.’”

Meta argued that its tools were “neutral” and that offending
content was exclusively provided by the scammers. But 230 allows services to
“structure the information provided by users,” not “to create the information
itself.” Plaintiffs alleged that “Meta created the offending information by
generating some of the false statements that tricked them into the investment
scheme.”

If a scammer tells Advantage+ Creative “that he is
interested in an ad promising astronomical weekly investment returns,
Advantage+ Creative will spin up a slew of ads that include the provided
language and other language, images, and videos it decides will be effective in
promoting the user’s chosen message.” Indeed, a journalist from Reuters asked
for an ad asking users if they were “interested in making 10% weekly returns.”
Advantage+ Creative “generated a slew of ads saying just that and new ads with
language like ‘Tired of living paycheck to paycheck? Break the cycle and start
earning steady weekly income with our proven system.’ The reporter did not come
up with that (patently fraudulent) language; it was all Meta.” It was at least
plausible that some of the illegal content (i.e., the fraudulent statements in
the ads) was created by Meta, not by the scammers.

Aiding and abetting fraud: “California has adopted the
common law rule that [l]iability may … be imposed on one who aids and abets
the commission of an intentional tort if the person … knows the other’s
conduct constitutes a breach of a duty and gives substantial assistance or
encouragement to the other to so act.” Meta argued that it neither had
knowledge of the scammers’ conduct nor substantially assisted in the execution
of their scheme. Plaintiffs alleged that Meta has been repeatedly subject to
lawsuits stemming from similar schemes; that Meta itself acknowledged the
proliferation of fraud using public figures and celebrities’ images; and that
Meta had an “ad review system” in place to screen ads for “violation of
[Meta’s] policies.”

Meta responded that knowledge that fraud is occurring
generally on its platforms could not have given “actual knowledge of the
specific primary wrong” at issue in this case. “In a vacuum, that argument has
merit. Under California law, knowledge that something illegal is occurring on a
defendant’s platform does not establish that the defendant knew of the
particular illegal conduct that injured the plaintiff.” But the court accepted
allegations “that when Meta saw the ads in its ad review process, Meta acquired
actual knowledge of their fraudulence.”

What about the moderator’s dilemma?  “To be sure, in many cases a defendant could
not be charged with actual knowledge of fraud simply because the fraud passed
through a routine review process. For that reason, many cases arising in the
financial fraud context have required a plaintiff bringing an aiding and
abetting claim to show that the defendant had some extra knowledge about the
primary fraudster in order to create an inference that the defendant knew of
the fraud and passed it through the review process anyways.” But here, “no
extra knowledge is required. That is because the advertisements are facially
ridiculous.” [This seems like it will create a bit of a problem on the back end
of proving classic fraud—where is the reasonable reliance?]

Thus, an ad showing “Savita Subramanian, one of Wall
Street’s most respected market observers, purporting to offer stock tips in a
WhatsApp group,” not through her employer Bank of America but promoting
something called “AI Investment.” “She” touted daily potential returns that
were roughly three to four times the average annual return of U.S. equity
markets, all for free. “Even a cursory look would warrant suspicion that the ad
is fraudulent….  If Plaintiffs succeed in
convincing a jury that this ad (and others that are equally preposterous)
passed Meta’s ad review process, the jury would be entitled to infer that Meta
had actual knowledge of the fraud at the time the ads went out to its users.”

Meta made the obvious point that its ad review is not human
review, and that automated systems don’t have the intuitive knowledge that
allows this conclusion from a “cursory look.” The court found that response
“confounding.” “It was Meta’s decision to use technological review tools to
screen ads, and it does not now get to claim it had no idea what was going on
because it tasked some software program with doing the first pass.” But … Meta
did have no idea what was going on, in the sense of having specific knowledge.
This really is a decision to allow general knowledge to count for liability; it
penalizes Meta for having automated review instead of no review. Given that
human review at Meta scale is … let’s say unlikely … then allowing this
generalized knowledge to count is another blow against large online services
generally.

The court also found that it was plausible that Meta
acquired knowledge that it was aiding and abetting a fraud “well before the ad
passed through a review system.” “At the moment a scammer asked Advantage+
Creative to generate an ad using a celebrity, a secret chat room, and the
promise of unfathomable riches, there is at least a fact question on whether
Meta acquired knowledge that it was aiding and abetting a fraud.” After all,
“even routine operations may constitute substantial participation if done with
knowledge.”

Breach of contract: Meta didn’t impose a binding contractual
obligation on itself to do anything, only a duty on its users not to pollute
Meta’s platforms with scam investment ads. For similar reasons, alternative
claims for promissory estoppel and for breach of the covenant of good faith and
fair dealing failed.

But negligence survived for the reasons above.

California’s Unruh Act provides that all individuals,
regardless of race or national origin, shall be “entitled to the full and equal
accommodations, advantages, facilities, privileges, or services in all business
establishments of every kind whatsoever.” Plaintiffs alleged that Meta’s
advertising tools targeted ads featuring celebrities and investors that shared
their race or national origin to make it more likely that they’d engage with
the ad and succumb to the scam. “In general, a person suffers discrimination
under the [Unruh] Act when the person presents himself or herself to a business
with an intent to use its services but encounters an exclusionary policy or
practice that prevents him or her from using those services.” Targeting is not
exclusion, so there was no violation.

Unjust enrichment also survived.

from Blogger https://tushnet.blogspot.com/2026/04/metas-ai-assistance-to-advertisers.html

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CA6 interprets literal falsity narrowly but says materiality implements the standing requirement, yay

Posted on April 1, 2026 by rtushnet

Victory Global, LLC v. Fresh Bourbon, LLC, — F.4th —-,
2026 WL 836221, No. 25-5173 (6th Cir. Mar. 26, 2026)

Lower
court decision discussed here.

Victory Global, d/b/a Brough Brothers claims to have become
the “first” African American-owned company to distill bourbon when it opened
its physical distillery in 2020. But Fresh Bourbon counters that it was the
“first” because its owners physically distilled their brand at another
company’s distillery two years earlier. Brough Brothers sued for Lanham Act
false advertising, but failed to identify any unambiguously false statements or
evidence of deception. The court of appeals affirmed the grant of summary
judgment to Fresh Bourbon.

Brough Brothers sold their its batch of bourbon under the
Brough Brothers label in 2020. The bottles truthfully disclosed that they were
distilled in Indiana. On New Year’s Eve in 2020, they distilled their first
bourbon in Kentucky.

Fresh Bourbon distilled using another distillery’s space starting
in 2018; eventually, Fresh Bourbon’s employees knew what they were doing and
got “free reign” [sigh] of the Hartfield distillery. It first sold its bourbon made
at Hartfield in 2020, using Hartfield’s federal license to sell to
distributors. The label stated: “Distilled and Bottled by Buchanan Griggs Inc.
Paris, Kentucky For Fresh Bourbon Distilling Company[.]” Fresh Bourbon owned
the recipe for this bourbon, and Hartfield agreed not to make it for others.
Eventually, Fresh Bourbon opened its own distillery and distilled its first
batch either in late 2022 or in early 2023.

“Given that Brough Brothers and Fresh Bourbon developed side
by side, various sources have made different claims about who came first.”

“If a defendant makes a literally false statement, the
defendant can identify no possible framing in which one could consider the
statement true.” [This is an overstatement—we can always imagine secret
definitions that make a statement true.]  By contrast, a misleading statement “requires
a reader to engage in some mental processing to determine its truth or falsity.”
[Also wrong: the whole point of falsity/misleadingness is that the reader does not
know the truth by way of the statement. A misleading statement requires some inference
that leads the reader to a false conclusion; the mental processing is the
process of determining what the statement is saying.] “If, for
example, an ambiguous statement is true under one interpretation but false
under another, the statement qualifies as potentially misleading (not literally
false). The same rule covers a technically true statement that lacks important
details.”

The court noted that other circuits have split over whether
the false/misleading line matters to materiality. Now here’s a line I like a
lot: Materiality “implements the statutory causation requirement because a
business is not ‘likely to be damaged’ from a claim that will not affect a
consumer’s decision on which product to buy.” The court declined to weigh in on
the split here (correctly recognizing that the Fifth Circuit had mistakenly cited
it as already having resolved the issue; indeed, the Fifth Circuit cited its
misunderstanding of other courts’ holdings as the reason it adopted a
separate-evidence-for-materiality requirement; the split emerged from a game of
Telephone).

Anyway, Brough Brothers bet it all on literal falsity. But
none of the categories of challenged statements met the “high” bar for literal
falsity.

First: The first to African Americans to “distill,”
“produce,” or “develop” Kentucky bourbon since the Civil War. For example,
Fresh Bourbon’s profile on X called the company’s bourbon the “first …
developed grain to glass by African Americans in the state of Kentucky.”

Brough Brothers’ expert conceded that it was “impossible to
verify” whether other African American distilleries existed before these two
companies because of the history of ignoring Black history. “At least with
respect to other bourbon makers, then, Fresh Bourbon’s statements are not ‘verifiable’
as false on this record.” So the alleged falsity was the message that Fresh
Bourbon made bourbon at its Lexington distillery before Brough Brothers made
bourbon at its Louisville distillery, when the truth was that Brough Brothers
obtained its distilling licenses and made its first batch of bourbon at its own
distillery in December 2020 before Fresh Bourbon completed the same tasks years
later. “If, then, the challenged statements unambiguously suggested that Fresh
Bourbon opened its physical location before Brough Brothers, they would likely
be literally false.” 

But there was another “reasonable” reading [applying the
correct standard rather than the “any reading” standard]: “that Fresh Bourbon’s
agents made its Kentucky bourbon first—no matter the physical distillery at
which it did so.” And that was true. Fresh Bourbon’s founders participated in
the distilling process at the Hartfield distillery starting in 2018. During
this time, Brough Brothers sourced their bourbon from Indiana and did not help
this producer in the distilling process. Under these circumstances, there was
ambiguity.

Brough Brothers argued that a party does not “distill,”
“produce,” or “develop” bourbon unless the party obtains licenses to open a
distillery.

But this technical claim has no
place in the “literally false” calculus—which requires a “bald-faced” lie. Fresh
Bourbon’s use of these verbs does not meet that high standard. In ordinary
language, one would naturally say that a party distilled or produced bourbon
when the party put the raw materials into a still and took the other steps
necessary to create the alcoholic beverage at the end.… These verbs also would
remain accurate even if the party lacked a license.

The legality claim thus “conflicts with the ordinary
understanding of the words.” And the facts showed that Fresh Bourbon’s team did
more than buy bourbon on Hartfield’s license; they physically participated in
the distilling.

Second: “[C]onsidered to be the first black-owned distillery
in Kentucky.” This phrase came from the Kentucky Senate’s resolution praising
Fresh Bourbon in February 2020, to which Fresh Bourbon’s website links. Brough
Brothers argued that it opened its Louisville distillery before Fresh Bourbon
opened its Lexington one, making this literally false.

But there was no evidence that Fresh Bourbon itself ever
claimed to have opened the first African American-owned distillery in
Kentucky. That the Kentucky Senate “considered” it to be the first, even if misleading,
wasn’t literally false. Also, “distillery” could mean different things in
different contexts. Although both dictionaries and Kentucky law define the term
as meaning a place where distilled spirits are made, “consumers do not
necessarily flip open a dictionary or check statutes when evaluating products.”
And Fresh Bourbon introduced evidence that companies often call themselves a
“distillery” even when they are “having a spirit bottled for” them by others. Brough
Brothers itself registered the name “Brough Brothers Distillery” in 2018—years
before it opened its physical location. The resolution itself suggested that
this was how the Kentucky Senate used the term, because it stated elsewhere that
Fresh Bourbon had “announced that they plan to build” a physical distillery in
Lexington. “[I]t would have made little sense for the resolution to refer to
Fresh Bourbon’s (unconstructed) venue as the first.” Under the understanding of
“distillery” that means a company that sells bourbon, Fresh Bourbon sold
Kentucky-made bourbon while Brough Brothers still sold Indiana-made bourbon, so
that was true.

Brough Brothers argued that Fresh Bourbon drafted the resolution
and was thus responsible for it, but the Senate didn’t use the language that
they drafted, which didn’t include the challenged statement. Thus the court
didn’t resolve the question of whether a state Senate resolution could be
attributed to a private party for Lanham Act purposes.

Likewise with other claims; the Senate resolution also said
that Fresh Bourbon “produces bourbon in the state of Kentucky with an African
American Master Distiller, the first in Kentucky since slavery[.]” Brough
Brothers argued that this statement was literally false because the putative
master distiller lacked the qualifications: “20+ years of experience operating
a distillery,” according to its expert. The putative master distiller “worked
full time at a bank and merely had an interest in bourbon as a hobby before he
took the job with Fresh Bourbon.” But the record showed that whether a producer
qualifies as a “master distiller” was opinion not fact; as one witness said,
the term is “more of a symbol” that some distillers coined in their marketing
to become “rock stars with the bourbon people.” He testified that there is “no
set experience level” or “no set anything” for that matter; the claim that a
master distiller must have 20 years’ experience would disqualify Brough
Brothers’ own master distiller. Brough Brothers’ expert conceded that it
“[b]asically” boils down to “a matter of opinion,” which is fatal to a Lanham
Act claim.

The court also declined to hold that these statements added
up to falsity by necessary implication. Unfortunately casting doubt on whether the
circuit actually recognized the doctrine, it understandably refused to “combine
statements from different sources into one ‘overall marketing scheme.’” Context
is vital, but “we have never treated every advertisement that a business has
ever made as the relevant ‘context.’” Even considered together, however, the
challenged statements were still ambiguous.

from Blogger https://tushnet.blogspot.com/2026/04/ca6-interprets-literal-falsity-narrowly.html

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Cal. anti-SLAPP law protects trailer for show that allegedly promised more fight than it delivered

Posted on April 1, 2026 by rtushnet

Camper v. Paramount Global, 2026 WL 836249, No. B339150
(Cal. Ct. App. Mar. 26, 2026)

Camper “viewed a trailer for the reality television show
College Hill: Celebrity Edition, which referenced, but did not show, a physical
altercation between two cast members.” Camper alleged that he was misled by the
trailer and other promotional materials to believe the show would include the
full altercation and therefore paid for a subscription to the online streaming
service BET Plus. When the show did not include any additional footage of the
altercation, he sued for false advertising and related claims.

The trial court granted Paramount’s anti-SLAPP motion to strike.

Camper alleged that the trailer showed an argument between
two of the show’s stars about racial identity, then showed one getting up to
confront the other, then cut to other cast members yelling. Based on the
trailer, “media interviews regarding the season, and a circulated screenshot of
a physical fight released by” respondents, Camper allegedly bought a
subscription to BET Plus so he could watch College Hill. At the moment of the
fight, the show displayed the following message, “Out of respect for all
parties involved, we have chosen not to show this fight.”

Paramount denied releasing the screenshot presented by
Camper, or “any other screenshot depicting a physical altercation” between the
cast members, “as part of an official marketing campaign or for any other
purpose.” It also argued that it did not exercise any control over the
interview given by a cast during which she discussed the fight, since by the
time the interview was recorded, she had been expelled from college and had
left the cast of College Hill.

The trial court concluded that the television program and
associated promotional activities constituted protected speech in connection
with an issue of public interest, as the episode involved “discussions of
issues regarding race and racial identity, and the physical fight that is at
the center of [Camper’s] claim arose out of a dispute on that topic.” Camper’s
claims under the UCL, FAL, and CLRA failed because he could not establish that
“it is probable that a significant portion of the general consuming public or
targeted consumers could be misled by the trailer.” The court found that the
physical altercation “was depicted in the episode, with a level of graphic
detail that was greater than that in the trailer,” including that it showed an
“opening swing” by one cast member, followed by “an extended segment of violent
and disturbing audio that leaves no doubt that a physical fight is occurring,”
as well as “audio of other classmates’ reactions during and after the event.”
The trial court found that the scene “is much more dramatic than what is shown
in the trailer, and nothing that is in the trailer is left out of the scene.”
The court further noted that “there is nothing in the trailer that indicates
how the fight would actually be depicted in the episode.”  

The court of appeals agreed. Camper argued that the trial
court should have applied an exception for commercial speech, but the
anti-SLAPP law carves out an exception from the commercial speech exception when
an action is “based upon the creation, dissemination, exhibition,
advertisement, or other similar promotion of any dramatic, literary, musical,
political, or artistic work, including, but not limited to, a motion picture or
television program.”

Camper had no evidence that a significant portion of
reasonable consumers viewing the College Hill trailer could be misled to
believe that the show would include additional footage of the physical fight. Declarations
from Camper and one other viewer regarding their expectations were insufficient,
especially since all of the footage in the trailer related to the fight was
shown during the episode, as well as audio recordings capturing the fight and
onlookers’ reactions to it. (Nor did he show causation given that he subscribed
before the cast member interview.)

from Blogger https://tushnet.blogspot.com/2026/04/cal-anti-slapp-law-protects-trailer-for.html

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abortion clinic can proceed with false advertising claims against for-profit ad agency and (in part) the anti-abortion “center” it touted

Posted on April 1, 2026 by rtushnet

Four Women Health Servs., LLC v. Abundant Hope Pregnancy
Resource Center, Inc., No. 1:24-cv-12283-JEK, 2026 WL 836424 (D. Mass. Mar. 26,
2026)

Four Women is a licensed healthcare clinic that provides
reproductive healthcare, including abortion care, to its patients. Abundant
Hope is a “nonprofit crisis pregnancy center” that opposes abortion operating
in a neighboring building. Four Women sued for state and federal false
advertising; the court dismissed the Massachusetts Chapter 93A claim against
Abundant Hope but denied dismissal as to the Lanham Act claim. Four Women also
stated a plausible Chapter 93A claim against CLM, “a for-profit entity paid by
Abundant Hope to make allegedly misleading advertisements about the services
provided at the Attleboro Women’s Health Center.” The other defendants weren’t
reachable under Chapter 93A because “Abundant Hope is a nonprofit that did not
charge for its services, which advanced its pro-life mission, and its officers
furthered that charitable mission.”

In 2018, Abundant Hope relocated next door to Four Women and
put the name “Attleboro Women’s Health Center,” or “AWHC” for short, on its
office. AWHC purports to furnish patients with free medical services, including
ultrasounds and pregnancy consultation, testing, and diagnoses, but “is not a
separate corporate entity from Abundant Hope, nor is it a licensed medical
provider.”

Abundant Hope hired CLM, a for-profit marketing agency in
Missouri, to manage that website and place advertisements on Google promoting
AWHC to women seeking abortion care. Abundant Hope approved the language
drafted by CLM. CLM also provides Abundant Hope with the contact information of
potential clients and describes the services that they are seeking based on
forms that those “leads” completed on AWHC’s website or elsewhere.

The alleged falsities: On its website and in Google
advertisements, AWHC is advertised as a “Women’s Health Center” that has
performed hundreds of “medical” tests and appointments and that can furnish
“medical services,” including pregnancy testing and ultrasounds. But AWHC does
not employ an on-site licensed doctor or Advanced Practice Registered Nurse,
and state law requires such licensed medical professionals to diagnose the
viability and location of a fetus.

AWHC also allegedly encourages women to access its services
by falsely representing on its website that an ultrasound and a determination
regarding viability are necessary to obtain an abortion.

AWHC’s website misrepresents that AWHC provides abortion
care by listing “abortion” first in the “Options” page and, on the “Abortion”
page, urging women who are “thinking about abortion” to “MAKE AN APPOINTMENT.” The
website also includes a client testimonial describing AWHC as a “[g]reat place
for women considering abortion.” While other pages on AWHC’s website include a
small disclaimer at the bottom that AWHC does not perform abortions, these
pages and its other advertising contain no such disclosure. Google advertising
further implies that AWHC performs abortions because AWHC appears among the
first Google search results for “abortion near me attleboro ma,” with an
advertisement for scheduling an appointment and links to “Abortion Cost,”
“Abortion Pill Info,” “Abortion Clinic Info,” and “Abortion Info.”

Four Women alleged diversion: Between January 2023 and
August 2024, 591 patients called both AWHC and Four Women. Many women “unknowingly
provided their contact information to Abundant Hope through AWHC’s website or
CLM’s Google advertising,” and AWHC allegedly schedules appointments with
callers without informing them that it does not furnish abortion care and, once
on-site, offers them pamphlets falsely stating that abortion is “dangerous” in
order to deter them from going to Four Women.

Chapter 93A prohibits “an unfair or deceptive act or
practice” between those “engage[d] in the conduct of any trade or commerce.” Abundant
Hope and its officers weren’t engaged in “trade or commerce,” which the law
defines, in relevant part, to “include the advertising, the offering for sale,
rent or lease, the sale, rent, lease or distribution of any services.” This
language “indicates an intent that the services be distributed in exchange for
some consideration or that there must be other strong indications that the
services are distributed in a business context.”

Using a for-profit marketing agency didn’t change that
calculus; “[i]n most circumstances, a charitable institution will not be
engaged in trade or commerce when it undertakes activities in furtherance of
its core mission.”

However, defendant CLM was a for-profit entity that has been
paid “substantial sums” by Abundant Hope to advertise AWHC’s services. “CLM is
therefore operating in a business context by receiving payment for its
advertising services, and its activities fall squarely within the definition of
‘trade or commerce’ under Chapter 93A.” It wasn’t immunized just because its
profit-making activities could be said to further the core mission of a
nonprofit organization.

CLM also argued that, since Abundant Hope couldn’t be held
liable under Chapter 93A, it couldn’t be held liable for what was essentially aiding
and abetting. “But under Massachusetts law, one entity’s participation in
another’s tortious conduct can lead to liability under Chapter 93A, even if the
other entity is not subject to Chapter 93A liability.”

And its conduct in advertising/running the website was
plausibly misleading, even if everything it produced was literally true. It was
also plausible that the deception injured Four Women by diverting patients. Four
Women alleged multiple specific instances in which women sought abortion care
at Four Women but, as a result of confusion, ended up at AWHC.

Lanham Act: Why a different result for Abundant Hope on “commercial
advertising or promotion”? The complaint adequately alleged that the defendants
had an economic motive and thus engaged in commercial speech. Even though Abundant
Hope is a nonprofit organization that provides free services at AWHC, “as a
for-profit business, CLM has a clear economic incentive and is paid to promote
AWHC’s services.” Nor was AWHC’s provision of free services and its status as a
nonprofit organization dispositive. A nonprofit organization’s promotional
advertising of services can directly relate to its “ability to fundraise and,
in turn, to buy more advertisements.”

Abundant Hope’s paid promotion of its services included
$38,846, or nearly 17% of its total functional expenses, in 2022 alone. And
Abundant Hope “promotes its diversion of patients from Four Women and AWHC’s
provision of free services in its fundraising.” Because Abundant Hope “has a
direct economic stake in the provision of its … service[s]” and advertises
those services “in the hopes of realizing an economic gain” through fundraising
“rather than merely informing the public or pursuing its ideological views, it
may reasonably be viewed as economically motivated.”  

Four Women also adequately alleged that the defendants’
representations were made with the intent of influencing potential customers to
purchase the services offered at AWHC; “purchase” here doesn’t require an exchange
of money. [Probably more to the point, the word “purchase” in the Gordon
& Breach test isn’t part of the statute, and we should be reasoning
about what “commercial advertising or promotion” means rather than what a word from
Gordon & Breach means.] And [although Lexmark should have
abrogated this element], the complaint plausibly alleged commercial competition
in the market for reproductive health care.

Materiality: Defendants admitted that AWHC is not “a
licensed medical provider” or “facility” and “has never been licensed by the
Massachusetts Department of Public Health to provide medical care,” but  they identify AWHC as Abundant Hope’s
“medical” arm that furnishes “medical” services; promote AWHC as providing
“medical appointments and medical tests” on its website; and advertise
elsewhere, including on Abundant Hope’s website, that AWHC provides “medical”
services to women, including pregnancy testing and ultrasounds. “These
statements give the mistaken impression that AWHC is a medical provider that
lawfully performs the identified medical procedures.” Likewise, misleadingly
suggesting that an ultrasound and a determination regarding viability are
necessary preconditions to obtaining an abortion, and misleadingly suggesting
that AWHC provides abortion care, were plausibly material for the same reasons
they were plausibly misleading. The complaint also provided examples of
actually deceived consumers, giving rise to an inference of materiality.

First Amendment: Four Women’s
claims do not target any speech the defendants wish to make, or have made,
about their pro-life viewpoint or any of their views about the propriety of
abortion. Rather, the claims are narrowly addressed to AWHC’s advertisements
and website content that, as alleged, contain false or misleading information
and divert women seeking abortion care from Four Women. Where, as here, a
plaintiff plausibly alleges that the defendant engaged in commercial speech
through false or misleading advertisements, the First Amendment does not
provide refuge from claims under the Lanham Act or Chapter 93A.

Cases like NIFLA weren’t apposite, because Four Women
wasn’t a government actor and it was challenging only false or misleading
advertising, not seeking to compel speech. [Yeah, good luck with that on
appeal.]

from Blogger https://tushnet.blogspot.com/2026/04/abortion-clinic-can-proceed-with-false.html

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challenge to whether certification agency did its job can’t be used to disprove an establishment claim

Posted on April 1, 2026 by rtushnet

McKeon Rolling Steel Door Co. v. U.S. Smoke & Fire Corp.,
2026 WL 865699, 1:23-cv-8720 (ALC) (S.D.N.Y. Mar. 30, 2026)

McKeon sued defendants for false advertising under NY and
federal law. I’m ignoring the trade secret counterclaim.

McKeon and USS&F compete in the market for commercial
and special purpose safety assemblies, focusing here on fire shutters that
close openings in buildings and block the passage of flames and gas in the
event of a fire. Fire shutters are installed in public buildings, including
hospitals, schools, and airports; they descend from ceilings if there is a
fire. Building codes throughout the United States require that fire shutters be
tested and certified by UL 10B Standard for Safety.

Defendant Guardian tests products, sometimes with
third-party help; once it deems a product certified, it posts that to its
website. Once the products at issue were deemed “certified” by Guardian, defendant
USS&F posted the certification information on its publicly accessible
website.

They argued that the statements were literally true because USSF’s
products were tested by a third party, a certified testing agency; the tests
were witnessed by Guardian, and Guardian issued certifications that the
products were UL 10B certified.

McKeon argued that, even though the products stated they
were UL 10B certified, they were not properly certified. McKeon had obtained
what defendants deem “confidential test reports” and interpreted the results to
determine whether the products should have been certified to UL 10B standard. McKeon
argued that it was bringing an establishment claim, by which it sought to prove
that “the Test Reports do not support the proposition for which they were
cited; namely, that the subject Products meet the UL 10B certification
requirements.”

The court found summary judgment appropriate, because this
wasn’t a case where the claim was “tests prove X,” but rather “this product is
accredited by a third party.” And that was true. The court found that cases
allowing challenges to the reliability of claim-supportive testing were about
protecting consumers against unfounded superiority claims. Here, there was no
superiority claim, so there could be no establishment claim. [This distinction
seems wrong to me, even if summary judgment is correct on these facts.
Certainly statements that “tests prove” a monadic claim (e.g., treats headaches)
or an equivalence claim (as good as) should also be able to be falsified.]

Instead, the court looked to Board.-Tech Elec. Co. v. Eaton
Corp., 737 F. App’x 556 (2d Cir. 2018), which rejected a challenge to whether a
competitor’s light switches should have actually been certified by the UL.
“Without any indication that UL decertified the defendant’s product—or
(perhaps) that the defendant’s product had materially changed since
certification—there would be no plausible allegation of a false statement.” Here,
McKeon conceded that it didn’t have a certifier re-test the products at issue,
or provide evidence from a testing agency that the products didn’t meet the standard,
or provide evidence that there was in fact no accreditation. Thus, the statements
were literally true.

from Blogger https://tushnet.blogspot.com/2026/04/challenge-to-whether-certification.html

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court enjoins lawyer from using exaggerated/distorted animation of misfiring gun in advertising

Posted on March 31, 2026 by rtushnet

Sig Sauer, Inc. v. Jeffrey S. Bagnell, Esq., LLC, No.
3:22-cv-00885 (VAB), 2026 WL 867181 (D. Conn. Mar. 20, 2026)

Bagnell, a lawyer, commissioned a graphics company to create
an animation purporting to show how a P320 pistol could misfire absent a
trigger pull, known as an “uncommanded discharge.” He later posted that animation
to YouTube and published it on his firm’s website; he represents plaintiffs who
claim that they have been injured by uncommanded discharges from P320s.

The court granted a permanent injunction against Bagnell’s
advertising use, though cautioning that the issue here was not “whether the
P320 pistol can misfire or undergo uncommanded discharges, or whether that
issue should properly be the subject of litigation elsewhere, or public
commentary anywhere.”

Commercial advertising or promotion: Lawyer advertising is
commercial speech, and the animation was made for the purpose of influencing
potential clients. It was available online. Even if it also was attempting to
raise awareness about a public safety concern, “[a]dvertisers should not be
permitted to immunize false or misleading product information from government
regulation simply by including references to public issues.”

Falsity:

The P320 is a striker-fired pistol,
meaning that a pull of the trigger initiates a sequence of internal components
to move, culminating in the releasing of a compressed spring, which drives a
pin forward to impact the cartridge, causing the gun to fire. The Animation,
which is approximately five minutes long, claims to show how vibrations or
sudden movements could cause the P320 to fire absent a trigger pull.

The animation opens with a written message that the P320
contains a “mechanism of failure,” “suggesting that the following sequence is
that mechanism.” It then depicts a CT scan of a P320 before moving into fully
animated renderings of the internal components of the firearm combined with
text guidance that it is possible for the P320 to have a “defective discharge”
with “no trigger pull.”

The court found that Sig Sauer demonstrated that it would
not be possible for the P320 to have the “mechanism of failure” specifically
depicted in the video, and identified five literally false statements within
the video about specific components of the pistol.

First, the video falsely depicts malformed versions of two
P320 components, the sear and the striker foot, as having “inset surfaces,”
which could lead to an unsafe “rollover condition.” Sig Sauer’s expert witness demonstrated
that both components are flat with straight edges, making “rollover”
impossible.

The animation showed a lumpy striker foot based on a photo that
the lawyer knew depicted grease buildup. [Though knowledge isn’t required.]

Second, the video falsely depicts the slide’s ability to
move up away from the frame, allowing the striker foot to walk up off the sear
and fire without a trigger pull. This wasn’t physically possible: two steel
parts—the slide and frame rail—merged into each other in an obscured part of
the video. Yellow lines show the location of the slide channel, and a red box shows
the location of the rail: An accurate depiction would have the red box sitting
inside the two yellow lines.

Third, there were key differences between the striker’s
so-called safety notch depicted in the video and the actual P320 striker safety
notch, which is angled and undercut:

Although this portrayal allowed them to claim that the
safety lock could slip over the safety notch to result in an uncommanded
discharge, “the physical geometry of the components prevents this from
occurring.” The safety notch as depicted in the video is 50% shorter than the
actual component, adding credibility to the otherwise inaccurate claim that the
lock could slide past the notch.

Fourth, the safety lock appeared less stable in the video
than it is in reality: the video showed a bulbous, rounded appearance fitting
loosely against the striker, while the real striker safety lock has flat edges
and is tightly fitted against the striker.

The video falsely represents the dimensions of the striker
foot and striker housing by depicting “[e]xcessive space” between the two
components.

These false claims “distort the firearm’s components and
safety features to support a claim that sudden impact or vibration leads to
unintentional discharge.”

Materiality: A firearm’s safety to its bearer is plainly an
“inherent quality or characteristic” and “likely to influence purchasers,” as
YouTube comments like “Should I stop carrying my P320?” and “This is definitely
plausible and very well described … BTW I own a Sig M18 with a safety”
showed.

Defendants didn’t rebut the resulting presumption of irreparable
harm, even if Sig Sauer couldn’t show lost sales. The video was viewed as many
as 37,000 times on YouTube over the seven-month period before it was taken
down, and at least 80,000 times on another website. For injunctive relief, that
was enough. First Amendment concerns were minimal because this was a post-trial
order dealing with commercial speech, not a prior restraint.

Preventing use of the video for advertising purposes “does
nothing to prevent the Defendants from continuing to practice law, represent
plaintiffs against Sig Sauer, publicly express opinions about Sig Sauer or its
products, or using even this version of the Animation in the context of other
litigation.” The court took no position on whether the animation would be
admissible in a tort case and suggested that its decision was narrow and its
injunction should not “be construed to affect the ability of the Defendants to
use any image, take any position, or make any argument to a court in any other
litigation.”

from Blogger https://tushnet.blogspot.com/2026/03/court-enjoins-lawyer-from-using.html

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Court enjoins T-Mobile’s “Save over $1000” campaign for comparing apples to oranges

Posted on March 31, 2026 by rtushnet

 Cellco Partnership v. T-Mobile USA Inc., 2026 WL 867129, No. 26-cv-0972 (LAK) (S.D.N.Y. Mar. 30, 2026)

Verizon sued T-Mobile for false advertising and the court granted a preliminary injunction, finding that T-Mobile’s claims that switchers could “Save Over $1,000” were likely false. As the court explains:

The cellular service industry is dominated by three large providers that fiercely compete to wrest customers from each other and to attract new ones. Price (or perceived price) is among the most important subjects of competition. Much provider advertising seeks to induce competitors’ customers to “switch” to the advertising provider. It often does so by claiming that the advertiser’s service is the cheapest.

The court agreed that the new campaign compared apples to oranges.

Verizon’s pricing strategy allows customers to customize their plans by adding optional “perks,” bundled together and offered at a discount compared to what the selected services (e.g., HBO and Netflix) would cost individually.

T-Mobile, by contrast, includes some benefits, such as a smaller, select set of streaming services, for no or little additional cost. It also includes T-Satellite, a network of low-orbit satellites that provide cellular service in parts of the United States that otherwise are unserved by terrestrial cellular networks. (T-Satellite is available to customers of other service providers, but few Verizon customers buy it.)

Previously, Verizon challenged T-Mobile’s “Save Up to 20%” campaign before the NAD, which recommended that “T-Mobile discontinue the challenged claims” because (a) “consumers are not likely to expect the value of ancillary benefits to be included in a savings comparison,” and (b) the terms that would enable a customer to save 20 percent were “not clear and conspicuous and further contradict[ ] the message of the broad comparative savings claim.” The NARB on review upheld that recommendation in part because “many reasonable consumers will conclude that the promoted savings is based on the cost of the wireless plans without any adjustments for additional benefits.” On January 22, 2026, the NARB found that T-Mobile still had “not made a bona fide attempt to” comply with aspects of its decision.

Instead, the “Save Over $1,000” campaign features claims that customers can save over $1,000 per year by switching from Verizon’s Unlimited Ultimate Plan or AT&T’s Unlimited Premium Plan to T-Mobile. This campaign tells customers that they can “[s]ave on streaming, satellite, and more benefits the other big guys leave out.” The fine print reads:

Savings vs. comparable plans at AT&T and Verizon plus the costs of optional benefits; plan features and taxes and fees vary …. With 3+ lines of Better Value Plan, 3+ new lines & 2 eligible ports or 3+ lines & 5+ years on T-Mobile postpaid plan required. Qualifying credit [required].

T-Mobile’s online calculator shows the a bunch of purported monthly cost comparisons between T-Mobile’s Better Value Plan and Verizon’s Unlimited Ultimate Plan, where services are listed as “included” through T-Mobile but extra through Verizon. Adding up the cost comparisons, T-Mobile’s calculator purports to show that its Better Value Plan costs customers $143 per month, whereas Verizon’s supposedly comparable Unlimited Ultimate Plan costs customers $260 per month, or a difference of $1,404 per year.

Verizon also has claimed in ads that its service is cheaper than those of its competitors. Until at least the T-Mobile campaign’s launch, Verizon offered its own interactive calculator that customers to toggle adding to their plan certain features, such as streaming bundles, that Verizon offers and then purported to show what a T-Mobile or AT&T customer purportedly would have to pay to obtain those same benefits.

Verizon’s core objections were two: “First, the campaign compares the promotional rate T-Mobile charges to new customers to Verizon’s nonpromotional rate, ignoring Verizon’s promotional rate of $175 per month. Second, it attributes to Verizon the costs of ancillary benefits that T-Mobile includes in its plan without charging T-Mobile the costs of ancillary benefits Verizon includes in its plan.”

T-Mobile counterclaimed that Verizon was falsely advertising its own “Better Deal,” but didn’t move for a preliminary injunction.  

For likely success on the merits, only falsity and materiality were contested. First, the court found that the “Save Over $1,000” campaign “necessarily implies” that customers can save over $1,000 per year on a comparable plan by switching from Verizon’s Unlimited Ultimate Plan to T-Mobile’s Better Value Plan. “That message is false. Instead of putting comparable plans side-by-side, T-Mobile engages in an apples-to-oranges comparison at every step of the way.” First, the undisclosed comparison of Verizon’s nonpromotional rate ($195 per month) with T-Mobile’s own promotional rate ($140 per month). It attempts to define away that problem by arguing that “$140 for three lines is the standard rate for T-Mobile’s Better Value [P]lan” was “akin to comparing an apple to an orange.”

T-Mobile argued that the comparison was reasonable because it “targets existing Verizon customers,” who supposedly would not be “eligible for Verizon’s promotional price.” “But nowhere in the campaign does T-Mobile indicate that it is speaking to only the subset of Verizon customers who are paying Verizon’s nonpromotional rate.” Verizon’s promotional rate lasts for three years, and using the term “switch” didn’t convey any limit on the claim.

Then, T-Mobile compared the price for each of three streaming services that it includes at little to no additional cost in its Better Value Plan to the full cost of each of Verizon’s bundles that include the relevant streaming service. “Yet, T-Mobile neither credits Verizon for the value of the additional services included in Verizon’s bundles nor charges T-Mobile for those services, which are not available through the Better Value Plan.” It also charged Verizon for the “sticker price” of T-Satellite too, even though T-Mobile controls how much to charge Verizon customers for T-Satellite and even though most Verizon customers do not purchase T-Satellite.

It was not enough that T-Mobile disclosed its inputs and methodology, because the plans were different, but T-Mobile portrayed them as “equivalents in all ways other than in price.” This is literally false by necessary implication because it portrays “non-comparable products … as otherwise equivalent (except for the superior or inferior aspect being illustrated in the advertisement).” “Accounting for Verizon’s promotional rate and the ancillary streaming benefits it offers in its bundles that T-Mobile does not and removing from Verizon’s side of the figurative ledger the cost of T-Satellite, the supposed savings fall to a mere $228.84 per year.”  

Finally, the campaign’s price guarantee of five years applied to only “the cost of voice, data, and texting on T-Mobile’s cellular network,” or “the price of the rate plan,” not the ancillary streaming benefits or T-Satellite. This was a “crucial fact” but disclosed “at best indirectly, in fine print, and only on some advertisements.” That didn’t change “the unmistakable message of the campaign that a customer can save over $1,000 per year by switching to T-Mobile.” That was literally false.

Materiality: “Claiming a price difference between two purportedly comparable products is material. Indeed, T-Mobile’s claim of immateriality is nonsense for the obvious reason that it is inconsistent with its decision to launch the campaign and with its repeated arguments that enjoining the campaign would harm its ability to communicate the value of its services and compete in the cellular service market.”

Verizon was thus entitled to a presumption of irreparable harm that was not rebutted by delay. The ongoing dispute over a different ad campaign didn’t affect the fact that Verizon “promptly” filed suit after the “Save Over $1,000” campaign launched.

Nor did Verizon’s allegedly bad conduct in substantially similar advertising affect the balance of equities. Even assuming that Verizon’s “Better Deal” campaign was false, Verizon took down its competitive grid before suing. Its position “must be judged by the facts existing as they were when this suit was begun, not by the facts existing in an earlier time …. Conduct which came to an end prior to the events which are in issue cannot constitute an unclean hands defense.” Even if that were not the case, it still would be “better to remedy one wrong than to leave two wrongs at large,” “particularly where the harm damages not just the parties but also the public.” The counterclaim was the right place to address Verizon’s bad behavior.

 

from Blogger https://tushnet.blogspot.com/2026/03/court-enjoins-t-mobiles-save-over-1000.html

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