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

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

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

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