despite rejecting Lanham Act PI, court enjoins D from making negative statements about P in public if prospective customers might see

Posted on December 11, 2025 by rtushnet

Red Sense LLC v. Bohuslavskiy, 2025 WL 3539968, No.
25cv12281 (EP) (AME) (D.N.J. Dec. 10, 2025)

This case illustrates that tortious interference has a small
remaining scope—where there’s no “commercial advertising or promotion” because
of the failure to solicit a substantial number of the relevant consumers in the
context of the relevant industry, targeting specific consumers with false
claims can still constitute tortious interference. The preliminary injunction
bars both targeting and certain public statements, which the court warns it
will treat as targeting. I’ll ignore the trade secret claims, but they are also
present.

RedSense offers cybersecurity threat monitoring and
reporting services. Bohuslavskiy was RedSense’s former Chief Research Officer;
Red Sense targeted his acts both before and after his resignation. (The
principals left another company to found RedSense and recruited him from there,
which probably makes their trade secret claims seem bitterly ironic to their former
employers.) [Information about clients redacted.] RedSense alleged that, for cybersecurity
companies—which have intimate knowledge of their customers’ vulnerabilities—a
“rumor regarding impropriety, ethical concerns, or a similar vulnerability is
enough to ruin the service provider’s reputation and cause a customer to seek
their threat intelligence from another more reputable source that they can
trust.”

Bohuslavskiy agreed to provide “ ‘in kind funding’ in the
form of Threat Intelligence and Intellectual Property for [RedSense’s] benefit
and use by [RedSense] in lieu of the $100,000 seed funding contribution.” Bohuslavskiy
represented to RedSense to that he had ownership rights in this IP as a
co-founder of the previous employer.

Bohuslavskiy allegedly promised multiple customers an
AI-driven search and report generation tool that would allow RedSense to
provide more targeted threat intelligence reporting, but did not deliver. Key
customers such as [Redacted] allegedly “have questioned the value of the
RedSense deliverables absent this automation tool.”

Bohuslavskiy disputed RedSense’s account and argued that he
was developing the AI tool on the side, and delivered a different product as
promised. He alleged that a key principal attacked Bohuslavskiy’s ethnicity and
immigration status, and that his complaints were ignored: After Bohuslavskiy
“confided” in a different principal about his concerns as an immigrant in light
of the new administration, the other one implied via text that he would report
Bohuslavskiy and his family if Bohuslavskiy did not “do [his] job.” At an
emergency partner meeting, another principal allegedly stated that RedSense was
“in the zone of insolvency” and suspended all partner distributions. Bohuslavskiy’s
position was rendered an “unpaid job,” and Bohuslavskiy and his team went weeks
without pay. He ultimately resigned, with his brother, “[d]ue to the unilateral
and arbitrary use of company finances by the CEO—actions [they] perceive as
coercion against our subordinates—as well as breaches of signed contracts and
unresolved financial disputes.”

However, he argued that he resigned only as CRO and retained
his partnership interests. Via email, he stated that, “as a partner of
RedSense,” he would “be informing each customer about this illegal action
tomorrow, as well as what lead [sic] to it. With all screenshots and evidence
attached.”

As promised, despite a C&D from RedSense’s counsel, Bohuslavskiy
began contacting many of RedSense’s existing and prospective customers—at least
a dozen. In emails to at least two customers, Bohuslavskiy stated he “recently
resigned from RedSense due to ethical and contractual concerns” and that
despite his resignation, he remains a co-founder, partner, and shareholder of
RedSense, and therefore, will continue to honor his obligations to ensure
“seamless intel provision and continuity.” In some follow-up emails,
Bohuslavskiy also provided threat intelligence reports and offered to schedule
a briefing with a client “consistent with [his] previous briefings.” He also
made a public LinkedIn post regarding his resignation as CRO from RedSense.

According to Red Sense, customers are not sure who is
responsible for providing the contracted-for services—RedSense or Bohuslavskiy—and
some customers have even asked whether Bohuslavskiy’s emails are part of a scam
or from an individual pretending to be Bohuslavskiy. Some customers were unsure
of Bohuslavskiy’s status with RedSense given his representations that he is
still operating as a representative of RedSense. Several previously satisfied customers
“informed RedSense this ongoing issue with Bohuslavskiy has stained RedSense’s
reputation and has undermined the otherwise high quality of services customers
have received from RedSense.” [Redacted]—RedSense’s largest customer—has
directly expressed disappointment and has yet to pay past due subscription fees
to RedSense. The Director of Cyber Intelligence and Threat Engineering at
[Redacted]–“a strategically important client of RedSense”—told RedSense that it
needed to “work it out” with Bohuslavskiy. [Wonder what they’ll think of this
result.] A prospective client also supposedly halted discussions with RedSense
when Bohuslavskiy made public comments regarding his resignation.

RedSense’s Lanham Act false advertising arguments centered
on the emails to “a handful” of RedSense customers.  In previous cases allowing claims based on a
few contacts to proceed, “the fact the defendant reached a significant portion
of the target audience with its statements was key to the determination that
the sharing of information even with a small number of individuals was
sufficiently disseminated to be actionable under the Lanham Act.” Here,
however, the numerator was “slightly more than a dozen,” and the denominator
was a market that is “large and highly competitive … across various industries,”
including healthcare. The relevant purchasing public thus included “entire
industries, and therefore, is comprised of at least hundreds, if not thousands
of companies.” Thus, the emails were not sufficient to constitute advertising
or promotion.

But tortious interference succeeded! The court found “a
clear intention to maliciously interfere with RedSense’s current contracts.” He
badmouthed RedSense and offered to “honor” its obligations to customers, and
provided one with a bespoke report that included analysis for [Redacted] on its
particular vulnerabilities.

“Bohuslavskiy knew or (at the very minimum) should have
known that sending emails directly to known RedSense customers could lead to
interference with RedSense contracts.” What is wrongful about the underlying
behavior? The court isn’t entirely clear, mentioning falsity but not identifying
anything specifically as false. It might be more trade secret-y, since the
court also quoted another case stating that the “taking of plaintiff’s
confidential and proprietary properly and then using it effectively to target
plaintiffs’ clients, is contrary to the notion of free competition that is fair.”
“His emails make clear he resigned due to ethical and contractual concerns and
that RedSense cut his access to corporate channels of communication, but he
also referenced ‘we’ and an intent to ensure seamless integration and
continuity.” Thus, “by reaching out to known RedSense clients and providing
them with bespoke information and data relevant to their specific needs, he
knew or was substantially certain that he would be maliciously interfering with
RedSense’s contracts.”

What about loss causation and damages? [Redacted 1’s]
complaints were apparently “rooted in product and service-related issues.” [Not
what I’d want in an opinion giving me injunctive relief.] Even if those
concerns traced back to Bohuslavskiy’s alleged failure to deliver the new AI
product, that was separate from whether he has tortiously interfered with
RedSense’s contract with [Redacted] by sending them emails.

But [Redacted 2] also apparently informed RedSense that it
would not be renewing its subscription service, citing “Bohuslavskiy’s actions
as a primary concern” because, despite blocking “Bohuslavskiy’s personal Gmail
address … Bohuslavskiy continued to make contact on non-blocked platforms,
including on Signal using an alias.” [Redacted 2] also “articulated security
concerns about Bohuslavskiy, including that it feels vulnerable due to
Bohuslavskiy’s knowledge of the customer’s cybersecurity concerns.” Thus, RedSense
did show causation and damages from that contract.

What about tortious interference with prospective economic
advantage? RedSense also showed that it was engaged in “serious discussions
with [Redacted], and an executive at [Redacted] told Miller that unless
RedSense resolves its issues with Bohuslavskiy, [Redacted] would not retain
RedSense’s services.” [Is that caused by defendant’s tortious behavior, or
caused by the split? The court does express desire for more detail, presumably
as we move on from the PI stage.]

Even if a defendant did not know of a specific contract, he
may still be liable for tortious interference if he intended to harm a specific
plaintiff, had knowledge of a particular “category of contracts,” and “the
resulting consequential damage to that plaintiff was a proximate result of the
defendant’s conduct.” This meant that Bohuslavskiy’s LinkedIn post could
constitute tortious interference. But, at this stage, that wasn’t enough.

While Bohuslavskiy’s LinkedIn post states that he resigned
from RedSense due to “ethical and contractual concerns”—which the court called “a
concerningly vague and ominous remark”—that was not the type of conduct that is
generally actionable under a claim for tortious interference: there was no
trade secret misappropriation or other wrongful attempt to lure away customers.
Plus, it wasn’t even clear that RedSense’s contracts with customers should be
considered one “category.” It was not clearly reasonably foreseeable that
prospective clients like [Redacted] would decide not to enter agreements with
RedSense based on Bohuslavskiy’s LinkedIn post.

But he could still have interfered with prospective contract
renewals with existing customers, so the same evidence above justified finding
likely success on the merits with respect to the emails.

Although economic loss isn’t irreparable harm, RedSense
showed irreparable harm because Bohuslavskiy reached out to over at least a
dozen other RedSense clients in a similar manner to how he contacted [Redacted]
“It is entirely reasonable for RedSense to fear that Bohuslavskiy’s others may
terminate their current contracts or decide not to renew their contracts the
way [Redacted] did.” Lost goodwill was also sufficient for irreparable harm.

Bohuslavskiy maintained that his outreach to customers was
solely in his capacity as a RedSense partner—not as part of a competing
venture. “If that is true, then Bohuslavskiy has no competing venture that
faces a potential loss of business from an injunction, and given his position
that he is a partner in RedSense, he has a strong interest in limiting
reputational and financial harm to RedSense.”

Thus, the court enjoined Bohuslavskiy from: (1) publicly or
privately soliciting and/or contacting RedSense’s current customers and known
prospective customers; (2) publicly or privately denigrating the quality of
RedSense’s cybersecurity services to RedSense’s current customers and known
prospective customers; and (3) publicly or privately making statements about
RedSense and/or its products and services for the purpose of stealing business
away from RedSense. The court limited (1) to “customers Bohuslavskiy
specifically knows RedSense was soliciting. Given wide swaths of companies
could potentially be RedSense customers, the Court will not prohibit
Bohuslavskiy from seeking to do business with companies he is not aware
RedSense sought to do business with.”

Comment: Why is (2) ok? Some of this would be
nonfalsifiable, and we have no finding that any of it is untrue. Shouldn’t the
remedy be limited to prohibiting him from soliciting known customers? Seems
like a First Amendment problem, especially if he’s not engaging in competing
commercial activities. Indeed, in a footnote, the court specifically says: “With
respect to enjoining Bohuslavskiy from making false statements publicly or
privately about RedSense, RedSense failed to establish a violation of the
Lanham Act.” So why is it ok to enjoin an even broader category of
statements—negative statements, regardless of truth or falsity? In another
footnote, the court justified its restriction on public statements because “RedSense
has shown that prospective clients have seen Bohuslavskiy’s LinkedIn post, and
that the post has already caused one prospective client to not move forward
with RedSense at this time,” so the court warned the defendant that “future public statements may further interfere
with RedSense’s business expectancies.” But why would public, untargeted statements, if not false or not falsifiable, be tortious?

Is “gag one party to prevent him from speaking” really the
resolution that RedSense’s clients and potential clients wanted to bring them confidence?

from Blogger http://tushnet.blogspot.com/2025/12/despite-rejecting-lanham-act-pi-court.html

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9th Circuit chips away at consumer protection again

Posted on December 11, 2025 by rtushnet

Hussain v. Campbell Soup Co., No. 24-6041 (9th
Cir. Dec. 10, 2025)

Nonprecedential despite a dissent. The majority affirms
dismissal of claims in a putative class action suit alleging that Kettle Brand
“Air Fried” chips are deceptively labeled as solely air fried when they are, in fact,
deep fried in oil.

Hussain failed to plausibly allege that a reasonable
consumer would be deceived into believing that the chips are not deep fried in
oil: The front of the packaging prominently states that the chips are not just
“Air Fried,” but also “Kettle Cooked Air Finished.” “The front label therefore
expressly describes a two-step process that involves both kettle cooking and
air frying. The suggestion that the chips are exclusively air fried is belied
by the plain language of the front of the packaging.” [Ed. note: I’m with the
dissent here. Using “fried” for one process and “cooked” for the other implies
that the second process is not “frying.”] 

The majority found that reasonable consumers would
understand “kettle cooked” to refer to “the commonly understood method of deep
frying potato chips in oil”; it wasn’t plausible to understand the term as including
cooking with water or steam. “[A] front-label burst indicates that these chips
have ‘30% less fat than regular Kettle Brand’ chips, and a reasonable consumer
would understand that the remaining fat content cannot come from potatoes
alone, without a significant amount of oil.” 

Anyway, even if the front label is
ambiguous, the back lists “vegetable oils (canola, sunflower and/or safflower)”
as the second ingredient and reiterates: “We batch cook them in kettles, then
air fry them for a light and crispy crunch!” And there is also “a pictorial
depiction of potato slices being dropped into a vat of boiling liquid that a
reasonable consumer would understand to be oil, especially given the visible
droplets bubbling out of the pot. Given this context, no reasonable consumer
unsure of the meaning of the front label would be deceived into thinking that
the chips are not deep fried in oil.”

Judge Mendoza dissented, arguing that the majority ignored
the plausibility standard and failed to take the perspective of ordinary
consumers. “At the Rule 12(b)(6) stage, our task is only to determine whether a
‘reasonable consumer’ could at least plausibly conclude what the front of this
packaging obviously intends to communicate: that the chips are exclusively ‘Air
Fried.’ The complaint alleges exactly that, and the labeling readily supports
it.”

In stand-alone font and sizing, the
front panel prominently states “Air Fried,” a phrase widely used in consumer
marketing to signify an exclusive and healthier frying method. … At best,
“kettle cooked” functions as a vague descriptor of texture or artisanal batch
cooking, not as a qualifying statement as to the frying method (i.e. that the
chips are in fact also deep fried in vats of oil). Consumers purchasing bags of
chips at a store are not required to understand formalized industry jargon or
technical food-processing methods.

The dissent noted that Campbell Soup’s counsel at oral
argument “readily conceded” that the term “kettle cooked” is an “industry” term
of art. “Any person with access to the internet  can also review the countless blogs, forums,
and websites that are devoted to explaining (and debating) the exact meaning of
‘kettle cooked.’” [I personally have no knowledge at all of what “kettle cooked”
generally means.]

Indeed, the “30% Less Fat” statement “operates in tandem
with the dominating ‘Air Fried’ label to further mislead a reasonable consumer”:
it plausibly gives the impression that the chips contain less fat because they
are exclusively “Air Fried.”

The majority contends that a
reasonable consumer simply must know and conclude that the presence of any fat
or oil necessarily means that the chips are also deep fried. But, again, the
majority is simply incorrect. Air frying does not suggest the use of no oil or
fat, but a lesser use of oil that is placed on the chips so that they fry via
circulating hot air.

After all, the complaint alleged deception about whether the
chips were deep fried, not whether the chips have any oil or fat. “When a
manufacturer chooses to intentionally place a prominent, dominating
health-coded claim like ‘Air Fried’ alongside a smaller, quantified
fat-reduction claim, a consumer is plausibly entitled to take those messages at
face value without searching for other obscure and technical qualifiers that
hold vague and unqualifying meanings.”

The back label, to the dissent, didn’t help—it repeated the
cook/fry distinction and did not disclose a deep-frying process. “[K]ettles can
be used for steaming, boiling, par-cooking, or a variety of non-frying
processes – all of which are indeed methods of making potato chips. The
packaging suggests to the consumer that the process of frying is exclusively
via air while not equally disclosing in any clear way that the chips are also
deep fried.” The “miniscule” back-of-package graphic was also ambiguous.

The packaging “appears deliberately engineered to foreground
a health-coded exclusive frying message while burying the true deep-frying
process behind jargon and technical phrasing that only a judge or label-lawyer
would ever bother to parse.”

from Blogger http://tushnet.blogspot.com/2025/12/9th-circuit-chips-away-at-consumer.html

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sitting by designation, Judge Bibas says there’s no de minimis exception to Lanham Act false advertising

Posted on December 9, 2025 by rtushnet

Montway LLC v. Navi Transport Services LLC, — F.Supp.3d
—-, 2025 WL 3151403, No. 25-cv-00381-SB (D. Del. Nov. 11, 2025)

Judge Bibas either likes sitting by designation or is
willing to take one for the team; here’s another of his IP district court
decisions. This case involves alleged trade secret theft (departing employees)
in the cross-country car-shipping business, which has only a “handful” of
competitors. The trade secret claims survive in key part, as do the false
advertising claims, on which I will focus.

Defendant Navi’s website generally resembled plaintiff
Montway’s own, including a Terms of Use page that “chose to apply Illinois law”
even though Navi was headquartered in Delaware. “The website also contained a
handful of peculiar, similarly worded reviews, including multiple reviews by
people with the same name. And the website claimed that Navi had shipped more
than 20,000 vehicles, even though the entity had only been in business for a
few months and had a negligible online footprint. … [A]t least one positive
internet review of Navi … had been posted by an ex-Montway employee who had
never used Navi’s services.”

The court did dismiss Delaware state trade secret claims,
without prejudice so that Montway could, if it was able to, add more facts that
could support applying Delaware law to Navi’s conduct (much of the misconduct
allegedly took place in Bulgaria).

The court noted that, while some courts have imposed a “slightly
heightened” pleading standard for Lanham Act false advertising claims, neither
the Supreme Court nor the Third Circuit had done so, and it agreed with
Delaware district courts that had been skeptical of inventing such a standard.
Nonetheless, because the parties didn’t dispute the issue, it analyzed the
claim under that intermediate standard.

For proximate cause (why would the false advertising take
sales away from Montway, instead of the handful of other competitors?), the
trade secret theft—which meant that “Navi targeted Montway customers by sending
unsolicited, cheaper quotes to individuals who have asked Montway for quotes”—sufficed.
The allegedly false statements on Navi’s website would plausibly lead a
consumer to do business with Navi instead of Montway.

As for falsity, the complaint provided screenshots of
specific reviews: “three near-identical reviews posted by individuals with
three different names within the period of several weeks in 2024, more
near-identical reviews posted by individuals with the same three names months
later, and repostings of those exact reviews a few months after that. The
suspicious timing and wording of those reviews makes their falsity plausible.”
And a screenshot of a glowing review posted by an alleged ex-Montway employee
“who had never used Navi’s services” also made the ‘fake reviews using names of
real people’ allegations plausible. So too with the allegation that Navi
falsely claims to have “shipped ‘over 20,000 vehicles,’ ” where falsity was plausible
given allegations that fewer than 125 people visit Navi’s website each month
and that Navi has only been in business since May 2024. “To be sure, if it
turns out after discovery that Navi’s customer reviews were legitimate, or that
it has in fact shipped more than 20,000 cars, Montway’s false-advertising claim
will run into problems. But trying to litigate that issue now puts the cart before
the horse.”

Navi argued, cheekily, that 125 visitors/month was not enough
to cause more than de minimis harm. “The Lanham Act does not have a de minimis
exception.” Anyway, given the allegations of customer swiping, “[i]f even some
of those visitors decide, after reading the statements on Navi’s website, to do
business with Navi instead of Montway, that obviously harms Montway more than a
little.”

Meanwhile, a wholly owned subsidiary of Montway that served
as its sales/servicing arm had standing to sue for misappropriation, but not
for false advertising.  The complaint
failed to allege any harm from the false advertising to the subsidiary.

from Blogger http://tushnet.blogspot.com/2025/12/sitting-by-designation-judge-bibas-says.html

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paying a late-disclosed “drip pricing” fee suffices as injury under Cal’s new law

Posted on December 8, 2025 by rtushnet

Chowning v. Tyler Tech., Inc., 2025 WL 3496690, No.
4:25-CV-04009-YGR (N.D. Cal. Dec. 5, 2025)

One of the first “drip pricing” cases I’ve seen under
California’s new law, which the court reads to enable certain claims over and
above previous law.

The California Department of Parks and Recreation awarded
Tyler a 10-year contract to design and operate ReserveCalifornia.com, a website
that enables online booking for campsites located in California State Parks.

Reserve California charges campers
a campsite fee and a $8.25 reservation fee. In exchange for Tyler’s services,
DPR “agreed to compensate [Tyler with] the eligible reservation-based
transaction fees.” The contract requires DPR to approve any service and
reservation fee that Tyler charges and requires Tyler to comply with federal
and California laws and regulations in designing, operating, and otherwise
performing any services related to Reserve California.

Plaintiffs alleged that the $8.25 reservation fee that Tyler
charges is not included in “the initial price displayed to consumers” and is
not disclosed “until the final check-out screens.” Although Tyler disputed this,
arguing weakly that it discloses the reservation fee under the “Show More” link
related to unit details, amenities, and other remarks regarding the selected
campsite, “[a] website is not judicially noticeable, nor does the Court resolve
factual disputes on a motion to dismiss.” Note: even if the court did consider
this, it shouldn’t matter— “Show More” is a classic example of an
uninformative, useless disclosure that wouldn’t allow consumers to understand
that additional fees are being added. In the screenshots below, the fee is only
mentioned at step 3 (checkout page 1), and the true full price of the
reservation is shown at step 4 (checkout page 2).

step 1: “starting at” price doesn’t include fee

step 2: specific choice doesn’t show fee

step 3: fee mentioned in middle of text, no indication of total

step 4: the actual price!

The plaintiffs brought the usual statutory California claims and also alleged unjust enrichment.

The 2023 Honest Pricing Act prohibits certain deceptive advertising tactics, including “drip pricing,” where a firm advertises the product’s base price and later reveals other mandatory fees. It added the following provision to the CLRA:

(a) The unfair methods of competition and unfair or deceptive acts or practices listed in this subdivision undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer are unlawful:

…

(29) (A) advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than either of the following:

(i) Taxes or fees imposed by a government on the transaction.

(ii) Postage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer….

Tyler argued that plaintiffs couldn’t show causation or harm, because they paid the final price knowing what it was.  The court noted that “the legislature’s decision to prohibit a particular misleading advertising practice is evidence that the legislature has deemed that the practice constitutes a ‘material’ misrepresentation, and courts must defer to that determination.” The complaint alleged that, “had [plaintiffs] known the true nature of the Junk Fee … [they] would have attempted to pay in person directly to [the California state park].” That sufficed for materiality, which itself suffices for the elements of reliance and causation.

“At this early stage of litigation, it would be inappropriate for the Court to hypothesize about the availability of alternatives or other factual circumstances surrounding the transaction.” Plus, the court declined to create a Catch-22: “any consumer seeking to enforce the new CLRA provision could either purchase the product (despite the fee disclosure, which, according to defendant would strip a plaintiff of standing due to a lack of causation) or decline the purchase (meaning the plaintiff was not damaged, and therefore did not have standing).” Quoting a previous decision: “Surely the Legislature did not pass a law with no practical effect—especially given the overarching purpose of the CLRA.”

This also resolved questions about what constituted damage: “A plaintiff is injured when they pay for an unlawful fee in the context of drip pricing,” whether or not they knew the full amount they were paying. “While the Court agrees that Tyler is not required to disclose to whom the reservation fee is paid, Tyler’s argument does not address its alleged failure to disclose the complete price, including the reservation fee, in the first instance.”

For the CLRA claim, Tyler argued that: (1) campsite reservations are neither “goods” nor “services” for purposes of the statute; and (2) the reservation fee is exempt because it is a tax or fee that the government imposes. The court rejected both arguments. In evaluating whether the challenged conduct is a good or service, a court must follow the statutory requirement that the CLRA shall be “liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.”

A campsite reservation isn’t a good, but it is a “service,” given that the Honest Pricing Act was “designed to prohibit drip pricing in all industries,” which, as the California Legislature explained, includes “short-term rentals, [and] hotels.” If a hotel reservation is a service, so is a campsite reservation. The court distinguished cases about entrance tickets and limited-time licenses to stream a film or TV show.

The fee was also not a “[t]ax[ ] or fee[ ] imposed by a government on the transaction” under the law’s exemption. Any exception to the CLRA (and the other California laws) should be construed narrowly. It wasn’t enough that DPR permits contractors to charge fees and requires DPR approval of those fees. The “airport use fees, hotel taxes, tourism board fees, [and] wheelchair accessible vehicle fees imposed on Lyft and Uber by the Public Utilities Commission” identified by Tyler were “fees collected by a private company but that are passed to and retained by the government.” By contrast, the complaint alleged that Tyler retained the fees at issue. “Whether DPR set and ordered the reservation fee is a factual dispute that the Court will not resolve on a motion to dismiss.”

However, the court dismissed the unjust enrichment claim for failure to allege that Tyler received a benefit through “mistake, fraud, coercion, or request.” Plaintiffs challenged only the advertising, not the fee itself.

from Blogger http://tushnet.blogspot.com/2025/12/paying-late-disclosed-drip-pricing-fee.html

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Lack of evidence on lost goodwill leads to remittitur (but also proposed doubling of lost profits)

Posted on December 5, 2025 by rtushnet

Sterilite Corp. v. Olivet International, Inc., No.
1:22-cv-10327-JEK, 2025 WL 3460553 (D. Mass. Dec. 2, 2025)

A jury awarded Sterilite $11 million in damages for Olivet’s
willful infringement of the trade dress in Sterilite’s storage cabinets and
drawers: $2,656,711 in lost profit damages and an additional $8,343,289 in
damages for loss of goodwill. The jury also found that Olivet tortiously
interfered with Sterilite’s business relationship with Walmart and awarded
Sterilite an additional $5.2 million in lost profits for its wastebasket lids.

The court granted Olivet’s motion for remittitur with
respect to the loss of goodwill damages but denied as to the lost profits for
Sterilite’s cabinets and drawers. The Court reserved judgment on Sterilite’s
motion for enhanced damages: If Sterilite opted for a new trial, its motion for
enhanced damages would be denied without prejudice. But if Sterilite accepted
remittitur, Sterilite’s motion for enhanced damages would be granted and
Sterilite’s damage award in lost profits for its cabinets and drawers would be
doubled to account for the difficult-to-quantify reputational harms caused by
Olivet’s trade dress infringement.

The standard: The court must view the evidence in the light
most favorable to the verdict, and it may not upset the jury’s assessment of
damages unless that assessment “is ‘grossly excessive, inordinate, shocking to
the conscience of the court, or so high that it would be a denial of justice to
permit it to stand.’ ”

Lost profits: To demonstrate causation under the Lanham Act,
Sterilite “must demonstrate that the [infringement] actually harmed its
business.” While Sterilite “must prove the profits [it] would have made but for
[Olivet’s] infringement,” it need not “ ‘negate every conceivable intervening
factor which might have caused a decline in sales.’ ” Olivet argued that,
during the COVID-19 pandemic, Sterilite was unable to fulfill its customers’
orders and therefore decided to allocate its stock of cabinets and drawers
among different customers. It thus supplied only 63% of the cabinets and
drawers that Walmart demanded, and Walmart decided to look to other suppliers
of cabinets and drawers. An email from Walmart stated that it had decided “to
exit the Sterilite business in plastic shelving” “[a]s a result of
[Sterilite’s] inability to keep pace with customer demand,” “poor instock, not
accepting [fines] due to loss sales, and poor communications as a business
partner.” But the jury heard this evidence and rejected Olivet’s theory of
causation. There was evidence that Olivet sought “to follow [Sterilite’s] spec
detail exactly” in order “to replace Sterilite” at Walmart, and Olivet replaced
Sterilite only three months after that notification; a Sterilite witness wrote
that, “in [his] 30 years’ experience it takes longer than 60 days to design,
engineer, build molds, prepare with inventory, to put yourself into position to
serve Walmart well for a program of this magnitude.” The jury could have
accepted that “had Olivet not agreed to replicate Sterilite’s products for
Walmart (and at a lower price), Walmart would not have terminated Sterilite’s
business on those products and Sterilite would not have lost the associated
profits.”

But awarding over $8.3 million for lost goodwill was “sheer
speculation,” given that “no witness or evidence attempted to quantify the
value of Sterilite’s reputation before and after Olivet’s trade dress
infringement.” Because “[r]eputational damages are often difficult to
quantify,” plaintiffs “need not prove such damages with exacting precision.” Still,
while “ ‘mathematical precision’ ” is not required, plaintiffs “ ‘must provide
sufficient evidence to take the amount of damages out of the realm of
speculation and conjecture.’ ”

“The evidence at trial supported, and Olivet does not
contest, that Olivet’s trade dress infringement harmed Sterilite’s reputation. Customer
complaints and witness testimony demonstrated that Sterilite’s brand suffered
from customer confusion over Olivet’s inferior cabinets and drawers.” Product
reviews “revealed that customers attributed Olivet’s inferior products to
Sterilite. One customer complained, for instance, about ‘how cheaply these ones
were made compared to the first set [she] bought.’”

However, not a single witness testified about the
approximate dollar amount of Sterilite’s lost goodwill or how that amount could
be calculated. “Nor did Sterilite produce any evidence of how much it spent
promoting its cabinets and drawers before Olivet’s infringing conduct, or how
much it spent or would need to spend on corrective advertising after that
infringing conduct.” The award exceeded the $7,863,871 that Sterilite sought in
total lost profits for its cabinets, drawers, and wastebasket lids, but the
wastebasket lids were not even a part of the trade dress infringement claims
presented to the jury. Thus, Olivet met its “substantial” burden to show that, viewing
the evidence in the light most favorable to Sterilite, the jury’s loss of
goodwill damages award was excessive, speculative, and unsupported by the
record.

So Sterilite could go for a new trial—with no new witnesses
or evidence, so that doesn’t seem desirable—or accept remittitur and get its
motion for enhanced damages granted. The Lanham Act provides that “[i]n
assessing damages the court may enter judgment, according to the circumstances
of the case” and “subject to the principles of equity,” “for any sum above the
amount found as actual damages, not exceeding three times such amount.” That
sum “shall constitute compensation and not a penalty.”

The court “is bound by … the jury’s finding of
willfulness, which affect[s]” its determination of the appropriate “equitable
remedy.” But willfulness alone is insufficient to justify an enhancement of
damages. “The role of deterrence must be carefully weighed in light of the
statutory prohibition on the imposition of penalties.” Sterilite argued that
Olivet engaged in “egregious” pretrial discovery misconduct that forced it to
file multiple motions to compel production. But courts are “reluctant to
approve increased damages intended solely as punishment for conduct unrelated
to the trademark infringement or to the actual damages caused by it.” “That is
particularly so where, as here, Sterilite could have requested other sanctions
for the alleged discovery violations at the time those violations occurred.”

“[T]he pertinent inquiry remains whether the jury’s award
appropriately compensates Sterilite.” To enhance an award “based on the same
conduct that established Olivet’s liability for willful infringement, without
any connection to the alleged inadequacy of the award itself, improperly ‘appear[s]
to be punitive.’”

Sterilite argued that the award missed some infringement,
but “Sterilite repeatedly represented to the jury that [its expert’s]
assessment of $2,656,711 in damages was all that it sought in lost profits for
its cabinets and drawers.” Any new post-trial theories of damages were waived
and too speculative.

What about Olivet’s allegedly improved relationship with
Walmart? The Second Circuit affirmed trebling damages “reflect[ing] the
intangible benefits that accrued to [the defendant] as a result of its false
advertising,” particularly given that the parties were “direct competitors in a
two-player market” and the defendant “usurp[ed] … [the plaintiff’s] market share.”
While Sterilite and Olivet are competitors, they are not the only two
manufacturers of plastic household products. So Sterilite was already compensated
for its losses.

Finally, though, the evidence supported the conclusion that
Olivet’s infringement damaged Sterilite’s reputation, and “damages for loss of
reputation … are inherently indeterminate” and thus difficult to quantify. “If
Sterilite were to reject remittitur and opt for a new trial, the jury could
weigh the value of that loss of goodwill and, if appropriate, award damages. In
that case, equity would not justify granting Sterilite’s request for enhanced
damages on the basis of that same loss of goodwill.” But if it accepted
remittitur, it wouldn’t have been compensated for reputational harm, and the
court would double lost profit damages.

from Blogger http://tushnet.blogspot.com/2025/12/lack-of-evidence-on-lost-goodwill-leads.html

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thorough opinion allows CT’s greenwashing claims against Exxon to proceed

Posted on December 5, 2025 by rtushnet

State v. Exxon Mobil Corp., 2025 WL 3459468, No.
HHDCV206132568S (Conn. Super. Ct. Nov. 26, 2025)

The court allows greenwashing claims against Exxon to
proceed under the Connecticut Unfair Trade Practices Act (CUTPA). The state
alleged a decades-long “systematic campaign of deception” about the impact of
its fossil fuel products on the earth’s climate and a more recent
“greenwashing” campaign designed to bolster its image as an environmental
steward in order to attract consumers.

The state focused particularly on an advertising campaign
that began in 1970 and continued until 2007 or later, including advertorials in
the New York Times nearly every Thursday between 1972 and 2001 with knowingly false
claims such as

• Claiming that “a greenhouse
effect” that could “melt the polar ice caps and devastate U.S. coastal cities”
was a “lie” and a “myth of the 1960s and 1970s.”

• Describing predictions concerning
the impact of global warming as “media hype” creating “an unwarranted sense of
crisis.”

• Promoting the delay of any
response to climate change based on a supposed “lack of scientific data.”

• Using scientific data in a
misleading fashion to suggest that fossil fuels had little to do with global
warming and that “little if any warming” had occurred.

Greenwashing: Exxon allegedly promotes its “minor and
insignificant alternative fuels program to obscure its continued focus on its
fossil fuel business and mislead the public into believing that the defendant
is making serious efforts to address climate change.” The ads also allegedly
mislead consumers into believing that “certain of its fossil-fuel-based
products can help consumers reduce greenhouse gas emissions and improve fuel
economy.” Exxon allegedly “sought to falsely induce purchases and brand
affinity by portraying ExxonMobil as a company working on a solution to climate
change through selling ‘green’ products.”

The materially false claims allegedly included: 

a. that ExxonMobil was uncertain
that climate change was real, occurring or would occur in the future;

b. that ExxonMobil was uncertain
that human activity, including the combustion of fossil fuels, contributed to
climate change;

c. that there was time to wait
before taking action;

d. that there was a balanced debate
amongst scientists about whether climate change was occurring, its relationship
to human activity, and whether its effects would be positive or negative;

e. that ExxonMobil’s research
supported the assertions in (a) – (d).

The state sought penalties based on the number of false ads,
as well as injunctive relief against making the claims and requiring disclosure
of Exxon’s relevant internal research. It disclaimed seeking any damages caused
by Exxon’s contribution to climate change.

Exxon argued that federal law preempted claims seeking
monetary relief for injuries allegedly caused by interstate and international
greenhouse-gas emissions. Although the court followed the framework in City of
New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021), finding preemption, it
distinguished the claims at bar. The Chevron case involved claims for
“(1) public nuisance, (2) private nuisance, and (3) trespass under New York law
stemming from the [defendants’] production, promotion, and sale of fossil
fuels. The [plaintiff] requested compensatory damages for the past and future
costs of climate-proofing its infrastructure and property, as well as an
equitable order ascertaining damages and granting an injunction to abate the
public nuisance and trespass that would go into effect should the [defendants]
fail to pay the court-ordered damages.”

Here, the deceptive marketing claims and, to some extent,
the nature of the relief sought counseled against preemption. The state’s CUTPA
claims didn’t amount to state regulation of “the production, sale and use of
fossil fuels,” but were limited to “regulating the associated marketing conduct.”

Indeed, in Connecticut v. Exxon Mobil Corp., 83 F.4th 122,
142 (2d Cir. 2023), the Second Circuit addressed federal removal jurisdiction in
this case in a decision that resulted in remand to state court. The court said,
“Each of the three necessary elements of Connecticut’s deception claim is one
that a court could … resolve[ ] … without reaching the federal common law
of transboundary pollution…. We entirely agree with the district court’s
analysis of this point: Connecticut alleges that ExxonMobil lied to Connecticut
consumers, and that these lies affected the behavior of those consumers. The
fact that the alleged lies were about the impacts of fossil fuels on the
Earth’s climate is immaterial.” So too with the unfairness claim.

On the merits, the complaint stated a claim. Exxon argued
that the statements were made outside of Connecticut. CUTPA defines “trade” and
“commerce” as: “the advertising, the sale or rent or lease, the offering for
sale or rent or lease, or the distribution of any services and any property,
tangible or intangible, real, personal or mixed, and any other article, commodity
or thing of value in this state.” The federal courts have “held that CUTPA does
not require that a violation actually occur in Connecticut, if the violation is
tied to a form of trade or commerce intimately associated with Connecticut, or
if, where Connecticut choice of law principles are applicable, those principles
dictate application of Connecticut law.” Based on the allegations of the
complaint, some of the alleged tortious conduct occurred in Connecticut (advertorials
in papers delivered to Connecticut), and that was enough.

Were the claims made in “trade or commerce”? Lafferty v.
Jones, 229 Conn. App. 487, 327 A.3d 941 (2024), held that Alex Jones’s
defamatory and harassing speech, which was motivated by desire to sell
products, but otherwise unrelated to those products, fell outside the scope of
“trade” and “commerce” in CUTPA. “[N]othing in the defendants’ speech, in and
of itself, concerning the Sandy Hook massacre made any mention of their
products.” That wasn’t the case here. “The speech at issue in the present case
is expressly alleged to be about the defendant’s products, if not specifically
then genetically.” [ed. note: generically?] After all, “advertising” “is not
limited to direct and express solicitations for the sale of a product,” but
includes “[a]ny form of public announcement intended to aid directly or
indirectly in the sale of a commodity….” At least without a more developed
factual record, the court wasn’t going to reject the claims here.

Were the statements falsifiable, or just opinion or true?
Were they immaterial? The complaint adequately alleged deceptiveness; many of
these disputes were for the factfinder. In determining whether a claim is
falsifiable or opinion, Connecticut requires “analysis of three basic,
overlapping considerations: (1) whether the circumstances in which the
statement is made should cause the audience to expect an evaluative or
objective meaning; (2) whether the nature and tenor of the actual language used
by the declarant suggests a statement of evaluative opinion or objective fact;
and (3) whether the statement is subject to objective verification.”

“It may be that some of the statements referenced in counts
one and two of the complaint are expressions of opinion but … this court is
being asked to make that judgment based only on the allegations of the
complaint.” The complaint sufficed, especially given allegations that Exxon’s
internal research disagreed with its ads. Interpretation of CUTPA is supposed
to be guided by FTC interpretations, and the FTC has long held that “[c]laims
phrased as opinions are actionable… if they are not honestly held, if they
misrepresent the qualifications of the holder or the basis of his opinion or if
the recipient reasonably interprets them as implied statements of fact.”

The disclosure-based claims also survived because, even
though there’s no duty to disclose in many circumstances, one who decides to
speak may not omit material facts if the omission misleads reasonable consumers
about the import of the affirmative claims, and that was alleged here.

And materiality was properly alleged, given that materiality
is a lower standard than reliance:

The FTC’s publication of the Green
Guides reflects a recognition that environmental issues are a matter of
interest and concern to consumers and that, therefore, the defendant’s alleged
greenwashing efforts are material, at least potentially so. It is fair to be
skeptical that consumers would choose to purchase gasoline from the defendant
based on an erroneous impression that the defendant is proactively and
earnestly engaged in efforts to reduce greenhouse gas emissions through the
development of alternative energy sources and other more eco-friendly fossil
fuel products. It is not a question of reliance by the consumer, however, only
a question whether the consumer is influenced by the defendant’s allegedly
misleading environmental marketing. That is a question of fact, not a question
of law.

Unfairness claims survived for much the same reasons. CUTPA’s
unfairness standard is taken from the FTC:

(1) [W]hether the practice, without
necessarily having been previously considered unlawful, offends public policy
as it has been established by statutes, the common law, or otherwise—in other
words, it is within at least the penumbra of some common law, statutory, or
other established concept of unfairness; (2) whether it is immoral, unethical,
oppressive, or unscrupulous; (3) whether it causes substantial injury to
consumers, [competitors or other businesspersons]…. All three criteria do not
need to be satisfied to support a finding of unfairness. A practice may be
unfair because of the degree to which it meets one of the criteria or because
to a lesser extent it meets all three….

Did the First Amendment bar the claim? Not at this stage.
Commercial speech “can include material representations about the efficacy,
safety, and quality of the advertiser’s product, and other information asserted
for the purpose of persuading the public to purchase the product.” And “[a]dvertisers
should not be permitted to immunize false or misleading product information
from government regulation simply by including references to public issues.” Interestingly,
the court relied heavily on Jordan v. Jewel Food Stores, Inc., 743 F.3d 509
(7th Cir. 2014) (an ad congratulating Michael Jordan on his career and bearing
store branding, but not explicitly proposing a commercial transaction or
mentioning a specific product, was commercial speech), and Kasky v. Nike, Inc.,
45 P.3d 243 (2002) (Nike’s advertorials and letters to the editor claiming fair
labor practices were commercial speech). Jordan: “An advertisement is no
less ‘commercial’ because it promotes brand awareness or loyalty rather than
explicitly proposing a transaction in a specific product or service.”Kasky:
“speech is commercial if the speaker is a commercial person or entity, the
intended audience is likely to be consumers of the speaker’s products or
services, and the content of the speech includes ‘representations of fact about
the business operations, products or services of the speaker… made for the
purpose of promoting sales of, or other commercial transactions in, the
speaker’s products or services.’”

In dismissing cert in Kasky as improvidently granted—basically
because they couldn’t figure it out—Justice Stevens wrote:

Whether similar protection [as in defamation
law] should extend to cover corporate misstatements made about the corporation
itself, or whether we should presume that such a corporate speaker knows where
the truth lies, are questions that may have to be decided in this litigation.
The correct answer to such questions, however, is more likely to result from
the study of a full factual record than from a review of mere unproven
allegations in a pleading. Indeed, the development of such a record may
actually contribute in a positive way to the public debate.

“Unfortunately, in the twenty-two years that followed the
Court’s decision to dismiss the writ of certiorari in Kasky, it still
has not addressed the ‘important,’ ‘difficult’ and ‘novel’ issues presented.”
Preach!

Anyway, Exxon’s conclusory claim that the statements
described in the complaint do not propose commercial transactions were insufficient.
“[T]he mere presence of non-commercial information in an otherwise commercial
presentation does not transform the communication into fully protected speech.”

Nor did the Noerr-Pennington doctrine, which protects
the right to petition the government through lobbying, litigation, or other
advocacy including publicity campaigns, bar the claims at this stage.

The court also rejected challenges to various smaller bits
of the complaint, such as the state’s claim for relief seeking “an order that
ExxonMobil fund a corrective education campaign to remedy the harm inflicted by
decades of disinformation, to be administered and controlled by the State or
such other independent third party as the Court may deem appropriate.” This
wasn’t government-compelled speech or compelled subsidy of private speech; the
funds would be used by the state to pay for corrective education.

Restitution/disgorgement: the state sought “payment of the
monetary value of the defendant’s gain” to the state, acting on behalf of the
citizens of the state. “[W]hen a public entity seeks disgorgement it does not
claim any entitlement to particular property; it seeks only to deter violations
of the [ ] laws by depriving violators of their ill-gotten gains.” This was a proper
request.

Can the state reach decades back in its claims?  CUTPA’s three-year limitations period
applicable to private enforcement actions does not apply to actions brought by
the state. “The defendant presents scant authority in support of its
proposition that an egregious delay by the sovereign violates due process.” It’s
up to the legislature, not the judiciary, to abolish or modify the doctrine of
nullum tempus (no limitations period runs against the state). Even if the court
agreed that, at some point, nullum tempus must yield to due process, it couldn’t
decide a laches-equivalent defense on a motion to strike. “The defendant is not
precluded from raising due process concerns to temper the court’s consideration
of the monetary relief sought by the plaintiff if the case reaches that
juncture.”

from Blogger http://tushnet.blogspot.com/2025/12/thorough-opinion-allows-cts.html

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wrongfully claiming Amazon ASIN might be false advertising, even with foreign TM rights

Posted on December 5, 2025 by rtushnet

Best Glide Aviation Survival Equipment, Inc. v. Tag-Z, LLC, No.
1-23-cv-1080-DAE, 2025 WL 3454210 (W.D. Tex. Aug. 20, 2025)

This case involves an alleged abuse of Amazon’s system to keep
out legitimate competitors. Amazon is so big it can help other, smaller
would-be monopolists! The parties compete to sell military style P-38 and P-51
can openers, stamped with “U.S. Shelby Co.” Best Glide alleged that U.S. Shelby
openers were originally manufactured by Mallin Shelby Hardware until 1983, when
the company dissolved, and since then, they have been manufactured,
distributed, and sold by various entities.

Best Glide alleged that it began such sales in 2009; that it
was well known in the community for making such sales; and that the public has
come to associate it as a provider of U.S. Shelby openers on its own website
and on Amazon’s. (Seems unlikely, but I don’t think it needs to be true for
Best Glide to be in the right here, given what comes next.)

Each product on Amazon has an Amazon Standard Identification
Number (ASIN), “akin to a serial number.” Amazon’s Brand Registry Program
allows a seller to become a brand owner by registering a brand name, registered
trademark, and/or trademark application into the program. “Once entered in the
program, a brand owner controls both the content of an ASIN and who is listed
as a seller on an ASIN.” With a generic ASIN, no one seller controls the
listing or who may be listed as a seller.

Tag-Z filed for, but later withdrew, a trademark application
for “US Shelby.” It also filed trademark applications for “P-38” and “P-51.” Best
Glide’s opposition to those applications is suspended pending resolution of
this case. Tag-Z possesses German trademark registrations for “P-38,” “P-51,”
“US SHELBY,” and “US SHELBY CO.” It allegedly used these to enter the Brand
Registry Program and block US sales.

Specifically, Amazon informed Best Glide that Tag-Z had
registered one or more of its marks in the program and thus was now the brand
owner for the previously generic ASINs. This allegedly led to a marked decline
in Best Glide’s sales.

Stretching the definition of “commercial advertising or
promotion” a little, but not in any way I find troubling, the court found that Best
Glide stated a claim for false designation of origin/association/endorsement
and unfair competition/false advertising under the Lanham Act and coordinate
state law claims.

The court lumped false designation of origin, association,
or endorsement together under §43(a)(1)(A), then applied (B) standards to the
claim, including materiality. (This is really mostly a (B) claim.)

The (A) claim was predicated on the idea that, by exploiting
the Brand Registry loophole, Tag-Z was able to misrepresent that associated
reviews should be attributed to it, when they in fact should be attributed to Best
Glide; this was plausibly material “since it can be inferred that customers
will be influenced by reviews believed to be associated with Defendant when
they are in fact attributable to Plaintiff.”

Likewise, the (B) claim survived because it was plausible
that the ASINs are commercial advertisements about the good’s designation of
origin, association, or endorsement. They were plausibly (1) commercial speech,
(2) for the purpose of soliciting business, and (3) sufficiently disseminated
to a relevant public audience. ASINs are (as alleged) not only serial numbers,
but the shorthand method of describing a product webpage. “[G]iven that
consumers can see the associated ASINs on the Products’ webpage listing, the
Court finds Plaintiff has pled the speech is sufficiently disseminated to the
relevant public audience.” [Yeah, but is it plausible they’re paying attention?
I think this could also be analyzed as a series of commercially motivated false
statements to Amazon, which is such a big intermediary that misstatements to it
are sufficiently disseminated to a relevant audience.] And “Defendant’s
excluding other sellers from using the ASINs and thereby positioning itself to
consumers as the exclusive seller of these Products with reviews which should
be attributed to Plaintiff is sufficient to plead a misrepresentation.” [Note
the one-from-column-A-and-one-from-column-B approach here: the commercial
speech is the ASINs, but then the misrepresentations come in the reviews
associated with the ASINs. I suppose this is analogous to situations where a
pharmaco claims “genericity” for something that isn’t bioequivalent, etc.—the ASIN
is sufficiently concentrated information, in this context, that it functionally
contains the statements associated with it, here the reviews.]

The similar state law claims survived, but tortious
interference with contract failed because the complaint (somehow?) didn’t
allege the existence of a contract between Amazon and Best Glide. Moreover,
Best Glide failed to allege that any contract between itself and Amazon
obligated Amazon to allow it to sell products under specific ASINs. “In the
absence of a contract requiring that obligation, Plaintiff cannot allege such a
contract was breached.” Likewise, tortious interference with prospective
economic relations failed for want of alleged interference with a specific
prospective contract or client relationship.

Business disparagement also failed because no allegedly
false statement was “about” Best Glide, much less defamatory.

from Blogger http://tushnet.blogspot.com/2025/12/wrongfully-claiming-amazon-asin-might.html

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“abortion pill reversal” proponents engaged in noncommercial speech, 2d Circuit agrees for PI purposes

Posted on December 5, 2025 by rtushnet

National Institute of Family and Life Advocates v. James,
— F.4th —-, 2025 WL 3439256, No. 24-2481-cv (2d Cir. Dec. 1, 2025)

Unlike the similar
California proceeding, the district court in NY granted a preliminary injunction
against enforcement of consumer protection law against evidence-free “abortion
reversal” claims, because there weren’t allegations of commercial benefit from
promoting those claims. “The NIFLA plaintiffs are non-profit, faith-based
organizations that have made, and seek to continue to make, statements
regarding abortion pill reversal.” At this stage, they were likely to succeed
on their First Amendment claim because their APR-related statements are
noncommercial speech. The statements were religiously, not economically,
motivated; the NIFLA plaintiffs didn’t provide APR and only refer individuals
to third-party providers who could then administer APR; and they received no
remuneration for their services, including no referral fees or commissions. The
NIFLA plaintiffs didn’t charge for access to APR “information” or any of their
pregnancy-related or parenting services.

“To hold otherwise could potentially subject a sweeping
range of non-profits to regulation of their speech for providing the public
with information and resources concerning critical services.” E.g., abortion information,
LGBT rights groups in states that ban in-state gender-affirming care, or “a
group that matches immigrants with organizations providing access to
employment, English language classes, or immigration legal services.” “Expanding
commercial speech in a way that covers public statements made by these types of
organizations would push the commercial speech doctrine far beyond its ‘core’ of
regulating commercial transactions.”

The AG argued that the speech should be considered
commercial because “someone must bear the cost” of APR “be it insurance, the
medical provider, or a charity,” and that the NIFLA plaintiffs offer services
in the “stream of commerce” that have commercial value. “However, this would be
true of any non-profit providing information, free services, and access to
third-party providers; those services will inevitably have some commercial
value and eventually someone will have to be paid for them.”

The AG also argued that “consumers will likely be led to
believe that the NIFLA plaintiffs will arrange for them to receive [the APR
protocol] because their intended statements invite consumers to access a
network of physicians who are willing and able” to provide it, thus making the
statements analogous to ads for other medical services. But the cases cited by
the AG involved medical procedures or products offered in exchange for money. The
NIFLA plaintiffs allege that they receive no direct or indirect payment for the
services they provide or referrals they make. “Moreover, there is no evidence
in the record, at this stage of litigation, to suggest that the NIFLA
plaintiffs gain other types of economic benefits by engaging in this speech,
such as an increased customer base or a capital increase through fundraising.”
[If soliciting for nonprofits is noncommercial speech, why would ordinary
fundraising be commercial speech as to statements about what the nonprofit does?]

The court emphasized that “no factor, including the
speaker’s motivation, is dispositive to the noncommercial speech inquiry.” But
it wasn’t just ideological motivation at issue here: the NIFLA plaintiffs were
actually not providing or charging for services or getting direct or indirect
compensation for their referrals.   

from Blogger http://tushnet.blogspot.com/2025/12/abortion-pill-reversal-proponents.html

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“ambiguity” in consumer protection cases is something different from “ambiguity” in Lanham Act cases: the case of “Naturally Derived”

Posted on December 1, 2025 by rtushnet

Kent v. Conopco, Inc., 2025 WL 3296002, No. 25-cv-03660-JCS
(N.D. Cal. Nov. 26, 2025)

The court allows a claim against “Naturally Derived”
personal care products to proceed. “There is no asterisk on the front label
linking the claim to a definition elsewhere on the front or back label; nor is
there a definition of the term ‘Naturally Derived’ on the front label.” The
back label does purport to describe what “naturally derived” means.” E.g.: Love
Beauty & Planet Plant-Based Vanilla Body Wash’s back label says, ‘92% of
our formula is naturally derived, meaning it’s unchanged from nature or keeps
over 50% of its original structure after some processing. This includes water
and ingredients from plant, mineral and fermentation sources.’ ”

For some of the products, “naturally derived ingredients” in
the list of ingredients are denoted with an asterisk. Plaintiffs allegedly
falsely or misleadingly identify synthetic ingredients as naturally-derived,
including cocoamidopropyl betaine, sodium lauroyl isethionate, sodium methyl
cocoyl taurate lauric acid, citric acid, and stearamidopropyl dimethylamine,
cetearyl alcohol, and behentrimonium chloride. Many of these ingredients are
allegedly non-naturally occurring chemicals made by chemically modifying
naturally-occurring plant oils.

The products are allegedly “predominantly composed of
ingredients produced using industrial chemical processes.” By way of example,
the complaint alleged that, “of the twenty (20) ingredients listed for the Dove
Men + Care Eucalyptus and Birch 2-in-1 Shampoo and Conditioner, fourteen (14)
are industrially-produced chemicals that most consumers would not identify as ‘natural’
or ‘naturally derived,’ including one (citric acid) produced using industrial
fermentation processes.” Plaintiffs alleged that “[s]imilar analyses hold true
for all the ‘X% Naturally Derived’ Products.” They also alleged that the claims
would be false even if they were based on ingredient weight.

Conopco allegedly used the British Standards Institute’s ISO
16128 to make its claims. That standard allegedly “defines ‘derived natural
ingredients’ as ‘cosmetic ingredients of greater than 50 % natural origin, by
molecular weight, by renewable carbon content, or by any other relevant
methods, obtained through defined chemical and/or biological processes with the
intention of chemical modification.’ ” But, plaintiffs alleged, this standard
is a proprietary standard that is not available to the public and thus, “for
all intents and purposes, the public is entirely ignorant of how [Conopco]
calculates the percentage of ingredients that is naturally derived/natural
origin and what [Conopco] is communicating when it makes the naturally
derived/natural origin claims.”

The standard allegedly expressly states that it “is not
designed for use in labeling and product communications.” Indeed, as alleged, “ISO
16128’s definition of ‘natural origin index’ is very complicated and entirely
beyond the ability of an ordinary consumer to understand.” It is allegedly not
a government standard, but instead, “was designed solely by cosmetic industry
scientists, without involvement of any consumer advocates or persons familiar
with consumer advertising” with the apparent purpose of “provid[ing] an
expansive definition [of] ‘natural origin’ to encourage manufacturers to use
‘natural’ materials as ingredients for manufacturing.” Plaintiffs further
alleged that ISO 16128 is “inappropriate for use in labeling because it does
not require uniform calculations”: users can include or exclude added water at
will. They can also use any of three criteria: “molecular weight,” “renewable
carbon content”, or “any other relevant methods” to calculate percentage, but the
standard does not define “renewable carbon content,” nor what the “any other
relevant methods” may be. The complaint also pled that “[l]aypeople are not
versed in assessing molecular weights.”

They brought the usual
California claims.

The court found the labels to be plausibly deceptive. In the
9th Circuit, consumer protection claims can be maintained if the
front label is plausibly misleading—that is, if it’s plausible that a
reasonable consumer would conclude that the front label contains all the
relevant information and believe a false claim as a result. If a reasonable
consumer who cared about the fact at issue would necessarily conclude that they
needed to look at the back label to clarify matters, though, and the back label
clears things up, the claim is merely ambiguous and not misleading.

This is a different framing of “ambiguity” than Lanham Act
“ambiguity,” though it may not produce hugely different results in practice. A
front label is not ambiguous under consumer protection law merely because it
has more than one plausible meaning (the Lanham Act standard). “Nature Fusion” is
fatally ambiguous: “so devoid of any concrete meaning that there was
nothing ‘from which any inference could be drawn or on which any reasonable
belief could be based about’” a personal care product’s ingredients. “[A] front
label is ambiguous when reasonable consumers would necessarily require more
information before reasonably concluding that the label is making a particular
representation. Only in these circumstances can the back label be considered at
the dismissal stage.” “[F]ront-label ambiguity is determined not by whether a
consumer ‘could’ look beyond the front label, but whether they necessarily
would do so.” And context can also matter to whether something is plausibly
misleading, such as one’s background knowledge about the exotic product Manuka
honey, and whether the product is a specialty one or would be bought by a busy
consumer with kids in tow.

The consumer protection concept of “ambiguity” therefore determines
whether a claim can be pursued under state law at all, whereas the
Lanham Act concept uses ambiguity as a screen for whether evidence of actual
consumer response is required, or whether proof of falsity alone will show
deceptiveness; that is, a Lanham Act-ambiguous claim can still be litigated and
proved deceptive. By contrast, consumer protection ambiguity is more like a
puffery defense: if a claim is so mushy that it doesn’t have a specific enough
meaning to be factual on its own (without consulting the back label), then it’s
too ambiguous to sue over.

The risk—and I do think it’s a significant one—is that
courts might use “ambiguity” the same way across regimes despite the different
meaning and function of the concept in the two areas. I have argued
that courts should not be so rigid in their use of the literal/implicit falsity
divide in Lanham Act cases, and this development in consumer protection law
adds to the reasons to do so: ambiguity in consumer protection law (understood
broadly to include the Lanham Act) should be a single concept.

Back to the case at bar: This front label was plausibly
misleading, so the court declined to consider the back label at this stage. Plaintiffs
alleged that a reasonable consumer would understand from the phrase “x%
naturally derived” that the specified percentage of the product, whether
evaluated by weight or by the number of ingredients, is made of ingredients
that are not synthetic but that in fact, because of the inclusion of synthetic
ingredients in the definition of “naturally derived” used by Conopco, the
percentage of the product that is made from synthetic ingredients is much
higher than the label suggests. It was indeed plausible that a reasonable
consumer would believe that “naturally derived” means non-synthetic. In some
cases, qualifying language indicating the percentage of the product that was
plant-based can be enough to avoid misleadingness—but that depends on the
plaintiff’s theory of the case. Where the plaintiff’s theory isn’t about “100%
natural” or similar claims, the percentage doesn’t help if it’s an allegedly
false percentage. Additionally “this case involves everyday products and not
the niche product at issue in the Trader Joe’s case [Manuka honey] that
resulted in a higher standard of care from the reasonable consumer.”

Even considering the back labels, they didn’t resolve any
ambiguity in a way that avoided plausible misleadingness, given the plaintiffs’
allegations that the definition Conopco used was unsuitable and misleading.

However, plaintiffs’ omission-based claims failed. (They
were a repackaged “the back label definition is bad” theory.)

The court also refused to reject a UCL unfairness theory at
this stage based on the allegation that Conopco’s conduct violates FTC
regulations and policy set forth in the Green Guides.

However, the common law fraud and negligent
misrepresentation claims fail to state a claim under California’s economic loss
rule.

from Blogger http://tushnet.blogspot.com/2025/12/ambiguity-in-consumer-protection-cases.html

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“unfair competition” CGL insurance exclusion applies only to competitor claims, not consumer claims

Posted on December 1, 2025 by rtushnet

Athena Cosmetics, Inc. v. Great American E&S Ins. Co.,  2025 WL 3304392, No. 2:24-cv-08010-AH-AGRx
(C.D. Cal. Nov. 24, 2025)

Three underlying putative class actions targeted Athena’s
sale of “lash enhancement serums from Athena that contained compounds found in
prescription drugs and were known to cause adverse side effects to the face and
eye area.” They alleged “false, misleading, unfair, and deceptive sale of
beauty products without disclosing dangerous risks and side effects of the
products’ key ingredient” and “unfair competition or unfair or deceptive acts
or practices” in violation of various states’ consumer protection statutes.
Although the underlying complaints alleged that the plaintiffs experienced
“physical impact” on their face and eye area, they explicitly did “not seek to
recover for physical injuries.”

Great American denied a duty of coverage to its insured,
Athena, under a Commercial General Liability Policy stating that Great American
“will pay those sums that [Athena] becomes legally obligated to pay as damages
because of ‘bodily injury’ … to which this insurance applies” and “will have
the right and duty to defend [Athena] against any ‘suit’ seeking those damages.”
The Policy defines “bodily injury” to mean “injury, sickness, or disease
sustained by a person, including death of a person,” as well as “mental
anguish, mental injury, or shock, if directly resulting from physical injury,
sickness, or disease to that person.” There’s also an exclusion for any “Claim
or Suit Alleging Infringement of Intellectual Property or Violation of Laws
Concerning Unfair Competition or Similar Laws,” which excludes coverage for
bodily injury or property damage “alleged in any claim or ‘suit’ that also
alleges any: … (2) violation of any statute, common law, or other laws or
regulations” “concerning unfair competition, antitrust, restraint of trade,
piracy, unfair trade practices, or any similar laws or regulations.”

Two questions: First, did the underlying lawsuits create a
duty to defend, or did they not claim “bodily injury”? The court’s answer:
there was a duty to defend given that the underlying complaints alleged such
injury, even though they disclaimed recovery for damages for physical injury
(presumably to allow a bigger class). An “insured is entitled to a defense if
the underlying complaint alleges the insured’s liability for damages
potentially covered under the policy, or if the complaint might be amended to
give rise to a liability that would be covered under the policy.” In other
words, under California law, “the insurer’s duty is not measured by the
technical legal cause of action pleaded in the underlying third-party
complaint, but rather by the potential for liability under the policy’s
coverage as revealed by the facts alleged in the complaint or otherwise known
to the insurer.” The insurer cannot “duck coverage simply because the
complainants sought the tactical advantage of bringing their claims through a
class action.” In addition, the complaint also alleged mental distress, which
was covered under the policy’s broad definition of physical injury.

Second, was a noncompetitor consumer protection suit one for
“unfair competition” or “unfair trade practices”? The court’s answer: no. The
exclusion, which must be interpreted narrowly, was focused on competitor-type
behavior, got its tenor from “antitrust,” “restraint of trade,” and “piracy.”
Consumer protection claims brought by consumers weren’t excluded. Great
American argued that nothing in the exclusion limits its application to
disputes among business competitors. But Standard Fire Ins. Co. v. Peoples
Church of Fresno, 985 F.2d 446 (9th Cir. 1993), interpreted “unfair
competition” in the context of a CGL policy and described common law unfair
competition as “synonymous with the act of ‘passing off’ one’s goods as those
of another,” limiting the term to “the common law tort which includes
competitive injury as an element,” at least where it was listed alongside of “libel,
slander, defamation, violation of right of privacy, piracy, misappropriation of
idea, and infringement of copyright, title or slogan.” And “piracy” was also in
the policy here. Thus, none of the “similar laws or regulations” listed along
with “unfair competition” in this policy referred to conduct directed at
consumers.

The “objectively reasonable expectations of the insured”
would not consider “unfair competition” to broadly exclude consumer
fraud-related claims.

from Blogger http://tushnet.blogspot.com/2025/12/unfair-competition-cgl-insurance.html

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