labeling grandfathered drug in standard format doesn’t misrepresent it as FDA-approved

Posted on January 14, 2020 by rtushnet

Belcher Pharms., LLC v. Hospira, Inc., — F. Supp. 3d –,
No. 8:17-cv-2353-T-30AAS, 2020 WL 102744 (M.D. Fla. Jan. 7, 2020)
“Epinephrine—a drug that is a medical necessity—has been in
short supply on and off for nearly a decade.” Hospira has made epinephrine since
before 1938, so Hospira is “arguably” grandfathered under the FDCA and has
never received FDA approval.  Regardless,
“the FDA asked Hospira to ramp up manufacturing to manage the epinephrine
shortage in 2010, which Hospira did.”   
Belcher launched an FDA-approved epinephrine ampule (it does
not sell a prefilled syringe, as Hospira does), in 2015. By early 2017, there
was no longer a shortage of epinephrine ampules, so the FDA asked Hospira to
discontinue its unapproved ampule, but to continue manufacturing its
still-scarce prefilled epinephrine syringe. Hospira complied, and Belcher saw
an increase in the sales of its epinephrine ampule.  After this, the FDA asked Hospira about
extending the expiration dates of the prefilled syringe, and the FDA then told
healthcare providers that the expiration dates were extended by 9 months past
the earlier 21-month expiration date.  
Becker sued Hospira for false advertising and for common law
unfair competition, for allegedly marketing its epinephrine products—both the
ampule and prefilled syringe—as FDA-approved. 
The court granted Hospira, “which did everything the FDA requested to
manage a severe shortage of a medically necessary drug,” summary judgment.    After the FDA told Hospira to discontinue its
epinephrine ampules, the FDA asked Hospira about extending the expiration dates
of its prefilled syringe. Hospira sent the FDA its shelf-life analysis, and
shortly thereafter the FDA told healthcare providers that the expiration dates
for Hospira’s prefilled syringe were extended for 9 months past their 21-month
expiration date. Hospira’s ampules had a 24-month expiration date, while
Belcher’s ampule had an expiration date of 12 months, which the FDA later
extended to 17 months.   Belcher alleged the following as false
advertising:  
1. Hospira’s product labels, which include as indications
for use that the epinephrine products (a) can treat cardiac arrest, (b) can be
administered intravenously, and (c) can prolong the effects of anesthesia; 2.
Hospira’s misleading advertisements as to its epinephrine products’ shelf life
on its packaging; and 3. Hospira’s comparison of its epinephrine products to [FDA-approved]
Adrenalin, which conveyed the message that its products were generic Adrenalin.
The court found that placing the products on the market with
indications for use and shelf life on product labels and packaging, in standard
format for FDA-approved drugs, could not, in itself, be a misleading claim of
FDA approval. It was too great a stretch to argue that presence on the market
in this was a representation of FDA approval. 
 
That left the comparison claim: Hospira compared its
products to FDA-approved Adrenalin, thus allegedly implying that it was a
FDA-approved generic.
First, internal Pfizer emails and an email response to a
drug distributor who inquired if Hospira was marketing the generic version of
Adrenalin were not “commercial advertising or promotion.”   An
Injectables Product Availability Report on its website did qualify, but
couldn’t be shown to be material. Even if the court assumed it was misleading,
that didn’t connect up to Belcher’s evidence that consumers believed Hospira’s
epinephrine products were a generic version of Adrenalin approved by the FDA. “Belcher
has not shown that a single consumer ever viewed the Injectables Product
Availability Report or was misled by it. Without evidence that a consumer
viewed the Injectables Product Availability Report, Belcher cannot show that
the misleading statements had a material effect on purchasing decisions.”   

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Reading list: Pam Samuelson on legal writing

Posted on January 14, 2020 by rtushnet

Pamela Samuelson, Good Legal Writing: of Orwell and WindowPanes 
From the archives: Excellent short piece on legal writing, for students and other
legal writers of all kinds.  In itself,
interesting to see how a groundbreaking female academic framed things in 1984,
including the advice not to use “she” as the generic third person singular
pronoun; it was “too cute.”

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confusion is not irreparable harm in false advertising case

Posted on January 14, 2020 by rtushnet

AMETEK CTS US, Inc. v. Advanced Test Equipment Corp., No.19-cv-02348-H-AHG,
2020 WL 133888 (S.D. Cal. Jan. 13, 2020)
The parties operate in the market for “sophisticated
electronic instruments in the automotive, telecommunications, energy,
aerospace, power, research, medical and industrial markets.” AMETEK sells
directly to consumers and also distributes its products through commercial
partners, while defendant ATEC has been a distributor of AMETEK’s products. In
late 2019, AMETEK informed ATEC that it would have to “decline the opportunity
for non-warranty service requests on behalf of ATEC going forward.” “Defendant
responded negatively to this development.” ATEC issued a press release titled
“AMETEK CTS No Longer Calibrating or Repairing Equipment After The Warranty
Expires,” disseminated through its website, social media, and email. AMETEK
began to receive inquiries about this from various customers and distributors. Although
ATEC offered to publish a retraction prepared by AMETEK, AMETEK instead sued
and sought a TRO, which the court here denied. ATEC represented to the Court
that “the press release with the allegedly false statements at issue in the
complaint had been taken down from ATEC’s website and that ATEC would not
disseminate similar statements” during the course of this litigation.
The court held that AMETEK failed to show both irreparable
harm and likely success on the merits. “Although loss of goodwill may
constitute irreparable injury, the loss must be based on factual allegations
and not be purely speculative.” Here, the evidence offered by AMETEK showed, “at
most, that some consumers were confused by ATEC’s press release. However, the
Ninth Circuit has explained that customer confusion is not the same thing as
irreparable harm.” None of the customers stated that they now had a negative
impression of AMETEK or that they’d refuse to deal with it in the future—these weren’t
like “numerous and persistent complaints from would-be customers” or actual
product complaints as a result of the disputed conduct.  Likewise, a VP’s declaration asserting that “AMETEK’s
reputation in the marketplace has been harmed by ATEC’s false statements” and
that “AMETEK expects to lose future sales” as result of ATEC’s conduct was too
conclusory.
Success on the merits: AMETEK argued that ATEC’s statements
about the scope of AMETEK’s post-service warranty were literally false, because
“AMETEK CTS No Longer Calibrating Or Repairing Equipment After The Warranty
Expires” indicated that it was no longer calibrating or repairing equipment
after the warranty for any purchaser. The body of the press release said that
“AMETEK CTS has notified [ATEC] that they would no longer be supporting their
products after the warranty period has expired.” In fact, AMETEK argued, it was
still supporting these product lines after warranty as long as the relevant
machines were not purchased by ATEC. ATEC argued that its contested statements were
true in the context of the entire press release.  The court found numerous disputed issues of
fact precluding a finding of likely success—both parties’ arguments were reasonable.
The argument that the subject line was misleading was “not without merit,” but
ATEC’s reference to the context of the full release was “also compelling.”
However, the case was not moot simply because ATEC removed
the offending statements from public view. ATEC made no argument that its
behavior “could not reasonably be expected to recur.”

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Amicus brief in Booking.com

Posted on January 14, 2020 by rtushnet

Joined by a number of able trademark scholars, I filed this amicus brief in Booking.com in support of neither party, arguing that (1) genericness standards need to take into account the risks of overassertion/overprotection, and (2) unfair competition doctrine provides relief for deceptive uses of even generic terms, but does not allow a ban on the use of such terms–the remedies have to focus on proper additional labeling.  EFF and AIPLA also filed amicus briefs, available here.

One note about the AIPLA brief (in support of neither party), which contends:

… gTLD composite marks should nevertheless be limited to the applicant’s use of the specific terms in combination. For example, the PTO should require the owner of “TOYS.COM” (if it has acquired distinctiveness and is otherwise protectable) to disclaim any right to use “TOYS” or “.COM” apart from the proposed mark as shown. This would potentially allow the trademark owner to argue that a competitor using “TOYZ.COM” is likely to confuse, but should not preclude the use of the generic term “toys” with another gTLD (e.g., “TOYS.BIZ”).  

The first two sentences make sense if TOYS.COM is to be allowed at all, but I have no idea how they expect to get to the last one without committing judges to casual empiricism, which would help preserve competition but which is in deep tension with the idea of the multifactor confusion test as an empirical inquiry. Even if TOYS.COM is supposed to be limited to the combination, it would almost certainly survive a motion to dismiss if they sued either TOYZ.COM or TOYS.BIZ, because the degree of mark similarity is only one factor in the confusion test and both hypotheticals diverge in some respects from TOYS.COM.  Implicitly, AIPLA wants the Court to think that there’s some rule that the gTLD is more useful to distinguish between businesses than the spelling of the second-level domain name, at least for second-level domains that are generic on their own (as both TOYS and TOYZ would be).  There is currently no such rule; ACPA cases and UDRP precedent are both decidedly to the contrary (at least for things that are distinctive and not generic terms). See, e.g., Omega S.A. v. Omega Eng’g, Inc., 228 F. Supp. 2d 112, 126 n. 36 (D. Conn. 2002) (“When evaluating whether a domain name is confusingly similar to a trademark, a district court disregards the top-level domain name (e.g. ‘.com’, ‘.org’, ‘.net’ etc.).”). And if your survey expert couldn’t get confusion results for TOYS.BIZ at least as extensive as those for TOYZ.COM, you have the wrong survey expert.

Underneath, perhaps, is an intuition about what we talk about in our brief: unfair competition as distinct from trademark as a basis for avoiding consumer deception. If TOYS.BIZ is definitely to be allowed, it is because “toys” is generic on its own, and therefore no amount of consumer confusion should justify TOYS.COM being the only provider allowed to use “TOYS” on its own as a second-level domain name.  But why that is different from TOYZ.COM is a mystery to me–for both, the appropriate answer is to use unfair competition to prevent either registrant from taking other actions that confuse consumers, like imitating the layout of TOYS.COM or otherwise failing to label itself.

A side note for any practitioner readers: I will often seriously consider filing an amicus in a case that raises an interesting legal issue, assuming I can make it work with my schedule. Please feel free to reach out if you think you have a case that would benefit from amicus attention–though of course I can’t promise I’ll be on your side!

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Amicus brief in Google v. Oracle

Posted on January 13, 2020 by rtushnet

Like everyone else, I filed an amicus, this one on behalf of copyright scholars, focused on fair use. Other currently submitted briefs are here.

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Reading list: disclosures as compelled commercial speech

Posted on January 10, 2020 by rtushnet

Reading list: Aaron Stenz, Note:
The Controversial Demise of Zauderer: Revitalizing Zauderer Post-NIFLA, 104
Minn. L. Rev. 553 (2019).
The First Amendment broadly stands
for the idea that government attempts to curtail the right of the American
people to both speak and not speak should be viewed with the utmost skepticism.
In the context of compelled commercial speech, however, that scrutiny is lessened.
Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio (Zauderer)
established that where the government attempts to compel commercial speakers to
make disclosures of purely factual and uncontroversial information about
products or services, courts will consider such regulations more deferentially.
Zauderer recognized that commercial speakers have a minimally protected
interest in notdisclosing such information, while the government has a vital
interest in protecting consumers against deceptive practices.
Zauderer has been interpreted in a
myriad of ways, with courts diverging on when Zauderer deference should be
applied, culminating in the Supreme Court’s 2018 decision in National Institute
of Family and Life Advocates v. Becerra (NIFLA). The NIFLA majority reasoned
that Zauderer deference was not applicable to a California disclosure
requirement in part because the underlying topic—abortion—was controversial.
This Note argues that the use of
the “purely factual and uncontroversial” standard as a threshold requirement
for Zauderer deference to be applied has always been problematic, but that
NIFLA is the straw that broke the camel’s back, mandating a fundamental
reconsideration of Zauderer deference. The “purely factual and uncontroversial”
standard has become the mutated product of an inconsistent body of law, and,
following NIFLA, is both prone to judicial bias and is fundamentally divorced
from the consumer protection interests. This Note concludes that, in order to
remedy these fatal flaws, Zauderer’s “unjustified or unduly burdensome”
standard should replace the “purely factual and uncontroversial” standard for
the application of Zauderer deference.
Comprehensive and thoughtful. Kudos to the author.

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Malwarebytes: same result, new puzzles on remand for 230 immunity

Posted on January 6, 2020 by rtushnet

Enigma Software Group USA, LLC v. Malwarebytes, Inc., —
F.3d —-, 2019 WL 7373959, No. 17-17351 (9th Cir. Dec. 31, 2019)
New opinion, same
result; no rehearing en banc. Because the parties are competitors, §230
does not provide Malwarebytes with immunity for blocking Enigma’s software. As
the dissent notes, one may search in vain for this limit in the wording of the
statute itself, but there you go. The immunity for blocking content that is
“otherwise objectionable” “does not include software that the provider finds
objectionable for anticompetitive reasons.” 
The majority, however, did remove broad language from the initial
opinion saying that blocking couldn’t be based on the identity of the person
providing the content.
Since this is now the result in the 9th Circuit,
on remand the court will have to face some questions that are not unlike those
that have come up in cases about copyright misuse and the meaning of “unfair”
business practices under California law: what exactly does “anticompetitive
animus” mean here?  Does it require
something that is like an antitrust violation? 
If so, if Malwarebytes lacks market power, then can it behave in an
“anticompetitive” manner or with “anticompetitive” motivations at all?  Separately: Does it have to have malice to be
liable?  What if it’s wrong about whether
Enigma programs were unwanted by consumers, but reasonably so?  Or suppose Malwarebytes concluded, via
motivated reasoning, that Enigma programs were indeed unwanted—is self-serving
sincerity enough?  What is the objective
standard against which unwantedness should be judged?  It does seem that, according to the standard
announced, §230 will still preempt/preclude claims that have internal validity
as long as Malwarebytes did not have “anticompetitive animus.”
The majority heavily emphasizes what it considers to be the
special circumstance that the parties are allegedly direct competitors. E.g.,
Congress said it gave providers
discretion to identify objectionable content in large part to protect
competition, not suppress it. In other words, Congress wanted to encourage the
development of filtration technologies, not to enable software developers to
drive each other out of business….  Users
would not reasonably anticipate providers blocking valuable online content in
order to stifle competition. Immunizing anticompetitive blocking would,
therefore, be contrary to another of the statute’s express policies: “removing
disincentives for the utilization of blocking and filtering technologies.”
Spam, malware, and adware could still be “otherwise
objectionable.” But “if a provider’s basis for objecting to and seeking to
block materials is because those materials benefit a competitor, the objection
would not fall within any category listed in the statute and the immunity would
not apply.”  Malwarebytes argued that its
reasons were legitimate (Enigma’s programs use “deceptive tactics” to scare
users into downloading them to prevent infections), but that’s a matter that
can’t be resolved on the pleadings. [Suppose a factfinder concludes the parties don’t actually compete: does 230 immunity reappear?]
Separately, the court reaffirms that §230’s exception for IP
doesn’t include Lanham Act false advertising, which seems right to me (though that
creates an interesting potential for situations like Belmora where
§43(a)(1)(A) covers nontrademarks). 
Unlike Eric Goldman, I’m actually pretty open to the basic false
advertising claim that labeling Enigma’s programs could be false advertising
despite §230.  The Lanham Act’s
requirements may pose substantive barriers to the claim (e.g., is the reporting
at issue “commercial advertising or promotion”? (maybe?) Is “potentially
unwanted” falsifiable? (seems unlikely, though maybe implication could save the
claim)).  And, again, if the §230
objectionability standard is not strict liability, then Malwarebytes might
escape liability even if it was in fact false or misleading to label Enigma’s
programs “potentially unwanted.”
Relatedly, the allegation that gets Enigma past §230 is
likely to prove a mismatch with the underlying theories of liability.  In general, nonfactual disparagement—negative
puffery—is not actionable, even if motivated by an evil heart, whether under
the Lanham Act or state law.  I wonder if
Malwarebytes wouldn’t end up doing better focusing on
falsifiability/specificity of the message, though of course the extent to which
the determination is subjective also feeds into the question of whether it had
the requisite state of mind under the court’s view of §230.

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another timeshare exit company can be sued under state law, but not Lanham Act

Posted on January 6, 2020 by rtushnet

Orange Lake Country Club, Inc. v. Reed Hein & Assoc.,
LLC, 2019 WL 7423517, No: 6:17-cv-1542-Orl-78DCI (M.D. Fla. Oct. 4, 2019)
Another timeshare case, this one kicking out Lanham Act
claims but not FDUTPA deceptive practices claims on proximate cause. Defendant
TET
allegedly puts out false and
misleading advertisements, leading owners to believe that it can relieve them
of their timeshares. Those owners then contact TET, which induces them to,
inter alia, stop paying on their timeshare contracts and hire TET. Once hired,
TET outsources the owners’ cases to “vendor attorneys” like Defendant Mitchell
Reed Sussman (“Sussman”), who allegedly engage in fruitless “negotiation” with
timeshare companies before employing one of his three deceptive and unlawful
methods to “exit” owners from their timeshare contracts. As a result,
Plaintiffs claim that the owners who contractually agreed to pay them have
defaulted on their obligations, causing harm to Plaintiffs.
The advertising allegedly “create[s] the impression that TET
can legally and permanently get owners out of the timeshare contracts for any
reason.” It used to claim a “100% success rate,” eventually changed to “highest
success rate in the industry.” It also “guarantee[d]” exit, and advertised a
“100% money back guarantee,” which deposition testimony indicated was not true.
The ads described TET’s process as finding illegal tactics in the underlying
timeshare sale and using them to get an exit. Dave Ramsey also served as a paid
endorser. Sales reps allegedly advised owners to cease all communication with
their timeshare developers, and (at least until 2016 and allegedly later) advised
owners to stop making payments under their timeshare agreements. 
Over 95% of TET’s cases went to outside vendors. When
accounts went to attorneys, TET allegedly prohibited account coordinators from
disclosing the attorney’s contact information to the client, and the attorneys were
prohibited from communicating directly with TET clients. [This can’t be ok
under Florida’s ethical rules for lawyers, can it? But then again given what
Florida lawyers did with foreclosures, why would anyone have noticed?]  TET allegedly requires account coordinators
to report that the case is proceeding according to a predetermined timeline,
even if untrue, to deceive customers into thinking things are going well.
Defendant Sussman, a vendor attorney, allegedly also treated
these cases the same regardless of circumstance, accusing developers of fraud
and instructing them not to contact the owners. When a developer thus sends
billing statements to Sussman, he throws them away. Sussman employs allegedly
ineffective methods to exit the timeshare; Orange Lake rejects his cancellation
methods, but Sussman continues to use them and tells owners they’re no longer
“responsible for future fees in connection” with the timeshares, leaving them
in foreclosure without their knowledge. 
“In 2014, TET’s general counsel vocally opposed Sussman’s methods, but
Sussman ran amok until April 2016, when TET supposedly terminated its
relationship with him. Even then, TET still had approximately 6,000 open files
with Sussman, 700 of which remained open as of September 2018.”
One Orange Lake owner hired TET, which told her to stop
payment. The rep assured her that TET had an attorney that would “fix” any
issues that arose from cessation. She discovered who was working on her case
and left a voicemail, but only got a brief letter claiming he was representing
her; all he did was send a C&D to Orange Lake. Ultimately, Orange Lake
“voluntarily” accepted a deed in lieu of foreclosure [ed. note: which actually
sounds like a relatively good result, but the anxiety and possible credit
damage have to be factored in, though the court’s summary doesn’t make clear
whether she could have instead afforded to pay forever].  The client demanded a refund from TET, while
TET refused and claimed that it helped, even though a month after her release, TET
claimed to still be working on an “exit” and claimed Orange Lake was delaying
the process.
Other Orange Lake owners who started out current on payments
and became delinquent due to TET’s instructions paid late fees to Orange Lake
and also paid TET for ineffective services; one hired a different attorney who
communicated with Orange Lake, at which point Orange Lake accepted a deed in
lieu of foreclosure. TET allegedly took credit for that exit and denied her a
refund. Other Orange Lake owners also had frustrating relationships with TET,
though interestingly Orange Lake did release some of them (allegedly outside
the TET connection). In one case, TET allegedly abandoned clients when they
received a foreclosure notice (they ended up with a deed in lieu of
foreclosure).
Lanham Act: The damages suffered by Orange Lake—nonpayment
of fees—were not proximately caused by the ads. Orange Lake did not allege that
its reputation was affected by the ads. The ads accused “Plaintiffs and all
timeshare companies generally [the ads don’t seem to have named Orange Lake, so
that’s a stretch] of engaging in deceitful, manipulative, or otherwise
imprudent behavior,” and Orange Lake’s expert testified that TET’s website “reflect
negatively on the timeshare industry and make Website viewers less likely to
purchase a timeshare.” This could create a question of fact on reputational
harm, but Orange Lake’s complaint didn’t rely on reputational harm, but only on
loss of sales.  Because none of the
advertisements directed owners to cease paying timeshare obligations, Orange
Lake couldn’t show proximate cause. The but-for causation—if not for the ads,
clients wouldn’t have hired TET and been instructed not to pay—was too remote.
Summary judgment for defendants.
Tortious interference did survive; although predisposition
to breach is a defense and the owners wanted to exit their relationships, there
was evidence that at least some owners were not predisposed to do so via breach
(stopping payment of fees).
FDUTPA: Requires “(1) a deceptive act or unfair trade
practice; (2) causation; and (3) actual damages.” Orange Lake argued that TET
violated FDUTPA by (1) soliciting Orange Lake owners through false and
misleading advertising; and (2) fraudulently inducing Orange Lake owners into
retaining TET based on TET’s advertised 100 percent guarantees of exiting timeshares
when TET cannot actually fulfill the guarantee. 
TET argued that some of its statements were accurate, and others mere
opinion/puffery. A reasonable jury could find some of the statements false or
misleading. “For example, the evidence reflects that TET’s ‘100% money back
guarantee’ is riddled with non-apparent conditions and not honored in many
cases. TET tacitly admits this by stating that it has procured exists for half
of its 28,000 customers but issued only 800 refunds.” There was also evidence
from deposed clients that they were deceived. “TET’s failure to deliver on its
advertised promises is sufficient evidence of consumer deception to create a
genuine issue of material fact.”

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“most experienced” is puffery, but misrepresenting degree of responsibility for projects could be false

Posted on January 2, 2020 by rtushnet

Cypress Advisors, Inc. v. Davis, 2019 WL 7290948, No.
17-cv-01219-MSK-KLM (D. Colo. Aug. 28, 2019)
Cypress provides financial advice to clients in the
franchise restaurant industry. Defendant Kent Davis used to work there, but he
left and started a competing business, C2. 
I’ll focus on the false advertising claims.
First, the allegedly false statements were on C2’s website,
but the parties didn’t produce a copy of the website itself, which limited the
court’s analysis.
C2’s claim that it was “the most experienced and
multi-skilled industry advisory firm” was allegedly false because C2 had only
been operating a short time and has had few clients in that time, while Cypress
has been operating since 1991 and has had “hundreds of engagements.” However,
“most experienced” is puffery—it might be defined by different customers in
different ways, including by counting the experience of principals.  Except at the margins—the extreme case where
the only employee had been in the business for only a few months and the
competitor has been around for decades—this was a matter of opinion. This was
not a marginal case, because Davis, and other C2 employees, had many years of
experience in the field, making distinctions “more nebulous” and opinion-based.
C2 also claimed that when Davis joined Cypress, it was a “fledgling” investment
bank; this was allegedly false because Cypress had been operating for 10 years
already. For the same reasons, “fledgling” lacked sufficient factuality to be
falsifiable.
C2 also allegedly misrepresented Davis’s level of
involvement with Wendy’s and TGI Friday’s refranchising projects, claiming that
he “secure[d] and manage[d] a 340-unit refranchising initiative … followed by
a 540-unit follow-up refranchising project” with Wendy’s and “originated and
managed the TGI Friday’s refranchising project.” He did work on these projects
while at Cypress, but the parties disputed the nature and extent of Mr. Davis’
work. Whether he was responsible for “originat[ing],” “manag[ing]” or “secur[ing]”
them could be sufficiently factual in nature as to proven true or false. [In
the Seventh Circuit, a reverse passing off claim might also work.]
C2 also allegedly misrepresented “Representative
Transactions” in the form of 44 “deal tombstones” (icons denoting individual
deals) that suggested that C2 had been involved with the listed deals. C2, as
an entity, was not involved in any of those deals, but Davis was, albeit as an
employee of Cypress at the time. So, would a reasonable consumer believe that
C2 was involved, or that its principals did? Neither side offered consumer
perception evidence, so the court determined that a factfinder should resolve
the issue at trial (implicitly holding that the representation could be
literally false). Relatedly, a specific testimonial/tombstone for one
particular transaction, as to which the endorser allegedly denied having made
the endorsement, could also go to trial.
Other alleged misrepresentations weren’t enough: C2
represented that one person was a “partner” and that two others were members of
the “team.”  Cypress argued that the
first was only an independent contractor and that, of the “team” members, one
was a provider of occasional services to C2 and who agreed to be listed as a
member of the “team” to make it “look like the company had a little more depth
to it”; and the other was an independent contractor. “The Court finds that
terms like ‘team’ and ‘partner’ as used in this respect have no particular
meaning, other than to convey some degree of business association and agreement
to work together,” and that much was true.
Injury: C2 argued that there was no evidence of injury.
Cypress’s damages expert opined that “the cost of a robust corrective
advertising campaign … as a result of the Defendants’ alleged false
advertising and false statements would range from $75,000 to $150,000 according
to an analysis performed by [the expert’s] public relations consulting
practice.” That created a triable issue of fact.  [Not every court would agree without evidence
of injury resulting in a need to correctively advertise.]
Cypress also argued that two statements were libelous: the
“fledgling” statement and claiming credit for Wendy’s/TGIF. The latter didn’t
defame Cypress; at most it might defame Cypress’s principal, who isn’t a party.
For purposes of defamation law, “fledgling” was not defamatory; it commonly
means “young, new, or inexperienced” or “a person or organization that is
immature, inexperienced, or underdeveloped,” but that’s “a necessarily
subjective statement of opinion.” 
Anyway, even if it had factuality, it was about 2000 Cypress, and the
coutt couldn’t see how that would harm 2019 Cypress.

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“diet” isn’t misleading for soda even if surveys say it is

Posted on January 1, 2020 by rtushnet

Becerra v. Dr Pepper/Seven Up, Inc., 2019 WL 7287554, No.
18-16721 (9th Cir. Dec. 30, 2019)
Becerra alleged that Dr Pepper violated the usual California
consumer-fraud laws by branding Diet Dr Pepper using the word “diet.” She cited
dictionary definitions to support her allegation that reasonable consumers
understand the word “diet” to promise assistance in weight loss. She included references
to print and television advertisements and online articles from the American
Beverage Association as further support of the allegation that consumers
understand “diet” soft drinks to offer certain health benefits. And she
summarized the results of a survey of California and national consumers that
allegedly supported her claim.
“The district court found that no reasonable consumer would
believe that the word ‘diet’ in a soft drink’s brand name promises weight loss
or healthy weight management and, even if a reasonable consumer would believe
that, Becerra had not sufficiently alleged that any such promise was false
because of insufficient allegations that aspartame consumption causes weight
gain.” The court of appeals affirmed on the first ground and didn’t reach the
second.
Dictionary definitions: focused on the meaning of “diet” as
verb or noun, not as adjective/proper noun, and Dr Pepper’s use of the word as the
latter “puts the word in a different light.” Adjective definitions work
differently, e.g., Merriam Webster defines the adjective as “reduced in or free
from calories[—]a diet soft drink.” In context, “no reasonable consumer would
assume that Diet Dr Pepper’s use of the term ‘diet’ promises weight loss or
management” but instead the term “is understood as a relative claim about the
calorie content of that soft drink compared to the same brand’s ‘regular’
(full-caloric) option.” [The problem is really one of implication—like “low tar”
for cigarettes.  The point of
having fewer calories is to help with weight control; no one cares about
calories in the abstract.  Interesting
that courts in tobacco cases fully recognize this but courts in diet cases don’t.]
So too with the proper noun version: “In common usage, consumers know that Diet
Dr Pepper is a different product from Dr Pepper—different not only in name, but
in packaging and, importantly, taste.”
Becerra argued that she alleged a plausible misunderstanding
of the word, but any such misunderstanding was unreasonable. “Diet soft drinks
are common in the marketplace and the prevalent understanding of the term in
that context is that the ‘diet’ version of a soft drink has fewer calories than
its ‘regular’ counterpart. Just because some consumers may unreasonably
interpret the term differently does not render the use of ‘diet’ in a soda’s
brand name false or deceptive.”
Nor did the ads, articles, or survey help. The ads didn’t
directly promise weight loss or other health benefits. The use of attractive,
fit models in the ads couldn’t reasonably be understood to convey any specific
meaning. The ABA blog posts also emphasized “that other lifestyle changes
beyond merely drinking diet soft drinks are necessary to see weight-loss
results.”  And the survey wasn’t
well-described by the complaint, but it appears to have asked four questions to
gauge consumer expectations of diet soft drinks related to one’s weight. “Of
the California consumers, only 12.5 percent expected diet soft drinks to help
them lose weight (compared to 15 percent nationwide), while 63.3 percent
expected diet soft drinks to help maintain/not affect their weight (compared to
62 percent nationwide).”  Even accepting
these allegations as true, “a reasonable consumer would still understand ‘diet’
in this context to be a relative claim about the calorie or sugar content of
the product. The survey does not address this understanding or the equally
reasonable understanding that consuming low-calorie products will impact one’s
weight only to the extent that weight loss relies on consuming fewer calories
overall.”
This is just a refusal to go beyond the literal to the
implied: of course consumers are likely to understand “fewer calories.” But the
question we usually ask with surveys is: what does the literal meaning of the challenged statement mean
to them? Here, the court just ignores implication (and seems to declare
more than 2/3 of consumers unreasonable). Without at least some other
principle, like cost-benefit analysis (the term might convey useful information
as well as deceptive information and it might be too hard to reduce deception)
I think this is a mistake. If Congress could rely on studies about
misunderstandings of low-tar representations to regulate tobacco, why is this survey result not relevant to the implications of “diet” for soda?
Anyway, this reasoning also doomed Becerra’s deceptive omission
theory: “Because she has failed to sufficiently allege a weight-loss promise
from Dr Pepper, there was nothing deceptive about Dr Pepper not disclosing to
consumers the alleged possibility of weight gain.”

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