a true story of a false advertising claim based on a “true story”

Incarcerated Entertainment, LLC v. Warner Bros. Pictures,
No. 16-cv-1302 (M.D. Fla. May 10, 2017)
Plaintiff alleged that it owned the rights to the life story
of Efraim Diveroli and sued Warner for false advertising and unfair competition,
based on Warner’s promotion of the movie War Dogs as the “true story” of Diveroli’s
path to becoming an international arms dealer. At 18, Diveroli allegedly
started a small business specializing in arms,  ammunition trading, and bidding on U.S.
Government defense contracts, and was awarded a $298 million contract to
support the United States’ war effort in Afghanistan. At  age 22, Diveroli was indicted by a federal
grand jury in Miami for his company’s violation of arms embargos and ultimately
accepted a four-year plea deal. Guy Lawson wrote an article in Rolling Stone, The Stoner Arms Dealers:
How Two American Kids Became Big-Time Weapons Traders, featuring accounts by
both Diveroli and one of his employees Packouz. Lawson optioned the movie
rights for the article to Warner and later expanded the article into a book,
Arms and the Dudes.  (Well played!) Diveroli
marketed his own manuscript, Once a Gun
Runner
, and his business partner contacted a number of producers and
studios, including Warner, which declined to pursue a consulting arrangement
with Diveroli but retained Packouz as a consultant and enlisted Guy Lawson as a
producer.
The complaint alleged that Warner grossed more than $85
million by promoting War Dogs as Diveroli’s “true story” when it was not the
true story, shutting the plaintiff out of the marketplace because consumers
would purchase a ticket to War Dogs
instead of buying Diveroli’s memoir, Once
a Gun Runner
.  Star Jonah Hill, for
example, claimed of the movie that “it’s all true,” while another promoter told
interviewers “these are real people,” and another explained that “we certainly
tried to follow what happened as closely as possible I think. If you know the
story at all, we pretty much stick to the facts as much as we can.”
The court, perhaps surprisingly, found that the challenged
statements were “commercial speech.”  The
statements were used for promotional purposes, referring to a specific product,
and with an alleged economic motivation: Warner knew that representing the
story as “true” would induce consumers to see the movie. The court rejected Warner’s
argument that the promotions were “intertwined” with non-commercial speech, including political and artistic
commentary, and were protected because they related to a movie, which is a
protected expressive work.  But movies “are
also sold in the commercial marketplace like other more utilitarian products,
making the danger of consumer deception a legitimate concern that warrants
some government regulation.” Rogers v.
Grimaldi
.
The intertwining theory couldn’t be resolved on a motion to
dismiss.  Rogers typically applies only to titles or other expressive works,
not to ads, e.g., Facenda (a “making
of” documentary about a  videogame whose
aim was to promote another creative work).  The challenged movie trailers, social media
posts, and interviews could be subject to Facenda
treatment.
Warner argues that “based on a true story” couldn’t be
actionable because it conveys that the movie “is obviously fictionalized in part.”
There was no such clear-cut rule; the entire trailer in context included a
realistic news report by Wolf Blitzer, a well-known CNN anchor, and the entire
ad has to be considered.  As for
interviews with principals, the question whether they, in their full context,
falsely or misleadingly portrayed War Dogs as a true story called for a
fact-intensive inquiry that couldn’t be done on a motion to dismiss. 
The complaint also plausibly alleged that statements by
Larson and Packouz were made as agents of Warner. Lawson was a producer of the
movie, and Packouz was retained as a consultant and had a cameo in the movie.  An agency relationship with Warner could be
plausibly inferred.  Warner argued that
their statements were opinion or puffery.  Lawson stated on his Facebook page that War
Dogs was “amazingly close to the real truth of the story” and that War Dogs was
inspired by his own book. A reasonable person could infer that Lawson knew the
true story and his characterization of War Dogs “fairly implie[d] a factual
basis.” Likewise, because Packouz identified himself as the subject of the movie, his statement
that “this is exactly how it happened” at least arguably implied a factual
basis.
Warner argued that plaintiff didn’t properly allege
deception, but no factual evidence of consumer deception is required at the
pleading stage. As to materiality, plaintiff alleged sufficient facts to
support an inference that the truthfulness of War Dogs was an “inherent quality
or characteristic,” alleging that consumers are drawn to true stories and that
a test screening for War Dogs revealed that one of the main things people liked
was that it was based on a real story. Plus, because plaintiff wasn’t alleging
that scenes from the movie itself  were
false or misleading, the accuracy of the movie wasn’t relevant to the issue of materiality.
 (Hunh?)
Warner finally challenged standing under Lexmark
Plaintiff alleged that it was a direct victim of Warner’s advertising because
War Dogs diverted book sales from it. Thus, the plaintiff plausibly alleged
that its injuries “flowed directly” from Warner’s advertising.

from Blogger http://ift.tt/2qe1Lwh

Posted in Uncategorized | Tagged , , | Leave a comment

remedial actions prevent finding of irreparable harm for TRO

Ocusoft, Inc. v. Walgreen Co., 2017 WL 1838106, No. H-17-1037
(S.D. Tex. May 8, 2017)
Ocusoft sells “the first commercially available eyelid
cleanser, Ocusoft Lid Scrub,” which Walgreens aells alongside its private label
eyelid cleansing pads, which are routinely placed next to Ocusoft’s products on
store shelves.  Ocusoft sued for false
advertising and unfair competition under the Lanham Act, federal patent
infringement, and unfair competition, dilution, misappropriation of goodwill,
and unjust enrichment under Texas common law. In support of its accompanying
motion for a TRO, Ocusoft alleged (1) that store clerks at three Walgreens
stores in Texas made false representations that the Walgreens Private Label and
the Ocusoft products were the same or were made by the same manufacturer, (2)
that one local store in Texas falsely advertised consumer savings on a
compare-and-save label showing a $7 discount, when the actual savings was
$3.50, and (3) that Walgreens’s online advertisements displayed the 2015
Walgreens Rinse-Free Pads, but customers were shipped the 2016 Walgreens Rinse-Free
Pads, which contained different ingredients.
Walgreens argued that it “never instructed its local store
employees to inform customers that Walgreens-branded products are the same as,
or are manufactured by the same company, as Ocusoft eyelid pads.” t argued that
“these isolated incidents, including a single incorrect savings tag in one
store, were unlikely to influence the purchasing decisions of consumers.” Walgreens
denied awareness of any customers other than Ocusoft’s agents who asked whether
the products are the same or were made by the same manufacturer, or of any
online customers (less than 1% of eyelid care customers) who complained about
receiving the 2016 version of the product instead of the 2015 version. However,
Walgreens also claimed that it had corrected the alleged misrepresentations,
including replacing the incorrect compare-and-save tag, issuing internal
communications to all store managers nationwide to instruct local store
employees to not tell customers that the Ocusoft and Walgreens Private Label
products are the same or are from the same manufacturer, and removing images of
the 2015 Walgreens Rinse-Free Pads from its website.
Ocusoft argued that a TRO was still necessary because at
least one Walgreens store in Florida displayed an incorrect compare-and-save
tag and an employee who was questioned about the Walgreens Private Label and
Ocusoft products said that they were the same.
The court found that Ocusoft hadn’t shown irreparable
injury, although the court wasn’t persuaded that Ocusoft’s ten-week delay in
seeking a TRO rebutted any presumption of irreparable harm. Ocusoft argued that
it filed its TRO after completing its investigation, which included store
visits, lab testing, and a survey; the court found that a two-to-three-month
delay in seeking a TRO does not foreclose injunctive relief.
In addition, Ocusoft alleged loss of market share, goodwill,
or reputation due to Walgreens’ false statements, but presented no record
evidence. Speculative injury isn’t sufficient. 
Though Ocusoft argued that lost market share was irreparable harm, it
didn’t present any data on that alleged loss.

Without deciding whether Ocusoft was entitled to a
presumption of harm, the court held that Walgreens’ corrective action avoided
any alleged imminent harm. One additional allegation of an incorrect
compare-and-save tag in one store in Florida was insufficient to revive Ocusoft’s
claim.

from Blogger http://ift.tt/2q5Wh6C

Posted in Uncategorized | Tagged , | Leave a comment

allegedly false claims of official endorsement by Trump can be false advertising

Bobbleheads.com, LLC v. Wright Brothers, Inc., 2017 WL
1838932,  No. 16-CV-2790 (S.D. Cal. May
8, 2017)
Bobbleheads.com makes bobbleheads, including the Hillary Clinton
Striped Prison Pantsuit Bobblehead, an application for copyright registration
for which was filed Sept. 2, 2016 (and an application covering just the head
was filed in May 2016).

Bobbleheads argued that defendants made unauthorized copies
in two of their bobbleheads:

(I see the claim for the first, but the second?  How is that anything more than the same idea?)
Several days after filing for the copyright registration,
Bobbleheads sent a C&D to defendants, and defendants allegedly took steps
to make it appear that they had temporarily discontinued the sale of the first
version.  Bobbleheads also sent numerous
DMCA takedown notices to ISPs, allegedly causing defendants to shift their advertising
and sales to other platforms and outlets.
Bobbleheads also alleged that defendants falsely advertised that
their products were sponsored or otherwise affiliated with the Trump/Pence
Presidential campaign (using the Trump/Pence campaign logo on websites and
other advertisements; indicating that a copyright for their website was owned
by or affiliated with Trump; and stating in their advertisements that
Defendants’ bobbleheads were “The official bobble head doll of the 2016 Donald
Trump Presidential campaign”). Plus, defendants allegedly falsely advertised
that they were selling the second version, but actually shipped the first
version.
The court first considered whether Rule 9(b) applied to the
Lanham Act claim, and held that it did where the claim is grounded in fraud, as
here. Under that standard, the claims survived in part, with the exception of
conclusory allegations that defendants used Bobblehead’s pictures of its own
bobblehead to sell their competing bobbleheads.
Defendants also successfully argued that Bobbleheads lacked
standing under Lexmark because it
failed to allege any kind of reputational or economic injury as a result of the
conduct charged.  Merely stating that
defendants’ false advertising “somehow caused Plaintiff to suffer damages” was
not specific enough—there were no more specific allegations of, “at the very
least, lost sales or damage to its reputation.” This wasn’t enough to plead
proximate causation.  Bobbleheads argued
that “if one product is the ‘official’ product, every other product is
unofficial and therefore inferior. Consumers in the market are likely to choose
the official product over the unofficial one and thus Defendants, through their
false advertising campaign have diverted sales from the Plaintiff….” Such
allegations might be sufficient, but they weren’t in the complaint; Bobbleheads
could replead.
Defendants argued that Dastar
barred any relief.  But Dastar is about false authorship claims,
not false endorsement.  Bobbleheads didn’t
allege reverse passing off, or anything about the manufacturer of the
goods.  Instead, Bobbleheads’ false
advertising claim was based on misrepresentations about “official” Trump endorsement.
This claim was “unrelated to the authorship or origin of Defendants’
bobbleheads,” and thus not covered by Dastar.
Defendants also argued that, “to the extent Plaintiff
complains of Defendants using an alleged false copyright notice, such a claim
must fail because the Copyright Act covers that kind of activity, but does not
allow for a private right of action.” But Bobbleheads wasn’t asserting a claim
for misuse of a copyright notice; instead the allegedly false copyright notice
was part of the overall false advertising claim based on misrepresentation of “official”
Trump campaign status.
Defendants further challenged the plausibility of
materiality here: It doesn’t matter if some customers who thought they were
ordering the second version received the first version because “the joke of the
bobblehead is the same regardless of the subtle variation in her hand position.”  But literally false statements and images
were allegedly used to market the bobbleheads, and literal falsity is presumed
to have deceived consumers.  Defendants
could attack materiality later.
Finally, defendants argued that associations with the Trump
organization were opinions/puffery, not actionable facts.  The court disagreed. “Whether or not the
Trump organization did, in fact, sponsor Defendants’ bobbleheads or claim
copyright in the website are ‘knowable’ facts, not opinions.”  There was a conceptual difference between use
of a symbol (TM or ©) indicating one’s belief in one’s own alleged rights,
versus use of a symbol indicating that someone
else
, e.g. the Trump organization, claims rights in defendants’ website—the
latter is an ascertainable fact.

The court also deferred ruling on defendants’ argument that Bobbleheads couldn’t
get statutory damages and attorney’s fees because Bobbleheads learned of the
alleged infringement before it applied for the registration.  (Only the full doll registration was relevant
because the allegations of copying focused on everything but the head.)  On the allegations of the complaint, the date
on which defendants began their infringement was unknown.
Plan P2 Promotions, LLC v. Wright Brothers, Inc., 2017 WL
1838943, No. 16-CV-2795  (S.D. Cal. May
8, 2017)
Same story, different bobblehead, here the Donald Trump Red
Hat Bobblehead, published in 2015, application for registration filed October
19, 2016.
Here, based on the dates, PPP agreed that it wasn’t entitled
to statutory damages/attorney’s fees under the Copyright Act, but the court
refused to dismiss its request for attorney’s fees under the Lanham Act.  PPP adequately pled that this case was
exceptional in that defendants “were willfully blind and acted in reckless
disregard” of plaintiff’s rights, defendants falsely claimed an association with
the Trump organization; and that defendants engaged in a bait-and-switch
advertising campaign in order to hide their infringement of PPP’s bobblehead
and deceive consumers into purchasing a product they did not order.

from Blogger http://ift.tt/2px6BCG

Posted in Uncategorized | Tagged , , | Leave a comment

CFP: 2018 AALS Annual Meeting

To encourage and recognize excellent legal scholarship and to broaden participation by new law teachers in the Annual Meeting program, the association is sponsoring a call for papers for the 32nd annual AALS Scholarly Papers Competition. Those who will have been full-time law teachers at an AALS member or fee-paid school for five years or less on July 1, 2017, are invited to submit a paper on a topic related to or concerning law. A committee of established scholars will review the submitted papers with the authors’ identities concealed. [Disclosure: I am on the committee this year.]

Papers that make a substantial contribution to legal literature will be selected for presentation at the AALS Annual Meeting in San Diego, California, in January 2018.
Inquiries: Questions should be directed to scholarlypapers@aals.org.

More details at the AALS site.

from Blogger http://ift.tt/2pdOYwE

Posted in Uncategorized | Tagged | Leave a comment

False advertising and the privatized state

Hansen v. Scram of California, Inc., No. 17-cv-01474, 2017
WL 1628401 (C.D. Cal. Apr. 28, 2017)
When the carceral state becomes a business, can it commit
business torts?  Plaintiffs sued Scram
and Alcohol Monitoring Systems (AMS) for the usual statutory California claims
and fraud, arguing that they misrepresented the capabilities of the transdermal
alcohol monitoring devices that AMS manufactures and Scram distributes.  The devices, worn on an ankle, were designed
to detect and record any instances when a wearer consumes alcohol by detecting
alcohol vapors caused by ingested alcohol diffusing through the skin.
Plaintiffs alleged that the devices were inherently susceptible to detecting false-positive
alcohol readings as a result of “environmental alcohol,” including vapors from
cologne, aftershave, hand sanitizer, household cleaners, and gasoline.  Defendants allegedly did not inform buyers of
the risk and affirmatively misrepresented it.
Defendants’ business model relies on court mandated
rehabilitation programs, as a condition of probation or bond, and other criminal
justice system functions.  People enter
into private contracts with defendants and pay monthly fees. Users sync the
device daily with a monitoring station; if the device concludes that any alcohol
vapor readings were caused by an “alcohol consumption event,” defendants inform
the relevant law enforcement agency or court exercising jurisdiction over the
wearer that the individual consumed alcohol, but they don’t alert the wearer,
nor does the device alert in real time. Thus, users can’t get time-sensitive
evidence—an immediate blood or breath alcohol test—to challenge any resulting
revocation of their bond or probation.
Defendants allegedly advertised their device as “a
cost-effective and accurate alternative for law enforcement agencies and courts
to track the alcohol usage of at-risk individuals,” and told the public and the
governmental agencies with which they seek to work that the device could tell
the difference between alcohol vapors from ingested alcohol and alcohol vapors from
enviromnental alcohol because the rate of alcohol dissipation purportedly
differs.  Plaintiffs alleged two
instances involving third parties in which courts rejected the device’s results
as “biologically impossible and scientifically unreliable.” Plaintiffs also
cited a study that concluded that the “methodology used by AMS cannot separate
ethanol [drinking alcohol] from other contaminating alcohols and therefore is
not a reliable method.”
Plaintiffs alleged that they experienced false
positives.  For example, plaintiff Hansen
wore the device while living in a residential alcohol treatment center; the day
after she tested negative on a breathalyzer at the center, AMS sent a report
indicating that she’d consumed alcohol for a day-long period.  When Hansen received the report, she again
tested negative for alcohol and a follow-up blood test reported the same. As a
result of the report, she was subject to an additional year of alcohol
monitoring; she paid $6,400 to Scram, $300.00 for a urine test from a certified
laboratory, and $2,000 in attorneys’ fees to defend against the alleged alcohol
consumption.  (It seems like a dangerous
business model to profit from false positives when the person who is ordered to
pay faces jail if she says no.)  Hansen
alleged that, had she known about the false positives and the lack of timely
notification to users, she wouldn’t have agreed to buy the alcohol monitoring
service as a condition of her bond.
Similarly, plaintiff Oh paid Scram $225 per week for its
monitoring services and a $325 enrollment fee. A Scram employee allegedly denied
Oh’s request for a fee reduction and warned that if Oh did not pay, Scram would
report to the trial court that Oh had violated her “Scram conditions.” Scram
reported that Oh was in violation of her monitoring conditions for consuming
alcohol from June 5 to June 7, 2015; the resulting report “indicated that Oh’s
transdermal alcohol concentration stayed constant for two days, which
plaintiffs assert is a biological impossibility.” When she became aware of the
report, Oh allegedly had her urine tested for alcohol at a state certified
laboratory and that test was negative. Oh challenged defendants’ report in
court and the “trial Court was unable to come to a resolution[.]”  Oh also alleged that she lost money in
reliance on the false representations/omissions.
Defendants argued that they were entitled to quasi-judicial
immunity and the litigation privilege, because this wasn’t really a false
advertising case but a case about monitoring alcohol consumption and reporting
the resulting information to a court. Quasi-judicial immunity is “extended in
appropriate circumstances to non jurists who perform functions closely
associated with the judicial process.” “However, it is only when the judgment
of an official other than a judge involves the exercise of discretionary
judgment that judicial immunity may be extended to that nonjudicial officer.” Defendants
didn’t claim to exercise any discretion when they offer their services on
behalf of courts. Plus, plaintiffs alleged misconduct beyond defendants’ work
on behalf of courts, extending to misrepresentations about their device to
individual customers, law enforcement agencies, courts, and the general public.
Similarly, defendants argued that they were protected by
California’s litigation privilege because plaintiffs’ essential claim was that
defendants communicated information about plaintiffs’ consumption of alcohol to
courts in connection with ongoing criminal matters. The California litigation
privilege “applies to any communication (1) made in judicial or quasi-judicial
proceedings; (2) by litigants or other participants authorized by law; (3) to
achieve the objects of the litigation; and (4) that have some connection or
logical relation to the action.” Again, the court disagreed: plaintiffs’ claims
relied on defendants’ alleged misrepresentations made to people in plaintiffs’
position.

However, plaintiffs failed to allege their common law fraud
claim with sufficient particularity, which also doomed the statutory claims
because each claim relied on defendants’ allegedly fraudulent misrepresentations.
Plaintiffs needed to allege who made the representations, when the
misrepresentations were made, and how they were communicated. They didn’t
describe the content of defendants’ ads or when plaintiffs viewed them. Also,
plaintiffs failed to provide defendants of thirty days’ notice of the alleged
CLRA violations, as required for damages under the CLRA.  Plaintiffs were allowed leave to amend. 

from Blogger http://ift.tt/2qT9GyY

Posted in Uncategorized | Tagged , , | Leave a comment

City of Chicago can sue pharmacos for falsely advertising opiods

City of Chicago v. Purdue Pharma L.P., 211 F.Supp.3d 1058
(N.D. Ill. 2016)

The court sustained in part a claim by Chicago against defendant pharmacos,
based on their allegedly deceptive and unfair marketing campaigns that served
to “reverse[] the medical understanding of opioids so that prescribing opioids
to treat chronic pain long-term would be commonplace.” Defendants, among other
tactics, allegedly deployed sales reps to doctors and other prescribers to mislead
them into believing that the benefits of using opioids to treat chronic pain
outweighed the risks and that opioids could be used safely by most patients. The
pharmacos allegedly “knowingly disseminated unbranded marketing messages that
were inconsistent with information on defendants’ branded marketing materials,”
including misrepresentations that that opioids improved function, that
addiction risk could be managed, and that withdrawal was easily managed, and
misleading minimization of the adverse effects of opioids and overstatements of
the risks of NSAIDs.

The court refused to stay or dismiss under the primary jurisdiction doctrine.
The court wouldn’t have to determine whether opioids were appropriate for the
treatment of chronic, non-cancer pain or whether defendants’ drugs’ labels were
accurate, but whether defendants deliberately misrepresented the risks,
benefits, and superiority of opioids when marketing them to treat chronic pain,
“contrary to … scientific evidence and their own labels[.]” “Courts are
equipped to adjudicate such claims.”
The complaint sufficiently alleged deceptive practices in
violation of MCC § 2-25-090, which makes it unlawful for a business to “engage
in any act of consumer fraud, unfair method of competition, or deceptive
practice while conducting any trade or business in the city,” including “[a]ny
conduct constituting an unlawful practice under the Illinois Consumer Fraud and
Deceptive Business Practices Act.”  The
ICFA requires: “(1) a deceptive act or practice by the defendant; (2) the
defendant’s intent that the plaintiff rely on the deception; and (3) the
occurrence of the deception during a course of conduct involving trade or
commerce.” In an enforcement action, as here, the city didn’t have to allege
injury and causation, or proximate harm to any consumer. “A deceptive practice
violates the ICFA even if it doesn’t actually deceive or injure anyone … and
the Illinois Attorney General has the power to investigate and enjoin such a
practice without a showing of actual loss.”  The same analysis applied to the city’s claims
under MCC § 4-276-470(1), which makes it illegal to use deception, fraud, false
pretense, or misrepresentation with the intent that others rely on such
concealment, in connection with the sale or advertisement of any merchandise.
The city alleged sufficient facts to meet Rule 9(b)’s
particularity requirement. It identified which Chicago-area prescribers
defendants’ representatives made alleged misstatements to, what those alleged
misstatements were, and generally when and where those alleged
misrepresentations were made. In addition, the city alleged that defendants
closely tracked specific dates and the identities of defendants’ sales
representatives who made the detailing visits and such information would be
found in discovery.
The city also alleged that defendants engaged in unfair acts
and practices to promote the sale and use of opioids to treat chronic pain. An
unfair practice (1) offends public policy; (2) is immoral, unethical,
oppressive, or unscrupulous; or (3) causes substantial injury to consumers;
unfairness “depends on a case-by-case analysis.” For public policy, a practice
must violate a standard of conduct contained in an existing statute or
common-law doctrine that typically applies to such a situation. The court found
that the policy of discouraging drug addiction in Illinois, the “public policy,
enshrined in state and federal law, seeking to ensure that pharmaceuticals are
marketed and utilized appropriately,” and the public policy against
victimization of vulnerable populations for profit, were not specific enough to
constitute a relevant public policy.
A practice is immoral, unethical, oppressive, or
unscrupulous when said conduct “leaves the consumer ‘little choice but to
submit.’ ” The allegations didn’t rise to the level of leaving the prescriber
or the consumer with limited alternatives to treat long-term pain.  
“A practice causes substantial injury to consumers if it
causes significant harm to the plaintiff and has the potential to cause injury
to a large number of consumers.” The alleged $13 million in false claims billed
to the city was a significant sum, but the city didn’t allege enough under Rule
9(b) to connect defendants’ alleged deceptive marketing with prescriptions that
were covered by the city.  The city was
given leave to amend.  Similar analysis
applied to the false claims allegations involving getting the city to pay for
fraudulent claims for prescriptions for opioids that were not medically
necessary or reasonably required to treat chronic pain.
The city alleged that defendants’ misrepresentations were
material because if it had known of the false statements, it would have refused
to authorize payment for opioid prescriptions to treat chronic pain. But it
also alleged that it “paid and continues to pay the claims that would not be
paid but for defendants’ illegal business practices,” which contradicts
materiality.  Thus, the city didn’t
sufficiently allege materiality, as required for a false claims cause of
action.
The city would also have to connect its allegations about
specific prescribers who heard defendants’ misrepresentations and prescriptions
for defendants’ drugs that were paid by the city.  If those were sufficiently connected, the
city would still need to allege that those prescribers relied on defendants’
misrepresentations when they prescribed defendants’ drugs. The city argued that
reliance was plausibly pled by alleging: (1) the city’s increased spending on
opioids; (2) interviews with Chicago prescribers who prescribed opioids paid
for by the city and confirmed that they prescribed opioids based on deceptive
marketing and patients’ demand; and (3) a sample of claims for opioids that
were prescribed by physicians who were subject to defendants’ deceptive
marketing and paid for by the city. 
Defendants argued that intervening events broke the causal chain,
including (1) the prescriber’s independent medical judgment; (2) the patient’s
preferences; (3) the patient’s decision to fill a prescription; (4) the
patient’s decision whether and how to use the medication; and (5) the city’s
decision to cover and reimburse the prescriptions.  Defendants were improperly relying on RICO
case law, which doesn’t ever find causation. 
For false claims, general tort law principles applied, and a defendant
is responsible for “the natural, ordinary and reasonable consequences of his
conduct,” which includes the effect of many foreseeable intervening effects
such as filling a prescription.  If the
city did connect prescribers with prescriptions, the court would likely find
adequate allegations of causation.  So
too with unjust enrichment claims.

from Blogger http://ift.tt/2qIOImq

Posted in Uncategorized | Tagged , , | Leave a comment

court allows company to bring right of publicity claim

Youngevity Int’l, Corp. v. Smith, No. 16-cv-00704, 2016 WL
7626584 (S.D. Cal. Dec. 1, 2016)
Youngevity and Dr. Joel D. Wallach sell various health
supplements using independent direct sellers known as “distributors” to move product.
The individual defendants were former Youngevity distributors and / or
employees. Defendants Wakaya and TNT were companies formed by some of the
individual defendants competing with Youngevity. For about seventeen years, TNT
ran various websites that explicitly used plaintiffs’ likenesses [sadly, the
court believes that both Wallach and Youngevity have separate claims,
even though Youngevity doesn’t have a “likeness”; the court does not address the scope of a ROP claim, however, so there is no specific legal ruling]. Plaintiffs terminated the
parties’ business relationship and demanded cessation of this use, but
defendants didn’t stop.
Under California law, misappropriation of likeness requires
“(1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of
plaintiff’s name or likeness to defendant’s advantage, commercially or
otherwise; (3) lack of consent; and (4) resulting injury.” Until March 2016, defendants
had implied consent to use plaintiffs’ likenesses; defendants argued that the
single publication rule barred plaintiffs from terminating consent so long as
the use was consistent.  “In the context
of websites, republication does not occur so long as the statement is not
substantively altered or directed to a new audience,” and defendants argued
that they hadn’t changed the use in the two years before the complaint, thus
precluding a claim.  The court disagreed,
because not all the elements of the claim had accrued more than two years ago:
there were no grounds for suit when consent existed.  The court was not going to “categorically
deny a plaintiff the right to terminate consent to the continued but unchanged
use of a plaintiff’s likeness after two years.”  Thus, plaintiffs were entitled to preliminary
injunctive relief. It was undisputed that the defendants used the websites to
get contact information for customers who wanted to buy Youngevity products and
advertised a website marketing their own products, falsely suggesting that some
of those products were produced and/or endorsed by plaintiffs. “A competitor’s
access to a company’s confidential customer information can clearly cause very
serious damage to a company’s market share and business goodwill that is
impossible to measure and compensate via money damages.”
The court also rejected some other challenges to plaintiffs’
claims on a motion to dismiss.  For
example, plaintiffs successfully alleged Lanham Act false advertising in
alleging that Wakaya made false statements regarding how much money a Wakaya
distributor could potentially earn: “a year from now, many of us will be
million dollar earners,” even though no Wakaya distributor has ever earned this
amount of money. This statement was allegedly made in a YouTube video;
defendants argued that there was no showing that the video came from a Wakaya
agent, but at the pleading stage, an allegation to this effect was enough to
give sufficient notice.  So too with an
allegedly false claim in a YouTube video that Wakaya was a joint venture with
billionaire David Gilmour, founder of the Fiji Water Company. However, more
conclusory statements that Wakaya falsely advertised that (1) Youngevity was
having financial problems and (2) Wakaya products originate from Fiji, without
any details regarding “where” and “when” Wakaya allegedly made the statements,
were insufficient. So too with allegations that Wakaya was a pyramid scheme and
thus claims that its distributors could earn a lot of money were false.
Plaintiffs also alleged that Wakaya’s advertisements of the
health benefits of its “pure Calcium Bentonite Clay” products was false or
misleading because these products contains high dosages of lead, which is very
dangerous. Defendants argued that there was no falsity because the challenged
Facebook post didn’t specifically disclaim lead related health hazards. However,
read as a whole, the post “tends to suggest that the clay products are overall
good for a person’s health,” which would be false if the products did in fact
contain high lead levels.

The court adopted the majority federal approach to claims brought by
competitors under California’s FAL, which holds that third party/consumer
reliance on false claims doesn’t allow a damaged competitor to sue in the
absence of the competitor’s own reliance and resulting damage.

Defendants were enjoined to cease operation of
1-800-WALLACH, myyoungevity.com, and wallachonline.com.Youngevity Int’l, Corp. v. Smith, No. 16-cv-00704, 2016 WL
7626584 (S.D. Cal. Dec. 1, 2016)
Youngevity and Dr. Joel D. Wallach sell various health
supplements using independent direct sellers known as “distributors” to move product.
The individual defendants were former Youngevity distributors and / or
employees. Defendants Wakaya and TNT were companies formed by some of the
individual defendants competing with Youngevity. For about seventeen years, TNT
ran various websites that explicitly used plaintiffs’ likenesses [sadly, the
court seems to think that both Wallach and Youngevity have separate claims,
even though Youngevity doesn’t have a “likeness”]. Plaintiffs terminated the
parties’ business relationship and demanded cessation of this use, but
defendants didn’t stop.
Under California law, misappropriation of likeness requires
“(1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of
plaintiff’s name or likeness to defendant’s advantage, commercially or
otherwise; (3) lack of consent; and (4) resulting injury.” Until March 2016, defendants
had implied consent to use plaintiffs’ likenesses; defendants argued that the
single publication rule barred plaintiffs from terminating consent so long as
the use was consistent.  “In the context
of websites, republication does not occur so long as the statement is not
substantively altered or directed to a new audience,” and defendants argued
that they hadn’t changed the use in the two years before the complaint, thus
precluding a claim.  The court disagreed,
because not all the elements of the claim had accrued more than two years ago:
there were no grounds for suit when consent existed.  The court was not going to “categorically
deny a plaintiff the right to terminate consent to the continued but unchanged
use of a plaintiff’s likeness after two years.”  Thus, plaintiffs were entitled to preliminary
injunctive relief. It was undisputed that the defendants used the websites to
get contact information for customers who wanted to buy Youngevity products and
advertised a website marketing their own products, falsely suggesting that some
of those products were produced and/or endorsed by plaintiffs. “A competitor’s
access to a company’s confidential customer information can clearly cause very
serious damage to a company’s market share and business goodwill that is
impossible to measure and compensate via money damages.”
The court also rejected some other challenges to plaintiffs’
claims on a motion to dismiss.  For
example, plaintiffs successfully alleged Lanham Act false advertising in
alleging that Wakaya made false statements regarding how much money a Wakaya
distributor could potentially earn: “a year from now, many of us will be
million dollar earners,” even though no Wakaya distributor has ever earned this
amount of money. This statement was allegedly made in a YouTube video;
defendants argued that there was no showing that the video came from a Wakaya
agent, but at the pleading stage, an allegation to this effect was enough to
give sufficient notice.  So too with an
allegedly false claim in a YouTube video that Wakaya was a joint venture with
billionaire David Gilmour, founder of the Fiji Water Company. However, more
conclusory statements that Wakaya falsely advertised that (1) Youngevity was
having financial problems and (2) Wakaya products originate from Fiji, without
any details regarding “where” and “when” Wakaya allegedly made the statements,
were insufficient. So too with allegations that Wakaya was a pyramid scheme and
thus claims that its distributors could earn a lot of money were false.
Plaintiffs also alleged that Wakaya’s advertisements of the
health benefits of its “pure Calcium Bentonite Clay” products was false or
misleading because these products contains high dosages of lead, which is very
dangerous. Defendants argued that there was no falsity because the challenged
Facebook post didn’t specifically disclaim lead related health hazards. However,
read as a whole, the post “tends to suggest that the clay products are overall
good for a person’s health,” which would be false if the products did in fact
contain high lead levels.

The court adopted the majority federal approach to claims brought by
competitors under California’s FAL, which holds that third party/consumer
reliance on false claims doesn’t allow a damaged competitor to sue in the
absence of the competitor’s own reliance and resulting damage.
Defendants were enjoined to cease operation of
1-800-WALLACH, myyoungevity.com, and wallachonline.com.

from Blogger http://ift.tt/2pIO7ma

Posted in Uncategorized | Tagged , | Leave a comment