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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court of appeals refuses to create right of publicity for houses, over dissent

Posted on November 26, 2025 by rtushnet

Dihno v. Netflix, Inc., 2025 WL 3280834, B335652 (Cal. Ct.
App. Nov. 25, 2025)

Over a partial dissent, the court of appeals affirms the
rejection of various claims, including CLRA
and FAL claims, against Netflix based on its use of a photo of plaintiffs’
house in an ad for Buying Beverly Hills, one of its reality shows, which
depicts the operations of a real estate firm. “Plaintiffs’ home is on a
ridgeline in the Hollywood Hills. The property is guarded by a private gate and
the home is not visible from any nearby street. The closest publicly accessible
vantage point from which the home can be seen is 1,034 feet away.” The photo
was taken by a nonparty and published on Shutterstock, then licensed for the
ad. The photographer “allegedly took the photo without Dihno’s knowledge or
consent using a drone or other specialized photography equipment. The photo
depicted interior and exterior details of the home not visible from any public
location, including the ‘room layout’ and the entrances and exits. The original
photo allegedly depicted plaintiffs’ silhouettes, but was cropped to remove
them for the ad. As alleged, both Netflix and its ad agency knew that the home
was not associated with or depicted in Buying Beverly Hills.

People allegedly began to visit plaintiffs’ home “on a daily
basis” asking to see it and claiming they learned it was for sale through the
Buying Beverly Hills advertisement, including a woman who demanded to enter,
refused to leave, and was arrested. “Other people attempted to open plaintiffs’
front gate and climb over their fence.” Plaintiffs received calls “more than
once daily” from real estate agents who sought to represent the family in
selling the home. (OMG! Me too!) This caused plaintiffs harm to their mental
health, reputations, and relationships with neighbors. They spent approximately
$20,000 on security measures.

Plaintiffs sued for: (1) invasion of privacy, based on
theories that Netflix intruded upon plaintiffs’ seclusion and portrayed them in
a false light; (2) negligent infliction of emotional distress (NIED); (3)
intentional infliction of emotional distress (IIED); (4) Consumer Legal
Remedies Act (CLRA) violations; and (5) violation of the California False
Advertising Law (FAL).

Invasion of privacy: Right of seclusion: This requires that
a defendant must intentionally intrude into a place, conversation, or matter as
to which the plaintiff has a reasonable expectation of privacy, and the
intrusion must occur in a manner highly offensive to a reasonable person.” The state
constitutional cause of action for invasion of privacy has “largely parallel” elements.

Netflix didn’t do the intruding; the question was whether it
“ratified” the intrusion when it published the ad. “Ratification is the
voluntary election by a person to adopt in some manner as his own an act which
was purportedly done on his behalf by another person, the effect of which, as
to some or all persons, is to treat the act as if originally authorized by him.”
But there were no allegations that the photographer acted on Netflix’s behalf.
Indeed, the photo was on Shutterstock, from which any member of the public
could license the photo, contradicting any argument that the photographer acted
for Netflix. Moreover, “[r]atification can only occur where the person
ratifying has full knowledge of the facts.” Netflix was not alleged to have
knowledge. 

What about the people who intruded, allegedly caused by
Netflix? Intentional intrusion doesn’t cover third party intrusions except when
vicarious liability is possible—that is, when the intruders are defendant’s
employees. Although an ad soliciting people to come to another’s home for sex
and providing the address might show an intent for third parties to harass the
plaintiff, that’s not what happened here.

False light: This requires a portrayal that would be “highly
offensive to a reasonable person, and where the defendant knew or acted in
reckless disregard as to the falsity of the publicized matter and the false
light in which the plaintiff would be placed.” “Yet, on its face, the
advertisement depicted a home, not the plaintiffs; and it included no personal
information from which any viewer could identify them.” Even if third party
real estate agents somehow associated them with the show, “the complaint does
not allege, and plaintiffs fail to explain, how association with a television
show involving real estate is highly offensive to a reasonable person. As a
matter of law, we conclude it is not.” Although they alleged that the ad
publicly disclosed the entrances, pathways, and floor layout of their home,
there was no allegation of falsity.

Statutory invasion of privacy: Plaintiffs invoked a
California law providing that any person who enters “the airspace above the
land of another person … in order to capture any type of visual image … of
the plaintiff engaging in a private, personal, or familial activity and the
invasion occurs in a manner that is offensive to a reasonable person” is liable
for physical invasion of privacy. But there were no specific factual
allegations that could support this statutory claim with respect to
offensiveness.

CLRA and FAL: No standing. Standing requires economic injury
or damage which “ ‘was the result of, i.e. caused by,’ ” the CLRA or FAL
violation. For causation, plaintiffs must demonstrate that they “ ‘ “actual[ly]
reli[ed]” ’ on the ‘ “allegedly deceptive or misleading statements” ’ and that
it ‘ “was an immediate cause” ’ ” of their injuries. But plaintiffs didn’t
allege reliance, only harm from alleged perceived affiliation with Buying
Beverly Hills.

Plaintiffs argued that reliance was unnecessary because
their CLRA and FAL claims do not sound in fraud, but they obviously were. Plus,
CLRA remedies are available only to a “consumer,” meaning “an individual who
seeks or acquires, by purchase or lease, any goods or services ….” Although
plaintiffs alleged that they purchased goods generally, “we disagree that the
CLRA can be interpreted to permit any person who purchases goods to seek relief
from any entity that publishes misleading advertisements.”

NIED: “[A]s a general matter, there is no duty to act to
protect others from the conduct of third parties.” There were no allegations
that plaintiffs had a special relationship with Netflix, and under the facts
alleged, Netflix did not affirmatively create any peril. The ad didn’t encourage
third parties to visit the home, trespass on the property, or harass the
homeowners. It didn’t even disclose plaintiffs’ address, “nor any street or
landmark from which the home’s location could be feasibly discerned.” Moreover,
the complaint alleged, plaintiffs’ home “is not even located in Beverly Hills,”
meaning that anyone searching for the home in the television show’s namesake
city would be looking in the wrong place.

IIED: Netflix allegedly posted the ad on its own home page
and on other unspecified websites and publications. The complaint didn’t allege
that plaintiffs themselves were Netflix subscribers, nor that they were the
target of any form of the ad, nor that Netflix intended to encourage third
parties to visit.

IIED typically requires conduct directed at the plaintiff, but
there’s an exception “when the defendant is aware, but acts with reckless
disregard of the plaintiff and the probability that [its] conduct will cause
severe emotional distress to that plaintiff.” This exception applies only when
the defendant’s conduct “was done with knowledge of [plaintiffs’] presence and
of a substantial certainty that they would suffer severe emotional injury.” The
complaint didn’t and couldn’t plausibly allege that.

Private nuisance also failed for similar reasons.  

A concurrence defended the majority’s reluctance to expand
the intentional tort of intrusion “in a sweeping and unwarranted way”:

In search of a legal theory,
appellants contend they “should have some right under the law to limit
Netflix’s exploitation of their home, life, and privacy.” Appellants’ claim
that Netflix “exploit[ed]” “their home” sounds suspiciously like a proposed right
of publicity for houses. For good reason, there is no such tort.

 Given the causal
chain alleged, liability under this new theory would be

breathtaking in its scope. Let’s
say the Los Angeles Times decides to do a piece on “five houses in Los Angeles
that look like they came out of a fairy tale.” You know—with those cute,
curving brown roofs. People read the piece and think, “Wow, I’d like to see
that.” They drive by, or walk by, the houses. Maybe some even knock and ask to
come inside. Let’s say lots of people do that. Let’s say the “publisher” of the
piece is not the Los Angeles Times but an influencer on Instagram who’s
interested in architecture. Can the owners or residents of those homes sue for
intrusion? One can imagine myriad other examples. And—according to
appellants—someone who merely licenses a photograph from a stock footage agency
and publishes it can be socked with a lawsuit as well if people show up to
check out the house in the photo.

Nor were ads without constitutional protection.

Judge Edmon partially dissented, arguing that there should
be an intrusion claim here, relying on the flexibility and expansiveness of the
privacy torts. “[A]t least a few cases have recognized claims for intrusion
where defendants published information about the plaintiffs that caused third
parties to intrude into their private spaces.” Unsurprisingly, these are cases
when harassers published solicitations claiming that women wanted sex and third
parties showed up in reliance on the false claims. But the dissent would
generalize to “defendants’ publication of information that created interest in
the plaintiffs and led to foreseeable physical intrusions by third parties that
significantly disturbed the plaintiffs’ solitude.” That’s not
foreseeability—that’s deception and intent to harass. But the dissent would not
require intent to harm, only intent to intrude. [I’m still not seeing intent to
intrude here.] And it didn’t matter that Netflix didn’t publish an address or
names, because, in a previous case, the ad used the woman’s name but not her
address and the third parties were able to find her address by using the phone
directory. Because “many third parties allegedly were readily able to discover [the
address here], presumably by using widely available Internet or artificial
intelligence tools, “I therefore would leave it to the trier of fact to decide
whether Netflix’s use of the photograph of plaintiffs’ home in its advertising,
even without an accompanying address, was sufficiently offensive to create liability
for intrusion.” And subsequent publication can matter to whether an intrusion
is particularly invasive.

Plaintiffs do not suggest—and I
would not conclude—that simply taking a photograph of the outside of
plaintiffs’ house was an actionable invasion of privacy. But that is not all
plaintiffs allege. They allege that the photograph was broadcast to hundreds of
millions of viewers in connection with a television series about the sale of
upscale real estate to the rich and famous. In an era of obsessive interest in
fancy homes and fancy people—coupled with Internet tools that make it a simple
matter to link an image of a property to an address—I believe a reasonable
trier of fact could, in appropriate circumstances, conclude that Netflix’s
advertisement gave rise to a cause of action for intrusion.

Because this was an ad, there were lesser constitutional
concerns than with other applications of the privacy torts.

As for the anti-drone photography statute, the dissent would
still have rejected the claim, albeit for a different reason: the dissent
accepted the allegations that the drone must have flown too close because it “captured
exterior and interior details of the house that that are not visible from any
public location,” which could be “offensive to a reasonable person” within in
the meaning of the law. Nonetheless, there was no “visual image, sound
recording, or other physical impression of the plaintiff engaging in
a private, personal, or familial activity,” as further required by the
statute.

The dissent would also have found private nuisance properly
alleged.

 

from Blogger http://tushnet.blogspot.com/2025/11/court-of-appeals-refuses-to-create.html

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once again, injury requirement defeats a false advertising claimant

Posted on November 26, 2025 by rtushnet

Skillz Platform Inc. v. Papaya Gaming, Ltd., 2025 WL 3268799,
24cv1646(DLC) (S.D.N.Y. Nov. 21, 2025)

Previously.
Here, Skillz successfully kicks out Papaya’s false advertising counterclaims
for lack of injury, showing once again that the statutory presumption of irreparable
injury is really, really helpful when the elements of likely success on the
merits don’t include injury (trademark) and much less helpful when they do
(false advertising).

The parties compete in the real-money skill-based mobile
gaming (“RMSB”) market. RMSB platforms match players with other users on games
created by third parties and compete to win cash prizes or for game rewards. Skillz
most commonly offers head-to-head competition between two players, while Papaya
offers multi-player tournaments with larger cash prizes.

Papaya argued that several of Skillz’s claims were false:
Skillz advertises “Match with REAL PLAYERS of equal skill,” and its website stated
that it “leverages player matching technology to ensure fairness by pairing
players of equal skill levels, so beginners only play beginners and experts
only play experts.” However, Skillz does not dispute that matchmaking on its
platform has included “skill band expansion.” That is, “[a]s the time increases
from when a game is initiated, the maximum player rating differential permitted
for a competitor to be matched with the initiating player also increases.” It
also made other adjustments in matching that arguably don’t conform to the “equal
skill levels” claim.

It also advertised “Play real people, NO BOTS, guaranteed!” and
similar claims. However, to third-party developers, it instructed: “The bot
behavior in your game must be deterministic, meaning that given the exact same
set of player inputs and conditions, it must always produce the same bot
behavior.”

Finally, Skillz informed its customers that they can
withdraw their cash awards “at any time.” But users requesting withdrawals
exceeding $5,000 must submit to a “playtest” fraud verification screening.

But none of the details mattered, because the question here
was injury. The parties were direct competitors. But without comparative
advertising, that wasn’t enough to presume injury. Papaya’s 30(b)(6) witness
stated that “[b]ased on my experience, advertisements highlighting the ability
to withdraw money easily and quickly are highly effective” and that “Skillz’s
statements about withdrawals on its platform” “are likely to and do cause harm
to Papaya.” Its damages expert did not opine on harm causation.

This was not enough to avoid summary judgment on injury.

Papaya’s market share in 2021 grew
astronomically, while Skillz’s market share declined…. Although there is no
requirement that a party experience a decline in revenue or sales in order to
suffer an injury under the Lanham Act, Papaya has failed to point to any
evidence demonstrating that it suffered harm either to its sales position or to
its reputation from the statements by Skillz it challenges in the counterclaim.

The claims by the Rule 30(b)(6) witness were “entirely
conclusory.” Also: “The four individuals that Papaya identified during
discovery as the only individuals likely to have discoverable information about
any harm Papaya suffered have each invoked their Fifth Amendment right against
self-incrimination.”

Papaya’s argument that the ads were comparative failed. On
one webpage, headed “The Skillz Difference,” Skillz stated that it was
“committed to fair competition” and that “every game is evenly matched.” That
wasn’t enough to be comparative. Nor was the statement under the same header, “only
real people, no unfair bots here,” or other Skillz statements that an
increasing number of RMSB games “infiltrated the app stores” and used bots to
defraud player, even when Skillz stated “[w]e have never and will never use
bots to defraud customers, unlike our competitors.” That post linked to a news
segment on bot fraud in the RMSB industry that mentions class action lawsuits
against Papaya and AviaGames for their usage of bots to control the outcomes of
games. But none of these made “a misleading comparison to a specific competing
product.” (Seems like the last one did, but maybe one tweet just isn’t enough.)
Where an injury “accrues equally to all competitors” a party must produce
evidence of “actual injury and causation” to ensure that the injury is not
“speculative.” Skillz never mentioned Papaya itself nor was this a two-player
market.

Skillz also won summary judgment on Papaya’s unclean hands
defense. While “a jury would be entitled to find that Papaya used bots to
compete with human players, including to control the outcome of games, while
representing in its advertising that players would be competing against other
humans and could win through the exercise of skill,” Papaya didn’t show that
Skillz used bots that way. “Players in Skillz’s games lost because other human
players out played them, not because they were outscored by a bot.”

from Blogger http://tushnet.blogspot.com/2025/11/once-again-injury-requirement-defeats.html

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