Rebecca Tushnet

Here, false advertising claims generate false advertising counterclaims, serving as a reminder that the advertiser who goes to court needs to have its own house in order.

Austin’s Natural Frozen Pops, Inc. v. Jonny Pops, LLC, 2025
WL 3182084, No. 1:24-CV-716-RP (W.D. Tex. Mar. 13, 2025)

The parties target consumers seeking “better-for-you” treat
options, selling in healthy grocery stores like Whole Foods and Sprouts. JonnyPops’
boxes show pictures of fruit, and JonnyPops advertises that its products are
made from “simple ingredients,” are made with ingredients like “100% real
fruit,” and have the “wholesome nutrition of a fruit bar.” JonnyPops also
displays the “USDA Organic” label prominently on its packaging.

JonnyPops boxes

GoodPop alleged that this violated California law and the
Lanham Act because the two main ingredients in JonnyPops’s pops are water and
added cane sugar, and any fruit in the products is only miniscule amounts. And,despite
displaying lemons, limes, blue raspberries, and grapes on the packaging for
JonnyPops’s “Fruit Stacks” treats, the product allegedly contains none of those
fruits. GoodPop’s survey of household grocery shoppers aged 18 to 65 years
allegedly found that 50% of respondents believed JonnyPops’s “Fruit Stacks”
treat was made primarily out of fruit, while the treat allegedly contains less
than 2% fruit content. Likewise, JonnyPops’s advertising allegedly led 61% of
respondents to believe that the majority of the sugar in the product came from
fruit. GoodPop’s complaint also cited customer reviews that praise JonnyPops’s
pops for being a healthier option and having relatively low sugar, and alleged
deception among retailers as well.

GoodPop alleged that JonnyPops models its mission, brand
positioning, and pops after GoodPop’s. While GoodPop uses Good in its name to
refer not only to the ingredients in its products, “but also its desire to
inspire a ‘World of Good,’” JonnyPops advertises its mission to be “Make the
World A Better Place, One Pop At A Time.” JonnyPops allegedly uses “nearly
identical flavors” and similar package design and claims. [In the absence of a
trade dress claim—and flavors are surely functional for ice pops—how could that
matter?]

JonnyPops boxes with same flavors as Goodpop boxes

First, JonnyPops argued that the images of fruit do not
mislead consumers when viewed in context of the entire package, because the
fruit images indicate flavors, rather than ingredients, especially in
combination with the ingredients list on the side or back of the package. But
“the mere presence of an ingredient statement on the back of the product ‘does
not eliminate the possibility that reasonable consumers may be misled.’” Misleadingness
was plausible. Nor were the pictures and the “simple ingredient” claim
non-actionable puffery. The statements at issue here, especially the pictures, weren’t
exaggerated in the way typically associated with non-actionable puffery: words
like “best,” “better,” and “favorite.” Even if “simple” may be subjective, it
was the phrase “simple ingredients” in combination with the fruit pictures and
the rest of JonnyPops’s advertising that allegedly misled consumers; that
context made the claim plausibly misleading.

Deception was plausible based on the survey as well as
consumer reviews, along with allegations that “a nutritionist with more than 1
million followers on social media” recommended JonnyPops over another pop that
contained less sugar, mistakenly believing that it was JonnyPops’s pop that had
less sugar.

The consumer reviews also plausibly showed materiality.
E.g., consumers believed and cared about claims that the pops have “a lower
sugar content and appear[] to be a better for you[] product tha[n] your typical
pop” and are “made of all natural ingredients and had good nutrition compared
to a lot of sugar brands.”

And injury was plausible because of the direct competition,
and because of allegations that, “where retailers have limited space to stock
either GoodPop or JonnyPops in their better-for-you section, retailers have
chosen JonnyPops due to its deceptive sales presentations, because JonnyPops is
not truly a better-for-you product.” For example, “when JonnyPops began selling
next to GoodPop as a better-for-you product in one health grocer, GoodPops’s
sales velocity declined by about 25%.”

The state law claims survived for the same reason; it was ok
to assert California claims in Texas because the alleged wrongful conduct
occurred in California.

Austin’s Natural Frozen Pops, Inc. v. Jonny Pops, LLC, 2025
WL 3182084, No. 1:24-CV-716-RP (W.D. Tex. Nov. 10, 2025)

The parties compete in the market for “ice pops.” GoodPop sued
JonnyPops under the Lanham Act and also for violations of California’s unfair
competition law. JonnyPops counterclaimed under the same laws, alleging that
GoodPop has “duped consumers into thinking that its products are nutritionally
superior to other ice pops, including JonnyPops’s products.” The court refused
to dismiss some of the counterclaims.

GoodPop allegedly falsely claimed that “[i]f it’s a GoodPop,
it’ll never have … refined sugars,” even though many of its products “contain
cane sugar, which is always refined to some extent,” citing definitions of “raw
sugar,” “sugar,” and “cane sugar.” It alleged that four consumer reviews showed
consumer belief and reliance. The court found that, at this stage, it would
accept the claim that cane sugar is refined sugar. Thus, JonnyPops had alleged
actual falsity and didn’t have to provide separate evidence of
deception/materiality; in the alternative, three of the alleged online reviews “specifically
refer to GoodPop’s products not containing refined sugar, which make it
plausible that GoodPop’s alleged deception is material.”

refined sugar claim on box

Second, JonnyPops alleged that GoodPop’s website makes the
false or misleading statement, “The fruit in GoodPops is real and really good!
We use real, whole fruits, juices and purees” when (1) certain GoodPops do not
contain any fruit, and (2) some GoodPops that do contain fruit ingredients are
made with fruit-juice concentrates and other additives, rather than “whole
fruit, juices or purees.” It quoted seven online consumer reviews that mention
GoodPops containing 100% fruit juice.

Cherry n’ Lemonade flavor

First, it wasn’t plausible that consumers would be deceived
by SKUs whose names didn’t claim fruit: the Disney Mickey Mouse Fudge n’
Vanilla Pop, the Fudge n’ Vanilla Crunch Pop, the Fudge n’ Caramel Crunch Pop,
and the Chocolate Vanilla Sandwiches. However, GoodPop’s Cherry n’ Lemonade Pop
and Star Wars Green Apple Lightsaber Pops allegedly “consist largely of
fruit-juice concentrates and other additives, rather than whole fruit, juices,
or purees.” Aaccepting as true JonnyPops’s allegation that fruit juice
concentrate is not a type of whole fruit, juice, or puree, that was enough to
plead literal falsity; several cited reviews positively reference GoodPop’s
Cherry n’ Lemonade Pop being made with “100% real juice.”

Third, JonnyPops alleged that GoodPop uses images of
children eating its most sugary products to give consumers the misleading
impression that its products are healthy for children. No dice. None of the alleged
online reviews or comments were tied in any way to images of children in its
advertising.

Fourth, JonnyPops alleged that GoodPop’s packaging of its
products is “misleading and deceptive because [it] displays images of fruit
that are not the exclusive or even the primary ingredients of its products.” For
example, GoodPop’s Cherry n’ Lemonade Pop allegedly contains filtered water,
white grape juice concentrate, and apple juice concentrate as the top three
ingredients, as well as “some lemon juice” and “cherry … concentrate” as
lesser-included ingredient. JonnyPops cited a review that states, “I love the
mixture of the sweet tangy flavors from the lemon and cherry juice” and another
stating “You can taste the lemon and cherry in them.” [I’m reminded of research
indicating that vanilla ice cream tinted pink is perceived by many consumers as
strawberry-flavored.] Whether consumers instead understand the packaging to
show “critical ingredient[s]” was a fact issue to be resolved after discovery—just
as in the Pom Wonderful case.

The court found that it was plausible that consumers believe
GoodPop products only or primarily contain the fruit(s) depicted on the
packaging, thus making the packaging misleading for products where the fruits
in question are not the only or primary ingredient. However, “JonnyPops’s
argument that GoodPop’s packaging displays images of whole fruit but does not
contain whole fruit is borderline frivolous. As GoodPop argues in its Reply, ‘no
customer who sees whole cherries or oranges on a package expects to find stems
and peel in the product.’”

The court likewise denied the motion to dismiss
counterclaims based on product names. “It is plausible, for example, that
consumers are misled by a product being called Cherry n’ Lemonade Pop, when the
product contains more grape-based and apple-based ingredients than cherry-based
or lemon-based ingredients.”

Finally, JonnyPops alleged that GoodPop’s use of the “USDA
Organic” symbol on its packaging misleads consumers into believing its products
are healthy. A review of GoodPop’s Orange n’ Cream Pop, which contains eight
grams of added sugar stated that the reviewer felt “particularly good about
[this popsicle] because it is made of organic ingredients, no refined sugar or
high fructose corn syrup, and no artificial dyes.” Another consumer reported
that they “love the fact that these pops are organic, dairy free and isn’t
loaded with sugars and calories. Taste like the normal thing but way
healthier.”

Although I would have gone with preemption, the court found
that this wasn’t plausibly misleading. “JonnyPops does not provide the Court
with any facts supporting that GoodPops being labelled organic makes consumers
think anything other than what the label says—that they are organic…. If
JonnyPops’s argument is that a product can be both organic and unhealthy, which
is misleading to consumers, then that is an issue inherent with the USDA’s
definition of organic— not an issue with GoodPop’s particular use of the ‘USDA
Organic’ label.”

The California claims failed because JonnyPops didn’t plead
facts allowing the court to draw the reasonable inference that GoodPop engaged
in wrongful conduct in California or made false or misleading statements there.

from Blogger http://tushnet.blogspot.com/2025/11/pop-six-squish-do-both-popsicle.html

 Kalmbach Feeds, Inc. v. Purina Animal Nutrition, LLC, 2025
WL 3153412, No. 2:25-cv-00617 (S.D. Ohio Nov. 12, 2025)

One reason I love advertising law is that, eventually,
everything lands in it, and I learn about new-to-me corners of the world. Kalmbach
sued its competitor Purina for statements about Purina’s poultry feed products
under the Lanham Act and the Ohio Deceptive Trade Practices Act, and secured a
preliminary injunction on some of its claim.

Kalmbach’s “Henhouse Reserve” is aimed at the “backyard”
poultry market, as is Purina’s “Farm to Flock.” They are both granola-like
“premium” feeds aimed at owners who keep egg-laying hens. “Backyard chicken
flock owners tend to have fewer chickens; they may treat their chickens more
like pets and pay for premium feed. … Backyard owners may also be more
emotionally motivated to keep their chickens alive, because they might keep
their chickens as a hobby, for eco-conscious reasons, or because they view them
as their pets. Thus, they may be particularly concerned about recent avian
influenza outbreaks.”

Farm to Flock contains “FeedLock,” a “multispecies feed
additive technology” consisting of medium-chain fatty acids which are designed
to interact with the membranes of envelope viruses and “deactivate” them. “Although
medium-chain fatty acids have been found to help prevent outbreaks of disease
in swine, to date, there is no evidence that they impact disease outbreaks in
poultry.”

Nonetheless, for a month and a half in 2025, Purina actively
marketed Farm to Flock as “helping to defend against bird flu.” It based this
claim on (1) a lab test and (2) an assumption. For (1), Purina and its
codeveloper dosed four samples of chicken feed with varying levels of FeedLock
and H5N1, and one sample of control feed with H5N1 only. The FeedLock feed
“showed reduced viral loads” after twelve hours, while the control sample
showed stable levels of bird flu for a week. For (2), based on the “consensus
in the swine industry,” stemming from a commercial swine study, that
medium-chain fatty acids “inhibited the transmission of [swine envelope virus]
pathogens in the feed to” swine, Purina extrapolated that the medium-chain
fatty acids in FeedLock would similarly inhibit the transmission of the avian
influenza envelope virus pathogens to poultry.

Purina directly advertised its Farm
to Flock bird flu defense claims on its website and social media platforms, as
well as through direct communications to consumers and distributors across the
United States. Its employees, including scientists and sales representatives,
repeated variations of these claims on webinars and at in-person industry
meetings. In describing the purported flu-fighting properties of Farm to Flock,
Purina’s employees sometimes claimed it “has been shown to be protective
against, protecting against viruses…includ[ing] bird flu.”

one example of the virus defense claims; more below

Regulators in Kansas and Minnesota quickly raised concerns,
to which Purina responded by removing its claims and requesting that similar claims
made by third parties be taken down. The FDA subsequently identified an
additional statement that Purina needed to edit or remove, which it did. But Kalmbach, believing it had already suffered damage, brought suit.

The court considered the state and federal claims to have
identical standards.

Purina argued that claims like “helps defend against bird
flu” referred to defending the feed from becoming a transmission mechanism for
bird flu, not to defending the birds against bird flu. The court didn’t find
that a plausible reading. Anyway, such claims were “scientifically dubious,”
given that chicken feed was not known to be a transmission vehicle in the first
place; swine feed can be a source of transmission for viruses in swine, but
those swine viruses don’t affect birds. Its lab test didn’t show a decreased
risk of chickens contracting bird flu. Thus, the court found that the
statements about the impact of FeedLock feed on avian influenza were likely to
be found literally false.

Purina’s “immunity” statements were also literally false. Not
only did Purina tout its feed’s “Complete…Defense for Laying Hens” and
“Fun-filled, flu-fighting goodness” in large font at the top of the
advertisement, with the supposed caveat explaining that this defense relates to
the feed in small font at the bottom, even the caveat was false: “FeedLock® is
a breakthrough ingredient of the system that nourishes and protects, helping to
instantly defend your flock against avian influenza, while also boosting
immunity and breaking down harmful pathogens on the feed with every bite.” This
reference to “immunity” indicated that Purina was making claims both about FeedLock’s
interaction with avian influenza on feed, where FeedLock supposedly would break
down pathogens, and about avian influenza in a bird, where FeedLock would
supposedly boost immunity. Purina’s own expert witness testified that it was
“improper” to represent that FeedLock provides any “immunity or treatment
against avian influenza.”

ad claiming to support “immune, digestive & overall health”

And, given the expert consensus that feed is not recognized
as a “transmission vector of bird flu,” Purina’s “more ambitious” statements
that FeedLock defends against the bird flu, apart from any immunogenic function,
were also literally false. “If feed is not a known transmission vector—and
Purina’s laboratory test does not show that it is—protecting the feed could
have no impact on whether birds would get avian influenza.” At most, Purina’s
expert would only say that “[FeedLock] would definitely be able to interact
with that virus and break down the viral envelope,” which would then reduce the
infectivity of the virus to some extent—but she would not say that it could
“neutralize” the virus. Even in the lab, infected feed was only “approaching
nondetectable or approaching noninfective” once treated with FeedLock
(emphasis added). “Purina had no evidence showing Purina feed infected with
avian influenza, once treated with FeedLock, ever had a nondetectable or
noninfective amount of avian influenza.” And the feed tested in the lab was poultry
mash feed— “a ground feed different than Farm to Flock.” [Some parts of this
sound like “lack of substantiation” arguments, something that shows up later in
the remedy discussion, though taken together they plausibly add up to literal
falsity. In addition, given the scientific nature of the claims, it is reasonable
to treat them as “tests prove” claims, which means that they can be falsified
by showing that the tests don’t prove the ad claim.]

social media post

In addition, Purina necessarily implied false statements
about “defense against” bird flu.  E.g.,
claims that FeedLock “helps defend your flock….It helps to support strong
healthy hens by actively supporting and fortifying immunity and gut health” had
to be read in context with Purina’s claim in that same ad that
“FeedLock®…helps defend your flock against avian influenza and other viruses”
and claims that the feed “give[s] your hens the wellness boost they deserve
with layer feed that nourishes AND defends: [f]ortifies immunity and helps
defend against bird flu[,] [g]ut health support[,] [s]trong shells, vibrant
yolks.” These claims necessarily implied that the feed would defend the chicken
against bird flu after consumption, and that the feed gives the hens a wellness
boost.

“Every other claim in the ad (that the feed nourishes,
fortifies immunity, supports gut health, leads to stronger shells and vibrant
yolks) suggests a benefit to the hen, not the feed.” Thus, even assuming the
bird flu defense claim could technically/linguistically be about the feed, it
was false by necessary implication. “Purina cannot be heard to claim that this
one statement, buried among six about how Purina feed benefits the health of
hens, is about a benefit to the feed itself. It cannot be heard to say that any
claim that its feed fortifies immunity is unrelated to a claim that the feed
defends against viruses.” Purina’s proposed truthful meaning was not reasonable
and thus the claim could not be called ambiguous.  The court noted that other ads suggest that
the more FeedLock feed a bird consumes, the stronger its immunity becomes:
“FeedLock®…help[s] to instantly defend your flock against avian influenza,
while also boosting immunity…with every bite.”

“[S]ome of these ads plainly and facially imply that
FeedLock feed is defending or mitigating avian influenza in the chickens
themselves by ‘boosting immunity.’” Letters and inquiries from Purina’s
regulators confirm this implication.” (Among other things, the FDA took issue
with advertising statements about the bird flu that lacked “explicit reference
to the feed itself.”)

another ad

The ads also necessarily implied that FeedLock defended
backyard chickens more when more feed is consumed, and continued to defend
chickens even after consumption—by offering continuing immunogenic and health
benefits to the birds “with every bite.” The combination of immunity and health
claims along with claims that FeedLock feed “defends against” avian influenza
and other viruses “necessarily implies that FeedLock is providing some
antiviral value to the bird itself, including after consumption. Based on the
record, this appears to be false.”

So too with the necessary implication of statements claiming
benefits against “other viruses.” “Viruses,” plural, “necessarily and
unambiguously implies, in the context of an advertisement for ‘Hen Food,’ that
there are other viruses that FeedLock defends against.” Again, the record
supported falsity. “Avian influenza is the only virus known to infect birds.”

fact sheet (or is it?) claiming to fight “viruses like” bird flu

The court didn’t bother with misleadingness (though some
evidence shows up in the materiality discussion), because literal falsity can
be presumed deceptive. There was direct and indirect evidence of materiality:
direct from customer inquiries, which can show that a claim was
purchase-relevant, and indirect. “One of Kalmbach’s sales representatives
testified that she was told by customers and potential customers that they
wouldn’t consider Kalmbach’s Henhouse Reserve feed because it lacked a bird flu
preventative or bird flu prevention, unlike Purina’s Farm to Flock.” (Not
hearsay because not offered for the truth of the matter asserted.) Plus,
Kalmbach showed that Purina “misrepresented an inherent quality or
characteristic of the product.” Advertising virus defense is likely to induce
consumers to believe they are getting a better product than feed that does not
offer such a defense. Purina’s own internal consumer research results concluded
that such claims were “most motivating” to customers; Kalmbach’s expert
testified that many consumers in this market “are more emotionally motivated to
keep their chickens alive, and are concerned by recent outbreaks of avian
influenza,” and Purina’s expert agreed that backyard owners “are emotionally
connected to their flock.” Purina’s senior marketing manager testified that
Purina’s consumers “started to humanize or personify their chickens, and so
they treated them like family. They were more like pets like cats and dogs.” [I
hate to ask, but, based on this
story, I have to wonder: is MAGA going to go after antivirals in chicken
feed? Will they worry about chicken autism?]

another example

The court pointed specifically to a Purina internal report
finding that the vast majority of consumers in the market found “brands that
spend time educating customers are more trustworthy,” [of relevance far beyond
this case!] and thought it was “important to stay up to date on the latest
nutrition for animals.” It did not follow that consumers would be skeptical of
such claims: “If anything, it seems logical that consumers would be less
inclined to scrutinize Purina’s claims because they would trust Purina,
believing that Purina’s efforts to educate consumers as to their feed’s
purported benefits were based on the latest updates in animal nutrition.” And
Kalmbach’s sales rep supported this by testifying that she told a potential
customer that the claim wasn’t true, and received the question: why would
Purina advertise it if it wasn’t true?

Causation/harm: “[T]o obtain injunctive relief[,] logical
likelihood of damages is sufficient.” Given the presumption of deception and
the existence of some evidence of misleadingness, including a consumer inquiry
into why Kalmbach does not “have a product like [Purina’s] that can defend
against bird flu,” Kalmbach was a likely victim of Purina’s acts.

There was a presumption of irreparable injury. Purina argued
that the presumption was rebutted here because any lost sales could be recouped
by money damages, and there was no evidence supporting “a more severe and
ongoing injury,” like a dealer dropping Kalmbach for Purina or reputational
damage. It also argued that requiring it to contact its customers would be too
extreme here, where there is no ongoing, irreparable injury.

Characterizing the issue as one of “presumption of harm,”
rather than presumption of irreparable injury, the court found that
there was still the distinct possibility that Kalmbach will suffer injury,
which is the wrong question, but the right one probably still has the same
answer. That’s because,

although Purina sent out three
blast emails to 130,000 recipients about Farm to Flock with statements
regarding avian influenza, it has never corrected those emails. Should any of
those 130,000 email recipients (or any further recipients of those emails) rely
on those emails, further disseminate those emails, or refer back to those
emails today or in the future, they may believe Purina still represents that
its Farm to Flock feed helps defend against bird flu. Because it would be
difficult, if not impossible, to calculate whether Purina’s more recent sales
of Farm to Flock were a result of these latent advertisements, calculating
damages would be futile.

Purina argued that Kalmbach’s supposed delay in bringing the
motion undermined any claim of irreparable harm. Kalmbach learned about
Purina’s advertisements in April and sued in early June; that wasn’t a
sufficient delay to undermine Kalmbach’s claim of irreparable injury,
especially given that Kalmbach would need some time to evaluate the scientific
claims.

Harm to Purina/balance of equities: Purina stopped further
publication but didn’t issue corrective statements. Purina argued that a public
retraction would risk damaging its reputation. At the preliminary injunction
stage, a court order proclaiming its ads were “unsupported and untrue” would
erode brand trust and goodwill, so that would be inappropriate. To be sure,
this was something of “a self-imposed risk” to Purina, so the court tailored
the injunction to avoid some of Kalmbach’s proposed harshness.

Purina initially consented to a mostly prohibitory
preliminary injunction: stop the accused advertising and notify distributors,
retailers, and marketing affiliates to cease use and dissemination of that
advertising. Kalmbach wanted Purina to publish a statement saying its claims
were untrue and that it was retracting them.

“Purina’s argument is mainly that requiring any public
statement on Purina’s part would be too extreme, and Purina points to cases
where courts ordered much more tailored relief.” The lesson was that “retractions
should be issued in instances where identifiable third parties received the
challenged claim,” and here those were emails. “Just because Purina has
addressed some forms of its prior advertisements does not mean that all
confusion will have dissipated. Thus, Purina must issue some form of a retraction.”

But the court would limit the language. The antivirus claim
was false “for the purposes of the Lanham Act and the Ohio Deceptive Trade
Practices Act because Purina had no empirical support or basis for it, and the
scientific consensus today suggests that it is incorrect.” But Kalmbach’s
expert testified that it is possible that avian influenza could live on
chicken feed, and that if a bird ingested that infected feed, that bird could
get avian influenza. And it was an open question whether FeedLock would have
any effect on avian influenza in bird feed, or the population of birds that eat
that feed. [It’s possible that sprinkling a mix of cinnamon and cumin
into the feed would protect birds; this is why the Third Circuit held that
making unsubstantiated claims that you have no reason to think are true counts
as making literally false claims. It’s bullshit in the sense that you have no
interest in the truth value of your claim; you’re just making it to sell the
product. And that’s not an attitude towards truth worth protecting even if
“lack of substantiation” claims are otherwise unavailable.]

But, anyway, this was a preliminary injunction and not a
final determination of falsity, so the court required the retraction (to be
sent to email recipients and posted on Purina’s website) to say “At the
preliminary injunction stage, the Court found that Purina engaged in false
advertising because these statements were not scientifically grounded and
lacked a scientific basis. Purina retracts these statements, as well as any
other representation that Purina’s Farm to Flock 18% Layer Hen Food defends
against, protects against, prevents, mitigates, or provides immunity to the
effects of avian influenza, bird flu, or other viruses.” [Quick TOS question:
does your TOS warn people who unsubscribe from your mailing list that you might
have to contact them in the future for legal compliance?] [Quick reading
comprehension question: what percentage of consumers will consider the reputational
hit to Purina decreased because it’s just a preliminary injunction? I think the
court did the right thing, but that doing so will not change the effects on
Purina’s overall reputation one jot. Which is to say that sometimes we should
be happily normative about these issues.]

Note: the court specified
URLs
at which the notice should be given, and they’re not there yet, but Purina
has 10 days, which (as of Nov. 14) have not yet passed. 

from Blogger http://tushnet.blogspot.com/2025/11/chicken-feed-virus-protection-claim.html

Skillz Platform Inc. v. Papaya
Gaming, Ltd., 2025 WL 3012836, 24cv1646(DLC) (S.D.N.Y. Oct. 27, 2025)

Most recent previous opinion discussed here.
Skillz sued its competitor in the “real-money skill-based mobile gaming” market
for violating the Lanham Act and NY GBL § 349 by stating or implying that its
games pit human players against each other when in fact Papaya employed bots
against human players. Here, the court denies summary judgment to Papaya.

“In RMSB games,
players are matched by the platform 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. In various ads, Papaya
has described its games as “fair” and “skill-based,” represented that Papaya
has “no vested interest” in and does not “profit” from who wins or loses its
tournaments, and refers to “players” “over the age of 18,” “individuals,” and
“winners” as the users on its platform. Its video ads showed images of humans
playing games, and claimed that its games “are directly determined by your
level of skill” and that Papaya will “match [you] against players with similar
skills.”

It was undisputed
that Papaya used bots in its games from 2019 until at least November 2023. Its
liquidity bots filled in user slots to ensure that a tournament “won’t stay
open for too long” as it awaits players. Its tailored bots were used to create
“a predetermined outcome” where Papaya “want[s] the player to finish at some
predefined rank,” which requires “control[ling] the scores of the rest of the
players.” All players in a tailored-instance outside the ‘receiving’ player”
are bots. “Papaya customers inquired between 2021 and 2023 whether they were
playing against other human beings or against a computer or a bot. Papaya’s
responses generally emphasized that it matched players with similar skill
levels and assured the complaining customers over 200 times that ‘we do not use
bots.’” Papaya even closed the accounts of two players who expressed suspicion
about Papaya’s use of bots.

Papaya regularly
identified Skillz as its largest direct competitor and benchmark for
performance assessments. During Papaya’s bot era, Skillz saw a decrease in
market share while Papaya saw an increase.

Papaya argued that Skillz
lacked sufficient evidence that any of its advertising statements communicated
a false message to consumers, were material, or caused Skillz injury. The court
disagreed.

A reasonable jury
could find literal falsity or falsity by necessary implication, leading to a
presumption of deception. Papaya’s representations that its tournaments are
“fair,” “skill-based,” and only between “players” and “individuals” who are
“over the age of 18” could be false based on the undisputed evidence of bot
use. Similarly, statements that Papaya has “no vested interest” in who wins or
loses, and that it does not “profit on the outcome of a Tournament,” could be literally
false because there is evidence that Papaya used bots to control the outcomes
of tournaments (and speed them up so players could use their winnings on new
games). [Frankly, I’d be inclined to grant summary judgment to Skillz on
falsity!]

Papaya argued that it
never expressly stated in its advertisements that there were no bots in its
games. “The issue is what a reasonable consumer would understand Papaya’s
statements to mean. Should a jury find, for instance, that the advertising
necessarily and unambiguously implied that only human players competed in
Papaya’s games, it would be entitled to find that the advertising was literally
false.”

Papaya argued that
“skill-based,” “fair,” “players,” and “individuals” were not literally false
because those terms had multiple meanings. [Insert goose meme: what meanings?
What ones???]. The jury could find that, in context, they were literally false
or false by necessary implication. Papaya’s expert concluded that skill played
a greater role than chance in the outcome of Papaya’s tournaments, regardless
of bot usage. So what? It was undisputed that Papaya used tailored bots to
control the outcomes of tournaments. Papaya “could prevent players from winning–or
allow them to win–no matter how they performed in the game.”

Papaya also argued
that its statements that it had “no vested interest” in and did not “profit” on
tournament outcomes were accurate, because Papaya made less money in sessions
with bots because bots do not pay entry fees. Its experts opined that human
players received more in total cash prize awards due to Papaya’s use of bots. That
was a jury question. [Seems pretty inconsistent with the profit motive—did
human players walk away with more money total because of bots, or did they play
more games/stay longer?]

Implied falsity: This
can be shown through either “extrinsic evidence of consumer confusion” or
“evidence of the defendant’s deliberate deception,” the latter of which must be
“egregious” to “create[] a rebuttable presumption of consumer confusion.”

There was
sufficient evidence for a reasonable jury to find deliberate deception, given
Papaya’s repeated denials of bots’ existence. E.g., when one player asked, “Is
every single player I play against in a tournament a real player or are there
computers playing at times?”, Papaya responded, to “clarify that we do not use
bots or computer players” and that “if it were possible to control [tournaments]
manually, it would not be fair to other players.” Papaya CSRs were instructed
to escalate any complaints that referenced bots to management, and one employee
stated that a customer service representative “displayed poor judgment” by
keeping open an account of a consumer who had complained about bots and
demanded a refund. Papaya had an internal policy of removing posts in its
Facebook group that mentioned bots.

Papaya argued that
there should be no presumption of deception because Skillz failed to provide
evidence that any intent to deceive was linked to a specific challenged
statement. But internal statements by executives and the company’s awareness of
consumer confusion, among other things, are relevant to intent. Here, there was
evidence that Papaya and its executives recognized that its use of bots “did
not align” with its public statements and that this “misalignment” confused
customers.

Indeed, executives
decided to respond to a consumer who asked for a direct answer on whether
Papaya used bots by informing the user that the platform has “real players” and
placing the blame on “rare cases where players use automated systems.”
Recognizing that consumers noticing bots on the platform was a growing issue
and impacted “trust in our fairness,” Papaya executives modified its bots’
performance to make bot profiles appear more human so that fewer users would
detect their usage going forward. Another employee stated: “While understanding
the need for bots, the margin of their winnings should be smaller and less
obvious to our players.” A reasonable jury could find intentional deception,
despite the testimony of Papaya’s Rule 30(b)(6) witness, who stated that
instances in which Papaya told customers that it did not use bots were “an
unfortunate mistake” committed by the customer support vendor and “not Papaya’s
position.” The court noted that “Papaya’s executives have not made similar
representations. They invoked their Fifth Amendment privilege to remain silent
during their depositions and have not offered affidavits in support of this
motion.” [Yikes.] Regardless, there was enough to go to a jury.

Skillz also offered
extrinsic evidence of consumer confusion created by Papaya’s use of the terms
“skill-based,” “fair,” “players,” “winners,” “individuals,” and “no vested
interest,” in its advertising. Along with individual consumer responses, Skillz
provided survey evidence.

Respondents had
played at least one of four games that Skillz and Papaya offer on their
platforms. Upon watching a Papaya ad, 45.8% of respondents indicated that they
believed that the game used solely human players. The survey next presented
respondents with a mock app store description constructed from Papaya’s public
statements:

Solitaire
cash makes sure to match players against other opponents with a similar skill
level to ensure a fun and fair experience for everyone. You’ll be matched with
other players within the same skill level, and you will get the same deck – so
the game is totally fair and skill-based. The outcome of Solitaire cash is
based on the skill of the players, rather than luck or chance. Solitaire cash
has no vested interest in who wins or loses, nor does it profit on the outcome
of a tournament that we provide.

After reading the
description, 60% of respondents indicated that they thought the game included
only human players.

Papaya argued that
the survey was inadmissible because it did not use a control, stripped the
statements to which respondents reacted of their “real world” context, and did
not survey the appropriate populations, excluding prospective game players and
thereby including too many men. These were issues for cross-examination, not
demanding exclusion.

Papaya didn’t
explain what kind of control could have improved the survey’s reliability.
[This is a missed opportunity! A control ad could have just described the game
mechanics and not the opponents and tested whether consumers thought they’d
received any message about whether they were playing against other humans. I
wouldn’t be at all surprised if the net confusion levels were still pretty
high, given the explicit claims. Still, the court didn’t appear to understand
the purpose of a control: “The survey is designed to test the impression
created by the words Papaya chose to describe its games. Testing responses to
statements that Papaya did not use in its advertising would be neither relevant
nor illuminating.”]

Papaya also argued
that the survey wrongly screened for past players of RMSB games, not
prospective consumers to whom the ads were directed towards, who differed
demographically. Skillz’ expert filed a supplemental report looking at what
happened when he removed randomly selected male respondents to match the ratio
of male to female respondents in Skillz’s own survey of Skillz’s actual
customers. The differences were, he reported, statistically insignificant.

Materiality: While
the materiality of the falsity and the injury to the plaintiff resulting from
the defendant’s falsity are “separate essential elements … where the
defendant and plaintiff are competitors in the same market and the falsity of
the defendant’s advertising is likely to lead consumers to prefer the
defendant’s product over the plaintiff’s,” proof of injury to the plaintiff may
also demonstrate the materiality of the falsehoods.

Skillz relied on
evidence that consumers complained to Papaya and closed their accounts with
Papaya when they came to believe that Papaya was using bots in its games, as
well as on Papaya’s efforts to deceive consumers about its use of bots. It also
offered a second survey that sought to measure the likelihood of consumers
continuing to play if they learned that some of their opponents in real-money
games whom they thought were human were actually bots.

Half
the respondents were randomly asked if they would “continue” to play if they
were informed that some of their opponents were bots, and the other half were
asked if they would “stop” playing. Of the former group, 51.2% of respondents
indicated they would be unlikely or very unlikely to continue playing. Of the
latter, 66.8% indicated they would be likely or very likely to stop playing.

[It seems to me
that with less evidence of deception, that amount of a swing (over 15% of
respondents) from a small wording change would be concerning—but frankly, even
if you take 51.2% as a midpoint and say that it might reflect only a range from
35%-66% materiality, those are big enough numbers that it shouldn’t matter.
Which is also to say that I’m not sure that you should draw anything but
qualitative conclusions from surveys like this. Also:]

The survey had a control: half the
respondents were also asked if they would continue playing – with the other
half being asked if they would stop – if they were informed that they had to
wait one hour to learn the results of the game. Here, the numbers were 40.8% (unlikely
or very unlikely to continue playing) and 54.8% (likely or very likely to stop
playing), suggesting that the wording affected about 15% of respondents, which
with these numbers didn’t matter much. “At bottom, regardless of how the question
was phrased, a significant number of respondents showed a propensity to cease
playing when they learned there were bots in the games.”

Papaya argued that the survey didn’t measure the materiality
of bots, but rather the materiality of learning of intentional deception. That
went to the weight of the survey, not its admissibility. [Especially if there
was intentional deception!]

Papaya also argued that bots are so ubiquitous in the
industry that consumers “fully expect” them to be deployed, and that its
failure to disclose was in line with industry practice. “These arguments fail
to engage with the evidence of deception and materiality offered by Skillz.”

Injury: Injury “can be established when defendant and
plaintiff are competitors in a relevant market and plaintiff demonstrates a
logical causal connection between the alleged false advertising and its own
sales position.” Papaya regularly identified Skillz as its largest competitor
and benchmark for performance assessments, and Papaya’s growth in market share
in 2021 coincided with Skillz’s decline in market share. “Even if Skillz were
unable to quantify its damages with sufficient certainty to recover those
damages, it could seek injunctive relief and disgorgement of the defendant’s
ill-gotten profits.” And Skillz offered an expert to calculate both damages to
Skillz and Papaya’s unjust enrichment, the latter of which was between $650 and
$719 million, depending on whether that profit was measured by Papaya’s cost
savings from its use of bots or by how much less it would have earned without
deception. That report was admissible and relevant.

Papaya argued that “the but-for world in a false advertising
case must be one in which the false statements were never made and cannot be
one in which the accused business practice did not occur.” But the expert’s
choice was not unreasonable. “There is evidence that Papaya may not have been
able to operate in the RMSB marketplace at all if it publicly and accurately
disclosed its use of bots.” If it did so, it might have been classified as a
gambling platform by app stores—unlike RMSB platforms, gambling platforms hold
a stake in the results. RMSB games don’t involve “playing against the house”
and are supposed to collect the same revenue regardless of who wins, whether
from entry fees, advertising revenue, or in-app purchases. “[H]ad Papaya disclosed
its use of bots, Papaya may have been faced with the regulatory and tax
requirements with which gambling platforms must comply. In addition, it may
have lost access to app stores and payment processors and have been excluded
from the RMSB market.”

GBL claims survived for the same reasons.

from Blogger http://tushnet.blogspot.com/2025/10/claims-about-game-providers-bot-use-in.html