No PI where individual defendant has left allegedly trademark-infringing role

Posted on September 21, 2021 by rtushnet

Nigerians in Diaspora Organization Americas v. Key, 2021 WL
811094, No. 19-3015 (RDM) (D.D.C. Mar. 3, 2021)

“NIDOA is a continental nonprofit organization that
advocates for the interests of Nigerians in the Western Hemisphere.”  It alleged that, under the continental
organization’s bylaws, defendant Key’s term in office as the chairperson of the
Board of Directors expired in 2019, but Key and her associates refused to cede
control. Thus, two separate groups claim to be the Board. NIDOA’s theory is
that Key is infringing NIDOA’s trademarks by continuing to act in the name of
NIDOA-USA.

“While the dispute between the dueling Boards continues, Key
has now relinquished her position on the holdover Board of Directors and has
thus ceased the activities that arguably infringed the trademarks.” Thus, the
request for preliminary injunction was moot, and NIDOA didn’t show likely
irreparable injury despite evidence that having two competing Boards caused
some confusion and some loss of goodwill and donations for NIDOA and for the
Board elected in 2019. For example, a member messaged one NIDOA person through
WhatsApp to report a $100 donation for a COVID-19 fundraiser, but it turned out
that the money had accidentally been sent to Key’s Board of Directors, when the
member intended to send the money to the Board of Directors elected in 2019. In
another WhatsApp message, a different NIDOA member observed that a press
release from Key was “very[,] very confusing” and complained that the “faction”
within NIDOA “sends a wrong signal to the outside world.”

Key satisfied the stringent standards for mootness due to
voluntary cessation—at least while the case was pending final resolution, as
appropriate for a preliminary injunction. NIDOA was challenging the activities
of the holdover Board, not of Key as an individual; many of the documents that
allegedly infringed its mark didn’t use her name at all or listed her with
other Directors. “[T]here is no basis to find that she will continue to
infringe Plaintiff’s trademarks during the pendency of this action, now that
she is no longer a member of that board.” Nor was the equitable power to enjoin
third parties as successors an interest an exception to the mootness doctrine.
The court would not enjoin third parties “even though the claim for a
preliminary injunction against Key, the only defendant named in the case, is
moot.”  Nor did NIDOA show that the other
Board members were in privity with Key or are acting as her agents. NIDOA
decided whom to sue, and chose only Key, not the entire holdover Board; it
opposed the intervention of the entity representing the holdover Board; it
didn’t seek to add the holdover Board as a party.

However, the court reserved judgment on NIDOA’s damages
claims and permanent injunctive relief.

Even if the claim weren’t moot, NIDOA failed to show
irreparable harm. Apparently uninformed about the TMA’s change in the standard,
the court held that there was no presumption of irreparable harm. Interesting
question: would cessation rebut the presumption if it had been properly
applied? The court concluded: “Ongoing confusion allegedly caused by Key’s past
acts is insufficient to support injunctive relief, in the absence of some
likelihood that Key will take similar actions again in the future.”

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continued desire to purchase TVs suffices for California standing

Posted on September 21, 2021 by rtushnet

Julian v. TTE Technol., Inc., 2021 WL 810228, No.
20-cv-02857-EMC (N.D. Cal. Mar. 3, 2021)

Plaintiffs alleged false advertising of TTE’s TVs in
violation of California and New Jersey law; the court granted the motion to
dismiss but allowed leave to amend as to injunctive relief claims.

According to Plaintiffs, it is false or misleading for TTE to
market the televisions as having a “120Hz CMI effective refresh rate” when in
fact the televisions have a 60Hz refresh rate. Two of the four named plaintiffs
alleged:

• “As a result of [TTE’s] false and
misleading statements, Plaintiff…paid more for his [TTE] television than he
would have paid had [TTE’s] advertising and representations been truthful.”

• “Plaintiff…would like to
purchase a [TTE] television in the future if he knew he could trust their [sic]
refresh rate advertising. But, without a court ordering [TTE] to fix their
[sic] advertising, Plaintiff…has no way of knowing whether he can trust
[TTE’s] refresh rate advertising.”

• “As a result of [TTE’s] false and
misleading statements, Plaintiff…paid for a television that [TTE] misrepresented
as using technology and including technical capabilities it did not actually
have. Plaintiff would not have bought the television but for [TTE’s] refresh
rate (Hz) misrepresentations.”

• Plaintiff has experienced poor
picture quality when using the TTE television for, e.g., action movies, sports,
or video games.

Was this plausible? If plaintiffs wanted a 120Hz television
only, not a 60Hz television with poorer picture quality, TTE argued, then
“correcting TTE’s alleged advertising to 60Hz would not affect [their]
purchasing decisions.” But “the point of the injunctive relief is to prevent
TTE from engaging in false advertising so that Mr. Julian and Mr. Pacano can
rely … on TTE’s advertising in the future – i.e., so that they can decide
whether or not to purchase a television from TTE.” Second, it wasn’t clear that
they would never buy a TTE TV in the future. “It is not inherently
contradictory for Mr. Julian and Mr. Pacano to make both allegations (i.e., to
assert that they would not have bought the televisions or would have paid less
for the televisions had there been no false advertising).” The TVs weren’t
allegedly worthless if truthfully advertised.

TTE argued that there was no actual or imminent threat of
future harm because, now that the individuals know what is meant by “120Hz CMI
effective refresh rate,” they will not be deceived in the future: “merely
looking at the online specifications or product label would clear any
ambiguity.” Again, though, the harm was inability to rely on advertising. As
another court cited by the 9th Circuit has held, “A material
representation injures the consumer not only when it is untrue, but also when
it is unclear whether or not it is true.” A consumer need not check the fine
print and is not expected to look beyond misleading representations on the
front of a package to discover the small-print truth. And, in fact, plaintiffs
“could not know whether the TTE televisions were truly 120Hz or 60Hz without
purchasing them.”

But were they really likely enough to be on the market for a
TV for an actual or imminent threat of future harm? TVs aren’t like flushable
wipes in terms of repeat purchases. “[S]ome day” intentions for the future are
not sufficient to establish standing. The complaint’s current allegations
weren’t good enough without any factual allegations to “suggest a purchase in
the relatively near or forseeable future …, at least in the context where, as
here, the goods are not, e.g., consumable items that are bought on a repeat
basis …, but rather a durable good not typically purchased on a regular basis.”

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divided NY court finds incomplete legal compilation wouldn’t mislead reasonable consumers

Posted on September 21, 2021 by rtushnet

Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP
v Matthew Bender & Co., 2021 NY Slip Op 03485, — N.E.3d —-  37 N.Y.3d 169 (Jun. 3, 2021)

The plaintiffs were a law firm that handles landlord-tenant
actions, a non-profit corporation that assists pro se litigants in housing
court matters, and a tenant advocate and organizer. They bought the annual
edition of a legal resource manual, New York Landlord-Tenant Law (the Tanbook),
which was published by Matthew Bender. They alleged Matthew Bender violated GBL
§ 349, based on its alleged misrepresentations about the completeness of the
laws reproduced in one section of its publication. The court found that the
alleged misrepresentations were consumer-oriented because they were “contained
in a manual that was then marketed to and available for purchase by consumers,”
nonetheless “a consumer acting reasonably under the circumstances here would
not have believed that defendant represented that the section at issue,
containing rent control statutes and regulations, was current and accurate for
its one-year shelf life.”

Plaintiffs contended that omissions and inaccuracies
rendered the Tanbook of no value to its users and that, after receiving
complaints, Matthew Bender included the previously omitted statutes and
regulations in the 2017 edition, which, although published late in the calendar
year, was sold to plaintiffs and other subscribers at full price.

Plaintiffs alleged that Matthew Bender deceptively implied
that Part III of the book contained a complete compilation of the rent control
and stabilization laws and regulations applicable to New York City. The book’s
“Overview” section described other sections as consisting of
“selected” laws and regulations or “excerpts.” By contrast,
the Overview describes Part III as containing “the laws and regulations
covering rent stabilization,” despite omitting significant portions thereof.
Matthew Bender argued that the omissions were an unfortunate mistake but not
actionable misconduct; among other things, the sales contracts expressly
disclaimed the accuracy, reliability, and currentness of the Tanbook.

The Supreme Court (that is, the appellate court) reasoned
that GBL § 349 was inapplicable because the Tanbook wasn’t directed at
consumers at large for personal, family, or household use, but rather to legal
professionals. That was error. “[A]ny such narrowing of the term ‘consumer’
would be contrary to the legislative intent to protect the public against all
forms of deceptive business practices.” Consumer-oriented conduct distinguishes
conduct with a broader impact on consumers at large from “[p]rivate contract
disputes, unique to the parties,” but does not depend on the use to be made of
the product. The Tanbook was advertised and available for sale to the general
public, including through Matthew Bender’s website and a public, online
shopping service. “Consumer-oriented conduct” need not “be directed to all
members of the public,” and Matthew Bender’s “As even plaintiffs concede, the
legal materials contained in Part III are subject to legislative amendment at
any time, seriously undermining plaintiffs’ contention that yearly publication
was a representation that the Tanbook was complete and accurate.” And the
misrepresentations weren’t materially misleading “under all the circumstances,
including defendant’s disclaimer.” The contract specifically didn’t guarantee
updates and provided for invoices for any supplements if and when they became
available. “It is therefore clear to a consumer that the Tanbook is not a
completely accurate compilation of the law.”

What about the express disclaimer? “A disclaimer may not bar
a GBL § 349 claim at the pleading stage unless it utterly refutes plaintiff’s
allegations, and thus establishes a defense as a matter of law. The defendant
must do more than disclaim liability generally; instead, a disclaimer must
address the alleged deceptive conduct precisely, so as to eliminate any possibility
that a reasonable consumer would be misled.” Moreover, an overall misleading
impression can’t be saved by a disclaimer.

The disclaimer here was: “WE DISCLAIM ALL WARRANTIES WITH
RESPECT TO PUBLICATIONS, EXPRESS OR IMPLIED . . . WE DO NOT WARRANT THE
ACCURACY, RELIABILITY OR CURRENTNESS OF THE MATERIALS CONTAINED IN THE
PUBLICATIONS.” Here, “[t]he Tanbook’s susceptibility to revision at any time,
coupled with the fact that the disclaimer addresses the precise deception
alleged in plaintiffs’ complaint, leaves no possibility that a reasonable
consumer would have been misled about the contents of the Tanbook.” The
question of whether the Tanbook was worthless without completeness “goes to
whether defendant is offering an item worth buying, not whether defendant has
deceived consumers about the nature of its product.”

A partial dissent would have allowed the claim to continue.
The dissent noted that plaintiffs alleged both that Matthew Bender’s statements
would lead a reasonable consumer to believe that the Tanbook contained all the
updated laws regarding rent regulation and stabilization, and that “the fact
that the Tanbook is updated and purchased by customers annually would lead a
reasonable consumer to believe that the Tanbook was updated on an annual basis
with the changes to the law that were made the previous year, i.e., that
consumers were not merely purchasing another copy of the same book each year.”
The plaintiffs didn’t plead that consumers would assume that the print copy
automatically updated for new rules enacted during the year, but rather the
more reasonable theory that consumers would believe that the print copy was
complete when it was printed. But the 2016 edition of the Tanbook allegedly
failed to include legislative amendments to statutes contained within the text
even though those amendments had taken place years, even a decade, earlier.

The dissent would have let the second theory go forward, at
least. Disclaimers shouldn’t “allow routine disclaimers to render the consumer
protections, codified by the statute, meaningless.”

The dissent went on to address a third issue: the cost of a
product the consumer would not otherwise have purchased is a cognizable injury.
“The use of deception to induce a consumer to buy a product is precisely the
kind of conduct the legislature sought to prohibit with GBL § 349.” To the
extent that some courts were interpreting previous Court of Appeals decisions
to bar that theory, the Court or legislature should clarify the matter.

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competitor’s copying of photos doesn’t inherently inflict competitive harm

Posted on September 20, 2021 by rtushnet

McCleese v. Natorp’s, Inc., 2021 WL 2270511, No. 1:20-cv-118
(S.D. Ohio Jun. 3, 2021)

The parties compete in the market for custom landscape
design services. “[I]n February 2010, Natorp’s began using approximately 24 of
McCleese’s photos on its commercial website.” The parties disagree about how
and whether they were authorized to do so. Each webpage that contained one of
McCleese’s photos also contained Natorp’s own trademark and copyright symbols
at the top and bottom. Natorp’s removed all of his photos from its website
shortly after he complained, but the photos allegedly remained “online at
various social media outlets including Natorp’s private website, Facebook, and
Pinterest.” McCleese registered copyrights for his photos in 2019.

Along with copyright claims, McCleese asserted Lanham Act
false advertising claims. But he failed to plead any injury to a commercial or
sales interest. He did allege sadness, distress, and “profound grief” from
Natorp’s copying of images of a particular landscape job, but the Lanham Act
doesn’t cover psychological, emotional harm. The complaint didn’t allege how
his position in the marketplace was harmed in any way; he even alleged that he
“does not license his photos for any commercial purpose, does not sell copies
of his photos, and his photos are unpublished.” Although the complaint alleged
that defendants were unjustly enriched, “[a] plaintiff’s standing under the
Lanham Act hinges on a commercial injury to the plaintiff, not merely a benefit
to the defendant.” (Now do trademark standing.)

The same analysis applied to claims under Ohio’s statutory and
common law of unfair competition.

DMCA §1202: McCleese didn’t plead facts sufficient to allege
the existence of false CMI. It was not enough to allege that Natorp displayed
its trademark and copyright symbols on the same webpage as McCleese’s photos. False
CMI, according to the case law, must appear in the “body” or “area around” the
infringed work.

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natural decay of nicotine complicates evaluation of literal falsity of nicotine content claims

Posted on September 20, 2021 by rtushnet

Bidi Vapor, LLC v. Vaperz LLC, 2021 WL 2433642, No. 21 C
1430 (N.D. Ill. Jun. 15, 2021)

“The novel question of how the electronic cigarette industry
should approach labeling nicotine content in the face of nicotine degradation
is both significant and unsettled.” Thus, the plaintiff was not going to get a preliminary
injunction against its competitor for falsely advertising 6% nicotine content.

All nicotine degrades with time, so all e-cigarette products
contain different amounts of nicotine than reported. This undermined Bidi’s
literal falsity theory.

Bidi’s lab reports found that Vaperz’s stick, which
advertises 6% nicotine, had an average nicotine level between 3.06% to 3.43%.
It’s cheaper than Bidi’s stick, and this allegedly caused Bidi to lose
business. It brought state and federal false advertising claims.

In context of inevitable degradation, 6% was not shown to be
literally false. “Even though Bidi’s reply argues that a +/- 10% degradation is
the industry norm, the mere existence of some norm acknowledges the fact that
some degradation is inevitable and even expected.” A case that must inevitably
be about what is acceptable variation within the industry cannot be about
literal falsity. The court pointed out that the package never made any claims
about when the stick had 6% nicotine. “[A] linguistically competent person
could, when considering nicotine degradation, reach at least two conclusions
about what 6% means in this context. This inherent ambiguity means that
Vaperz’s statement is not indisputably or undeniably false.”

Comment: One annoying thing about Seventh Circuit precedents
is that they are often sloppily phrased even when they intuitively have the
result right. The court of appeals did not mean “linguistically” competent
despite what it said, and the court here isn’t applying linguistic analysis. It
is considering cultural competence. Indeed, immediately following this
statement, the court concludes: “Rather, this case presents a genuine dispute
about market norms in the e-cigarette industry and whether Vaperz has defied
those norms.”

Bidi tried to argue that the statement was literally false
because defendant’s stick contained less nicotine than the industry-accepted
+/- 10%. But there was little evidence that such a standard existed. [The court
probably goes overboard saying that a literal falsity theory could prevail if
all sides agree that 6% doesn’t mean 6%–if there really were an industry
standard that defendant violated, or if there were 0% nicotine from the start,
that seems literally false.]

Likewise, Bidi didn’t have a clearly enough defined or well
enough evidenced theory of misleadingness. Also, there was at least one lab
report finding that defendant’s stick had 5.38% nicotine, which was within the
10% tolerance proposed by Bidi.

Even if it showed falsity, Bidi didn’t show materiality. It
presented little evidence that rates of nicotine degradation are “actually
salient to consumers”— “especially when nicotine degradation appears to be an
industry-wide issue.” “Instead, it is distinctly possible that customers base
their purchasing decisions on factors like taste, convenience, or price.”

Finally, Bidi didn’t make a strong showing on causation,
just a bare assertion of a tradeoff in sales, and Bidi’s sales had also been
increasing, which weighed against showing likely success.

Because of all this, Bidi wasn’t entitled to the statutory
presumption of irreparable harm (of which the court did not seem very fond,
citing Winter despite its obsolescence in the Lanham Act context). And Vaperz
largely rebutted any presumption, by which the court seems to mean “made
arguments that Bidi didn’t do a good job providing evidence.” Lost profits
aren’t generally irreparable injury and a sales tradeoff would be “purely
financial, easily measured, and readily compensated.” Claims about “customer relationships,
goodwill, and reputation” were mere bare assertions. Market
dynamics—specifically the existence of other 6% products on the market, as well
as the inevitability of nicotine degradation for all participants—made
irreparability of harm hard to assess.

And the balance of harms didn’t favor Bidi, since a
preliminary injunction would essentially be a mandatory recall. The court was
also influenced “by the very strong likelihood that the Bidi Stick also does
not contain exactly 6% nicotine. … The available record evidence suggests that
the Bidi Stick could have as low as 5.47% nicotine.” This could constitute
unclean hands.

The court was also concerned that any injunction would
incentivize e-cigarette manufacturers to add more nicotine in the manufacturing
process, but the FDA usually worries more about products with too much nicotine
than too little. It’s much worse for a user to consume too much nicotine than
too little, and the current situation errs on the side of too little. Plus, the
FDA is actively regulating this market, and the court didn’t want to interfere.

The court did caution that discovery might reveal a very
different picture; this was just how it looked now.

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ordinary recalls aren’t commercial advertising or promotion

Posted on September 20, 2021 by rtushnet

Pictsweet Co. v. R.D. Offutt Farms Co., 2021 WL 4034222, No.
3:19-cv-00722 (M.D. Tenn. Sept. 3, 2021)

Defendant RDO has a subsidiary, CRF, which was in the
business of “producing, preparing, processing and selling frozen vegetables to
frozen vegetable producers, processers, repackers, distributors and wholesale and
retail re-sellers, including Pictsweet, for human consumption.” Pictsweet
packages frozen vegetables for various wholesale and resale customers,
including Kroger.

CRF assumed responsibility for
Pictsweet’s previous supplier’s facility and obligations, which Pictsweet
allegedly consented to in reliance on representations that CRF would fully
perform those obligations and that Pictsweet—through CRF— “effectively would be
doing business with RDO Farms, which was well known in the industry.”

However, shortly after CRF took
over, defendants allegedly became aware that products processed at CRF’s
facility had tested positive for Listeria or “exceeded an IEH2 Process Control
Test (‘PCT’) value of 9,” meaning that they knew the products were “adulterated,”
and they affirmatively chose not to notify Pictsweet of the Listeria-positive
test results, despite purchase orders containing express warranties by CRF
regarding the products’ wholesomeness and fitness for human consumption,
language regarding the seller’s obligation to notify Pictsweet of any
“significant issues” relating to the products, and indemnification provisions
requiring CRF to indemnify Pictsweet for any claims against it relating to
injury caused by the products.

In 2016, the CDC and the FDA began investigating reported
instances of illnesses related to Listeria and soon determined that the strains
were “closely related to strains” of Listeria detected in vegetables processed
at CRF’s facility. CRF thereafter issued two voluntary nationwide recalls of
its frozen vegetable products. The second recall “impacted 432 products and
included Pictsweet products.” However, Pictsweet alleged, the “second recall,”
for undisclosed reasons, also included products that were not contaminated. “Because
of CRF’s recall, Pictsweet, as required by law, issued its own recall of
products that either contained or could contain CRF green beans and green peas.
Pictsweet’s customers, including Kroger, were then required to issue their own
recalls.”

As a result of a consumer class action against Kroger, Pictsweet
allegedly obtained an FDA inspection report for CRF’s facility, from which it
learned for the first time that CRF had concealed positive Listeria test
results and PCT scores above 9 and that it had engaged in a protocol pursuant
to which it redirected and shipped product that it knew was contaminated to
Pictsweet and other customers that did not require finished-product pathogen
testing. Pictsweet allegedly also learned through discovery that “CRF’s representations
about [Listeria] contaminated products was [sic] inaccurate, and that a large
portion of the frozen green peas and beans CRF had supplied to Pictsweet were
not contaminated by [Listeria].”

Most of the decision is about alter ego liability, but the
court spends some time on the various business tort claims. Some fraudulent
concealment claims weren’t challenged in the motion to dismiss, but libel
claims failed because the complaint didn’t allege that CRF made any statements
about Pictsweet’s product. CRF allegedly knew that, “once it issued its recall,
Pictsweet would be obligated to issue its own recall, which would communicate
to Pictsweet’s customers that the product Pictsweet had delivered was
contaminated and not merchantable.” But that meant that “it was Pictsweet’s own
recall that communicated to its consumers false and disparaging information
about Pictsweet’s products, not CRF’s recall. CRF’s recall, necessary or not,
was only about its own product.”

Lanham Act claim: The recall was not “commercial advertising
or promotion.”  Innovation Ventures, LLC
v. N.V.E., Inc., 694 F.3d 723 (6th Cir. 2012), was not to the contrary. That
case involved a recall order based on a trademark/trade dress claim. The
plaintiff had sued two different manufacturers of competing energy shots and
gotten a preliminary injunction based on trade dress, but not trademark. It
then sent a “recall notice” to 110,000 convenience stores and truck stops,
without specifying which “6 Hour Shot” was covered or mentioning that there
were multiple such products on the market. There was no dispute in that case
about whether the notice was commercial advertising or promotion.

Here, the plaintiff didn’t sufficiently allege what in the
recall notice was false or misleading. But more important, the recall here “clearly
did not constitute commercial advertising or promotion of CRF’s product but
instead recalled it. Even if the court assumes that the recall was ‘misleading,’
insofar as it allegedly extended to products of its own that CRF actually knew
were not contaminated, this is simply “not the kind of misrepresentation
prohibited by the [Lanham] Act.’”

Tennessee Consumer Protection Act claims based on the same
conduct also failed, though there was other stuff going on (alleged
misrepresentation of the CRF/RDO relationship, and allegedly knowing provision
of contaminated/adulterated products to Pictsweet while representing their
wholesomeness/fitness for human consumption). The economic loss doctrine didn’t
bar recovery under the TCPA.

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Does the Lanham Act cover a campaign to get a particular job?

Posted on September 20, 2021 by rtushnet

Healthcare Integrity, LLC v. Rehoboth McKinley Christian
Health Care Servs., Inc., 2021 WL 4129248, Civ. No. 20-750 KG/LF (D.N.M. Sept. 9, 2021)

Plaintiffs, a healthcare management company and its
individual owner  alleged that a group of
medical providers at RMCHCS secured their ouster as management company/Chief
Executive Officer of RMCHCS through a campaign of false and misleading
information. Defendant CMO Wangler was allegedly motivated by a desire to
replace the individual plaintiff, Conejo, as CEO and secure a lucrative
management agreement for her own company.

Plaintiffs sought to amend the complaint to add, inter alia,
a Lanham Act false advertising claim, which the court held was not futile.

Footnote: Commercial advertising or promotion isn’t
necessarily straightforward. The court didn’t undertake any analysis of this
element at this stage.

The proposed amended complaint would allege that Wangler “in
connection with a professional service (i.e., managing a hospital system) made
false or misleading statements of fact regarding the hospital management
services Plaintiffs provided that, in fact, caused damage to Plaintiffs.” She
allegedly “embarked on a campaign to disparage the value and quality of the
management services Mr. Conejo and HCI were providing to RMCHCS” because she
“knew that Mr. Conejo was well-liked and respected” and that she would “need to
create a negative impression of Mr. Conejo … if she were to be successful in
ousting Mr. Conejo” and HCI so that she could “secure the CEO position for
herself under a management contract with her LLC[.]” She allegedly
“complain[ed] publicly about how Mr. Conejo had cancelled contracts with agency
nurses and proposed employee pay cuts and insist[ed] that his mismanagement and
desire to turn a profit was endangering patient lives and safety”; made
statements to the media suggesting that the entire RMCHCS medical staff had
voted “no confidence” in Conejo where, in fact, the majority of physicians and
nurses had not signed the No Confidence Declaration; accused Conejo of creating
patient safety risks and engaging in retaliatory suspensions; and made the
foregoing statements despite knowing that they were false or misleading.

Wangler also allegedly (1) disseminated the allegedly false
or misleading statements to the relevant purchaser of the services: the RMCHCS
Board, which had the authority to engage—and/or terminate—the services of a
hospital administrator of its choosing; (2) utilized multiple methods of
communication, including interviews with news media, email, Zoom
videoconferencing, and letters, to disseminate false or misleading statements
about the services Plaintiffs were providing; and (3) “made an express sales
pitch for the CEO contract” in a letter she submitted to the Board in May 2020.
Taking all this as true, the court couldn’t say that amending the complaint
would be futile.

Comment: The key move prefigured here is whether a specific
potential employer is the relevant audience for an individual’s services. Is
this an organized campaign to penetrate the relevant market? We can only know
once we understand the relevant market, and the answer might be different for
an ordinary company that could in theory provide services to many different
hospitals versus a very specific employment situation—or it could simply be
that soliciting a particular employer, no matter how desireable to that
would-be CEO, is not enough to be commercial advertising or promotion, since
the relevant skills are likely transferable in ways that, say, supplies for
Ford engines are not. That is, previous cases recognizing solicitations to a
single buyer as “commercial advertising or promotion” for Lanham Act purposes
have all, as far as I know, been about customized products that can only
realistically be sold to the specific buyer, like Ford or Coca-Cola. However,
it’s notable that the producers in those cases chose to customize their
products—there was a broader market out there; they just wanted to participate
in a very specific market. So at what point in time do we assess the relevant
market, and can the specificity of human factors be part of that?

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“recyclable” could be deceptive where local recycling isn’t widespread

Posted on September 17, 2021 by rtushnet

Downing v. Keurig Green Mountain, Inc., 2021 WL 2403811, No.
1:20-cv-11673-IT (D. Mass. Jun. 11, 2021)

Keurig allegedly deceptively advertised its plastic
single-serving pods as recyclable when those pods were not recyclable according
to federal regulations. Keurig allegedly released pods that were manufactured
from #5 plastic (which is recyclable) instead of #7 plastic (which is not) in
order to address backlash to the use of nonrecyclable plastic. The new pods
featured a three-arrow recycling symbol and the catch phrase “Peel, Empty,
Recycle,” although the word “Recycle” was followed by an asterisk that advised
buyers to “Check Locally.” The box also informed customers that they could
“Have your cup and recycle it, too,” although again it stated that customers
should “Check locally to recycle empty cup.”

During the period from the release to the present, however,
many recycling centers could not accept the Pods as a recyclable product. In a
pre-release investigation, Keurig allegedly discovered that even at recycling
centers which will accept the Pods only 30% of the Pods were successfully
recycled, because of their size, their tendency to become crushed by the
recycling machines, and residue from the foil tops, filters or other
contaminants.

Keurig argued that Downing lacked Article III standing
because he didn’t include the specific ad he saw that induced him to buy the
pods, didn’t say whether he was a prior pod purchaser before the change, didn’t
allege whether the pods he bought were recyclable in his community, and didn’t
allege what the difference in value between a recyclable and a non-recyclable
pod would be. That’s not required (and very little of that is about standing).
He attached photos of the ads and stated that the ads had been substantially
and materially the same since the “recyclable” pods were released, which was
sufficient. He further alleged that he relied on the ads and paid more than he
would have paid for the truth.

Keurig then argued that any harm was traceable to the
recycling centers, not to Keurig. Also no. “Keurig’s advertisement may be
understood as making representations regarding the recycling process,” and
causation exists “where the deceptive act or practice ‘could reasonably be
found to have caused a person to act differently from the way he [or she]
otherwise would have acted.’ ”

He also had standing to seek injunctive relief so that he
could rely on future statements from the company. It was plausible that he’d
buy pods from Keurig again if he had confidence that they were recyclable, so
his alleged present inability to rely on the product’s labeling satisfies the
requirement of an “actual and imminent, not conjectural or hypothetical” threat
of future harm sufficient to establish his “ ‘personal stake in the outcome of
the controversy’ as to warrant his invocation of federal-court jurisdiction.”

Massachusetts Chapter 93A: Massachusetts law is “guided by
the interpretations given by the Federal Trade Commission.” The FTC has
provided such guidance: “When recycling facilities are available to less than a
substantial majority of consumers or communities where the item is sold,
marketers should qualify all recyclable claims.” The guidance also states: “If
any component significantly limits the ability to recycle the item, any
recyclable claim would be deceptive. An item that is made from recyclable material,
but, because of its shape, size, or some other attribute, is not accepted in
recycling programs, should not be marketed as recyclable.”

It offers an example:

[a] paperboard package is marketed nationally and labeled
either ‘Recyclable where facilities exist’ or ‘Recyclable B Check to see if
recycling facilities exist in your area.’ Recycling programs for these packages
are available to some consumers, but not available to a substantial majority of
consumers nationwide. Both claims are deceptive because they do not adequately
disclose the limited availability of recycling programs.

Given the allegations that most recycling centers do not
accept Pods and only 30% of Keurig’s Pods were recyclable at the facilities
that accepted them, Keurig’s statement to “check locally” might not be
sufficient to avoid deceptive marketing under the FTC guidance.

A reasonable consumer could have relied on the claim:
“reasonable customers viewing the Keurig’s claims that the Pods were recyclable
were not expected to do research to see if the Pods were actually recyclable,
either in their own communities or across the United States. The warning ‘check
locally’ did not make those customers unreasonable in assuming the Pods were
recyclable.”

However, Downing could not represent a putative nationwide
class, even if the relevant decisions were made in Massachusetts.

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Lost profits aren’t restitution for California UCL purposes

Posted on September 17, 2021 by rtushnet

Lee v. Luxottica Retail North
America, Inc., — Cal.Rptr.3d —-, 2021 WL 2451109, A157657 (Ct. App. Jun.
16, 2021)

Lee, on behalf of a
putative class of California optometrists with independent optometry practices,
brought suit against a competing chain of optical retailers, alleging UCL
violations. However, compensation for lost market share isn’t authorized by the
UCL, because that’s not restitution, “the only form of nonpunitive monetary
recovery authorized under the UCL. … Lost profits are damages, not restitution,
and are unavailable in a private action under the UCL.” Absent a legally
enforceable right to a stream of future income, the plaintiff lacks an
ownership interest in it and thus there is nothing to “restore.”

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handful of bad Amazon reviews make Energizer’s false advertising claims plausible

Posted on September 17, 2021 by rtushnet

Energizer, LLC v. MTA Trading, Inc., 2021 WL 2453394, No.
20-CV-1583 (MKB) (E.D.N.Y. Jun. 16, 2021)

Along with breach of contract and tortious interference
claims, Energizer alleged that MTA falsely advertised by selling batteries with
Energizer’s mark and then by fulfilling orders with products different from
those advertised and shipping batteries to consumers that were “used, aged, or
tampered-with.” In seven consumer reviews quoted in the complaint, the
reviewers report that batteries sold by the relevant account did not work or
were not as advertised.

Defendants argued that Energizer failed to state a false
advertising claim because it relied on seven pieces of negative feedback
without explaining whether they were representative, and didn’t allege details
about how the batteries were advertised, such as whether they disclosed
repackaging or advertised an expiration date (two subjects that came up in the
negative reviews). It argued that there are plausible alternative explanations
for the negative reviews, including that Amazon shipped and fulfilled the
products (and might well have sent them from another seller, which does seem to
be a thing with Amazon sales) or that competitors were leaving fake negative
reviews. That’s a fascinating Twiqbal issue, it seems to me: at what point do
Amazon’s problems become part of common sense?

The court found the Lanham Act allegations adequate.
Energizer alleged that defendants advertised their batteries as “new,” and also
advertised the batteries in certain quantities, but instead, the batteries were
not new and were inoperable or had insufficient charge, and the shipments sent
to consumers were short of the quantities they ordered. That was specific
enough.

The additional arguments might work, but not on a motion to
dismiss.

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