Alerts

AD-ttorneys@law - August 29, 2017

Alerts / August 29, 2017

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SharkNinja Sucks It Up On Ad Claim Challenge

Vacuum rival Dyson claims company’s “preference” tags are full of hot air

The Competition Bristles

SharkNinja, manufacturer of the Shark Rotator Powered Lift-Away vacuum, made some strong claims regarding the popularity of its product. In television ads and online, the company boasted that “America preferred … Shark” and that “two out of three” people preferred their vacuum over Dyson’s Cinetic vacuum.

Dyson challenged the claims before the National Advertising Division (NAD), which launched a self-regulatory proceeding.

Weak Claims

At the heart of Shark’s preference claims was a national in-home use test that the company commissioned using third-party experts. Shark maintained that its performance claims “were supported by the results of [this] double-blind, multi-week, head-to-head, paired-preference study of 355 subjects at eight centers across the United States.”

Shark reported that it had provided each subject with new vacuums, one Shark model and one Dyson model each. The subjects were asked to use both vacuums for two weeks in their “household routines” and “in all of the ways (and for all of the tasks) that you would use a vacuum that you owned.”

When NAD reviewed the methodology of the study, it was left with concerns that were hard to shake. NAD questioned the study’s length, deeming the two-week period to be too short to produce meaningful results. More important to NAD, though, was the nature of the test itself. NAD found that there was no clear direction as to how and under what conditions the vacuums should be used in the test. It also faulted a lack of follow-up questions to document the actual usage of the vacuums by each subject.

The Takeaway

The NAD decision provides guidance regarding the care that advertisers need to take when commissioning studies that measure consumer preference. Companies that want to make comparative claims need to ensure that their experts use methodologies that make meaningful, well-defined comparisons. Shark has agreed to comply with NAD’s recommendation that both claims be discontinued.

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Judge: Quaker Oats Class Action is Cooked

Misleading “natural” product packaging at heart of dismissed multistate claims

Common Ingredient

Glyphosate is one of the most common herbicides in the world, useful for killing the weeds that stifle crops. First formulated in the 1950s by a Swiss scientist, the chemical had become the No. 1 herbicide in the United States agricultural sector, and the second-most used in homes and gardens by 2007. Experts have described glyphosate as “a one in a 100-year discovery that is as important for reliable global food production as penicillin is for battling disease.”

Brought to a Boil

The herbicide was front and center in Kathleen Gibson’s class action lawsuit against Quaker Oats, filed in the Northern District of Illinois, Eastern Division, in May 2016. Ms. Gibson took exception with Quaker Oats’ claim that its products were “natural,” “100 percent natural” and “heart healthy,” among other such claims, given that traces of glyphosate were found after testing certain Quaker Oats products.

Given glyphosate’s ubiquity, it is no surprise that it touches the production life of many different food products. The producers of the oats that find their way into Quaker products use the herbicide while their harvest is in the ground, to aid in the drying of the oats and to produce an earlier and more uniform crop.

Gibson’s suit alleged that the presence of the glyphosate, while not unlawful in its own right, undermined Quaker’s “Green and environmentally conscious” brand and proved that its advertising was intended to mislead. She brought claims alleging negligent misrepresentation; unjust enrichment; and violation of the Illinois Food, Drug and Cosmetic Act and the Consumer Fraud and Deceptive Business Practices Act, among others.

The Takeaway

The court granted Quaker Oats’ motion to dismiss in August. While observing that the consolidated class was bringing a dozen different claims with a similar theme under Illinois, California, Florida, New York and common law, the court noted that the labeling of food is governed by the Federal Food, Drug and Cosmetic Act, and not by individual states. The court posed the question: Did Congress intend to pre-empt the field of nutritional and food labeling in this case?

The court ruled that it did, and that the state claims brought by the class could not survive: The Food and Drug Administration’s guidance on the term “natural” did not encompass food production methods, effectively removing the use of herbicides before processing as a basis for possible claims. It also noted that the use of the word “natural” did not imply a nutrition or health benefit.

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Pre-Recorded Call Settlement Settles into Port

After 5 years of choppy waters, cruise companies settle TCPA class action

High Tide

Philip Chavrat lives in landlocked Columbus, Ohio, but he alleges that he received a flood of telemarketing calls from Travel Services, a marketing company working on behalf of well-known cruise companies Carnival, Royal Caribbean and Norwegian. Chavrat claims he received four separate calls between February 2011 and July 2012, some manned by live representatives and others featuring prerecorded messages.

According to Chavrat, neither he nor anyone in his family had given consent for the calls.

Chavrat filed his original complaint against the telemarketing company and the cruise lines in July 2012 on behalf of himself and a putative class of similarly situated individuals. As the case proceeded, it eventually narrowed to plead alleged violations of the prerecorded calls provisions of the Telephone Consumer Protection Act (TCPA), seeking injunctive relief and the standard TCPA-mandated damages award of $500 to $1,500 per call.

Rough Seas

The case was tumultuous, lasting five years and involving three amended complaints, briefings amounting to more than 3,000 pages, and frequently challenged and interrupted discovery comprising 30 discovery hearings and 15 depositions in four states.

The case slammed to a halt in April 2013, when the litigation was stayed pending a decision from the Federal Communications Commission (FCC). The FCC was debating whether plaintiffs could sue for vicarious liability under the TCPA for calls that the defendants did not initiate. This was relevant to the case because Mr. Chavrat was seeking to hold both the telemarketer and the cruise lines, which did not place the calls themselves, liable. When the Commission ruled in favor of vicarious liability, the case was revived.

The Takeaway

The Northern District of Illinois, Eastern Division, approved a motion to settle the case in late July 2017. The settlement established a fund containing $7 million to $12.5 million, varying by the number of claims filed, to cover reimbursements to class members who could demonstrate that their phone numbers appeared in call records produced in discovery. Chavrat received an incentive award, and court costs and attorney fees were included in the final agreement.

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Uber Driven to Privacy Policy Settlement with FTC

Commission: company policies had not changed sufficiently since major incidents

Under the Hood

Uber had something of a difficult year in 2014 in terms of its data privacy. In May, an intruder accessed the personal information of Uber drivers: 100,000 names and driver’s license numbers were viewed by the intruder. And then, that November, an Uber employee was accused of accessing the ride history of a journalist who had written extensively about the company.

An internal audit was launched regarding the company’s privacy policies. Changes were recommended. But the Federal Trade Commission (FTC) was watching, and it believed that the company hadn’t changed enough.

Where Are My Keys?

This August, Uber settled allegations made by the Commission that the company had continued to fail to protect its customers’ privacy.

The Commission claimed that Uber’s automated monitoring system, which had been established in response to its internal review, had been abandoned less than a year later. Internal access to private data was rarely monitored after that point.

Moreover, the FTC claimed that Uber failed to implement straightforward and affordable strategies to secure its data. For instance, in the May 2014 hack, the intruder gained entry to the company’s systems by using a special access key published openly on the web by an Uber engineer. The Commission also noted that the company stored consumer information in plaintext, readable format in the Internet’s storage “cloud.”

The Takeaway

The settlement prohibits Uber from misrepresenting its efforts to monitor internal access to personal customer information and its efforts to secure its data generally. The company must institute a comprehensive privacy and confidentiality policy to protect customer information. And the agreement requires 20 years of independent audits to verify that the FTC’s concerns are addressed.

Uber’s rise has been phenomenal, and it has at times claimed that its privacy problems are due to its rapid growth. This agreement underscores the necessity of a privacy policy that “scales” alongside enterprises. Companies – especially new companies that depend on leveraging data as a matter of course – need to ensure that the security of their data grows in lockstep with their business as a whole.

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Candy Maker Chewing Over Slack Fill Class Action

Mike and Ike boxes contain air

You Know … Those Guys

Mike and Ike brand candy made an advertising splash a few years ago, with a campaign built around the “breakup” of the not-quite famous pair whose names are the brand. Boxes of the candy appeared with one or the other name scratched out, and short missives from Mike or Ike appeared on the back of the boxes explaining the breakup – Just Born, the maker of the candy – even commissioned a movie trailer built around the concept.

The campaign was very popular, in part because it played on the candy’s simultaneous ubiquity and anonymity: Everyone is familiar with the Mike and Ike box, yet few people probably know much about the product, which has been consumed by Americans in some form or another for more than 75 years.

Slackers?

The Mike and Ike brand hit the headlines again this August but in a less positive way – a class action suit filed in the Southern District of California. Anthony Buso brought claims on behalf of a class of Mike and Ike purchasers against Just Born alleging violations of California’s Consumer Legal Remedies Act, Unfair Competition Law and False Advertising Law.

Buso claimed that a box of the candy he purchased was only 70 percent filled with actual product, which triggered the various California statutes. “Judging from the sizes of the container, a reasonable consumer would expect them to be substantially filled with product,” the suit maintains.

The Takeaway

‘The suit seeks injunctive relief, costs of the suit and attorneys’ fees, and damages. This suit is part of an overall increase in slack-fill litigations across the country, as we have reported previously.

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