Alerts

AD-ttorneys@law - April 5, 2019

Alerts / April 5, 2019

In This Issue

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Snowboarding Company Accused of Slapping Biggie Smalls’ Image on Merch

Rapper’s estate challenges with Lanham Act and right of publicity suit

Biggie Won’t Slip

It’s difficult to name a recording artist who has earned more posthumous success and influence than Christopher Wallace, the Brooklyn-born rapper better known as Biggie Smalls, Biggie and The Notorious B.I.G.

According to Billboard magazine, in the wake of his death, “there won’t be a permutation of hip-hop that doesn’t carry The Notorious B.I.G.’s DNA.” Virtuosic flow, lyrical genius, sheer storytelling prowess – he’s regularly named the greatest MC of all time by contemporary practitioners and his musical inheritors, all of whom internalized his technical innovations.

All this adulation is based on a body of work assembled before Wallace turned 25 years old. His second album, released 16 days after he was gunned down by unknown assailants in 1997, was certified diamond within three years of its release.

Mo Money, Mo Problems

“Unfortunately, when an artist’s work has touched people so significantly, there are often usurpers that want to capitalize on that connection,” laments a recent complaint filed by Biggie’s estate in the Central District of California.“ A strong brand attracts parasites that attempt to create profits through no work of their own, based on the popularity of and love for an artist.”

BIG is the somewhat obviously named company that controls the late rapper’s licensing and intellectual property; it was founded by Wallace’s mother, Voletta, and his wife, singer Faith Evans, who still hold the reins. BIG is accusing Yes Snowboards, a Swiss snowboard manufacturer doing business internationally, of using the rapper’s image without permission in products including “posters and prints [and] other artwork.”

The Takeaway

The image in question is a photograph, taken by hip-hop photographer Chi Modu, of Wallace standing in front of another New York City icon, the World Trade Center; Modu is also named as a defendant in the suit for, presumably, collaborating with Yes. on the alleged offending products.

BIG is accusing Yes of unfair competition and false advertising under the Lanham Act, trademark infringement, violation of California’s unfair competition law, violation of New Jersey’s right of publicity law, and unjust enrichment.

According to one outlet, the product that sparked the suit was a snowboard printed with Biggie’s likeness, although this use is not named specifically in the suit; the complaint references posters, prints, and other allegedly unauthorized and infringing artwork. If true, Yes seems to have pulled any such product from its website along with other snowboards it allegedly sold as part of the same campaign with images of also-deceased hip-hop icons Tupac Shakur, Ol’ Dirty Bastard and Eazy-E.

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Ferrara Candy Company Settles Artificial Flavor Class Action

Settlement is uncommon in its simplicity, lack of monetary award

Love Gone Sour

San Diego resident Jessica Littlejohn seems to be a committed fan of SweeTARTS candy. So are we – they’ve remained a dependably tasty American Halloween staple for more than five decades.

Over the years, Littlejohn has purchased several varieties of the product, including the original chalky tablets, the giant chewy sub-brand and the chewy sours variety.

So, what made this fangirl turn sour on SweeTARTS manufacturer Ferrara Candy?

Malic Aforethought?

We’ve covered Ferrara’s packaging tribulations before, although this time around it isn’t a slack-fill case. In this instance, Littlejohn accused the company in an April 2018 class action of failing to disclose its use of malic acid as a flavoring ingredient in the SweeTARTS line.

Malic acid comes in a few varieties, including a naturally occurring version and synthetic strains that have passed muster for human consumption. Littlejohn claims that Ferrara uses a synthetic version of the flavoring called “DL-malic” acid to flavor the treats, giving the lie to the “no artificial flavors” tag on the packaging.

The specific accusations in question? Littlejohn says Ferrara failed to note the use of malic acid on either the front or back side of the package, as required by law; called DL-malic by a generic term in its ingredients list rather than by its specific name; and failed to state that the characteristic flavor of the product (“fruit”) was bolstered with the use of an artificial flavoring that contributed to the tart taste.

The Takeaway

Littlejohn tackled Ferrara with a number of charges, including fraud by omission, negligent misrepresentation, breach of express and implied warranties, and violations of California’s Consumers Legal Remedies Act, Unfair Competition Law and False Advertising Law.

The parties began settlement negotiations in October of last year, and the Southern District of California granted preliminary approval at the end of February. The settlement is distinctive; the only agreement between the parties is that Ferrara promises to remove the “No Artificial Flavors” tag from the product line packaging by the end of this year, and to identify “DL-malic acid” as an ingredient by the same deadline.

But aside from attorney’s fees and other expenses, there’s no cash for the class; SweeTARTS aficionados will have to be satisfied that their class representatives sued Ferrara simply to make the world a better place.

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$8.4 Million in Attorneys’ Fees Requested in TCPA Settlement

Telemarketing saga ends with a demand for one-third of the fund

Scofflaw, I Say!

Abante Rooter and Plumbing Inc. v. Alarm.com Inc. went right down to the wire.

The original suit, filed in December 2015, accused Alarm.com of Telephone Consumer Protection Act (TCPA) violations, including recorded calls and calls made from autodialers. Some of the calls were made to consumers on the National Do Not Call Registry. Wrapped up in the suit was one of Alarm.com’s “service providers,” Alliance Security. You may remember Alliance in its earlier incarnation as VMS.

No matter the name, the company has had numerous run-ins with TCPA charges, including plenty of attention from the Federal Trade Commission (FTC) (see our earlier story here). Although Alarm.com was the only named defendant, Alliance was accused of making the offending calls on its behalf to two separate classes of phone owners. The suit contains a comprehensive list of Alliance’s legal run-ins under the heading “Alliance Security and its Predecessor Are Notorious TCPA Scofflaws.”

The Takeaway

In May 2018, Alarm.com failed in a motion for summary judgment, arguing that it wasn’t liable for calls placed by Alliance on its behalf (Alarm.com tried a similar tack with somewhat different results back in late 2017). The case headed for trial that October, but just a month and change short of the opening arguments, the parties settled to the tune of $28 million, along with guarantees that Alarm.com’s practices would change and that Alliance would be kicked to the curb. The class representatives requested service awards of $10,000 each. Attorneys’ fees were capped at 30 percent of the total settlement amount, and litigation costs were estimated at $525,000.

The capacious tribe of plaintiffs’ lawyers in the case went for it, requesting the total available fee payment of $8.4 million and slightly higher costs of more than $529,000.

The plaintiffs’ attorneys were not shy. “The settlement amount is in line with – and in fact superior to – many other TCPA settlements in this circuit and around the country,” their notice reads, “including a long list of cases approved by district courts in California.” Later, the notice lauds the attorneys’ “depth of experience with TCPA claims and class action litigation.”

To the victors belong the spoils. Or at least a third of them.

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Energy Drink Maker’s Novel Appeal Collapses, Exhausted, in Washington State

Washington State Court of Appeals says it’s fine to listen to the FTC

SACRILEGE!

Living Essentials, producer of the 5-Hour ENERGY drink, claimed in a recent advertising campaign that its product was “Superior to coffee.”

NOTHING IS BETTER THAN COFFEE.

Give us a second, to compose ourselves, will you? We’ll try not to take sides here.

Let’s Start Over

Okay. Deep breaths.

Leaving aside accusations of apostasy – as they must under the First Amendment – Washington state nonetheless found cause to sue Living Essentials for making this claim (which we will not repeat) along with two others: that the decaf version of 5-Hour ENERGY kept drinkers alert and focused “for hours” and implications that “73 percent of doctors would recommend 5-Hour ENERGY.”

The resultant dispute, a grueling “11-day bench trial involving testimony and transcripts of testimony from 20 lay and expert witnesses and the admission of approximately 500 exhibits,” yielded a 57-page decision that “followed FTC guidance” in concluding that all three claims were deceptive and violated the Washington state Consumer Protection Act (CPA).

The reason? Living Essentials, the trial court claimed, lacked evidence to back up the first two claims, while its doctor-recommendation claim left a false impression on consumers.
The court ruled in favor of the state and hit the company with a $2,183,747 civil penalty, exclusive of fees and costs.

Living Essentials came back to appeal the ruling, claiming that the trial court had been too stringent in applying the FTC’s “prior substantiation doctrine,” which holds that advertisers must have evidence to back up product claims prior to launching the marketing campaign.

The Takeaway

“Living Essentials’ primary contention,” wrote the Washington Court of Appeals in its March 18 opinion, “is that the trial court erred by relying on the FTC’s ‘prior substantiation doctrine’ because it has not been adopted in Washington, cannot be judicially adopted, and is inconsistent with Washington CPA law.”

The appellate court disagreed with Living Essentials and held that “Washington courts have repeatedly adopted federal court interpretations of [S]ection 5 of the FTCA when reviewing CPA cases.” Additionally, the court maintained that the original ruling relied on a careful critique of the studies the company offered as evidence, in addition to the FTC doctrine.

Living Essentials also argued that the trial court penalty violated due process because it was “grossly disproportionate to other CPA violations.” The appellate court disagreed, pointing out that the per-violation charge of $90 was lower than that in other suits Living Essentials cited in its appeal. The appellate court further noted that “the total penalty here is significantly higher [only] … because Living Essentials violated the CPA more than 24,000 times.”

“In essence,” the appeals court concluded, “Living Essentials is suggesting that the penalty is unconstitutionally excessive because they violated the statute too many times.”

Some aspirin with that coffee?

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Illinois Court Chomps Down on Junior Mint Slack-Fill Claims

Plaintiff failed to demonstrate

Mint Core

We bring you, today, a second installment in Tootsie Roll Industries’ (TRI) Junior Mints slack-fill saga.

Last August, we reported on the rejection of a Junior Mint slack-fill class action brought against manufacturer TRI in the Southern District of New York. [Side note: In a memorable phrase, the SDNY gave the plaintiffs a spanking by saying that it declined “to enshrine into the law an embarrassing level of mathematical illiteracy.”]

For the latest iteration of what seems to be a new slack-fill subgenre, we move to the Northern District of Illinois, where named plaintiff Paige Stemm sued manufacturer TRI for violating the Illinois Consumer Fraud and Deceptive Practices Act (ICFA). The specific charge, filed in March 2018, is that the company packaged its famous candy with 44 percent nonfunctional slack fill, leading Stemm to believe she was getting more than she wound up receiving.

Boxed In?

TRI launched a motion to dismiss in May 2018, which the district court addressed in a recent opinion.

The court rejected TRI’s argument that the information describing the product’s net weight and number of pieces precluded Stemm’s claim. But the court agreed with TRI’s argument that Stemm had failed to plead actual damages to establish a deceptive act or practice under the ICFA. “Stemm has not alleged that the candy that she received was defective or worth less than the dollar she paid for it,” the court argued. “Instead, she claims that she expected to receive more candy than she did. … That she expected to receive something more than what she got, in and of itself, does not constitute actual damages.”

The Takeaway

With that, the court dismissed Stemm’s case. But it left open a pathway for the class to return with an amended complaint, which must be filed by April 10.

Together with the earlier TRI case and other similar cases in the national docket, court watchers may be able to discern a tightening of standards regarding slack-fill cases, which have become the center of a booming legal subpractice for the plaintiffs’ bar. As we noted back in August, it is becoming increasingly difficult for plaintiffs to get past the pleading stage on such cases. And with states taking some of the teeth out of their anti-slack-fill laws, that trend is likely to continue.

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AD-ttorneys Law Blog Roundup

FDA Slow but Steady on CBD

It seems like CBD oil is all we talk about, but honestly, it’s almost all that our clients are talking about. If your marketing folks haven’t come to you yet with an idea to add CBD oil to something, they will almost certainly show up soon. Read more >>

To Ensure a Complete Release, Address California’s New Section 1542

Civil Code Sections 1541 and 1542, California laws that govern the extinguishment of certain obligations, were recently amended by Senate Bill No. 1431. The subtle amendments made to these code sections not only impact ordinary settlement agreements but also impact a variety of other releases that intend to be a complete release of all potential claims, known or unknown. Read more >>

A Quick Hit on CBD – Departing Commissioner Gottlieb Talks CBD With Congress

Departing Food and Drug Administration (FDA) Commissioner Gottlieb reiterated many of the things we have blogged about here recently in his testimony before a Senate subcommittee this past Thursday. Read more >>

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Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

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