Alerts

AD-ttorneys@law - August 22, 2017

Alerts / August 22, 2017

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Tyson Winds Up for Knockout Blow Against Boxing Hall of Fame

Boxer’s suit is a one-two Lanham Act/right-of-publicity combo

The Champ

“Iron Mike” Tyson is a controversial sports figure who seems in equal parts loved and loathed by the public. Celebrated for a genuine world-class talent and derided for his behavior in and out of the ring, Tyson has a public profile that has generated decades of attention and – for certain people – profit.

The Boxing Hall of Fame, a Las Vegas-based organization, provoked a throw down with the former champ when it began using his image and the moniker “Iron Mike” on T-shirts and other memorabilia. The Hall of Fame also allegedly made deals with third parties such as American Classics Apparel and Urban Outfitters to sell the merchandise.

The Arena

In a complaint filed in the District of Nevada, Tyson claims three grounds for a suit against the Hall of Fame and its founder, Steve Lott: first, his ownership of the federally registered trademark “Mike Tyson”; second, his ownership of the nonregistered trademark “Iron Mike,” which he claims is known to the general public as his nickname; and third, statutory protections of his name and likeness that establish his “hard-earned right of publicity.”

Tyson is claiming registered and common-law trademark infringement and trademark dilution of his name and nickname under the Lanham Act. Under Nevada Revised Statute 597.790, which establishes a right-of-publicity for state residents, Tyson is claiming damages arising from the Hall of Fame’s “unauthorized use and exploitation of his name and likeness.” Other claims under Nevada state law include common-law trademark infringement and dilution and unfair competition.

The Takeaway

There is surprisingly little case law regarding Nevada’s rights-of-publicity statute. However, state rights-of-publicity laws generally give strong protections to people to limit the commercial use of their name, likeness and persona, absent a First Amendment fair use. It will be interesting to see which of Tyson’s claims survive, and whether an overlap develops between the state law and Lanham Act claims. Keep in mind that while an effective disclaimer may insulate a use against a Lanham Act claim if it prevents the likelihood of consumer confusion, rights-of-publicity laws protect a property right, and consumer confusion as to source or affiliation is irrelevant.

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Slack-Fill Class Wants a Bite of Pret A Manger

Clever packaging panels deceive consumers, claims class action

Ready-to-Air

The Chakalaka. The Bang Bang Chicken. The Green Goddess Turkey Wrap. Are these sandwiches the innocent and delicious Pret A Manger products that they appear to be? Or are they sinister Trojan horses for pockets of air, aided and abetted by clever packaging?

Most emphatically the latter, states a class action brought by Yee Ting Lau, a customer at one of the company’s countless sandwich stores in Manhattan.

Ms. Lau’s complaint alleges that the Chakalaka and several of its sister wraps are cleverly shrouded in semiopaque packaging whose cardboard panels conceal slack-fill space between the halves of the wraps. When consumers grab one, they believe that they’re about to enjoy a sandwich that is bigger than it actually is.

Ms. Lau’s action was filed at the end of July in the Southern District of New York, only a month after her fateful trip to a Madison Avenue Pret A Manger in June.

Her action alleges that the wraps are filled with nonfunctional slack-fill space, and that members of the class – either consumers who purchased the allegedly deceitful wraps nationwide or, more narrowly, in New York – reasonably relied on the company’s deceptive representations when grabbing a seemingly hearty lunch. She seeks on behalf of the class to enjoin the use of nonfunctional slack fill in the offending packages under New York and federal law, and to obtain compensatory and punitive damages.

The Takeaway

As we have reported previously, the number of slack-fill cases has been growing recently – all told, the number of filings has increased six fold since 2013.

Ms. Lau’s action, filed in New York, is part of an uptick in filings in that state’s Eastern and Southern Districts; perhaps these jurisdictions will one day compete with the Northern District of California – the so-called food court – where more than a third of slack-fill suits originate.

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CITGO Settles Free Gas Call TCPA Class Action

Fuel giant pays $8 million to class members who received at least one text message

Intrusion?

Matthew Gottlieb thought that placing his number on the National Do Not Call Registry would protect him from intrusive phone advertising. So when he received three texts from fuel refiner and transporter CITGO, he felt empowered to file a class action claim under the Telephone Consumer Protection Act (TCPA).

Gottlieb, a resident of Palm Beach, filed the action in the Southern District of Florida in November 2016. In the complaint, he alleged that he received three separate text messages urging him to sign up for the Club CITGO mobile application, which he alleges were attempts to convince him to make purchases from CITGO gas stations.

The action claims that CITGO sent related text messages to more than 90,000 other people.

Never Surrendered

Gottlieb claimed that he never offered his phone number to CITGO, and that he never consented to calls from or any other attempt at contact by the company. He had been listed as a registrant with the National Do Not Call Registry for eight years prior to the texts.

In the action, Gottlieb claimed that CITGO violated the TCPA’s express consent provisions and used automatic calling technology to push its products and offers. He also alleged that the company invaded his personal privacy and disrupted his daily life, and he advanced several claims regarding his cellphone, including battery drainage and loss of use – a clear attempt to establish harm for standing purposes.

The Takeaway

After two rounds of mediation, the action was settled last month. CITGO denies any liability. The $8 million will be shared by a class consisting of anyone who received at least one CITGO marketing text. CITGO also agreed to pay a separate $300,000 in cost and fees.

The agreement is the latest in a string of recent TCPA settlements by a variety of companies, including SolarCity Corp. and Uber Technologies. Class action lawyers like TCPA claims because the compliance requirements are arduous and complex, the law provides for significant per-text statutory damages, and many, many noncompliant texts may be involved. Thus, marketers who use calls or texts to provide informational or promotional messages should ensure they understand and comply with all applicable regulatory requirements.

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Class Action Tries to Milk WhiteWave Foods for DHA Claims

Head Healthy

WhiteWave Foods is the manufacturer of various dairy products under the Horizon Organic brand, a well-known product line with familiar red packaging. Six of the company’s Horizon Organic products are sold with a label that boasts added “DHA Omega-3” and that the product “Supports Brain Health.”

These claims caught the eye of Dan Zeiger, a California consumer who purchased the products in question. He started to do some research.

Convinced that the added DHA omega-3 did not promote brain health, Zeiger filed a class action against WhiteWave in early August, alleging violations of the Consumers Legal Remedies Act and the Unfair Competition Law stemming from WhiteWave’s “false, misleading and deceptive advertising.”

Science!

According to Zeiger’s complaint, he had retained “one of the world’s foremost experts in brain chemistry” to assess the Horizon Organic products.

The scientific basis of his allegations is a complicated skein involving DHA, one of several omega-3 fatty acids in the human diet, and other fatty acids that the body uses to manufacture it. The plaintiff alleged that because these other acids are already plentifully available in the human body and diet, there is no shortage of DHA in the human system, and no need for DHA supplements at all. The expert also holds that even if DHA supplements were necessary for brain health, the amount that the Horizon products would provide was negligible given the levels that already are present in the body.

Zeiger also cites randomized controlled studies regarding DHA that he claims demonstrate that the fatty acid doesn’t have any effect on health at all, as well as proceedings before the Federal Trade Commission and the Food and Drug Administration that cast their own doubts on DHA’s supposed benefits.

The Takeaway

Zeiger is championing a class of consumers across nine states who have purchased Horizon Organic milk since Nov. 25, 2015. He seeks restitution and disgorgement of revenues based on WhiteWave’s false advertising, an injunction that will halt the current advertisements and an order for a corrective ad campaign to counter the misrepresentations WhiteWave made in the past. Advertisers need to be particularly careful regarding substantiation of health and wellness claims.

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FTC Won’t Crack a Smile for Tooth-Whitening Cabal

Army of defendants accused of enrolling consumers in bogus trial offer plan

Negative Option

A recent Federal Trade Commission (FTC) lawsuit filed in the District of Nevada targets a baffling array of defendants: more than 50 limited liability corporations scattered across Nevada, Colorado, Indiana, Wyoming and Arizona.

The common denominator? It is the founder and CEO of several of these companies, Blair McNea, who, along with two other executives, is accused by the FTC of using this massive array of companies to engage in shady activity.

The McNea-directed companies created websites that charged visitors small fees for supposed one-time trial offers of a tooth-whitening product, but which wound up enrolling consumers in a negative option scheme whereby consumers would be charged monthly fees thereafter unless they canceled. While the sample prices could be as low as $1.03, the monthly fees could reach $100 until the consumer affirmatively canceled the plan. In addition, the websites would often double-enroll customers in two separate negative option schemes. Required disclosures of the terms of the agreements were often posted in tiny, grayed-out text on the bottom of the sales web pages.

Positive Response

The FTC is charging the company with misrepresentation of the product price and illegal negative option marketing under the Restore Online Shoppers Confidence Act (ROSCA). ROSCA prohibits negative option features without clear and conspicuous disclosure, express informed consent, and a simple mechanism that allows the customer to cancel the recurring charges. The complaint was followed within a day by a temporary restraining order and asset freeze.

The Takeaway

The FTC is seeking a permanent injunction requiring the companies to cease further violations of the FTC Act and ROSCA, award relief to injured consumers and pay incurred court costs. Negative options and continuity plans are not necessarily illegal; however, marketers need to closely adhere to federal and state laws regarding sufficiency of notices and ease of cancellation to ensure their compliance.

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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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