Alerts

AD-ttorneys@law – February 19, 2020

Alerts / February 19, 2020

In This Issue:

The Whole Egg Thing Still Stinks, Apparently

Goop gets tagged by TINA for deceptive health claims – for the third time

Reminiscing

Remember the infamous Yoni Egg?

It feels like a thousand years ago, but back in 2017, there was a kerfuffle over jade eggs marketed as vaginal health products.

Such a product is strange enough to attract attention in its own right, of course, but the main source of all the to-do was the company that hatched the idea: Goop, Gwyneth Paltrow’s company that rose from a simple email newsletter to become a company worth hundreds of millions of dollars.

Yep. That egg.

Today? It’s hard to believe that there was ever a media environment in which Gwyneth Paltrow’s Yoni Egg was a truly big deal.

Relentless

Well, the egg is back, thanks to the terrierlike insistence of Truth in Advertising, Inc. (TINA). As we reported back in 2017, the egg in question – in addition to a slew of other products – landed Goop in hot water. Back then, TINA sent a letter to district attorneys (DAs) in two California counties – Santa Clara and Santa Cruz – alerting the public servants to the “unsubstantiated, and therefore deceptive, health and disease-treatment claims” made by the company.

TINA put together a list of 50 instances when Goop claimed that its products offered treatment, cure or prevention of depression, anxiety, insomnia, infertility, uterine prolapse, arthritis and other medical problems. That list served as a prod for a 2018 lawsuit brought by 10 California counties and the settlement that followed in short order.

In addition to a $145,000 civil penalty, Goop was required to refrain for five years from marketing nutritional supplements and medical devices that are out of line with Food and Drug Administration (FDA) guidelines. Goop also agreed to restrict nutritional supplement and medical device claims to those supported by competent and reliable scientific evidence.

The Takeaway

Well, here we are again.

TINA has unleashed another exposé on Goop, along with a follow-up letter to the Napa County DA’s office.

“Currently, Goop – which claims throughout its website that Goop products are made with ‘clinically proven ... ingredients at active levels ... that ... deliver high-performance results ...’ – deceptively markets products as able to treat and/or mitigate the symptoms of several medical conditions,” the letter states.

What set TINA off? The egg is back, for starters, now allegedly marketed to treat hormonal imbalance. A new, literary-themed supplement (Madame Ovary) joins the product roster, also claiming to treat hormonal balance issues. TINA claims that “hormonal balance” is a byword for menopause, a condition with approved FDA treatments, so the court order was violated.

A full list of products and claims being questioned can be found here.

Takeaways? First, an observation. TINA is clearly betting on an increased interest of local authorities in pursuing consumer protection cases. Goop seems to be playing right into their hands.

Second, a recommendation. Back up your claims. Specifically, back up your health and wellness claims. And get good legal counsel on whether they are defendable before you design the marketing materials.

Third, a warning: Stay off TINA’s radar. Once you’re on it, they’ll always be thinking of you.

Kim K Drives Stake Into Heart of ‘Vampire’ Marketer

Facelift-peddling doctor settles with superpowered influencer

Say What?

The title of Dr. Charles Runels’ webpage reads “Botox|Juvederm|Mobile|Fairhope|Orgasm Shot.”

Weird enough for you?

Then consider the page itself. To say it’s retrograde is an understatement. Flip through it; you’ll feel like you’re visiting GeoCities circa 1996.

But it’s the content that’s the kicker; it’s a mélange of often-bizarre sex- and cosmetic-related therapies: Priapus shots. Erection enhancement. Botox for men.

Then there’s this link:

The following recording discusses Dr. Freud’s ideas about Leonarodo [sic] da Vinci’s transmutation of sex energy into genius (from the podcast Sex Energy Doctor™).

Eclectic stuff, right? If we threw something called a “vampire facelift” into the mix, would you be surprised?

How about a Kardashian?

Bloodsucker?

OK, OK. Let’s rewind. Runels claims to have invented something called a “Vampire Facelift.” We’d explain it to you if we understood it, but you can read about it here if you’re curious.

Kim Kardashian – because she is allowed to pop up in any celebrity-related story, at any time, OK? – sued Runels at the end of 2019, making some harsh accusations. Despite the central thrust of her complaint – that Runels used her and her sister’s likenesses in print and web advertisements and his own LinkedIn profile – Kardashian piled up details that the doctor was running a “a naked pay-to-play scheme; if applicants can pay the monthly fee, they are approved.”

Kim was clearly annoyed.

In any case, the super-influencer admits that she had the procedure done once, seven years ago, but claims she never gave Runels permission to use her likeness. “Unsurprisingly, his misdeeds are not limited to unscrupulous licensing activities,” the complaint reads. “[He] has also misappropriated the names and likenesses of some of the most famous women in the world, including Ms. Kardashian.”

The Takeaway

Kardashian sued Runels for copyright infringement, infringement of registered mark, false association, violation of the right of publicity and trademark infringement under California common law.

But that’s where the fun ends. The case settled at the end of January with a proposed judgment and permanent injunction – Runels seems to have agreed to cease using the offending photographs and any other image or likeness of Kardashian in perpetuity.

She always wins. Always. [Cue maniacal laughter.]

Will Free-Sample Marketer Get a Deserved Lashing?

Or is the class-action plaintiff laying it on thick?

Convocation

Oprah Winfrey, Jennifer Aniston, Sandra Bullock, Black Chyna, the entire panel of “Shark Tank” – if these people are enthusiastic about a product, what’s not to love, right?

Not so fast, says Cindy Adam, a cosmetics purchaser and class-action plaintiff who hails from the Golden State.

Adam claims that she was taken in by a star-studded marketing ploy arranged by a number of related beauty product companies and their officers. She filed a complaint against the defendants in the Northern District of California back at the beginning of February.

And the Kitchen Sink

Adam throws a ton of spaghetti at the wall in her complaint, and the charge list reflects it: violations of California’s Consumer Legal Remedies Act; California’s False Advertising Law; the unfair, fraudulent and unlawful prongs of California’s Unfair Competition Law; California’s Automatic Renewal Law; the Electronic Fund Transfer Act; civil racketeer influenced and corrupt practices (RICO); conspiracy …

At times in the 116-page complaint, it appears Adam is winding up to file a right-of-publicity suit on behalf of the celebrities who were falsely lined up as endorsers.

The Takeaway

But the core of the complaint is the free-trial scheme itself. Adam claims that she believed she was being charged nominal shipping and handling costs for free samples of eyelash cosmetics, when in reality, a subscription service had been set up in her name with around $90 in monthly bills per product. She also claims that she had a devil of a time canceling the service.

For patient readers, the complaint is a masterful documentation of the sophisticated strategies embraced by today’s free-trial schemers: false application pages that redirect to payment pages on entirely different web domains, lies to banks when customers challenge the charges, and a large-scale collusion between a baffling array of businesses that aim to deflect, distract and defer legal responsibility of any sort (the source of the RICO charge).

We’ll keep you up to date on what the court thinks should stick to the wall.

Children’s Place Settles Pricing Class Action

Will cough up $6.8 million for cargo pants

Cargo Cult

Monica Rael and Alyssa Hedrick, two California consumers, sued The Children’s Place Inc. back in 2016, claiming that purchases – a pair of cargo pants and a pair of blue jeans – from two of the chain’s San Diego locations were fishy.

The plaintiffs, whose enterprising counsel “tracked the pricing on various consumer goods at various retail stores … for several months preceding and subsequent” to their purchases, claimed that The Children’s Place violated California’s Unfair Competition Law, false advertising laws and Consumer Legal Remedies Act by discounting its prices deceptively.

The Takeaway

Under California laws, businesses cannot discount the original price of retail merchandise for more than 90 days. The clothes in the case of Rael and Hedrick had allegedly been advertised with steep markdowns, but the “original” prices, they say, had never been assigned to the products in question.

After four years and two amended complaints, the case finally settled in the Southern District in late January. The Children’s Place is on the hook for $6.8 million, most of which consists of consumer vouchers at the store for $6 each. This is a significant haircut of the possible $40 million that might have been required by a court win.

We see a lot of deceptive sales cases, not only in California but also nationwide. Many states, including California, have specific statutes. The rest still have their unfair and deceptive practices laws.

Uh, I Dunno – Maybe the FCC Just Isn’t Into You?

Petitioners, looking a bit desperate, beg the commish to address autodialer definitions

Chill, or You’re Going to Blow It

Are they trying too hard? Or playing it way too cool? In the end, what’s the difference?

The U.S. Chamber of Commerce and a boatload of other interest group organizations – representing financial services, healthcare and restaurant groups, among others – sent a petition to the Federal Communications Commission (FCC) this month, after 20-plus months of silence from the FCC, which was most likely drying its hair or out with friends.

The tract is a follow-up to a first petition the same groups penned back in May 2018. The tsouris back then, as now, is all about automatic telephone dialing systems (ATDS), which, you may recall, is a central conceptual underpinning of the Telephone Consumer Protection Act (TCPA).

At the time, the petitioners claimed that frivolous and expensive TCPA lawsuits were blowing up all over because the definition of ATDS had been rendered overly broad. In 2015, the commission released an order to clarify the situation, but their effort only exacerbated the problem because they defined ATDS so broadly that many more autodialing devices were now in the sights of the TCPA.

Closer to the Heart

For anyone keeping score at home, the central issue is capacity. We’re going to quote ourselves from the May 2018 piece, because we worked really hard on it and did a good job.

The [TCPA] defines ATDS to mean “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.” The petition states that the Omnibus Order broadly defined “capacity” so that devices that might be modified in the future to store or generate numbers and dial them were subject to TCPA litigation, even if they were not currently configured to do so.

The petitioners urged the FCC to restore random or sequential dialing, not mere storage, to its pride of place as the logos of TCPA interpretation.

The Takeaway

Oh-so-much has happened since that first missive.

A bunch of circuit court rulings muddied the matter further by splitting on the 2015 FCC order. In March 2018, the D.C. Circuit cut the order down to size; in June of that year, the Third Circuit killed off another TCPA class action; in October, the Ninth Circuit flipped the script and, claiming confusion about the act’s language, remanded a case based on a more capacious understanding of ATDS technology.

And so we arrive at 2020, when, in a recent ruling, the Eleventh Circuit went ahead and contradicted the Ninth.

All this action, with not a word from the FCC, got our petitioners a little bit wound up – and so they fired off their second note in two years.

What’s the lesson? The wheels of autodialer justice turn slowly. “It is imperative that the Commission take action to ensure that the definition of ATDS conforms to the text of the statute and provides certainty for actors in the calling ecosystem,” the petitioners wrote in an impassioned cri de call.

But it’s still anyone’s guess whether or when the FCC will take further action to clarify the state of affairs.

CCPA Continues to Rock Ad Industry, With Little Help Provided by Revised Regulations

Knead Solutions

In case you have been hiding under a rock, the Californian Consumer Privacy Act (CCPA) is a paradigm-shifting consumer protection law that went into effect on Jan. 1. A collation of ad industry associations asked the California attorney general (AG) to delay enforcement until six months after the regulations are final in order to assist the ad industry in developing compliance solutions to open issues. See here for more details. The AG issued a statement saying the request would be dealt with as part of the ongoing rule-making process. Then, approximately a week later, the AG issued a new set of proposed regs. The comment period on that draft closes at 5 p.m. on Feb. 25.

Ahoy

The draft makes no mention of any enforcement delay beyond the extension to July 1 previously granted by legislative amendment to the CCPA, and it continues to be silent on the issue of how cookies – and in particular interest-based advertising cookies and the related sharing of associated data – should be treated under the law. In the meantime, the Interactive Advertising Bureau’s CCPA compliance framework is reported to have more than 200 participants and seems to be getting traction as publishers, advertisers and ad tech companies struggle to apply the CCPA to the digital advertising ecosystem with no meaningful guidance from Sacramento on how to do so. In a few years, if the prognostications for a cookieless world turn out to be accurate, we may look back on the CCPA cookie conundrum and giggle.

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