Alerts

AD-ttorneys@law – January 16, 2019

Alerts / January 16, 2019

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Blue Diamond Evades Almond Milk Class Action

Ninth Circuit provides clarity for battling milk bar

Plant in Your Coffee?

If you have a favorite local coffee shop, chances are you’ve witnessed the increasing popularity of plant-based milks first-hand. The non-dairy milks available to consumers are no longer limited to soy-based products and come in a wide variety of tastes and levels of sweetening. The overall surge in plant-based milk consumption has led to the creation of a $1.6 billion industry, with 10 percent growth in the year preceding August 2018. According to the Plant-Based Foods Association, plant-based milk now represents 15 percent of the total milk market.

As with any popular food trend, marketing litigation did not lag behind alt-milk’s extraordinary growth. In fact, the fight over which products can be properly called milk at all has raged for decades.

Froth

The latest skirmish in this ongoing milk war just wrapped up in the Ninth Circuit. The appeals court dismissed a class action brought against almond milk manufacturer Blue Diamond Growers in the Central District of California.

The original case, brought by California resident Cynthia Painter in early 2017, accused Blue Diamond of misleading consumers by bragging on specific health benefits of almond milk but failing to recognize how the product underperforms dairy milk in a variety of vitamin and nutrient benchmarks.

Moreover, Painter accused Blue Diamond of improperly branding its alt-milk product as “milk,” in violation of the Food, Drug, and Cosmetic Act (FDCA) and California’s Sherman Law. Painter claimed that because Blue Diamond failed to notify consumers about the “percentage of characterizing ingredients” in its product in comparison to standard milk products, it was required to call its products “imitation milk” instead of “milk,” which it failed to do.

The Takeaway

The Central District dismissed the case in May 2017, and Painter appealed. In a pithy, five-page affirmation of the lower court decision, the Ninth Circuit agreed that Painter had failed to state a case.

Noting the FDCA’s robust pre-emptive powers, the appeals court dismissed the mislabeling claims, noting that “[t]he FDCA sets forth the bare requirement that foods imitating other foods bear a label with ‘the word imitation and, immediately thereafter, the name of the food imitated.’” Painter’s demand that the labeling include nutritional comparisons or else drop the word milk altogether was therefore not mandated by the FDCA, which superseded her state claims.

The misleading health claims were shot down by the appeals court as well. Painter had conceded that the nutritional information on Blue Diamond’s packaging was accurate; given that fact, a reasonable consumer could not be misled by it, even if it did not note that standard milk was superior by other nutritional measures.

Finally, the appeals court had a lesson for the plaintiff’s bar: Similarity does not equal mimicry. “Notwithstanding any resemblance to dairy milk,” the court wrote, “almond milk is not a ‘substitute’ for dairy milk … because almond milk does not involve literally substituting inferior ingredients for those in dairy milk.”

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Proposed Law to Keep Fake Meat Makers Honest

Indiana bill an early attempt to address brave new food

Creepy?

In vitro meat. Synthetic meat. Vat-grown meat, lab meat, clean meat, cultured meat. Run through the names for meat grown in laboratories through controlled cell division and you might feel like you’re trapped in some sort of sci-fi/horror movie mashup.

But the introduction of synthetic meat — that’s the term we’re most comfortable with — to a consumer market is now a real possibility. It made its public debut in 2013, when the first synthetic meat burger was consumed at a press conference in London; but the idea of growing meat instead of harvesting it from living animals has been around for a while. “We shall escape the absurdity of growing a whole chicken in order to eat the breast or wing, by growing these parts separately under a suitable medium,” Winston Churchill predicted back in 1931.

Credible!

The process is still expensive and time consuming. Starter stem cells are collected in a lab environment and treated with proteins that stimulate growth, they are then directed into familiar forms, like muscle tissue. Once grown in sufficient quantity, the synthetic meat can be ground up, chopped, or otherwise prepared just like meat off the bone.

Nonetheless, several startups are making real progress toward creating affordable cultured beef, pork and fish products. And the idea of synthetic meat, as odd as it may seem, has genuine appeal for several communities of interest. Environmentalists see it as a weapon in the ongoing battle to reduce climate change — fewer “harvest” animals means less CO2 emissions and less pressure to clear valuable forest for grazing.

And, of course, synthetic meat is cruelty free, which animal rights activists love. PETA has offered a cash prize to the first producer of synthetic chicken meat, and philosopher Peter Singer, author of Animal Liberation, has voiced support.

The Takeaway

Anyone who has read this newsletter knows what happens next: labeling controversies. And even though consumer market synthetic meat products are not yet available, lawmakers are trying to get ahead of the herd.

Enter Terry Goodin, Indiana General Assembly representative. Goodin has put together a bill for the Assembly’s 2019 session that aims to ensure that no one tries to sell synthetic meat as the “normal,” animal-grown original. “I have no problem with scientists making meat in a petri dish, as creepy as that sounds,” Goodin said. “I just don’t like the idea of them trying to hoodwink people into thinking that it is a natural food fresh from a farm.”

Pitched as a “truth in labeling” law for fake meat, the law would prevent synthetic meats from being labeled as “being meat,” although what this means in practice remains unclear. Some states have similarly proposed laws that require disclaimers for vegetarian products labeled with terms like steak or bacon. In Wyoming, for example, a bill has been introduced that would require those products to state “Imitation Food” on their label. A disclaimer for synthetic meat would likely operate similarly. Eventually, discerning between synthetic meat, imitation meat and traditional meat on labels could become a headache for consumers, but it promises to be much more of one for manufacturers.

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Gingko Stink Clarifies Plaintiff Burden

Ninth Circuit flips summary judgment decision that “asked too much”

Olfactory Tragedy

You’re walking down a street in an affluent neighborhood in a major U.S. city — let’s say Carroll Gardens in Brooklyn, New York. It’s early fall, and you’re having a nice stroll in the cool morning air. You turn a corner onto a lovely residential street ablaze with autumn colors supplied by rows of slender, graceful trees that line the sidewalks. The broad, fanlike leaves burn a bright, almost impossible yellow; fallen leaves blanket the sidewalks, transforming the block into an inviting Technicolor byway. You walk down the block to take it all in, and then the smell hits you.

The fruitlike seeds of the Ginkgo biloba tree put out a stench that has been likened to vomit or bad cheese; it’s enough to make the tree’s popularity and cultivation in the United States something of a mystery (they were brought here from original wild populations in Asia). Why bring that stench to another continent?

But Gingkoes are truly fascinating organisms. They are resistant to pollution and pests alike. They thrive in urban environments. They are the oldest surviving species of seed tree — Gingko fossils can be found all the way back in the Early Triassic period. As one expert rhapsodized, Gingko bilobas are “an assemblage of changelessness, a heritage from worlds of an age, too remote for our human intelligence to grasp, a tree which has in its keeping the secrets of an immeasurable past.”

Perhaps it is the plant’s vast antiquity and exotic origins that have led people to ascribe all sorts of health benefits to consuming its seeds.

Smell be damned.

Expert Slap Fight

Gingko seeds and various extracts derived from it are consumed as food or as a dietary supplement around the world. Benefits are said to include improved memory and attention, but these claims are hotly disputed.

Which leads us to our case.

Back in July 2015, California resident Kathleen Sonner filed a complaint against Schwabe International GmBh and its subsidiary Nature’s Way, manufacturers of Ginkgo biloba-infused supplements Ginkgold® Advanced Ginkgo Extract and Ginkgold Max Advanced Ginkgo Extract.” Sonner claimed that the companies had violated California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) by falsely advertising that the products could improve “cognitive health and brain function.”

“All available, reliable scientific evidence demonstrates that the Ginkgold products have no efficacy at all, are ineffective in the improvement of cognitive health, and provide no benefits related to increasing the memory, concentration, or healthy functioning of consumers’ brains,” the complaint read. A little more than a year into the proceedings, Schwabe and Nature’s Way moved for summary judgment, supplying expert testimony and scientific trials that supported their claims. Sonner responded with her own set of experts and studies, that reaffirmed her claims that Gingko biloba was “no more effective than a placebo.”

The Takeaway

In February 2017, the Central District of California ruled in favor of the defendants. While the court gave a nod to the experts and research on both sides, it weighed in for Schwabe because Sonner failed to challenge “the methodology, structure, or independence of [Schwabe’s] studies,” which meant that her evidence was “insufficient to allow a reasonable juror to conclude that there is no scientific support for [Schwabe’s] claims.”

Sonner appealed, and the Ninth Circuit flipped the script, noting that district courts in its circuit were split on what sort of summary judgment standard applied to false advertising claims when scientific evidence was brought to bear.

“Schwabe argues that a more exacting summary judgment standard applies to false advertising claims brought under the UCL and CLRA,” the Ninth Circuit wrote, noting that the argument leaned on a previous decision from the Fourth Circuit. In that case, the Fourth Circuit “reasoned that because the plaintiffs did ‘not allege that all scientists agree that [the products] are ineffective at providing the promised [] benefits,’ they failed to show as a matter of law that the advertised claims are false.”

Nonetheless, the Ninth Circuit rejected the Fourth Circuit’s argument, holding that “the notion that a plaintiff must not only produce affirmative evidence, but also fatally undermine the defendant’s evidence” to move ahead to trial was “unpersuasive.”

Advertisers and their counsel in the Ninth Circuit now have a clearer, although more limited, pathway to summary judgment than they did before.

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FCC Takes One Arrow out of TCPA Quiver ... for Now

Reassigned number database includes safe harbor for callers

Headaches!

Ever switch phone numbers? It’s a hassle, right? Not only do you have to tell everyone and their assistant what your new number is, but the calls keep rolling in for your new number’s previous owner.

And these personal travails pale in comparison to what companies that rely on phone number databases must endure. A misplaced phone call, or series of phone calls, to a consumer who never consented to hear from you can land you in dicey legal territory, even if the calls you made were placed without knowledge of a number reassignment.

Well, we’re here to announce to consumers and businesses alike something they don’t hear every day: The Federal Communications Commission (FCC) feels your pain.

Tale of Woe

In a recent statement on the issue, Commissioner Brendan Carr related that the agita created by reassigned phone numbers reaches into the hallowed halls of the FCC. In his own words:

When I started at the FCC a few years back ... the mobile phone our IT team gave me had recently been turned in by another employee. So I got a lot of calls meant for her. I don’t want to call that person out, but I will say, Jennifer Manner, if you’re still missing phone calls, I am happy to give you an update next time you stop by the Commission.

Carr’s statement addressed a recent FCC announcement that much-needed rationality was coming to the reassigned-number problem, including its impact on actions under the Telephone Consumer Protection Act.

On Dec. 12, the Commission announced the creation of a single, comprehensive database that will log reassigned numbers. Callers can avail themselves of the database, using it to winnow out now-incorrect phone numbers in their own systems. The Commission also introduced a new 45-day “aging period” to hold back disconnected numbers from being reassigned. The new database will be managed by an independent administrator.

The Takeaway

According to the Commission, “the rules respond to consumer groups, trade associations, and state and federal authorities that asked the Commission to establish a single, comprehensive database as the best solution to reducing calls to reassigned numbers while minimizing burdens on both callers and providers.”

These concerned groups will also likely be happy with the Commission’s plans to institute a “safe harbor from liability for any calls to reassigned numbers caused by database error.” According to Commissioner Michael O’Reilly’s statement on the same issue, “In all reality, this database will always be imperfect, meaning, despite our action effectively requiring callers to use it, users will still need to be shielded from pointless lawsuits.”

O’Reilly also mentioned that he thought the new database was an incomplete solution to problems caused by poor definitions within the existing TCPA statute and its interpretations. “To the extent that the purpose of creating the database is to insulate users from liability, it would have been more fitting, in my opinion, to first address the definition of “called party” in the context of the TCPA,” O’Reilly wrote. “After all, should the Commission decide to rightfully redefine ‘called party’ as the intended recipient of the call — rather than the subscriber of the number — the legal liability basis for establishing the database would significantly dissipate.”

Nonetheless, O’Reilly expressed support for the database approach as a stop-gap measure. “[I] have been promised that a comprehensive redo of our TCPA rules will be considered promptly,” he concludes.

Keep your ears to the rail, folks. Bigger changes to the TCPA may be barreling down the tracks.

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Hunky Model and GNC Both Lose Fees Battle

Did exorbitant cash for likeness damages claim cost plaintiff his attorney’s fees?

Hot Property

If you happened to see advertisements for Versace, Ralph Lauren or Calvin Klein in GQ and Elle back in the 1990s, you might recognize Jason Olive, a model who graced print ads in these and other magazines. Olive commanded big fees at the height of his original career — reportedly $25,000 per day for certain modeling jobs.

But he has since moved on to a somewhat successful acting career, including stints on several TV shows, most notably Tyler Perry’s For Better or Worse.

As his acting prospects grew, his modeling rates began to decline. One of his latest modeling gigs was a 2010 shoot for vitamin manufacturer and retailer GNC’s “Live Well” campaign, for which he received roughly $12,000; the fees included an initial one-year contract with a one-time right of renewal for GNC, and further rights to use his likeness on trucks and other vehicles.

Sour Release

But when the campaign launched in 2011, Olive was shocked at its scope; he claimed that the shoot was “a very small job” for a small fee. When GNC didn’t renew the contract for the initial shoot, he had a representative email GNC and forbid further use of his image.

Through a series of snafus at the GNC office, the expiration of Olive’s model release (and the releases of other models hired for the same campaign) was not noticed, meaning that his images were used after the established release agreements expired. When the error was discovered, GNC negotiated settlements with every other model involved in the original shoot except Olive.

Olive held out, but GNC’s final offer of $150,000 wasn’t enough for him; he sued GNC for common law misappropriation of likeness and statutory misappropriation of likeness.

Olive also sought restitution for unjust enrichment based on GNC’s profits derived from the use of his picture. The case went to trial — a relative rarity — and the jury sided with Olive, granting him $1.1 million, consisting of $213,000 in damages and $910,000 in emotional distress. The trial court ruled against Olive’s unjust enrichment claims.

The Takeaway

And then the trial court made an interesting decision. Both parties had moved for attorney’s fees, but the court ruled that there was no prevailing party to award them to.

As the California Appeals Court wrote in its opinion affirming the trial court’s decision, “The trial court noted that both parties were visibly disappointed after the jury rendered its verdict. It found there was no prevailing party because ‘the jury accepted neither side’s recommendation but instead awarded a middling sum amounting to a tie.’”

The disappointment on Olive’s side certainly had something to do with how far short the jury award fell from his original demand — somewhere in the neighborhood of $20 million (the opinion mentions several figures; for a full breakdown of the events and an explanation of the damages request estimate, read Eric Goldman’s excellent summary here). GNC, on the other hand, probably felt it was overpaying given its previous settlement offer and expenses incurred by tearing down Olive’s image from all those trucks and vehicles.

While we have no real insight into what led to the jury’s damages and emotional distress awards, we do know that the appeals court agreed with the trial court on attorney’s fees, which must have been substantial in Olive’s case. His large initial demand meant that the final $1.1 million award wasn’t impressive enough to name him the winner.

“Given that the mixed results in this case did not amount to a lopsided verdict in Olive’s favor,” the appeals court wrote, “the trial court did not abuse its discretion in determining that neither party prevailed for purposes of awarding attorney fees.”

So, Olive won $1.1 million, but how much did he lose?

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First Public Forum on the California Consumer Privacy Act

The California attorney general and the Department of Justice held the first public forum about the California Consumer Privacy Act (CCPA) on Tuesday, Jan. 8, in San Francisco. The public forums are part of the rulemaking process the attorney general’s office is undertaking pursuant to Section 1798.185 of the CCPA, which requires the attorney general to “solicit broad public participation and adopt regulations to further the purposes” of the CCPA. These forums are an opportunity to provide input to the attorney general prior to publication of the proposed rules, and BakerHostetler will be actively participating throughout the public comment and subsequent rulemaking process. For more information, click here.

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Speaker Spotlight

Canadian Institute’s 25th Advertising & Marketing Law Conference, Toronto, Ontario

Amy Ralph Mudge, co-leader of BakerHostetler’s advertising, marketing and digital media practice team, has been invited to serve on the faculty of the Canadian Institute’s advertising law conference in Toronto Jan. 22–23. Amy will participate in a panel discussion on gender stereotyping in advertising. For additional details, click here.

Children’s Advertising Review Unit/West Coast Conference, Marina del Rey, California

BakerHostetler partner Alan Friel will join a faculty of experts at the west coast conference of the Children’s Advertising Review Unit in Marina del Rey, California, on March 6. Alongside Cynthia Kao, vice president, Sony Pictures Entertainment, Alan will explore how to harmonize the compliance requirements of COPPA, GDPR and the California Consumer Privacy Act, which is set to go into effect in 2020. To register, click here.

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