AD-ttorneys@law – June 28, 2019

Alerts / June 28, 2019

In This Issue

Prime Rib and Primer: Boxes Trigger Subscription Suits

The latest auto-renewal cases surface in California


Subscription boxes provide consumers with special to-order deliveries – and sometimes surprise assortments – of products, straight to their doorstep. Shipping is so standardized and easy that consumers can forgo the unexpected pleasure of odd finds they may once have encountered in brick-and-mortar shops and instead have the experience without leaving home.

Of course, boxes come with price tags, and often with long-term subscription offers for regular deliveries of goodies. And as soon as you hear the phrase “subscription offer,” you know what may be coming next: a lawsuit.

We’ve covered them before: a suit involving boxes of products for expectant mothers and another featuring boxes of healthy snack products. These cases featured allegedly shady trial offers, hidden auto-renew agreements and, in one case, compensated endorsements on the Better Business Bureau website.

Here, Put This Over Your Eye

Our latest subscription cases, both filed in May, involve an incongruous pair of boxed product categories that sound like the name of an ’80s punk rock band: meat and cosmetics.

First up is a suit brought by consumer Kyle Johnson in the Eastern District of California against Butcherbox, a Boston-based beef-to-bacon box biz (sorry). Johnson alleges that the company sent him and other class members “email follow-ups to their purchases, but has failed, and continues to fail, to provide an acknowledgment that includes the automatic renewal or continuous service offer terms” – a big no-no under California business law.

The other case is brought by California consumer Inez Vasquez-Cossio against Boxy Charm, a cosmetics delivery company, in California’s Central District. It features the same basic accusations – in fact, the wording used in the meat suit above is repeated almost verbatim in Ms. Vasquez-Cossio’s complaint.

The Takeaway

Turns out both Johnson and Vasquez-Cossio are represented by Pacific Trial Attorneys. At first glance, the firm appears to be a somewhat-new entrant to the class-action bar. But Pacific Trial Attorneys used to be the Newport Trial Group, which works out of the same office address.

And they’re interesting because they’re the subject of a RICO suit.

That suit, brought by a Florida homeopathic product company in California’s Central District in 2015, is still rattling around after getting sent up to the Ninth Circuit and back down again, and, perhaps predictably, it’s got a staggeringly long list of defense counsel.

The charges are amazing: Newport/Pacific is accused of masterminding a conspiracy through which they operated “an unlawful enterprise by paying individuals to assume the role of plaintiffs, who in fact had no bona fide basis for suit, and to initiate and maintain fabricated class action suits in order to extort money from those defendants.” That’s in addition to allegedly paying for false affidavits and inducing perjury.

True charges or a hysterical stab at revenge? We’ll let you know how it pans out.

NAD Resolves a ‘We’re Number One!’ Double-Header

Sales more important than ducats, says Division

Cruel Setup

Reckitt Benckiser was loud and proud, letting its freak flag fly in front of the National Advertising Division, and competitor company Bissell couldn’t stand it.

But let’s start at the beginning.

In the carpet kings’ first clash back in April, Bissell, producer of Scotchgard Carpet Shampoo, was sent home, defeated. Reckitt Benckiser – manufacturer of Resolve-brand carpet cleaners – challenged Bissell’s “#1 Carpet Cleaning Brand” before NAD, which held that Bissell’s claim did not hold for the overall brand, although it might apply to specific Bissell products within a specific class of cleaners.

And it all seemed over and done with.

The Takeaway

And it was, until Reckitt Benckiser celebrated its victory by making the very same claim.

This time, it was Bissell’s turn – the company went straight back to the NAD to challenge Reckitt Benckiser’s “#1 Carpet Cleaning Brand.”

And again, NAD sided with Reckitt Benckiser.

Bissell’s mistake seemed to be challenging what was, to NAD, an objective claim: Reckitt Benckiser was relying on unit sales data, rather than dollar sales figures, to support its claim. “Generally speaking, unit sales are a better fit than dollar sales to support a ‘#1 Brand’ claim where the price of products can influence a company’s ranking,” the Division said.

Remember this the next time you or a client tries to make a similar claim. Sales beats bucks.

Aside from a minor quibble – Reckitt Benckiser’s claim failed to mention either the time period or the scope of the claim in its disclaimer, a problem the company promised to fix – it was a double victory for the Resolve kids.

Gigi Hadid “Obliterates” Copyrights With Fair-Use Bazooka

Argument over Instagram post ramps up with bitter cross-filings

Grab the Popcorn

The story so far: Supermodel extraordinaire Gigi Hadid was sued in February by a company called Xclusive-Lee Inc. for allegedly copying a photo of herself that Xclusive-Lee owned and posting it to her Instagram account. Got it?

But this suit came on the heels of a previous suit, a since-settled case in which she was sued for copyright infringement in Virginia’s Eastern District by paparazzo Peter Cepeda. The accusations? Exactly the same behavior. Xclusive-Lee even cited Cepeda’s suit in its complaint as proof that Hadid knew exactly what she was doing, and why it was wrong.


Quick Snaps

So, as promised, we bring you news of some more movement in the more recent case, including two new filings.

First is Ms. Hadid’s motion to dismiss, and it’s fun stuff: Hadid attempts to dodge the suit altogether by claiming that her posting of the photo was fair use.

In the motion, Hadid argued that “[a]ccording to [Xclusive-Lee’s] complaint, Ms. Hadid merely reposted the photograph to her Instagram page and made no effort to commercially exploit it. Her reposting thus reflected a personal purpose different than the photographer’s purpose in taking the photograph, which was to commercially exploit Ms. Hadid’s popularity.”

Moreover, the motion read, the shot was nothing but a friendly photo taken on a city sidewalk – “a factual work, not a creative one, thus favoring a determination of fair use.” Hadid also argued that she stopped and posed for the shot, and therefore had some stake in the final product’s ownership since she collaborated with the photographer.

The Takeaway

Xclusive-Lee’s opposition memo is a masterwork of outrage. Here’s a representative passage: “Concerning Hadid’s assertion that she somehow maintains joint copyright in the Photograph because she noticed the photographer and smiled at the moment the photographer chose to snap the shutter is preposterous,” Xclusive-Lee responds. “Ms. Hadid is as much a joint copyright holder in the Photograph as the subject of a biography is joint copyright holder to the words used by the author to describe her life.”

The counterargument breaks down Hadid’s motion, maintaining that her use of the work was not transformative – “Hadid has not claimed she copied and posted the Photograph for any of the established albeit narrowly defined statutory allowances, including commentary, criticism, reporting, or research.” Her argument regarding commercial use of the photograph, the complaint claims, is similarly misguided; since Hadid is a successful model, the use of the photo granted her an indirect commercial advantage.

Hadid had also argued that her posing for the camera created an implied license between the photographer and herself, and this assertion comes under withering fire:

“If a model poses for a sculptor, does she possess an implied license to appropriate the work? If an individual provides a quote to [a] reporter for a story, does she possess an implied license to appropriate the work? If an individual cooperates with an author on a biography, does she possess an implied license to appropriate the work. Of course not. If Hadid’s approach to the issue of an implied license were adopted, the copyrights of the majority of the world’s authors would be obliterated because the only requirement for an implied license would be for the subject of a work of original art would be to claim (not very convincingly) that she winked, smiled, nodded, or otherwise communicated her acceptance to the author.”

Tons of drama. More to come, we’re sure, and we’ll be following it all.

Fourth Circuit Throws Open TCPA Barn Doors

Dish Network can’t scrape Do Not Call registry claims off its plate


In the closing days of May, the Fourth Circuit issued an opinion on Thomas Krakauer v. Dish Network, a class action filed in 2014 in the Middle District of North Carolina. It’s an important opinion in a Telephone Consumer Protection Act landscape that’s still in upheaval over the consequences of the Supreme Court’s 2016 Spokeo decision.

It’s also quite clear-cut and emphatic.

Here are the facts of the original case. Dr. Krakauer alleges he began receiving calls in 2009 urging him to buy Dish Network’s services. The calls were placed by Satellite Systems Network (SSN), a company that made sales calls on behalf of TV service providers. Dr. Krakauer claims – wait for it – that he placed his number on the national Do Not Call (DNC) registry six years prior. Hence, the lawsuit.

The case went to trial in early January 2017, with the jury deciding that SSN was acting as Dish’s agent, that Dr. Krakauer and other class members received two calls within a 12-month period despite being on the DNC registry, and that each call merited a $400 fine under the TCPA. The court trebled the fine for knowing violations. After a year of contentious claims process, the court entered a final judgment of $61 million.

The Appeal

Dish appealed on three points, and the Fourth Circuit answered each forcefully.

First, on standing, Dish argued that Krakauer and company had not suffered concrete and particular harm as demanded by Spokeo, a suggestion the Fourth Circuit rejected handily. “Rather than paying heed to Congress’s judgment of what sort of particular and concrete harms ought to count,” the court wrote, “the appellants ask that we import the elements of common law torts, piece by piece, into any scheme Congress may devise. … Since [the harm caused by disregarding the DNC] is both particular to each person and imposes a concrete burden on his privacy, it is sufficient to confer standing. The appellant’s suggestion otherwise is nothing more than an attempt to dismember the TCPA.”

Dish also took aim at class certification. “Dish argues that the class necessarily includes a large number of people who have no statutory claim at all,” the court wrote, explaining that Dish wanted to narrow the class to subscribers alone, rather than anyone who received an improper call. Again, the appeals court was firm: “A non-subscriber who receives a call can suffer a privacy intrusion just as easily as a subscriber can. The extensive legislative history accompanying the TCPA confirms its broad reach.”

Finally, Dish challenged the jury’s ruling that it was liable for the calls placed by SSN, arguing that it had occasionally admonished the company to obey the TCPA, and in any case its contract kept SSN at arm’s length as an independent contractor rather than as an agent.

But that simply wasn’t enough for the court: “It may be that Dish believes that its warnings and admonitions should have been given greater weight by the jury,” the opinion states. “Because the jury resolved this question and had extensive evidentiary support for its conclusion, it does not matter whether Dish now believes its argument to be convincing. Dish had its chance to persuade the jury, and it lost.”

In addition, the contract between Dish and SSN shouldn’t have been the sole focus of a jury: “parties cannot avoid the legal obligations of agency by simply contracting out of them.”

The Takeaway

The Fourth Circuit’s opinion will have several effects.

First, the opinion tightly binds class certification to the TCPA statute; two calls in 12 months is enough to establish a class. This case is going to be a favorite cite for plaintiffs’ counsel. The opinion also keeps the affected class open to anyone who receives offending calls, regardless of their responsibility for the phone line, again hewing close to the TCPA text which mentions “consumers” rather than the more specific “subscribers.”

Next, companies should be on notice that it is not enough to merely ask an agent to follow the TCPA’s DNC requirements. Companies need to ensure that their agents are following the rules, or they risk a day in court.

Finally, the Fourth Circuit may become a popular battleground for TCPA plaintiffs. It’s not just a matter of legal opinion, it’s also a matter of attitude:

“[The TCPA] private cause of action is a straightforward provision designed to achieve a straightforward result,” the opinion states in one of many pointed passages. “Congress enacted the law to protect against invasions of privacy that were harming people. The law empowers each person to protect his own personal rights. Violations of the law are clear, as is the remedy. Put simply, the TCPA affords relief to those persons who, despite efforts to avoid it, have suffered an intrusion upon their domestic peace.”

The Root Weeds Out Ebony’s Lanham Suit

Storied African American magazine can’t get relief for infringing parody


The bold red “EBONY” cover logo is as recognizable as any in journalism: White letters in a bold, red, rectangular box. It’s been the signature look of one of the country’s most important African American-focused magazines since it was founded in 1945, the same year the owners also took the time to trademark the magazine’s name and logo art.

But a 75-year-long run as one of the most recognizable publications in the country means you’re bound to receive some negative attention. And a recent article published by The Root, an online journal of African American culture and politics, was rather vicious.

Fake News! (No, Really, Fake News …)

We won’t get into all the details – there are a lot of them – but the basic gist is that the Root article made a variety of accusations against the owners of Ebony, claiming that they, among other things, failed to pay their writing staff for work that had been delivered and then turned around and threw a lavish gala. (The unpaid writers sued, and then settled – The Root covered it here.)

Anchoring the article was a fake Ebony cover image that accompanied the article. It’s a reasonable mock-up of Ebony’s iconic cover until you start reading the headlines, which repeat several of the article’s assertions over a picture of Ebony owners Michael Gibson and Willard Jackson (who are called out by name).

Last December, Ebony lawyered up and sued The Root’s owner, Gizmodo Media Group, and its owner, Univision Communications, in the Southern District of New York. A slew of violations was alleged: trademark infringement, trademark dilution, unfair competition and false advertising under the Lanham Act, among others.

The Takeaway

In early June, the district court threw the whole thing out.

The first sentence of discussion in the court’s order granting Gizmodo’s motion to dismiss sets the tone: “The Lanham Act must be construed narrowly to avoid conflict with First Amendment values.”

On the infringement claims, the court ruled that the competitive relationship between the outlets did not override the free speech protections granted to a parody like the offending fake magazine cover.

The dilution claims were likewise waved off: News reporting, the court maintained, is “not actionable as dilution by blurring or dilution by tarnishment.”

As for the false advertising claims, the court held that the cover was simply not commercial speech. The Root did not gain a competitive advantage over Ebony through its parody. “Although it may implicitly invite comparison between how Plaintiff and Defendants treat their writers,” the court held, “the central message of the Accused Image, and the article in which it appears, is simply that Plaintiff should pay its writers in a timely fashion.”

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