Alerts

AD-ttorneys@law – June 30, 2020

Alerts / June 30, 2020

In This Issue:

Pablo Escobar Estate Sues Atlanta Restaurant

Eponymous eatery uses drug lord’s likeness to bump biz and sell swag

Strange Praise

You have to wonder about a restaurant that promises “tasteful ambience” but names itself after Pablo Escobar, one of the more infamous criminals in history.

Escobar’s criminal activities led to the deaths of thousands of people in Colombia and abroad, which is surely something of an indictment of his sensibilities; but beyond the carnage, the drug kingpin amassed inconceivable wealth and spent it on lavish displays – diamond-encrusted Rolex watches, for instance, and his private zoo. Then there was the time he set fire to $2 million in cash to keep his daughter from being cold.

Ambience

Escobar the restaurant, which boasts two locations in Atlanta, is the brainchild of Grammy Award-winning rapper 2Chainz. And despite its name, it appears to be a lovely place – and the food looks amazing.

Nonetheless, Escobar (the restaurant) found itself on the business end of a spate of charges in the Central District of California, including trademark infringement, false designation of origin, unfair competition, false advertising and other Lanham Act charges, along with state law right of publicity violations.

Who’s doing the suing, you ask? Why, the estate of Escobar (the drug lord), of course.

What’s Spanish for Chutzpah?

“Escobar is regarded as one of the greatest heroic outlaws of all time by many in Colombia and all over the world,” the complaint states. “Moreover, Pablo Escobar’s life has been the subject of numerous books, films and television shows.”

The Escobar estate has been carefully plotting a savvy licensing effort, permitting use of his name or likeness – “but only after careful evaluation of the product or service that would be advertised, and only when the monetary compensation and other benefits were sufficient payment for the rights being exploited, and only when the use fits within an overall publicity strategy for the commercialization of Pablo Escobar’s name, image, identity, persona and legacy.”

The Takeaway

Escobar’s estate claims that in addition to appropriating his name, the restaurant used the likeness of the kingpin (who was gunned down by the Colombian National Police in 1993) to festoon its website, decorate its menus and promote itself in social media.

The complaint also alleges that the restaurant is peddling Escobar-themed products, including clothing.

Or maybe not.

In a sign of how the case may develop, the likeness of Pablo Escobar seems to have been stripped from the website altogether (although the name, obviously, remains). Likewise, we couldn’t find any Pablo Escobar-themed products on the website marketplace named in the complaint.

Perhaps the case will head to a settlement if all parties sit down and negotiate a peaceful solution. Regardless, this case will be an interesting example of how current popular culture references and their basis on historical figures continue to generate litigation based on licensing, likeness and false advertisement, regardless of the unpalatable behavior of the referenced character.

Senators Challenge Trump’s Ongoing Pressure on Internet Platform Protections

Communications Decency Act protections – will they be revoked?

DEFCON 2

We’re a nonpartisan bunch here at AD-ttorneys@law, but these facts are enough to pique anyone’s interest.

At the end of May 2020, Twitter fact-checked two of President Donald Trump’s tweets. Finding them in need of additional context and information, Twitter also linked users to new posts where readers could “get the facts” (in this case, about mail-in balloting).

The president did not take kindly to this and expressed as much … by tweeting about it.

That was May 26. Two days later, the White House issued “Executive Order on Preventing Online Censorship” (you can read it here if you haven’t gotten the gist from the news and media yet).

The timeline between the fact-checking by Twitter and the Executive Order from the White House seems to indicate more than a coincidence.

Migraine

The White House’s Executive Order addresses Section 230 of the 1996 Communications Decency Act (CDA), which gives cover to communications platforms for odious material that users might publish on their website or service. The user who publishes illegal material is liable, but the platform is ultimately not. This section of the CDA, while controversial, is often cited as one of the internet’s fundamental free speech protections. Over the years, various bills have been introduced in Congress to limit the scope of Section 230, but none as yet have passed.

The Executive Order maintains that companies that edit, tag or otherwise flag “objectionable” content beyond run-of-the-mill threatening or obscene material are engaging in “editorial conduct” and therefore forfeit their protections under Section 230 of the CDA. The Executive Order charges the Federal Communications Commission with setting up a rule structure for judging related complaints and orders the Federal Trade Commission (FTC) to enforce those rules.

In short, the president was threatening to drop Section 230 protection for social media companies that interfered with the free speech of users when they engage in editorial conduct.

What’s mystifying about this Executive Order? If it should be pursued, the chilling effect of new, ongoing liability threats would most likely provoke an overreaction by Twitter and other platforms in favor of “censorship.” Platforms would aggressively monitor and edit all content; Trump’s own controversial posts would risk suffering more of the same treatment that the order (seems) designed to punish.

The Takeaway

Halfway through June, Connecticut Sen. Richard Blumenthal and Rep. Jan Schakowsky of Illinois penned a letter to FTC chairman Joe Simons decrying Trump’s order. “The Federal Trade Commission (FTC) is not an arm of the Presidency,” the legislators write, “and it cannot be pressed into service to retaliate against Donald Trump’s political rivals or to stifle critical speech.”

While arguing that the FTC has too much work to do without monitoring political speech, the authors also attack the president’s motivations. “The … executive order is a transparently unconstitutional scheme to coerce private companies for political purposes and has no interest in freedom of expression or consumer protection.” They believe that the political dimension of the order would undermine the FTC’s ability to pursue legitimate anti-competition efforts.

Two days later, the Trump administration continued its push to dismantle protections for the big platforms.

Who knows what comes next?

CBD Class Action Stayed Until FDA Moves on Regs

Lack of regulation creates bottleneck; consumer groups get crafty

Heavy Traffic

The lack of federal regulation of cannabidiol (CBD)-derived ingestible products is causing something of a traffic pileup on the district court highway.

In any case, now comes Glass v. Global Widget, a case that recently ground to a halt in the Eastern District of California. Plaintiff Kenneth Glass brought a class action against Global Widget in September 2019, accusing the company of two misdeeds: misbranding its products and selling illegal ingestible products.

According to plaintiff Glass, the Global Widget Hemp Bomb ingestible CBD products he purchased contained much less CBD than the package promised, up to 82 percent less. And he says the company claimed on its website that ingestible CBD products were legal to sell in the United States, when they are not. Plaintiff Glass alleged several causes of action against the company, including unjust enrichment and fraud as well as violations of California and Florida consumer protection, unfair competition, and false advertising laws.

It’s Making Us Wait

Global Widget moved to dismiss the case but also to stay the action under the “primary jurisdiction” doctrine – to be specific, to hold the litigation until the Food and Drug Administration (FDA) finally releases its long-awaited guidance.

Allow us to quote ourselves, from an article we penned back in April 2020: “See this list. Debate over how to regulate CBD rages on even as the FDA seems to take its time releasing final rules. And in the interim, the number of CBD products grows by leaps and bounds.”

Lest we be unfair, we will admit that there has been movement at the FDA. In the past year, the FDA has created a task force for addressing CBD products, held public hearings and issued this guide.

Nevertheless, the court granted Global Widget its stay, agreeing with the “primary jurisdiction” argument, concluding that “the Court will stay this lawsuit until such time as the FDA completes its rulemaking regarding the marketing, including labelling, of hemp-derived ingestible products.”

In its order, the court relied heavily on a similar case in California’s Northern District and mentioned four other similarly bottled-up CBD cases in the Golden State alone.

The Takeaway

Unsurprisingly, the natives are getting restless. The Center for Responsible Nutrition (CRN) released a petition poking at the FDA’s slow motion; it recommends that the Trump administration exercise “its authority to allow CBD use in dietary supplements and [impose] the existing dietary supplement regulatory framework over these products.”

The petition purposely omits recommendations on CBD food and beverage products; CRN’s president was recently quoted as saying, “We felt it was more important to start the path by getting dietary supplements recognized, and then we’ll deal with food later. We’re not ignoring the issue, but we think FDA has the data to deal with supplements now and get recognized very quickly, and then we’ll deal with food.”

Will the CRN petition be the last crack in the dam?

Plaintiff Potato Gun Misfires in Attack on TGI Fridays, Utz

But a defendant’s subsidiary may be brought to task for surviving claim

Proud to Be an —

Love them, judge them, fear them – you haven’t committed to the American project in all its grandeur without at least wishing you could down a platter of TGI Fridays potato skins. The small “loaded” potato skins variant, for example – a testimony to our national brand of Rabelaisian freedom and excess. “Crispy Maine-grown white potatoes topped with a layer of melted cheddar and crispy bacon.” Yum.

Sure, it weighs in at 2,660 calories, but who cares? Go on. Go look at them. Go ahead. And we’ll wait for you to order some and return.

Chip Off the Old Skin

Done? Do you feel happy? Or ashamed? However you feel, just own it.

Moving on – when a restaurant chain puts together something as awesome as these skins, it can’t rest on its laurels. What if its customers want the same potato-skin goodness when their local franchise is closed? A committed company would make that happen. And TGIF is committed.

Partnering with iconic American snack maker Utz, TGIF licensed its name and trademark to one of the company’s subsidiaries. The result? “TGI Fridays Potato Skin Snacks,” which come in a variety of delicious flavors.

So, what’s the problem, you ask? This sounds like a situation where everyone wins, right?

Not so fast.

Mashed Claims

Solange Troncoso, the plaintiff with the coolest name ever, brought a class action against TGIF, Utz, and Utz’s subsidiary and the manufacturer of the skins, Inventure, filed in March 2019, with a second swing at the complaint filed in July 2019. Troncoso accused the companies of deceptive trade practices, false advertising and fraud, and she sought injunctive relief. Why?

According to the Southern District of New York, which undoubtedly reviewed the defendants’ motion to dismiss over a platter of pan-seared pot stickers, no one is quite sure.

According to the court, the accusations were “noticeably, and perhaps intentionally, imprecise.” According to the court’s review, Troncoso might have maintained that the snack chips were “actually derived from TGIF’s famous potato skins appetizer.” But at other points in the complaint, she “alleges that she believed the snack chips were ‘comprised of skins peeled from potatoes.’”

“Ultimately, [we] will not waste words parsing Plaintiff’s intent,” the court wrote.

Target Practice

Instead, one by one, the court relied on hypothetical instances outlined in the motion to dismiss to systematically pick off the claims … all except one.

“Defendants argue that Plaintiff has potentially alleged [italics ours] that she and other reasonable consumers were misled into believing that: (i) the snack chips tasted like the Potato Skins appetizer that one could order inside a TGIF’s restaurant; (ii) the snack chips were a genuine Potato Skins appetizer that one could order inside a TGIF’s restaurant; or (iii) the snack chips were healthier than they actually are.”

All three hypotheticals were dismissed on the reasonable consumer standard – “No reasonable consumer would believe that the snack chips, shelf-stable and sold at room temperature in gas stations, would be identical in taste or substance to an appetizer, prepared with perishable dairy products and served hot in a restaurant.”

The Takeaway

But … one claim, despite the odds, survived. The complaint “can reasonably be read to assert a claim that Plaintiff was misled into believing that the snack chips contain potato peels as an ingredient,” the court held.

Noting that the motion to dismiss failed to defuse this line of attack, the court concluded that “[t]he [complaint] does not merely present a bald assertion that the snack chips do not contain potato peels; it includes factual allegations to support this assertion. Plaintiff notes that the only potato-based ingredients in the snack chips are potato starch and potato flakes.”

So – the class action limps along, does it not?

Sort of. After all the torturous close reading engendered by the complaint, the court removed TGIF and Utz from the case. TGIF had simply licensed its trademark to Utz, and Utz was merely the parent company of Inventure, which manufactured and packaged the snacks; therefore, the court concluded, neither company bore any liability for the remaining claim.

A much-reduced class action continues. We’ll let you know what happens when Inventure prepares for battle.

Golf Course Aeration Product Manufacturer Takes Swing at Competitor’s Tines

(Read on; we promise it will make sense)

Curiouser and Curiouser

Writing a blog about marketing law sends you down some obscure rabbit holes. The interpretation of the term “auto-dialer” under the Telephone Consumer Protection Act, for instance. Or the decades-long, vicious battle over how to define “milk.” Or – this is a favorite – a scholarly analysis of statistics related to too-clever-by-half acronym legislation titles.

We confess, however, that we did not expect to find ourselves diving headlong into the obscure world of golf course aeration equipment. We like golf as much as the next person, but we don’t think too much about the scientific underpinnings of golf course health and maintenance.

Thank goodness someone does.

Hurry Up, Please – It’s Tine

Here’s the obscure topic at hand: aeration tines. If you’ve ever seen a golf course worker riding around on a small, tractorlike vehicle with spiked rollers behind its rear tires that appear to be ripping up the course and wondered “Huh, what is that?” before turning back to the game at hand – well, we’re about to answer the question for you.

The spikes on the rollers are called tines, and their basic function is to punch gazillions of regularly spaced holes in the green or fairway. The tine punches down into the soil, lifts out a plug of earth and then repeats the process again and again. The holes that are left behind help the grass surrounding them thrive by providing space for newer, stronger root growth.

Mostly, players don’t think twice about this process – unless their ball lands in an inconvenient aeration hole, in which case they do need to consult Specimen Local Rule 3c in Part B of Appendix I to the Rules of Golf.

Which constitutes its own, separate rabbit hole that we will happily ignore.

By a Nose

If you thought it was amazing that certain people living in the Arctic Circle (supposedly) have 400 words for snow, well, it’s not really that impressive when you consider all the various flavors of tine that are on the market.

Ceres Turf, manufacturer of MiniQuad turf aeration tines, was hauled before the National Advertising Division (NAD) by competitor Trigon Turf Sciences for several tine-related claims.

Trigon challenged a series of claims by Ceres that compared Trigon’s Ninja brand tines unfavorably with Ceres’ MiniQuad products, including this tag: “We have increased the length of the nose which improves the MiniQuad’s longevity as compared to the Ninja.”

Consider the nonpareil of subject matter obscurity: golf-course-aeration-tine nose lengths.

The Takeaway

So, how did it all turn out?

For this question, we don’t have an answer. In a move that – given historical precedent – was probably unwise, Ceres “stated that it would no longer participate in the NAD dispute resolution process.” NAD explains that “Ceres Turf stated that while it respects NAD and its self-regulatory proceedings, it did not believe NAD’s decision would resolve the dispute with Trigon Turf Sciences.”

And as you may have guessed, NAD kicked the complaint upstairs to the tine regulators at the FTC.

These situations rarely end well, so remember: Prepare your claims as if they were guaranteed a challenge before NAD. It will cost time and effort now but will save you much discomfort later.

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.