AD-ttorneys@law – October 26, 2022

Alerts / October 26, 2022

In This Issue:

TINA: Carbon Offsets May Produce Turbulence for Airlines

Offsets are popular, but what do they measure?

Flying the Guilty Skies

Whether you’re a hardened business air warrior or someone who takes the occasional vacation flight, you’re conscientious. You understand that air travel makes a heavy contribution to CO2 emissions, and you’re wondering what you can do to reduce your share. You want to do your part.

For starters, you can check out Travel + Leisure’sThe Plane Truth About Airline Emissions,” which presents actions you can take when planning your next trip. Obvious actions, like flying economy instead of business class, and less obvious ones, like taking nonstop flights — “planes use more fuel during takeoff and landing than while cruising.”

One of T+L’s strategies, however, is not as straightforward as it seems.

Clipping the Wings

“Buy carbon offsets,” the article recommends. “Most major airlines make it easy to balance some of your impact by supporting third-party environmental projects; United and Delta even let you use frequent-flier miles to pay.”

Sounds great, right?

Eh ... not so fast.

Truth in Advertising, Inc. (TINA) has taken the air out of some carbon offset claims. On their own, carbon offsets aren’t a bad idea at all—but TINA suggests that the way they’re presented by airlines may confuse consumers.

Focusing on United Airlines, which offers an “offset your flight” option during online purchases, TINA offers several critiques. First, the metrics used to measure offsets may be flawed (the article links through to a Greenpeace study supporting that point). Second, although the offsets are cheap and most likely helpful, they’re not actually addressing the problem of emissions from your flight head-on. The article includes an interesting, and candid, admission from United’s CEO on this exact point.

The Takeaway

We’ve covered “greenwashing” before—the use of environmentally conscious marketing and programs to direct consumers’ attention away from problematic practices and results. A lawsuit we discussed a couple of months back against fast-fashion company H&M, for example, is still getting underway.

TINA didn’t issue one of its dreaded letters to the Federal Trade Commission about United’s claims, likely in part because the airline has dialed back statements regarding how important offsets are to its environmental efforts. But similar danger can buffet any company that trumpets offsets.

Where can you turn? Learn the vectors involved in carbon offset advertising, and keep your claims verified and qualified. Offering the opportunity to purchase carbon offsets is clearly a positive practice and does not have to fall under greenwashing so long as consumers know what they’re purchasing. Here, for example, the advertising should make clear how the carbon offset is being calculated and how it relates, if at all, to the underlying activity of flying.

Check out our blog post from last year, “The Difficult Art of Advertising Carbon Reductions.” Given the regulatory complexity of the topic, it provides as good an overview of carbon advertising as possible.

Sleeping CSPI Beast Awakens Over Alcohol Labeling

Ignored for decades, an old petition leads to Treasury/TTB lawsuit

Got Me Looking So Crazy Right Now

Ah, 2003. 50 Cent was “In da Club.” The Lord of the Rings ruled the box office. And the Bureau of Alcohol, Tobacco and Firearms had just been split into separate organizations with functions assigned, variously, to the Treasury Department and the Department of Justice.

OK, nostalgia has its limits.

But today’s story has its roots in that golden age of The O.C. and totally-nothing-by-today’s-standards scandals like Madonna kissing Britney.

Back in aught-three, as we old-timers call it, the Center for Science in the Public Interest (CSPI) and more than 60 other organizations sent a petition to the Alcohol and Tobacco Tax and Trade Bureau (for the sake of simplicity, we’ll call it the TTB). The subject? Labeling on alcoholic beverages.

Specifically, the petition requested

that labels of all alcoholic beverages regulated by TTB include: (a) the beverage’s alcohol content expressed as a percentage of volume; (b) the serving size; (c) the amount of alcohol per serving; d) number of calories per serving; (e) the ingredients (including additives) from which the beverage is made; (f) the number of standard drinks per container; and (g) the U.S. Dietary Guidelines’ advice on moderate drinking for men and women.

Aside from some hemming and hawing, the petition went unanswered for 19 years.

CSPI staff may be patient, but they don’t forget. We like to imagine some lawyer working in the watchdog’s third-level subbasement suddenly remembering the original letter, freaking out, and (along with co-plaintiffs the Consumer Federation of America and the National Consumers League) suing Treasury and TTB.

Regulatory Underlap

It’s not something consumers think too much about, but many alcoholic beverages lack nutrition information labeling, which is surprising when so much of the food and drinks we consume are labeled within an inch of their life.

But regulations regarding alcoholic beverage labeling evolved strangely over the years. Because of the idiosyncrasies of the Federal Alcohol Administration Act, the Food and Drug Administration (which loves labels) and the TTB (which doesn’t) wound up splitting said beverages between them. “Certain beers, hard ciders, and hard seltzers do not meet the definitions of ‘distilled spirits, wines, and malt beverage products’ under the FAA Act,” the CSPI suit states, “and, therefore, are subject to the FDCA.” Distilled spirits, wines and malt beverages, on the other hand, are subject to the TTB and lack nutrition labels.

(Doesn’t the “Hard Seltzer” label sound like it’s trying too hard to appeal to the bros? Like “Maximum Butter” or “Extreme Scandinavian Fiber Crispbread”?)

We’ll let the complaint do the heavy lifting, but the murky regulatory lacunae described therein have produced “wildly inconsistent labeling requirements for nearly identical (or, in some cases, identical) products,” including the fact that a hard seltzer product with the same alcohol by volume as a standard lager is labeled, but the lager is not.

The Takeaway

In any case, CSPI’s arguments are fundamentally the same as they were decades ago. “Enhanced transparency in alcohol labeling is a commonsense step that can help address the health and safety concerns related to the consumption of alcohol and would allow consumers to make informed choices about the alcoholic products they purchase,” their complaint states. The petition suggested a model label including alcohol content by volume and by serving, drinks per container, calories per serving, possible allergens, and dietary guideline advice on how to drink in moderation.

But the interesting thing for us is how they’re suing. The lawsuit is essentially a procedural affair—CSPI is suing under the Administrative Procedure Act, which, according to the complaint, “requires that an agency ‘shall...conclude a matter presented to it’ ‘within a reasonable time,’ and the reviewing court ‘shall … compel agency action … unreasonably delayed.’”

The suit is now before the District of Columbia district court, where it likely will be addressed within a “reasonable time”—something less than 20 years.

Fitness Acolyte SLAPPs Back at Former Guru

Megan Roup says mentor Tracy Anderson’s suit chills business

Will Roup Recoup?

We covered Tracy Anderson Mind and Body, LLC et al v. Megan Roup et al. when the case was first filed back in July of this year. We promised to break out the cookie dough ice cream and wait for the fight between the two fabulously sculpted fitness instructors to develop; a couple of months and several pounds later, we have news to report.

Roup, the mastermind behind the Sculpt Society empire, has responded to former mentor Tracy Anderson’s lawsuit. It’s shaping up to be an interesting fight.

If you recall, as you surely do, Anderson, whose Tracy Anderson Mind and Body (TAMB) enterprise employed Roup as a trainer, sued Roup for federal copyright infringement, Lanham Act violations, breach of contract, and violations of the Unfair Competition Law of California. Roup worked at TAMB from 2011 until 2017; it’s Roup’s experience (not to mention access to TAMB’s corporate information) during this time that Anderson says enabled Roup to create Sculpt Society.

It’s a grab bag of a suit. In the main, it accuses Roup of allegedly using Anderson’s proprietary information to create The Sculpt Society’s overall approach. According to the complaint, “Roup took the Confidential Information, founded TSS with it, based TSS on it, and based the TSS Method on it. In doing so, Defendants have capitalized on years of Anderson’s research, development, and investment to enrich themselves at the expense and to the detriment of Plaintiffs.” There’s a confusion of origin aspect to the suit, and copyright infringement claims allege that Roup “regularly, repeatedly, and intentionally” published videos that copy “the choreography movements, sequences, and routines depicted in the [Tracy Anderson] Works; [their] organizational structure and format … and aesthetic elements depicted in [them].”

The Takeaway

The Fashion Law, one of our favorite blogs, discusses Roup’s response in depth, but if you’re all TL;DR, here are the basics.

Roup isn’t simply saying that TAMB failed to make its claims; she’s accusing her competitor of starting a SLAPP (strategic lawsuit against public participation) fight in an effort to “chill” Roup’s expression.

As we foreshadowed in our earlier coverage, Roup leaned on Circuit Court precedent holding that “functional exercise sequences—even if aesthetically pleasing or incorporating choreographic elements—are unprotectable ideas or processes under [the Copyright Act] and non-copyrightable …” She collapses TAMB’s copyright infringement allegations by claiming they are attacking advertising copy that is nothing but nonactionable puffery. And according to the motion, the contract claim, which centers on Roup’s employment agreement with TAMB, is fatally flawed due to an “express carve out for any publicly disclosed information.” Roup says TAMB never identifies pilfered nonpublic information in the complaint.

All of these flaws, Roup maintains, defeat TAMB’s complaint and its causes of action under federal copyright law, the breach of contract claim, and the Lanham Act confusion of origin claim. As for the California UCL claim, because the suit is meritless for the above reasons, Roup argues it should be discarded under California’s anti-SLAPP legislation.

We’re sure a response is in the offing, but in the meantime, we’ll grab a bag of funions and wait to see what happens next. You can bring the two-liter bottle of Mountain Dew, OK?

FCC Boots Seven VSPs Into Outer Darkness

Companies banned from Robocall Mitigation Database for failing to STIR, SHAKE

What Do We Do Now?!

If you’re the general counsel of voice service providers Akabis, Cloud4, Global UC, Horizon Technology, Morse Communications, Sharon Telephone or SW Arkansas Telecom, your head is likely aching right about now.

Each of these telecom companies just got served with a dire letter from the Federal Communications Commission (FCC or Commission). Get your act together, the letters read, or we’ll shut you down.

The wording is a bit more formal than that, of course:

By this Order, we direct Akabis, LLC to demonstrate why the Enforcement Bureau of the Federal Communications Commission should not remove Akabis from the Robocall Mitigation Database.

Removal from the database would require all intermediate providers and terminating voice service providers to cease accepting the Company’s traffic. If that were to occur, all calls from Akabis’s customers would be blocked and therefore no traffic originated by Akabis would reach the called party.

The companies have until October 18 to make their case, or it’s curtains.

What Were They Doing All Year?

We’ve covered the FCC’s Robocall Mitigation Database since its inception last year. Its consequences shouldn’t be a surprise to anyone in the industry, but apparently some industry players ignored or underestimated the Commission’s commitment to the program.

The Telephone Robocall Abuse Criminal Enforcement and Deterrence Act went into effect in 2020, mandating full industry implementation of the STIR/SHAKEN IP caller ID technology by July of last year. STIR/SHAKEN is an IP protocol developed by the industry to ensure that the displayed ID of a phone call matches the number of its source—mismatches being one of the key weapons of a robocaller.

The Database was set up to track compliance with the mandate. If you don’t comply, you’re off the database. And off the network.

The Takeaway

Anyone who’s been plagued by the post-COVID-19 explosion in robocalls will be grateful to hear that the FCC is bringing the hammer down on offenders, and this latest action is no joke—it’s a death sentence for any company that doesn’t take the robocall-mitigation steps required by the FCC. The FCC Chairwoman didn’t mince words in the Commission’s announcement of the actions, posted October 3:

“If a provider doesn’t meet its obligations under the law, it now faces expulsion from America’s phone networks,” she said in the announcement. “Fines alone aren’t enough. Providers that don’t follow our rules and make it easy to scam consumers will now face swift consequences.”

Let’s see if there are further expulsions in the near future.

Peloton Switch-and-Bait Crashes in SDNY

Peloton told former brand partner Lululemon it would play nice

Send In the Bras

To paraphrase Frank Sinatra, “Whether it’s the fitness bike company or the athletic wear brand who left is unimportant. It’s a breakup.”

Lululemon and Peloton enjoyed a long-standing co-branding agreement through which the interactive fitness company sold workout gear created by the activewear giant. But the partnership foundered, and the power couple parted ways in 2021.

Like many couples that split up, the companies remained a negative presence in each other’s lives. When Peloton started turning out its own activewear later that year, Lululemon fired off a cease-and-desist letter alleging patent and trade dress infringement. According to Lululemon, Peloton’s new products—including alarming-sounding gear like the Cadent Laser Dot Bra—were rip-offs of Lululemon originals.

In response, Peloton fired off a lawsuit in the Southern District of New York, seeking declaratory judgment that “Peloton has not infringed upon the relevant patents and trade dress, that the patents are invalid and unenforceable, and that Lululemon has no trade dress rights in the relevant trade dress.”

Tread Lock

Alright! Sounds exciting! We’re gonna dig into some design issues with this one, maybe explore how companies should carefully define the terms of co-branding agreements lest they wind up in court! Right?

Wrong. The suit hit a hole.

Lululemon’s cease-and-desist letter “clearly inform[ed] Peloton of the intention to file suit in federal court,” the Southern District held in its recent order dismantling the case. “The cease-and-desist letter also specified the causes of actions Lululemon would pursue … and provided a deadline—November 19, 2021—by which Peloton needed to comply.”

The problem here is that Peloton responded to the letter, saying it could not meet the deadline, and asked Lululemon for an extension to the 24th of the month, a date to which Lululemon agreed. But instead of responding to the letter, Peloton got aggressive and opened its suit for declaratory judgment.

The Takeaway

This is what you call a no-no. Lululemon moved to dismiss, claiming that Peloton’s efforts were an improper anticipatory declaratory judgment action (say that three times fast).

In the words of the Southern District, “An improper anticipatory declaratory judgment action is one ‘filed in response to a direct threat of litigation that gives specific warnings as to deadlines and subsequent legal action’ and ‘deprive[s] the “natural plaintiff” of its choice of forum.’” When Peloton sued instead of keeping faith with its request for an extension, it forfeited the right to sue first. A related case, opened by Lululemon against Peloton in California’s Central District, survived but was settled by the companies this year.

How’s this for a takeaway? Sometimes the underlying issues of the case don’t matter at all if the suit isn’t brought in good faith.

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The 15th Commission Meeting Brings Us Back to the 1970s with More Rulemaking

If there were any question whether the current Federal Trade Commission (FTC) was reenacting the 1970s, that question has been put to rest. And unfortunately, it’s not about seeing Grace Jones, Liza Minnelli and Andy Warhol at Studio 54 or wearing our finest velour shirts; the 1970s also saw quite a lot of rulemaking at the FTC.

Brought to You by the FTC: Event on Digital Marketing and Blurred Advertising to Kids

Yesterday, the Federal Trade Commission (FTC) hosted an event to look at kids’ digital marketing. Here is a rough transcript; and if you have a spare five hours, you can watch the videos, which will soon be posted on the event page.  The big question is whether the FTC will update its updated Testimonial & Endorsement Guides (or issue other mandates) with kid-specific requirements based on this event. (As an aside, these things used to be called “workshops.” For reasons that escape us, that term appears to be passe at the current FTC. Wouldn’t it be more festive to call them soirees, galas, thought raves or to dos if you wanted to rebrand?)

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