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Home | BakerHostetler

Defending ‘Zero Net Loss’ Mail and Wire Fraud Cases in the Wake of <em>United States v. Kousisis</em> (<em>Westlaw Today</em>)

The Bargaining Table

‘Preemption? What Preemption?’ New York Bill Attempts To Supplant the NLRB

What’s Happening at TCEQ: An Update from Chairwoman Brooke Paup

Analysis of the 2025 Federal Tax Changes Under the “One Big Beautiful Bill” Legislation

In This Issue:
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<ul>
 	<li><a href="#rapper">Rapper 50 Cent Settles with Plastic Surgery Clinician</a></li>
 	<li><a href="#marijuana">Marijuana-Loving Presidential Candidate Sued by Cops</a></li>
 	<li><a href="#hormone">Hormone Therapy Company Tagged by TINA</a></li>
 	<li><a href="#commission">The Commission and the Pea</a></li>
 	<li><a href="#dc">DC AG Raises the Heat on Restaurant Service Fees</a></li>
 	<li><a href="#blog">Check Out Our Latest Blog Posts</a></li>
 	<li><a href="#webinar">Register for Our Upcoming Webinars</a></li>
</ul>
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<h5><a id="rapper" name="rapper"></a>Rapper 50 Cent Settles with Plastic Surgery Clinician</h5>
<em>Claims clinic owner used snapshot to suggest ... something embarrassing</em>

<strong>A Question You Wouldn’t Ask in Person</strong>

50 Cent—rapper, TV producer, actor—once took nine shots, at close range, from a 9mm handgun and lived to tell the tale. What kind of nerve does it take to mess with him?

Because if 50—birth name Curtis Jackson—is to be believed, Angela Kogan, owner of Perfection Plastic Surgery &amp; MedSpa in Sunny Isle Beach, Florida, has got a lot of nerve.

Jackson claims that Kogan took a snapshot with him on Feb. 1, 2020. The photo included as evidence in the rapper’s <a href="/wp-content/uploads/2023/06/fitty-comp.pdf" target="_blank" rel="noopener">complaint against her</a> is your typical celebrity snap, with Jackson giving Kogan a hug and Kogan flashing the peace sign (why always with the peace sign?). This “act of goodwill,” as Jackson calls it, was allegedly twisted by Kogan and a local gossip magazine into promotional material for her spa.

By August 2020, Kogan had allegedly posted the photo several times to her own Instagram account and the MedSpa Instagram feed, using various hashtags, including one specifically citing Jackson. According to the complaint, commentators on the posts indicated that they assumed Jackson was visiting with Kogan to get work done.

An article in a gossip magazine called <em>The Shade Room</em> insinuated that Jackson was a customer of MedSpa. TSR reporter Matthew McNulty quoted Kogan as saying that she “has an extensive clientele of celebrities, including … 50 Cent.”

<strong>The Takeaway</strong>

Jackson sued Kogan and <em>The Shade Room</em> in the Southern District of Florida in September, accusing both of a mix of violations, including right to publicity, invasion of privacy, false endorsement and false advertising under the Lanham Act, unjust enrichment, and defamation. For the record, Kogan disputed Jackson’s claims, maintaining that he was a client and allowed her to use the photo in exchange for services.

Jackson and Kogan recently <a href="/wp-content/uploads/2023/06/fitty-set.pdf" target="_blank" rel="noopener">settled </a>the suit on undisclosed terms (Jackson settled with the magazine earlier).

So what’s our takeaway?

Celebrity right-of-publicity cases are legion, but while we generally focus on the “big” ones—Michael Jackson and Katherine Heigl spring to mind—there are always new ones bubbling away in the district courts, many of which, like this one, emphasize the importance of securing permission from <em>anyone </em>you want to use in an advertisement.
<h5><a id="marijuana" name="marijuana"></a>Marijuana-Loving Presidential Candidate Sued by Cops</h5>
<em>Officers say footage of raid used without permission in music videos</em>

<strong>Platinum-Selling Artistry</strong>

We’re not giving rapper and current independent candidate for the presidency Afroman (real name Joseph Edgar Foreman) points for innovative songwriting on three of his most recent tracks, “<a href="https://www.youtube.com/watch?v=oponIfu5L3Y">Will You Help Me Repair My Door</a>,” “<a href="https://www.youtube.com/watch?v=9xxK5yyecRo">Lemon Pound Cake</a>,” and “<a href="https://www.youtube.com/watch?v=ISe3IVBBbyU">Why You Disconnecting My Video Camera</a>” (all NSFW, mostly because the video quality is dicey and may be embarrassing to residents of the 2020s). All three feature his trademark bass-baritone voice; lumbering, right-angled raps; and syrupy singing.

These qualities are familiar to anyone who was alive and possessed functioning ears in 2000, when Afroman released his low-rent megahit “Because I Got High,” which, despite being little more than a limerick repeated over a spare drum set, went platinum and secured Afroman a deal with Universal Records.

No, what makes these songs and their accompanying videos notable is the grainy security camera footage they’re built around.

<strong>This Is How You Come Up with Ideas?</strong>

Last August, <a href="https://www.tmz.com/2022/08/22/afroman-home-raided-police-ohio-drugs/">according to TMZ</a>, the Adams County, Ohio, police department raided Afroman’s home, knocking down the front door and rifling through his possessions. He claims that he isn’t sure why the raid happened—he says in the songs that the warrant referenced narcotics charges and kidnapping but that the police had not recovered anything of interest from his home.

Security cameras caught some of the action; Afroman’s wife recorded more on her phone (he was apparently out of town when the raid occurred). That’s when the rapper’s creativity, such as it is, kicked in. He used the footage to create the videos for the aforementioned songs, whose lyrics explore the raid from his point of view.

These videos caught on. One moment of the surveillance footage caught an officer apparently eyeing, briefly, a cake on Afroman’s kitchen counter. Hence “Lemon Pound Cake,” which became both a song and a moniker for the police officer caught on camera. He called out other officers by name in the songs and posted stills of them (along with the judge who signed the warrant) to a variety of social media sites and generally kicked up a ton of <em>meshuggaas </em>by insulting them in a variety of ways.

You might assume that Afroman recognized the commercial possibilities in this real-life drama, but you don’t need to: Afroman was quite clear about it. According to <em><a href="https://www.law360.com/articles/1589450/ohio-police-claim-privacy-violations-in-afroman-s-raid-videos">Law360</a></em>, Afroman posted a YouTube video in January in which he said, “When they kicked the door in, money kicked the door in. Material kicked the door in. I didn’t have anything to write about.”

<strong>The Takeaway</strong>

In a terribly interesting twist, the police involved in the raid <a href="/wp-content/uploads/2023/06/afro-comp.pdf">sued Afroman in Adams County court</a>, claiming that their images that were used in the videos and social media posts were violations of their rights of privacy. They seek $100,000 in damages as well as a court order forcing Afroman to pull down the posts and videos.

This is going to be an interesting case to watch. Privacy and publicity rights, common issues in advertising, are rarely weaponized by public servants executing a lawful warrant. Do they have the right to sue, given their job descriptions? Considering the flood of video involving, documenting, and sometimes critiquing police operations, if the case goes anywhere, it will have wide-ranging implications.

The takeaway, again (we can’t say it enough):<em> Get your permissions</em>—from anyone who might wind up pictured (or heard) in your project. These rights are generally established by state law, but the standards vary quite a bit—some states exclusively protect the rights of the famous, while others protect the rights of anyone, living or dead. So blanketing yourself with as much consent as possible is just a smart idea.

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<h5><a id="hormone" name="hormone"></a>Hormone Therapy Company Tagged by TINA</h5>
<em>Happy Mammoth didn’t check with the FDA before menopause claims</em>

<strong>Cri de Coeur</strong>

What sort of calculation is a company like Happy Mammoth making when it launches a product line that addresses menopause, perimenopause, polycystic ovary syndrome, and general hormone imbalance? Is it making a calculation at all?

OK. Let’s back up. You need the background first.

Truth in Advertising Inc., that most tenacious of watchdog groups, <a href="https://truthinadvertising.org/articles/happy-mammoth-hormone-harmony/">recently called out Happy Mammoth</a>, a producer of health supplements, for marketing its hormone-balance supplements without clearing the products first with the Food and Drug Administration (FDA).
<p style="margin-left: 40px;"><em>Pursuant to FDA law, no company can market products claiming to reduce, improve, help or assist with the symptoms of medical conditions such as menopause or hormonal imbalance without going through the agency’s rigorous review process to prove that the products are safe and effective.</em></p>
Which, allegedly, Happy Mammoth neglected to do.

But why? Why on Earth <em>why</em>? Don’t they read our newsletter? Doesn’t everybody?

<strong>The Takeaway</strong>

If you’re going into the health supplement business, a basic understanding of the regulatory requirements involved seems as much of a prerequisite to entry as knowing how to create an effective product.

So, heads up, everyone: Here. We’ve got it <a href="https://www.fda.gov/consumers/consumer-updates/fda-101-dietary-supplements">right here:</a>
<p style="margin-left: 40px;"><em>Generally, to the extent a product is intended to treat, diagnose, cure, or prevent diseases, it is a drug, even if it is labeled as a dietary supplement.</em></p>
We’re at a loss for a takeaway here, especially since we see this problem coming up again and again. Make sure your supplement isn’t promoted to treat a disease, perhaps?

Because bad press involving FDA disapproval is a headache that no pill will cure.

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<h5><a id="commission" name="commission"></a>The Commission and the Pea</h5>
<em>Supreme’s </em>AMG Capital <em>ruling shadows recent made-in-USA settlement</em>

<strong>To the Mattresses</strong>

The last time we brought up Resident Home LLC—parent company of Nectar Sleep, a mattress company—we discussed the company’s alleged violation of a 2018 Federal Trade Commission (FTC or Commission) consent order blocking the company from making false claims that its products were made in the United States.

The Commission <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2023179C4767ResidentHomeComplaintrev.pdf">had accused </a>Nectar of hawking products that were “Designed and Assembled in USA” when they were “wholly imported from China.” In addition, the FTC alleged that the company performed “no assembly operations in the United States.” The decree the company accepted banned it from making unqualified made-in-the-USA claims without proving that the manufacture of the mattresses, including all the components involved, took place in the United States.

When Nectar Sleep continued to post similar claims in the two years following the decree, the Feds had enough. The Commission hit Nectar and its owner, Ran Reske, with $750,000-plus in monetary relief. A <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2023179C4767ResidentHomeOrder.pdf">new consent order</a> blanketed Resident Home as well as Nectar.

Now, nearly two years later, the Commission <a href="https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-sends-payments-consumers-deceived-false-made-usa-claims-dreamcloud-mattresses">announced </a>that it’s begun to return $45,000 of Nectar Sleep money to consumers who purchased the company’s mattresses, along with its plan to contact 12,000 more consumers who may be eligible for a payment.

<strong>The Takeaway</strong>

The payments on their own probably wouldn’t muster a mention in the august pages of this newsletter—we covered it already in our trademark scintillating prose. But the decision to get monetary relief from Nectar Sleep divided the Commission back in 2021. The case itself predated the FTC’s MUSA Rule, which can allow for penalties, so the Commission was only able to get money through a consumer redress theory.

The majority of the Commissioners, including the Chair, argued that Section 19 of the FTC Act “expressly authorizes payment of redress and damages.” Then-Commissioners Phillips and Wilson <a href="https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/dissenting-statement-commissioner-noah-joshua-phillips-commissioner-christine-s-wilson-matter">objected, stating </a>that getting money in this matter exceeded the Commission’s authority.

Given that the Commission received more than $750,000 from the company and has returned just $45,000, one certainly can’t help but wonder which side was correct in this instance.
<h5><a id="dc" name="dc"></a>DC AG Raises the Heat on Restaurant Service Fees</h5>
<em>Like ’em or hate ’em, this service fee guidance is sound</em>

<strong>Welcome Break</strong>

We live in an era of unprecedented unease, a stomach sickness caused by whipsaw changes and disturbances to the national psyche. Political instability, social change, economic uncertainty, let’s not forget a global pandemic: Vast, unpredictable forces seem to be practicing on our collective lives, and that’s left us all feeling a bit edgy. To put it mildly.

Which is why President Biden’s <a href="https://www.nytimes.com/2023/02/09/briefing/biden-junk-fees.html">attack on junk fees </a>in his last State of the Union address ... stuck out a bit. Whatever you think of junk fees—or service fees, as they are known to those who charge them—it was refreshing for such a pedestrian topic to be part of the discourse in the 2020s. A crusade against smallish, undisclosed, unidentified, or misnamed charges had an almost pre-2001 feel; the type of issue that used to be part of the warp and weft of politics but has been left behind for more vicious conflicts.

But even this once-quotidian issue is being driven by larger forces—and we’re not just talking about the fees everyone complains about, like airline and hotel fees.

<strong>We Miss Annie’s Paramount Steakhouse</strong>

Consider the bars and restaurants of Washington, D.C.

(Side note—there’s <a href="https://www.gbrowns.com/"><em>amazing</em> food</a> to be had in the capital.)

The dcist, a local Washington news site, has <a href="https://dcist.com/story/23/03/10/dc-restaurants-service-charges-violations-attorney-general-warning/">an interesting (and sometimes salty) article </a>about the turmoil caused by the city’s Office of the Attorney General’s (OAG) recent warnings about service fees—specifically, a mailer that was sent to District restaurants that advised on how to disclose and describe fees to customers, and how to use the fees once they’re collected.

The guidance, however, is ruffling some feathers because the District has been hit by twin forces that are making the fees attractive—some would say necessary—for restaurant owners. First, the pandemic provided a rationale for some owners to charge <a href="https://washingtoncitypaper.com/article/506465/d-c-restaurants-add-service-charges-to-offset-pandemic-expenses/">COVID-compliance</a> fees to defray the costs of making restaurants safe for employees and diners alike (similar measures have been introduced in other major cities). Second, the District recently <a href="https://www.washingtonpost.com/dc-md-va/2022/11/08/dc-initiative-82-results-wage/">passed legislation</a> that will dramatically raise the hourly rate for employees who can receive tips, placing even more strain on restaurant owners.

<strong>The Takeaway</strong>

Check out the article for a broad survey of reactions from restaurant owners.

There’s a lesson here for restaurant owners—indeed, for any business that might be considering adopting fees to defray costs. The letter sent to the restaurants, as well as the <a href="https://oag.dc.gov/release/consumer-alert-dc-restaurants-are-barred-charging">Consumer Alert</a> released by the DC OAG that covers similar ground, offers sound advice for any business, anywhere.

First, disclose fees before an order is placed, either on the menu or by communicating directly with the patron. Second, tell them why you’re charging it, even if that only entails naming it properly (“COVID-compliance fee,” for instance). Third, use the fees for the purposes you’ve described, and nothing else.

Straightforward and simple. Even if it does put a crimp in your ability to charge a fee just because <s>you feel like it</s> need the cash, these three rules will help protect you as regulatory attention focuses ever more tightly on service fees.
<h5><a id="blog" name="blog"></a>Check Out Our Latest Blog Posts</h5>
<strong><a title="The Potential Risks of ChatGPT and Other Generative AI" href="https://www.adventures-in-law.com/ai/the-potential-risks-of-chatgpt-and-other-generative-ai/">The Potential Risks of ChatGPT and Other Generative AI</a></strong>

“Shall we play a game?” Those innocuous words “spoken” by Matthew Broderick’s computer in John Badham’s sci-fi techno-thriller War Games stunned audiences at the time. A computer that could “talk” and “think” and engage in conversation?!? This was the height of science fiction. Well, with the recent release of generative artificial intelligence (AI) tools, specifically in the form of ChatGPT and other predictive natural language processing (NLP) algorithms, science fiction has once again become reality.

<strong><a title="FTC Reverts to Penalty Letters, Threatening 670 Companies with Penalties for Unsubstantiated Health Claims and Maybe More" href="https://www.adventures-in-law.com/ftc/ftc-reverts-to-penalty-letters-threatening-670-companies-penalties-for-unsubstantiated-health-claims/">FTC Reverts to Penalty Letters, Threatening 670 Companies with Penalties for Unsubstantiated Health Claims and Maybe More</a></strong>

Advertisers likely recall that back in 2021, the Federal Trade Commission (FTC) created quite the stir when it sent to more than 700 companies warning letters that threatened penalties if companies engaged in deceptive endorsement practices. In a continuation of these pot-stirring practices, the FTC has now notified 670 companies that they may be subject to some serious civil penalties if they make deceptive health or disease claims for any products.

<strong><a title="FTC Brings the Supreme Court Together Again" href="https://www.adventures-in-law.com/ftc/ftc-brings-the-supreme-court-together-again/">FTC Brings the Supreme Court Together Again</a></strong>

For those of you who worry about the partisan divide in our country, it’s nice to know that the Federal Trade Commission (FTC or Commission) has once again brought an often sharply divided Supreme Court to unanimity. Unfortunately for the FTC, that unanimity has again come at the agency’s expense. Two years ago, the Supreme Court unanimously held that the FTC lacked the redress authority it had often invoked under Section 13(b) of the FTC Act. That ruling, among other things, has resulted in the agency conducting an unprecedented amount of rulemaking and blanketing the country with notice of penalty letters.
<h5><a id="webinar" name="webinar"></a>Register for Our Upcoming Webinars</h5>
<strong>Advertising and Privacy Issues in the Metaverse</strong>

As more and more brands engage with existing and new customers in the metaverse, this webinar will highlight key advertising and privacy issues for how businesses can create customer trust in immersive virtual worlds. Join Linda Goldstein and Jeewon Serrato as they champion this interactive discussion.

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AD-ttorneys@law – April 20, 2023

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