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Risk-free trialContinuity, or “negative option,” marketing is a popular and convenient way for consumers to subscribe to products and/or services, receive new issues, receive product replenishment, or continue a service by making automatic payments at predetermined times. From skincare to dietary supplements, to groceries and periodicals, the popularity of continuity-based marketing with consumers is soaring. However, a proposed amendment to Section 17602 of the California Business and Professions Code that passed the California State Senate and is now winding its way through the state Assembly could leave marketers who use continuity-based offers feeling like they have recurring nightmares.

Senate Bill 313 (SB313) takes direct aim at continuity marketing that offers a free trial period or incentivizes consumers with free gifts when it results in an automatic enrollment of the consumer into a continuity program.

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Continue Reading Continuity Plans Receive Renewed State Scrutiny

gavel-and-questionYou think judges are immune to lawsuits? Think again, especially if you are a retired judge seeking to resolve disputes in the private alternative dispute resolution (ADR) business.

A San Diego jury is being asked to decide whether former California Court of Appeal Justice Sheila Sonenshine and ADR powerhouse JAMS, Inc. are liable for false advertising based on representations touting Sonenshine’s experience on JAMS’s website.

Kevin Kinsella, the plaintiff in the case, hired JAMS and Sonenshine to serve as a privately compensated temporary judge in his divorce dispute. Kinsella is a venture capitalist who had a number of profitable business ventures prior to his marriage and claims that he agreed to his now ex-wife’s request to hire Sonenshine because he wanted a judge with expertise in dissolution actions and business matters. Kinsella says that he reviewed JAMS’s website to evaluate Sonenshine’s experience in business, including investment banking, financial markets, business ventures, and private equity funding, but learned too late that Sonenshine’s biography was misleading.

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Continue Reading Even Former Judges Can Be Exposed to False Advertising Liability

sunshineThe coming of spring has been accompanied by good news for two food marketers—ConAgra and Bumble Bee Foods—in their respective court fights in California.

In the Northern District of California, a federal judge dismissed a putative class action against ConAgra alleging that the marketer’s Crunch N’ Munch product violated California’s unfair competition law since it contains partially hydrogenated oil (PHO), a food additive high in trans-fat. The complaint, filed by Tony Walker, specifically stated, “although safe, low-cost, and commercially acceptable alternatives to PHO exist, including those used in competing brands and even in other ConAgra products, ConAgra unfairly elects not to use safe alternatives in Crunch ‘n Munch in order to increase its profits at the expense of the health of consumers.”

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Continue Reading Springtime for Food Marketers? Two Big Wins in California in Recent Days

In March, a new federal law quietly went into effect that places additional pressure on importers to develop compliance systems for their supply chains, including identification of items potentially made with forced labor. The Trade Facilitation and Trade Enforcement Act of 2015 (Trade Act) prohibits the import into the United States of goods, wares, articles, and merchandise mined, produced, or manufactured in a foreign country by convict, forced, or indentured labor.

The new law comes at a time when federal and state regulators are turning their focus to supply chain management as a way to combat forced labor overseas. At the National Association of Attorneys General (NAAG) 2016 Winter Meeting, for example, Attorney General Loretta Lynch gave a speech noting that the Department of Justice would prioritize human trafficking for law enforcement at all levels. Susan Coppedge, Ambassador-at-Large to Monitor and Combat Trafficking in Persons and Senior Advisor to the Secretary of State, also presented to the AGs at NAAG. Given this scrutiny, any company—regardless of industry—that imports goods from overseas should review its supply chain management policies to ensure that they are appropriately tailored to address this issue.

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Continue Reading Don’t Import Compliance Troubles—New Supply Chain Law Goes into Effect

Image by lungstruck [CC BY 2.0] via flickr
Image by lungstruck [CC BY 2.0] via flickr

C.S. Lewis once wrote that “[t]ea should be taken in solitude.”  A California federal court agrees, ruling Tuesday that a consumer’s false labeling claims against tea manufacturer R.C. Bigelow could not proceed as a class action due to the lack of an acceptable classwide damages model as well as standing.

The consumer’s complaint targeted two antioxidant claims on Bigelow’s green tea product labels: “Healthy Antioxidants” and “Mother Nature gave us a wonderful gift when she packed powerful antioxidants into green tea.”  Plaintiff alleged that these were unlawful and unapproved health claims under California law because Bigelow’s green tea products “fail[ed] to meet the minimum” nutritional and antioxidant requirements to make such claims.  According to plaintiff, he based his purchase decision “in substantial part” on these claims.

Plaintiff moved to certify a statewide class of all persons in California who purchased a variety of Bigelow’s green tea products, which Bigelow opposed.  The court denied the motion, concluding that plaintiff had failed to show that damages were capable of being measured on a classwide basis.…
Continue Reading Consumer’s Green Tea Class Action De-Caffeinated

CA Office of Environmental Health Hazard Assessment proposes both an emergency regulation to allow temporary use of a standard point-of-sale warning message for BPA exposures from canned and bottled foods and beverages, and a Proposition 65 Maximum Allowable Dose Level for BPA

On March 17, 2016, the California Office of Environmental Health Hazard Assessment (OEHHA) issued a proposal to promulgate an emergency regulation to allow temporary use of a standard point-of-sale warning message for bisphenol A (BPA) exposures from canned and bottled foods and beverages. By way of background, on May 11, 2015, BPA was added to the Proposition 65 (Prop 65) list of chemicals known to cause cancer and reproductive toxicity; the chemical was listed as a reproductive toxicant.…
Continue Reading CA Agency Proposes Emergency Bisphenol A (BPA) Exposure Warning Regulation, Maximum Allowable Dose Level for BPA

Marketers of consumer products, including foods, beverages, dietary supplements, OTC drugs, and cosmetics, should be evaluating their products, including product packaging, for the presence of bisphenol A (BPA) without delay. On May 12, 2016, the one-year grace period permitted by California’s Office of Environmental Health Hazard Assessment (OEHHA) ends, and companies whose products expose California consumers to BPA must provide a Proposition 65 (Prop 65) reproductive toxicity warning to those consumers.

Importantly, California has not yet established a maximum allowable dose level (MADL) (i.e., a safe harbor level) for BPA, so a product that exposes consumers to any amount of BPA will be required to carry a warning for reproductive toxicity in females unless the company marketing the product has established an MADL in compliance with California regulations. As a reminder, Proposition 65 requires “clear and reasonable” warnings prior to exposure.

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Continue Reading Have You Evaluated Your Products and Product Packaging for BPA Content? A Prop 65 Warning is Required Beginning in May

By Mokkie (Own work) [CC BY-SA 3.0], via Wikimedia Commons
Countless Cosmetic and Dietary Supplement Products Implicated

Effective Friday, December 4, the California Office of Environmental Health Hazard Assessment (OEHHA) listed Aloe vera (non-decolorized whole leaf extract) and goldenseal root powder as carcinogens on its list of…

Last month, we blogged about the U.S. District Court for Northern District of California’s recent decision entered in Luna v. Shac, LLC, — F. Supp. 3d –, No. 14-cv-00607 (N.D. Cal. Aug. 19, 2015), which awarded summary judgment to the defendant-gentleman’s club in a Telephone Consumer Protection Act (“TCPA”) class action.  You can read that post here.  In short, the court held that the defendant’s dialing/texting platform did not constitute a prohibited autodialer under the TCPA in the wake of the FCC’s July 2015 omnibus TCPA Order – i.e., (1) adding numbers to a database (either by manually typing the phone numbers, or by uploading or cutting-and-pasting from an existing list of number); (2) drafting the content of the text messages for each campaign; and (3) selecting the numbers to call and clicking “send” (one-click) to transmit the messages–because of the level of human intervention in dialing. Notably, summary judgment briefing in Luna wrapped up before the FCC Order was released, but the plaintiff noticed the Order as supplemental authority in opposition to the defendant’s motion for summary judgment. The defendant responded explaining why the FCC Order did not pose an obstacle to summary judgment.  The court also cited the Order in its decision.…
Continue Reading Postscript to Luna v. Shac LLC: Human Intervention Still Precludes Finding That Strip Club’s Dialing Platform Constitutes an Autodialer Under the TCPA

In a big win for Yahoo!, the U.S. District Court for the Southern District of California denied certification of a putative class in a suit alleging that Yahoo! violated the Telephone Consumer Protection Act (“TCPA”).  The litigation arose out of claims that Yahoo! spam-texted consumers by allowing its users to send text messages from a computer to a mobile phone.  In order to send a text message via Yahoo! Messenger, the user must either select the recipient’s name from the user’s Yahoo! contact list or manually input the recipient’s mobile number in the Messenger window.  Yahoo!, then, automatically checks to see if anyone has used its Messenger service to send a message to that mobile number.  If not, Yahoo! sends a “Welcome Message” to the recipient providing a general explanation of the feature.  Yahoo! users agree to the terms of service, and over the years some of these terms of service have included consent for Yahoo! to send text messages.  The plaintiffs claimed that the “Welcome Message” violates the TCPA prohibition on sending automated text messages through an “automatic telephone dialing system” without the recipient’s consent.…
Continue Reading Yahoo! Says Yahoo! In Defeating Class Certification in TCPA Texting Case