Class Action

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The COVID-19 crisis has spawned a new wave of predatory behavior toward consumers, with the marketing of coronavirus-related products and untested cures. Regulators have responded to these behaviors swiftly and in a variety of ways. Richard Cleland, assistant director – division of advertising practices at the Federal Trade Commission (FTC), and Venable attorneys Melissa Steinman and Kristen Klesh addressed the advertising enforcement trends stemming from the COVID-19 pandemic and offered their reflections on best practices for consumer protection.

How has the FTC addressed consumer complaints?

The FTC’s response to COVID-19-related violations has been a combination of education and enforcement. The agency recorded more than 130,000 complaints in approximately the first half of 2020; unsubstantiated health claims and health fraud are the main areas of concern. The FTC has issued more than 300 warning letters and has seen a high compliance rate (around 95%) with this course of action. These letters address claims that businesses are promoting the cure or treatment of COVID-19 through:

  • dietary supplements or treatment in medical or wellness clinics in the form of herbal teas, essential oils, vitamins, zinc, immunity boost IVs, chiropractic, homeopathic, other therapies, virus-killing “zappers,” and colloidal silver
  • anti-vaccine messaging

The FTC has also filed three federal court actions related to COVID-19 consumer fraud and the agency is conducting extensive consumer education campaigns related to health fraud and coronavirus scams. The FTC website examines various types of health and economic fraud related to the epidemic.Continue Reading Ad Law in the Age of COVID-19 and Regulatory Reactions

On June 17, 2020, the Ninth Circuit Court of Appeals issued a published opinion affirming the dismissal of a consumer class action seeking $32,000,000 against Venable client Premier Nutrition Corporation. The Court held that federal equitable principles must apply to class actions pending in federal court, even where state law rules the underlying causes of action. See Sonner v. Premier Nutrition Corp., No. 18-15890, 2020 WL 3263043 (9th Cir. June 17, 2020).

Plaintiff-Appellant Kathleen Sonner sued Premier on behalf of a class of California consumers claiming that Premier’s product, Joint Juice, did not provide its advertised joint health benefits. Sonner sought damages, restitution, and injunctive relief under the Consumer Legal Remedies Act (CLRA), as well as restitution and injunctive relief under California’s Unfair Competition Law (UCL).Continue Reading Ninth Circuit Blocks Class Plaintiffs’ Efforts to End Run Jury Trial

On April 22, the Maryland Court of Special Appeals told us that a class action settlement can’t buy you peace from the CFPB. That court ruled that a class settlement that purports to interfere with a state agency’s or the CFPB’s enforcement authority was unenforceable. The underlying dispute stems from two cases. The first is a class action brought by lead poisoning victims with cognitive impairments. And the second is a suit bought by government agencies for mishandling the rewards of the first case.

According to the CFPB’s Amended Complaint, class members in the first case were provided a structured settlement where they had the opportunity to transfer a portion of their future payment streams in exchange for a discounted immediate lump sum. Under Maryland’s Structured Settlement Protection Act (SSPA), structured settlement companies, such as the Access Funding Defendant, have to obtain the court’s approval before purchasing a payment stream. And most importantly, the SSPA requires that class settlement members consult with an independent professional advisor.Continue Reading You Can’t Block the Ability of the CFPB to Challenge Conduct Through a Release in a Class Action

Twombly and Iqbal—two names that invoke fond memories of the first year of law school for the (much) younger attorneys—have defined the bar that each plaintiff must meet to survive a Rule 12(b)(6) motion to dismiss. Walk into any first-year civil procedure class and you’ll hear the students muttering the following like a nursery rhyme or a page from a Dr. Seuss book, “Twombly said ‘enough facts to state a claim to relief that is plausible on its face’ and Iqbal followed ‘[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.'” The lesson the students are supposed to take away is that a complaint must connect the dots between a defendant and the claim.

In a recent ruling issued by the Southern District of California, Ewing v. Encor Solar, LLC, No. 18-2247, 2019 WL 277386 (S.D. Cal. Jan. 22, 2019), the court confirmed that this fundamental requirement applies, unsurprisingly, to Telephone Consumer Protection Act (“TCPA”) claims against multiple defendants. In particular, the court dismissed the TCPA claim because the plaintiff failed to identify who actually called him.Continue Reading Who Made the Call? Applying the Fundamentals of Pleadings to TCPA Actions

Consumer class actions predicated on state laws alleging deceptive claims are one of the scourges of modern marketing. In a recent decision, the Second Circuit laid out some important guidance on whether and how putative class actions based on laws of different states can move forward.

In Langan v. Johnson & Johnson Consumer Companies, Inc., Langan, a Connecticut resident, sued J&J for violating the Connecticut Unfair Trade Practices Act (CUTPA), alleging that two Aveeno Baby washes were deceptively marketed as containing “natural oat formula” when they allegedly only contained 1% natural ingredients. Langan sought class certification on behalf of Connecticut consumers and consumers in 17 other states who purchased the two baby washes under those states’ “mini-FTC Acts”.

A Connecticut federal district judge certified a class of consumers who had purchased the products in 18 states—rejecting J&J’s arguments that the Plaintiff lacked Article III standing to bring a class action under multiple state laws and that the state consumer protection laws were too varied to satisfy the predominance requirement of Rule 23.Continue Reading Second Circuit Says Multi-State Consumer Class Actions Might Not Be All-Natural

telemarketing lawsIn a blow to the soundboard industry, the D.C. Circuit recently ruled in Soundboard Association v. FTC, No. 1:17-cv-00150 (D.C. Cir. Apr. 27, 2018) that the Federal Trade Commission’s November 2016 opinion letter, which reclassified soundboard technology as “robocalls” under the Telemarketing Sales Rule (TSR), is not subject to judicial review. We previously blogged about the underlying litigation and FTC’s November 2016 opinion letter here. Soundboard technology allows telemarketers to communicate in real-time, dynamic, two-way conversations utilizing pre-recorded audio clips­­­­. These differ from the type of pre-recorded message contemplated by the drafters of the TSR in that there is a live agent monitoring the call and selecting the appropriate clip depending on the situation. The FTC’s 2016 opinion letter rescinds a 2009 letter that concluded that calls made with soundboard technology are not subject to the same restrictions as robocalls under the TSR.
Continue Reading Court to Agency: Is That Your Final Answer on Soundboard Technology?

Over the past few years, class action plaintiffs have filed a slew of lawsuits against online retailers under the New Jersey Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), which prohibits a seller from offering or entering into consumer contracts that contain any term that violates a “clearly established” New Jersey or federal law. Violations are punishable by a maximum civil penalty of $100, actual damages, or both, and private actions can be brought by “aggrieved consumers” (more on that later).

TCCWNA has been around for years, but class action plaintiffs started using the statute to sue online retailers based solely upon their website terms and conditions without suffering any other injury. From what many retailers can tell, the plaintiffs did this by searching for and then challenging indemnification clauses, limitations of liability, and disclaimers of warranties in website terms of use and terms of sale, merely for the purpose of filing lawsuits.Continue Reading New Jersey Truth in Consumer Contract Warranty and Notice Act: New Jersey Supreme Court Holds That Injury Is Required

The Telephone Consumer Protection Act (TCPA) has been making news of late, with the U.S. Court of Appeals for the District of Columbia’s partial rejection of a Federal Communications Commission rulemaking grabbing most of the headlines. We reported on that here. It is understandable that the D.C. Circuit’s decision has captured the attention of telemarketers and TCPA practitioners. However, nonprofit organizations and for-profit companies that help nonprofits reach consumers via telephone and text message should also take note of a less publicized recent TCPA opinion.

For years, Anthem Foundation, Inc. has supported the American Heart Association (AHA) and its “Hands-Only CPR” campaign to help people respond to a cardiac arrest event. Anthem Foundation is a 501(c)(3) charitable organization that serves as the philanthropic arm of for-profit insurance company Anthem, Inc. The plaintiff in Reese v. Anthem, Inc. admitted that she had provided her cellular phone number to AHA in order to receive “monthly CPR reminders, healthy messaging information, and [questions from AHA].” According to her amended complaint, though, the plaintiff and unnamed class members allegedly were “bombarded” with unwanted text messages that contained only “vacuous” pieces of medical information. Moreover, because the text messages stated “AHA/Anthem Foundation” and because Anthem Foundation’s name and logo appeared on AHA’s Hands-Only CPR webpages, the plaintiff believed that the ostensibly informational text messages actually served as pretexts for an advertising campaign benefiting Anthem, Inc. and Anthem Foundation.Continue Reading Another TCPA Decision Involving Nonprofits Results in Dismissal of Plaintiff’s Claims

wine bottlesIs the government about to make it harder for companies to settle consumer class actions? The Department of Justice’s Consumer Protection Branch, in a Statement of Interest (Statement), has requested that a Judge set aside a proposed class action settlement that would enrich plaintiffs’ attorneys to the tune of nearly $2 million. Specifically, the DOJ…

Opting OutWe all have received an errant text message on our phone or a marketing message intended for someone else. This is surely annoying but most of us will either ignore the message, send a reply message opting out, or, as an extreme measure, leave a scathing review online, complete with ALL CAPS. What some individuals do, however, is intentionally solicit additional texts by replying or following through on some of the action requested. By using multiple phones and spending all day subscribing to services, these individuals inevitably receive a lot of calls and texts with offers. Some of those messages might even be from sellers that the individual didn’t actually contact because the consumer’s information has become so widely disseminated, which is exactly what certain serial litigants seek to achieve.

The incentive to become a serial litigant is clear when you consider that for each message received without consent, an individual can claim statutory damages under the Telephone Consumer Protection Act (“TCPA”). Those damages could be $3,000 per text and/or call if the message is automated and sent to an individual on the National Do Not Call Registry. Yes, you read it correctly, it may be up to $3,000 per violating text. One such serial litigant has brought suit for alleged TCPA violations over one hundred times since 2014. He often files complaints pro se and will continue litigation until companies decide it’s cheaper to settle rather than pay additional legal fees. He has openly bragged about these methods, writing blog posts entitled “TCPA enforcement for fun and profit up to 3k per call” and aspiring to author a book entitled Tales of a Debt Collection Terrorist: How I Beat the Credit Industry at Its Own Game.Continue Reading Relief from TCPA Trolls