In 2012, the CPSC intended to publish a report attributing the death of an infant to a product made by Company Doe. Company Doe objected and after some wrangling over redactions of misleading information, Company Doe ultimately sued for an injunction in Company Doe v. Tenenbaum, 8:11-cv-02958. The Maryland District Court granted Company Doe’s requests to proceed confidentially, which resulted in sealing large portions of the docket as well as the court’s rulings on issues. Consumer groups Public Citizen, Consumers Union, and Consumer Federation of America attempted unsuccessfully to intervene in the lawsuit, seeking access to the sealed documents. Ultimately, the district court granted Company Doe’s motion for summary judgment. In early 2013, the CPSC declined to pursue an appeal of the decision. Consumer groups, however, pursued an appeal in the Fourth Circuit.
Over a year after the Consumer Products Safety Commission (CPSC) abandoned its Safeproducts.gov appeal, a successful appeal by consumer groups has blown the lid off Company Doe’s secrecy.
In re POM Wonderful LLC Marketing & Sales Practices Litigation, 2014 U.S. Dist. LEXIS 40415 (N.D. Cal. Mar. 25, 2014), involves allegations that the defendant falsely advertised that certain of its juice products provide various health benefits and that substantial scientific research demonstrates those benefits. The plaintiffs alleged familiar theories based largely on California consumer fraud statutes. The court had earlier certified the class, and the plaintiffs proposed two damages models from their expert as part of that process. The first would grant a full refund of the entire purchase price to the entire class--$450 million. That model assumed “that consumers would not have purchased Defendant’s juices if not for the alleged misrepresentations.” Id. at *11. The court rejected that model, however, because it failed to acknowledge that consumers received some benefit even if they purchased the juice based on the “fraudulent” representations. It would be an improper windfall for the plaintiffs to receive a full refund when they could not “plausibly contend that they did not receive any value at all from Defendant’s products.” Id. at *14.
In postings in September 2013 and February 2014, I discussed tactics for opposing class certification in food labeling class actions. These tactics included relying on the Supreme Court’s opinion in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), to challenge the sufficiency of the plaintiffs’ damages model, which should be particularly difficult in these types of claims. In late March 2014, the Northern District of California decertified a food labeling class action largely based on those shortcomings.
For fun, I took a handgun safety class once. During all nine hours of the class, the former Marine captain made us do every maneuver only after first looking around us to develop “situational awareness.” I had never made myself regularly do that as a habit. I now look around parking areas and walkways, as a habit, because his comments made real sense. Be aware of where you are and what is around you. You will see things quite literally and avoid many issues by having your head up and looking around.
In a recent car commercial, the driver accelerates some new style engine in the car in order to bring the three passengers’ heads up from their devices to make them discuss where to go to lunch. Everywhere you go, you see people preoccupied with something and not paying attention. We all go about our pattern behavior without really looking around and seeing our situation. Lots of trips and slips of all types can be avoided by effectively looking, a concept long recognized in negligence case law.
Consider Your Collective Bargaining Agreement & the FLSA
If you don’t know, it could cost you. In the past few years, federal courts have seen an influx in “donning and doffing” lawsuits. These suits reflect a general discontent of employees that are not compensated for the time spent dressing in work-related attire while on employer premises. Sometimes employers are required to pay and sometimes they aren’t, but it is best to be aware of recent developments to avoid being caught with your pants down.
The tide seems to be turning in favor of food labeling class action defendants with respect to the “unlawful” prong of California’s Unfair Competition Law. The UCL provides consumers with a claim for “unlawful,” “unfair,” or “fraudulent” business practices. Cal. Bus. & Prof. Code § 17200. Since the California Supreme Court’s opinion in Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 246 P.2d 877 (2011), there has been no doubt that the UCL requires that a named plaintiff prove actual reliance on the challenged advertising when pursuing claims under the UCL’s unfair or fraudulent prongs. A number of plaintiffs have argued, however, that they need not plead reliance when proceeding under the unlawful prong of the UCL. Those plaintiffs contend that simply purchasing an “illegal” product that is misbranded in violation of California law is sufficient; thus, they need not prove that they relied on the alleged misbranding in those circumstances. Admittedly, the decisions of some judges in the Northern District of California in food labeling class actions may support the argument that the plaintiff need not demonstrate reliance under the unlawful prong but need only allege facts showing that it is plausible that the defendant violated the law when selling a product. E.g., Trazo v. Nestle USA, Inc., 2013 WL 4083218, *9 (N.D. Cal. Aug. 9, 2013).Fortunately for class action defendants, however, the trend now seems to require reliance even under the UCL’s unlawful prong. Judge Edward Davila issued the latest such decision in Thomas v. Costco Wholesale Corp., No. 5:12-CV-02908-EJD (N.D. Cal. Mar. 31, 2014). There, two named plaintiffs alleged that Costco improperly labeled several products. Judge Davila granted in part the motion to dismiss and emphasized the need for reliance for such claims under the unlawful prong. Plaintiffs pursuing these claims allege they would not have purchased a product if he or she had known that it was mislabeled contrary to California law. Because California law also makes it unlawful for a person to hold or offer for sale any misbranded food, such plaintiffs contend that they received products that are “worthless” and have no economic value, even if those plaintiffs consumed and enjoyed the products. See Cal. Health & Safety Code § 110760 (unlawful for person to hold or offer for sale any food that is misbranded).
As the recent Target and Neiman Marcus data breaches have made clear, cyber security is one of the top threats to business today. These threats can be devastating to companies - damaging customer confidence, the company brand, and the bottom line by increasing costs through remediation costs, lost revenues and customers, litigation, and fines. Governments and customers are now holding businesses accountable for inadequate protection of customer data.It has been reported that 24% of data breaches occur in retail environments and restaurants. And the average total cost to a US company of a data breach is approximately $5.4 million. There are 46 different state statutory schemes and a host of federal regulations that apply to the collection and storage of data and the prevention and reporting of a breach. These rules often contradict. An interstate or internet retailer, however, must comply with the laws of the states in which a customer makes a purchase.
Mr. Mix had been the first criminal conviction stemming from the Deepwater Horizon oil spill, indicted in May of 2012, two years after the 2010 disaster. While Mr. Mix was employed at BP, he received ten (10) notices from BP that he was required to preserve all of his spill-related records. However, Mr. Mix deleted a string of texts to and from his supervisor, Jonathan Sprague. While the verdict may be overturned due to jury misconduct, the verdict carries with it a potential twenty (20) years in prison and $250,000 fine. His sentencing is set for March 26, 2014.
While there is little likelihood that your client or company will be under such heavy scrutiny from the US government than BP following the blowout, there are lessons to learn useful to minimizing risks in all litigation with E-Discovery (which is to say, all litigation).
On December 18, 2013, Kurt Mix, a former BP engineer was convicted 18 U.S.C. 1512(c)(1); which prohibits individuals from “corruptly… alter[ing], destroy[ing], mutliat[ing] or conceal[ing] a record, document, or other object, or attempt[ing] to do so, with the intent to impair the object’s integrity or available for use in an official proceeding.”
Concerned about this discovery, the American Bar Association (ABA) sought clarification from the NSA. In correspondence to the NSA, ABA president James Silkenat underscored the importance of the attorney-client privilege as the “bedrock legal principle of our free society.” In essence, privileged attorney-client communications facilitate the “full and frank discussion between lawyer and client that is essential for effective legal representation.” As our interests continue to globalize, this full and frank discussion increasingly involves electronic and voice communication with foreign clients. Although many of us would welcome an excuse to increase our global travel, it is simply not feasible for US law firms to limit their communications with foreign clients to in-person interviews.
The Edward Snowden scandal brought to light evidence that the National Security Agency obtained information from foreign intelligence services, which included privileged attorney-client communications between U.S. law firms and their foreign clients.
Simpson v. Sanderson Farms, Inc., No. 13-10624 (11th Cir. Mar. 7, 2014), involves poultry processing plant employees’ allegations that the plant depressed wages by falsely attesting that illegal employees presented genuine work-authorization and identification documents. Such false attesting violates 18 U.S.C. § 1546 and is a predicate offense under RICO. This is not an entirely new theory. Indeed, the Eleventh Circuit held only a few years ago that a plaintiff stated a valid RICO claim by alleging that a deliberate scheme to hire illegal employees depressed wages in Williams v. Mohawk Industries, Inc., 465 F.3d 1277 (11th Cir. 2006). At least two other circuits also have let such depressed wage claims survive motions to dismiss. Trollinger v. Tyson Foods, Inc., 370 F.3d 602 (6th Cir. 2004); Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir. 2002). Importantly, however, all three of those opinions predate Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), and the pleading standards that those United States Supreme Court opinions embraced. The Eleventh Circuit relied on that important fact when affirming the dismissal of these Plaintiffs’ complaint.
Recently, the Eleventh Circuit issued an opinion that stands to be very useful to RICO defendants at the motion to dismiss stage. Undoubtedly, plaintiffs will argue that the decision is limited to RICO cases relying on a specific predicate act. That argument, however, ignores very important language in the opinion and the structure of RICO itself.
Two scenarios that every industry and claims examiner must respond to on a regular basis are: (1) an attorney sends a letter demanding the preservation of footage after an incident; and (2) a customer incident occurs with no attorney involvement and a decision must be made if footage should be preserved, and if so, what footage. These issues typically arise very soon after a customer incident takes place because time is of the essence when dealing with surveillance footage. Most systems are digital and the amount of time you have to preserve the footage depends on the size of the DVR memory. Therefore, the first and one of the most important things a claims examiner must do is know the capabilities of your company’s surveillance system. Know how it works and most importantly, know the typical amount of time you have before footage is gone.
Nowadays everywhere you go, someone is watching. Why? Because surveillance cameras are in every store, restaurant, hotel and gas station around the country. The primary purpose of these cameras may differ among the many industries that use them but one thing is certain, if a customer is injured, the surveillance footage will be an issue.
At present, it is unrealistic to expect renewable energy sources (solar, wind and geothermal) to serve as a foundation for national energy policy. In the United States, even with the best use of conservation, energy efficiency and renewables, the combination of these various “alternatives” will not become a substitute for fossil fuels for a very long time.
It is necessary that natural gas be substituted for coal and oil as an energy source if the world is to have any chance of avoiding runaway greenhouse gas (“GHG”) emissions, particularly from the developing world.
Wonderful: What could go wrong with that? If it can, it will and there have been a number of breaches individually of the lawyer, and the firms as well as the service providers. What then is a prudent lawyer or firm to do?
What does weather have to do with the practice of law? It is the term now used to identify web-based storage of a lawyer’s files and records instead of the usual paper files and firm server, backed up on local electronics. It is called Software as a Service (SaaS), or on-demand software. Technology as it has evolved is universally viewed as a requirement for modern lawyers. Clients expect it, but do not expect to pay for it. So, to avoid the high costs of servers, back-ups, installation, maintenance and support, some are turning to subscription services for a fixed fee (example, Dropbox and many others). Of course, the advantage is the management of a cost and then the accessibility of data at any time over a range of devices.
One of the less discussed issues with the ACA however, is the potential for a massive provider shortage. At its basic level, one of the primary purposes of the ACA is to increase the number of insured Americans. Indeed, according to various estimates, the implementation of the ACA is anticipated to provide insurance to 25-30 million additional individuals who would otherwise not be insured: “[T]he Affordable Care Act will also ensure that every American can access high-quality, affordable coverage, providing health insurance to nearly 30 million Americans who would otherwise be uninsured.” (Quoted from 2014 Funding Highlights bulletin published on www.whitehouse.gov). Coupled with provisions providing for free or reduced cost annual exams; greater Medicare coverage; increased coverage for younger adults; and increased coverage for preventative care and testing such as mammograms and colonoscopies; that means more insured people utilizing more health care services. Consequently, the question arises of whether we have enough physicians and providers to administer the increased health care demands?
The Patient Protection and Affordable Care Act, often referred to as the “Affordable Care Act” (ACA), or perhaps more commonly “Obama Care,” has had no shortage of media coverage and controversy since it was signed into law nearly four years ago (Yes, it has been 4 years! President Obama signed the Act into law on March 23, 2010). Several aspects of the ACA have been, for better or worse, more “visible” than others; such as the heavy focus on the “individual mandate,” i.e. the requirement that uninsured citizens obtain health insurance or pay a penalty; the impact on employers and small businesses; and the more recent website debacle where many people seeking to sign up for health insurance on the newly created exchanges were unable to do so due to technical issues with the ACA’s www.healthcare.gov website.
The first case involves five gallon bottled water that is municipal tap water that the seller put through a purification process. In the Chicago Faucet Shoppe, Inc. v. Nestle Waters North America, Inc., No. 12 C 08119 (N.D. Ill. 2/11/14), the plaintiff alleged that the defendant failed to disclose that the water is municipal tap water and not natural spring water. After buying the bottles for years, that plaintiff realized it was simply purchasing municipal tap water that underwent a purification process. That defendant apparently referred to “spring water” on its website, invoices, and panels on its delivery trucks. Importantly, it did not include that statement on its labels. That was crucial for purposes of the defendant’s preemption argument. Federal regulations exempt “purified water” from disclosing if the water comes from a community water system. 21 C.F.R. § 165.110(a)(3)(ii) & (a)(2)(iv). In fact, the FDA considered but rejected requiring disclosure for purified water, concluding that consumers purchasing it were more concerned with purity and not the source.
This plaintiff knew it couldn’t force the defendant to add more to its label than federal law required. Instead, it argued that it only wanted the defendant to disclose the source in marketing materials and on invoices. But marketing really is no different than labeling. The federal Food Drug & Cosmetic Act prohibits states from imposing any food labeling that is not identical to a federal standard. Because the federal regulations do not require “purified water” to disclose if it came from a municipal water source, federal law preempted this plaintiff’s claims even though it framed the targeted materials as marketing materials rather than labeling.
You may wonder why the plaintiff did not allege affirmative fraud based on statements on the website and invoices referring to Ice Mountain “spring water.” Indeed, the court wondered the same thing, so it analyzed (and rejected) an affirmative misrepresentation claim even though the plaintiff did not plead it. Of course, the most likely reason that the plaintiff did not pursue an affirmative misrepresentation claim is the near impossibility of getting such a class certified. The court did not touch on that issue, but anyone familiar with consumer fraud class actions certainly recognizes it. If the plaintiff built its case on specific statements on the website or on invoices, it would have to explain how the court could certify a class without getting mired in individual issues of who saw the website, who relied on it, and what other sources of information they possessed. That is why these types of food labeling claims tend to rely entirely on the product labeling as opposed to occasional statements on websites or other places.
The next case is Kane v. Chobani, Inc., No. 12-CV-02425-LHK (N.D. Cal. 2/20/14). This case is familiar to people following food labeling class actions and began in May 2012. Since then, the court has granted various motions to dismiss but allowed that plaintiff more opportunities to plead cognizable claims. At this point, the plaintiff was on her fourth attempt and, thankfully, it is the last one. This case is a little more typical because it is in the Northern District of California and relies on California consumer protection laws. This plaintiff has been pursuing claims falling into two categories. The first relates to Evaporated Cane Juice (“ECJ”); she alleges that ECJ is nothing more than sugar or dried can syrup, so referring to ECJ on the label is misleading and violates federal regulations requiring manufacturers to refer to ingredients by their common and usual names. The second class of claims are “all natural” claims. She alleges that using fruit and vegetable juice and turmeric for color was false and misleading because those are not “all natural.”
One of the most useful portions of this order is its discussion of California UCL claims under that statute’s “unlawful” prong. Some plaintiffs have successfully argued that they need not rely on a labeling statement that is “unlawful”; rather, they only need to plead that it is plausible that a defendant broke a law (typically, a federal food labeling requirement). In fact, a handful of other courts in the Northern District of California have accepted that rationale. But Judge Lucy Koh was having none of it. She reasoned that any UCL named plaintiff must allege that they relied on the offending statement or conduct, even under the “unlawful” prong. This will be a developing area under California consumer fraud law. At some point, the California Supreme Court or the Ninth Circuit will resolve this growing split among lower courts interpreting allegations of “unlawful” conduct and UCL claims. For now, unfortunately, the outcome in such cases may turn on which judge handles a particular case.
The court then analyzed whether this plaintiff actually relied on the alleged misstatements. This really is an interesting portion of the opinion, particularly considering how Judge Koh evaluated the plaintiff’s changing allegations over the course of the case. As to ECJ, the plaintiff initially contended she did not realize that ECJ was just another sweetener. But in other portions of the amended pleading, the plaintiff repeatedly referred to sugar and dried cane syrup interchangeably. Judge Koh did not believe it was plausible that the plaintiff could realize that “dried cane syrup” was a form of sugar, but that “evaporated cane juice” was not. Similarly, the plaintiff earlier sought a preliminary injunction (perhaps an unwise move) and submitted a declaration indicating she would not have purchased the product if she knew it contained “dried cane syrup”; again, this showed she knew that dried cane syrup was the same as sugar. And despite the court’s earlier rulings, this latest pleading failed to explain how the plaintiff could understand that dried cane syrup was a form of sugar but was oblivious to that fact regarding ECJ, particularly considering that she purported to read and rely on the label.
Perhaps showing some desperation, the plaintiff and her counsel suggested that the “cane” in ECJ could have referred to some other type of cane, such as bamboo cane or sorghum cane. But during the hearing on the plaintiff’s preliminary injunction motion (again, probably not a good idea), the plaintiff’s counsel admitted that he does not know what people might think when they see ECJ on a label or whether they may believe it is something other than sugar cane. It was too much for Judge Koh, who found the “which cane is it” argument to be nonsensical.
Two recent district court decisions emphasize that food labeling class action defendants must carefully review complaints to identify what each named plaintiff contends it reviewed and whether the allegedly deceptive statements even affected the named plaintiff’s decision to purchase a product. These plaintiffs often string together unrelated allegations that have nothing to do with their purchases. If a defendant connects the dots and shows just how unrelated those allegations are, you have a much better chance of succeeding early in the case.
The 2008 amendments to the Foreign Intelligence Surveillance Act permit the Director of National Intelligence and the Attorney General to jointly authorize warrantless electronic surveillance, for one-year periods, targeted at a foreigner who is abroad. There is limited, if any, protection for foreigners engaged in communications with American attorneys. Communications that American lawyers take for granted—our phone calls and e-mails with client—may be subject to interception when they involve a foreign client.
A lawyer has an ever evolving duty to safeguard confidential client information. We don’t just lock our doors and keep our voices down—we encrypt our files, we scrub our metadata—and now, we tackle the issue of how we safeguard our communications with foreign clients.
You take comfort when you walk on to a plane that the flight crew always runs a printed checklist on every aspect of the flight and that most systems on the aircraft are duplicated. If you were awake, you might have heard the scrub or circulating nurse doing a sponge and instrument count before and after your surgery. These are routine and fundamental procedures in these professions.With the number of claims and their severity on the rise against legal professionals, you might just wonder why we do so little check-listing. I often remind younger lawyers that spell-checking is not proofreading. Double-checking legal documents by proofreading seems to be a dying art.
To help put these changes in context, consider this hypothetical. Assume I am defending a car manufacturer against a product case involving one of their fine automobiles cars. The case is venued in the District of Nevada. I want to inspect what remains of the car; envision the car inspection scene from Fight Club. The purportedly defective car, however, is at a junk yard, partially covered by a tattered blue tarp storage facility, where it is protected from the elements, located in the Eastern District of Michigan. The storage facility hates lawyers will not permit an inspection without a subpoena.
On December 1, 2013 an amended FRCP 45 went into effect. Why did it require amendment? “Current Rule 45 creates what the Advisory Committee came to call a ‘three-ring circus’ of challenges for the lawyer seeking to use a subpoena.” Report of the Civil Rules Advisory Committee, May 8, 2012 (page 80 of the link). Those with federal cases need to be aware of the changes this post attempts to address. As always, I encourage you to actually read the rule yourself.
A recent decision from the Northern District of California provides defendants with reason for cautious optimism regarding food labeling class actions. In Sethavanish v. ZonePerfect Nutrition Co., No. 12-20907-SC (N.D. Cal. Feb. 13, 2014), the court denied the plaintiff’s motion for class certification. That plaintiff alleged that the “all natural” representations on ZonePerfect bars were false and misleading because the bars contain at least one of ten specified non-natural ingredients. The plaintiff alleged that she regularly purchased those bars for her then-fiancé, who was an active-duty Marine who eventually deployed overseas. The plaintiff alleged that she and her fiancé relied on those representations and paid more for the ZonePerfect bars than she would have paid for other bars that were not all natural. She alternatively alleged that she would have purchased another brand of nutrition bar that truly was all natural.In ruling on class certification, the court first addressed whether the plaintiff had standing to bring her claims. While the court’s ruling in this regard is not helpful to defendants, it is also not surprising. The defendant argued that the plaintiff did not suffer any injury because its bars are less expensive than the Pure Protein bars that the plaintiff now purchases. The defendant also noted that the plaintiff admitted that she and her fiancé were willing to purchase non-natural nutrition bars so long as they were less expensive than “all natural” alternatives. Plaintiff also admitted that she has always been willing to eat foods with artificial and synthetic ingredients. While the court saw some tension among the plaintiff’s declaration, her pleadings, and her deposition testimony, that tension was not enough to eliminate standing. From the court’s perspective, “[i]t is enough that she has asserted that she would not have purchased the product but for Defendant’s alleged misrepresentation. She bargained for a nutrition bar that was all natural, and she allegedly received one that was not.” Again, the standing threshold is not a terribly difficult one to overcome, so this ruling is not too surprising. More helpful for defendants, however, is the court’s ruling on ascertainability. The court agreed with the defendant that the plaintiff could not define an objectively ascertainable class. The defendant overwhelmingly sells to retailers, and not directly to consumers. Records could only identify a very small fraction of consumers who purchased ZonePerfect bars in the last several years. Thus, no method existed to identify the members of the class. The district court noted that courts in the Ninth Circuit are split on the issue. It cited Xavier v. Philip Morris USA, Inc., 787 F. Supp. 2d 1075 (N.D. Cal. 2011), as an example of a case concluding a class could not be certified when there is no way to ascertain class membership. That court declined to rely on affidavits from potential class members, reasoning that such a procedure could invite fraudulent or inaccurate claims. In that respect, the Third Circuit’s opinion in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), also was instructive. There, the Third Circuit found that retailer records were not sufficiently thorough or accurate to identify class members. In addition, the Carrera court “held that fraudulent or inaccurate claims could dilute the recovery of absent class members, and, as a result, absent class members could argue that they were not bound by a judgment because the named plaintiff did not adequately represent them.” The court also pointed to Ries v. AriZona Beverages USA LLC, 287 F.R.D. 523 (N.D. Cal. 2012), as an example of a court rejecting a defendant’s ascertainability argument when dealing with “all natural” claims. Nonetheless, this court found the reasoning in Xavier and Carrera more persuasive. While those cases may restrict types of consumer class actions that may be certified, they do not bar such classes altogether. Because this plaintiff did not identify any method to determine class membership, let alone an administratively feasible method, the court denied class certification without prejudice. One effect of such decisions may be to encourage class counsel to try to certify narrower classes. For example, if a manufacturer sells directly to consumers through its website, a class action plaintiff may contend that a court could certify a class of those consumers. Of course, that assumes that the manufacturer maintains adequate records of such customers. Similarly, class representatives may argue that the court may certify a class of consumers who purchased the products at retail locations with robust consumer loyalty programs. Those types of programs often track individual customer’s purchases, though the extent of data maintained varies considerably. This is not to say that such narrowed classes would be appropriate. They would bring a host of other difficult issues. Nonetheless, it would not be surprising to see plaintiffs resort to that tactic in hopes convincing a court to certify a class. Such class certification would, of course, provide the type of leverage that class counsel seek to negotiate a broader settlement.