Articles Posted in False Advertising

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Sports drink brand Gatorade recently settled a lawsuit that was brought against the company by California Attorney General Xavier Becerra. At the heart of the matter was a free, downloadable game that Becerra argued disparaged water and healthy nutritional choices.

Legal-Fees-PaidGatorade made a game called Bolt! that was available to the public for free download in 2012, 2013, and then for a short time in 2017 as well. Players used a likeness of Olympic track athlete Usain Bolt to race across cell phone and tablet screens. When Bolt encountered Gatorade on the track, his speed increased, but when he encountered water, his performance deteriorated. Allegedly, the game inspired players to maintain their “performance level high and avoid water.”

Becerra argued in his complaint that the game made it appear as if water was an unhealthy choice that most athletes avoid. Accordingly, playing the game would encourage people, particularly children, to choose sports drinks instead of water.

In a statement, Becerra said: “Making misleading statements is a violation of California law. But making misleading statements aimed at our children is beyond unlawful, it’s morally wrong and a betrayal of trust.”

The day after the complaint was filed, Gatorade reached a settlement deal with the state. They agreed to a settlement of $300,000, $120,000 of which is earmarked for the promotion of better nutrition and hydration choices for young people.

Still, Gatorade does not admit to any wrongdoing in connection with the settlement. Katie Vidaillet, spokeswoman for Gatorade, notes: “The mobile game, Bolt!, was designed to highlight the unique role and benefits of sports drinks in supporting athletic performance. We recognize the role water plays in overall health and wellness … .” Moreover, the company has agreed to work harder at meeting the responsible advertising standards set by parent company PepsiCo.

Becerra hopes that the lawsuit and settlement will put other companies on notice about false advertising. While creativity is wonderful for capturing the attention of consumers, it is best to guard against making false claims. Work with a California business attorney to ensure that you company doesn’t run afoul of the law.

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When an individual or a company obtains a trademark registration in the U.S., they are granted certain rights and protections. If they discover that another party is using a mark that is the same as or confusingly similar to their registered trademark, then they have a right to bring legal action against the alleged infringer. This concept is at the heart of a lawsuit against well-known outdoor outfitter company L.L. Bean.

Trademarks-47837347-001A good trademark acts as a source indicator for the products it covers. However, what happens when two companies in the same industry decide to adopt similar marks? Consumers may have difficulty differentiating the offerings of one company from those of its competitor. The result can mean lost sales and a tarnished reputation if the products are not as good as those of the competition.

Utah-based outdoor and mountaineering gear manufacturer Alfwear, which uses the KÜHL trademark as their brand name for outdoor clothing, brought the lawsuit against L.L. Bean based on their registration of “The Outsider” mark. The mark is registered for “rugged outdoor clothing, namely, belts, bottoms, hats, jackets, pants, shirts, shorts, T-shirts, tops,” and has been in use since June 2015.

Recently, L.L. Bean launched a marketing campaign with the tagline “Be an Outsider.” The company even filed a trademark application to register the mark “Be an Outsider” in June 2017. The phrase is being used in various advertisements across the country.

The lawsuit from Alfwear argues that these marks are too confusingly similar. Moreover, Alfwear believes that L.L. Bean deliberately choose their “Be an Outsider” phrase in an attempt to mislead, confuse or deceive consumers.

Among other relief, Alfwear is asking that L.L. Bean be ordered to stop using the phrase “Be an Outsider” altogether. The company is seeking damages for lost profits as a result of consumer confusion.

L.L. Bean has not publicly commented on the lawsuit, but it is natural to assume that they will be fighting against Alfwear’s claims. Intellectual property is one of a company’s most valuable assets, and protecting it with the help of a California business attorney is imperative.

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Does a company have the right to use someone’s image without their permission? That question is central to a new lawsuit. While the lawsuit’s merit remains undetermined, it is stirring up negative publicity for the company. Entrepreneurs who are starting an ad campaign may want to consult with an experienced business attorney to avoid finding themselves in a similar situation.

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Plaintiff Leah Caldwell filed her lawsuit against Chipotle Mexican Grill. The complaint names Steve Ells, the company’s founder and CEO, as a defendant as well as a photographer named Steve Adams.

Caldwell alleges in her complaint that her photograph was taken without her knowledge while she ate in a Chipotle restaurant in Denver during the summer of 2006. She recalls that the restaurant was virtually empty, and she also states that she did not see any cameras or notices of a photo shoot being underway. Nevertheless, as she left the restaurant, she alleges that Adams approached her and asked if she would sign a release for the use of her image. Caldwell refused.

Caldwell was in Orlando in December 2014 when she visited another Chipotle location, only to see her image displayed. In her complaint, she says that the image was digitally altered, most notably by including bottles of alcohol in her vicinity. A few months later, she visited two other Chipotle locations in California, only to see her picture yet again.

She responded by filing the lawsuit, claiming that Chipotle did not have the right to use her image in their marketing campaign. Caldwell is representing herself in the case, and she has asked for a settlement of more than two billion dollars, the amount which she says the restaurant chain earned as a result of the use of her unauthorized photo.

Chipotle has not commented publicly on the suit, and much investigation will be required to determine whether or not Caldwell’s rights were violated and if so, how much money she may be entitled to. Speaking with a qualified business attorney is the best way to avoid legal pitfalls when it comes to using or designing marketing materials.

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In general, American consumers are willing to pay extra for a premium product that has to be imported. That’s because they realize that getting that product to the shelf costs more than an item that is produced in the contiguous U.S. However, what happens when a product merely gives the impression of being imported? Are those consumers then entitled to a cash settlement to compensate them for being misled?

https://www.californiabusinesslitigation.com/wp-content/uploads/sites/283/2017/03/Happy-St.-Patricks-Day-135056274-001.jpgThat question is at the heart of a California lawsuit that was recently filed against Craft Brew Alliance Inc. Craft Brew produces Kona Brewing Co. beers, which feature labels crammed with images that look like they are straight out of Hawaii. The problem, as consumers Sara Cilloni and Simone Zimmer point out in their complaint, is that Kona Brewing Co. beers aren’t brewed anywhere near the islands. Instead, they are created in facilities in Washington, Oregon, Tennessee and New Hampshire. The plaintiffs are seeking class action status on behalf of consumers.

Plaintiffs allege that people “are willing to pay more for items, because they are from Hawaii,” when in reality, they are produced in the contiguous 48 states. Portland, Oregon-based Craft Brew has yet to comment on the pending litigation. The company does have a brewing facility and brew pub in Hawaii, but it only produces a scant 12,000 barrels a year, none of which make it to the mainland.

This type of litigation is nothing new in the beverage industry. Anheuser-Busch InBev has been the target of more than one similar lawsuit. As the largest brewer in the world, it stands to reason that Anheuser-Busch would attract some litigation. In fact, a judge ordered them to pay a $20 million settlement in 2015 for purportedly allowing consumers to believe that its Beck’s label beer was made in Germany. Beck’s was initially a German product, but Anheuser-Busch has been producing it in St. Louis since 2012.

The current lawsuit is only in its earliest stages. Nonetheless, it is a helpful reminder to all companies to review their labeling and marketing practices to ensure that they are not vulnerable to similar litigation.

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It’s not unusual for litigation to require months or years before settlement. Even then, it does not necessarily follow that anyone will receive timely compensation. That is where companies like RD Legal Funding step in.

Funding-61101867-001RD Legal Funding is a New Jersey company that was founded by Roni Dersovitz. Their business involves advancing money to plaintiffs who are entitled to settlement money. RD Legal provides the plaintiff with money, which the plaintiff later pays back, with interest, when they receive their settlement. There is nothing inherently wrong with this business model. In fact, numerous companies provide similar services across the U.S.

However, a lawsuit has been filed against RD Legal by the New York Attorney General and the Consumer Financial Protection Bureau. Among the allegations leveled in the complaint, RD Legal is accused of scamming 9/11 first responders and former NFL players who are suffering the after effects of multiple concussions. The CFPB and the Attorney General claim that the contracts given to clients of RD Legal were confusing and inaccurate. What’s more, many people who accepted the deals offered by the New Jersey company ended up paying interest in excess of 250 percent, which would be a clear violation of state usury laws.

The case of former NYPD Officer Elmer Santiago is one example. After serving as a 9/11 first responder, Santiago was declared disabled because of an associated respiratory illness. He was awarded a $3.9 million settlement in 2014 that was scheduled to be paid to him within 18 months. RD Legal offered to advance him $355,000 at 19 percent interest. However, when he received his settlement money, RD demanded payment in the amount of $860,000, which was apparently in excess of the contract terms.

Dozens of similar situations are detailed in the lawsuit. RD Legal Funding maintains that it has done nothing wrong while CFPB Director Richard Cordray alleges that the company is part of an “illegal scheme.”

This lawsuit is far from concluded, but it is a helpful reminder for companies to review their policies to ensure compliance with all state and federal laws.

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A company’s intellectual property is easily one of its most valuable assets. It’s vital to protect this information at all times, and to ensure that all necessary legal precautions have been taken. Even when a company’s owners think they have done everything correctly to protect their intellectual property, things can still go wrong.

Lawsuit word breaking through red glass to illustrate legal action brought by a plantiff against a defendant in a court of law through opposing lawers or attorneys

That is the case for a Santa Barbara-based startup called Olaplex LLC. The company claims to have pioneered a revolutionary three-step process for protecting hair while it is being bleached in a salon. Bleaching is harmful to hair, causing it to become dry, brittle and damaged. Nonetheless, many people still undergo the treatments, particularly celebrities who must change their hair color for various roles. The result is lighter hair, but at a high cost.

Olaplex set out to change that with a new chemical bonding process that was designed to protect hair strands during the bleaching process. They filed a patent application to protect their invention, which they called Olaplex Bond Multiplier No. 1. It debuted in 2014 and quickly began winning awards. L’Oreal, a French-based conglomerate known for many beauty products, began trying to lure away certain Olaplex employees early in 2015. When that effort didn’t prove successful, L’Oreal and Olaplex entered negotiations in which the larger company proposed to acquire the startup.

Confidentiality and non-disclosure agreements were signed. However, the deal eventually fell through. Olaplex started noticing a few months later that L’Oreal seemed to be selling a product that was remarkably similar to theirs. What’s more, their advertising campaign seemed strangely familiar.

Olaplex has now filed a patent infringement and false advertising lawsuit against L’Oreal. The plaintiff argues that the defendant gained access to secret, proprietary information while the acquisition negotiations were underway. Olaplex argues that this gave L’Oreal access to their exclusive chemical process, which the older company then used to create a knock-off product.

Officials from L’Oreal strenuously deny the allegations. Nonetheless, this entire situation is a crucial reminder of how important it is for all companies, large and small, to protect their intellectual property with the help of an experienced attorney.

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We regularly receive requests to explain the process of litigation, which we always communicate (using dialog NOT monologue) to prospective clients during our initial consultation. We hope you will find our lawsuit synopsis helpful. Feel free to forward it to others and remember to contact us with any questions about any business or employment lawsuit.

If your lawsuit or legal problem involves business issues, you may find it helpful to visit our website.  Once there you will find the following information: “Eleven Questions to Ask BEFORE Hiring a Business Attorney”.  It has always been one of our most visited web pages.

The litigation process generally involves four (4) phases. The length of each phase varies with the legal and factual complexities of each case.

DT%2019867194%20scale-001.jpgThe initial phase takes place before anything is filed in court. The attorney meets with the client to determine the facts of the claim being advanced by the client or the client’s defense to a claim brought by another. In either case, it is essential that the client meet with the attorney at the earliest opportunity as valuable rights may be lost by delay. Once the attorney meets with the client, the attorney will review any documents relevant to the matter, research the applicable law and possibly speak to witnesses in order to chart a course which is in the best interest of the client.

The next phase involves the filing of an initial pleading in court. Typically, this is the filing of a Complaint or an Answer to a Complaint. The discovery process begins, which may include serving the other side with written questions, called Interrogatories, obtaining evidence which may be in the possession of the adversary or some other party and taking depositions, the oral questioning of parties and witnesses.

Once this phase has been completed, the case is ready to be tried. A trial may be in front of a Jury or a Judge and can vary in length depending upon the number of witnesses and quantity of exhibits offered. Under our system of jurisprudence, the plaintiff has the burden of proof. The plaintiff’s case goes first. The defendant then has an opportunity to respond to the plaintiff’s case with witnesses and evidence to support the defense. If the defendant has brought a Cross-Complaint, it is tried in the same manner. Otherwise, the plaintiff has an opportunity to put on a rebuttal case to counter the evidence offered by the defendant and, on occasion, a defendant may offer a sur-rebuttal to reply to the evidence offered by plaintiff in the rebuttal case.

The final phase of litigation involves the post-trial matters including motions to vacate or correct the judgment, appeals and efforts to collect on the judgment.
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A class action lawsuit has been filed against online flash-sale retailer HauteLook. Plaintiffs claim that they were sold purportedly genuine Rolex watches at a substantially reduced price. However, the watches they received were damaged or contained inferior replacement parts.

Rolex%20NOT%2088997580-001.jpgClass representative Vahdat Aghdasy purchased what he believed was an authentic Rolex watch from the HauteLook website. A large part of HauteLook’s appeal is that they claim to sell 100% authentic merchandise straight from the designer or manufacturer. Accordingly, customers are led to expect a certain level of quality. The vintage Rolex watches that the website offers from time to time were no different. HauteLook specifies that the watches are sold “as is,” meaning that there may be some level of damage.

Nonetheless, the company promised to provide certified appraisals of each watch after it was purchased. Aghdasy and other class members received an appraisal from a company calling themselves Swiss Watch Appraisers. However, they note that there is no contact information for the company except for a telephone number that is disconnected. The lawsuit alleges that the appraisal certificates are fraudulent and that the watches have never been appraised.

Moreover, HauteLook’s claim that the watches are 100% authentic is also coming under fire. Consumers are finding that their watches contain inferior, non-Rolex parts and that the watches do not come from the brand as promised by the website. Instead, plaintiffs believe that the watches are coming from various jewelry stores and other retailers.

Plaintiffs are seeking damages against HauteLook and Nordstrom, the company that purchased the web retailer in 2011. The basis for the lawsuit includes common law fraud, breach of implied and express warranties, unjust enrichment and conspiracy to commit fraud. Plaintiffs argue that HauteLook significantly misrepresents the actual value of the watches. Accordingly, they are seeking actual damages and exemplary and/or punitive damages in addition to attorney fees and interest.

Rolex, a company known for vigilant protection of its intellectual property rights, has yet to comment on the lawsuit. It would not be surprising if the Swiss watch-making company decided to sue HauteLook and Nordstrom as well.

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Anyone who has ever joined LinkedIn knows that the social media giant sends out numerous emails. It’s fairly annoying, and the company doesn’t make it easy to opt out of their communications. That practice has gotten LinkedIn in some serious trouble. The company will be paying out at least $13 million next year in a settlement agreement that they recently signed.

Social%20Media%20Magnified%2044298834-001.jpgThe settlement agreement ends a class action lawsuit against LinkedIn. Known as Perkins v. LinkedIn, the case related to the website’s “Add Connections” function. Plaintiffs allege that the company did not provide adequate notice regarding the emails it would send to contacts in the member’s email address book. If LinkedIn users signed up for the Add Connections function, they were able to import contacts from any external email accounts. LinkedIn would then send an invitation email to many of these contacts. Contacts who ignored the email for a certain amount of time might receive up to two additional, reminder emails.

The court decided that while LinkedIn members who signed up for Add Connections did consent to have invitation emails sent to their contacts, they did not provide consent for the company to send any follow-up emails. Moreover, users were not asked for and did not give consent for their names and likenesses to be used in any follow-ups to the invitation email.

As part of the class action settlement, LinkedIn was not required to admit any wrongdoing. Similarly, the company denies each of the allegations made in the complaint.

LinkedIn users who are thought to be members of the class may have already received an email from the company letting them know about the settlement. Each email included a unique, 15-digit number to identify the claim. Others who feel they may be entitled to a portion of the settlement may apply to become a class member until December 14, 2015. Analysts suggest that class members may only receive about $10 each, but the lawsuit was aimed at punitive measures against LinkedIn. This outcome serves as a reminder to all companies that full disclosure of all email practices is imperative.

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Deceptive and misleading advertising, deaths and heart attacks are among the claims in lawsuits filed against energy drink makers.

Energy%20Drinks%2048725117-001.jpgVermont, Washington and Oregon have sued Living Essentials, makers of 5-Hour Energy for “deceptive and misleading” advertising. 5-Hour Energy claims include “hours of energy, no crash later” and apparently Attorneys General of those three states do not agree. It is likely that other states will join and file lawsuits in the near future.

If you bought one or more cans of Red Bull in the last 12 years, and it failed to “Give You Wings”, you may file a claim to receive your settlement of $10 cash or $15 worth of Red Bull products. The makers of Red Bull agreed to a $13 Million settlement with US consumers to settle a class action lawsuit alleging that promises of increased performance and concentration fell short of delivering more effectiveness than a cup of coffee.

The Red Bull settlement is awaiting U.S. District Court approval. Red Bull does not admit any wrongdoing. Watch for settlement application forms online, no proof of purchase is required.

Six adverse reports of energy drinks have been entered into the Food and Drug Administration’s voluntary reporting system. FDA spokeswoman Shelly Burgess states that it is not clear whether the drinks caused or even contributed to the five reported deaths and one reported heart attack. She goes on to say “…that’s why we’re taking this seriously and looking into it.”

Most recently, the family of 14 year old Anais Fournier sued Monster Energy Drinks. Anais died after consuming two 24 ounce Monster Energy drinks within 24 hours. The last one shortly before her death which the autopsy attributed to cardiac arrhythmia due to caffeine toxicity.
48 ounces of Monster Energy contains almost the same amount of caffeine as 14 cans of Coca-Cola, approximately 480 milligrams.

In a statement, Monster said they believed they were not responsible for the girl’s death and would vigorously defend itself.

On a final note, the Attorney General of New Your issued subpoenas in July to Monster, PepsiCo (makers of AMP), and 5-Hour Energy’s Living Essentials. The AG is seeking information about the companies’ advertising and marketing practices.

Bottom line, if any company makes claims in its advertising, it better have proof to back up those claims, preferably before going to court.
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