Articles Posted in False Advertising

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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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Imagine having the ability to predict future medical conditions based on a DNA test. Armed with this sort of information, people would know to be particularly aware of heart disease, diabetes and high cholesterol and could take steps to protect themselves against developing such conditions.

Genetic%20Testing%2055993888-001.jpgEssentially, that’s what was promised by 23andMe, a Mountain View, California company that’s been in existence since about 2007. Advertising on television, radio and the Internet promised consumers the ability to gain valuable knowledge about their personal health risks. The company marketed a $99 DNA test kit. Customers merely had to send a saliva sample the company. After analysis, 23andMe would provide a detailed report that people could use to safeguard themselves against certain health risks.

However, a San Diego woman by the name of Lisa Casey recently filed a lawsuit in the U.S. District Court alleging that the company’s results were actually “meaningless.” Moreover, the complaint states that the DNA is being added to a company database and that the data is subsequently being made available to researchers.

As Casey’s attorney puts it, the company’s efforts are “a very thinly disguised way of getting people to pay them to build a DNA database.” The complaint seeks damages on behalf of many thousands of 23andMe customers who were misled by what the filing terms the company’s false advertising.

The lawsuit isn’t the only roadblock that 23andMe is currently facing. Almost simultaneously with the lawsuit filing, the company received a letter from the Food and Drug Administration. In the letter, the company is accused of making medically related claims that have not been vetted by the department. It’s not the first time 23andMe has received warnings from the federal government. In fact, the FDA has been lodging complaints against the company since 2010, alleging that they have not proven that their testing yields accurate results. The administration fears harm as a result of misinformation provided by the company. Concerns that the procedure could be construed as the practice of medicine have caused the FDA to essentially shut down 23andMe pending a satisfactory response to the letter, available HERE.
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Over more than 40 years in business, Trader Joe’s has developed a reputation as a unique grocery store where customers can purchase exclusive items like Organic Hummus Dip and Milk Chocolate Covered Potato Chips. The company operates in 30 U.S. states with about 400 stores. Because Trader Joe’s can’t be found on everywhere, they have been able to enhance their reputation as a distinct and unusual retailer. An inherent part of the Trader Joe’s experience is the trade dress in their stores. Their South Pacific theme is considered by the company and its customers to be an indispensable part of shopping there.

Trademarks%2047837347-001.jpgTrader Joe’s has not officially expanded across America’s border with Canada. One devotee of the brand, Michael Hallat, lamented the fact that he could get his Trader Joe’s fix only by driving from his home in Vancouver, Canada to a store in Bellingham, Washington. The trip involved a lengthy wait to cross the border in both directions and travel time was usually 3 to 4 hours round trip.

Hallat looked for a way to make the experience a little easier, bring Trader Joe’s goods to other Canadians and perhaps turn a profit. He began buying up Trader Joe’s wares in large quantities. In a little more than two years, he managed to spend hundreds of thousands of dollars at the store, bringing the merchandise back across the Canadian border to sell at his own retail store, which he called “Pirate Joe’s”. With a modest markup on the original price of the goods, Hallat was soon making good on his idea of turning a profit on the resold wares.

While Hallat’s customers may have been enjoying the ability to get Trader Joe’s items without crossing the border, Trader Joe’s itself was less than amused. They quickly filed a lawsuit alleging trademark infringement and false advertising.

At this point, Hallat dropped the “P” from the name of his store making it “Irate Joe’s”.

The suit was filed in the U.S. District Court in Seattle, but was recently thrown out by a judge who said that the court did not have jurisdiction in Canada. For now, Hallat triumphs in this matter, but it seems clear that Trader Joe’s is unlikely to allow this unauthorized use of their trademarks to continue.
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As technology evolves and society relies more and more on the Internet for work and play, scam artists seem to dream up increasingly creative ways to derive a profit from it. Most regular Internet users have become familiar with the term “cybersquatting” in recent years. This nefarious online activity involves a company or individual who registers a domain with a name that is confusingly similar to a legitimate website. Administrators use the sham websites to elicit personal information and money from unwitting users. The result is big time profits for the criminals and big time headaches for their victims.

http.www%2051883498-001.jpgRecently, federal courts decided in favor of Facebook against several defendants who had registered domains with confusingly similar names. The websites, examples of which included Dacebook.com and Facebooll.com took advantage of the most frequently made typographical errors users enter when searching for Facebook. In addition to having similar titles, many of the websites also copied the Facebook look and interface to further convince users that they had landed at the legitimate Facebook website.

Facebook executives filed the complaint against the typosquatters in 2011. The judge ordered that the defendants should pay Facebook a combined total of some $2.8 million in damages. Moreover, the infringing domains must be turned over to Facebook, making it possible for the social networking giant to redirect users with poor typing skills to the Internet destination they actually wanted to reach. The defendants in the case are also prevented from continuing to register domain names that are confusingly similar to Facebook’s. A lawyer working on behalf of Facebook notes that “we are pleased with the court’s recommendation.” In addition, he foresees a continued vigorous defense in support of Facebook’s intellectual property.

Facebook is not the first company to rely on the 1999 Anticybersquatting Act. Other recognizable companies like Microsoft have used the act in the past to protect their online presence and reputation. As commerce continues to rely on the Internet in an ever increasing amount, it seems clear that this law will be put to the test on many occasions in the future.