State Unfair Competition Laws

“…Clowns to the right of me, jokers to the left, here I am…”

-Stealers Wheel (1972)


Legal actions regarding “Made in the USA” claims, whether prosecuted by the Federal Trade Commission (FTC) or through various state unfair trade practices acts, often settle early in the proceedings.  For example, in 2014, the FTC issued 16 “closing letters” wherein the target company agreed to revise its “Made in the USA”  claim to clarify that its products, even those assembled in the United States, included imported components. In 2015, the FTC issued 28 such “closing letters”; and in 2016, to date, the FTC has issued 18.

Earlier this month, Chemence, Inc., the Ohio maker of Kwikfix, Hammer-Tite and Flash Glue, entered into a settlement with the FTC.  Chemence was the third glue company that has resolved its claims issues with the FTC since 2015.   Toagosei America, Inc., makers of the Crazy Glue brand, and Gorilla Glue both previously reached agreement with the FTC, with FTC issuing closing letters after both companies agreed to make clear that their products included some imported materials.

Chemence’s path to resolution with the FTC was different.  Continue Reading Stuck in the Middle with the FTC

Barber v NestleWe recently blogged about a new wave of class action litigation related to California’s Transparency in Supply Chains Act.  In December, Nestlé USA won the dismissal of a complaint against it alleging that the company was “obligated to inform consumers that some proportion of its cat food products may include seafood which was sourced from forced labor.”  See Barber v. Nestle USAThe question was whether Nestlé had a duty to disclose on its packaging the possibility that some of its suppliers or suppliers’ suppliers used illegal labor practices, particularly when it is virtually impossible to trace such practices directly to their food products.  The Central District of California found that the law recognizes a “safe harbor” and that Nestlé complied with the law by providing a limited disclosure to its customers regarding the company’s efforts to ensure compliance with labor laws on its website.

It turns out that fish used in cat food is not the only product that may include sourcing from forced labor.  Suppliers of cocoa used to make chocolate may be using forced labor and child labor in cocoa fields.  Continue Reading Another California Dismissal of Proposed Class Action Regarding Disclosure of Forced Labor in the Supply Chain

Our colleagues Michael Arnold and Gauri Punjabi recently discussed the U.S. Supreme Court’s rejection of the Federal Rule 68 “pick off” strategy on Mintz Levin’s Employment Matters Blog.  We previously blogged about this crafty strategy employed by class-action defense counsel back in November 2014.  Following the recent Campbell-Ewald Co. v. Gomez decision, defense counsel may no longer argue that a rejected Rule 68 offer that fully satisfies a named plaintiff’s claims is sufficient by itself to moot an action.  Under basic principles of contract law, the Court ruled, an offer of judgment once rejected has no force and parties retain the same stake in litigation as at the outset.  However, this decision does not necessarily foreclose defendants from “picking off” named plaintiffs by making an actual payment for the full amount of the claim.  To read more about the defeat of the Rule 68 “pick off” strategy and the actual payment option, click here.

 

 

The first round goes to the industry: on December 9, 2015, the Central District of California dismissed the complaint in Barber v. Nestle USA, a key bellwether case in a new wave of class action litigation related to California’s Transparency in Supply Chains Act. The Barber plaintiffs’ theory was that Nestle had violated California’s panoply of consumer protection statutes by failing to disclose that “some proportion of its cat food products may include seafood [that] was sourced from forced labor.”

Judge Cormac McCarthy disagreed, finding instead that Nestle’s disclosures under the Supply Chains Act were protected under California’s “safe harbor” doctrine. And as the details of the decision make clear, this is no one-off victory: the court’s reasoning sets the blueprint for companies defending against similar suits going forward.

Continue Reading Knockout in Round One: Court Dismisses California Supply Chains Act Class Action

Made in the USA Labeling RequirementsA courtroom battle concerning a manufacturer’s alleged false marketing of allegedly foreign-produced products as “Made in USA” is potentially nearing a resolution.  On November 30, 2015, the lead plaintiff in Paz v. AG Adriano Goldschmied, Inc. et al. asked the court for preliminary approval of a $4 million settlement between class members and defendants Nordstrom, Inc. and AG Adriano Goldschmied Inc. (“AGAG”).  The lawsuit accuses defendants of falsely marketing jeans—manufactured by AG and sold by Nordstrom—as entirely made in America when they allegedly contained foreign components (such as the jeans’ fabric, thread, buttons, and rivets).  Bringing claims under California’s consumer protection laws, plaintiff’s class action complaint alleges that consumers’ belief that domestically-made products are of higher quality than foreign-made products allows defendants to charge a premium for clothes labeled “Made in USA.” Continue Reading Settlement Looms for “Made in USA” Jeans Suit

Passed in 2010, the California Transparency in Supply Chains Act has a worthy aim: requiring retailers and manufacturers doing big business in California to disclose what measures, if any, they are taking to ensure their suppliers comply with human rights standards. What started as a legislative effort to educate consumers and incentivize good corporate citizenship, however, is quickly becoming a vehicle for private class actions against companies making this information available–even though the Act itself nowhere authorizes private lawsuits seeking damages. For consumer product companies, this is an important trend that could mark the next wave of class action litigation in California.

So what exactly does the Act require? And what litigation risks does this law now pose for companies doing business in California?

Continue Reading When Transparency Is Not Enough: Class Action Litigation Under California’s Transparency in Supply Chains Act

Made in the USA LabelingCalifornia, the beacon of individualism and often marching to its own set of rules, has joined the rest of the country as Gov. Jerry Brown has signed SB 633 which revises California’s take on what constitutes “Made in USA”.

Up until this week, existing California law prohibited the sale or offering for sale in the state of any merchandise in which the words, “Made in U.S.A.,” “Made in America,” “U.S.A.,” or similar words appeared on the label when the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.  (Read our previous post on the California, the FTC and Made in the USA Claims here.) An epidemic of consumer class actions had been launched in the past several years claiming that this law was violated by California manufacturers and retailers even though the products met Federal and other state requirements for the proper use of “Made in USA labeling. Continue Reading California Joins rest of Country in “Made in USA” Rules

Apple iPad Shows 16GB of Storage, but not all is available to the user.In our continuing efforts to highlight litigation trends that affect consumer product companies, we often focus on class actions brought in California and, especially, its federal Northern District. The Northern District of California has come to be nicknamed the “Food Court,” and with good reason: the district is a high-traffic forum for class actions targeting the labeling and advertising of a range of consumer goods, but especially food and beverage products. In one recent suit in the Food Court, however, plaintiffs have taken a page from the food-and-beverage class action playbook to target a very different kind of product from a different kind of company–albeit one with a food-related name itself.

The lawsuit, filed last Tuesday as Orshan v. Apple Inc., alleges that the consumer electronics giant has illegally deceived consumers by misrepresenting the storage capacity of its 8 GB and 16GB iPhones, iPads, and iPods. Citing the usual array of California consumer protection statutes, the Orshan complaint claims that Apple falsely advertises these products as offering a specific amount of memory when, in reality, they have anywhere from 18.1% to 23.1% less usable storage space than advertised. 

More details on the allegations against Apple, as well as the plaintiffs’ Food Court-inspired theory, below.

Continue Reading Jobs-ed: New Class Action Pulls Apple into California’s “Food Court”

The Pick Off DefenseIn recent years, we’ve noticed a new maneuver that class-action defense counsel have increasingly added to their playbooks: The Pick Off.  This is how the play is run: Offer the named plaintiff(s) full relief through a Rule 68 offer of judgment and, even if the plaintiff(s) reject the offer, argue that the fact that they were offered full relief nevertheless moots the case and requires dismissal.

For reference, Rule 68 of the Federal Rules of Civil Procedure allows a defendant to “serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.”  If the plaintiff rejects the defendant’s Rule 68 offer of judgment and the judgment ultimately obtained by plaintiff “is not more favorable than the unaccepted offer,” then the plaintiff is liable for any costs the defendant incurred after the offer was made.

Continue Reading Class Action Defense Counsel adding ‘The Pick Off’ to Their Playbooks

California’s District Courts have, of late, become the go-to jurisdictions for plaintiffs bringing ‘natural’ labeling lawsuits against national food manufacturers.  This is due, in large part, to California’s consumer-friendly Unfair Competition Law, False Advertising Law, and Consumer’s Legal Remedies Act.  California District Courts may be sending a different message though.

‘All Natural’ suits try to take advantage of the FDA’s and the FTC’s unwillingness to broadly define the term ‘natural.’   In one such suit, plaintiffs in the Central District of California claimed that ‘All Natural’ on the rear panel of some of Nestle’s Buitoni pasta products is reasonably likely to deceive the public.   Plaintiff asserted that the ‘all natural’ label is false and misleading because the products contain unnatural, artificial, or synthetic ingredients including xanthan gum or soy lecithin.

At the core of California false and misleading labeling claims is whether or not a reasonable consumer would be deceived or misled by the label.  While this question is typically not resolved on a motion to dismiss, dismissal is appropriate where a court can conclude as a matter of law that consumers are not likely to be deceived.  Two such examples held that reasonable consumers would not be misled to believe that Cap’n Crunch’s Crunch Berries are real berries, or that Froot Loop cereal contains real fruit.

Continue Reading Are California Courts Cooling on ‘All Natural’ Suits?: Naturally Beyond Belief