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National Advertising Division recommends that Shark Tank product discontinue representations

The National Advertising Division (NAD), a voluntary advertising self-regulatory body administered by the Better Business Bureau, just dealt a major blow to the Pavlok Aversion Therapy wristband by recommending that it discontinue numerous unsupported claims as a violation of false advertising laws. Pavlok has said it will accept the recommendations.

Pavlok, a product by the Behavioral Technology Group, first entered the public’s general consciousness after being featured on “Shark Tank” this past May. (It did not get a deal, and involved a rather testy exchange between show stalwarts Kevin O’Leary and Mark Cuban, and the contestant.) In essence, Pavlok …

National Advertising Division confirms: Make sure your testimonials have evidentiary support

Many health and fitness companies know that federal and state laws prohibit unfair or deceptive practices, including false advertising. But many still have the mistaken impression that they can freely post testimonials from their products’ users without running afoul of false advertising laws. After all, the thought goes, the company is merely relaying its customers’ opinions and experiences, not making general statements of a product’s effects.

Although facially plausible, this view is not consistent with false advertising law. By way of background, Section 12 of the Federal Trade Commission Act prohibits “false advertisement” for food, drugs, devices, services, or cosmetics. …

Consumer data breaches

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What happens if your personally identifiable information is stolen, but no harm has come to you…yet? Do the eyes of the court feel that simply the fear of harm warrants relief? Jay and Ryan Graham discuss the differing decisions to date and how things may evolve in the future.…

“Made in USA” class actions target condiments and energy drinks

The Times Square ball was not the only thing that dropped on New Year’s Eve for condiment maker H.J. Heinz and energy-drink maker Rockstar Inc. Both were hit with consumer class actions last Thursday in California Federal Court, alleging that their products are falsely labeled “Made in the USA” in violation of California’s ultra-strict “Made in USA” labeling statute. Named Plaintiff Suzanne Alaei brought both complaints, claiming she was swindled into buying a bottle of Heinz 57 sauce and a can of Rockstar energy drink, which despite being labeled “Made in the USA,” contained foreign-made ingredients— namely, turmeric, tamarind extract, …

Can a class be certified if some members have no injury?

Our colleagues in the class action and product liability practice groups recently posted an article that should be of interest to our readers. The article discusses the court’s conundrum: Can it certify such a broad class even though some of the purchasers likely have no injury? When the Sixth Circuit Court of Appeals says yes and the Ohio Supreme Court says no, the question can be especially difficult for class action practitioners. The article reviews cases from those courts and recaps a recent oral argument before the United States Supreme Court regarding the viability of two “no injury” class actions.…

Nordstrom and jeans designer settle “Made in USA” class action lawsuit

As we reported in December 2014, a wave of class action lawsuits has been pounding some of the nation’s largest retailers thanks to an until-recently obscure California statute that declares it a deceptive practice for a product to be labeled “Made in USA” if even the smallest component of the product is manufactured abroad. One of the larger retailers to be caught in the surf was Nordstrom, who, together with high-end jeans designer Adriano Goldschmied, was hauled into California federal court in 2014 on allegations that it sold jeans labeled “Made in USA” despite the fact that the jeans’ “fabric, …

Health care data breaches – inevitable, but you can minimize the damage

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Data breaches in health care can be the most devastating, both to the consumers whose personally identifiable information was exposed, but also to the institutions that possessed this sensitive data. In this podcast Jay and Christina Hultsch review the various issues surrounding such data breaches, including when to review data security policies, how to prepare for a potential breach and how to deal with third-party vendor access.…

FTC chief administrative law judge: No harm, no foul

In a long awaited decision, the FTC’s chief administrative law judge (ALJ) ruled against FTC staff and held that LabMD did not violate Section 5 of the FTC Act by not reasonably securing customer data. The basis for the decision was that staff could not prove that customers would suffer “substantial injury” from LabMD’s data breach. Because the ALJ decided the case on those grounds, he never reached two critical issues – namely, were LabMD’s data security protections “unreasonable” and does the FTC have jurisdiction to enforce the unfairness prong of Section 5 to reach unreasonable data protection measures. …

Third Circuit’s Wyndham decision – Part two

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So what did the Third Circuit hold in FTC vs. Wyndham and what does the decision really mean? Jay and Ryan continue their discussion of the Third Circuit’s decision and give you some key takeaways on what this means for companies that collect personally identifiable information.…

Third Circuit’s Wyndham decision – Part one

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In part one of this two part series, Jay is joined by Ryan Graham, a colleague at Porter Wright and former FBI analyst, to discuss the Third Circuit’s decision in FTC vs. Wyndham. Ryan and Jay discuss generally the various agencies who have authority over data security and the challenges facing companies who have experienced a data breach. They also outline the issues involved in the Wyndham case.…

Government licensure for the personal training industry – unnecessary, unworkable and unintelligible

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A campaign to require licensure in the personal training industry by the U.S. Registry of Exercise Professionals has left some scratching their heads. Six states have considered licensure laws that, through criminal liability, would forbid providing personal training services without a license. In 2013, Washington, D.C. passed legislation authorizing the D.C. Board of Physical Therapy to enact regulations for licensure of personal trainers, though it now appears that this law will be repealed.…

Let the antitrust battles begin… State licensures of professional services: A look at personal training

With the explosion of personal services industries, many states are seeking to enact new professional licensing and regulation in many industries.

From healthcare to eyebrow threading to personal training, states are considering who can practice and what type of training is necessary.  Porter Wright’s Brodie Butland, B.Sc., Starting Strength coach shares his recent Starting Strength article “Government licensure for personal trainers: A solution in search of a problem.” Tune in for a podcast with Brodie and me later this week for a deeper dive into these murky waters…

For more coverage on this decision, check out these …

FTC Breaks 100-Year Silence and Issues “Statement of Enforcement Principles”

On August 13, the FTC issued its “Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act.” The 1-page policy statement provides a general framework for the Commission’s exercise of its “standalone” Section 5 authority to fight anticompetitive acts or practices. A bit of context might help to understand why this is newsworthy.

In addition to enforcing the traditional antitrust laws, the FTC is empowered by Section 5 of the FTC Act (which was enacted in 1914) to investigate and proceed against those who engage in “unfair methods of competition” and “unfair …

Lawyers: In a class of their own

Ever wonder how many lawyers can fit into one courtroom? Judge Catherine Perry of the U.S. District Court of the Eastern District of Missouri just may find out. On July 14, Judge Perry granted a motion to certify a class made up of lawyers in Downing v. Goldman Phipps PLLC.[1] Although plaintiffs have not made clear exactly how many lawyers will be in the class, they argued in their class certification briefing that there are more than 33 law firms and over 100 lawyers in the potential class.

What started it all, you ask? It is pretty simple: …

Managing post-data breach litigation just got harder

Data breaches are messy stuff, no doubt about that. They consume a huge amount of corporate resources, damage a company’s goodwill and can cost a lot of money. No real news there. And while the technological challenges in preventing, and responding to, data breaches are ever-changing – fueling the booming cybersecurity industry – the corporate response to a data breach is fairly standardized. Basic steps include (not necessarily in this order):

  • Convene response team, including IT, HR, legal and crisis management, among others (you do have a response team, right? If not, let’s talk)
  • Figure out what happened, including whether

Has Amazon.com® become an….. amazon? Part One

Authors take their turn trying to tame the retailing beast

This three part series will discuss the newest antitrust challenges aimed at Amazon.  In Part One, we’ll introduce you to the most recent issues facing the online retailer (and publisher), while in Part Two we will provide a little history on the Amazon/Apple scuffle that cost Apple and various publishers hundreds of millions of dollars.  Finally, in Part Three, we’ll provide a bit more detail on the latest challenges and discuss whether the antitrust laws can affect the publishing elephant in the room.

Amazon.com® (or just plain ole Amazon) …

LegalZoom Kicks Off Antitrust Battle Against State Bar Associations

State bar associations and other licensing boards were left like bleeding seals in shark-infested waters following the United States Supreme Court’s landmark decision this February in North Carolina State Board of Dental Examiners v. Federal Trade Commission, 135 S. Ct. 1101.  The decision held that a state agency controlled by active participants in the market regulated by the agency—a description that fits pretty much every state bar association and other licensing board in areas such as medicine, nursing, cosmetology, etc.—must be “actively supervised” by a politically accountable state official in order to enjoy state-action immunity from federal antitrust laws.  …

Ascertainability is different from other class action elements …seriously, we aren’t joking

A little over a year ago we wrote to discuss the FTC’s Order against Aaron’s, one of the country’s largest rent-to-own (“RTO”) stores, charging that its franchisees were spying on its customers.  Well, the inevitable follow-on class actions were filed and recently, in Byrd v. Aaron’s Inc., — F.3d –, 2015 U.S. App. LEXIS 6190 (3d Cir. Apr. 16, 2015), the Third Circuit clarified the analysis for the ascertainability requirement for class actions.  While perhaps not as salacious a topic as the conduct underlying the actions themselves, the opinion could have important repercussions for antitrust and consumer class …

Supreme Court to states – actively supervise your regulating boards or else

The North Carolina State Board of Dental Examiners can no longer regulate the practice of dentistry without active state supervision—and neither can other state professional boards controlled by active market participants. Last Wednesday, the U.S. Supreme Court concluded in North Carolina State Board of Dental Examiners v. Federal Trade Commission (FTC) that the state action doctrine does not protect the board from the Federal Trade Commission’s challenge to its policy prohibiting non-dentists from offering teeth whitening services.

We previously discussed the background of this case and the state action doctrine here and here. In short, the North Carolina Board …

“Made in the USA” labeling: A trap for the unwary – Part two

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How can retailers and product designers minimize their liability exposure to “Made in the USA” false-labeling claims without sacrificing the valuable label itself? In part two of the “Made in the USA” podcast series, Jay Levine, Jared Klaus and Bob Tannous discuss how mitigating risk from such claims requires a holistic approach, including such strategies as negotiating indemnity agreements and reps and warranties with upstream suppliers and manufacturers, structuring insurance arrangements, conducting internal audits and monitoring for warning signs on social media and court filings.…

“Made in the USA” labeling: A trap for the unwary – Part one

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A slew of recent class actions brought in California are claiming that retailers and product designers acted deceptively by marketing their products as “Made in the USA.” But, as discussed in this podcast, the issue is far from black and white. For instance, can a pair of jeans assembled in the USA from domestically produced denim be labeled “Made in the USA” if the zipper on those jeans was imported from a foreign country? According to the FTC, the answer is yes, but California law says no. Find out how this strict California law is wrecking havoc on the apparel …

Hospital pays six figures to settle data breach enforcement suit

At the end of last month, Boston hospital Beth Israel Deaconess Medical Center (BIDMC) settled a data breach lawsuit brought by the Massachusetts Attorney General related to the 2012 theft of a physician’s laptop. Under a consent decree entered on Nov. 20, 2014, BIDMC agreed to pay $100,000 and to take a number of steps to ensure future compliance with state and federal data security laws.

The state of Massachusetts filed the enforcement suit against BIDMC on the same day as the consent decree’s entry, alleging that an unauthorized person gained access to a BIDMC physician’s unlocked office on campus …

A compliance problem truly “Made in the USA”

Following the expiration of a public comment period last week, the ink is now dry on the Federal Trade Commission’s consent decree against Made in USA Brand, LLC, settling charges that the Columbus, Ohio-based company sold its “Made in USA” certification label to product-sellers without making any attempt to verify whether the companies’ products were actually made in the USA.

The FTC’s case against Made in USA Brand, LLC seems to present a pretty bright line for what not to do when labeling a product as “Made in USA.” According to the FTC, the company’s certification would have been just …

FTC’s focus on ‘patent trolls’ not limited to competition concerns

The FTC sent a message to “patent trolls” earlier this month, though how well that message will resonate remains to be seen. On Nov. 6, the FTC’s Bureau of Consumer Protection concluded its investigation into MPHJ Technology Investments, LLC’s practices involving its so-called “inquiry letters” by agreeing to accept a consent order. The consent order addresses two sets of misrepresentations contained in various letters that MPHJ sent to alleged infringers of MPHJ patents. First, the FTC found that MPHJ misrepresented that they had sold a substantial number of licenses within a certain price range; second, they misrepresented that they intended …

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