Hunton Retail Law Resource

The U.S. Court of Appeals for the Ninth Circuit has continued to clarify when a court can consider the back label of a product in connection with a false advertising claim.  Misleading label information is a common basis for false advertising suits, especially under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. However, in recent decisions, the court has detailed new circumstances in which a label might be saved.

It has been two years since the Supreme Court handed down its opinion in Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (2021), holding that Ford could be subject to personal jurisdiction in Minnesota and Montana because the suit “related to” the company’s contacts with the states, even though there was not a causal relationship between Ford’s contacts with the forum and plaintiffs’ claims. The Court’s ruling clarified its decisions in Bristol-Myers Squibb Co. v. Superior Ct. of California, San Francisco Cnty., 137 S. Ct. 1773, 1780 (2017) and Daimler AG v. Bauman, 134 S. Ct. 746, 749 (2014), which held that for state courts to exercise specific jurisdiction, the suit must “arise out of or relate to the defendant’s contacts with the forum.” As Justice Kagan explained, “[t]he first half of that standard asks about causation; but the back half, after the ‘or,' contemplates that some relationships will support jurisdiction without a causal showing.” Ford at 1026. Because claimants alleged a defective Ford vehicle caused the crashes and harm at issue, and “Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States,” there was a strong “relationship among the defendant, the forum, and the litigation” such that Ford could be subject to personal jurisdiction in those states. Id. at 1028.

This past week, several consumer actions made headlines that affect the retail industry.

Federal Court OKs Large Warning Requirement for Cigar Products

A federal court has upheld forthcoming health warning requirements that will take up 30 percent of the principal panels of cigar product packages and 20 percent of cigar product advertisements. The court found that the textual warnings were “unambiguous and unlikely to be misinterpreted by consumers,” and that the cigar sellers retained sufficient space on their packaging and advertisements “in which to effectively communicate their desired message.” It also concluded that, under the Zauderer standard for commercial speech, the size, format and other design features of the warning statements were reasonably related to the government’s substantial interest in “providing accurate information about, and curing misperceptions regarding, the health consequences of cigar use.” The case is captioned Cigar Assoc. of Am. et al. v. FDA et al. No. 1:16-cv-1460 (D.D.C.).

As reported on Hunton's Employment & Labor Perspectives blog, the U.S. Supreme Court has voted to hear an appeal of the Ninth Circuit’s decision in Varela v. Lamps Plus, Inc. The Supreme Court is expected to decide whether workers can pursue their claims through class-wide arbitration when the underlying arbitration agreement is silent on the issue. The case could have wide-reaching consequences for employers who use arbitration agreements.

As reported on the Hunton Privacy & Information Security Law Blog, on March 8, 2018, the Ninth Circuit Court of Appeals (“Ninth Circuit”) reversed a decision from the United States District Court for the District of Nevada. The trial court found that one subclass of plaintiffs in In re Zappos.Com, Inc. Customer Data Security Breach Litigation had not sufficiently alleged injury in fact to establish Article III standing. The opinion focused on consumers who did not allege that any fraudulent charges had been made using their identities, despite hackers accessing their names, account numbers, passwords, email addresses, billing and shipping addresses, telephone numbers, and credit and debit card information in a 2012 data breach. 

This past week, several consumer actions made headlines that affect the retail industry.

FTC v. AT&T Mobility: “Good News for Consumers” Per FTC Chairman

The Ninth Circuit Court of Appeals rules en banc in FTC v. AT&T Mobility, LLC, that the FTC could challenge AT&T’s broadband data throttling practices, despite the fact that AT&T is a “common carrier” subject to exemption under the FTC Act. The court ruled that the common carrier exemption was activity-based rather than status-based. Therefore, the FTC may challenge a carrier’s non-carriage unfair or deceptive acts or practices. Simply put, “a phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology means that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more.” Acting FTC Chairman Maureen K. Ohlhausen issued a statement praising the Ninth Circuit’s decision as “good news for consumers.”

Two recent decisions out of California—one in state court and one in federal—provide defendants new ammunition for defeating class certification. The Ninth Circuit’s decision in In re Hyundai & Kia Fuel Economy Litigation and the Fourth District Court of Appeal’s decision in Apple Inc. v. Superior Court have important implications for California retailers opposing class certification. But Hyundai also poses challenges to retailers looking to settle class claims on a nationwide basis.

On January 3, 2018, in Italian Colors Restaurant v. Becerra, the Ninth Circuit found unconstitutional a California law barring retailers from imposing surcharges on customers using credit cards. The ruling has important implications for retailers operating in California and potentially for retailers operating in several other states with similar bans on credit card surcharges.

The Ninth Circuit will decide whether Great Lakes Reinsurance must defend clothing company, In and Out, against a trademark infringement suit by Forever 21. The dispute focuses on exclusionary language in the general liability policy issued by Great Lakes to In and Out, which broadly bars coverage for claims stemming from violations of intellectual property rights, but which also excepts from the exclusion claims for copyright, trade dress and slogan infringement occurring in the company's advertisements. The appeal concerns last year’s ruling by a California federal judge that Great Lakes owed a defense because the underlying complaint raised a potential that In and Out’s advertising infringed Forever 21’s trade dress.

A year ago, the United States Supreme Court held in Spokeo, Inc. v. Robins that a plaintiff must do more than plead a mere statutory procedural violation to establish standing; to plead an injury in fact, a plaintiff also must allege a harm that is both “concrete” and “particularized.” Two recent decisions by the U.S. Court of Appeals for the Eleventh Circuit—one involving a rare written dissent from the denial of a petition for rehearing en banc—demonstrate the continuing difficulties courts are facing in determining what constitutes a concrete injury under Spokeo. They suggest that the Eleventh Circuit is most likely to find standing for violations of statutes that are intended to protect personal privacy or create a right to information, although judges do not always agree as to which statutes fall within these categories.

On April 18, 2017, the state of Washington passed House Bill 1493 (“HB 1493”), which sets forth requirements for businesses who collect and use biometric identifiers for commercial purposes. Under HB 1493, a biometric identifier includes a fingerprint, voiceprint, retina, iris or other unique biological pattern or characteristic used to identify a specific individual. Commercial use includes “a purpose in furtherance of the sale or disclosure to a third party for the purpose of marketing of goods or services when such goods or services are unrelated to the initial transaction in which a person first gains possession of an individual’s biometric identifier.” This bill comes after several other states have passed similar legislation regulating the commercial use of biometric identifiers, including the Illinois Biometric Information Privacy Act (740 ILCS 14) (“BIPA”) and the Texas Statute on the Capture or Use of Biometric Identifier (Tex. Bus. & Com. Code Ann. §503.001). 

As reported on the Hunton Employment & Labor Law Perspectives blog, the United States Supreme Court has granted consolidated review of three cases to determine whether arbitration agreements that waive employees’ rights to participate in a class action lawsuit against their employer are unlawful. The Court’s decision to address the uncertainty surrounding class action waivers of employment claims follows a circuit split last year in which the Fifth and Eighth circuits upheld such waivers and the Seventh and Ninth circuits found that such waivers violate the National Labor Relations Act (“NLRA”). Given the increasingly widespread use of class action waivers by employers to stem costly class and collective actions, the high court’s ruling is likely to have a significant nationwide impact.

On January 3, 2017, a Ninth Circuit panel (the “panel”) weighed in on a growing split among circuits over Rule 23’s ascertainability requirement—in particular, the extent to which a plaintiff must prove there is an “administratively feasible” means of identifying class members.

The first blow to the recent expansive application of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) was struck by a federal court in California last month. In Candelario v. Rip Curl, Inc., the Central District of California granted a motion to dismiss a complaint alleging a TCCWNA violation of website terms and conditions because the plaintiff lacked Article III standing. The plaintiff has appealed the decision to the Ninth Circuit.

This past week, several consumer, self-regulatory and regulatory actions made headlines:

Full Throttle: Ninth Circuit Dismisses FTC Data Suit Against AT&T

On August 29, 2016, the Ninth Circuit dismissed a suit brought by the FTC against AT&T Mobility LLC, ruling that the telecommunications company is exempt as a “common carrier” from enforcement under the FTC Act. The FTC claimed that AT&T had not properly informed customers with grandfathered unlimited data plans that their internet speed would be reduced after using a certain amount of data in a billing cycle. While the district court denied AT&T’s motion to dismiss, the Ninth Circuit reversed that ruling, finding that, based on the language and structure of the FTC Act, the common carrier exception was a status-based, not activity-based, exemption and that AT&T, as a common carrier, was not covered by Section 5.

This past week, several consumer protection and regulatory actions made headlines:

Class Plaintiffs Just Keep Swimming Against Safeway in Underfilled Tuna Case

On July 13, 2016, Safeway escaped negligent misrepresentation claims in a putative class action consumer suit alleging that Safeway violated federal guidelines when it chronically underfilled two of its private label canned tuna products. Safeway filed a limited motion to dismiss the class plaintiffs’ unjust enrichment and negligent misrepresentation claims. The court found that, though duplicative, unjust enrichment was properly plead, but the negligent misrepresentation claim failed because class plaintiffs could not show that they suffered any loss other than an economic loss. Unfortunately for the grocer, eight other claims in the suit survived, including various breaches of warranty, unjust enrichment and California unfair competition counts. 

This past week, several consumer protection and regulatory actions made headlines:

Technology

Volkswagen to Pay an Additional $86 Million to California

On July 6, California Attorney General Kamala Harris announced that Volkswagen (“VW”) will pay the state an additional $86 million in a second partial settlement over VW’s emissions “defeat devices.” This civil penalty sum is the largest amount ever recovered by California from an automaker, and comes on the heels of the recently announced $14.7 billion settlement negotiated by the EPA and the FTC over the German automaker’s emissions-cheating scandal. The $86 million is part of a total $603 million VW has agreed to pay to resolve consumer-protection claims with 46 jurisdictions. As part of the settlement, VW agreed to strict injunctive terms, including prohibitions on false advertising and affirmative disclosure of defeat devices.

This past week, several consumer protection and regulatory actions made headlines:

Once You Pop, the Suit Can’t Stop: 7-Eleven Chip Labeling Suit Begins Again

On June 7, 2016, the Ninth Circuit reversed the district court’s dismissal of a proposed class action alleging that plaintiffs were misled by 7-Eleven’s potato chip bags, claiming they had no trans-fat or cholesterol. The lead plaintiff in the case claimed that he relied on the front-of-package labeling and would not have purchased the chips had the front also included the FDA-mandated, “See nutrition information for fat content,” disclosure. Importantly, the Ninth Circuit’s holding clarified that California’s consumer protection statute makes misleading statements actionable, even if they are not “technically false.” Plaintiffs allege that 7-Eleven’s attempts to gain a market advantage by a half-truth claim misled customers nationwide.