Advertising Law Blog

This is the second ruling of this type in two months

A concept that we explored in a recent article – the reduction of massive class-action awards based on fairness concerns – appears to be picking up judicial steam. In August 2022, a Northern District of California court reduced statutory damages in a consumer class action from the $91.4 million to just $8.3 million plus pre-judgment interest. That case is Montera v. Premier Nutrition Corp. The basis for lowering damages in the face of the requirements of the New York statute at issue was a 1919 Supreme Court ruling which authorized courts to set aside judgments based on statutory penalties that are “wholly disproportionate to the offense and obviously unreasonable.”

* Rachel Gold is a law clerk in the Corporate/Securities Law practice group.

Following up on its action against other celebrities who have promoted crypto investments without disclosing their compensation interest, the Securities and Exchange Commissions (“SEC”) announced “unlawful touting” charges and Order against reality star Kim Kardashian for promoting a cryptocurrency on social media without acknowledging that she was being compensated for the post. This enforcement action is a reminder that it is not just the Federal Trade Commission (“FTC”) who is enforcing compensation disclosures on social media.

Dual-purpose phones can qualify as “residential” numbers to support a TCPA action

The Telephone Consumer Protection Act (“TCPA”) and its regulations prohibit calls and text messages to residential telephone subscribers who have registered their phone numbers on the national do-not-call list maintained by the federal government. While business lines are not eligible to be registered on the national do-not-call list, in practice there is nothing that bars such registration. As a result, TCPA litigation sometimes requires a determination as to whether a phone line is used for residential or business purposes. This issue arises more frequently in the current gig-economy era, because many cell phone owners use their devices for both personal and business purposes.

* Taylor Lodise is a law clerk in the Litigation practice group.

In one of several related class-action lawsuits against the maker of a drink marketed under the brand name Joint Juice, Chief Judge Richard Seeborg of the United States District Court, Northern District of California, applied case law from 103 years ago to reduce statutory damages in a consumer class action from the $91.4 million seemingly required by a New York statute to just $8.3 million plus pre-judgment interest of $4.5 million. The August ruling was based on Fourteenth Amendment due process protections as interpreted by the Supreme Court in the 1919 case St. Louis, Iron Mountain & Southern Railway Co. v. Williams (“St. Louis”).

* Rachel Gold is a law clerk in the Corporate/Securities Law practice group.

Panera Bread Company (“Panera”) is facing a class action lawsuit that alleges its Unlimited Sip Club (“Club”) is in fact not so unlimited. According to Panera’s own promotional materials, the Club is a refill program where members pay $10.99 per month for access to lemonade, soda, coffee, and tea drinks of “any size” at “any time.”

The Federal Trade Commission (“FTC”), along with six states, filed a lawsuit against housing rental listing platform, Roomster Corp. (“Roomster”), its co-founders, John Shriber and Roman Zaks, and the principal of a related app that provided allegedly fake reviews, Jonathan Martinez. The lawsuit, filed in the Southern District of New York, alleges that the defendants used fake reviews to entice consumers to join and pay for access to its platform. The lawsuit is a reminder that federal and state regulators are increasingly focused on the legitimacy of consumer reviews, particularly given their impact on purchasing decisions.  

Sweepstakes entrants’ lack of knowledge of free method of entry insufficient to constitute violation of California Penal Code.

A Northern District of California case styled Suski v. Marden-Kane, Inc. (decided August 31, 2022) has resulted in a significant ruling in the field of sweepstakes law. A sweepstakes sponsored by Coinbase, a popular cryptocurrency exchange, and administered by Marden-Kane offered the chance to win valuable prizes to Coinbase users who bought or sold Dogecoin, a well-known “meme” token, on Coinbase for a total of $100 or more. The sweepstakes offered an alternative method of entry that did not require the trading of Dogecoin or incurrence by the entrants of any other expense. However, this free alternative method of entry was not well-publicized.

The Federal Trade Commission (“FTC”) is set to issue updates to both its Endorsement Guides and .com Disclosure Guidance. The proposed updates to both guidance documents signifies the FTC’s ongoing attention to online and social media advertising, as the regulator takes steps to bring its guidance into focus with contemporary advertising issues.

Title III of the Americans with Disabilities Act (the “ADA”), 42 U.S.C. §§ 12181, et seq., prohibits discrimination against individuals “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation." Among other things, ADA Title III requires places of public accommodation and other commercial facilities—restaurants, movie theaters, hotels, and other businesses—to be designed, constructed, and altered in a manner that permits broad accessibility to persons with disabilities, and provides individuals with a private right of action for discrimination in violation of its regulations. Remedies for discrimination in violation of ADA Title III include injunctive relief compelling compliance with ADA accessibility standards, as well as reasonable attorney’s fees awarded to a successful plaintiff.

Juice Joint facing catastrophic liability after jury decides against it on the merits

Faced with a series of class-action lawsuits over its Joint Juice drink, Premier Nutrition Corp. has lost the first jury trial and is now fighting back against what could be a devastating financial blow if it loses a post-trial motion scheduled to be heard next month in the Northern District of California. The company was found by a jury to have falsely touted the health benefits of the drink, so the issue is no longer whether the claims were defensible, but how much the marketer will have to pay to the class of purchasers.