Morrison Foerster’s Class Dismissed blog provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class actions lawsuits and product liability issues that affect consumer-facing companies. Through Class Dismissed, attorneys from our nationally recognized Consumer Class Action and Products Liability practices offer a real-time assessment of the developments in matters that are shaping the industry. This blog examines the full spectrum of consumer-related class action and product liability lawsuits ranging from false advertising, privacy, consumer product safety, ADA, food misbranding, TCPA, environment, retail, and government actions as well as nationwide and multidistrict litigation class actions.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Partner

Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Adam Hunt

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office.Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.Alexandra has significant trial experience. She has first-chaired a one-week jury trial and second-chaired a five‑week jury trial, both involving multiple claims and witnesses. She also has extensive experience in alternative dispute resolution, representing clients at mediations, mandatory settlement conferences, and early neutral evaluations.Alexandra enjoys tracking developments and keeping her clients updated on product liability and personal injury claims, frequently writing or presenting on emerging areas such as autonomous vehicles and smart devices. Alexandra’s experience also extends to professional liability, warranty claims, eminent domain, and construction law.Alexandra earned her J.D. from the University of San Diego School of Law. While in law school, the San Diego Law Review published her comment on the recovery of damages by plaintiffs in a persistent vegetative state, and she also served as a comment editor. She received her B.A. from the University of California, Los Angeles, where she majored in Political Science and minored in Spanish. A San Diego native, she attended a Spanish immersion school through the eighth grade. Alexandra is active in the San Diego community, advising students at a local college. She is also a member of several legal organizations in San Diego, including Lawyer’s Club, the Association of Business Trial Lawyers, and Wallace Inn of Court.

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Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra’s litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, automobiles, AI, and robotics. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow

<div class="videoWrapper"><iframe frameborder="0" class="sticky-video" allowfullscreen="1" title="Meet Penny Preovolos, Litigation Partner" src="https://www.youtube-nocookie.com/embed/hv7hYn-Bl7c?rel=0&showinfo=0;vq=hd1080" title="iframe"></iframe></div>Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products. According to Chambers USA, Penelope has a “great reputation for antitrust and product liability work” and is a “superb all-around antitrust lawyer.”Penelope was named the 2019 Antitrust Lawyer of the Year by the Antitrust, UCL, and Privacy Section of the California Lawyers Association. She was co-chair of MoFo’s antitrust practice for 14 years. She has served as chair of the Antitrust and Trade Regulation Section of the State Bar of California and as a member of the Ninth Circuit Advisory Committee on Local Rules and Operations. She is an editor of and frequent contributor to Morrison & Foerster’s <a href="https://classdismissed.mofo.com/">Class Dismissed blog</a>, as well as a frequent speaker about class action and antitrust issues.More About PenelopePenelope clerked for the Honorable Charles M. Merrill, United States Court of Appeals for the Ninth Circuit. She graduated cum laude from Harvard Law School, where she was executive editor of the Harvard Civil Rights – Civil Liberties Law Review. Penelope was a member of Phi Beta Kappa at the University of California, Berkeley. She was awarded the University Medal, the highest undergraduate honor at the university, as well as the English Departmental Citation (awarded to the outstanding graduate in that department).

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Senior Counsel

Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products.

Penelope A. Preovolos

Zak is an associate in the Litigation Department in Morrison Foerster’s New York office.Zak’s practice focuses on class actions, commercial litigation, white collar defense, government investigations, and antitrust litigation and counseling. He has represented clients before federal and state courts in complex commercial matters, as well as in arbitration tribunals.Zak received his J.D. from New York University School of Law in 2018, where he was inducted into the Order of the Barristers. During law school, Zak also served as the Marden executive editor for the NYU Law Moot Court Board. In 2013, Zak received his B.A. and M.A. in political science from Yale University, receiving honors in his major and the Ellsworth Prize for Best Senior Essay in the Social Sciences.

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Associate

Zak Newman

Mitchell A. Hokanson is an associate in the Litigation Department of Morrison Foerster’s San Diego office.Mitchell’s practice focuses on commercial litigation and consumer class actions. He has extensive experience with civil litigation, including managing day-to-day strategy, propounding and responding to discovery, taking and defending depositions, and engaging in motion practice. He also has experience providing regulatory advice to clients, including pro bono partners and multinational corporations. Mitchell maintains an active pro bono practice.After law school, Mitchell worked as a judicial clerk for Justice Susan M. Carney of the Alaska Supreme Court, where he drafted bench memoranda and opinions on a wide range of state and federal law topics. Prior to joining MoFo, Mitchell worked for another international law firm, where he was a member of the Complex Civil Litigation practice group, in Los Angeles, California.Mitchell received his J.D. from Columbia Law School, where he was honored as a James Kent Scholar and Harlan Fiske Stone Scholar. While in law school he was the senior executive editor of the Columbia Journal of Environmental Law and worked as a judicial intern for Judge Sandra S. Ikuta of the United States Court of Appeals for the Ninth Circuit and Judge George B. Daniels of the United States District Court, Southern District of New York. Prior to that, Mitchell earned his B.A. from Stanford University.

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Mitchell Hokanson

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Software Gains New Status as a Product Under Strict Liability Law

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Republican Ann Marie Buerkle was named Acting Chairman of the Consumer Product Safety Commission (CPSC) on February 9, 2017, replacing former Chairman and Democrat Elliott Kaye. This transition has many wondering whether the trend of increased CPSC enforcement, and its pledge to issue increased civil penalties, will continue under Buerkle’s leadership.CPSC Enforcement Under Former Chairman KayeAs we have <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltba3468f449d4f4e8/62731590a1a1dd2aa9f6c986/150303cpscpenaltiestoincrease.pdf" target="_blank">previously reported</a>, over the last few years CPSC has stepped up its enforcement actions against retailers, distributors, and manufacturers for unsafe products and associated reporting violations. Under former Chairman Kaye’s leadership, the agency also pledged to, and did, increase the monetary amount of civil penalties issued against companies for failure to report potentially hazardous products.CPSC’s increased focus on fines is backstopped by the Consumer Product Safety Improvement Act of 2008, which increased the maximum penalties from $8,000 to $100,000 per occurrence for failure to report a product safety hazard, and increased the maximum penalty amounts for a related series of violations from $1.8 million to $15 million. Recently, CPSC has used its authority to impose higher penalties on manufacturers, distributors, and retailers to reach settlements with significant price tags for settling companies.<a href="#_ftn1" name="_ftnref1">[1]</a> In 2016, the average reported CPSC penalty was over $6 million, more than double the average in 2015.<a href="#_ftn2" name="_ftnref2">[2]</a> Under Kaye, CPSC escalated its enforcement efforts by filing litigation against companies for failing to report product safety hazards.<a href="#_ftn3" name="_ftnref3">[3]</a> Former Chairman Kaye spoke out often about using increased civil penalties and frequently released press statements to highlight fines, enforcement actions, and recalls. Kaye viewed higher civil penalties as a “real deterrent” aimed at forcing manufacturers, retailers and distributors into reporting potential product safety issues early.<a href="#_ftn4" name="_ftnref4">[4]</a>Outlook: Will The Trend Of Increased Enforcement Continue?Acting Chairman Buerkle is a former New York Congresswoman who was nominated to serve as a CPSC commissioner by President Barack Obama in 2013. Buerkle’s ascension to acting chairman has many wondering whether the trend of increased enforcement will continue, particularly in light of the fact that Buerkle has been a vocal critic of the trend of seeking increased penalties. Under Kaye’s leadership, Buerkle was “deeply troubled by recent pronouncements that the Commission will seek higher civil penalties.”<a href="#_ftn5" name="_ftnref5">[5]</a>As acting chairman, Buerkle has instead emphasized a collaborative approach that brings all stakeholders together to forge new solutions that work for all. Buerkle has <a href="https://www.cpsc.gov/Newsroom/News-Releases/2017/Ann-Marie-Buerkle-Elevated-To-Serve-As-Acting-Chairman%20of-US-Consumer-Product-Safety-Commission" target="_blank">stated</a> that she is committed to working “to enhance relationships so that CPSC can leverage the knowledge, insight, and expertise of the entire consumer product safety community.” At the same time, she has <a href="https://www.cpsc.gov/Newsroom/News-Releases/2017/Ann-Marie-Buerkle-Elevated-To-Serve-As-Acting-Chairman of-US-Consumer-Product-Safety-Commission" target="_blank">emphasized</a> that “[w]hile we are experiencing a change in leadership, CPSC’s mission remains the same and I look forward to continuing to work closely with all stakeholders in my new position.” Although Buerkle’s position as acting chairman may not be set in stone, the partisan balance of CPSC will very likely shift towards Republicans this year. Three Democrat and two Republican commissioners currently head CPSC.<a href="#_ftn6" name="_ftnref6">[6]</a>  Democrat commissioners Kaye, Robert Adler,<a href="#_ftn7" name="_ftnref7">[7]</a> and Marietta Robinson<a href="#_ftn8" name="_ftnref8">[8]</a> have all been outspoken in their support of the trend of increased penalties. The term of Democrat Commissioner <a href="https://cpsc.gov/About-CPSC/Commissioners/Marietta-Robinson" target="_blank">Marietta Robinson</a>, however, expires in October 2017. At that time, President Trump will have the opportunity to appoint a new commissioner that aligns with his vision of the agency. Given this shift under the new administration, CPSC will almost certainly back away from the rhetoric of severe penalties and enforcement that prevailed under Chairman Kaye’s leadership. We will continue to monitor CPSC’s enforcement approach as it unfolds in the coming months.<a href="#_ftnref1" name="_ftn1">[1]</a>“CPSC Penalties to Increase Beyond ‘Cost of Doing Business,’” Morrison & Foerster LLP Client Alert, Mar. 3, 2015, available at <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltba3468f449d4f4e8/62731590a1a1dd2aa9f6c986/150303cpscpenaltiestoincrease.pdf" target="_blank">https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltba3468f449d4f4e8/62731590a1a1dd2aa9f6c986/150303cpscpenaltiestoincrease.pdf</a>.<a href="#_ftnref2" name="_ftn2">[2]</a> See Civil and Criminal Penalties Database, Consumer Product Safety Commission, available at <a href="https://www.cpsc.gov/Business--Manufacturing/Civil-and-Criminal-Penalties" target="_blank">https://www.cpsc.gov/Business–Manufacturing/Civil-and-Criminal-Penalties</a>.<a href="#_ftnref3" name="_ftn3">[3]</a> “Recall, Enforce, Repeat! CPSCP and DOJ Team Up for Another Enforcement Action,” Morrison & Foerster LLP Class Dismissed Blog, June 22, 2015, available at <a href="http://classdismissed.mofo.com/consumer-products/recall-enforce-repeat-cpsc-and-doj-team-up-for-another-enforcement-action/">http://classdismissed.mofo.com/consumer-products/recall-enforce-repeat-cpsc-and-doj-team-up-for-another-enforcement-action/</a>.<a href="#_ftnref4" name="_ftn4">[4]</a> See, e.g., “Joint Statement of Chairman Elliot F. Kaye and Commissioner Robert S. Adler on Civil Penalties,” Consumer Product Safety Commission Statements, July 20, 2016, available at <a href="https://www.cpsc.gov/about-cpsc/chairman/elliot-f-kaye/statements/joint-statement-of-chairman-elliot-f-kaye-and" target="_blank">https://www.cpsc.gov/about-cpsc/chairman/elliot-f-kaye/statements/joint-statement-of-chairman-elliot-f-kaye-and</a>.<a href="#_ftnref5" name="_ftn5">[5]</a> “Overseeing the Consumer Product Safety Commission”: Testimony Before the S. Comm. on Commerce, Science, and Transportation and Subcomm. on Consumer Protection, Product Safety, Insurance, and Data Security, (June 17, 2015) (testimony of Ann Marie Beurkle, Consumer Product Safety Commission), available at <a href="https://www.cpsc.gov/s3fs-public/Buerkle-Senate-Testimony.pdf" target="_blank">https://www.cpsc.gov/s3fs-public/Buerkle-Senate-Testimony.pdf</a>.<a href="#_ftnref6" name="_ftn6">[6]</a> See “Commissioner Biographies,” Consumer Product Safety Commission, available at <a href="https://cpsc.gov/About-CPSC/Commissioners" target="_blank">https://cpsc.gov/About-CPSC/Commissioners</a>.<a href="#_ftnref7" name="_ftn7">[7]</a> See, e.g., “Joint Statement of Chairman Elliot F. Kaye and Commissioner Robert S. Adler on Civil Penalties,” Consumer Product Safety Commission Statements, July 20, 2016, available at <a href="https://www.cpsc.gov/about-cpsc/chairman/elliot-f-kaye/statements/joint-statement-of-chairman-elliot-f-kaye-and" target="_blank">https://www.cpsc.gov/about-cpsc/chairman/elliot-f-kaye/statements/joint-statement-of-chairman-elliot-f-kaye-and</a>.<a href="#_ftnref8" name="_ftn8">[8]</a> See, e.g., “Statement of Commissioner Marietta S. Robinson on the Appropriateness of Civil Monetary Penalties Generally and The Recent Settlements with Teavana Corporation and Jarden Consumer Solutions,” Consumer Product Safety Commission Statements, June 10, 2016, available at <a href="https://www.cpsc.gov/about-cpsc/commissioner/marietta-s-robinson/statements/statement-of-commissioner-marietta-s-robinson" target="_blank">https://www.cpsc.gov/about-cpsc/commissioner/marietta-s-robinson/statements/statement-of-commissioner-marietta-s-robinson</a>.

Fertility Center Litigation

Fitbit

MicroPort

Leading Healthcare, Pharmaceutical, and Medical Device Company

Lethal Injection Matters – Major Pharmaceutical Company

Pain Pump Matters – Large Pharmaceutical Company

Major Technology Company

Leading Chemical Company

Security Device Company

In re Air Crash Near Peixoto de Azevedo, Brazil

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Co-Chair, Litigation Department

Erin Bosman is the global co-chair of Morrison Foerster’s litigation department. Erin is also the founder and co-head of the Artificial Intelligence group and former chair of the Complex Litigation + Advisement practice group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin M. Bosman

Erin Bosman is the Global Co-Chair of Morrison Foerster’s Litigation Department. Erin is also the founder and co-head of the Artificial Intelligence Group and former chair of the Complex Litigation + Advisement Practice Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin Bosman

An orthopedic implant company

A children&rsquo;s monthly subscription service product

A fertility company

A major technology company

A smart fitness equipment company

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Julie Park provides analytic and strategic counsel for issues in product life cycle, product liability and defective products, consumer class actions, and more.

Julie Park

Julie Park | Product Liability Lawyer

Julie Park protects her clients’ products no matter what kind of product issue they face—whether it is planning for new product development, recalling an existing product, or defending clients against product liability or consumer class actions. Drawing on her deep technical and legal expertise, Julie counsels clients on consumer product safety regulation and pharmaceutical and medical device preemption while also managing complex and multijurisdictional litigation both in state and federal court.

Julie Y. Park

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A Changing of the Guard: Same Enforcement Trend under New CPSC Leadership?

A Changing of the Guard: Same Enforcement Trend under New CPSC Leadership?

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Republican Ann Marie Buerkle was named Acting Chairman of the Consumer Product Safety Commission (CPSC) on February 9, 2017, replacing former Chairman and Democ

Product Liability

Consumer Products

Retail

CPSC

On February 2, 2017, the Central District of California terminated a false advertising lawsuit against Schwabe North America, Inc. and Nature’s Way Products, LLC (Defendants), based on allegations that the companies misrepresented the cognitive benefits of two Ginkgo biloba products.  Sonner v. Schwabe North America, Inc. et al., Case No. 15-1358-VAP (C.D. Cal., filed July 7, 2015).  The court granted Defendants’ motion for summary judgment, finding that Plaintiff Kathleen Sonner (Plaintiff) had failed to establish that the claimed memory benefits were provably false.Background of the Case.  On July 7, 2015, Plaintiff Kathleen Sonner filed a class action against Defendants, alleging that the companies had falsely advertised that Ginkgold and Ginkgold Max products had cognitive benefits, including mental sharpness, memory, and concentration.  The complaint alleged claims under the Wisconsin Unfair Trade Practices Act (UTPA), California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA), and breach of express warranty.  Ms. Sonner sought to represent a class of consumers who had purchased the Ginkgold and Ginkgold Max products in the United States.Plaintiff Had Standing to Pursue Claims for Products Not Purchased.  Defendants argued that Plaintiff lacked standing to pursue claims as to the Ginkgold Max product, which Plaintiff never purchased.  The court disagreed, finding that she had standing to assert claims for unnamed class members because the two products were “essentially identical.”  The only purported difference between the products—the level of active ingredient EGb 761—was irrelevant since the dispute was whether any amount of EGB 761 provided cognitive benefits.Plaintiff Failed to Show the Cognitive Benefits Advertisements Were False or Misleading.  Defendants argued that Plaintiff’s UCL and CLRA claims were barred because they were “lack of substantiation claims,” which may not be brought by private individuals.  But the court found that Plaintiff did more than claim that Defendants lacked substantiation for their advertising claims; she provided evidence of scientific reports concluding that Ginkgo biloba does not appear to provide cognitive health benefits.  As such, the relevant inquiry was whether a reasonable juror could find that Plaintiff had proven that Defendants’ advertising claims were false or misleading.To resolve that inquiry, the court analyzed each side’s proffered evidence, including quantitative meta-analyses and clinical studies, in what the court called the “Battle of the Experts.”  Plaintiff criticized Defendants’ reliance on less recent studies and criticized the fact that Defendants’ studies conflicted with what Plaintiff claimed was the most authoritative source of review and synthesis.  But the court found that merely taking issue with the strength of the studies was not enough to prove their falsity.Plaintiff also argued that Mullins v. Premier Nutrition Corp., 178 F. Supp. 3d 867 (N.D. Cal. 2016) compelled her recovery.  In that case, the plaintiff brought almost identical UCL and CLRA claims against a defendant that had advertised the health benefits of its product.  The court in Mullins found that plaintiff had met her burden to establish that a reasonable jury could find that defendant’s claims were provably false by offering principled, supported critiques of the studies relied upon by defendants.  The Plaintiff in Mullins was also entitled to recover under a theory that the representations were misleading because a reasonable juror could conclude that the “vast weight of the competent evidence establishe[d] that th[e] health claims [were] false.”The court found that Mullins did not support recovery.  Unlike in Mullins, the Plaintiff failed to offer “principled, supported critique” of “each of the studies finding beneficial effects.”  Nor did Plaintiff challenge the methodology, structure, or independence of any of the studies.  As such, Plaintiff failed to meet her burden of proving falsity.For these reasons, the court held that Defendants were entitled to summary adjudication as to Plaintiff’s UCL and CLRA claims.  The court also granted Defendants’ motion with regards to Plaintiff’s UTPA claim and breach of express warranty claim finding that Plaintiff had failed to identify any express warranty.Takeaway.  Companies should carefully consider which scientific evidence they use to support defenses in false advertising cases, and should be on the lookout for outside studies that may challenge the methodology, structure, or independence of proffered scientific evidence.

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District Court Sacks Ginkgo Biloba False Advertising Case

District Court Sacks Ginkgo Biloba False Advertising Case

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On February 2, 2017, the Central District of California terminated a false advertising lawsuit against Schwabe North America, Inc. and Nature’s Way Products, LL

False Advertising

A trap for unwary manufacturers and retailers is the California Air Resources Board (CARB) regulations for consumer and other products sold in the state. These rules limit the concentrations of volatile organic compounds (VOCs) and other greenhouse gas–producing chemicals. CARB enforces these regulations with civil penalties and demands for stipulated injunctions. The regulations often apply a step-down approach to require ever-smaller amounts of these chemicals over an extended time period.

California’s New Spray Adhesive and Aerosol Coatings Requirements – Will You Be Ready on January 1?

A trap for unwary manufacturers and retailers is the California Air Resources Board (CARB) regulations for consumer and other products sold in the state. These 

California’s New Spray Adhesive and Aerosol Coatings Requirements – Will You Be Ready on January 1?

Environmental Law

A federal district court in Wisconsin recently ruled against a product manufacturer, finding it liable for failing to report timely in a rare U.S. Consumer Product Safety Commission (CPSC)‑backed lawsuit.  United States v. Spectrum Brands, Inc., No. 15-CV-371-WMC, 2016 WL 6835371, at *24 (W.D. Wis. Nov. 17, 2016).  While CPSC actively oversees voluntary recalls,<a href="#_ftn1" name="_ftnref1">[1]</a> it seldom brings suit in court.  In Spectrum Brands, the Wisconsin district court interpreted the Consumer Product Safety Act (CPSA) to grant CPSC broad latitude in seeking and levying penalties for failure to report potential product safety hazards.BACKGROUNDIn November 2014, Spectrum merged with Applica Consumer Products, Inc. (“Applica”), leaving Spectrum to assume all of Applica’s assets and liabilities.  Between 2008 and 2012, Applica imported coffeemakers from China and sold them in the United States.  During the same period, Applica received numerous customer complaints that the coffeemaker’s carafe handle would break and spill hot coffee.  In March 2012, Applica was sued over the carafe handles.  Applica submitted a Section 15(b) report to CPSC in April 2012, followed by a voluntary recall of the coffeemakers in June 2012.SUMMARY OF ISSUESProcedural BackgroundThe DOJ, on behalf of CPSC, sued Spectrum seeking civil penalties and permanent injunctive relief for Spectrum’s alleged violation of reporting requirements under Section 15(b) of the CPSA.  The court considered a number of different motions in this ruling.  Early in the case, Spectrum moved to dismiss the government’s request for injunctive relief for failure to state a claim and for summary judgment on statute of limitations grounds.  Spectrum later moved for summary judgment on due process, Section 15(b) safe harbor, and other grounds.  The government also moved for summary judgment on its claims.Fair Notice under Due Process ClauseSpectrum moved for summary judgment on the ground that CPSC violated Spectrum’s due process right to fair notice by inconsistently determining whether similar defects and injuries triggered a reporting obligation.  The court rejected this argument, noting that the threshold for reporting a potential defect is a lower standard than whether a substantial product hazard actually exists.  The court explained that this disparity “is confirmed in practice, as less than 20% of non‑fast track Section 15(b) reports result in the CPSC finding that a substantial product hazard exists.”  The court further explained the perceived inconsistency in CPSC enforcement by noting that a number of factors, including the nature of defect and the number and severity of injuries, could reasonably lead to different results in analogous cases.Statute of LimitationsSpectrum also moved for summary judgment on the ground that the government’s civil penalty claims were time-barred.<a href="#_ftn2" name="_ftnref2">[2]</a>  The parties agreed a five-year statute of limitations applied to the government’s claims under 28 U.S.C. § 2462 because the CPSA does not have its own statute of limitations.  However, the parties disagreed as to when the claims first accrued.  The court endorsed the “continuing violation doctrine,” finding that a Section 15(b) action for a company’s alleged failure to make a timely report accrues not when the company first fails to report, but when its reporting obligation ends.  In other words, a claim accrues when a company eventually submits a late report or gains actual knowledge that the government is adequately informed.  The government’s claims were therefore timely in this case.Spectrum’s Duty to Report under Section 15(b)“Adequately informed” safe harbor.  The court rejected Spectrum’s argument that it fell within Section 15(b)’s safe harbor provision, which does away with a company’s obligation to report hazards if CPSC is already “adequately informed.”  It found that CPSC was not “adequately informed” of the risk posed by the coffeemakers because CPSC did not have the same material information as Spectrum.  Although CPSC knew about the defect and injuries, the court concluded this was not enough to trigger the safe harbor as CPSC’s knowledge must also overlap sufficiently with the defendant’s knowledge.  The court found that Spectrum knew of over a thousand more failures and dozens more injuries than did CPSC.Spectrum failed its section 15(b) obligation to report.  Reaching the merits of the case, the court held that no reasonable jury could find that Spectrum “immediately” informed CPSC about the potential product hazard.  The court noted that Spectrum’s duty was triggered at the very least by May 2009.  At that time, Spectrum was aware of reports of 60 broken handles and four burns.  It had also identified a similar cause of the breakages in two separately returned carafes and had implemented design changes in an attempt to remedy the handle issue.Availability of Injunctive ReliefAlong with civil penalties under the CPSA, the government sought injunctive relief and liquidated damages or the creation of an escrow account for continued violations.  Spectrum moved to dismiss as a matter of law on the grounds that the allegations in the complaint and the CPSA itself did not support such injunctive relief.  The court found dismissal of the request for injunctive relief premature at the pleadings (and even summary judgment) stage without further factual development.  However, the court noted that Spectrum provided reason to doubt the government’s ability to show that the broad scope of the injunctive relief was necessary.  The court therefore postponed the consideration of any proposed permanent injunction until further factual development.KEY TAKEAWAYS“When in doubt, report.”  The court’s decision echoes CPSC’s more recent signals to proactively heed Section 15(b) reporting requirements.  As the court notes: “[C]ompanies are strongly encouraged not to wait to report until a product defect causes a serious injury, but rather to report when they first appreciate that their product may contain a defect that could injure people, even when the risk of serious injury is in doubt.”CPSC has plenty of time to bring suit.  Companies are not necessarily in the clear after voluntary corrective action or submitting a late Section 15(b) report.  Other courts are likely to follow this court’s holding that the government’s five-year statute of limitations does not accrue until a company submits a late report or gains actual knowledge that the government is adequately informed of the product hazard.Potentially broad injunctive relief.  The parties now await the civil penalty determination and injunctive relief phase of the case.  Both of these issues will be significant as the court hints that the government may be asking for too much with its request for injunctive relief, depending on the language of the permanent injunction.  Thus, this case could continue to provide insight into CPSC enforcement policy as these issues are decided.<a href="#_ftnref1" name="_ftn1">[1]</a> <a href="https://www.law360.com/articles/742154/looking-back-at-another-very-active-year-for-the-cpsc" target="_blank">https://www.law360.com/articles/742154/looking-back-at-another-very-active-year-for-the-cpsc</a> (subscription required)<a href="#_ftnref2" name="_ftn2">[2]</a> <a href="/consumer-products/statute-of-limitations-taking-the-steam-out-of-cpsc-backed-enforcement-action/" target="_self">https://classdismissed.mofo.com/consumer-products/statute-of-limitations-taking-the-steam-out-of-cpsc-backed-enforcement-action/</a>

Rare Court Decision in CPSC-Backed Enforcement Action

A federal district court in Wisconsin recently ruled against a product manufacturer, finding it liable for failing to report timely in a rare U.S. Consumer Prod

Rare Court Decision in CPSC-Backed Enforcement Action

The Federal Trade Commission’s recent workshop on drones raised familiar issues related to the privacy implications of a new and evolving technology. While the many potential innovations and consumer benefits of drone technology were highlighted, the workshop’s focus was on whether drones raise unique privacy considerations and, if so, how such considerations should be addressed.

Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance c

Julie O'Neill

Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance challenges around a wide variety of both online and offline privacy issues, including tracking, interest-based advertising, geo-targeting and other mobile tracking, personalization, and cross-device tracking. Recognized in The Legal 500 US 2014, 2016, 2019, and 2020 and Chambers USA 2021 for her exceptional legal work, her clients praise her saying, “She is really good at giving practical, targeted advice and taking stock of what the risk profile of the client is, so that the advice is holistic.” (Chambers USA 2021).

FTC Workshop on New Drone Technologies Raises Familiar Privacy Issues

The Federal Trade Commission’s recent workshop on drones raised familiar issues related to the privacy implications of a new and evolving technology. While the 

FTC Workshop on New Drone Technologies Raises Familiar Privacy Issues

Privacy

Aviation & Drones

District Court Judge Gonzalo Curiel recently considered and rejected—for the second time—a proposed class action settlement involving false advertising claims against a defendant jeans manufacturer.  Hofmann v. Dutch, LLC, No. 3:14-cv-02418-GPC-JLB (S.D. Cal. Aug. 16, 2016).  The court initially rejected the proposed settlement because of its coupon offer, charitable award unrelated to the issues of the case, and attorneys’ fee provision, which the Court found excessive.  The court rejected the parties’ renewed attempt to secure settlement approval because the problematic provisions remained unchanged and the sole addition – a free denim tote bag – did not adequately address the Court’s concerns.On September 5, 2014, plaintiff Sonia Hofmann sued defendant Dutch, LLC, alleging the denim company manufactured and sold jeans labeled “Made in the USA” that contained foreign-made components (buttons, rivets, zipper assembly, thread, and fabric).  Plaintiff alleged four causes of action under California law:  violations of the Unfair Competition Law (UCL); violations of the Business and Professions Code § 17533.7 (relating to manufacturers’ and retailers’ use of the label “Made in the USA”); violations of the Consumer Legal Remedies Act (CLRA); and negligent representation.Settlement Reached.  After litigating the case for just over a year, the parties agreed to a settlement.  On October 26, 2015, Plaintiff filed an unopposed motion requesting the court’s approval of a settlement agreement including the following terms:<ul><li>an injunction requiring Dutch to change its labels to reflect the country-of-origin of its jeans’ component parts;</li><li>$20 e-gift certificates for participating class members;</li><li>an award of $250,000 over five years to charities that benefit women; and</li><li>attorneys’ fees and costs not to exceed $175,000.</li></ul>Initial Settlement Rejected.  On April 26, 2016, Judge Curiel rejected the proposed settlement.  While the Court had no issue with the injunction, it rejected the $20 gift card offer, charitable award, and attorneys’ fees provisions, finding that the first two provisions did not provide sufficient value to potential class members, and the third suggested collusion between the parties.$20 Gift Card.  The parties argued that a $20 gift card was appropriate restitution for class members in light of the risk that they would receive nothing if the case went to trial.  The Court disagreed, noting that the average price of a pair of Dutch jeans is $205.  Therefore, the $20 offer was merely a coupon or discount requiring class members to spend more money to buy a Dutch product.  The Court reasoned that this was an inadequate offer to class members because it would require them to spend additional money on Dutch products, which would result in a net benefit to Dutch.Charitable Award.  The Court also rejected the cy pres provision whereby Dutch would pay $250,000 to various charities that purportedly benefit women, including breast cancer research and juvenile diabetes charities.  The Court noted that charitable awards may be acceptable when they benefit a cause related to the litigation and therefore provide an indirect benefit to class members.  The parties argued that there was a link between class members, who tended to be women, and charities that benefit women.  The Court rejected this argument as too tenuous, finding no link between women-focused charities and a “Made in the USA” class action.Attorneys’ Fees and Costs.  The settlement included a “clear sailing” term, whereby Dutch agreed not to contest any attorneys’ fees or cost awards that did not exceed $175,000.  The Court noted that such provisions create a danger of collusion, because they may encourage plaintiff’s counsel to accept an inadequate settlement on behalf of class members in exchange for an excessive fee award, and therefore require close scrutiny.  The Court rejected the fee award, reasoning that it was too high in light of the fact that class members received no value from the settlement apart from the $20 discount.Second Settlement Fails.  On June 23, 2016, the parties submitted a second settlement agreement to Judge Curiel.  The terms of the agreement remained the same, with one addition: class members were entitled to a denim tote bag valued at $128.  Judge Curiel rejected this settlement in short order, sharply noting that none of the problematic terms in the initial agreement had been remedied.  The Court reiterated its concerns regarding the coupon provision, charitable award, and fee provision, and was unpersuaded by Dutch’s tote bag offer.  As before, the Court denied approval, but permitted an additional 60 days for the parties to submit an improved settlement.Takeaway.  Hofmann offers yet another reminder that courts today strictly scrutinize class action settlements to ensure that they provide real value to settlement class members, do not appear collusive, provide sufficient notice, and treat all members of the class fairly.  See, e.g., Cotter v. Lyft, No. 13-cv-04065-VC, 2016 U.S. Dist. LEXIS 50579 (N.D. Cal. Apr. 7, 2016) (denying settlement agreement that short-changed members of the class by offering less than half the reimbursement to which they were entitled); Deatrick v. Securitas Sec. Servs., No. 13-cv-050160-JST U.S. Dist. LEXIS 22597 (N.D. Cal. Feb. 24, 2016) (settlement failed to provide clear notice procedures to class members); Thomas v. MagnaChip Semiconductor, Inc., No. 14-cv-01160-JST (N.D. Cal. Apr. 7, 2016) (settlement denied in part for distributing class funds to a charitable recipient without a sufficient nexus to the interests of the class members).  Parties submitting a settlement agreement for court approval need to carefully evaluate whether the proposed terms are consistent with current case law in their jurisdiction.

Third Time’s the Charm? Court Rejects Parties’ Second Settlement Agreement for Failure to Provide Sufficient Value to Class Members

District Court Judge Gonzalo Curiel recently considered and rejected—for the second time—a proposed class action settlement involving false advertising claims a

Third Time’s the Charm?  Court Rejects Parties’ Second Settlement Agreement for Failure to Provide Sufficient Value to Class Members

A California federal court recently denied a motion to certify a class of Kohl’s customers allegedly misled by false advertising, finding that plaintiff Wendy Chowning’s claim was a copycat of an earlier-filed case, Russell, et al. v. Kohl’s Department Stores, Inc., 5:15-cv-01143 (C.D. Cal., filed June 11, 2015). Chowning v. Kohl’s Department Stores, Inc., Case No. 2:15-cv-08673 (C.D. Cal. April 1, 2016). Judge R. Gary Klausner of the Central District of California, presiding over both actions, initially ruled that the cases were not duplicative because the Chowning plaintiff sought injunctive relief and restitution, while the Russell class was certified for injunctive relief only.  However, after Kohl’s defeated the Chowning plaintiff’s restitution claims at summary judgment, the Court ruled that Chowning no longer differed from Russell, and dismissed the suit.Same Claims, Different Suits.  The Chowning and Russell plaintiffs presented nearly identical claims, only weeks apart. On June 11, 2015, the Russell plaintiffs filed their putative class action, alleging that Kohl’s comparative-pricing sales tags were a form of false advertising under California’s False Advertising Law (FAL) and Unfair Competition Law (UCL). The Russell plaintiffs claimed that Kohl’s exclusive-brand items displayed two price tags, (1) a “sale” price tag, and (2) a significantly higher “original” price tag, but that the items were never actually sold at the higher “original” price advertised. Instead, plaintiffs alleged, Kohl’s simultaneously displayed both tags to deceive plaintiffs and putative class members into thinking that the “original” price was the true price of the item, and induce them to purchase products at the purported “sale” price.The next month, on July 21, 2015, Wendy Chowning filed suit in the same court, alleging the same claims against Kohl’s under the FAL, UCL, and Consumer Legal Remedies Act (CLRA), and also seeking monetary restitution and injunctive relief.Chowning Initially Survives by Seeking Monetary Restitution.  Given the substantial overlap between the two cases, and Russell’s status as the first-filed case, Judge Klausner issued an order in the Chowning action to show cause why it should not be dismissed as duplicative. He declined to the dismiss the action, however, finding that Chowning’s relief sought—restitution in addition to injunctive relief—was sufficient to distinguish the case from Russell.Though the Russell plaintiffs initially had also sought restitution, Judge Klausner certified their class only as to injunctive relief, ruling that plaintiffs failed to meet their burden to present a viable damages model. Russell, et al. v. Kohl’s Department Stores, Inc., 5:15-cv-01143 (C.D. Cal., Dec. 4, 2015).Court Rejects Chowning’s Restitution Claims, Denies Class Certification, and Dismisses the Case.  Chowning’s distinguishing factor soon disappeared, however, when on March 15, 2016, Judge Klausner granted Kohl’s motion for partial summary judgment on the issue of restitution, finding that plaintiff’s proposed damages models did not provide a viable measure of restitution. According to the Court, even if Kohl’s did misrepresent the “original” price of an item, Kohl’s is not required to pay restitution as long as the retail value of the item is higher than the price charged. Chowning, et al. v. Kohl’s Department Stores, Inc., 2016 WL 1072129, at *12 (C.D. Cal. Mar. 15, 2016).In light of this ruling, Judge Klausner found that Chowning was no longer meaningfully different from Russell. Thus, on April 1, 2016, Judge Klausner denied the Chowning plaintiff’s motion for class certification, finding that “the same facts, legal arguments, evidence, and remedies are implicated in both [cases].” The putative Chowning class would therefore be adequately represented as members of the injunctive relief class certified in the Russell action. The court dismissed the case.Takeaway.Chowning is helpful to defendants fighting copycat actions on identical or similar issues. It demonstrates that, where both the underlying facts and requested remedies in two cases are the same, the first-filed case will win the day.

Been There, Done That: Kohl’s Wins Dismissal of Copycat False Advertising Class Action

A California federal court recently denied a motion to certify a class of Kohl’s customers allegedly misled by false advertising, finding that plaintiff Wendy C

Been There, Done That: Kohl’s Wins Dismissal of Copycat False Advertising Class Action

Class Certification

On February 16, 2016, U.S. District Judge Sam Sparks of the Western District of Texas dismissed a multidistrict litigation involving 11 putative class action lawsuits against various Whole Foods corporate entities and Skotidakis, Inc., a third-party manufacturer, based on an alleged misrepresentation regarding the sugar content in Whole Foods’ store-brand yogurt.  In re: Whole Foods Mkt., Inc., Greek Yogurt Mktg. and Sales Practices Litig., Case No. 1:14-mc-02588-SS.  The court granted defendants’ motion to dismiss after concluding that plaintiffs’ state law claims were expressly preempted because the sole evidence substantiating their claims did not comply with FDA testing methodology.Plaintiffs alleged that the yogurt’s nutrition label was false and misleading because it stated that the yogurt contained two grams of sugar per serving, but according to six tests conducted by Consumer Reports magazine, the yogurt actually contained 11.4 grams of sugar per serving.  Plaintiffs claimed that defendants intentionally mislabeled the product to charge a price premium and that plaintiffs would not have purchased the product had they known the truth about the sugar content.  On this basis, plaintiffs brought claims for violations of various state consumer protection and unfair competition statutes, breach of warranty, unjust enrichment, negligent misrepresentation, and requested declaratory and injunctive relief.The court granted defendants’ motion to dismiss, finding that plaintiffs’ state law claims were expressly preempted because the sole evidence substantiating their claims—the Consumer Reports testing—did not comply with FDA testing methodology, which requires a composite of 12 subsamples from 12 randomly selected shipping cases.  In what the court deemed a “far cry” from the FDA protocol, Consumer Reports analyzed only six samples from six different lots.  The court granted plaintiffs leave to amend and encouraged them to test products in a manner that complied with FDA protocol.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy mat

Claudia Vetesi

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class actions.

Claudia M. Vetesi

Testing 101: Court Dismisses Whole Foods’ Yogurt MDL over Failure to Comply With FDA Testing Requirements

On February 16, 2016, U.S. District Judge Sam Sparks of the Western District of Texas dismissed a multidistrict litigation involving 11 putative class action la

Testing 101: Court Dismisses Whole Foods’ Yogurt MDL over Failure to Comply With FDA Testing Requirements

Food Misbranding

We’ve all heard about food fads:  Paleo, artisanal, farm-to-table.  But what about food litigation fads?  Plaintiffs’ lawyers must scour the same grocery aisles, judging from their past “sweet tooth” obsession with “evaporated cane juice” (ECJ).  But—with most courts in this District staying ECJ cases pending the U.S. Food and Drug Administration’s (FDA’s) review of its ECJ draft guidance—the ECJ litigation fad appeared to have faded as abruptly as it began.Not so fast, Plaintiffs’ lawyers will say.  While the majority of courts have maintained stays pending FDA’s final review, recent decisions to the contrary may portend the revival of this forgotten trend.  Will ECJ have another “moment”?We provide further background and discuss the implication of these decisions below.Plaintiffs’ ECJ Allegations. Plaintiffs bringing ECJ claims allege that ECJ is actually sugar, so listing ECJ as an ingredient misleads consumers into believing that these products are healthier than those listing sugar as an ingredient. Plaintiffs assert that FDA has explicitly stated that ECJ is not a common or usual name for sugar, and thus cannot be listed as an ingredient at all.FDA’s Position. Despite these assertions, FDA’s position on ECJ is in flux. Although FDA issued draft guidance in 2009 suggesting that ECJ is not the common or usual name for sugar, as we have previously posted, FDA subsequently issued a notice in 2014 reopening the comment period for its draft guidance, indicating that it would reconsider the issue.ECJ Stays. Following FDA’s notice, courts facing ECJ claims stayed or dismissed the claims pursuant to the primary jurisdiction doctrine, finding that, based on FDA’s authority over product labeling and its expertise in the area, courts should permit FDA to at least finalize its stance on ECJ before passing judgment. At least 18 ECJ claims were dismissed or stayed between 2014 and 2015.After issuing stays, one Northern District court judge who had stayed an ECJ case—Judge Chen—requested an update from FDA on the status of its review. In July 2015, FDA confirmed that it anticipated finalizing its guidance by the close of 2016. At least six Northern District courts continued stays since that update — all over plaintiffs’ objections. One court, however, departed from the trend: in August 2015, Judge Chhabria lifted a stay in an ECJ case.  See Gitson et al. v. Trader Joe’s Company, No. 3:13-cv-01333-VC (N.D. Cal. Aug. 18, 2015), Dkt. No. 123.Updates. Until recently, Judge Chhabria was the lone dissenter in the ECJ debate. But on January 4 and 5, 2016, Judges Henderson and Donato, respectively, also lifted ECJ stays. See Figy v. Lifeway Foods, Inc., No. 3:13-cv-4828-TEH (N.D. Cal. Jan. 4, 2016), Dkt. No. 57; Swearingen v. Pacific Foods of Oregon, Inc., No. 13-cv-04157 (N.D. Cal. Jan. 5, 2015), Dkt. No. 61. While neither decision contains substantial analysis, Judge Donato did note that he considered the issues “in light of the FDA’s continued delay in providing final guidance.” Id. at 1:18. These courts appear to have become impatient with the pace of FDA’s review.Two other courts, however, have continued stays subsequent to these three rulings. See, e.g., Gitson, et al. v. Clover-Stornetta Farms, Inc., Case No. 3:13-cv-01517-EDL (N.D. Cal. Jan. 7, 2016) (extending ECJ stay for an additional 180 days, until August 2016) (Laporte, J.); Swearingen v. Amazon Preservation Partners, Inc., Case No. 13-cv-04402-WHO (N.D. Cal. Jan. 11, 2016) (Orrick, J.) (extending ECJ stay and continuing case management conference until July 2016). The new year has thus brought divergence in Northern District courts’ treatment of ECJ cases.Implications. The future of ECJ claims is unclear: while Judges Orrick and Laporte’s decisions upholding stays suggest that the pendulum has not shifted towards reviving these claims, Judges Chhabria, Henderson, and Donato’s rulings to the contrary may suggest that ECJ stays will not remain in place indefinitely. This means that a slew of dormant ECJ claims could come back to life this year, especially if FDA fails to make headway on its draft guidance.  We may see a revival of the ECJ fad after all.But another trend may nonetheless keep these cases quiet. Many district courts have stayed misbranding cases pending the Ninth Circuit’s decisions in misbranding appeals, including Jones v. ConAgra, Brazil v. Dole, and Kosta v. Del Monte. These appeals concern class certification issues—including ascertainability and the proper measure of damages—that district courts must consider when assessing a plaintiff’s proposed class certification motion. Courts have therefore found it appropriate to wait for the Ninth Circuit’s guidance before deciding these issues. See, e.g., Ham v. Hain Celestial Grp., Inc., 3:14-cv-02044-WHO (N.D. Cal. Dec. 10, 2015), Dkt. No. 59. (staying putative class action pending Ninth Circuit appeals and collecting decisions in accord). ECJ cases are no exception. See Thomas v. Costco Wholesale Corp., No. 12-CV-02908-BLF, 2015 WL 6674696 (N.D. Cal. Nov. 2, 2015) (staying entire action based on Ninth Circuit appeals after staying ECJ claims in November 2014). Thus, even if FDA-based stays are lifted, Ninth Circuit stays may continue to keep ECJ claims at bay.