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.
Congress Engineers a Compromise on GMO Labeling Bill
On July 14, 2016, Congress passed a compromise bill that requires manufacturers to label their food products with QR codes to allow customers to track whether the products contain any genetically-modified organism (“GMO”) ingredients. The bill appears to be a “better this than nothing” result, leaving both sides of the debate frustrated – manufacturers incur new costs of labeling and food sourcing accuracy, while customer advocates say no customers will actually use the QR code and a plain English statement would be much more effective. Importantly, Congress granted the Department of Agriculture much discretion in deciding the details, so the bill, the subsequent rules and their enforcement will remain in flex for some time.
McAfee Secures Settlement in Misleading Auto-Renewal Price Challenge
On July 14, 2016, McAfee, Inc., settled class claims that it had automatically renewed software security subscriptions at a higher, undiscounted price after an initial or trial period without notifying customers of the increased rate. The putative class action alleged that McAfee: (1) charged higher automatic renewal prices than they disclosed they would, and (2) advertised reference prices that were misleading because they were not actual, accurate prior sales prices. The settlement calls for McAfee to reimburse the auto-renewal class $11.50 per person and to notify current and future customers at point-of-sale that the increase will take place upon auto-renewal. McAfee also agreed to change its past price advertising policy so that it only lists actual prices charged to customers in the last 45 days.
Salov’s Filippo Berio Seared by Imported Olive Oil Claims in Class Certification Grant
On July 15, 2016, Judge Yvonne Gonzalez Rogers in the Northern District of California granted class certification to a class of olive oil buyers who claim they were misled by Filippo Berio brand’s claims that it was “Imported from Italy.” Defendant Salov North America Corp., owner of the Filippo Berio brand, argued that the class representative’s testimony indicated that because she read the back of the bottle for the expiration date and the disclaimer that the olive oils also came from Spain, Tunisia and Greece was next to the expiration date, then she must have known that information and could not possibly have been misled. The court rejected that argument, stating that the testimony that she did not see the disclaimer could not be ignored. The court also avoided individualized differences concerns by saying class members could file a claim form or an affidavit attesting to whether they bought Filippo Berio and whether they were misled by the “Imported from Italy” claims.
Fitbit Execs Staying Awake at Night as Sleep Tracker Suit Clears First Hurdle
On July 15, 2016, a putative class’s claims against Fitbit alleging its sleep tracker did not work as advertised survived a motion to dismiss and will proceed to discovery. The suit claimed that Fitbit overcharged customers by at least $30 – the difference between a low-end Fitbit and the high-end with sleep-tracking capabilities – by deceiving customers into believing the tracker would track the length and quality of the customer’s sleep. Plaintiffs argue that academic studies show Fitbit’s sleep trackers overestimate sleep by 67 minutes per night compared to scientific sleep studies, but Fitbit challenges those claims and states that its tracker is meant to be accurate but not to the level of laboratory study. The court said those differences were irrelevant at the motion to dismiss stage and were better left to discovery and summary judgment.
Kimberly-Clark Seeks to Perforate Its Case From Consolidation
On July 15, 2016, Kimberly-Clark Corporation (“Kimberly-Clark”) filed a letter with Judge Jack Weinstein of the Eastern District of New York to notify the court that the Federal Trade Commission (“FTC”) closed its investigation into Kimberly-Clark’s flushable wipes advertising, requesting that Kimberly-Clark’s case remain separate from the other pending class actions. The pending putative class action alleges Kimberly-Clark (and other manufacturers) advertised that its wipes were flushable but, instead, the wipes wreak havoc on customers’ plumbing because they do not disintegrate after being flushed. In October, the court put the six proposed class actions on hold while the FTC determined what “flushable” meant and whether the claims violated the FTC Act, and last month, the court recommended the suits be consolidated. The letter requests the case be kept independent because the FTC’s decision to close its investigation into Kimberly-Clark but enter a consent decree against Nice-Pak shows the cases should be adjudicated separately.
FTC Issues Refund Checks for Extended Car Warranty Customers
On July 19, 2016, the FTC announced it was issuing $4 million in refunds to 5,970 consumers who were deceived into purchasing spurious extended car warranties from The Dolce Group Worldwide, LLC (“Dolce”), and its owner Fred Khalilian. The FTC’s original complaint, filed in June 2010, alleged that Khalilian and Dolce, doing business as My Car Solutions, offered extended warranties and misled customers to believe that Dolce was affiliated with car dealers and manufacturers. But no customer actually received any extended warranty and customers requesting refunds had hardly any success. The January 2011 court order settling the charges set out a $4.25 million judgment and prohibited the defendants from telemarketing and otherwise making any misrepresentations when selling products or services. The refunds are the near-final step in what has become a more than six year process.
Coca-Cola’s Request to Stay Discovery Goes Flat
On July 19, 2016, Coca-Cola Co. lost its bid to stay discovery pending guidance from the Ninth Circuit in multidistrict litigation accusing the beverage purveyor of advertising that its flagship soda does not include artificial flavors or preservatives although it contains phosphoric acid. Coca-Cola sought to pause discovery while the Ninth Circuit decided three false labeling cases because those cases would resolve several open questions as to class certification in labeling cases that would be on point for class certification proceedings in Coca-Cola’s case. The court rejected this argument, saying that Coca-Cola had already admitted that the Ninth Circuit’s resolution of those cases would not entirely resolve the labeling issues because other consumer protection statutes and common law claims were implicated in the Coca-Cola MDL beyond those to be addressed by the appellate court.
NAD Recommends Bevel Brand Shave Down Razor Bump Claims
On July 19, 2016, the National Advertising Division (“NAD”) recommended that Walker & Company Brands modify or discontinue certain single-blade razor ad claims suggesting its razors could reduce razor bumps caused by pseudofolliculitis barbae. Gillette Company challenged Walker’s Bevel Brand’s claims that multi-blade razors were the reason some people get razor bumps. The NAD determined Walker could continue to say that its single-blade system was “specifically designed to help reduce and prevent razor bumps and irritation.” The NAD found that there was evidence that a single-blade system was less likely to cause razor bumps, but that it was not sufficient to allow Walker to claim that it was “clinically proven,” and so the NAD recommended that such claims be discontinued.