Advertising Law

by Manatt, Phelps & Phillips, LLP
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In This Issue:

  • Linda Goldstein Invited to Moderate Social Media Panel at 2014 Response Expo

  • SAG Allocation Guidelines Trump Settlement Deal

  • Pinterest Promotion Investigated by FTC

  • ANA, IAB Support Self-Regulation for Privacy Issues

  • Noted and Quoted . . . AdWeek Turns to Linda Goldstein to Discuss Potential Impact of McSweeny’s FTC Confirmation

Linda Goldstein Invited to Moderate Social Media Panel at 2014 Response Expo

Response Expo 2014 will bring together decisionmakers and industry leaders from the corporate marketing and direct response areas at its three-day conference and expo in San Diego, California, on April 29-May 1, 2014.

Linda Goldstein, Chair of Manatt’s Advertising, Marketing and Media Division, has been asked to moderate a panel titled “Getting Social? Tread Carefully.” This discussion will offer practical guidance as to how leading marketers are maximizing social media opportunities while complying with regulatory guidelines. Linda’s co-panelists are Bill Hildebolt (President and Co-Founder, EXPO) and Pat Donohoe (CEO, Iconic Labs).

For more information or to register for this event, click here.

SAG Allocation Guidelines Trump Settlement Deal

In the first decision interpreting the Screen Actors Guild 2009 Commercials Contract Allocation Guidelines, an arbitrator ordered a signatory to double its payments to the SAG-Producers Pension and Health Plans for a model/performer because they were less than the amounts set forth in the guidelines.

A model and performer contracted with Tommy Bahama to provide services in connection with various promotional materials in 2007, including print advertisements, television commercials, and in-store promotional materials. A dispute over terms led to a settlement agreement between Tommy Bahama (represented by Talent Direct, which helps clients produce commercials and pay talent) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA), on behalf of the performer, in which an allocation of 20 percent to the plans was established.

In April 2009, the contract was renewed between the parties, and Talent Direct continued to allocate 20 percent of the total compensation for the pension and health contributions pursuant to the settlement.

But on June 1, 2009, the new Commercials Contract took effect.

SAG-AFTRA argued that Section 46.E of the 2009 Allocation Guidelines required Talent Direct to make a 40 percent allocation, plus pay liquidated damages for late payments. Talent Direct countered that the settlement deal between the parties governed the allocation amounts.

An arbitrator sided with SAG-AFTRA, ruling that the proper allocation under the 2009 agreement between Talent Direct and the performer was governed by the 2009 Commercials Contract.

Emphasizing that arbitrators do not have the authority to ignore or modify any terms of a collective bargaining agreement, the decision said the services provided by the model/performer “fall squarely within” the 40 percent allocation.

Talent Direct’s defenses were unavailing, the arbitrator added. The prior 20 percent allocation “was in settlement of the dispute over the 2007 agreement under the 2003 Commercials Contract which contained no specific guidelines,” and the parties did not have an understanding that the compromise would apply to any future multiple service arrangements.

“It is recognized that [Talent Direct] and [the performer] may not have been aware of the Guidelines when the 2009 agreement was signed,” the arbitrator wrote. “But as signatory to the 2009 Commercials Contract, [Talent Direct] is charged with notice and compliance with its terms.”

The arbitrator also noted that the Allocation Guidelines are rebuttable, but found that Talent Direct failed to present sufficient rebuttal evidence simply based on an argument that the 20 percent allocation was more reasonable given the nature of the services performed.

Talent Direct must pay $15,500 to the relevant pension and health plans plus an additional $3,100 in liquidated damages for late payment, the arbitrator concluded.

To read the arbitrator’s opinion and award, click here

Why it matters: In the first decision interpreting the 2009 Allocation Guidelines, the arbitrator relied heavily upon the language of the 2009 Commercials Contract, noting that despite the agreement and settlement deal between the parties, the “most reliable indicator of mutual intent is the words used by the parties in their labor contract.”

Pinterest Promotion Investigated by FTC

Can a “pin” on Pinterest constitute an endorsement?

According to the Federal Trade Commission, the answer is yes. The agency recently concluded an investigation into retailer Cole Haan after the company ran a contest on the social media site that encouraged users to “pin” images of Cole Haan shoes.

The Wandering Sole Pinterest Contest instructed participants to create a Pinterest board with five shoe images from Cole Haan’s board and five images of the contestant’s “favorite places to wander.” Each pin description was to include the hashtag “#WanderingSole.” The most creative entry was promised a $1,000 shopping spree. But the hashtag pins were endorsements of Cole Haan products, the FTC concluded after investigating the contest, and consumers who saw the pins would not reasonably expect that the pins were incentivized by a reward.

“Moreover, we were concerned that Cole Haan did not instruct contestants to label their pins and Pinterest boards to make it clear that they had pinned Cole Haan products as part of a contest,” associate director for advertising practices Mary K. Engle wrote in a letter from the FTC to Cole Haan’s counsel. “We do not believe that the ‘#WanderingSole’ hashtag adequately communicated the financial incentive – a material connection – between contestants and Cole Haan.”

Section 5 of the Federal Trade Commission Act requires the disclosure of a material connection between a marketer and an endorser, the agency explained, and “entry into a contest to receive a significant prize in exchange for endorsing a product through social media constitutes a material connection that would not reasonably be expected by viewers of the endorsement.”

The FTC declined to take enforcement action against Cole Haan for several reasons, including the small number of contestants involved in the contest and the fact the agency has not previously addressed the possibility that a pin on Pinterest could be considered an endorsement or whether entry into a contest is a form of material connection.

In addition, the letter noted that Cole Haan “has since adopted a social media policy that adequately addresses our concerns.”

To read the FTC’s letter to Cole Haan, click here

Why it matters: Advertisers and marketers that sponsor a promotion on social media should take careful note of the agency’s letter and the potential that entries may be deemed an endorsement and a material connection by the FTC. Although the letter did not provide specifics about what kind of disclosure would satisfy Section 5, the name of Cole Haan’s contest alone (#WanderingSole) clearly did not suffice.

ANA, IAB Support Self-Regulation for Privacy Issues

In written comments provided to the White House, ad groups are standing behind self-regulation in lieu of privacy legislation.

Earlier this year, President Obama created a task force to study the implications of big data on privacy. In addition to taking meetings with various industry members, the White House’s Science and Technology Policy Office also sought comments about whether legislation was necessary.

In response, both the Interactive Advertising Bureau and the Association of National Advertisers threw their collective weight behind self-regulatory efforts and cautioned that concern about government surveillance should not be equated with the collection of data for marketing purposes.

“Unlike government access and use, consumers have a choice regarding business practices,” the IAB wrote in its submission. “Coupled with the strong privacy regulations that exist today, self-regulatory programs can adequately meet evolving consumer privacy expectations in the digital marketplace.”

The ANA agreed, writing that “It is difficult to see how broad or comprehensive new privacy laws or regulations at the present time could keep pace with the revolutionary and extraordinarily rapid transformation of the Internet and other new media techniques.”

Both groups also emphasized the strides made in recent years and pointed to the Digital Advertising Alliance as an industry success story. “The private sector has made substantial progress over the past several years to enhance the level of privacy protection for consumers,” Daniel L. Jaffe, executive vice president for government relations for the group, wrote for the ANA. Developments such as the DAA “demonstrate that companies are pro-active as well as responsive to consumers, and focusing on privacy as a way to distinguish themselves in the marketplace.”

The ANA did indicate support for federal legislation in one area. It maintained that it could be beneficial to establish a uniform national standard to preempt the existing 47 different state laws on data breach notification.

To read the ANA’s comments, click here.

To read the IAB’s comments, click here

Why it matters: The IAB and the ANA both distinguished the industry’s use of data from government surveillance and argued that data collection for marketing purposes does not require as “heavy-handed” an approach as the need to regulate government access to private citizen data. Instead, as both groups emphasized, the current framework of self-regulatory efforts is the appropriate structure for addressing privacy concerns.

Noted and Quoted . . . AdWeek Turns to Linda Goldstein to Discuss Potential Impact of McSweeny’s FTC Confirmation

On April 9, 2014, AdWeek interviewed Linda Goldstein on how Terrell McSweeny’s confirmation to the Federal Trade Commission could affect the agency’s focus, after the Senate voted to confirm McSweeny to be the third Democratic commissioner on the FTC.

Linda said, “An increased voice at the FTC favoring enhanced privacy protection may fuel continued efforts for regulation in this area, including the potential for the passage of Do Not Track legislation.”

To read the full article, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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