AD-ttorneys@law - February 2020 #2

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Solar Panel Review Is Another Mixed Ruling From NAD

Sunrun’s comparative savings claim, at least, is set on fire

Bright Lights

The country’s leading installer of residential rooftop solar panels – media darling Sunrun – recently had an appointment with the National Advertising Division (NAD), which aired grievances against the company brought forward by a watchdog group.

And, as seems to be a habit in recent NAD decisions, the ad industry review board doled out a little bit of praise and a little bit of blame.

NAD Taketh Away

First, the blame: The main bone of contention was the claim that consumers can “save up to 20%” on their energy bills by switching to solar. According to NAD, Sunrun based this claim on “projections, based on historical rate increases, showing that utility rates will increase on average 3.76% annually over the 20-year span of a Sunrun contract.”

NAD didn’t find the comparative evidence persuasive. “[T]he advertiser’s twenty-year projection of utility rates is insufficiently reliable and therefore cannot support a long-term savings claim comparing the cost of solar energy provided by Sunrun to electricity provided by traditional utilities.”

The claim relied on projections that the company’s own industry doesn’t use to project costs. Moreover, “long-term projections of utility rates are dependent on a number of [volatile] variables including oil and gas prices … as well as macroeconomic conditions, tax rates and public policy, and the impact of technological changes all of which may impact energy prices.”

That’s a mouthful.

The Takeaway

Having dispensed with this object lesson on how not to justify cost and savings projections, NAD switched course and spared several other Sunrun claims, including this one:

“Every time that the rates go up … too bad. Just keep paying. It’s not like you had a choice, right. Well you do now. You can lock in a surprisingly low electricity rate by going solar with Sunrun. The next time utility rates rise, you’re laughing all the way to the bank.”

This looks like the type of claim that the folks at NAD love poking at with a sharp stick, but they found that it had been sufficiently substantiated because consumers can lock in their rates with Sunrun – a luxury they are not afforded by conventional energy sources.

Sunrun agreed to follow NAD’s recommendation to discontinue the 20% claim.

FDA Turns Its Attention to Celebrity Influencers

New studies to explore the power of endorsement and disclosure techniques

One of These Things Is Not Like the Others

The Food and Drug Administration (FDA or Administration) performs an extraordinarily important public service: “protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices; and by ensuring the safety of our nation’s food supply, cosmetics, and products that emit radiation.”

Doesn’t it seem that last item just comes out of nowhere?

In any case, we imagine that dedicated public servants such as the FDA staff derive some enjoyment from the work they do – at the very least, the satisfaction of making the country a healthier, less-irradiated place.

But surely every once in a while they want a break from the enzyme chains and prosthetics and products that emit radiation. Sure.

Every now and then, they may want a thrill.

Starstruck

Perhaps this explains the Administration’s on-again-off-again fixation on celebrities. Determining the marketing impact of celebrity endorsement has a public service angle, but we can’t help feeling that the Administration’s latest study has a little bit to do with staring at celebrity Instagram feeds.

Whatever the motivation, the FDA recently unveiled plans for two studies that will examine the comparative strength of celebrity endorsements of pharmaceutical products when coupled with varying levels of in-ad disclosure. The studies seem likely to generate interesting data for marketers and academics alike.

The studies will examine four types of endorsers – celebrities, doctors, patients and influencers – to determine “whether the presence of a disclosure of their payment status influences participant reactions,” the Administration writes in its announcement, which was filed in January. The studies will also test disclosure language to see whether “direct and more consumer-friendly” is more effective than language that is “less direct.”

The Takeaway

The FDA has done a fair bit of work on the question of how influencer marketing impacts pharmaceutical sales. The Administration’s Office of Prescription Drug Promotion has a page filled with studies of interest.

The novelty here is the Instagram element – the second of the two studies uses an online celebrity as its model. Pharma company marketers, take note: It may be wise to prepare for increased government oversight of your online marketing activities. As for the rest of us, the studies will have a lot to say about the effectiveness of various online disclosure strategies, so get ready for some helpful analysis.

Public comment is open for feedback about either study.

Moschino Counterpunches on Cardi B Paparazzi Pic

In a novel move, fashion house asserts the copyright of photographed clothing

Inversion of Privacy?

Has the paparazzi copyright lawsuit craze hit a brick wall?

When last we remarked on the trend, we mentioned that a fair number of celebrities – including the likes of Victoria Beckham, Gigi Hadid, Nicki Minaj, Ariana Grande and Khloe Kardashian – were being sued for using photographs taken by their paparazzi tormentors. The celebs or their handlers would spot a photograph of them online and use it in their personal Instagram feed, for instance.

Leaving the law aside, we’re with the stars on this one: If some stalker-cameraperson took an unexpected shot of us looking fresh and brand-new on a city sidewalk, we’d totally slap it up on our Instagram feed. If we had an Instagram feed, that is.

So, it’s with some interest that we’ve tracked the creative ways the celebs were trying to get out from under the suits. Gigi Hadid tried to nuke one case by claiming fair use of the offending snap; football player Odell Beckham (unrelated to Victoria, for those scoring at home) charged a paparazzo with attempting to extort payment from him, presumably to avoid a similar suit.

When it happens to us, we want to be prepared.

She Bad

And now the fashion houses are mounting a counterattack as well.

The original offending image in our latest case from the paparazzi files was a snap of Cardi B. Taken on a spring night in 2018, the photo features the inimitable rapper in a jacket that looks like the aftershocks of a floral hand grenade. (Check it out, she looks amazing!)

The paparazzi who took the photo, Splash News and Picture Agency, sued … well … everyone, it seems, in a complaint filed in the Central District of California in October of last year. It sued Jeremy Scott, the designer of the jacket; Cardi B, the wearer of the jacket; and Moschino, the high-end fashion brand that sold the jacket – all for allegedly scooping up the snap and using it to promote themselves online.

The charge? Copyright infringement. As we mentioned, this has become a relatively common type of case.

The Takeaway

Moschino’s response, however, is less run-of-the-mill. The brand countersued Splash, claiming that the jacket itself is an “original work of authorship, embodied in a dress later worn by Cardi B,” with the apt title “When Spring Is In Bloom.” Moschino claims that it registered the work with the U.S. Copyright Office.

Because the jacket is supposedly protected by copyright, the countersuit alleges, Splash was the real infringer in this case. “The Photographs … unlawfully depict the Work,” the claim reads, “thereby rendering the Photographs unauthorized derivative works that, among other things, lack their own copyright protection and constitute copyright infringements.” In addition to defending against Splash’s charges, Moschino fired back with its own infringement claims.

For this tack to work, photographs of any copyrighted designs worn in public would become infringing works themselves. Is that an argument that the Central District is willing to try on?

We’ll keep lurking outside the courthouse, waiting for the next development.

Mega-Class Plaintiffs Face New Hurdle for Certification

District court ruling on McCormick slack-fill case offers ammo to the accused

Price a Proper Pepper Product Package?

A quarter-century of rising demand for black pepper, combined with steady levels of production, placed McCormick, the largest manufacturer and leading seller of the spice in the United States, in a bind. Prices were pushing consumers toward private-label brands. In 2014, McCormick tried to wiggle out of its uncomfortable position by embracing a time-honored tactic: Put less product in the same package but charge the same amount.

You know what happened next: Swarms of black pepper slack-fill lawsuits were filed in districts across the country.

By the end of 2015, the cases had been consolidated before the District of Columbia court; in the summer of 2019, the district issued a mixed ruling that will have some impact on slack-fill class certifications.

Groupings

The court mostly came down on McCormick’s side, refusing to certify a 20-jurisdiction class of consumers. Noting that “claims arising under different states’ laws can be ‘grouped’ into a single class only if they contain ‘materially identical legal standards,’” the court claimed that there were too many material variations across the jurisdictions regarding “burden of proof, scienter requirements, definitions of deception” to allow for class certification.

Likewise, the court refused to certify the classes because of the material variations of “unjust enrichment” that span the various jurisdictions.

The Takeaway

The court, however, let single classes of consumers survive in three states: California, Florida and Missouri. In these jurisdictions, consumer protection violations can be established by proof common to the plaintiffs – proof including McCormick’s own internal communications establishing a “Black Pepper Net Weight Reduction Project.”

McCormick’s travails should serve as a warning that playing around with one of the variables involved in product packaging without appropriately changing the others is risky business. In the case of McCormick’s tins of black pepper, only the amount of product changed. The packaging, which was opaque, did not become appropriately smaller or transparent – changes that might have defanged the original class actions.

More important – the court’s takedown of the 20-state class certification provides new ammunition for defendants. By paying close attention to variances across jurisdictional boundaries, companies may be able to defuse a mega-class before it does too much damage.

California Ponders New Limits on Rehab Advertising

“Brandon’s Law” would prevent facilities from misrepresenting treatment

Bleak

Brandon Nelson’s story is the stuff of nightmares. A bright student and UCLA graduate, he was at the beginning of a promising career as an aerospace engineer in Southern California. At a time when his prospects were bright, he was seized by a sudden bout of mental illness, the onset of which took his family by surprise.

And matters only got worse. Nelson was hospitalized for his mental health and, once released, was taken in by a residential mental health home that promised state-of-the-art care. He lasted 24 hours in the home before committing suicide.

Action

Nelson’s parents began digging into the circumstances of his death, and, according to their account, they discovered that the staff at the mental health facility was not prepared to handle the emergency that led to their son’s death. The parents claim that the facility lacked even the most basic information about Nelson – when they called 911, they didn’t even know his name. But worst of all, the staff allegedly lacked CPR training that might have saved him.

The Takeaway

The young life cut short by this awful incident provided the inspiration for California Senate Bill 863, or “Brandon’s Law.” The bill, which prohibits operators of addiction recovery or treatment facilities from “making a false or misleading statement about the entity’s products, goods, services, or geographical locations,” also mandates that California’s Department of Health Care Services investigate and impose sanctions on violators.

An earlier version of the bill was vetoed by Gov. Gavin Newsom back in October 2019; this latest version of the bill has yet to receive a vote as of this writing.

Check Out Our Latest Blog Posts

Who Can I Trust on the Way to the Dog Show? The FTC on Review Websites and Fake Reviews

The FTC’s recent proposed settlement with LendEDU gives us reason to pause. The complaint alleges the website www.lendedu.com promoted itself as a resource for consumer products to research options for financial products such as loans and insurance. The website provided star rankings and rate tables that it said were objective and unbiased. Read more and subscribe here.

California AG Releases Modified CCPA Regulations

On February 10, the California Attorney General updated the modified regulations that were issued on February 7. The updated modified regulations are available here. The public comment period has been extended by one day to February 25, 2020. Learn more 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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