AD-ttorneys@law – May 2021 #3

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CARU Pats Unity Technologies on Back, Sends It on Its Way

Inquiry into possible COPPA violations finds the company clean as a whistle

Kumbaya

Normally our newsletter is filled with reports of chicanery, misrepresentation, and fraud—or accusations of the same, at the very least. But this issue has more than an average share of upright citizens striving for moral rectitude. Or striving to avoid a lawsuit, which is more often than you might expect the same exact thing.

Take, for instance, the folks over at the Children’s Advertising Review Unit (CARU), who were asked by the International Digital Accountability Council (IDAC) to review Unity Technologies’ data collection practices. Turns out they were in for a pleasant surprise.

AAID + AID = KIDID?

IDAC reported that Unity, a software enterprise that creates and monetizes “interactive real-time 2D and 3D content” was utilizing an ad development kit that was collecting the Android advertising ID (AAID) and Android ID from users of certain phone apps—Princess Salon, Number Coloring, and Cats and Cosplay. You can probably tell from the names alone that these apps are aimed at kids.

Collection of both the AAID and Android ID data points meant that companies that possessed the info could track users over time for behavioral advertising—a no-no without parental permission as far as the Children’s Online Privacy Protection Act (COPPA) is concerned.

“CARU was concerned that Unity had ‘actual knowledge’ its Ads SDK collected information from children under 13 in violation of the COPPA Rule and CARU’s Guidelines,” the watchdog reported in its summary of the review.

The Takeaway

Happily, Unity replied to CARU’s satisfaction that it had not known that the collection was taking place. “Unity provides multiple opportunities for app developers to indicate an app is a ‘Child App,’” CARU wrote, gateways “which would then prevent the collection of the AAID and Android ID by its Ads SDK.” Unity reported that it enforced this reporting requirement through its terms of service and other policies with app developers with requirements that the developers identify any of their apps that are child-directed. Of the games at issue, some were set as child-directed, so no data was collected. One of the games had been misidentified by the developer. Upon learning this, Unity took steps to change the setting and delete the data.

The best part? Before CARU even investigated its case, Unity had placed roadblocks in its platform to keep developers from accessing both ID types simultaneously. So, there was no there there, as it were.

“CARU was pleased that Unity participated in CARU’s self-regulatory program and took steps to delete all personal information that it had inadvertently collected from children,” the group said.

We love these feel-good stories, but in all honesty, we’re hoping for at least a few twisted tales of advertising malfeasance each week. Otherwise, we’ll have to shutter the newsletter and find honest work.

California Plaintiff Deftly Dodges Dismissal of Mexican-Food Fight

Olé Mexican Foods can’t rely on “made in the USA” disclaimers to escape false origin claims

Razonable

The Central District of California kept a Mexican-food class action cooking in April with an order that serves up a helpful review of just what is implied by the word “reasonable” in “reasonable consumer.”

Here’s the background.

Juan De Dios Rodriguez, citizen of the “Jewel of California’s High Desert,” Victorville, California, purchased La Banderita brand Burrito Grande flour tortillas and Sabrosísimas corn tortillas from a grocery store last July. He claims that the products, which are manufactured by Olé Mexican Foods Inc., featured taglines that led him to believe they were of Mexican origin—namely, “El Sabor de Mexico!” (read: “A Taste of Mexico!”), the brand name “La Banderita” and the Spanish phrase “Tortillas de Maiz.”

Despite its south-of-the-border name, Olé Mexican Foods is domiciled in the United States—Georgia, to be precise, which, although closer than the South Caucasian country of the same name, is still not in Mexico.

False Flag?

Rodriguez put together a class action lawsuit and went after Olé for misrepresentation of source under California’s Consumers Legal Remedies Act, False Advertising Law and Unfair Competition Law as well as warranty claims. In the suit, he mentioned other allegedly deceptive tags, including prominently displayed Mexican flags, sometimes underlined by the word “Authentic.”

Olé Mexican Foods struck back with a motion to dismiss in December, arguing, in part, that the case failed the reasonable-consumer standard under California law, which “requires a probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.”

In this case, Olé argued that its packaging would not deceive a reasonable consumer for three reasons it distilled from a dozen or so similar cases.

First, the “taste of” tags made no specific geographic claims, such as the name of an actual city or location. Second, Olé disclosed the actual origin of the products— “Made in the USA”—on its packaging. Finally, the flag and other aspects of the packaging “merely evoke[d] the cuisine, culture, history, people, spirit, or feeling of a country or a place.”

Read the motion if you have a minute. Agree with it or not, it contains an excellent survey of recent origin claim litigation that we don’t have the room to detail here.

Survey Says …!

Whether or not the motion was well-argued, the court denied Olé’s motion in an order issued in late April. “While the Court finds Defendant’s survey useful,” the court wrote, “it is not persuaded by Defendant’s proposed framework.” Instead, the court considered “the context of the whole label or advertisement” and found that Rodriguez alleged “a probability that a significant portion of the general consuming portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled … Plaintiff plausibly alleges that the representations and images in the labels of the Products are misleading by causing a reasonable consumer to believe that the Products are made in Mexico.”

This finding was made notwithstanding the “made in the USA” disclosures on the packaging. “The alleged misrepresentations are prominently displayed in the front label,” the court continued, “and the Ninth Circuit has noted that a reasonable consumer is not ‘expected to look beyond misleading representations on the front of the box to discover the truth.’”

And so, the case continues.

The Takeaway

Remember, dear readers, that the clearest disclosure may be no defense if it does not play a large enough role in the context of the whole label.

We should also note that while Olé is based in Georgia, its products claim a connection to Mexico that few would call inauthentic—at least outside the courtroom. “The company’s founder, Veronica Moreno, began making and selling authentic tortillas in Atlanta, Georgia, in 1988,” the company’s website states. “She used traditional ingredients and techniques passed down to her through generations from her native Mexico.”

Does “authentic” Mexico really end at the southern border of the United States as far as Moreno is concerned?

Given the amount of ink expended on issues of minority representation and cultural appropriation, it will be interesting to see whether, in the future, origin claims take on new subtleties that go beyond straightforward questions of geography. That goes for the remainder of this case, and for the law in general as the decades pass.

Synthetic Gem Manufacturer Fights Deep Cuts by Industry Group

NAD rules against claims that undercut lab-grown gem value

A for Effort?

Although synthetic gemstones have been produced for more than a century, the odd market competition between man-made or synthetic gemstones and their mined, “natural” siblings is utterly contemporary—a perfect conundrum for a world where the real and the virtual are combining in odd and disruptive ways (“non-fungible tokens” are another apt example).

According to the authorities, synthetic gemstones “are physically, optically and chemically identical to the natural stone, but are created in controlled conditions in a laboratory.” But why are natural gemstones (except diamonds) worth more on the market?

An aside in a recent National Advertising Division (NAD) decision may give a hint. “The mined diamonds recovered and sold by Natural Diamond Council members are found in some of the most remote places on the planet and require significant investment and technical expertise to locate and recover.”

Synthetics are physically, optically and chemically identical and can be obtained with less expenditure of human effort and investment of money, but because natural gems are way out there and deep in the ground, they’re more valuable.

They’re worth more because they’re harder to get.

Humans are crazy.

Rough Cut

This may be why Federal Trade Commission rules regarding how to draw distinctions between the different classes of gems are … oddly tentative. Check out our earlier coverage of a recent change in those rules.

But back to the NAD decision. The precipitating conflict involved Diamond Foundry Inc., a “manufacturer of laboratory-grown diamonds,” and the Natural Diamond Council (NDC). Diamond Foundry challenged before NAD several claims made by the NDC regarding synthetic gems—claims that have obvious marketing utility for the Council but elicited a mixed critique from NAD.

First, a real swipe at synthetics: NDC’s alleged claim that emissions associated with lab-grown diamonds (LGDs) are “three times greater than those associated with mined diamonds.” NAD recommended that the NDC discontinue implied claims “that mined diamonds are better for the environment than man-made diamonds.” Several express claims using the three-X multiplier suffered the same judgment.

But NAD had further critiques for several NDC claims that hit synthetic gemstones where it hurt the most.

The Takeaway

NAD found that the Council had failed to provide proof that mined diamonds are becoming scarcer, and therefore (you guessed it) more valuable. “While it may be likely that supply issues will someday influence the consumer market for natural diamonds,” NAD wrote, “the challenged advertising reasonably conveys a message that consumers might become ‘priced out’ of the diamond market ....”

While it wasn’t problematic for the Council to “generally refer to mined diamonds as deriving value because they are ‘rare’ or ‘unique,’ the advertiser’s references to ‘resale’ value reasonably convey an unsupported message about the resale value of man-made diamonds.”

And finally, getting to the heart of it all: “The advertiser’s use of the word ‘real’ to describe its diamonds reasonably conveys the unsupported message that LGDs, such as Diamond Foundry’s, have different physical and chemical properties than mined diamonds.” Claims such as the following were sent to the chopping block:

Laboratory-grown and synthetic diamonds … are also made of carbon, but without the Earthly origins of real diamonds, they lack the unique qualities infused by nature.

The Council agreed to abide by NAD’s recommendations.

Dollar General Settles Class Action Over Irrelevant Oil

Retailer accused of using slick placement tactics to push its own brand

Damned Obsolescence!

In the wide world of advertising, there are the obvious hooks for lawsuits—ad claims, packaging design—and there are the subtle ones.

Consider this monster of a multidistrict class action filed against Dollar General Corp. by plaintiffs in more than a dozen states. It’s such a big, lumbering case that it was consolidated almost five years ago and only resolved with a settlement in February.

It’s hard to sum it up, but we’ll give it a try. Dollar General, “a discount retailer focused on low- and fixed-income consumers in small markets,” offers its own lines of merchandise along with brand names in its 17,000 national locations. Its product lines are identified by the “DG” tag: DG Auto, DG Hardware, DG Office and so on.

The plaintiffs alleged that Dollar General violated the consumer protection laws of more than a dozen states when it used “deceptive and misleading” tactics to sell DG motor oil, which it claims is obsolete.

The Unctuous Among Us

First, an aside regarding motor oil.

Like almost any component involved in a modern car, motor oil has evolved with the underlying automotive technology. The Society of Automotive Engineers keeps tweaking and testing motor oils to make sure they will protect modern engines.

According to the suit, “[m]otor oils designed to protect engines from earlier eras do not protect, and can harm, modern-day engines. Thus, motor oil that would be suitable to use in an engine manufactured in the 1980s or earlier is not suitable for use in modern-day engines.”

The plaintiffs claim that Dollar General’s DG SAE 10W-30, DG SAE 10W-40 and DG SAE 30 motor oils are obsolete but were not clearly advertised as such. The oils are, according to the complaint, “unsuitable for, and [harmful to], the vehicles driven by the overwhelming majority of Defendants’ customers (and the public at large).”

Ouch.

Doublespeak?

Some of Dollar General’s alleged tactics are obvious—funky labeling being the prime example. DG does include explicit disclaimers that its oils aren’t suited for contemporary cars. For instance, some of the product labels inform the consumer that the oil within is “not suitable for use in most gasoline powered automotive engines built after 1988” and “may not provide adequate protection against the build-up of engine sludge.” Other oils are “not suitable for use in most gasoline powered automotive engines built after 1930”!

These disclaimers, the plaintiffs claim, are in small print on the back label, sometimes located near advertising tags such as “DG Quality SAE 30 is a non-detergent motor oil designed for use in older engines where consumption may be high and economical lubricants are preferred.”

These juxtaposed statements (along with their placement on the back label) are obvious points of concern, if true.

The Takeaway

But it’s the not-so-obvious vulnerabilities of Dollar General’s advertising approach that we’d like to focus on.

First, there’s the way the products are placed within the retail environment. “Defendants place their DG Auto motor oil adjacent to the other brands of motor oil that they sell, such as PEAK, Pennzoil, and Castrol,” the complaint maintains. “These other brands are non-obsolete motor oils that, unlike DG Auto motor oil, are meant to be used in modern automotive engines.”

Add to that the quantity of goods within that placement. “In addition, the quantities of the DG Auto motor oils on display are similar to the quantities displayed of other brands of motor oil that are suitable for modern day vehicles,” the plaintiffs claim, which tells “the typical shopper that, like those other brands, DG Auto motor oils have widespread use and that legitimate demand for the product is similar in volume to demand for the other motor oils on display.”

Did the placement of the oil and the amount of visible product add up to a deceptive tactic? The court (or a jury) never decided. But it’s something to think about when you’re stocking shelves with your product (or paying someone to do it for you).

As we mentioned, the case settled in February, with Dollar General coughing up $28.5 million to consumers, who can claim more than $16 from the company without proof of purchase or a full refund if they have their receipts. If their cars were damaged, consumers can recover anywhere between $250 and $2,250, depending on documentation.

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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