- Posts by Scott Shaffer
PartnerScott has focused on complex commercial litigation and arbitration involving advertising and marketing law, class action defense, administrative investigations, contractual disputes, consumer fraud, and business ...
Online games company loses motion based on unconscionability
On August 14, 2024, the Federal Trade Commission (“FTC”) announced and published a final rule banning fake reviews and testimonials. Although unfair or deceptive acts and practices are already generally unlawful, the new rule will enable the FTC to more easily go to court and seek civil penalties against knowing violators. The rule, published at 16 CFR Part 465, takes effect this October 13th.
The Consumer Financial Protection Bureau (“CFPB”) is making it a priority to monitor credit card rewards programs and crack down on unfair or deceptive acts that prevent consumers from obtaining the advertised benefits of these programs.
Olshan Frome Wolosky LLP has been recognized by The Legal 500 US in its 2024 edition as a Leading Law Firm. The Advertising Practice has again been ranked along with three attorneys. The Shareholder Activism Practice has again been ranked as a Tier One practice, a position it has held since the rankings’ inception, including six of the practice’s attorneys. The rankings are based on feedback from clients, peers and The Legal 500’s independent research.
The Consumer Financial Protection Bureau (“CFPB”) has survived a Supreme Court challenge that threatened to render its source of funding unconstitutional. In CFPB v. Community Financial Services Assoc. of America, the Supreme Court, by a ruling of 7-2, approved the ability of the Federal Reserve to provide operational funds to the CFPB. Opponents of the CFPB unsuccessfully argued that the only permissible means of funding should be a congressional appropriation.
The Federal Trade Commission (“FTC”) has amended the Telemarketing Sales Rule (“TSR”). The simplest change is the expansion of the TSR to explicitly cover all business-to-business (“B2B”) telemarketing and artificial intelligence-enabled calls, which takes effect on May 16, 2024. Oddly, the only B2B calls previously covered by the TSR were those selling office and cleaning supplies.
Olshan’s Advertising, Marketing & Promotions Group was named a leading Tier 1 law firm by Media Law International. MLI’s 2024 ranking guide, covering firms and practitioners with media law experience across 60 jurisdictions globally, recognized Olshan for its excellence. Employing a multidisciplinary approach, Olshan integrates Brand Management & Protection and Advertising lawyers to offer knowledgeable, solutions-focused advice. View the rankings and editorial in MLI’s 2024 guide.
New Jersey Supreme Court Sides with Aéropostale in Consumer Class Action
In a significant legal victory for New Jersey retailers, that state’s Supreme Court has ruled in a class-action lawsuit that advertising illusory discounts and phantom former prices does not necessarily cause consumers to sustain an ascertainable loss, and therefore dismissed the lawsuit despite the state’s generally very pro-consumer protection statute, the Consumer Fraud Act (“CFA”).
Random sample method used to calculate damages
In the case of Federal Trade Commission v. Jonathan Braun, decided on February 6, 2024 in the Southern District of New York after a jury trial, a federal court entered a judgment requiring merchant cash advance company owner Jonathan Braun to pay $20.3 million in monetary relief and civil penalties for misleading small businesses and unlawfully seizing their assets. Braun was found guilty of deceiving business owners about how much money he would advance to them and how much they would have to pay back.
Lawsuit dismissed for failure to allege a physical nexus
A recent decision in the Western District of Pennsylvania has provided a rare defendant’s victory in an ADA (Americans with Disabilities Act) website accessibility lawsuit. In Murphy v. Spongelle LLC (decided on January 24, 2024), the plaintiff alleged that Spongelle’s website did not meet the ADA requirements for accessibility to visually impaired individuals. There have been thousands of similar lawsuits over the past decade, and the main reason for this proliferation is that there are still no clear guidelines for ADA compliance that businesses can follow when setting up a website. What made Spongelle unusual is that Judge Richard A. Lanzillo dismissed the lawsuit, raising critical questions about whether a website can be deemed a “public accommodation” under Title III of the ADA.
2024 is poised to be a year that the FTC increases its authority over the abuse of artificial intelligence in advertising. FTC chair Lina M. Khan wrote in a New York Times opinion piece, “As companies race to deploy and monetize A.I., the FTC is taking a close look at how we can best achieve our dual mandate to promote fair competition and to protect Americans from unfair or deceptive practices.” In late November, the FTC authorized its staff members to begin issuing non-public subpoena-like information demands for products and services that use or claim to be produced using AI. One of the FTC’s main concerns will be how AI uses consumer data. For example, in 2023, Amazon was accused of, and settled charges, that its Alexa software indefinitely kept recordings of children in order to perfect its voice recognition algorithm.
Although not final as of the time this is being published, the FCC is poised to make life difficult for lead generators and the companies that rely on them. In late November, the FCC proposed a rule that would require texters and robocallers obtain prior express written consent that is specific to a single seller in order to comply with the Telephone Consumer Protection Act. The problem, according to the FCC, is the “lead generator loophole,” which currently allows lead generators to obtain consent on behalf of multiple sellers from consumers who complete a single lead form, often hyperlinked to a long list of sellers. The FCC is expected to pass the rule during in mid to late December, effective in 2024. Another possible change will be extending the National Do-Not-Call Registry to text messages instead of just phone calls.
New law takes effect just prior to the holidays
On December 10, 2023, a new law takes effect in New York that will mandate a grace period that will allow consumers three months to use up their credit card rewards points prior to a change in their loyalty program. New York General Business Law § 520-e was enacted in 2021 with a delayed effective date. The new law provides that before a credit card rewards program can be modified, cancelled or terminated, the consumer must be provided with at least 90 days’ notice of the forthcoming change and therefore an equally long window of opportunity to “redeem, exchange, or otherwise use” the previously accumulated points. The notice must go out no later than 45 days after the change has been decided upon by the credit card issuer.
McDonald’s and Wendy’s defeat lawsuit over burger depictions
Recently, we blogged about a lawsuit that accused Arby’s of false advertising by serving roast beef and brisket sandwiches that contained significantly less meat than what was depicted in advertisements. Arby’s may be breathing a sigh of relief right now because McDonald’s and Wendy’s have just prevailed in a similar lawsuit that targeted the depictions of their burgers.
Coffee seller’s motion to dismiss class action denied by court
In a recent legal battle, Starbucks became the center of a lawsuit filed by plaintiffs who are alleging deceptive advertising practices related to beverage and food items sold in their stores. The case, combined with the court’s recent ruling denying Starbuck’s motion to dismiss, raises questions about the transparency of product labeling and the expectations of consumers when it comes to the accuracy of product names.
Arby’s roast beef accused of being less plentiful, too well done compared to ads
For the past few years, Arby's Restaurant Group, Inc. touts its fast-food chain with the slogan, “We have the meats.” Now, a class-action lawsuit filed in the Eastern District of New York alleges otherwise. Plaintiff Joseph Alongis accuses Arby's of engaging in unfair and deceptive trade practices by using misleading photographs of sandwiches in its advertising. According to Alongis, Arby's customers receive roast beef and brisket sandwiches with significantly less meat than the amount depicted in advertisements.
Alleged “dark patterns” now in play in at least four separate actions
Last year, this blog reported about Dorobiala v. Amazon.com, a private class action pending in federal court in the Western District of Washington against Amazon over the "dark patterns” Amazon used to hamper consumers from canceling their subscriptions to the Amazon Prime program. As described in a recent blog post, the Federal Trade Commission (“FTC”) upped the ante in June by filing suit against Amazon in the same court.
Meanwhile, not only is Dorobiala is still pending, there are at least two other ...
For late-shipped goods, Court deducts the value of benefits received by consumers
A Prince-ly ruling for copyright holders
Defendant disputes the factual basis for the precedential ruling
Happy New Year! As we begin 2023, Olshan’s Advertising and Branding law groups share their list of hot topics that look to be on the horizon this year and should be of particular interest to you.
Tom Brady and Gisele Bundchen join Kim Kardashian and Floyd Mayweather as defendants.
* Taylor Lodise is a law clerk in the Litigation practice group.
On November 9, 2022, amidst ongoing investigations by the FTC regarding “dark patterns” that Amazon allegedly employed to discourage subscribers from canceling their Amazon Prime memberships, a class-action lawsuit named Amazon as a defendant. The lawsuit was filed in United States District Court for the Western District of Washington and is styled Dorobiala v. Amazon.com, Inc.
Federal Court rules CFPB funding mechanism is unconstitutional
This is the second ruling of this type in two months
A concept that we explored in a recent article – the reduction of massive class-action awards based on fairness concerns – appears to be picking up judicial steam. In August 2022, a Northern District of California court reduced statutory damages in a consumer class action from the $91.4 million to just $8.3 million plus pre-judgment interest. That case is Montera v. Premier Nutrition Corp. The basis for lowering damages in the face of the requirements of the New York statute at issue was a 1919 Supreme Court ruling which authorized courts to set aside judgments based on statutory penalties that are “wholly disproportionate to the offense and obviously unreasonable.”
Dual-purpose phones can qualify as “residential” numbers to support a TCPA action
The Telephone Consumer Protection Act (“TCPA”) and its regulations prohibit calls and text messages to residential telephone subscribers who have registered their phone numbers on the national do-not-call list maintained by the federal government. While business lines are not eligible to be registered on the national do-not-call list, in practice there is nothing that bars such registration. As a result, TCPA litigation sometimes requires a determination as to whether a phone line is used for residential or business purposes. This issue arises more frequently in the current gig-economy era, because many cell phone owners use their devices for both personal and business purposes.
* Taylor Lodise is a law clerk in the Litigation practice group.
In one of several related class-action lawsuits against the maker of a drink marketed under the brand name Joint Juice, Chief Judge Richard Seeborg of the United States District Court, Northern District of California, applied case law from 103 years ago to reduce statutory damages in a consumer class action from the $91.4 million seemingly required by a New York statute to just $8.3 million plus pre-judgment interest of $4.5 million. The August ruling was based on Fourteenth Amendment due process protections as interpreted by the Supreme Court in the 1919 case St. Louis, Iron Mountain & Southern Railway Co. v. Williams (“St. Louis”).
Sweepstakes entrants’ lack of knowledge of free method of entry insufficient to constitute violation of California Penal Code.
A Northern District of California case styled Suski v. Marden-Kane, Inc. (decided August 31, 2022) has resulted in a significant ruling in the field of sweepstakes law. A sweepstakes sponsored by Coinbase, a popular cryptocurrency exchange, and administered by Marden-Kane offered the chance to win valuable prizes to Coinbase users who bought or sold Dogecoin, a well-known “meme” token, on Coinbase for a total of $100 or more. The sweepstakes offered an alternative method of entry that did not require the trading of Dogecoin or incurrence by the entrants of any other expense. However, this free alternative method of entry was not well-publicized.
Juice Joint facing catastrophic liability after jury decides against it on the merits
Faced with a series of class-action lawsuits over its Joint Juice drink, Premier Nutrition Corp. has lost the first jury trial and is now fighting back against what could be a devastating financial blow if it loses a post-trial motion scheduled to be heard next month in the Northern District of California. The company was found by a jury to have falsely touted the health benefits of the drink, so the issue is no longer whether the claims were defensible, but how much the marketer will have to pay to the class of purchasers.
FTC likely to eliminate the exemption
The Federal Trade Commission (“FTC”) is considering a proposed amendment to the Telemarketing Sales Rule (“TSR”) that would broaden the rule’s scope by prohibiting material misrepresentations and false or misleading statements in business-to-business (“B2B”) transactions.
Source: NAAG Press Release
The National Association of Attorneys General (“NAAG”) sent a letter to the Federal Communications Commission (“FCC”) on behalf of 41 states’ attorneys general commending the FCC for its leadership in combatting robocalls and sharing their commitment to working collaboratively with the FCC via information-sharing agreements. The lead states in this effort are Colorado, Tennessee and North Carolina.
In a 5-0 decision, New York’s First Appellate Department granted a unanimous win to Olshan partner Scott Shaffer who was representing a California construction company.
Facebook joins Amazon in pursuing reviews for sale
Facebook, through its parent company Meta, has filed a federal lawsuit against a company that allegedly produces and sells fake reviews and feedback for ads designed to increase an advertiser’s Facebook Customer Feedback Score. The lawsuit was filed in the Northern District of California against Chad Taylor Cowan of Australia, who does business under the name Customer Feedback Score Solutions.
TCPA liability reduced to $500 for Gold’s Gym
A recent ruling out of the Central District of California will prove to be very useful for telemarketers faced with class actions under the Telephone Consumer Protection Act (“TCPA”). In Bustillos v. West Covina Corporate Fitness, Inc., United States District Judge Stanley Blumenfeld, Jr. denied an order seeking class certification where it was clear that the call in question violated the TCPA.
Defendants plagued by failure to include arbitration clause in sweepstakes rules
A class-action lawsuit against an online sweepstakes operator will go forward despite the plaintiffs’ admitted agreement to an arbitration clause. The sweepstakes offered the chance to win $1.2 million in Dogecoin, a type of cryptocurrency. The plaintiffs in the Northern District of California district court action, styled Suski v. Marden-Kane et al., initially agreed to arbitrate all disputes at the time they opened their online accounts with defendant Coinbase Global, Inc.
Class action attorneys score a victory
Olshan’s Advertising, Marketing & Promotions practice group has been named a Tier 2 firm as part of the 2022 release of Media Law International.
Fashion retailer agrees to $4.2 million settlement with the FTC and the issuance of guidance regarding consumer reviews
Sunshine State Takes a Strong Stance against Autodialed Calls and Texts
As reported in The New Jersey Law Journal (subscription required), Olshan partner Scott Shaffer achieved a full dismissal with prejudice of a class-action lawsuit filed under New Jersey’s Consumer Fraud Act.
Happy holidays! We hope you are safe and healthy. As we enter the new year, Olshan’s Advertising and Branding law groups shares their list of hot topics that look to be on the horizon for 2022. If you have any questions on these or other issues, please reach out to us.
The New York Law Journal published an Expert Opinion article authored by attorneys Andrew Lustigman and Scott Shaffer, entitled “Are College Athletes the Next Fashion Stars?”.
FTC trying to recover the right to seek disgorgement of unjust enrichment in federal court
Court allows FTC to withdraw disgorgement claims with eye towards possible reinstatement.
FTC can no longer go straight to court to recover monetary damages
The New Jersey Law Journal (subscription required) reported that Olshan partner Scott Shaffer achieved a full dismissal with prejudice of a Consumer Fraud Act class action suit on behalf of Pure Radiance, a distributor/manufacturer of wellness products. The suit was dismissed because the lawyer-plaintiff, Harold Hoffman, claimed that the purchased nutritional product did not perform as advertised. The lawyer-plaintiff asserted that the advertising for the consumer product made claims that were not substantiated by research, but in a first-of-its-kind state court decision, the court ruled that sort of claim is reserved for the attorney general, not a private plaintiff. The Court further ruled that the lawsuit failed to allege sufficient facts to state a claim under New Jersey’s Consumer Fraud Act. Scott Shaffer was quoted as saying that “the judge’s ruling is correct in assessing the Consumer Fraud Act, and on behalf of the client, I’m pleased with the ruling.”
One billion spoofed calls touted short-term health insurance
Reckitt Benckiser agrees to pay $53 million to end class actions regarding dietary supplement pain relief claims.
Olshan Advertising attorneys Andrew Lustigman, Scott Shaffer, Mary Grieco and Morgan Spina presented a webinar for the Consumer Protection Monthly Update hosted by the American Bar Association Antitrust Law Section.
Court of Appeals Issues Legal Victory for States Challenge to Department of Justice
Law360 has published an article authored by advertising partner Scott Shaffer entitled “TCPA Future Uncertain After A Tumultuous 2020.” In the article, Mr. Shaffer discusses the legal developments that occurred during last year regarding the Telephone Consumer Protection Act (TCPA) and what to expect in 2021.
Olshan Advertising partners Andrew Lustigman and Scott Shaffer, along with Olshan Intellectual Property partner Mary Grieco—all of whom are members of Olshan’s Brand Management & Protection Practice Group—will present a webinar entitled “Marketing in the COVID-19 Era” for the Bronx Third Avenue Business Improvement District on December 16 at 9am. Areas to be covered include ecommerce marketing, advertising claims, social media marketing, and data privacy, followed by a Q&A.
Law360 has published an article authored by advertising partner Scott Shaffer entitled “Charter TCPA Ruling May Benefit Cos. Facing Robocall Claims.” In the article, Mr. Shaffer analyzes a recent ruling, Creasy v. Charter Communications Inc., which held that a significant portion of the Telephone Consumer Protection Act (TCPA) is unenforceable for violations occurring between November 2015 and July 6, 2020.
Court reverses award of $448 million in ill-gotten gains
The Court of Appeals for the Third Circuit rejected a district court’s award of $448 million against a pharmaceutical company in a lawsuit brought by the Federal Trade Commission (FTC). In an antitrust case styled FTC v. AbbVie, Inc. (decided on September 30, 2020), the Third Circuit ruled that district courts lack the power to order disgorgement under the FTC Act. While the Third Circuit ruled in favor of the FTC on other issues in this case, the reversal of the disgorgement award the FTC is the focus of this blog entry.
Ruling could have broad implications on thousands of pending cases
A federal district court has ruled that the Telephone Consumer Protection Act (TCPA) is unenforceable for violations occurring between November 2015 and July 6, 2020. The trial court in Creasy v. Charter Communications, in the Eastern District of Louisiana on September 28, 2020, dismissed all asserted TCPA violations alleged to have occurred before July 6, 2020 because a portion of the TCPA was unconstitutional until the Supreme Court “fixed” it on that date.
Our fast-moving webinar discussed key issues involving marketing and business practices in the current environment.
Authored by Scott Shaffer and summer associate Christian Villatoro
Highest court affirms the right of the SEC to recover fraudulently obtained profits
Advertising, Marketing & Promotions practice chair Andrew Lustigman, Intellectual Property/Privacy partner Mary Grieco, AMP partner Scott Shaffer, and associate Morgan Spina authored four Guidance Notes on direct marketing in California recently published in the prestigious OneTrust DataGuidance (subscription required). The first, entitled “California – Emarketing,” covers both the state and federal legislation, as well as regulatory guidance from the Federal Trade Commission, concerning emarketing. In the second, “California – Telemarketing,” the authors examine the numerous pieces of state and federal legislation governing telemarketing, including the “Automatic Dialing Law” and the “Unwanted Calls Law.” The third, entitled “California – SMS/MMS Marketing,” discusses various state and federal laws on SMS/MMS, including the Telephone Consumer Protection Act, and the consent requirements that advertisers must follow when using these services. In the fourth, “California – Postal Marketing,” the authors explore various state and federal laws on postal marketing, such as California’s “Mail Solicitation Law” and the federal “Deceptive Mail Act.”
Class-action lawsuit seeks recovery of fees obtained through subscription renewal plan.
We continue to monitor the effects of the COVID-19 pandemic on telemarketing regulations. The FCC has allowed health care providers to place emergency automated calls and text messages related to COVID-19, but three states have seen new telemarketing restrictions triggered by state-of-emergency declarations. Meanwhile, California is considering changes to its telemarketing statute unrelated to the pandemic. The following summarizes these recent developments:
Oral arguments held in Liu v. SEC
Liu v. SEC will also likely affect Federal Trade Commission’s powers
NCAA Clears The Way For Monetizing Athletes’ Names, Images and Likenesses by 2021
Decision Means That Issue of TCPA Standing Is Likely Headed To Supreme Court
Disgorgement Avoided Even Though Liability Established
Consumer not permitted to revoke consent given as part of a transaction
But Don’t Expect the Database Until 2020 at the Earliest
FTC must react to Eleventh Circuit’s LabMD ruling
Floyd Mayweather, Jr. Failed To Disclose He Was Paid For Social Media Posts
First-of-its-kind ruling broadens the reach of the TCPA
Illegal offer no longer enough: a plaintiff must suffer some form of injury to recover under the statute
Companies that communicate with consumers through autodialed telephone calls or mass text messages should be aware that a federal appeals court has just struck down two key, pro-plaintiff Federal Communications Commission (“FCC”) interpretations of the Telephone Consumer Protection Act (“TCPA”). Although the ruling did not provide clear limits to what marketers can and cannot do, it certainly provides marketers and debt collectors with important tools that should make life more difficult for class-action plaintiffs.
At last count, 60 lawsuits are pending vs. cellphone giant
Online Retailer must go to trial or settle
Supreme Court considering solicited fax rule for faxed advertisements
Hospital had compliant consent language on its consent forms
Conference call outlines FTC efforts at bureaucratic reform
Pre-fight concealment of boxer’s injury did not give consumers a cause of action
Third Circuit reverses district court and reinstates TCPA lawsuit
The Second Circuit rules in favor of companies in the question of consumers' permission revocation.
TCPA ruling in conflict with prior case law
Ruling shows that fraud can trump homestead protection laws
Practice is common in Northern District of Illinois
Federal court rules that telemarketers may not use soundboard technology to avoid robocalling restrictions.
Attempts to end class action with “pick off” strategy continue to fail.
D.C. Court of Appeals vacates FCC order from 2006.