Our parents and teachers taught us that “two wrongs don’t make a right.” But in the world of Lanham Act litigation, the opposite is often true. When defending a Lanham Act claim brought by a competitor, the doctrine of unclean hands—the lawyerly version of “But they did it too!”—can be a case-dispositive argument. Last month, the Ninth Circuit made it a bit easier to establish this defense, holding that a defendant arguing unclean hands need not prove that the plaintiff’s unclean conduct caused “actual harm.” See Certified Nutraceuticals, Inc. v. Avicenna Nutraceutical, LLC, 2020 U.S. App. LEXIS 22351 (9th Cir. July 27, 2020).
What distinguishes a “cosmetic” from a “drug” under the Federal Food, Drug, and Cosmetic Act (FDCA)? The FDA has struggled to offer clear guidance on the distinction, but the classification as one or the other (or both) carries significant legal and regulatory consequences for manufacturers: a product that is a “drug” needs pre-market approval from the FDA, while a “cosmetic” does not. A cosmetic product that has not received this approval may not represent that, like a drug, it is “intended to affect the structure or any function of the body of man.” 21 U.S.C. § 321(g)(1). Thus, a product that claims to be capable of changing how part of the body works (e.g., “reduces cellulite” or “regenerates cells”), but has not been subjected to this pre-approval process, is considered mislabeled under the FDCA.
Last month, Misbranded co-editors Josh Kipnees, Jonah Knobler, and Jane Metcalf presented a live-streamed webinar via Bloomberg Law titled “Hot Topics in Consumer False Advertising Litigation.” The free hour-long webinar, now available on demand, covers the following subjects, some of which should be familiar to regular readers of this blog:
- “Natural” / “no artificial ingredients” claims
- “No preservatives” claims
- Ingredient claims (“made with [X]”)
- Geographic origin claims (e.g., “Made in the USA”)
- Slack-fill claims
- Claims involving nondisclosure of morally troubling/offensive facts
- What’s next in consumer false advertising litigation?
We encourage you to check it out (and obtain some CLE credit in the process).
Proving Retail Sales Figures In Consumer Class Actions: Different Approaches Lead To Very Different Results
To prove damages in a consumer class action, the named plaintiff must show—among other things—how many units of the defendant’s product were purchased by consumers in the relevant state (or states). This is easier said than done. Manufacturers generally keep records of their own wholesale transactions—i.e., how much product they shipped to distributors or large retail chains. But they generally don’t have direct visibility into sales at the retail level, since they aren’t a party to those transactions. If not all of the product sold at wholesale ends up being purchased by consumers, manufacturers’ records may not reflect this. Likewise, if the product that a manufacturer ships to an address in State A (e.g., a regional distribution center) ends up being moved to State B before reaching store shelves, manufacturers’ records will not reflect this either. What, then, is a class-action plaintiff to do?
Unless you were born yesterday, you know that packaged goods usually contain some empty space in the box, bottle, or bag. This has been true for as long as there have been packaged goods. What is relatively new is that consumers—or, rather, a small cadre of specialized plaintiff’s lawyers—are suing over it. But as Newton said, for every action, there is an equal and opposite reaction. And the more that lawyers have inundated courts with these suits, the more aggressively courts have responded to shut the silliness down. This post examines the regulatory underpinnings of these so-called “slack-fill” suits and the many bases that courts have found for letting the air out of them.
In Comcast v. Behrend, 569 U.S. 27 (2013), the Supreme Court held that a plaintiff cannot obtain class certification with an inadequate damages model. In the years since, courts have diverged over how much a plaintiff must do to satisfy this requirement. Often, plaintiffs seek class certification with nothing more than a skeletal proposal to develop and perform an analysis at some future point, using information they do not—and might never—possess. While some courts have found such adumbrative “models” sufficient at the class certification stage, the better decisions require more. As Comcast recognizes, Rule 23 “does not set forth a mere pleading standard.” Rather, a plaintiff “must affirmatively demonstrate” through “evidentiary proof” that damages are measurable on a class-wide basis through a common methodology. Faithful application of that principle obligates plaintiffs and their experts to offer a detailed methodology that is tailored to the facts of the case, and to show that any data that the model requires in fact exists and can be obtained.
In consumer cases alleging product mislabeling, one frequently litigated question is whether the plaintiff has standing to seek an injunction of the labeling practice that he or she claims is misleading. Over the past decade, consumer protection defendants have often won on this issue by demonstrating that the plaintiff is at no risk of future injury. But last year, in Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir. 2018), the Ninth Circuit made this issue tougher for defendants, adopting an exceptionally broad view of plaintiffs’ standing to seek injunctive relief in mislabeling cases. Below, we discuss the aberrant holding in Davidson, and how Ninth Circuit defendants may still be able to distinguish its facts to defeat a claim for injunctive relief.