- Vermont attorney general sues purported patent troll for misleading and deceptive statements in licensing demand letter (Ars Technica)
- Cloud Computing and Its Unexpected Jurisdiction Under Corrupt Practices Act (Corporate Counsel)
- Coalition for Responsible Regulation SCOTUS appeal (in which WLF filed amicus supporting cert) could be the biggest regulatory case in years, or be quickly denied (SCOTUSblog)
- Retailers’ efforts to throw out false advertising cases on lack of standing grounds in California just got harder (Product Liability Monitor)
- As we await outcome in generic drug preemption case Bartlett, Supreme Court asked to review other drug & device preemption issues (FDA Law Blog)
- Gift, travel, and entertainment expenses under the Foreign Corrupt Practices Act: When’s it ok to pay, when’s it not? (FCPA Professor)
- Can a South Carolina resident bring a nationwide class action in federal court based on New Jersey consumer protection law? The 3d Circuit says NO (Class Defense)
Update: Court Throws Out Class Action Claiming Yogurt Wasn’t “Yogurt”
Several past Legal Pulse posts have discussed food labeling class action suits against yogurt makers, including this one on a case against Clover-Stornetta Farms for its allegedly misleading use of the term “evaporated cane sugar.” That suit is currently pending in the Food Court Northern District of California.
Another yogurt-related class action suit, this one claiming that the use of milk protein concentrate (MPC) rendered Activa yogurt misbranded, recently reached a welcome end in the Southern District of New York (Conroy v. The Dannon Company, Inc.).
Conroy alleged injury under a number of state common law theories as well as provisions of New York General Business Law. None of those theories or laws are referenced beyond the opinion’s first page; instead, Judge Vincent Briccetti devoted his analysis entirely to whether MPC is an allowable “other optional ingredient” under Food and Drug Administration (FDA) standards for “yogurt.” If it wasn’t, Conroy’s claims would no doubt have proceeded.
Had one started reading in the middle of the opinion, one would fairly think the complaining entity was FDA, not a random yogurt consumer. Judge Briccetti found that FDA’s views on yogurt were that MPC was permitted as an “other optional ingredient.” FDA’s views, Judge Briccetti wrote, were contained in “a FDA-issued memorandum from the Milk Safety Branch to all Regional Food and Drug Directors.” The document memorialized an answer given by an FDA employee at a Regional Milk Seminar to a question specifically on MPC.
A memo restating the answer to a question at an obscure seminar in 2004 circulated among regional FDA directors — not exactly our idea of good federal rulemaking practice, but enough, it seems to get a class action suit dismissed. That is what Judge Briccetti ultimately did do: grant Dannon’s motion to dismiss as well as its request that the plaintiff be prohibited from amending her complaint.
Patent Litigant Targeting Retailers’ Use of Gift Card Activation Prevails in Federal Circuit
Featured Expert Column
Beth Z. Shaw, Brake Hughes Bellermann LLP
The U.S. Court of Appeals for the Federal Circuit on May 20 upheld the validity of two claims of a patent for activating gift and pre-paid phone cards, U.S. Patent No. 6,000,608 (“the ’608 patent”), in a divided panel opinion authored by Judge Dyk and joined by Judge Moore (Alexsam, Inc. v. IDT Corporation ). Judge Mayer dissented, writing that patent should be held invalid under 35 U.S.C. § 101. The plaintiff, Alexsam, Inc. (“Alexsam”) has filed suit against a wide array of merchants, seeking damages for infringement whenever a conventional or online retailer uses an existing banking network to process gift and pre-paid cards.
The ’608 patent is directed to a system for activating gift and pre-paid telephone cards at the time that they are purchased. In the past, retailers often installed dedicated “activation terminals” in their stores in order to activate such cards. The inventor on the ’608 patent decided that the activation process could be made more efficient if gift and pre-paid telephone cards could be activated using the point-of-sale terminals that are used for processing credit card transactions. Instead of activating a card by swiping it through a dedicated activation terminal, a store employee could simply swipe it through the terminal used for processing credit card transactions. Continue reading
Update: Judge in “All Natural” Food Labeling Class Action Won’t Wait for FDA Action
In our ongoing discussion of and commentary on class actions alleging consumer fraud in food labeling, we’ve assessed numerous cases where use of “natural” or “all natural” allegedly rendered the labeling false or misleading (our latest here and here). These crusading lawyers have rushed into the void left by the Food and Drug Administration (FDA), which has refused to issue a formal definition of “natural” for use on food labels.
Defendants in such cases have routinely argued that FDA policy statements on the meaning of natural should preempt state law-based consumer protection claims, or that courts should defer to the federal agency under the prudential “primary jurisdiction” doctrine. The preemption arguments have been unsuccessful, but some judges have put class action suits on hold and urged FDA action. Such action has not been forthcoming.
Judge Hamilton of the Northern District of California addressed these issues on May 10 in Janney v. General Mills. The suit involves General Mills’s Nature Valley® line of products and claims that certain sweeteners in those products are not “natural.” The defendants sought dismissal based on the primary jurisdiction doctrine. They pointed to a November 2012 Northern District ruling, Astiana v. Hain Celestial, that dismissed claims against the use of “natural” on cosmetics packaging based on FDA’s primary jurisdiction.
Though Judge Hamilton called the question “a close one,” she said General Mills’s motion must be denied “at least at this stage of the litigation.” She acknowledged the cosmetics case precedent, but reasoned that because FDA has “signaled its relative lack of interest” in defining natural, the Janney case was different from the Astiana case because FDA had “issued no guidance.” Because “any referral to the FDA would likely prove futile,” Judge Hamilton declined to stay or dismiss Janney’s suit.
9th Circuit Ruling Issued In Midst Of Debate Over Federal Agency “Sue-and-Settle” Tactics
Northwest Forest Plan
Cross-posted at WLF’s Forbes.com contributor page
Complying with notice-and-comment and other due process requirements is expensive and time-consuming for federal agencies. Those procedural duties also make agencies accountable to the public and regulated entities. So it’s no surprise that regulators avoid formal rulemaking like the plague. As we’ve spotlighted at The Legal Pulse, agencies instead issue “guidance” documents or utilize even more perversely creative tactics, such as setting new standards by replying to a U.S. Senator’s inquiry letter. Another evasive maneuver which has drawn the ire of not only affected businesses, but also state attorneys general and Members of Congress, is “sue-and-settle.”
Please Sue Us. Special interest groups, especially those with environmental-oriented missions, routinely sue federal agencies to compel actions, especially in situations where the regulators have missed deadlines, or, for political or other reasons, have stopped short of the most rigorous approach. The agencies are presented with an offer they can’t (and often don’t want to) resist: settle the citizen’s suit in a way that implements new mandates (and expands agency authority) without public input.
Judicial Rejection: Conservation Northwest v. Sherman. As noted above, elected officials are expressing their concern with this and seeking remedies (a bit on that below). In the meantime, however, an April 25 U.S. Court of Appeals for the Ninth Circuit decision reflects that judges can and should very closely scrutinize any friendly settlements between federal agencies and activists. In 2007, a throng of environmental groups sued the Bureau of Land Management (BLM) for attempting to eliminate a costly and complex surveying mandate from the management of the Northwest Forest Plan (a land use agreement arising from the 1990s’ spotted owl litigation wars). Continue reading
WLF “In All Fairness” Advertorial Appears in National Edition of New York Times
As part of its Eating Away Our Freedoms project, Washington Legal Foundation (WLF) today placed an advertorial on the op-ed page of the National Edition of The New York Times. WLF first debuted its “In All Fairness” advertorial column in 1998 in The Times, and it has appeared on the newspaper’s op-ed page over 150 times. The Times national edition reaches 75% of America’s population and according to one survey is read by 90% of major newspaper editors.
We encourage you to peruse the Eating Away Our Freedoms site and please consider signing up to receive updates as WLF supplements the site and continues to counter those “public interest” activists, regulators, and lawyers whose approach to reducing obesity enriches them at the expense of their intended beneficiaries.
Imposing Weight-Loss Guidelines: Another Function of ObamaCare?
Cross-posted at WLF’s contributor page at Forbes.com
The federal Affordable Care Act, better known as “ObamaCare,” may provide activists and government a little-known wedge to advance their obesity agendas through regulated health-care providers — specifically America’s nearly 3,000 non-profit hospitals. One organization, The STOP Obesity Alliance, recently identified this wedge as a way to have such hospitals embrace its core convictions, including one principle which questions the role of personal responsibility as a cause and a solution to obesity.
Community Health Needs Assessments. Section 9007 of the Act requires non-profit hospitals, as a condition of maintaining their tax-exempt status, to conduct Community Health Needs Assessments (CHNAs). These documents, which must be filed with the IRS, will demonstrate the health needs of the hospitals’ local communities and explain how hospitals are meeting those needs. One assessment of CHNAs likened them to banks’ responsibilities under the Community Reinvestment Act, in the sense that the documents might be used as tools by activists to prompt agreements or actions. It’s likely the STOP alliance understood this when it made its “recommendations.”
STOP’s Recommendations. The STOP Obesity Alliance “strongly encourages nonprofit hospitals to overcome and prevent obesity on the following core principles.” On balance, the coalition’s principles are laudable (encourage physical activity, encourage best practices, address and reduce stigma). One recommendation — that CHNAs use a “sustained loss of five to ten percent of current weight” as a barometer to successful weight reduction — may be troublesome for hospitals. If hospitals incorporate such a specific goal into their CHNAs, and their patients don’t achieve such consistent weight loss, that could provide STOP and other advocates with the clear data they need to oppose continued non-profit status at the IRS or with a potent stick to prod hospitals to certain actions. Continue reading
