Eleventh Circuit Weighs in on Need for Consumer Class Actions’ Plaintiffs to be Ascertainable

11th CircuitWhether a class of plaintiffs must be “ascertainable”—i.e. capable of being feasibly identified through an objective process—continues to be one of the most contested legal issues in class-action litigation. We’ve written about ascertainability mostly in the context of food labeling lawsuits (our collection is here) but it has arisen in claims involving other consumer products. The U.S. Court of Appeals for the Eleventh Circuit is the latest jurisdiction to weigh in on the issue with a decision that directly addresses one of the common objections to ascertainability—that it dooms small-dollar class-action suits.

The plaintiff in Karhu v. Vital Pharmaceuticals accused the defendant of falsely advertising its dietary supplement, “Meltdown Fat Incinerator,” because it did not in fact incinerate his fat. The federal district court dismissed Karhu’s claims because he failed to demonstrate the class members were ascertainable. The Eleventh Circuit affirmed the district court. Judge Richard Goldberg of the U.S. Court of International Trade, sitting by designation, authored the majority opinion and Judge Beverly Martin wrote a cautionary concurrence. Continue reading

FDA Trans-Fat Order Sets the Table for More Food Product “Regulation by Litigation”

Partially hydrogenated oil  chemical structure

Partially hydrogenated oil
chemical structure

To no one’s surprise, the Food and Drug Administration (FDA) has confirmed its November 8, 2013 initial determination that the agency no longer considers the main source of trans fat in Americans’ diet, partially hydrogenated oils (PHOs), “generally recognized as safe” (GRAS). In its announcement, FDA emphasizes how the three-year window it has granted food companies to comply with the order would “allow for an orderly [transition] process.” Before anyone applauds FDA for being reasonable or magnanimous, however, consider what else the agency says, and doesn’t say, in its Declaratory Order (“Order”). FDA’s statements and omissions essentially set the table for an explosion of private lawsuits that could require PHO-containing products to be reformulated, or removed from the market, far earlier than June 2018.

What the Order Says. Under federal law, an FDA determination that a substance is no longer GRAS is not the equivalent of it being “unsafe.” It means that because some level of uncertainty has arisen from studies of the substance, food producers must seek approval for its use in specific products through a food additive petition. The Order, however, glosses over this inconvenient nuance, and instead consistently and repeatedly states that FDA has concluded PHOs are unsafe. The media has slavishly echoed FDA’s distorted conclusion to an American public that includes prospective judges and jurors for the lawsuits to come. Continue reading

EPA Shifts its Legally Suspect “Environmental Justice” Agenda into Higher Gear

EPA-LogoIn one of our first WLF Legal Pulse posts five years ago, we wrote about efforts at the Environmental Protection Agency (EPA) to revitalize “environmental justice” (EJ), which had essentially laid dormant since the Clinton Administration. The EJ movement’s influence has gradually spread, with EPA citing “EJ concerns” among its reasons for opposing the Keystone XL pipeline, and activists utilizing EJ to successfully oppose express toll lanes in Arlington, Virginia and agitate for severe development limits in the Los Angeles area.

Several recent developments at EPA aim to inject the environmental justice movement even further into federal regulatory policy-making. Continue reading

FTC’s Actions on In-App Purchases Reflect Chilling Move Toward “Mother-May-I” Paternalism

amazonFederal regulatory agencies routinely act as table-setters for the plaintiffs’ bar. Class-action lawsuits can require targets of federal enforcement actions, even after those actions end in settlement, to defend against the same allegations in court. A federal judge’s April 3, 2015 dismissal of a class action on the ground that the company had already entered into a settlement with the Federal Trade Commission (FTC), therefore, was a commendable outcome. The underlying FTC action that inspired the suit, however—an industry-wide investigation into companies’ in-app purchase procedures—is far less welcome. The Commission’s investigation is yet another example of government’s steady drift away from respecting permissionless innovation and toward “mother-may-I” paternalism.

FTC’s In-App Purchase Inquest. FTC initiated an investigation in 2011 of various companies’ mobile-app sales practices. The Commission had received complaints from parents that their children were making “unauthorized” purchases on mobile app stores. On January 15, 2014, Apple agreed to settle with FTC over charges that its in-app purchase process constituted an unfair business practice under § 5 of the FTC Act. On September 4, 2014, Google entered into a similar settlement. Both app sellers agreed to provide customers with refunds and alter their app sales practices.

In addition to Google and Apple, FTC also accused Amazon of unfair business practices for failing to prevent “unauthorized” in-app purchases.  Amazon, however, refused to settle the charges. The Commission filed suit on July 10, 2014 in the U.S. District Court for the Western District of Washington. On December 1, 2014, Judge John C. Coughenour denied Amazon’s motion to dismiss. Continue reading

Will the American Law Institute “Restate” or Try to Rewrite U.S. Copyright Law?

copyrightOn April 24, 2013, House Judiciary Committee Chairman Bob Goodlatte announced that the committee would be undertaking “a wide review of our nation’s copyright laws and related enforcement mechanisms.” Five months later, UC Berkeley School of Law Professor Pamela Samuelson formally requested that the American Law Institute (ALI) prepare a restatement of copyright law. It might seem odd that a prestigious institution like ALI would devote time and resources to restating the “law of copyright” when the U.S. House of Representatives is taking steps to possibly amend the federal Copyright Act. But it is going forward with a Restatement of the Law, Copyright project.

ALI is an organization of academics, lawyers, judges, and other legal professionals that studies various areas of law and prepares treatises that “clarify, modernize, and otherwise improve the law.” Courts and legislatures look upon ALI’s best-known treatises, such as the Restatement of Contracts, as authoritative summaries of state common law—i.e. legal principles derived from judicial decisions. A review of its current projects, though, suggests that ALI is drifting away from its traditional approach.

Professor Samuelson’s letter stated that an ALI copyright project “could provide an invaluable and timely analysis and framework for other reform efforts that are currently underway.” Further on in the letter she implies a much larger ambition when decrying the “long and contentious process” of passing laws that makes “comprehensive reform of the statute . . . unlikely to happen any time soon”: Lawyers, academics, and judges at ALI, she seems to suggest, are better positioned to bring clarity to the law of copyright than elected officials in Congress. Continue reading

White House Privacy Protection Proposal Sets an Ominous Tone for Future Action

whitehouseSince its release in late February, the White House’s “Discussion Draft: Consumer Privacy Bill of Rights Act of 2015” has drawn a significant amount of friendly fire from privacy activists and even federal privacy regulators. Their criticism insinuates that the Discussion Draft is at best a floor, a starting point for more stringent regulation. That perspective should be quite troubling to those who work in and benefit from the Internet Economy, for as we discuss below, certain aspects of the draft impose burdens on data use that far outpace any that currently prevail or have been proposed at the federal level.

“Privacy Risk.The data rights and protections the Discussion Draft affords are predicated on consumers suffering a “privacy risk” harm. That harm is defined as “the potential for personal data, on its own or when linked to other information about an individual, to cause emotional distress, or physical, financial, professional or other harm to an individual” (our emphasis). This definition would enshrine into federal law broad, amorphous, and precautionary concepts of harm that are radically out of step with prevailing law. For instance, federal courts have almost uniformly rejected data-privacy-related class-action lawsuits where the injuries alleged reflect plaintiffs’ fears of financial harm or emotional concerns. One very recent example is a Middle District of Pennsylvania ruling, Storm v. Paytime, Inc. and Holt v. Paytime Harrisburg, Inc., in which the court found that plaintiffs who cannot allege harms that are “concrete in both a qualitative and temporal sense” lack standing to sue. An alleged injury that provides the basis for a federal law enforcement action should certainly be no less concrete. Some activists, however, view “privacy risk” as too difficult for consumers or regulators to prove and have called for an even broader concept of injury. Continue reading

FDA’s Next Gift to the Litigation Industry: A Veritable Ban on Partially Hydrogenated Oils?

sharkIn a recent post, we lampooned the “high trans fat intake consumer” the Food and Drug Administration (FDA) invented to advance its de facto ban of partially hydrogenated oils (PHOs) as being a cross between Augustus Gloop and Homer Simpson. The ramifications of such a PHO ban for many processed food makers and their customers, however, are no laughing matter. Among other things, FDA’s final determination could expose the food industry to an avalanche of lawsuits and potentially billions of dollars in liability costs.

The Current Litigation Environment. Plaintiffs’ lawyers have been working feverishly for the past decade to turn lawsuits against “Big Food” into the next big payday. As chronicled on this blog since its inception in 2011, a small but persistent segment of the Litigation Industry has filed hundreds of class-action lawsuits alleging that everything from a perceived excess of empty space in a bag of chips to the printing of “evaporated cane juice” on a label violates state consumer protection laws.

By Litigation Industry standards, this lawsuit product line has not yet met profit expectations. But the lawsuits have successfully established, especially in California, that private litigants can enforce federal food laws and regulations. Continue reading