Source: https://www.manatt.com/Insights/Newsletters/Retail-and-Consumer-Products-Law-Roundup/California-Now-Requires-Female-Directors-on-Public
Timestamp: 2019-04-23 00:35:26+00:00

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1 We note that the bill is unclear as to the effect of vacancies in determining the number of required female directors relative to overall number of directors.
An enforcement action by the New York Attorney General’s Office and a lawsuit from the Federal Trade Commission (FTC) provide an important reminder about making adequate disclosures when using online reviews.
In New York, online attorney rating site Avvo reached a deal with AG Barbara D. Underwood that requires the company to revise its attorney rating system and improve its consumer disclosures. Previously, Avvo relied on attorneys to voluntarily provide the information used in their profiles (such as background or type of practice) that determined their rankings on a scale from 1 to 10, the AG explained.
Pursuant to its agreement with the AG’s Office, Avvo’s site now tells users “clearly and conspicuously” that its ratings model relies on information attorneys add to their profiles and that the company does not independently collect all available information that could increase an attorney’s ratings.
Avvo will no longer refer to its ratings as “unbiased,” and the company promised to pay the state $50,000 to cover the costs of the AG’s investigation.
The FTC also had online reviews in its crosshairs as one of several problems with defendant Roca Lab’s advertising. In 2015, the agency filed suit against Roca Labs, its related corporate entities and two individuals for violations of Section 5 of the FTC Act. The agency alleged that Roca Labs made false and unsubstantiated weight loss claims, that it misrepresented that one of its promotional websites was an objective information website, and that it ignored its privacy promises by disclosing consumers’ personal health information in public court filings and to banks and payment processors.
Specific to online reviews, the defendants failed to disclose their financial ties to individuals who posted positive reviews about their products, the FTC said. The defendants solicited testimonials by offering to pay up to $1,000 to customers who met certain conditions (such as achieving a certain interim weight loss goal and demonstrating that loss in “before & after” pictures). Not only did the defendants not disclose that the people in the testimonials were paid, but they failed to reveal that employees were also directed to post positive reviews of the products on third-party blogs and websites.
In addition, the defendants sued and threatened to sue consumers who complained or shared their negative experiences online, and they enforced a nondisparagement or “gag clause” contained in their online terms and conditions that attempted to prohibit customers from publishing disparaging comments about the company or its products. The terms stated that the purchase price was “conditional” or “discounted” in exchange for the customer’s agreement to the gag clause, leaving the customer on the hook for the full price of the product ($1,580) and an additional $100,000 penalty if he or she breached the gag clause.
Last month, a federal judge in Florida granted summary judgment in the FTC’s favor on all counts. She agreed with the agency that the enforcement of the “gag clauses” to stop consumers from posting negative reviews was an unfair practice in violation of the FTC Act, and she entered a permanent injunction against the defendants.
“Because defendants admittedly suppressed negative information about the products and because … the absence of negative information could make a consumer more inclined to purchase Roca Labs products, the court finds that defendants’ practices have caused or were likely to cause substantial injury to consumers,” U.S. District Judge Mary Scriven wrote.
The court ordered supplemental briefing on the issue of the amount of the defendants’ $26.6 million in gross sales that should be awarded to the FTC for consumer redress.
To read the New York AG’s Office announcement of the Avvo settlement, click here.
To read the order in Federal Trade Commission v. Roca Labs, Inc., click here.
Why it matters: The two cases send a powerful message to advertisers that both state and federal regulators are keeping a close eye on reviews to ensure that necessary disclosures are being made. “My office will continue to protect New York consumers and ensure they get the transparency and accurate information they deserve,” New York AG Underwood said in a statement, while the FTC will pursue monetary penalties against Roca Labs based in part on its deceptively published online reviews.
A call promoting pet insurance made to a recent kitten adopter constituted an “advertisement” pursuant to the Telephone Consumer Protection Act (TCPA), an Illinois federal court has ruled.
In Legg v. PTZ Insurance Agency, Ltd., one of the defendants, Pethealth, offered various services related to pet adoption and pet insurance. One service offered by its subsidiary defendant PTZ Insurance Agency (PTZ) is an initial 30-day free gift of pet health insurance. The gift is offered to adopters of pets from PTZ’s partner animal shelters, generally for pets that have a microchip implanted for safety.
During the adoption process, adopters fill out paperwork providing the shelter with their name, address, email address and telephone number. The paperwork provides that unless adopters opt out, they may be sent information and special offers by mail or email regarding products or services that may be of interest to them.
Adopters are sent at least two emails reminding them of the 30-day gift. In addition, they receive at least two prerecorded robocalls.
Plaintiff Christopher Legg adopted a kitten from the Florida Humane Society in November 2014. As part of the adoption process, the kitten was fitted with a microchip and registered with 24PetWatch. The paperwork Legg completed specified only mail or email communications, but he did not opt out of receiving the offers.
Legg claimed he received four prerecorded calls on his cellphone from the defendants, offering the 30-day free gift. He filed suit under the TCPA and moved for summary judgment, arguing that the defendants made unsolicited advertising calls to his cellphone without his express written consent. The defendants countered that calls were simply reminders of a free gift and neither included the commercial availability of any product.
U.S. District Judge Robert W. Gettleman of the Northern District of Illinois considered each call in turn to reach a mixed decision.
As Legg pointed out, numerous courts have held that communications are advertisements when the call “leads” the recipient to other materials, Judge Gettleman said, citing decisions from federal courts in the District of Columbia and Illinois.
Although the plaintiff argued that the Day Six Call directed recipients to “press 1,” which connected them to a sales agent who pitches defendants’ insurance products, the judge was not convinced. “But what happens when a recipient presses 1 (plaintiff did not) is hotly contested and cannot support a finding on summary judgment that the call constitutes an advertisement,” the court said.
Because the Day Six Call was not an advertisement, the defendants did not need express written consent to place it. They did need prior express consent in some form, the court said, but failed to establish they had it.
Unable to demonstrate a genuine issue for trial, the court granted summary judgment in favor of the plaintiff, awarding statutory damages of $2,000 for the four calls. The court trebled the damages to $6,000, as the defendants did not respond to Legg’s argument that the violations were willful and knowing.
To read the memorandum opinion and order in Legg v. PTZ Insurance Agency, Ltd., click here.
Why it matters: As we previously reported, the court had denied class certification in this case based on the predominance of individualized issues of consent, but the defendants were not able to walk away with a second victory. Instead, Judge Gettleman found that one of the two calls did constitute an advertisement under the TCPA, and while the second did not, the defendants lacked the necessary consent and were therefore liable under the statute, with trebled damages.
Uber drivers seeking to be classified (and compensated) as employees and not independent contractors were dealt a blow by the U.S. Court of Appeals, Ninth Circuit when the federal appellate panel reversed class certification and ordered the drivers to arbitration. The litigation began in 2013. Over the years, multiple class actions were consolidated and worked their way through the court system, including making a prior visit to the Ninth Circuit. In that ruling, the panel held that arbitration agreements between the drivers and Uber were neither substantively nor procedurally unconscionable and that the agreements delegated the threshold question of arbitrability to the arbitrator. With that background in mind, the Ninth Circuit granted Uber’s motion to compel arbitration, reversing the district court. The mere fact that the lead plaintiff opted out of arbitration did not bind the other drivers, the court said. In light of this conclusion, the court also decertified the class of approximately 160,000 drivers.
Douglas O’Connor and a fellow Uber driver filed a putative class action complaint against the company in August 2013, alleging claims for failure to remit the entire gratuity paid by customers to drivers in violation of California Labor Code Section 351 and for misclassifying the drivers as independent contractors and failing to pay their business expenses (including vehicles, gas and maintenance) in violation of California Labor Code Section 2802.
After several similar suits were consolidated with the original complaint, a California federal court judge certified a class of roughly 160,000 drivers in September 2015.
The court later ruled that the arbitration agreements signed by some of the drivers in 2014 and 2015 were unenforceable on public policy grounds, relying on the California Supreme Court’s decision in Sanchez v. Valencia Holding Co., because they contained a waiver of claims under the Private Attorneys General Act (PAGA).
Uber argued that the nonseverable PAGA waiver didn’t ban all PAGA claims but only prevented such claims from being arbitrated, with the blanket PAGA waiver found in a different section of the agreement that was severable. But the court disagreed.
The defendant appealed to the U.S. Court of Appeals, Ninth Circuit, telling the federal appellate panel that the 2014 and 2015 arbitration agreements featured an opt-out provision and that drivers who failed to exercise this choice should not be permitted to avoid the results. The court agreed and reversed the district court’s denial of Uber’s motion to compel arbitration. The agreements were not unconscionable, the court said, and the relevant provisions in the agreements delegated the threshold question of arbitrability to the arbitrator.
On remand, the district court upheld the class certification order and denial of the motion to compel arbitration for that class. Back before the Ninth Circuit, the federal appellate panel unequivocally ruled that the denial of Uber’s motions to compel arbitration must be reversed, rejecting the drivers’ alternative arguments that the arbitration agreements are unenforceable.
Alternatively, the drivers argued that the arbitration agreements were unenforceable because they contained class waivers in violation of the National Labor Relations Act (NLRA). This position was rejected by the Supreme Court earlier this year in Epic Systems v. Lewis, when a divided Court held that employers may require employees, as a condition of employment, to enter into arbitration agreements that contain class or collective waivers.
“In sum, the district court’s orders denying Uber’s motions to compel arbitration … must be reversed,” the panel said. In light of this ruling, the court also decertified the class created by the district court.
The panel reversed the denial of the motions to compel arbitration as well as the class certification orders.
To read the opinion in O’Connor v. Uber Technologies, Inc., click here.
A coding website directed to kids should modify its privacy practices and include the odds of winning a sweepstakes in a disclosure in order to achieve compliance with both the Children’s Online Privacy Protection Act (COPPA) and the Self-Regulatory Program for Children’s Advertising, the Children’s Advertising Review Unit (CARU) has recommended.
However, the registrant is free to join without verifying that he or she has an accompanying adult, by simply clicking the “Join” button. The registrant is also asked for an email address and must accept the website’s terms and conditions. Although an email address is collected, no email is sent to notify the parent or guardian about information practices or that the child has registered.
At the bottom of its website, Kano advertises a sweepstakes offer: “Sign up to our newsletter to win a Computer Kit Complete. You’ll also receive the latest news, offers and projects straight to your inbox.” Users can enter and submit their email address, again without parental notification.
Based on its review of the site, CARU determined that the operator did not comply with the CARU Guidelines or COPPA with regard to privacy practices, and failed to clearly disclose the odds of winning a sweepstakes as required by the CARU Guidelines.
COPPA and the CARU Guidelines require that services use a reliable method of parental consent, and during its review, the self-regulatory body observed there was no privacy practice notice sent to parents or any attempt to obtain verifiable parental consent.
To read the press release about the decision, click here.
Why it matters: Kano agreed to modify its advertising in accordance with CARU’s decision by implementing an FTC-approved method for obtaining verifiable parental consent and updating the online registration process so that prior to entering the sweepstakes, registrants will view a disclosure about the odds of winning.

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