In This Issue:

• Energizer False Advertising Suit Runs Out of Juice at 9th Circuit
• It's Been a Long Time Coming, But FTC Finally Obtains Settlement Permanently Freezing Out Fake Sweepstakes Company
• Of Baby Bottles and BPA-Free Claims: Lawsuits Make Identical Greenwashing Allegations Against Separate Advertisers

Energizer False Advertising Suit Runs Out of Juice at 9th Circuit

The 9th Circuit affirmed the dismissal of a class action lawsuit alleging that Energizer falsely advertised its AA MAX batteries as "up to 50% longer lasting."

Plaintiffs alleged that the packaging for Energizer Brand AA MAX batteries fraudulently exaggerated their performance, in violation of California's consumer protection laws including the California False Advertising Law (FAL), Consumer Legal Remedies Act (CLRA), and the California Unfair Competition Law. The district court dismissed the claims. On appeal, the panel affirmed the district court's decision, finding that plaintiffs failed to show how a reasonable consumer would be likely to be deceived by Energizer's representations—in a decision on the reasonable meaning of "up to" claims phrasing that conflicts with the position taken by the Federal Trade Commission (FTC) and to some extent with the National Advertising Division (NAD).

Plaintiffs were essentially arguing that a reasonable consumer would read Energizer's advertising to mean that AA MAX batteries usually last 50% longer than most or all batteries in most or all compatible devices, wrote the panel. But, as the panel said, that was not what the packaging says. Energizer claimed only that its AA MAX batteries are "up to 50% longer lasting than basic alkaline in demanding devices" (emphasis added in opinion). Thus, found the panel, the claim at issue promised only an "upper limit of performance (a ceiling of 50%) compared to a certain category of competitors (basic alkaline batteries) in a subset of applications (demanding devices)." Contrary to what plaintiffs posited, the claim did not make a blanket promise that the batteries would last 50% longer than all (or even most) competitors in all (or even most) applications.

The 9th Circuit was also unconvinced by plaintiffs' argument that the "up to" and "demanding devices" qualifiers did not cure the deception because they were vague and appeared in small print. The panel held the qualifiers were not hidden or "unreadably small," and, quoting the 9th Circuit's 1995 Freeman v. Time, Inc. opinion, they "appear[ed] immediately next to the representations [they] qualifie[d]."

Quoting from the dictionary, the panel also found that the qualifying words were not so vague that the reasonable consumer would not understand them. "These words are not particularly technical or difficult to understand, and though not exact, they cabin the scope of Energizer's claim in a way that renders Plaintiffs' reading of the advertising unreasonable."

The panel also rejected plaintiffs' reliance on the results of a battery testing and consumer perception survey to show that the batteries did not last as long as advertised, noting that where plaintiff is unable to prove that a reasonable consumer would be likely to be deceived, it was not necessary to evaluate additional extrinsic evidence.

Even if it were to evaluate the evidence, the testing didn't do the plaintiffs any favors, as it demonstrated that the AA MAX batteries performed better than the vast majority of competitors, wrote the panel. Further, the consumer protection survey results tested a different packaging with formatting differences, so the survey was not a good fit for the claim. The court rejected plaintiffs' argument that these formatting differences would not change consumers' understanding of the claim, noting that the "entire context of the advertisement is relevant when deciding whether a reasonable consumer might be deceived."

Key Takeaways

The 9th Circuit's decision highlights the often conflicting views on the meaning or reach of "up to" claims voiced by courts, the Federal Trade Commission, and the National Advertising Division, a BBB National Program. Although one could view the case as providing guidance on what constitutes a clear and conspicuous disclaimer—its real importance is the limitation it advances on the reasonable interpretation of the "up to" phrase—FTC has claimed that "up to" really means most as the plaintiff here alleged; NAD continues to espouse the view that an "appreciable number" of consumers must achieve the top-touted results—but what constitutes an appreciable number varies. This court took a far more practical view.

It's Been a Long Time Coming, But FTC Finally Obtains Settlement Permanently Freezing Out Fake Sweepstakes Company

Almost 10 years after filing the lawsuit, the Federal Trade Commission (FTC) has finally obtained a settlement barring a fake sweepstakes scheme that it alleged stole millions from consumers with the promise of prize money. The settlement bars three individual defendants from operating any sweepstakes outfit in the future.

In May 2015, the Federal Trade Commission filed the lawsuit alleging that a group of entities and individuals operating out of Fort Lauderdale, Florida, fleeced unwitting consumers in multiple countries out of more than $28 million with a deceptive sweepstakes operation.

According to the complaint, the scam operated by tricking consumers into thinking they'd won multimillion-dollar cash prizes. The catch was that letters sent to consumers informing them about the "prize" also told them that they had to pay a $20-$30 fee to obtain it. The sweepstakes letters falsely warned consumers that they'd forfeit the winnings if they didn't respond within a short period of time. Of course, there were no winnings, and the only one to make any money was the "sprawling sweepstakes operation," which had zero connection with any actual sweepstakes.

The FTC's complaint notes that the defendants did include language in their letters to the effect that they do not sponsor any sweepstakes and are only compiling a report for consumers on available sweepstakes, but this disclaimer appeared in "dense, confusing language" at the bottom or back of the letters. Further, most consumers did not receive this promised report either, said the FTC.

Under the terms of the settlement, three individual defendants—Matthew Pisoni, Marcus Pradel, and John Leon—are permanently barred from involvement in any sweepstakes or prize promotion. The settlement additionally prohibits the defendants from utilizing any of the information they gleaned while running the sweepstakes scam for future business ventures.

Key Takeaways

As Samuel Levine, director of the FTC's Bureau of Consumer Protection, notes in the press release announcing the settlement in a direct jab at Congress, no money will be returned to consumers thanks to the Supreme Court's decision in AMG Capital Management and its impact on the FTC's ability to collect monetary damages and incentivize defendants to pay money towards a settlement. That's a far cry from the FTC's original press release announcing the action, which said the agency sought not only to end the illegal practices but to return money to the victims.

Of Baby Bottles and BPA-Free Claims: Lawsuits Make Identical Greenwashing Allegations Against Separate Advertisers

It's all coming up baby bottles, BPAs, and microplastics …

A pair of class action lawsuits—different advertisers, different plaintiffs, same law firm—separately allege that Handi-Craft and Philips North America falsely advertise their products as "BPA free" when heating the bottles actually cause microplastics to leak into the bottles' contents.

Both lawsuits allege that the baby bottle manufacturers falsely market the products by materially omitting the fact that, when the products are heated, they leak harmful microplastics that can cause long-term health complications. The complaint also alleges that defendants further deceive consumers by labeling the products as "BPA FREE," lulling consumers into a false sense of security about the safety of the products.

Plaintiffs allege the products are made with polypropylene plastic and are exposed to heat through ordinary use. When heated, plaintiffs allege, this type of plastic leaks microplastics, and microplastics are decidedly not safe, especially for children.

"By making the affirmative representation of 'BPA FREE' and simultaneously omitting the fact that the Products leach harmful microplastics, Defendant deceives reasonable consumers into falsely believing that the Products do not pose any risk of exposing children to harmful plastics."

Both lawsuits accuse the companies of violating several California consumer protection statutes: the Unfair Competition Law (UCL), the False Advertising Law (FAL), and the Consumers Legal Remedies Act (CLRA).

The nearly identical complaints also allege that the "BPA FREE" claims run afoul of the FTC Green Guides, which state that it is deceptive to misrepresent directly or by implication that a product is free of a certain substance, as Handi-Craft and Philips do here.

Key Takeaways

This case is a subset of the wide-ranging wave of greenwashing suits targeting false advertising of everything from carbon neutrality to treatment of animals. We've seen a lot of suits lately alleging products are falsely advertised as natural when they contain PFAS. Plastics false advertising litigation is a trend as well, as these cases illustrate.

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