Two (Out of Three) Thumbs Down: Divided Ninth Circuit Panel Rules Rigged Product Reviews Can Be Actionable False Advertising

When you’re in the market for a fresh haircut or a new restaurant, innumerable business and product reviews are available to guide you towards a cleaner trim or tastier takeout. But what happens when the reviewer is not an impartial arbiter, but a less-than-honest broker disguising a financial interest in the service or product they’re applauding? And can a reviewer be held liable for false advertising if the reviews are secretly paid product placements?

In Ariix, LLC v. NutriSearch Corporation, 985 F.3d 1107 (9th Cir. 2021), the Ninth Circuit ruled that clandestinely biased reviews can be actionable false advertising under the Lanham Act. The decision may force reviewers and influencers to reconsider whether the First Amendment insulates them from false advertising liability.

At the center of Ariix is the NutriSearch Guide to Nutritional Supplements (the “Guide”), a nutritional supplement reference guide that has “become a trusted name among sales representatives in the direct marketing supplement industry.”[1] In the Guide, NutriSearch awards star ratings to nutritional supplement products and issues medal certifications to companies that comply with certain FDA practices and obtain laboratory certifications verifying the claims on their supplement labels. NutriSearch portrays the Guide’s ratings as objective and neutral, and has historically asserted that the Guide is the “sole creative effort of the author and NutriSearch Corporation, neither of whom is associated with any manufacturer or product represented in th[e] guide.”[2] 

Ariix, a nutritional supplement company covered in the Guide, brought suit against NutriSearch for false advertising under the Lanham Act, alleging that NutriSearch’s claims of objectivity were all a ruse. According to Ariix, the Guide is not the trustworthy source of unbiased reviews it purports to be, but is instead a covert advertising scheme intended to benefit Usana, one of Ariix’s competitors. Indeed, Ariix alleged, the Guide was originally developed by its author—a former Usana sales representative and advisory board member—as a means of promoting Usana products. Usana purportedly continued to pay NutriSearch and the Guide’s author in order to secure a top rating in the Guide. And as a means of preserving Usana’s top-rated status in the Guide, NutriSearch also changed its ratings criteria to hinder Ariix’s attempts to secure medal certification. 

The district court dismissed Ariix’s complaint, finding that consumer product reviews were categorically beyond the reach of the Lanham Act, and thus the Guide could not be commercial advertising or promotion that could be the subject of a false advertising claim.[3] The district court also concluded that any statements contained in the Guide were merely statements of opinion rather than actionable statements of fact. Ariix appealed.

Are Product Reviews Covered by the Lanham Act?

On appeal, a divided Ninth Circuit reversed. As the court initially noted, the prohibition on false advertising under the Lanham Act covers only “commercial advertising or promotion”—that is, publicly disseminated commercial speech intended to influence consumers to purchase a defendant’s goods or services. To determine whether the Guide indeed constituted “commercial speech”—which receives weaker First Amendment safeguards than other constitutionally protected speech, and thus can be regulated under the Lanham Act—the Circuit employed the three-part test from Bolger v. Youngs Drug Products Corp., 463 U.S. 60 (1983): (1) whether the speech at issue is an advertisement, (2) whether the speech refers to a particular product, and (3) whether the speaker has an economic motivation. Finding that the first two considerations did not “shed much light” on whether the Guide’s product reviews constituted commercial speech, the court focused largely on the third factor: whether NutriSearch had “acted primarily out of economic motivation.”[4] 

In discussing the “economic motivation” factor, the Circuit took care to note that not just any profit motive suffices; otherwise, any newspaper or book offered for sale would be rendered commercial speech and consequently receive weaker First Amendment protection. Nonetheless, the court concluded that Ariix had sufficiently alleged that the Guide was published with a primarily “economic motivation,” given Ariix’s allegations that the Guide was more akin to a “sham marketing scheme intended to benefit Usana” than “an objective compilation of product reviews.”[5] Namely, the court looked to Ariix’s allegations that the Guide was originally conceived as a means of increasing sales of Usana products, as well as Usana’s history of paying NutriSearchto maintain its status as the highest-rated company in the Guide. Moreover, the court noted that the Guide’s supposedly objective criteria were formulated to promote new Usana products and to ensure that Usana alone achieved the highest medal certification in the Guide. 

Taken together, these allegations sufficiently pleaded that the Guide was commercial speech that could form the basis of a false advertising claim—or, “[p]ut another way, it is more paid promotion than product review.”[6] And the majority also determined that the Guide contained actionable misrepresentations of fact, in its apparently false disclaimer of independence and its refusal to award medal certification to Ariix despite the seemingly objective criteria in the Guide. Having concluded that the Guide was thus commercial speech under the First Amendment, the majority briefly turned to the remaining factors bearing on whether that speech could be actionable “commercial advertising or promotion” under the Lanham Act: (a) whether it was sufficiently disseminated to the purchasing public, and (b) whether it was intended to influence consumer purchasing behavior. After summarily concluding the Guide satisfied the former factor, the majority directed the district court to consider the latter factor on remand —i.e., whether the Guide was intended to influence consumers to buy Usana’s product.

The Dissent on Statutory Grounds

Although the majority only briefly addressed the “intended to influence” factor before remanding on that issue, Judge Collins, in dissent, perceived it as the linchpin of the case. Citing the doctrine of constitutional avoidance—of deciding cases on statutory rather than constitutional grounds—the dissent focused not on whether the Guide was commercial speech under the First Amendment, but rather whether the Guide, even if it were commercial speech, could qualify as the type of “commercial advertising or promotion” that can form the basis of a Lanham Act claim in the first place. And according to the dissent, Ariix could not seek to hold NutriSearch liable under the Lanham Act unless the Guide “influences the target audience to purchase goods that are, in some viable sense, those of [NutriSearch]”—not those of a third party like Usana.[7]

Despite Ariix’s allegations that the Guide was little more than a means to promote Usana’s products, Judge Collins found the complaint established only that NutriSearch and the Guide’s author “produced biased reviews in the craven hope that Usana would then act in ways that were economically favorable” to them.[8] In other words, the Guide was not an attempt to promote NutriSearch’s own goods or products, nor was it the result of a true agency relationship, with NutriSearch acting under Usana’s direct control. As a result, the dissent would have affirmed dismissal of Ariix’s claim as falling outside the scope of the Lanham Act, regardless of whether the Guide was commercial speech for purposes of the First Amendment. By reaching the First Amendment question first rather than dismissing the case on statutory grounds, the dissent contended, the majority had injected “a substantial amount of uncertainty as to the scope of First Amendment protection for product reviews”—a result the dissent called “doubtful and disquieting.”[9] 

The Future of False Advertising Claims Regarding Product Reviews

To some extent, the result in Ariix is slightly overdetermined, considering its particularly egregious facts. As the majority took pains to emphasize, the offense was not simply a failure to disclose a financial interest; instead, NutriSearch had allegedly “conceived the Guide to juice sales of Usana products, actively misled the public about their supposed independence, and fiddled with their own ratings criteria to boost a favored company that lavishes them with hundreds of thousands of dollars in compensation.”[10] And the Guide’s misleading content, including its supposedly neutral criteria and its self-proclaimed objectivity, made NutriSearch a particularly easy target for a false advertising claim and a particularly weak case for a broader challenge to commercial speech regulation (as we have covered previously). 

But the ubiquity of paid product placements on social media—and the broad reach of those platforms—means that Ariix could usher in a bevy of Lanham Act challenges from disgruntled companies and consumers unsatisfied with third party reviews. Should those claims proliferate after Ariix, courts will need to grapple with drawing the line between product review and product promotion—and how much First Amendment protection should be afforded to each.