Edited by
Jeffrey D. Knowles 
and
Gary D. Hailey
Venable Obtains Complete Dismissal of all Tort and Fraud-Based Claims Aimed at New York Law School
On Wednesday, Venable attorneys won dismissal of all claims brought by a putative class of New York Law School students and alumni in Gomez-Jimenez v. New York Law School, which was filed in New York State Court.
The fundamental claim in the case was one of false advertising, arguing that students and applicants relied on misleading information disseminated by the school concerning its graduates' employment and salaries in making their decision to attend the school.
In his opinion, Judge Schweitzer wrote, "The issues posed by this case exemplify the adage that not every ailment afflicting society may be redressed by a lawsuit." His decision dismissed each of the Plaintiffs' claims of statutory consumer fraud, common law fraud and negligent misrepresentation and adopted many of the arguments Venable set forth in its briefs and at the recent oral argument. Most significantly for purposes of the consumer fraud claim, the Court emphasized that the school's statements were not misleading in a material way to reasonable consumers acting reasonably under the totality of the circumstances, and the applicants had a wealth of information regarding their realistic employment prospects before, during and after the onset of the recession.
The Venable team handling the case includes James L. Shea, Michael J. Volpe, Edmund M. O'Toole, Edwin M. Larkin, Michael C. Hartmere, Megan Mann, Julia L. Davis, Emily M. Tortora and Kaveri B. Arora.
Click here to read Venable's press release about the dismissal.
Click here to read Judge Schweitzer's opinion.
"Fake News Site" Affiliate Marketers Settle FTC Deceptive Advertising Charges for $1.3 Million
The Federal Trade Commission ("FTC") announced Wednesday that two online marketers have agreed to settle allegations that they used so-called "fake news" websites to promote sales of dietary supplements containing acai berry. In both cases, the FTC alleged that the marketers created websites designed to look like those of legitimate news organizations and enticed consumers to buy the featured products from online merchants. Allegedly, the websites, which had names such as "Health News Health Alerts," often falsely represented that the reports they carried had been seen on major media outlets such as ABC, Fox News, CBS, CNN, USA Today and Consumer Reports.
The settlement in the first case, which the FTC describes in its press release as "the first FTC suit against an affiliate network," is with Copeac, a New York-based company that allegedly both operated its own fake news sites and recruited a network of affiliates that used fake news sites to drive product sales. Under the settlement, Copeac will pay more than $1.3 million to the FTC. The company must also monitor all of its affiliate marketers when selling any good or service, obtain adequate information about its affiliate marketers, approve its affiliates' advertisements, and immediately stop processing payments generated by any affiliate using deceptive advertisements.
In the second case, the FTC is suspending a $2.7 million judgment against Coulomb Media, Inc., and Cody Law after the defendants pay $170,000 in cash and surrender other assets.
In both settlements, the FTC requires that the companies make clear that any future commercial messages are advertisements rather than legitimate journalism. The settlements also bar the defendants from making deceptive claims about health-related and any other types of products.
Click here to read the FTC's press release and proposed settlements.
Oregon Attorney General Announces $3.34 Million Deceptive Advertising Settlement with Pfizer, Enforces Previous Internet Marketing Settlement
On Tuesday, Oregon Attorney General John Kroger announced that the state had reached a $3.34 million agreement with Pfizer, the world's largest research-based pharmaceutical company, to settle allegations that the company used unreliable and unsubstantiated claims to deceptively market its Zyvox® antibiotic.
The state alleged that Pfizer relied on flawed clinical studies
to substantiate assertions that Zyvox® was superior to a
well-known generic drug for treatment of pneumonia and bacterial
skin infections. Under the settlement, the company will pay more
than $3.34 million to reimburse the State Accident Insurance Fund
and Oregon Department of Corrections for purchases they made of
Zyvox®. The settlement funds will also fund a new Consumer
Education and Antimicrobial Stewardship Program. The remainder of
the settlement money will be used to fund Oregon's consumer
protection activities. The settlement provides for injunctive
relief to deter future similar claims by Pfizer and that will
prevent similar future misconduct with respect to other Pfizer
drugs.
The state also announced an unrelated settlement with Pfizer
regarding the company's Internet marketing practices. Under the
terms of a 2008 settlement with the state, the company's
promotional claims were required to comply with the federal Food,
Drug and Cosmetic Act ("FDCA"). However, Pfizer received
notice of violation letters from the Food and Drug Administration
("FDA") in both 2009 and 2011 alleging that the company
violated the FDCA by promoting various drugs via "sponsored
links" without disclosing required risk information. Under the
second Oregon settlement announced on Wednesday, Pfizer is required
to comply with FDA's interpretation of the law.
Click here to read the Oregon Attorney General's press release.
Analysis
The FTC Speaks Spanish - Do Your Advertising Lawyers?
Late last month the FTC and the Florida Attorney General's Office obtained a consent order against defendants who used Spanish-language television and radio spots to advertise a deceptive prize travel promotion. Venable partner Gary D. Hailey writes on Venable's advertising law blog, www.allaboutadvertisinglaw.com, that marketers should not be surprised that the FTC and state attorneys general are taking a greater interest in Spanish-language advertising given the growth in the Hispanic population over the past two decades and the growing influence of Spanish-language media.
Click here to read Hailey's blog post.
Federal Crackdown on Debt Buyer Emphasizes Need for Consumer Disclosures
A recent FTC settlement with debt buyer Asset Acceptance Capital Corp. is the latest of several actions against companies that profit from consumers in financial distress. Venable attorneys Jonathan L. Pompan and Damon W.D. Wright write on Venable's advertising law blog, www.allaboutadvertisinglaw.com, that the settlement illustrates the type of disclosures that any company which collects or buys debt and their attorneys should expect the FTC to demand in connection with investigations and enforcement actions going forward. They also write that it would be wise to expect the new federal Consumer Financial Protection Bureau ("CFPB") to follow this course through industry-specific regulations for debt collectors and debt buyers that are on the horizon.
Click here to read the post by Pompan and Wright.
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