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Recruiters who contact candidates by text message should take note of a recent decision out of the Western District of Virginia. In Kattato v. Cross Country Healthcare, Inc., No. 7:23-CV-00485 (W.D. Va. Feb. 23, 2026), the Court granted the plaintiff’s motion to compel discovery of phone numbers, text message dates, and related records that could be used to identify a class of individuals who received recruiting text messages in alleged violation of the Telephone Consumer Protection Act (“TCPA”).

The plaintiff, a certified registered nurse anesthetist, was contacted by two healthcare recruiters about travel healthcare job opportunities. Although the plaintiff initially consented to be contacted, he eventually grew frustrated with the text messages and repeatedly asked to be removed from the recruiters’ contact list. Despite those requests, the recruiters allegedly continued to text him about job opportunities.

The plaintiff filed suit in August 2025, asserting two claims under the TCPA on behalf of himself and a putative class. Count I alleged that the defendants violated the TCPA’s Internal Do Not Call List provisions under 47 C.F.R. § 64.1200(d) by failing to honor his request to stop receiving solicitations (“Internal DNC Claim”). Count II alleged that the defendants violated the National Do Not Call Registry provisions under 47 U.S.C. § 227(c)(5) by placing telephone solicitations to a phone number that had been registered on the National Do Not Call Registry since May 2019 (“National DNC Claim”).

The Discovery Dispute

As part of pre-class certification discovery, the plaintiff served interrogatories and requests for production seeking information about other individuals who received similar text messages from the defendants. After unsuccessful attempts to resolve the dispute through meet-and-confers, the plaintiff filed a motion to compel. His discovery requests, which he described as “pared back” from his original requests, sought four categories of information:

  1. The phone numbers of individuals who met the Internal Do Not Call List class definition: i.e., “all persons to whom, Defendants (or Defendants’ agent) [sent] two or more text messages about a health-care position … more than 30 days following a request by such individual not to receive such communication … from August 4, 2019 to present.”
  2. Information and Documents reflecting the dates texts were sent to those identified in Category # 1 and the dates in which those individuals were requested to be placed on the Internal Do Not Call List.
  3. The phone numbers of individuals who met a portion of the National Do Not Call Registry class definition: those who received two or more recruiting texts within a twelve-month period from August 4, 2019 to present.
  4. Documents reflecting the dates texts were sent to the phone numbers identified in the third request.

The defendants opposed the motion on two primary grounds. First, they argued that the discovery was irrelevant because they were engaged in “recruiting,” not “telemarketing,” and the TCPA applies only to telemarketing. Second, they contended that the discovery was disproportionate because the requested materials were held by third-party vendors, making production unduly burdensome.

The Court’s Analysis

The Court rejected the defendants’ relevance objections as to all four discovery requests. For the Internal DNC Claim, the Court noted that the discovery requests directly addressed the elements of a claim under 47 C.F.R. § 64.1200(d)(3), including whether the defendants made multiple calls for commercial purposes and failed to honor do-not-call requests. For the National DNC Claim, the Court similarly found that the requests sought information going to the core elements of a claim under 47 U.S.C. § 227(c)(5)—namely, whether telephone solicitations were placed to numbers on the National Do Not Call Registry more than once within a twelve-month period.

On proportionality, the Court found that the defendants failed to carry their burden. Although the defendants characterized their tracking system as “very clunky,” they did not submit an affidavit estimating the cost of compliance in opposing the motion to compel. The Court noted that an objecting party “must allege specific facts that indicate the nature and extent of the burden, usually by affidavits or other reliable evidence,” and the defendants’ vague assertions fell short.  The court then walked through all six proportionality factors under Rule 26(b)(1) and found that a majority favored granting the motion:

  • Importance of the issues: The Court found that vindicating the privacy interests of the putative class members was an important issue, consistent with the TCPA’s purpose of protecting consumer privacy.
  • Amount in controversy: Neutral, as neither party clearly established the amount in controversy, though the plaintiff alleged aggregate damages potentially in the millions of dollars.
  • Relative access to information: Favored the plaintiff because the defendants had greater access to the records held by their third-party vendors.
  • Parties’ resources: Neutral, as neither party made a sufficient showing.
  • Importance of discovery in resolving the issues: Favored the plaintiff, as the discovery was necessary for him to establish class certification requirements such as numerosity, commonality, and typicality.
  • Burden vs. benefit: Favored the plaintiff, because the defendants failed to quantify or even estimate the costs of producing the requested discovery.

The Court ordered the defendants to produce the requested materials within 30 days.

Key Takeaways

This decision holds several important lessons for companies that use text messaging as part of their recruiting or marketing operations.

  • The TCPA may apply to recruiting texts in certain circumstances. The defendants’ principal argument—that they were engaged in recruiting, not telemarketing—did not carry the day at the discovery stage. The Court did not foreclose the argument on the merits, but it was not enough to shield the defendants from pre-certification discovery. Businesses that use text messages to recruit workers should be aware that courts may treat those messages as solicitations.
  • Maintain robust internal do-not-call procedures. This case underscores the need for companies to maintain effective internal do-not-call lists and to honor opt-out requests within the appropriate windows required by 47 C.F.R. § 64.1200(d)(3). Companies should ensure their systems reliably suppress communications to individuals who have requested not to be contacted.
  • Keep records of your text message campaigns. The defendants’ reliance on third-party vendors to store text message data did not shield them from discovery obligations and may not shield them from liability. The Court found that the defendants had greater access to those vendors’ records than the plaintiff, which weighed in favor of compelling production. Companies should ensure they maintain or can readily obtain from their vendors records of text messages sent, dates of transmission, and opt-out requests.
  • Do not rely on boilerplate objections to resist discovery. The Court found the defendants’ proportionality objections inadequate because they failed to provide specific facts, affidavits, or cost estimates to support their claims of undue burden. Specific, well-supported objections backed by reliable evidence are essential.
  • Pre-certification discovery in TCPA class actions is broadly available. The Court reaffirmed that discovery before class certification is generally permitted in certain courts to allow plaintiffs to develop the factual record necessary for class certification. Companies facing TCPA class actions should expect plaintiffs to seek discovery of call logs, phone numbers, and related records at the pre-certification stage.

We will continue to monitor developments in this case and others like it. Companies that use text messaging for recruiting or marketing purposes would be well served to review their TCPA compliance programs now.

When a defendant defaults, fails to respond to a motion for class certification, and produces no evidence of consent, one might assume that class certification is a formality. A recent decision from the Eastern District of Pennsylvania is a useful reminder that in telemarketing litigation, even an unopposed motion gets a “rigorous analysis” and a plaintiff who cuts corners can come up short.

In Garcia v. Star Power Marketing Group, LLC, 2026 WL 1830937 (E.D.P.A. Jun. 24, 2026), a consumer sued individually and on behalf of a putative class, alleging that Star Power violated the Telephone Consumer Protection Act (TCPA) by sending text messages to numbers on the National Do Not Call Registry without written consent. The consumer, whose number was allegedly on the Registry, said she received at least five marketing texts soliciting her to attend Star Power events. She also asserted a claim under the Pennsylvania Telemarketer Registration Act (PTRA), alleging Star Power made calls as a telemarketer without registering with the Office of Attorney General.

After initially defaulting, Star Power answered the complaint and asserted that the consumer had “opted in” to receiving Star Power’s promotions prior to June 2024.

As with the complaint, Star Power did not respond initially to the plaintiff’s motion for class certification. Even so, the court reminded the parties that even when unopposed, certification is proper only after the court confirms that the prerequisites in the Federal Rules of Civil Procedure are met. That burden rests squarely on the party seeking certification.

Before even reaching Rule 23, the court flagged that the plaintiff’s supporting declaration was unsigned, and therefore its evidentiary value was “drastically reduced.” Because the motion was denied without prejudice, the plaintiff will get a chance to re-file a signed declaration—and the court pointedly noted “[i]t would behoove her to do so.”

The Numbers Were There—But Consent Was the Problem

The plaintiff cleared the numerosity hurdle. The plaintiff asserted that texting records produced in response to a subpoena identified 2892 telephone numbers that received texts despite being on the National DNC Registry. Because the Third Circuit treats numerosity as typically satisfied when the potential class exceeds 40, that requirement was met.

Adequacy posed no immediate obstacle either. The plaintiff described herself as an “ordinary, well-meaning consumer who is fed up with the text message calls at issue” who was familiar with her role as class representative.  The court cautioned, however, that the plaintiff’s unsigned declaration in support of her adequacy carried “little to no weight,” though it saw no issue with her adequacy so long as she re-filed a signed declaration and the defendant did not object.  As for counsel, the court found no reason that the plaintiff’s attorney—who had been appointed class counsel in a TCPA class action and served as co-counsel in others that settled—could not adequately represent the class.

The case unraveled on typicality. The plaintiff argued that consent did not defeat typicality because she denied consent was given and Star Power proffered no evidence to the contrary. The court disagreed, finding it could not determine whether the consent defense was typical across the putative class. Star Power repeatedly asserted that the plaintiff had “opted in prior to June of 2024” and denied that a class could exist for people who “voluntarily ‘opt[ed] in’ to a text database with [the] option of removing themselves by texting stop.” The proposed class definition did not limit itself to non-consenting recipients, and the plaintiff offered nothing about whether Star Power even had a consent mechanism.

The same gap doomed predominance. The court was “perplexed” by the plaintiff’s assertion that “Defendant admitted that it possessed no consent,” noting that the claim had no record citation and that Star Power’s Answer pled the opposite. Critically, the court held that a defendant’s mere failure to produce consent evidence is not enough to certify a class. Determining the type of consent each class member did or did not give would require individualized review, and a plaintiff is not entitled to a presumption that all class members failed to consent. If discovery was the problem, the court observed, the plaintiff should have moved to compel rather than relying on a bald assertion.

The PTRA Claim: No Private Right of Action

The court raised an even more fundamental problem with the PTRA class: courts in the Eastern District of Pennsylvania have repeatedly held that the PTRA does not create a private cause of action. The court observed that plaintiff’s counsel should be well acquainted with that principle, having served as a pro se plaintiff in two such cases and as counsel in another where the Eastern District of Pennsylvania held the PTRA does not create a private cause of action. Rather than certify a class under a statute that provides no private remedy and waste judicial resources, the court ordered supplemental briefing on why the PTRA claim should not be dismissed with prejudice. As the court put it, resolving the key factual question of whether Star Power was a registered telemarketer would seemingly not change the outcome when the PTRA confers no private right of action in the first place.

Takeaways for Advertisers

  • Consent is the battleground in TCPA class actions. A defendant’s denial of consent—or even silence in discovery—does not relieve the plaintiff of showing that the consent question can be answered on a classwide basis. Maintaining clear records of opt-ins and a documented consent mechanism remains a powerful defense to certification.
  • A defendant’s lack of consent evidence does not carry the plaintiff’s burden; without a record showing how consent works, a class definition that excludes consenting recipients, and proof that consent can be resolved with common evidence, courts will treat consent as an individualized question that defeats certification.
  • Unopposed does not mean automatic. Defaulting or failing to respond to a certification motion does not hand the plaintiff a certified class; the court still conducts a rigorous, merits-based Rule 23 analysis.
  • Procedural basics matter. An unsigned declaration carried little to no weight and nearly sank the plaintiff’s adequacy showing.
  • Mind the statute. A claim under a statute with no private right of action—like the PTRA—may not just fail certification; it may be dismissed with prejudice.

The court denied the motion for class certification without prejudice, so this story is not over. But Garcia offers a clear reminder that, in TCPA class litigation, the plaintiff’s evidentiary burden does not disappear simply because the other side goes quiet.

The Federal Trade Commission (“FTC”) recently filed a Complaint in the Southern District of California against six entities and four individuals, accusing them of deceiving customers with their use of “free” and “risk-free” trial period advertising related to cooking products, golf-related products, and online subscription services on their websites, in TV infomercials, and via email.

risk-free trial offer
Copyright: kchung / 123RF Stock Photo

The FTC’s Complaint alleges that the defendants violated section 5(a) of the FTC Act, which prohibits unfair or deceptive acts, by misrepresenting the trial offers applicable to their products.  Specifically, the FTC accuses the defendants of advertising their products as having a “risk-free” trial period when, in reality, the consumers are required to return the product at their expense before the trial period ends in order to avoid being charged additional amounts for the product.  The FTC also accuses the defendants of failing to adequately disclose the material terms and conditions of the trial offer, of their continuity/subscription plan offers, and of their refund and cancellation policy.  For example, the FTC takes issue with the defendants’ failure to clearly disclose that they would start charging the consumer if he/she did not cancel the trial period or return the product.

In addition to violations of the FTC Act, the FTC’s Complaint also alleges violations of the Restore Online Shoppers’ Confidence Act (“ROSCA”).  The FTC describes ROSCA as an act that “prohibits any post-transaction third party seller (a seller who markets goods or services online through an initial merchant after a consumer has initiated a transaction with that merchant) from charging any financial account in an Internet transaction unless it has disclosed clearly all material terms of the transaction and obtained the consumer’s express informed consent to the charge.”  The FTC’s Complaint against the defendants focuses on section 4 of ROSCA, which prohibits the sale of products through an improper “negative option” feature.  A “negative option” feature is a provision in an offer to sell goods or services under which the consumer’s silence is taken as an acceptance of the offer.  It is improper to utilize a “negative option” feature unless the seller satisfies the following requirements: (1) clearly and conspicuously disclose all material terms of the transaction before obtaining the consumer’s billing information, (2) obtain the consumer’s express written consent before charging the consumer, and (3) provide a simple mechanism for the consumer to stop recurring charges.  The FTC’s Complaint alleges that, in violation of section 4 of ROSCA, the defendants did not meet any of those three requirements with respect to their cooking and golf-related goods and services.

The FTC seeks an injunction preventing future violations of the FTC Act and ROSCA as well as other relief necessary to redress injury to consumers.  It is clear that the FTC looks closely at advertisements claiming to offer “free” and “risk-free” trial periods and that companies should make sure to adhere to the FTC’s and ROSCA’s requirements.

 

In Van Elzen v. American Home Shield Corp., No. 24-C-1206, 2026 WL 1078771 (E.D. Wis. Apr. 21, 2026), the United States District Court for the Eastern District of Wisconsin granted summary judgment to American Home Shield Corporation (“AHS”) in a putative class action alleging violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. The decision offers important guidance for companies that engage in text-based marketing, particularly on two issues: what constitutes “prior express consent” under the TCPA and how a robust compliance program can invoke the statute’s safe harbor defense.

The Facts: A Familiar Pattern in TCPA Litigation

The plaintiff alleged that AHS sent him four unsolicited text messages about home warranty products in August 2024, despite his phone number being listed on the National Do Not Call (“DNC”) Registry since 2011. The plaintiff denied ever visiting AHS’s website, emphasizing that he is a renter with no reason to inquire about home warranties and that his name was misspelled in the email address AHS had on file.

AHS told a different story. It contended that someone using the plaintiff’s contact information had navigated to a warranty comparison website, proceeded to AHS’s site, and submitted an online form requesting a home warranty quote. The form included a clear disclosure immediately above the submit button, stating: “By clicking the button below, you consent to receive email at the email address you provided, as well as prerecorded messages, auto-dialed phone calls and text messages at the phone number you provided.” AHS further noted that when it called the number provided, the outgoing voicemail identified the phone as belonging to the plaintiff.

Adding intrigue, AHS characterized Van Elzen as a “frequent filer of TCPA lawsuits,” having brought twelve prior TCPA complaints—all apparently resolved by settlement. Forensic analysis of the plaintiff’s computer revealed that internet browsing history had been deleted from his laptop the same day he took his laptop to a local IT vendor and just six days before filing suit. Recoverable data showed visits to home-improvement lead-generation websites, including myhomequote.com, which lists AHS among its partners.

The Court’s Analysis of Consent: Written Agreement Not Required

On the consent question, the District Court rejected the plaintiff’s argument that AHS could not establish consent because it lacked a “signed, written agreement” as required by FCC implementing regulations. The District Court concluded that compliance with the E-SIGN Act was unnecessary because “the plain text of the TCPA does not require a written agreement in order for a consumer’s consent to receive texts to be valid.”

Citing the Eleventh Circuit’s decision in Insurance Marketing Coalition Limited v. FCC, 127 F.4th 303 (11th Cir. 2025), and the Supreme Court’s ruling in McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., 606 U.S. 146 (2025), the District Court held that it was not bound by the FCC’s interpretation of the TCPA and should instead apply “ordinary principles of statutory interpretation.” Under those principles, and drawing on the common law meaning of “prior express consent,” the District Court found that “[a] consumer who provides his contact information and clicks on the word ‘submit’ on his computer screen, above which appears the message that, by doing so, ‘you consent to receive … text messages at the phone number you provided,’ is giving express consent to receiving such messages.”

However, the District Court could not grant summary judgment on this basis. Despite the suspicious circumstances including serial TCPA filings, deleted browser history, and visits to lead-generation websites, the plaintiff’s “testimony that he did not” submit the online form was sufficient to create a genuine factual dispute. The District Court noted that AHS’s evidence, while strong, did not amount to the kind of irrefutable video evidence that would permit a court to reject a nonmovant’s sworn testimony at summary judgment.

The Safe Harbor Defense: Where the Case Was Won

Although the consent question survived summary judgment, AHS prevailed on its alternative argument: the TCPA’s safe harbor defense. Under 47 U.S.C. § 227(c)(5) and 47 C.F.R. § 64.1200(c)(2)(i), a defendant can avoid liability if it demonstrates that a violation resulted from error and that the company had implemented reasonable practices and procedures to prevent such errors.

The District Court found that AHS met this standard. AHS maintained a written Telemarketing DNC Policy that applied to all employees, subsidiaries, and third-party contractors. It used a sophisticated lead management system that blocked calls to numbers on its internal DNC lists and restricted calls to permissible times of day. AHS required employees to log call outcomes, undergo training on TCPA requirements, and ensure that third-party contractors were contractually bound to comply with the TCPA. Critically, AHS did not make “cold calls” to anyone who had not already expressed interest in its products, and it purchased access to the National DNC Registry from July 2024 through July 2025.

This showing was “sufficient to demonstrate compliance with the regulatory standards” and as a result, AHS was “not liable for its error (assuming it was error) in believing it had Plaintiff’s prior express consent to contact him.”

Takeaways for Marketers

This case is instructive on several fronts for companies that use text messages or phone calls as part of their marketing programs.

  • The holding that the TCPA does not require a written agreement for prior express consent is a significant development, particularly in light of the Supreme Court’s and the Eleventh Circuit’s recent decisions limiting the FCC’s authority to layer additional restrictions onto the statutory text. Marketers should nonetheless continue to document consumer consent clearly and conspicuously.
  • The decision also highlights the difficulty of proving consent at summary judgment. Despite strong circumstantial evidence (e.g., serial TCPA filings, deleted browser history on the eve of litigation, visits to lead-generation sites, and a voicemail matching the plaintiff’s identity) the plaintiff’s bare denial of submitting the online form was sufficient to create a genuine dispute of material fact. The District Court noted that nothing short of irrefutable evidence, such as a video recording, would permit it to reject a nonmovant’s sworn testimony. Companies should therefore not assume that a strong factual record on consent will be dispositive before trial, which makes the safe harbor defense all the more critical as a path to early resolution.
  • Perhaps most importantly for day-to-day compliance, this case underscores the power of the safe harbor defense. Even where a company cannot conclusively prove that a consumer consented, a well-documented compliance program can provide a defense. The defendant won this case not because it proved consent but because it proved it had done everything reasonable to avoid TCPA violations.
  • The decision is a reminder that the economics of TCPA class actions continue to drive litigation as potential exposure can reach hundreds of millions or even billions of dollars. The District Court’s pointed discussion of the “incentive structure” of TCPA class actions, along with its observation that the plaintiff had filed twelve prior TCPA suits, all resulting in settlements, reflects a judicial awareness that serial TCPA plaintiffs remain a reality of the landscape.

Companies should take this decision as a prompt to review their own TCPA compliance programs. Written policies, training protocols, internal DNC lists, sophisticated call-blocking software, and subscription to the National DNC Registry—all of the measures AHS had in place—are the building blocks of an effective safe harbor defense. As Van Elzen demonstrates, a strong compliance program can mean the difference between a potential class-wide damages award and summary judgment.

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The recent final approval of a class action settlement in Johnson v. Comodo Group, Inc. demonstrates the substantial risks companies face when facing allegations of engaging in automated telemarketing without proper consent. On February 4, 2026, the U.S. District Court for the District of New Jersey granted final approval to a $1,625,000 settlement resolving claims that Comodo Group violated the Telephone Consumer Protection Act (“TCPA”) by making prerecorded telemarketing calls to consumers’ cell phones without their prior express written consent.

Plaintiff Michael Johnson initiated the class action in 2016, alleging that Comodo Group engaged in a “sophisticated sales practice” to market encrypted software using prerecorded voice messages without obtaining consent from the recipients. The TCPA expressly prohibits autodialed or prerecorded marketing calls to cellular telephones without the called party’s prior express written consent. 47 U.S.C. § 227(b)(1)(A)(iii). Violations carry statutory damages of $500 per call, which can be trebled to $1,500 for willful violations.

This case exemplifies the marathon nature of TCPA class litigation. Over ten years, the parties engaged in extensive discovery and vigorously contested every phase of the litigation. Document productions consisted of not just audio recordings and call records, but also emails, contracts, system manuals, and the like.  The defendant unsuccessfully moved for summary judgment, sought to strike plaintiff’s expert testimony twice, moved to decertify the class, and pursued interlocutory appeal to the Third Circuit. Despite these efforts, the court certified a nationwide class of all persons who received prerecorded telemarketing calls from Comodo within four years of the complaint’s filing.

Of the 12,757 identified class members, 1,266 submitted valid claims.  The District Court noted that a 10.2% claims rate was “far above the median” for class actions. The average recovery per claiming member was $596.17, with distributions weighted by the number of unlawful calls received. The District Court emphasized that this recovery “is far above the average recovery for TCPA class settlements,” citing comparable cases where per-claimant recoveries ranged from approximately $14 to $160. No class members objected to the settlement, and none opted out.  The Court found this to be a powerful indicator of the settlement’s fairness.

Key Takeaways for Businesses

The Johnson decision reinforces several critical compliance considerations for any company engaged in telemarketing or automated outreach:

  • Document Consent: The TCPA requires prior express written consent for autodialed or prerecorded marketing calls to cell phones. Businesses must implement robust systems to capture, store, and verify consent before initiating such calls.
  • Understand the Stakes: With statutory damages of $500 to $1,500 per call, a telemarketing campaign reaching thousands of consumers can quickly generate exposure in the millions. As Johnson demonstrates, even a settlement representing a fraction of maximum potential liability results in substantial payouts.
  • Prepare for Prolonged Litigation: TCPA class actions are frequently hard-fought and resource-intensive. Companies should assess their compliance posture before litigation arises rather than after.

The Johnson v. Comodo Group settlement underscores that the TCPA remains a powerful consumer protection statute with real teeth. For businesses relying on telemarketing, ensuring proper consent protocols is not merely a best practice—it is a legal necessity.

The advent of generative-AI tools has brought challenging questions of accountability to the forefront, especially when those tools generate content that may infringe on someone’s copyright. Determining liability—whether it falls on the user who prompted the tool, or the company that developed the tool—is complex. As technology outpaces current legal frameworks, courts have been cautious in navigating these unexplored areas of law and liability.

In Andersen v. Stability AI Ltd., a group of artists brought a class action against the developers of an image-generator. They alleged the tool infringes on their copyrights by producing images that are substantially similar to their own copyrighted work. Specifically, the artists claimed that every image the tool outputs infringes because it was trained on copies of their work.

The artists pointed to case law precedent about direct copying to support their claims. In the prior case, music companies claimed individuals were playing music without obtaining the necessary license or paying royalties. Proving infringement there was just a matter of showing the music was being played because the performers were wholly copying the music for their shows. The AI-generated outputs in Andersen, however, are not exact replicas but rather a chaotic mixture of everything used to train the tool. This makes it much more difficult to prove direct copying or substantial similarities.

In Andersen, the Northern District of California found it implausible that every image could be substantially similar enough to infringe on the artists’ copyrights. While the court dismissed their claims, it allowed them leave to amend their complaint to (1) clarify how their works were copied in the training process, and (2) identify infringing output images. In the artists’ amended complaint, they offered additional evidence to support their direct infringement claims, and they added a new claim: that the developers should be liable for enabling others to infringe by distributing a tool that can reproduce copyrighted images. This argument calls on precedent from a time when file-sharing platforms were becoming notorious for the unauthorized distribution of copyrighted music.

That era of novel legal developments established that developers of file-sharing services could be held accountable for intentionally encouraging and facilitating the exchange of infringing music files among users. Much like cases of copying music to perform it, proving file-sharing services infringed was simple, as the shared music was an exact copy of the original. The question now is whether this reasoning will extend to the outputs of generative-AI tools.

There may be a parallel to be drawn with liability for software vendors. In a Connecticut case, the vendor of a tenant screening software faced a lawsuit for breaching the Fair Housing Act due to alleged racial discrimination. The vendor offered a platform for housing providers to perform criminal background checks. Although the District of Connecticut did not directly rule on the vendor’s liability because it was not subject to the Fair Housing Act, it emphasized the vendor’s duty to not sell products that could enable customers to unknowingly violate the law.

Likewise, courts may begin to stress that AI-tool developers have a duty to not distribute tools that can violate copyrights by replicating copyrighted images. Lawsuits concerning the outputs of generative-AI tools continue to test the boundaries of copyrights as they make their way through the judicial system. The outcomes of these legal battles could set crucial precedent and shape the future of AI-generated content and its regulation.

Note: David Lindgren drafted this post while a Summer Associate at Fox Rothschild’s Minneapolis Office this summer.

On June 11, 2022, Plaintiffs Matthew Sinatro and Jessica Prost filed a class action lawsuit in the Northern District of California against the Barilla pasta company over alleged false advertising. The plaintiffs claim Barilla deliberately deceives shoppers into believing fifty-four of Barilla’s pasta products are made in Italy by labeling some pastas as “ITALY’S #1 BRAND OF PASTA” while replicating Italy’s national flag’s green, white, and red colors:

Contrary to this labeling, the plaintiffs claim Barilla’s pasta products are not made in Italy, do not use ingredients from Italy, and are not manufactured in Italy.

According to Barilla’s website, Barilla pasta that is sold in the United States is made in Ames, IA and Avon, NY, “with a few exceptions.” Only the Barilla Tortellini and Barilla Oven Ready Lasagne are made in Italy. Barilla’s website also notes the same recipes are used in the United States and Italy, and that the pastas are made by the same types of machines. 

The Complaint argues “authentic Italian products, including pastas, hold a certain prestige and [are] generally viewed as a higher quality product,” and that “consumers willingly pay more for Italian sounding and/or looking  products.” Indeed, the plaintiffs both argue they would not have purchased Barilla’s pasta products if they had known the pastas were made in the United States. Rather, they would have chosen cheaper alternatives.

The plaintiffs assert five causes of action against Barilla: violation of California’s Unfair Competition Law (“UCL”); violation of  California’s False Advertising Law (“FAL”); violation of California’s Consumers Legal Remedies Act (“CLRA”); breach of warranty; and unjust enrichment/restitution.

Barilla moved to dismiss the complaint, arguing the plaintiffs lacked Article III standing to pursue their claims and that the plaintiffs’ claims were deficient. The Northern District of California granted the motion in part and denied in part.

The Court agreed with Barilla that the plaintiffs lacked Article III standing to pursue injunctive relief under their UCL, FAL, CLRA, and breach of warranty claims. The Court explained the plaintiffs “cannot plausibly allege that they remain unaware that the products are manufactured in the United States from ingredients that are not from Italy or that they reasonably would be misled if they encounter the Challenged Representation in the future.” Thus, the plaintiffs’ claim for injunctive relief was dismissed with leave to amend.

However, the Court rejected the rest of Barilla’s arguments and declined to dismiss any other claim. Therefore, the plaintiffs’ claims will move forward, with an initial case management conference scheduled for November 2, 2022.

What does “natural” mean in the context of product advertising?  Consumers see phrases like “natural,” “all natural,” and “100% natural” over and over again in modern marketing.  The trouble is that “natural” may not mean what consumers expect it to mean, thereby opening companies up to claims of false or misleading advertising.

Two recent lawsuits against Pret A Manger, the sandwich company, provide a cogent illustration.  One complaint was filed by two consumers as a class action.  The other was filed by three non-profit organizations (including the Organic Consumers Association) on behalf of their members and the general public.  Both complaints assert that Pret A Manger has deceptively labeled, marketed, and sold certain bread and other baked goods as “Natural Food” when the products contain trace amounts of a chemical biocide.  According to the non-profit plaintiffs, consumers are willing to pay more for “natural” products and consumers expect such products to be free of pesticides.

This isn’t the first time the Organic Consumers Association, the Federal Trade Commission, or others have gone after companies advertising their products as “natural.”  Companies should be mindful when marketing their products using that term, and should be prepared to defend the claim with substantiation if necessary.

 

Trademark professionals often warn our clients to be skeptical when they receive official seeming bills or notices offering pricey and unneeded trademark related services. These scams have been around for as long as I have been practicing trademark law. There are periodic attempts to combat the practice by our community with warnings (we blogged about the issue here), information (the USPTO maintains a blacklist and encourages trademark owners to email a copy of the notice and the envelope it came in to TMFeedback@uspto.gov in order to keep the list up-to-date) and lawsuits.

Whack-a-Mole Game at a CarnivalThis summer has seen another flurry of activity against the moles.

A few weeks ago the United States Patent and Trademark Office held a roundtable on fraudulent solicitations:

Numerous owners of U.S. trademark registrations, as well as applicants for such registrations, have been targeted by unscrupulous parties who extract their names from … USPTO databases and offer them services, often holding themselves out to be acting on behalf of the USPTO. In many instances, the services are never performed, or are performed in an incorrect manner that puts the registration at risk of cancellation. In addition, inflated fees may be charged for the alleged services.

Leason Ellis, a 25-attorney IP boutique firm based outside New York City, filed a lawsuit in 2012 against a scammer called USA Trademark Enterprises, which was eventually resolved by a consent decree. The firm sued again in 2013, this time against a renewal scam called Patent and Trademark Agency LLC. Last month the firm reportedly filed a new lawsuit against the similarly-named Patent and Trademark Association Inc.

If you are victimized by one of these con artists, we encourage you to take action both for yourself and for the good of the community. If you have incurred actual damages, talk to a lawyer about how to obtain reimbursement and whether you might be a good candidate for a class action lawsuit on behalf of other victims. Although your losses may not be enough to justify incurring legal fees, a successful class action lawsuit reimburses class representatives for their reasonable costs and covers the attorney fees as well. Think about it…

Several large retailers likely thought that they were finally clear of legal problems relating to advertising sale prices for products that were not truly on sale.  With a post on September 28, 2016, https://advertisinglaw.foxrothschild.com/?s=class+action, Dennis Hansen discussed these class action lawsuits, several which have settled for millions of dollars.  For example, JC Penny paid $50 million to settle a class action suit against it alleging that its advertised and listed sale prices were not actually sale prices, but were more akin to regular prices.  However, the bad news for these retailers continues as local government enforcement actions have now been brought.

The Los Angeles city attorney brought claims against Kohl’s, JC Penny, Macy’s and Sears based upon the same alleged conduct.  These lawsuits could subject these retailers to additional substantial penalties, on top of the money already spent on the consumer class actions.  Additionally, the Alameda County Attorney’s office recently brought claims against My Pillow for making health claims in its advertising that are allegedly not supported by any scientific research or studies.  My Pillow settled with Alameda County, agreeing to pay over $1 million in fines.

These actions brought by local governments are unique in that false advertising claims are usually left to the Federal Trade Commission (FTC”), consumer class actions, or lawsuits brought by competitors.   The FTC, however, does not have the resources to bring claims against all improper advertising, even focusing on just advertising relating to health claims.  However, these local government enforcement actions can somewhat fill that gap and give more effect to state statutes regulating advertising, such as California’s statute regarding what is a sale price.  As a result, it is important to make sure that you are aware of the advertising statutes in each state in which you are advertising, particularly if you are frequently listing a product as being on sale.  For example, in California, a sale price cannot be compared to a previous price (such as 50% off) unless that previous price was the actual market price of the product within the previous three months.  And, as always, all advertising claims, especially health claims, should be substantiated so that if a competitor, the government, or a consumer class action lawyer brings a claim, you are able to quickly show that the advertising is accurate.