The United States Supreme Court recently held that classwide arbitration cannot be inferred from an ambiguous agreement.  The Supreme Court’s decision reverses a Ninth Circuit decision that relied on state contract principles to compel classwide arbitration of a putative class action filed by an individual employee.

In Lamps Plus, Inc. v. Varela, __ U.S. __ (April 24, 2019), the Court considered whether the Federal Arbitration Act (“FAA”) forecloses interpretation of an ambiguous arbitration agreement compelling classwide arbitration.  The Ninth Circuit affirmed the trial court’s determination that an agreement that stated “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings” was ambiguous as to whether it authorized class arbitration.  Applying California state contract principles to construe the agreement against the drafter, the Ninth Circuit held there was sufficient ambiguity to conclude the parties agreed to class arbitration. Continue Reading Supreme Court Holds That Class Arbitration Cannot Be Inferred from Ambiguous Agreement

The Ninth Circuit recently held a company vicariously liable for the actions of a downstream vendor of text message and telephone marketing activities. Companies should consider due diligence and vendor oversight protocols as counter-measures to limit the risk of liability for digital advertising and text marketing activities. Read the full article here.

On August 7, 2019, the Federal Trade Commission (FTC) will host a public workshop to examine consumer protection issues related to the sale of “loot boxes” in video games.

For those unfamiliar with the phrase, “loot boxes” are often in-game rewards that players can buy that typically contain a random assortment of virtual “loot” items for players to use in the game (e.g., to help them succeed or to customize their in-game avatars). Although loot boxes contain virtual rewards, they are purchased with real money and are becoming an increasingly popular revenue source for game developers. However, class action lawsuits, U.S. senators,  and the FTC have questioned the techniques used to market loot boxes in video games and whether there is a risk that minors can become addicted or otherwise be exploited by these in-game offers. Continue Reading FTC to Hold Workshop on Consumer Protection Issues Related to Video Game Loot Boxes

In 2016, UrthBox, Inc., a subscription-based service sending monthly snack boxes to customers, had only nine reviews on the Better Business Bureau’s website and all of them were negative. By 2017 UrthBox had 695 BBB reviews, 612 of which were positive.

According to a complaint from the FTC however, the cascade of positive reviews was the result of an incentivized review program. Specifically, in 2017 UrthBox offered to send customers an incentive (a free snack box) in exchange for submitting a positive review for UrthBox on the BBB website. However, the BBB requires customers submitting reviews to affirm they have not been provided any incentive from the business they are reviewing. UrthBox also offered incentives for customers who posted about their products on Twitter, Instagram, Tumblr, and Facebook but, according to the FTC, UrthBox did not monitor or provide instructions to consumers on how to comply with the FTC’s Guidelines on endorsement disclosures. Those Guidelines put the onus on businesses to make sure that customers posting reviews sufficiently disclose any compensation received from the business. Continue Reading Incentivized Review and Free Trial Practices Draw the Ire of the FTC

On March 28, 2019, the Federal Trade Commission (FTC) joined the Food and Drug Administration (FDA) in sending warning letters to three companies that market products that contain cannabidiol (CBD), which the companies claim can treat a variety of serious physical and mental disorders. Continue Reading FTC Joins FDA in Sending Warning Letters to Companies Advertising and Selling Products Containing Cannabidiol (CBD) Claiming to Treat Alzheimer’s, Cancer, and Other Diseases

In the wake of the D.C. Circuit’s opinion vacating the Federal Communications Commission’s order interpreting the Telephone Consumer Protection Act (TCPA), federal courts have disagreed on how to define an “automated telephone dialing system” (“autodialer”) under the statute. Judge Edmond E. Chang of the U.S. District Court for the Northern District of Illinois recently stepped into the fray, holding in Gadelhak v. AT&T Service, Inc., that equipment qualifies as an autodialer only if it has the (present) capacity to generate numbers randomly or sequentially. Continue Reading New TCPA Ruling Holds an Autodialer Must Have the Capacity to Generate Numbers Randomly or Sequentially

As of January 1, 2019, video game developers and publishers are now subject to certain accessibility requirements under the Twenty-First Century Communications and Video Accessibility Act (CVAA) that apply to manufacturers and providers of advanced communications services (ACS). Games made available to the public prior to December 31, 2018 are not subject to the new requirements, even if they continue to be sold to the public after January 1, 2019. However, all games released on or after January 1, 2019, and all games released prior to that date that undergo future “substantial upgrades,” must comply with the ACS accessibility requirements. Continue Reading New Accessibility Requirements in Effect for Video Game Software

The U.S. Supreme Court denied a petition for writ of certiorari filed by Spirit Airlines Inc. in Spirit Airlines Inc. v. Steven Maizes et al., which sought review of the Eleventh Circuit’s decision that when an arbitration agreement cites the American Arbitration Association (“AAA”) rules but is otherwise silent on the issue of who determines class arbitrability, the arbitrator, not the court, should determine whether the arbitration clause allows for class proceedings. Continue Reading Supreme Court’s Denial of Spirit Airline’s Petition for Review Leaves Uncertainty about Whether Court or Arbitrator Determines Whether Class Arbitration Is Available

Last month, the Direct Selling Association (DSA) launched the Direct Selling Self-Regulatory Council (DS-SRC), a new enforcement agency charged with policing the direct selling industry. The DS-SRC will be administered by the Advertising Self-Regulatory Council, which operates under the Council of Better Business Bureaus.

Direct selling companies use independent sellers to market and sell products and services, typically outside of a fixed retail establishment. One form of direct selling that has received significant scrutiny from the Federal Trade Commission (FTC) is multilevel marketing (MLM), which distributes products or services through a network of independent salespeople who earn income from their own retail sales and from retail sales made by their direct and indirect recruits. Continue Reading Proactive Self-Regulatory Council for the Direct Selling Industry Launches in January

The U.S. Court of Appeals for the Ninth Circuit issued a decision on January 15, 2019 in a closely followed web accessibility case, Robles v. Domino’s Pizza, LLC, reaffirming Ninth Circuit precedent holding that companies whose online activities share a nexus with physical places of public accommodation may be held liable under the Americans with Disabilities Act for failing to make their websites and apps accessible to persons with disabilities. Most notably, however, the decision expressly rejected the argument that the lack of regulatory clarity on the ADA’s application to web content violates due process rights. Continue Reading Ninth Circuit Rules That Lack of Web Accessibility Regulations Does Not Bar ADA Suits