Posts Tagged ‘class action’

• The Los Angeles Times in its coverage of Wal-mart Stores, Inc. v. Dukes, Betty, et al., 10-277, ”Supreme Court hears arguments in Wal-Mart sex discrimination case,” calls the Supreme Court “skeptical.”
• Meanwhile, The New York Times in its story, “Justices Take Up Class-Action Issue in Wal-Mart Bias Suit,” says the Supreme Court “appeared closely divided on Tuesday during arguments over the theory put forth by the plaintiffs.”
• Bloomberg sees an emerging gender gap on the Supreme Court bench, “Wal-Mart Discrimination Case Reveals Gender Gap at High Court.”

The United States Supreme Court heard oral arguments today in a case that could have an enormous impact on business in the United States.  In Wal-mart Stores, Inc. v. Dukes, Betty, et al., 10-277, plaintiffs seek to affirm certification of a “nationwide class action consisting of all current and former female employees of Wal-Mart Stores, Inc., estimated at the time to comprise at least 1.5 million women.”  Petition for a Writ of Certiorari, 2010 WL 3355820, *1 (U.S. 2010). “The millions of class members collectively seek billions of dollars in monetary relief under Title VII of the Civil Rights Act of 1964, claiming that tens of thousands of Wal-Mart managers inflicted monetary injury on each and every individual class member in the same manner by intentionally discriminating against them because of their sex, in violation of the company’s express anti-discrimination policy.” Id. at 3355820.  The lower courts certified and affirmed the enormous class.  Id.at *1.

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“Together with the District of Columbia, every state now has codified some form of consumer protection.”¹ New Jersey and California have some of the toughest consumer protection laws. As an example, we will focus on the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (the “CFA”).

The CFA is a powerful tool that consumers can use against sellers of consumer products. Consumers can recover for reasonably ascertainable economic losses that result from 1) a seller’s misrepresentations in an affirmative statement, 2) a seller’s intentional omissions of material fact, or 3) a seller’s violation of applicable regulations. In addition to the broad powers that the CFA gives to the Attorney General to penalize such conduct, consumers can recover treble damages and attorney’s fees in a direct civil lawsuit. These heavy damages and the way in which some New Jersey trial courts apply the CFA, combine to make treading in New Jersey somewhat tricky.

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Endorsements on social networking websites can be a valuable marketing tool for companies.  They can also lead to potential liability according to guidelines issued by the Federal Trade Commission (“FTC”).  Effective December 1, 2009, the FTC issued revisions to its endorsement guidelines which provide guidance on how to avoid deceptive advertising.  Section 5 of the FTC Act (15 U.S.C. 45) prohibits businesses from engaging in unfair or deceptive acts or practices affecting commerce, and the FTC has interpreted this prohibition as covering false and misleading advertising practices.  The newly revised guidelines, called the Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 C.F.R. § 255), address the application of Section 5 to the use of endorsements on the Internet and social networking websites, such as Facebook, Twitter, LinkedIn, MySpace, and personal blogs.

Pursuant to Section 5, advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for the failure to disclose a material connection between themselves and their endorsers.  Endorsers also may be liable for statements made in the course of their endorsements.  According to the new guidelines, an individual can have a “material connection” with a company not only if he or she is employed by the company whose products or services are discussed, but also if the individual receives free goods, services or special privileges in connection with commenting about a company.

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