Retail and Consumer Products Law Roundup

Social Media, Behavior Policies Tossed by NLRB ALJ

Why it matters

Prohibiting social media activity by employees that “reflect[s] poorly” on the employer violates the National Labor Relations Act (NLRA), an administrative law judge (ALJ) determined. Employees filed an unfair labor charge against National Captioning Institute (NCI), challenging two rules they alleged infringed on their Section 7 rights under the statute. In addition to the problems with the social media policy, the ALJ found that an “unacceptable behavior policy” could reasonably be read by employees to ban them from criticizing NCI, and ordered the employer to rescind both policies. The ALJ also held that the termination of two workers because of their union activity should be remedied by rehiring them and providing back pay.

Detailed discussion

A nonprofit corporation, National Captioning Institute, Inc., provided closed-captioning, subtitling and other media services for national broadcasters, cable TV networks, corporations and universities.

In early 2016, the National Association of Broadcast Employees & Technicians-Communications Workers of America attempted to unionize the company’s offices. The employer began monitoring its employees’ union activities, searching chat logs on the company’s messaging system and identifying workers supporting the movement.

During the same time period, the company decided to close its Texas office and offered some of its workers the option to apply for remote, work-from-home positions or transfer to other offices. Two employees previously identified as pro-union had their requests to work from home denied, even though they both had positive performance reviews and one had already been working remotely for years.

After both were terminated, they filed unfair labor charges with the National Labor Relations Board (NLRB). As part of the action, they also challenged two personnel policies.

The social media policy stated: “If you opt to post about your job on social media, it must be done responsibly … [Here are] … our guidelines …” Specific instructions detailed a prohibition on posts about NCI’s software as well as subjective commentary that “could reflect poorly upon NCI’s professionalism or reputation” or commented on the quality of other captioning. Further, the employer instructed workers not to “use the NCI name on any posts that are Google-searchable,” reminding them that “[y]ou are NOT anonymous on the internet.”

A second policy addressed “Unacceptable Behavior,” prohibiting employees from accusing NCI management of dishonesty and acting in bad faith, complaining in an “aggressive and hostile manner” to either management or coworkers, disparaging and bullying management, and spreading personal information about NCI employees.

Considering the personnel policies, Administrative Law Judge (ALJ) Robert A. Ringler found both violated Section 8(a)(1) of the National Labor Relations Act (NLRA).

The social media policy was unlawful in several ways, the ALJ said. Employees could reasonably construe the restriction on generating social media posts that do not “reflect well upon NCI” to ban their Section 7 right to collectively criticize their employer or workplace, he wrote. The policy also improperly banned usage of the company’s name on searchable posts, which “could reasonably be construed by employees to ban them from naming NCI in posts about their wages, hours or other terms and conditions of employment on any ‘Google-searchable’ platform.”

The “online harassment” prohibition could be read by employees to bar online Section 7 activities such as solicitations to initially resistant coworkers to support the union, while the software posting ban left no exception for software postings that do not reveal proprietary matters while simultaneously touching upon collective concerns.

Similarly, the Unacceptable Behavior policy violated the NLRA by prohibiting disrespectful workplace commentary, “which could reasonably be construed by employees to ban statements of criticism of their employer,” while the bar on “spreading … personal information” about coworkers could be understood to ban sharing wage and other workplace data for collective purposes, Ringler wrote.

Additional violations of the NLRA included the employer’s surveillance of email, chat logs and other electronic communications, as well as the discharge of both employees.

The ALJ ordered the company to rescind the overbroad policies and offer both workers full reinstatement to their former jobs without prejudice to their seniority or any other rights or privileges, making them whole for any loss of earnings and other benefits including back pay.

To read the decision and order in National Captioning Institute, Inc., click here.

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Reassigned Numbers: Commenters Embrace Database, Split on Safe Harbor

By Christine M. Reilly, Chair, TCPA Compliance and Class Action Defense | Diana L. Eisner, Associate, Litigation

Of the dozens of comments filed in response to the Federal Communications Commission’s (FCC) request on how to handle the problem of reassigned numbers, the majority appeared to support the agency’s plan to establish a central database, although opinions differed on the details.

In July, the FCC released a Notice of Inquiry asking for feedback on handling unwanted phone calls to reassigned numbers. Feedback included questions about the ways in which providers could report number reassignments and what information should be reported.

The agency also sought comment on the appropriate mechanism for reporting, suggesting the creation of a central database of reassigned numbers, where providers could report information and robocallers could turn for a list. Options included FCC oversight of the database, each voice service provider operating its own list, a publicly available database or having providers report reassigned number information to robocallers directly.

Many commenters expressed support for the FCC’s plan to establish a database of reassigned numbers as well as the related idea of a corresponding safe harbor for companies that scrubbed their calling lists based on the database.

For example, the American Bankers Association (ABA) backed the centrally administered database, “urg[ing] the Commission to provide a safe harbor” for companies that utilize it. Numbers reassigned prior to the creation of the database or numbers reassigned in the gap between updates may not be on the list and a safe harbor is necessary to protect callers in such situations, the ABA said.

The National Retail Federation (NRF) took a similar stance. Its members unanimously selected the concept of a centralized database overseen by the FCC, the NRF reported, as well as the creation of a safe harbor, which “provides an incentive for callers to spend the money and apply its own resources to develop procedures for accessing and utilizing the reassigned number information, resulting in fewer ‘wrong number’ calls to consumers and fewer TCPA lawsuits for callers who are caught unaware of a number reassignment.”

Alternatively, other commenters praised the database idea but sought to limit the safe harbor. Together, eight consumer groups (including the National Consumer Law Center, Public Citizen and Consumer Action) joined forces to advocate for a “simple, inexpensive, ubiquitous and transparent” design of a database, with all telephone service providers required to participate.

The groups did not object to “a short and finite grace period for users of the database,” limited to those callers that used the database within 24 hours of making the call where the list provided inaccurate information and no calls were made after the caller was informed it was the wrong number. But the comment opposed a broader safe harbor from liability “simply for using the database.”

To read the ABA’s comment, click here.

To read the NRF’s comment, click here.

To read the comment filed by the consumer groups, click here.

Why it matters: Identifying reassigned numbers with only imperfect market solutions available is one of the biggest problems created by the FCC’s July 2015 ruling. The solution of establishing a central database for reassigned numbers appeared to receive support from the majority of commenters, with disagreement found in the debate over the creation of a safe harbor. Industry groups such as the ABA and the NRF advocated for the safe harbor, emphasizing the potential for liability under the Telephone Consumer Protection Act and the “excessive litigation” they could face as a result of an error. Alternatively, consumer groups argued against the need for total relief from liability and instead pushed for more limited protection based on use of the database. Now that the time period for comments has ended, the FCC will hopefully review the submissions and make a decision about how to move forward in short order.

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California Appellate Court Sides With Plaintiff in PAGA Suit

Why it matters

A plaintiff seeking civil penalties under the Private Attorneys General Act (PAGA) for a violation of the Labor Code is not required to satisfy the “injury” and “knowing and intentional” requirements of the statute, a California appellate panel has concluded. Eduardo Lopez alleged Friant & Associates violated California Labor Code Section 226(a)(7) by failing to include the last four digits of employees’ Social Security numbers on their itemized wage statements. Friant moved for summary judgment, arguing that the plaintiff failed to show that he suffered any injury resulting from a knowing and intentional violation of Section 226, as required by Section 226(e). The trial court agreed, noting that Friant’s accounting manager testified that she was unaware that the digits were not on the paychecks. But the appellate panel reversed. Consistent with the PAGA statutory framework and the plain language and legislative history of Section 226, a plaintiff seeking civil penalties for a violation of Section 226(a) does not have to satisfy the “injury” and “knowing and intentional” requirements of Section 226(e)(1), the court held.

Detailed discussion

In 2015, Eduardo Lopez filed a single-count complaint under the California Private Attorneys General Act (PAGA) in California state court asserting that his employer, Friant & Associates LLC, failed to include the last four digits of its employees’ Social Security numbers or employee identification numbers on itemized wage statements, in violation of California Labor Code Section 226(a)(7).

The parties stipulated that Friant issued 5,776 itemized wage statements to the plaintiff and other employees that failed to include the required information.

Friant responded with a motion for summary judgment. The employer argued that Lopez did not suffer any injury resulting from a “knowing and intentional” violation of Section 226, as required by Section 226(e), as evidenced by testimony from the company’s accounting manager that she was not aware that the last four digits were not included on employees’ pay stubs.

A trial court agreed, granting the motion in favor of the employer. Lopez appealed, and an appellate panel reversed.

The appellate court explained that under PAGA, a worker is empowered to file a representative action on behalf of him/herself and other current and former employees to recover civil penalties for violations of the Labor Code that otherwise would be assessed and collected by the Labor and Workforce Development Agency. For those provisions of the Labor Code for which a civil penalty is not specific, PAGA creates a default civil penalty.

Lopez premised his PAGA claim on Friant’s alleged noncompliance with Section 226(a)(7). Section 226(e) provides that employees who “suffer[] injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a)” are entitled to either actual damages or an increasing per-pay-period penalty beginning at $50 for the first offense.

The defendant’s argument that Section 226(e) requires the plaintiff to demonstrate both an “injury” and a “knowing and intentional” violation of Section 226(a) to succeed on his PAGA claim “oversimplifies” statutory interpretation and “ignores how a PAGA claim differs from an employee’s individual or class claim for damages or statutory penalties,” the panel wrote.

Section 226(e) states that employees are entitled to recover “actual damages” or a “penalty,” not a “civil penalty,” the court explained. “Because the penalty in section 226(e) is not called a ‘civil penalty,’ it is a statutory penalty. Thus, under the plain language of the statute, the prerequisite that an employee suffer injury as a result of a knowing and intentional failure by an employer to comply with section 226(a) applies to an action for statutory damages under section 226(e)(1).”

Legislative history further reinforced the conclusion that Section 226(e) authorizes a private right of action for statutory damages recoverable by an individual plaintiff rather than a civil penalty for the benefit of the public, the panel said. In 1979, lawmakers created a separate civil penalty recoverable for violations of itemized wage statement requirements, adding to the existing statutory damages, established in 1976, that were available to individuals.

Applying this interpretation of Section 226(e) to Lopez’s PAGA claim, the panel held that his complaint sought only PAGA civil penalties. “Because section 226(e)(1) sets forth the elements of a private cause of action for damages and statutory penalties, its requirement that a plaintiff demonstrate ‘injury’ resulting from a ‘knowing and intentional’ violation of section 226(a) is not applicable to a PAGA claim for recovery of civil penalties,” the court wrote.

The panel further explained that its interpretation was bolstered by “the fact PAGA expressly recognizes a claim for violation of section 226(a), but does not mention 226(e),” the court said. “Thus, by its plain language, PAGA allows a claim for violation of section 226(a) without any reference to subdivision (e).”

Decisions from federal courts have made similar determinations, the court added, and “Friant has not pointed us to a single state or federal case holding that section 226(e)’s ‘injury’ or ‘knowing and intentional’ requirements apply to a PAGA claim for violation of section 226(a).”

“Consistent with the PAGA statutory framework and the plain language and legislative history of section 226(e), we hold a plaintiff seeking civil penalties under PAGA for a violation of section 226(A) does not have to satisfy the ‘injury’ and ‘knowing and intentional’ requirements of section 226(e)(1),” the panel wrote.

To read the opinion in Lopez v. Friant & Associates, LLC, click here.

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A Winner for the Defense

By Diana L. Eisner, Associate, Litigation

Judge Padova in the Eastern District of Pennsylvania recently granted a motion by Kohl’s to dismiss a putative Telephone Consumer Protection Act class action for lack of standing in Winner v. Kohl’s, finding that texting a specific opt-in code after viewing a “call to action” satisfied the TCPA’s prior express written consent (PEWC) requirement.

In 2014, Winner saw a call-to-action in a Kohl’s store, texted the call-to-action keyword “APP,” received a response with information about the Kohl’s app (and stating she’d receive two or three autodialed messages) and then received a second message inviting her to text “Save30” for other coupons. Winner then opted into the mobile alerts program by texting “Save30,” and she began getting alerts. She claimed she repeatedly asked for the messages to stop, including asking an employee in the store. The in-store employee was unable to help. Finally, Winner texted “stop” to Kohl’s and the messages stopped. The second plaintiff, Jennings, also texted a call to action in 2014 and began receiving messages, but did not claim she revoked consent. 

Plaintiffs claimed, among other things, that they were never “clearly and conspicuously informed they were enrolling in automated” marketing messages and Kohl’s never obtained PEWC. Winner also claimed she revoked consent. The parties stipulated to certain facts, including the language at the bottom of the calls to action, which stated that autodialed marketing messages would be sent, and consent was not a condition of purchase. The disclosures were contained at the bottom of the call to action, in fairly small font compared with the rest of the text.

Kohl’s moved to dismiss based on lack of standing, arguing that because both plaintiffs consented to receive the messages, they could show no concrete injury.

Judge Padova agreed, finding that both “expressly consented” to receive the marketing messages and provided PEWC. While the court cited Spokeo, the decision is grounded on more general standing principles, and is not specific to the Spokeo “bare procedural violation” holding. The court found the disclosures Kohl’s used sufficient to satisfy the standard for PEWC as they stated that (1) by opting in the customer “will receive two to three auto-dialed text messages” to set up their participation; (2) “Participation is not required to make a purchase;” (3) customers could “Reply HELP for help, reply STOP to cancel;” (4) message and data rates may apply; and (5) the terms and conditions of the program were available on Kohl’s website.

The court also noted the sequence of the messages to both plaintiffs—both sent an opt-in text to Kohl’s before Kohl’s sent any text message. Importantly, the “written agreement” was in the form of the text message Winner received after texting “APP,” which included a disclosure that she would receive five to seven texts a month and incorporated by reference the terms and conditions of the program by including a link to Kohl’s terms and conditions. The terms and conditions contained PEWC disclosures, including that consent was not required as a condition of purchase.

After disposing of plaintiffs’ lack of consent claim, the court made quick work of Winner’s revocation claim. The court noted that Winner did not specify how she tried to revoke consent, except her request to a store employee. Importantly, the court found this action “did not comply with the terms and conditions of the program,” which required texting “STOP” to opt out, and was thus insufficient to establish an injury-in-fact. Moreover, once Winner texted “STOP,” the messages stopped.

Finally, the court rejected the plaintiffs’ argument that only one text was permitted based on the 2015 FCC order, essentially arguing their request was for a one-time message. First, the court recognized the opt-ins were received before the 2015 FCC order was issued, and thus it didn’t apply to the call to action. Substantively, the court found that more than one text is permitted where PEWC is received, which it was in this case.

Why it matters: The opinion out of the typically plaintiff-friendly Third Circuit is a win for retailers, as it shows that even plaintiff-friendly jurisdictions seem to be taking a hard look at manufactured TCPA claims. The decision also indicates that PEWC disclosures can be incorporated into a call to action by reference to a marketer’s terms and conditions (however, here they were also contained on the in-store call to action). And it also shows that despite the 2015 FCC order on revocation, not following clear instructions for opting out is unreasonable and thus cannot be the basis for a claim. Finally, the decision underscores the importance of properly crafted and compliant text marketing campaigns, including proper language in terms and conditions.

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Amazon Delivers Pricing Challenge to Arbitration

By Jeffrey S. Edelstein, Partner, Advertising, Marketing and Media

Amazon successfully moved a putative class action challenging its pricing practices to arbitration after the U.S. Court of Appeals, Ninth Circuit held that the retailer’s agreement was not unconscionable.

Allen Wisely sued Amazon, alleging the company ran afoul of California’s False Advertising Law by using the highest marketplace price for comparison in order to deceive consumers into believing they were getting a deal. In reality, they were paying the same price offered by competitors, the suit claimed.

Pursuant to the website’s terms and conditions of use, Amazon moved to compel arbitration. A district court judge granted the motion, and the Ninth Circuit affirmed in a memorandum opinion.

Wisely conceded that Amazon’s conditions of use created a valid contract. Although he argued that California law should apply, the panel found the contract established that Washington law applied.

Under Washington law, a contract of adhesion alone is insufficient to support a finding of procedural unconscionability, the Ninth Circuit said, and no other indicia of procedural unconscionability were present.

The plaintiff “fails to explain how California’s consumer protection statutes are more protective than Washington’s consumer protection statutes; rather, Washington’s and California’s consumer protection laws and protections against unconscionable contracts appear to be substantially similar,” the court said, adding that “any distinction does not bear on this case, as we would reach the same result under California law.”

The notices on Amazon’s checkout and account registration pages providing hyperlinks to the conditions of use “were in sufficient proximity to give [the plaintiff] a ‘reasonable opportunity to understand’ that he would be bound by additional terms,” the panel wrote, and the arbitration clause itself was presented in the same size font as the rest of the conditions of use, with key terms bolded.

Nor did the incorporation by reference of the American Arbitration Association’s rules create procedural unconscionability, as the site provided a phone number to resolve any uncertainty.

Turning to substantive unconscionability, the panel found no merit to any of Wisely’s three arguments. A unilateral modification clause was limited by the implied covenant of good faith and fair dealing, while the exemption for intellectual property claims for injunctive relief did not make the provision overly harsh or one-sided.

Finally, the attorneys’ fees provision mirrors Washington’s statutory right to attorneys’ fees for frivolous claims, the court said, and to the extent it is unilateral, state law automatically converts it to a bilateral provision that would afford Wisely the same right. The plaintiff also failed to demonstrate that the overall arbitration fee scheme would be unaffordable or would have a substantial deterrent effect in his case.

The panel affirmed the order to compel arbitration.

To read the memorandum in Wisely v. Amazon.com, Inc., click here.

Why it matters: The unpublished decision is a victory for Amazon and other companies seeking to rely on arbitration clauses in consumer contracts.

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Cybersecurity, Data Breaches Continue to Make Headlines

By Donna L. Wilson, Co-Chair, Financial Services Group

Cybersecurity continues to make headlines in the financial services industry, from the recent announcement that the Securities and Exchange Commission (SEC) was targeted by hackers to final approval of the settlement in a class action brought by financial institutions against Home Depot after a major data breach at the national retailer.

What happened

Demonstrating that data breaches can happen to any entity, SEC Chairman Jay Clayton revealed that hackers hit the agency in 2016 when an intrusion occurred in the agency’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. “Specifically, a software vulnerability in the test filing component of the Commission’s EDGAR system, which was patched promptly after discovery, was exploited and resulted in access to nonpublic information,” Clayton said.

While the SEC initially stated that the intrusion did not result in unauthorized access to personally identifiable information, jeopardize the operations of the Commission or result in systemic risk, it acknowledged the breach “may have provided the basis for illicit gain through trading” by providing access to nonpublic information. The agency later said the ongoing investigation found that the names, birth dates and Social Security numbers of two individuals were obtained.

The incident was shared as part of the SEC’s announcement of multiple cybersecurity initiatives. “Cybersecurity is critical to the operations of our markets and the risks are significant and, in many cases, systemic,” Clayton said in a statement. “We must also recognize—in both the public and private sectors, including the SEC—that there will be intrusions, and that a key component of cyber risk management is resilience and recovery.”

To that end, the agency expanded its Enforcement Division’s efforts to address cybersecurity issues with the creation of a Cyber Unit focused on market manipulation schemes involving false information spread through electronic and social media, hacking to obtain material nonpublic information, violations involving distributed ledger technology and initial coin offerings, misconduct through the use of the dark web, intrusions into retail brokerage accounts, and cyber-related threats to trading platforms and other critical market infrastructure.

In addition, the SEC launched a Retail Strategy Task Force, which will “develop proactive, targeted initiatives to identify misconduct impacting retail investors,” leveraging the agency’s history of cases involving fraud targeting retail investors ranging from the sale of unsuitable structured products to microcap pump-and-dump schemes.

A few days later, Clayton testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs, where he faced criticism about the agency’s handling of the data breach, especially the delay in making it public. Clayton told lawmakers that he plans to tap into a $50 million reserve fund established under the Dodd-Frank Wall Street Reform and Consumer Protection Act to improve the agency’s cybersecurity practices and intends to ask Congress for more money to improve the SEC’s defenses.

The aftermath of Home Depot’s 2014 data breach may finally be coming to an end after a federal court judge in Georgia granted final approval to the $27.25 million settlement in a suit brought by financial institutions.

Hackers placed malware on the retailer’s self-checkout kiosks, leading to a major breach of consumer names, payment card numbers, expiration dates and security codes. Banks and credit unions responded with more than 25 class actions filed nationwide, charging the company with shoddy security measures.

The deal provides $25 million to cover the losses of the financial institutions, with class members set to receive a “fixed payment award” estimated to be $2 per compromised card without having to prove their losses and regardless of whether they have already received compensation from another source. Those that submit proof of losses and compensation already received are eligible for an additional “documented damages award” of up to 60 percent of their uncompensated losses from the data breach. These awards will be paid from the fund after payment of all fixed payment awards and reduced on a pro rata basis if not enough money remains.

Another $2.25 million was included in the fund for sponsored entities whose claims were released by their sponsor in connection with a Mastercard program, with payments of $2 per compromised card.

Home Depot promised to implement new data security measures, such as designing and implementing reasonable safeguards to manage the risks identified in its data security risk assessments, establishing a vendor program with annual security assessments and adopting an industry-recognized security control framework for information security.

Finding the agreement “fair, reasonable and adequate,” U.S. District Court Judge Thomas W. Thrash Jr. granted final approval of the deal. He also signed off on counsel fees of $15.3 million, down from the $18 million requested by the lawyers, but triple the $5.6 million advocated for by the defendant, to be paid separately from the settlement fund.

To read about the SEC’s new initiatives, click here.

To read the order in In re: The Home Depot, Inc., Customer Data Security Breach Litigation, click here.

Why it matters

The SEC initiatives are the most recent effort by the agency to address cybersecurity, both internally and for covered entities, including a Risk Alert issued earlier this year and the hiring of additional staff and outside technology consultants to aid in the agency’s protection of the security of its network, systems and data. The Home Depot settlement provides a reminder about the costs to companies and financial institutions of a data breach—in that case, north of $42 million.

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California AG Thirsty for Action Against Gatorade

By Jesse M. Brody, Partner, Advertising, Marketing and Media

The Gatorade Company violated state law by urging players of its advergame to ditch water for the sports drink, California’s attorney general alleged in an action against the company.

In 2012, Gatorade worked with its media agency and a third-party game developer to create Bolt!, a free mobile app in which users guided a cartoon version of Gatorade pitchman Usain Bolt to the finish line of a race. Released to coincide with Bolt’s 2012 Olympic performance, the game was targeted to a youthful demographic, featuring animated flying pirate ships and stolen gold. Although the app is no longer available, it was downloaded more than 2.3 million times (an estimated 30,000 times in California), with 87 million games played by an audience composed predominantly of those age 13 to 24 years old.

But according to AG Xavier Becerra, Bolt! also ran afoul of the state’s false advertising law (FAL) and Unfair Competition Law (UCL) in three ways: by falsely depicting “water slowing down the athletic performance of the Olympic sprinter, while depicting Gatorade as increasing his speed”; by using a “fuel meter” in the game that falsely depicted “water as decreasing the amount of ‘fuel’ available to the Olympic athlete, while depicting Gatorade as increasing the amount of available fuel”; and by offering a tutorial that “directly told its users to ‘Keep Your Performance Level High by Avoiding Water.’”

Although the purpose of the game was to entertain a youthful audience and share a Gatorade-branded marketing message, the company overstepped with a message that was not only misleading, but also was a dangerous communication for a youthful audience “that is particularly prone to inaccurate beliefs regarding the nutrition benefits of beverages.”

“California law prohibits false or misleading statements in connection with the selling of a good,” according to the complaint. “This is true regardless of the medium in which the statements are made—whether through more traditional advertising or emerging fields such as advergames or social media—and regardless of whether the ‘statements’ are made through words, images, or a combination thereof. Brand integration in mobile gaming is thus no exception to the rule: sellers of goods must follow California’s [FAL] and [UCL] regardless of what medium sellers use to advertise their goods.”

To settle the charges, Gatorade agreed to pay $300,000 and stop “making statements that disparage water or the consumption of water.” In addition, the company—which did not admit any liability—is prohibited from the marketing or advertising of an app or game that creates a misleading impression that water will hinder and/or adversely affect athletic performance, that consuming water in general is to be avoided in favor of consuming Gatorade, that athletes consume Gatorade and avoid all water consumption, and that water consumption in general should be avoided.

For a period of five years, the company also promised to use “reasonable efforts” to abide by parent company PepsiCo’s Policy on Responsible Advertising to Children, which prohibits advertising in media where children under 12 make up more than 35 percent of the audience, and include a provision in its endorser contracts that they will clearly and conspicuously disclose their relationship with Gatorade in communications promoting the company on any webpages or social media channels.

To read the complaint in California v. The Gatorade Company, click here.

To read the final judgment and permanent injunction, click here.

Why it matters: “Making misleading statements is a violation of California law,” AG Becerra said in a statement about the action. “But making misleading statements aimed at our children is beyond unlawful, it’s morally wrong and a betrayal of trust. It’s what causes consumers to lose faith in the products they buy.” The attorney general added that his office will “pursue false advertisers and hold them accountable,” and that the complaint provides an important reminder that less-traditional advertising forms such as advergames and social media are not safe from the AG’s scrutiny.

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