What are the issues in a false advertising lawsuit?

Verna Law, P.C. handles false advertising lawsuits.  If you have an issue with competitors’ advertising about your product, please contact us at 914-908-6757 or anthony@vernalaw.com 

As a competitor or a consumer, you rely on companies to accurately represent their products and services. Unfortunately, not all businesses adhere to ethical marketing practices. Some resort to false or misleading advertising to attract more customers, which can lead to significant negative consequences for buyers. At best, purchasing a falsely advertised product results in a loss of money; at worst, it can cause serious injury or even death.

Understanding Your Legal Rights

Various federal and state statutes protect consumers from false advertising. If you have paid for a product or service based on misleading or deceptive advertising, you can hold the responsible company accountable through a lawsuit. Successfully proving your claims can result in financial compensation.

 

Class Action Lawsuits

False advertising claims often targets large groups of consumers. As a result, affected customers may join forces in a class action lawsuit against the offending company. This approach provides plaintiffs with strength in numbers, making it easier to demonstrate the widespread impact of the company’s unethical marketing practices.

If you have been misled by deceptive advertising, our lawyers at Verna Law, P.C. are here to help. Call us at 914-908-6757 for a free consultation or use our online form.

 

Is False Advertising Illegal?

Yes, there are laws prohibiting companies from misleading consumers with deceptive product labels or false advertisements. An attorney can help you determine the appropriate legal framework for filing a false advertising lawsuit in your state.  The Federal Trade Commission may have jurisdiction over the false advertisement because of the federal law that is the FTC Act.  The Lanham Act, a federal law, may have allow federal court to have jurisdiction over the false statements (“literal falsity”) and deceptive claims in the advertisement.  Competitors and consumers may take legal action against an advertiser.  

 

What Qualifies as False Advertising?

False advertising, deceptive branding, and misleading marketing come in many forms, including:

• Manipulating key terms: Using certain words as descriptors without justification.
• Deceptive visual representation: Showing a product being used in ways it cannot actually be used.
• Bait and switch: Advertising one product or service but delivering an inferior one.
• Incomplete or false comparisons: Claiming a product is superior without justification or concealing its inferior parts.
• Misleading warranties or guarantees: Failing to deliver on promised product quality or refusing to honor warranties.

Some companies prioritize profits over ethical practices, misleading or tricking consumers into purchases. This unethical advertising can result in millions of dollars lost by consumers and, in severe cases, can jeopardize lives.  It depends upon the particular product, of course.

 

Examples of False Advertising

Here are specific examples for context:

• Misrepresentation: Selling a product that doesn’t perform as advertised.
• Omission: Leaving out crucial information that an average buyer would consider important.
• Size exaggeration: Overstating the size of a product or serving size.
• False labels: Incorrectly labeling products as “organic” without basis.
• Ingredient misrepresentation: Misstating ingredients or their quantities.
• Hidden fees: Charging undisclosed fees or surcharges.
• False endorsements: Claiming unsupported scientific or industry endorsements.
• Outdated claims: Marketing based on outdated or flawed research.
• Geographic misrepresentation: Misreporting the origin of a product.
• Price discrepancies: Advertising one price but selling at a higher price. Any low price may be susceptible to this.
• Fake sales: Claiming sale prices without actual markdowns. A regular price must be clear and conspicuous.
• Warranty refusals: Advertising warranties but not honoring them.
• Guarantee dishonesty: Marketing with a money-back guarantee but refusing to honor it.

Consequences of False Advertising

Victims of false advertising can file a lawsuit against the responsible company in civil court. For mass-market products, this can lead to class action lawsuits, potentially involving thousands or millions of consumers, and substantial financial stakes. Companies found guilty may be ordered to compensate consumers for their losses and cover any injury-related costs. Courts can also issue injunctions to stop ongoing false advertising campaigns.

False Advertising Under Consumer Protection Laws

False advertising is prohibited by both state and federal consumer protection laws. Businesses often exaggerate claims in competitive marketplaces, but outright falsehoods or misleading statements, particularly those that harm consumers or other businesses, are unlawful.  This can come from the FTC Act, the Lanham Act (which is the trademark statute in the United States), or state statutes.  

Deceptive Practices

Common forms of false advertising include:

• Deceptive descriptions: Misleading claims about product features or quality.
• Deceptive pricing: Hidden fees or surcharges that inflate the final price.
• Deceptive measurements: Misleading product sizes or quantities.
• Deceptive comparisons: Unfair comparisons to competitor products.
• Deceptive guarantees: Vague or unenforced warranties or guarantees.

Legal Framework

The federal Lanham Act and state consumer protection statutes allow for civil lawsuits against false advertising. Under the Lanham Act, businesses in commercial competition can sue for false advertising, while individual consumers generally rely on state laws.  Consumers can enforce false advertising laws.  Competitors can enforce false advertising laws.  A state attorney general may enforce state false advertising laws.  

Remedies for False Advertising

Courts can issue injunctions to stop false advertising and order corrective actions, including monetary damages and attorneys’ fees. Class action lawsuits can amplify the impact, forcing companies to change their practices and compensate affected consumers.

Verna Law, P.C. handles false advertising lawsuits.  If you have an issue with competitors’ advertising about your product, please contact us at 914-908-6757 or anthony@vernalaw.com

 

Case studies

Verna Law, P.C. helped defendant Fusion Orthopedics, LLC, defeat a preliminary injunction for false advertising in the United States District Court for the District of Arizona, which looked for injunctive relief in the form of an order to stop the defendant from advertising its products.  In Treace Medical Concepts, Inc. v. Fusion Orthopedics, LLC, the United States District Court for the District of Arizona denied Treace Medical’s motion for a preliminary injunction for false advertising. The court’s decision was based on the following key points:

1. Likelihood of Success on the Merits: Treace Medical failed to demonstrate a likelihood of success on the merits of its false advertising claim. The court found that the evidence presented by Treace Medical was insufficient to establish that Fusion Orthopedics’ statements were false or misleading under the Lanham Act.

2. Irreparable Harm: The court determined that Treace Medical did not adequately show that it would suffer irreparable harm in the absence of a preliminary injunction. Treace Medical’s claims of harm were found to be speculative and not supported by concrete evidence.

3. Balance of Hardships: The court found that the balance of hardships did not favor Treace Medical. Issuing a preliminary injunction would impose a significant burden on Fusion Orthopedics, while the harm to Treace Medical was not clearly established.

4. Public Interest: The court concluded that the public interest would not be served by granting a preliminary injunction. The court emphasized the importance of competition in the marketplace and noted that an injunction could disrupt the availability of medical products to consumers.

 

In the denial of the preliminary injunction for false advertising in Treace Medical Concepts, Inc. v. Fusion Orthopedics, LLC, the court closely examined Treace Medical’s arguments and the evidence presented. Here is an expanded analysis of the false advertising arguments:

1. Alleged Misrepresentations: Treace Medical argued that Fusion Orthopedics made several false and misleading statements about its own and Treace Medical’s products. These statements included claims about the efficacy, safety, and advantages of Fusion Orthopedics’ products over Treace Medical’s products.

2. Falsity or Misleading Nature of the Statements: The court evaluated whether the statements in question were literally false or likely to mislead or confuse consumers. Treace Medical needed to provide clear and convincing evidence that the statements were either explicitly false or implicitly misleading. The court found that Treace Medical did not meet this burden. The evidence presented did not convincingly show that Fusion Orthopedics’ claims were factually incorrect or that consumers were actually misled by the advertising.

3. Materiality: Treace Medical also had to prove that the allegedly false or misleading statements were material, meaning they were likely to influence purchasing decisions. The court found that Treace Medical did not provide sufficient evidence to demonstrate the materiality of the statements. Without strong evidence showing that the statements had a significant impact on consumers’ purchasing behavior, this element of the false advertising claim was not satisfied.

4. Causation and Injury: To succeed on a false advertising claim, Treace Medical needed to show a causal link between the alleged false advertising and harm to its business. The court found that Treace Medical’s assertions of harm were speculative and lacked concrete evidence. The company did not adequately demonstrate that it had suffered or was likely to suffer actual injury as a direct result of Fusion Orthopedics’ statements.

5. Expert Testimony: Both parties presented expert testimony to support their claims. The court scrutinized the qualifications and credibility of these experts, as well as the methodologies used to reach their conclusions. The court found that Treace Medical’s expert testimony was not sufficiently persuasive to establish the falsity or misleading nature of Fusion Orthopedics’ statements.

Overall, the court concluded that Treace Medical did not provide compelling evidence to support its false advertising claims under the Lanham Act. This lack of convincing evidence was a crucial factor in the denial of the preliminary injunction.

 

The judge’s opinion in Treace Medical Concepts, Inc. v. Fusion Orthopedics, LLC included several key quotations that highlighted important aspects of the decision to deny the preliminary injunction for false advertising. Here are a few significant excerpts:

1. On Insufficient Evidence of Literal Falsity or Misleading Nature:

   • “Plaintiff has not provided clear and convincing evidence that Defendant’s statements are factually incorrect. Without such evidence, the claim of literal falsity cannot be substantiated.”

2. On Lack of Evidence on Materiality:

   • “To succeed on a false advertising claim, Plaintiff must demonstrate that the statements in question were material, meaning they were likely to influence consumers’ purchasing decisions. Plaintiff has not provided sufficient evidence to establish the materiality of Defendant’s statements.”

3. On Speculative Nature of Claimed Irreparable Harm:

   • “The allegations of irreparable harm presented by Plaintiff are speculative at best. Concrete evidence is required to show that Plaintiff would suffer immediate and significant harm in the absence of a preliminary injunction, which has not been demonstrated here.”

4. On Balance of Hardships:

   • “The balance of hardships does not favor the Plaintiff. Granting a preliminary injunction would impose a significant burden on Defendant, disrupting its business operations, while the alleged harm to Plaintiff remains unsubstantiated.”

5. On Public Interest Considerations:

   • “The public interest in maintaining fair competition in the marketplace must be considered. An injunction could hinder the availability of medical products and disrupt competitive dynamics, which would not serve the public interest.”

6. On Evaluation of Expert Testimony:

   • “The expert testimony provided by Plaintiff lacks the persuasive power necessary to establish the falsity or misleading nature of Defendant’s advertising claims. The qualifications, credibility, and methodologies of the experts have been carefully scrutinized, and found wanting in this context.”

These quotations capture the essence of the judge’s reasoning and the factors that led to the denial of the preliminary injunction. They emphasize the need for clear and convincing evidence, the importance of proving materiality, the speculative nature of the alleged harm, and the consideration of public interest and balance of hardships.

 

Overall, the court denied the motion for a preliminary injunction because Treace Medical did not meet the necessary legal standards for such relief.  Verna Law, P.C. and Anthony M. Verna III, false advertising lawyer, drafted the response brief and argued the case at the District of Arizaona.