So What’s In the “Fairness in Class Action Litigation Act of 2017”?

On Feb. 9, the Chair of the House Judiciary Committee introduced a bill titled the “Fairness in Class Action Litigation Act of 2017” (FCALA) (H.R. 985).  Although the FCALA has a worthy goal and several provisions that build on existing, successful class action reforms, it may have too many “poison pills” to pass the Senate, as did its predecessor bill of the same title introduced in 2015 (H.R. 1927).  Before businesses suit up for a fight over those more controversial aspects of the bill, however, they should consider the likelihood of unintended consequences if those provisions become law.

Two provisions of the FCALA would extend to all class actions some of the beneficial changes Congress imposed on securities fraud class actions in the 1995 Private Securities Litigation Reform Act.  The bill would require named plaintiffs to provide certifications attesting to their willingness to serve as class representatives and disclosures of any other class action cases they have brought.  It also would presumptively stay discovery in all class actions while motions to dismiss are pending.  Both of those steps would be helpful to class action defendants and preclude class plaintiffs from exerting undue settlement pressure until the Court has determined the plaintiff has a plausible claim.

The FCALA then would go beyond the securities reforms by also requiring class counsel to disclose any employment, familial, or contractual relationship it has with the named plaintiff and precluding courts from certifying classes represented by people possessing such relationships.  The bill seems to preclude a law firm from representing the same client in multiple class actions — a requirement the bar will resist.  It also would stay discovery during the pendency of “any motion to transfer” or “motion to strike class allegations.”  In that respect, the FCALA would become the first federal law or rule explicitly recognizing the propriety of pre-discovery challenges to class claims.  The bill does not contain an express exception allowing discovery on class issues while a motion to strike class allegations is pending, which would set up an interesting and perhaps untenable dynamic if the defendant seeks to introduce materials beyond the pleadings while preemptively attacking class claims.

The bill would substantially tighten class certification requirements.  Under current law, before certifying classes, courts must find (among other things) that the named plaintiff is a “typical” and “adequate” class representative, and that questions common to the class “predominate” over questions individual to each putative class member.  The FCALA would impose a new “super-typicality” requirement that “each proposed class member [must have] suffered the same type and scope of injury” as the named plaintiff.  What this would mean in practice is unclear.

Every Court of Appeals to opine on the subject of class definitions has precluded so-called “fail-safe” classes and held that classes must be “defined with reference to objective criteria.”  The FCALA would codify that requirement.

The FCALA also weighs in on the current Circuit split over “ascertainability” and resolves that split in the Third Circuit’s favor.  It would preclude class certification unless “there is a reliable and administratively feasible mechanism” to determine whether someone is a member of the class.  The bill is silent, however, as to whether accepting say-so affidavits from class members is such a “feasible mechanism.”  If affidavits are not acceptable, the net effect of the FCALA likely would be to preclude class certification in consumer products cases where the defendants do not have contact information for their end-purchasers.  That potential effect already has generated major opposition to the bill from consumer advocates.

In fact, the FCALA would go well beyond the Third Circuit’s holding by prohibiting courts from certifying classes unless a means exists to “distribut[e] directly to a substantial majority of class members any monetary relief secured for the class.”  Businesses, however, should be at least as wary of that provision as the plaintiffs’ bar is, if not more so.  Although one possible outcome, if this aspect of the FCALA becomes law, is that classes rarely will be certified, another is that plaintiffs will push harder to maximize claims rates, including by demanding intrusive third-party discovery from the defendants’ business partners and insisting on ever-more-expensive and burdensome steps to provide notice to class members.

Where defendants find themselves on the wrong end of a class certification ruling, current Federal Rule of Civil Procedure 23(f) already permits interlocutory appeals from those orders.  Rule 23(f), though, allows the Courts of Appeals to accept or reject those appeals based on any criteria they may set.  The FCALA would require the Courts of Appeals to hear these appeals mandatorily.  That change would be a boon to defendants who believe a class was certified wrongly, but it also would mean defendants must bear the costs and risks of defending appeals from disappointed plaintiffs that, under the current procedures, never would have made it past the petition stage.

The most recent round of major class action reform, the Class Action Fairness Act of 2005, came in the last year of unified Republican control of Congress and the Presidency.  The return of that unified control stirs hope for further class action reform, which is badly needed.  The FCALA is a helpful first shot in that battle, but it could use some additional input from the proverbial front lines of the consumer class action wars.

To learn more about Class Action Litigation, please tune in for our webinar on February 22 at 12 PM ET on “Litigation is Inevitable: Update on Recent Advertising Class Actions.” For more information and to register, please click here.

Ad Law News and Views Newsletter

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Did you know Kelley Drye’s Advertising Law practice produces a newsletter, Ad Law News and Views, every two weeks to help you stay current on ad law and privacy matters? Click here to access our Publication Sign Up and select Advertising and Marketing to subscribe. Find contents from the latest issue below:

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Recent News

Chairman Kaye Steps Down as CPSC Chair; Republican Buerkle Assumes Role of Acting Chair

CFSAN Director Anticipates “Tweaks,” Not Rollbacks Despite Administration’s De-Regulation Emphasis

Smart TV Manufacturer “Smarting” after $2.2 Million Privacy Enforcement

FTC Announces Changes at the Helm of the Bureau of Consumer Protection; Thomas Pahl to Take Over as Acting Bureau Director Following Jessica Rich’s Departure

Not a Passing Grade: FTC Settles with Company Over Alleged False Advertising for High School Diploma Program

EU Data Protection Authority Issues GDPR Action Plan, Swiss Sign Privacy Deal with U.S.

New FTC Acting Chair Maureen Ohlhausen Offers Insight into Consumer Protection Priorities

CIT Adds New Requirements for ‘Assembled in USA’ Claims Analysis

FTC Cries Foul On Breathometer Accuracy Claims

Spotlight On Our New Texas Offices

Kelley Drye & Warren LLP recently merged with Jackson Gilmour & Dobbs, P.C., a highly respected Texas law firm best known for success in environmental litigation matters. The team also brings substantial experience in sophisticated regulatory and commercial litigation matters. The merger strengthens Kelley Drye’s litigation and environmental practices, as well as extends our national presence.

The collective environmental practices broaden Kelley Drye’s nationwide capabilities in site remediation, cost recovery, natural resource damages, and related insurance litigation, creating a powerhouse firm for businesses contemplating sales and acquisitions, debt and equity financings, and real estate development and construction where environmental issues may be present.

Please read more about our Environmental Law and Environmental Litigation capabilities, as well as our new offices in Houston and Austin

Analysis 

Marketing in a Multi-Device World: Update on Cross Device Tracking

On January 25, Kelley Drye hosted a webinar on maintaining transparency and respecting consumer choice while achieving marketing objectives. Megan Cox, Attorney at the Federal Trade Commission, J. Jurgen Van Staden, Vice President, Policy & Technology at the Network Advertising Initiative, and partner Dana Rosenfeld discussed recent law enforcement activity, such as the FTC’s recent settlement with Turn Inc., as well as self-regulatory guidance and enforcement issues surrounding cross device information tracking and uses. For a copy of the slide deck, please click here.

Our next webinar will be on “Litigation is Inevitable: Update on Recent Advertising Class Actions” February 22. Please click here for more information and to register.

To sign up to receive future webinar invitations, please click here and sign up to receive communications from the Advertising and Marketing practice group.

Suing over Empty Space: Why Lawsuits over Slack Fill in Packaging Are Growing

Partner Kristi Wolff and associate Devon Winkles co-authored the Nutritional Outlook article “Suing over Empty Space: Why Lawsuits over Slack Fill in Packaging Are Growing.” The article discusses the rise in lawsuits regarding slack fill, or the difference between the capacity of a container and the volume of the product inside. Read more…

ABA Section of Antitrust Law Presidential Transition Report

Partner Bill MacLeod addressed the American Bar Association’s Section of Antitrust Law with an introductory note to the Section’s 2017 Presidential Transition Report. The American Bar Association Section of Antitrust Law released its 60-page eighth sequential Presidential Transition Report, which offers a retrospective of current state and federal antitrust and consumer protection law and policy, as well recommendations for ways the new Trump administration might consider further strengthening policy and enforcement to deal with new antitrust challenges on the horizon. Read more…

Has the Supreme Court’s Resolution of Spokeo Played Out as Expected?

Partner Lee S. Brenner and senior associate Cathy D. Lee co-authored the Bloomberg BNA article “Has the Supreme Court’s Resolution of Spokeo Played Out as Expected?” On May 16, 2016, the United States Supreme Court held in Spokeo Inc. v. Robins that a consumer cannot satisfy the injury-in-fact demands of Article III by alleging only a bare procedural violation of a statute, divorced from any concrete harm. The article examines the Spokeo decision and how that case impacted litigation in various contexts, including data privacy, the Truth in Lending Act (TILA), the Fair and Accurate Credit Reporting Act (FACTA), and the Telephone Consumer Protection Act (TCPA). Read more…

Fifty Countries and Counting, Sixty Sessions and More – at Spring Meeting: A Message From Bill MacLeod, Chair, Section of Antitrust Law

Partner William MacLeod authored his monthly address to the American Bar Association’s Section of Antitrust Law. This month’s message features The Spring Meeting of the Section of Antitrust Law. Read more…

Upcoming Events and Speeches

Toys for Sale: IoT Devices and Connected Kids
February 15, 2017 |WEBINAR
American Bar Association
Dana B. Rosenfeld

Litigation is Inevitable: Update on Recent Advertising Class Actions
February 22, 2017 | WEBINAR
August T. HorvathJeffrey S. Jacobson

Regulation of Cosmetics
March 3, 2017 | WASHINGTON, DC
Introduction to U.S. Food Law and Regulation
Kristi L. Wolff

Doing Data Right: Legal Best Practices for Making Your Data Work
March 16, 2017 |SAN JOSE, CA
Strata + Hadoop World 2017
Alysa Zeltzer Hutnik, Crystal N. Skelton

Eyes on the 1-800 Prize: IP Restrictions and Online Competition
March 29, 2017 | WASHINGTON, DC
65th Antitrust Law Spring Meeting
David H. Evans

Multi-State Privacy/Security Investigations: Expert Roundtable
April 20, 2017 |WASHINGTON, DC
Global Privacy Summit 2017
Alysa Zeltzer Hutnik

Impact of the 2016 Election on Antitrust and Consumer Protection Class Actions
April 27, 2017 |SEATTLE, WA
Law Seminars International’s Litigating Class Actions
Jeffrey S. Jacobson

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Chairman Kaye Steps Down as CPSC Chair; Republican Buerkle Assumes Role of Acting Chair

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Late Wednesday evening, Democrat Elliot Kaye resigned as chair of the Consumer Product Safety Commission.  Republican Commissioner Ann Marie Buerkle has assumed the position of Acting Chair until a new chair is appointed by the President and confirmed by the Senate.  Kaye will remain on the CPSC as a commissioner, with a term set to expire October 2020.  Buerkle said in a statement last week, “I am honored to have the opportunity to lead CPSC as Acting Chairman as the agency transitions under a new Administration.”  She further stated,

I will work to enhance relationships so that CPSC can leverage the knowledge, insight, and expertise of the entire consumer product safety community. We are all consumers and what we do at CPSC impacts the lives and livelihoods of all Americans. If we take a thoughtful, collaborative approach, we will impact the culture of product safety in a positive and meaningful way.

Commissioner Buerkle has been vocal in her opposition to the CPSC’s recent proposals for the voluntary recall notices and 6(b) proposals.   In a statement made last October, Buerkle advocated that the proposed rules be terminated, calling them “unsalvageable.”  She stated, “Any attempt to move forward now would put the staff in an extremely uncomfortable position of responding to harsh comments on ideas that did not originate with the staff.”

Buerkle’s elevation means that the Commission holds onto its 3-2 Democratic majority, at least until Commissioner Robinson’s term expires this October and the Trump administration appoints a Republican commissioner to replace her.

Smart TV Manufacturer “Smarting” after $2.2 Million Privacy Enforcement

This week, the FTC announced a settlement with VIZIO, Inc., one of the world’s largest manufacturers of “smart” TVs.  The settlement, also with the Office of the New Jersey Attorney General, arises from claims by regulators that VIZIO installed software that collected viewing data for 11 million consumer TVs without consent.  The $2.2 million settlement includes a payment of $1.5 million to the FTC as consumer redress, and $1 million to the New Jersey Division of Consumer Affairs, $300,000 of which is suspended.

In particular, the complaint alleged that VIZIO sold televisions that continuously track what consumers are watching and transmit that information through automated content recognition (“ACR”) software.  It also alleged that VIZIO remotely installed ACR software on previously-sold televisions that did not originally have ACR software installed at the time of purchase. VIZIO allegedly then shared that data and other data such as IP addresses with third parties for purposes of audience measurement, analyzing advertising effectiveness, and targeting advertising to particular consumers.

The complaint alleged three types of violations of the FTC Act and NJ Consumer Fraud Act:

  • Unfair Tracking: VIZIO’s collection and sharing of sensitive data without consumers’ consent is unfair, in that it has caused or is likely to cause substantial injury to consumers that is not outweighed by countervailing benefits to consumers or competition and is not reasonably avoidable by consumers themselves. According to the complaint, consumers do not expect that TV manufacturers would be engaged in tracking of their viewing data. The FTC complaint pointed, by way of example, to privacy protections for consumers’ viewing history under the Cable Privacy Act. 47 U.S.C. § 551.
  • Deceptive Omission: VIZIO failed to adequately disclose that the “Smart Interactivity” feature comprehensively collected and shared consumers’ television viewing activity from cable boxes, DVRs, streaming devices, and airwaves, which Defendants then provided on a household-by- household basis to third parties. The complaint alleged that VIZIO’s representations were not sufficiently clear or prominent to alert consumers to their practices related to data collection and sale of licenses. In particular:
    • Purchasers of TVs with ACR tracking pre-installed received no onscreen notice of the collection of viewing data.
    • Consumers who received the update to install ACR received a pop-up notification, but that notification provided no information about the collection of viewing data or ACR software, and it did not directly link to the settings menu or a privacy policy.
    • In March 2016, VIZIO sent a pop-up notification that referenced television viewing data, but that notification timed out after 30 seconds without input from the consumer who happened to be viewing the screen at the time and did not provide easy access to the settings menu.
    • VIZIO televisions with ACR tracking had a setting called “Smart Interactivity” with the description “Enables program offers and suggestions,” but the description did not include information about the collection of viewing data.
  • Deceptive Representation: The complaint alleged that VIZIO represented expressly or by implication that it would provide program offers and suggestions to consumers with “Smart Interactivity” enabled on their televisions, but it has not done so for more than two years.

All three commissioners at the time, including former Chairwoman Edith Ramirez and new Acting Chairwoman Maureen Ohlhausen, voted in favor of the complaint and proposed order. Acting Chairwoman Ohlhausen issued a concurring opinion. In her concurring opinion, Acting Chairwoman Ohlhausen reiterated the FTC’s concern as to Count II (deceptive omission).  However, she expressed concern as to the implications of the unfairness claim in Count I, which, she argued, alleged for the first time that household or individual television viewing activity is sensitive personal information.   She announced plans to launch an effort to further examine what constitutes “substantial injury” in the context of information about consumers.

This case is yet another example of enforcement action alleging privacy violations for “smart” technology. We will continue to monitor developments in this space, particularly in light of the new administration and Acting Chairwoman Ohlhausen’s new leadership.

FTC Announces Changes at the Helm of the Bureau of Consumer Protection; Thomas Pahl to Take Over as Acting Bureau Director Following Jessica Rich’s Departure

Acting Chairman of the Federal Trade Commission Maureen Ohlhausen announced today that Thomas Pahl – a current partner at Arnall Golden Gregory with significant experience at both the FTC and the Consumer Financial Protection Bureau – will take over as Acting Director on February 17.  Jessica Rich will depart as Director of the Bureau of Consumer Protection, a position she has held since 2013.

While currently in private practice, Pahl previously spent more than twenty years at the FTC, including stints as Assistant Director of the Division of Financial Practices and Assistant Director in the Division of Advertising Practices.  After his time at the FTC, Pahl served as a Managing Counsel in the Office of Regulations at the CFPB, where he oversaw rulemaking, guidance, and policy development activities relating to debt collection, credit reporting, and financial privacy.  Pahl also advised Reagan appointee and FTC Commissioner Mary Azcuenaga, and served as an attorney advisor to Republican FTC Commissioner Orson Swindle.

Pahl recently praised the appointment of then-Commissioner Ohlhausen as Acting Chairwoman as a “wise choice” that will “place[] the agency in very capable hands” and suggested that President Trump “should give serious consideration to making Ohlhausen the permanent chairman of the FTC.”   In announcing his appointment, Acting Chairman Ohlhausen commented that “Tom’s career demonstrates his continuing commitment to protecting consumers through active enforcement and advocacy that promotes a free and honest marketplace.”

Outgoing Bureau Director Jessica Rich served in various capacities at the FTC for 26 years and has presided over the Bureau of Consumer Protection since 2013, when she was appointed by former Chairwoman Edith Ramirez.  During her tenure, Rich advocated for rigorous enforcement of consumer protection laws and oversaw a number of high profile enforcement actions against major corporations such as Volkswagen, Apple, Google, and Amazon.  She also championed efforts to expand the Commission’s efforts to regulate privacy and data security practices under the FTC Act, as well as to develop the technological expertise necessary to protect consumers in a constantly-evolving marketplace.

Further shake-ups at the Commission are inevitable.  With former Chairwoman and current Commissioner Ramirez’s departure effective this coming Friday, there will be three vacancies on the five-person Commission.  However, the interim appointments of Commissioner Ohlhausen as Chairwoman and Pahl as Acting Bureau Director suggest that top positions at the Commission may continue to be filled by individuals with significant consumer protection experience.  Stay tuned.

Not a Passing Grade: FTC Settles with Company Over Alleged False Advertising for High School Diploma Program

On February 3, 2017, the Federal Trade Commission (FTC) announced a new settlement against Stratford Career Institute alleging that Stratford’s advertising for its high school diploma program (claiming that it provided the equivalency of a high school credential) was deceptive and violated Section 5 of the FTC Act.

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EU Data Protection Authority Issues GDPR Action Plan, Swiss Sign Privacy Deal with U.S.

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On January 16, 2017, the Article 29 Working Party (“Working Party”)—the EU’s central data protection advisory board—published a press release regarding its Action Plan for 2017, which was adopted as part of its wider implementation strategy for the General Data Protection Regulation (“GDPR”).  The Action Plan follows up on the actions initiated in 2016 and outlines the priorities and objectives for the year to come in anticipation of the entry into force of the GDPR in May 2018.

In 2017, the Working Party commits to continue and/or finalize work on several key issues:

  • Guidelines on certification and processing likely to result in a high risk and Data Protection Impact Assessments (“DPIA”);
  • Administrative fines;
  • Setting up the administration of the European Data Protection Board (“EDPB”) structure; and
  • Preparation of the one-stop shop and the EDPB consistency mechanism.

New work priorities and objectives for 2017 include:

  • Guidelines on the topics of consent and profiling;
  • Guidelines on the issue of transparency; and
  • Update of existing opinions and guidance documents on data transfers to third countries and data breach notifications.

Moreover, the Working Party commits to continue consultation rounds and will invite relevant stakeholders to provide input on topics of interest.  During a “Fablab” workshop announced for April 5 and 6, stakeholders will have the opportunity to comment on the Working Party’s Action Plan. Non-EU counterparts will have an opportunity to exchange views on the Working Party’s GDPR implementation and the GDPR generally during an interactive workshop scheduled for May 18 -19, 2017.

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In other data protection news, on January 11, 2017 the U.S. and Switzerland signed a Privacy Shield Agreement recognizing the adequacy of U.S. data protection legislation in light of Swiss requirements.  Months earlier, on October 7, 2015, the Swiss Data Protection Commission stated that it would follow the Court of Justice of the European Union’s invalidation of the U.S. – EU Safe Harbor framework, and hence, a new framework was required.  Resembling the EU – U.S. Privacy Shield, the new Swiss – U.S. agreement enables certified companies to export data from Switzerland to the U.S. in compliance with Swiss data protection laws.  There are three notable differences between the EU –U.S. and Swiss – U.S. Privacy Shield frameworks:

EU – U.S. Privacy Shield Swiss – U.S. Privacy Shield
EU Data Protection Authority is cooperation and compliance authority Swiss Federal Data Protection and Information Commissioner is cooperation and compliance authority
Sensitive data definition under Choice Principle Modified sensitive data definition under Choice Principle includes ideological or trade union-related views or activities, information on social security measures or administrative or criminal proceedings and sanctions, which are treated outside pending proceedings
Binding arbitration option in place Commerce to work with Swiss Government to put in place binding arbitration option at first annual review

The new agreement replaces the existing U.S. – Swiss Safe Harbor Framework with immediate effect. The Department of Commence will begin accepting self-certification applications on April 12, 2017.

New FTC Acting Chair Maureen Ohlhausen Offers Insight into Consumer Protection Priorities

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Just over one week after being named acting chair of the Federal Trade Commission (FTC), Maureen Ohlhausen delivered the keynote address at the American Bar Association’s biennial Consumer Protection Conference in Atlanta on February 2.

During her remarks, acting chair Ohlhausen offered insight into consumer protection priorities during her tenure as acting chair.

First, acting chair Ohlhausen signaled the importance of the Agency focusing on stopping fraudulent schemes, especially those targeting vulnerable populations such as the elderly or military members.

Second, the acting chair noted that remedies sought in FTC cases should be more closely linked to actual, rather than speculative, consumer injury or harm, echoing her recent dissent in Qualcomm, and further posited that the FTC’s efforts in recent cases to collect disgorgement in non-fraud cases is inconsistent with prior FTC practice.  Specifically, the acting chair called into question the Agency’s practice of seeking disgorgement that is disproportionate to actual consumer injury.  As an example, she referred to her dissent in Uber, where she wrote that “I dissent from the complaint against Uber and the settlement resolving that complaint because the monetary settlement of $20 million is not tied to an estimate of consumer harm.”  And for privacy enforcement actions, she emphasized the need for “concrete injury” to justify agency action.

Third, acting chair Ohlhausen indicated a desire for the FTC to be more transparent about its investigation and enforcement matters.  She noted that there may be value in disclosing (without disclosing confidential information) details of investigations where the FTC closes an investigation without nay enforcement action.  According to acting chair Ohlhausen, such transparency would help provide guidance to businesses about practices and policies that the Commission deems permissible, in addition to those that are not.  It is unclear how much additional information acting chair Ohlhausen envisions disclosing beyond information contained in Commission closing letters at present.

Also with respect to investigations, the acting chair signaled the need for the Agency to narrowly tailor investigative requests to only obtain information that is necessary and relevant to its investigations.  Recognizing the burden of overly broad information requests, she stated that “the FTC must remain able to collect the information we need to enforce the law, but I am certain that we can do this while reducing the burden on businesses, particularly third parties who are not under investigation.”

Although her remarks were brief, the acting chair’s address suggests a more restrained approach by the FTC than it has pursued in recent years.  Given the three open seats on the Commission yet to be filled, two by Republicans, and the future appointment of a permanent chairperson, more changes are a certainty.

CIT Adds New Requirements for ‘Assembled in USA’ Claims Analysis

A recent decision the by the U.S. Court of International Trade (CIT) has important implications for importers, government contractors, and manufacturers that make “Assembled in America” and similar claims. In a ruling against Energizer Battery, Inc., the CIT determined that domestic assembly of foreign component parts does not fulfill the Buy America requirements found in government procurement law.

The case turned on the question of what constitutes “substantial transformation” of a product, a standard also used by the FTC in regulating “Made in the USA”-type marketing claims. Because FTC defers to Customs in determining whether an article has been “substantially transformed,” this ruling could impact the validity of current marketing claims.  Companies making these claims currently or who may be considering what kinds of “Made in USA”-type claims they can make going forward will want to understand how this decision impacts their products.  Read more about it here.

FTC Cries Foul On Breathometer Accuracy Claims

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The FTC recently announced a settlement with Breathometer, Inc., a company that marketed a smartphone accessory that it claimed could detect blood alcohol levels.  Users could simply plug the accessory into the headphone jack, open the Breathometer app, blow, and receive a reading of their blood alcohol content within five seconds.  Breathometer marketed the products as “FDA registered devices,” featuring “law enforcement”-grade technology, to help you “make informed, dependable decisions” about whether to drive after drinking.

The FTC alleged that Breathometer did not have adequate substantiation for its performance claims. Specifically, the products were tested to determine accuracy at .02% blood alcohol content, not .08%, which is the legal limit under state laws.  In addition, testing revealed that the accuracy of the Breeze version of the product degraded over time and the company did not have a means of recalibrating it remotely.  Breathometer stopped selling the Breeze product but allegedly did not adequately inform consumers of the issue.

This case is yet another illustration of the FTC taking the lead on mobile health products that are or could potentially be regulated by the FDA. As readers of our Food and Drug Law Access blog may know, FDA has taken a risk-based approach to regulation of such products and, with the exception of products that could cause patient harm or death upon malfunction, is exercising regulatory discretion. Yet, many companies, particularly those who are new to the health market, presume that FDA is the primary, if not the only, regulator likely to have an interest in their product and claims.

Not so. The FTC has repeatedly voiced concerns about the proliferation of mobile health apps and whether claims were being properly substantiated, particularly where disease diagnosis, treatment, or mitigation claims are featured.  Along with the Breathometer matter, the Lumosity, Melanoma Detective and Aura Labs cases collectively demonstrate that when it comes to many consumer-directed mobile health products, the regulator most likely to take interest is the FTC.

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