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Shipping Insurance Claims and the UCL

February 4, 2023/in False Advertising /by taulersmith

Many companies that offer shipping insurance on e-commerce sites are violating California insurance laws, which have strict requirements about who is allowed to offer insurance and how that insurance can be offered. Moreover, California’s insurance laws can serve as a predicate for civil lawsuits brought under other statutes, including the California Unfair Competition Law (UCL). When it comes to shipping insurance claims and the UCL, there is strong legal precedent in favor of consumers who are charged for insurance by an unlicensed agent. Additionally, the shipping insurance offered by online sellers is often just a surcharge on services already being provided, which is business fraud that can also be the basis for a civil suit.

To learn more about how California consumer protection laws can be used to file a shipping insurance lawsuit against e-commerce sellers, keep reading.

Filing a Shipping Insurance Lawsuit Under California’s Unfair Competition Law (UCL)

Some companies that offer shipping insurance on their e-commerce websites expressly label it as “insurance,” while other companies call it “safe ship” or use another term. In fact, it is common for online sellers to refer to an insurance fee by some other name. For example, the plaintiff in Miller v. Travel Guard Group alleged that the company mislabeled the travel insurance fee on their website in order to get around the state prohibition against unlicensed agents selling insurance. Regardless of what term is used, however, both the California Insurance Code and the Unfair Competition Law (UCL) protect consumers against unlawful offers of insurance.

Section 1631 of the California Insurance Code imposes licensing requirements on any entity that seeks to sell insurance in the state. If a company violates the California Insurance Code by attempting to sell insurance as an unlicensed agent, consumers may be able to bring a UCL claim. Additionally, companies that hide a shipping insurance charge on a purchase could be exposed to lawsuits under the UCL for false, misleading, deceptive, and unlawful marketing and sales practices.

Section 17200 of the UCL

The California Unfair Competition Law (UCL) is set forth in Cal. Bus. & Prof. Code § 17200. The statute defines “unfair competition” as:

Any unlawful, unfair, or fraudulent business act or practice.
Unfair, deceptive, untrue, or misleading advertising.

The UCL is a sweeping law that is meant to protect both consumers and businesses. In fact, the statute has been interpreted broadly by California courts to cover a wide variety of business acts and consumer transactions, including antitrust violations, intellectual property claims, employment claims, misbranded drug products, and disputes over shipping insurance charges.

Both federal and California courts have held that companies may be sued for breach of contract and unfair competition when they violate state insurance laws. In fact, the U.S. Court of Appeals for the Ninth Circuit said that the California Insurance Code can serve as a predicate for a claim brought under the California Unfair Competition Law (UCL) even though the UCL does not explicitly provide for a private right of action for shipping insurance claims. In Miller v. Travel Guard Group, the California Northern District Court went even further by ruling that consumers may bring a claim under the UCL based on both an illegal agent theory and an illegal premium theory when the insurance fee is automatically included in the total price and the customer is not given an opportunity to opt out of paying it.

Only Licensed Agents Can Sell Insurance in California

California has strict laws regulating exactly who can sell insurance. Whether it’s auto insurance, property insurance, health insurance, general liability insurance, or shipping insurance, only licensed agents are allowed to offer insurance to customers. One way that California law protects consumers against insurance fraud is by requiring many types of insurance agents (e.g., home and auto insurance) to file bonds with the state insurance commission.

In order to charge customers for shipping insurance, a company must comply with California’s insurance laws. This means that insurance agents need to be registered with the state. Beyond that, owners, insurance agents, and even non-licensed employees must provide fingerprints that are kept on file with the state. All of this is in addition to standard business certification requirements, such as securing a certificate of good standing if the company is a corporation and a certificate of organization if the company is an LLC.

Friedman v. AARP Established Precedent for Shipping Insurance Claims in California

In Friedman v. AARP, Inc., the Ninth Circuit Court issued an important ruling that set precedent for subsequent cases involving offers of insurance to California consumers. The plaintiff in Friedman was a Medicare recipient who purchased UnitedHealth supplemental health insurance coverage through the AARP (previously known as the American Association of Retired Persons). Since AARP earned a 5% commission on the sale, they were essentially acting as an insurance seller without a license. This would be in direct violation of California Insurance Code § 1631. That statute prohibits anyone from soliciting, negotiating, or effecting an insurance contract unless the person holds a valid license from the California Commissioner of Insurance. California Insurance Code § 1633 goes even further by explicitly prohibiting an unlicensed company from “transacting” insurance regardless of whether the company reports itself as an insurance agent.

Facts of the Case

The plaintiff in the case was Jerald Friedman. He was one of several AARP members who filed a class action against AARP because the organization allegedly charged inflated insurance rates for Medigap coverage. (Medigap policies provide supplemental health insurance for costs that are not already covered by Medicare.) These exaggerated charges allegedly stemmed from a hidden commission that AARP was collecting.

The lower court in Friedman dismissed a class action brought by the plaintiff under the UCL. The Ninth Circuit then reversed that decision because the federal appellate court determined that AARP’s fee arrangement qualified as a commission on every insurance sale. In other words, AARP was acting as an insurance agent by selling insurance.

UCL Violation

Section 17200 of the California Unfair Competition Law (UCL) explicitly prohibits companies from engaging in “any unlawful, unfair, or fraudulent business act or practice.” AARP was accused of violating the UCL by committing the unlawful act of selling insurance without a license.

Since AARP is not licensed to sell insurance in California, it is unlawful for the group to offer insurance to its California members. AARP marketed the Medigap policy to its members in a number of ways, including television ads, websites, and materials sent directly through the mail. A lot of these advertisements included text reading, “This is a solicitation of insurance.” Although AARP later tried to describe its insurance commission as a “royalty,” the federal government determined that it was still a commission being charged on top of the typical monthly premium. This meant that AARP was essentially acting as an insurance agent despite not having a license to do so in California.

Unlawful to Conceal a Shipping Insurance Charge in California

Under California law, there is an expectation that consumers will be able to provide informed consent for purchases they make online. Unfortunately, some businesses trick customers into paying more for shipping insurance with hidden or confusing features on their e-commerce websites, particularly when it comes to placing and finalizing orders. The businesses generate additional revenues by offering a service that they are not legally allowed to offer without a valid, state-issued license.

Companies that do business in California and use deceptive marketing and sales tactics could be subject to civil suits for violating the UCL. That’s because the statute prohibits false, misleading, deceptive, and fraudulent acts or practices, which may include attempts by the business to deceive customers about hidden shipping insurance fees. An experienced Los Angeles insurance claim lawyer can help consumers bring a lawsuit against companies that violate the UCL by making an unlawful offer of shipping insurance.

UCL Claims

When consumers unknowingly purchase shipping insurance on a website due to misleading and/or deceptive information, they suffer an injury. The Unfair Competition Law can be used as the basis for a shipping insurance lawsuit if the defendant violated the “fraudulent” prong of the statute by misleading customers about the additional charge. In these cases, the plaintiff will need to establish two elements to bring a successful claim: (1) that the company deceived the public in some way either in an advertisement or during the checkout process; and (2) that the consumer relied upon the company’s statements or advertisement.

There are several ways that a company could violate the UCL by attempting to charge customers for shipping insurance:

Confusing Language: The company might use ambiguous and confusing language to describe the insurance charge, which means that consumers won’t necessarily understand what it is that they are purchasing.
Hiding the Insurance Charge: It’s also possible that the company might hide the total purchase price from the consumer by failing to clearly inform them of the total cost when shipping insurance is included, or by failing to allow the consumer to edit their order once a shipping insurance charge has been added.
Lack of Consent: In the most egregious cases, the company might not even give the consumer an opportunity to consent to the shipping insurance charge. There have been cases in which a company automatically charges for shipping insurance unless the purchaser clicks on a random and inconspicuous “decline” button before completing the order.

When a company fails to disclose information that consumers need in order to make informed decisions about a purchase, it could be a violation of the UCL. Whether it’s a misleading advertisement or a concealed charge on a company’s website order form, California consumers may be able to bring a shipping insurance claim under the UCL.

CLRA Claims

This type of conduct by a business might also violate the California Consumers Legal Remedies Act (CLRA), which prohibits certain unlawful acts involving consumers. For example, the CLRA explicitly forbids companies from “advertising goods or services with intent not to sell them as advertised.”

The ordering and check-out processes on some e-commerce websites are confusing and possibly even deceptive. As a result, it’s very possible that consumers are unknowingly purchasing shipping insurance as an upcharge or add-on because websites don’t make the additional charge immediately apparent to site visitors. Moreover, it’s possible that some consumers would not have purchased the product at all if they had known about the shipping insurance charge. Worse yet, many consumers might not become aware of the additional charges until much later when their bank account or credit card is debited for the order.

Contact the Los Angeles False Advertising Lawyers at Tauler Smith LLP

Were you charged for shipping insurance while making a purchase on an e-commerce website? The Los Angeles false advertising lawyers at Tauler Smith LLP represent clients in civil lawsuits and class action lawsuits against companies that commit business fraud, including litigation involving shipping insurance claims against companies that illegally offer shipping insurance in online transactions. Call 310-590-3927 or email us to schedule a free initial consultation.

California’s Unfair Competition Law (UCL)

February 3, 2023/in False Advertising /by taulersmith

California’s Unfair Competition Law (UCL) is one of the most important consumer protection laws in the country. California courts tend to interpret the UCL broadly so that it applies to a wide range of unethical business practices. The statute explicitly prohibits companies from engaging in unlawful, unfair, or fraudulent business actions. It also prohibits companies from using false advertising. Businesses that violate the UCL may be subject to penalties that include financial compensation, monetary fines, and injunctions to stop committing certain acts. This means that consumers who purchase a product or service from a business that violates the UCL may be able to have an experienced California consumer fraud lawyer file a lawsuit and seek financial restitution.

To learn more about the California Unfair Competition Law, keep reading this blog.

What Is the California Unfair Competition Law?

The California Unfair Competition Law (UCL) is codified in Bus. & Prof. Code section 17200. The UCL protects consumers against business fraud, false advertising, and other deceptive practices by placing limits on companies doing business in California. The statute also protects honest companies and ensures that competition remains fair and strong, with no one company allowed to stifle competition and gain a competitive advantage by breaking the law.

Importantly, the UCL applies to all private companies doing business in California. This means that if a company is based in another state, if they sell to consumers located in the state, or even if they advertise in the state, they can be sued under the UCL.

What Is “Unfair Competition”?

The California Unfair Competition Law defines “unfair competition” as any of the following:

An unlawful business act or practice.
An unfair business act or practice.
A fraudulent business act or practice.
Unfair, deceptive, untrue, or misleading advertising.
Any other act prohibited by the UCL.

Courts have interpreted the UCL broadly so that just about any violation of the law by a business can also constitute a violation, so long as the action or practice injured consumers or gave the business an advantage over its competitors. One of the most common examples of unfair competition in consumer transactions is when a company makes misrepresentations to customers about the type, quality, or cost of a product or service.

Deceptive Advertising

Examples of deceptive advertising that may violate the UCL include robocalling customers, using bait and switch advertising to trick customers, using fake endorsements in ads, exaggerating product descriptions, omitting important information about a product or service in an advertisement, manipulating prices, using false reference pricing in ads, and infringing on another company’s intellectual property.

Unlawful, Unfair, and Fraudulent Business Acts

The UCL defines “unlawful” business acts or practices as any action taken by a company that violates state or federal law. Even if the company committed the unlawful act just once, that can be enough to trigger legal action under the UCL.

An “unfair” business act or practice, as defined by the UCL, is typically committed by either a company or a business competitor. Generally speaking, a company violates the UCL when they attempt to sell goods or services that harm consumers. In the context of a business competitor, it is considered an unfair business act when the company does something that broadly undermines competition in the marketplace.

The UCL also prohibits “fraudulent” business acts or practices, which means any conduct that misleads or deceives consumers. When a consumer relies on false statements made by the company in an advertisement or at the point of sale and subsequently suffers an economic injury, they may be able to bring a UCL claim for restitution.

Private Right of Action Under Section 17200 of the UCL

The California Unfair Competition Law (UCL) allows both private parties and public prosecutors to take legal action against companies that commit fraudulent business acts. In most cases, an individual who has suffered an injury because of unfair competition must have their lawsuit filed by a county or city prosecutor. When the lawsuit is filed as a class action, however, a consumer may bring the action as a private plaintiff.

Standing to sue under the UCL can be established by showing that the plaintiff sustained an economic injury because of the business’ conduct. If the plaintiff bought an item from the business, then this would be enough to meet the UCL standing requirement.

False advertising claims brought under the UCL must establish that the plaintiff sustained economic injury because the defendant company engaged in misleading advertising of goods or services. Basically, this means that the consumer needs to show that they purchased an item or service and that they did so because of a deceptive advertisement.

Strict Liability

Section 17200 of the Unfair Competition Law imposes strict liability on businesses that commit fraud, which means that it does not matter whether they intended to commit fraud. The mere fact that their actions were unlawful, unfair, or fraudulent is enough to violate the statute. Additionally, it is not a defense against a UCL claim that the company’s ad was true or accurate. That’s because the plaintiff in a UCL case merely needs to show that the ad was likely to mislead consumers.

Moreover, it is important for businesses to understand that they can be sued under the UCL even if their actions are not technically unlawful. That’s because the statute explicitly prohibits “unfair” business acts and practices.

Restitution and Damages Available in UCL Claims

There are two remedies available to plaintiffs in an Unfair Competition Law claim:

Actual economic damages, which means the defendant company is ordered to pay back any money received from the consumer.
An injunction ordering the defendant to stop committing the fraud.

There are no punitive damages allowed in UCL cases. This is one reason that individual consumers often join forces to file a UCL claim as a class action, which can make it harder for the defendant to avoid paying a large damages award. A knowledgeable California UCL attorney can help the plaintiffs determine if it would be better to bring a class action lawsuit.

What Is the Statute of Limitations for UCL Claims?

The statute of limitations for a UCL claim is four (4) years, with the clock starting as soon as the business commits the fraudulent act or as soon as the plaintiff discovers the fraud. The standard used in these cases is a reasonable person standard, which means that the court will ask whether a person who exercised reasonable diligence would have discovered the unlawful business act when the statute of limitations period started to run.

Consumer Fraud Defense: Answering UCL Claims

Sometimes, a consumer brings a UCL claim against a company without merit. These claims can be tricky for businesses to answer because the statute is interpreted broadly by courts, and plaintiffs are typically given wide latitude to prove their case. If you have been sued in state court for allegedly violating the Unfair Competition Law, you need to speak with a knowledgeable consumer fraud defense lawyer immediately.

Related Laws: CLRA, ARL, and FTC Act

There are a few other related statutes that California consumers should be aware of when deciding whether to file a UCL claim.

CLRA Claims

Unfair Competition Law claims are often accompanied by claims under the California Consumers Legal Remedies Act (CLRA). The CLRA is more limited than the UCL because the CLRA includes protections for specific actions by businesses, whereas the UCL applies broadly to business fraud. It may be in the best interests of a plaintiff to bring a claim under both statutes because the remedies are cumulative. Beyond that, only the CLRA allows for punitive damages to be imposed against the defendant. Additionally, the CLRA allows plaintiffs to recover attorney’s fees.

ARL Claims

It is also possible for California consumers to use the Unfair Competition Law to bring a private civil action against companies that violate California’s automatic renewal laws. This is significant because the California ARL does not allow for a private right of action, which means that consumers who are deceived into signing up for an auto-renewal subscription may still be able to sue for full restitution under the UCL.

Federal Laws

There are also federal laws, such as the Federal Trade Commission Act (FTC Act), that protect California consumers against business fraud and false advertising. One advantage for plaintiffs filing a UCL claim is that the state statute has broad consumer protections that go beyond the protections provided under federal law.

Keep in mind that defendants may argue that more lenient federal law should apply in a particular case instead of the stringent California state law. That’s why it is important to have a skilled Los Angeles false advertising attorney on your side throughout the case.

Contact the California Consumer Protection Attorneys at Tauler Smith LLP

Tauler Smith LLP is a Los Angeles law firm that represents consumers in civil litigation, including class actions based on UCL violations. Our Los Angeles consumer protection lawyers understand the nuances of the California Unfair Competition Law, and we can help you get financial restitution from a company that used fraudulent business practices. Call us today at 310-590-3927 or email us to discuss your case.

California Invasion of Privacy Act (CIPA)

October 4, 2022/in False Advertising /by taulersmith

It is quite common these days for businesses to monitor and record phone calls with customers, whether it’s to ensure that orders are accurate, to review employee interactions, or for some other reason. At the same time, new technologies have made it easier than ever to eavesdrop on private communications. Unfortunately, this has resulted in some companies going too far by invading the privacy of customers. The California Invasion of Privacy Act (CIPA) is a state law that makes it illegal for businesses to wiretap consumer communications and record you without your consent. Businesses that violate the CIPA may be subject to both criminal and civil penalties, including a lawsuit filed by any consumers whose conversations were wiretapped or recorded without permission.

To learn more about the California Invasion of Privacy Act, keep reading this blog.

What Is California’s Invasion of Privacy Law?

California has the nation’s strongest consumer protection laws, including the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), the California Consumers Legal Remedies Act, and the California Unfair Competition Law (UCL). The CCPA was enacted in 2018 to become the nation’s first state privacy law, and it strengthened protections for customer data collected by businesses online. The CIPA has a longer history, having been passed by the California State Legislature in 1967 for the purpose of more broadly protecting the privacy rights of all state residents, including consumers. Under the CIPA, it is illegal for companies to wiretap or record conversations unless all participants have consented to the recording. This applies to telephone conversations and online communications.

Cell Phones

Although the wiretapping law was initially intended to cover calls on landline phones, the use of cellular phones has been addressed by the statute. Cal. Pen. Code sections 632.5 and 632.6 specifically prohibit the use of a recording device when a call involves a cellular phone, whether it’s two cell phones or one cell phone and one landline phone.

Websites & Session Replay Software

In addition to recording phone conversations, a lot of companies also keep records of their interactions and communications with customers who visit a company website. This becomes problematic – and possibly illegal – when the company uses session replay software to capture visitor interactions with their website. That’s because the use of this type of tracking software may constitute an unlawful intercept of the communication, as defined by California’s wiretap law.

Session replay software allows website operators to monitor how a user interacts with the website. The tool then reproduces a video recording that shows the user’s interactions, including what they typed, where they scrolled, whether they highlighted text, and how long they stayed on certain pages. When companies employ this software, the very fact that a machine is being used to intercept customer communications constitutes a violation of the CIPA.

California Penal Code Section 631: Wiretapping

California Penal Code Section 631 forbids anyone from illegally wiretapping a conversation. The law specifically prohibits the following:

Using a machine to connect to a phone line.
Trying to read a phone message without the consent of all the parties participating in the conversation.
Using any information obtained through a wiretapped conversation.
Conspiring with another person to commit a wiretapping offense.

Some states allow a call to be recorded when just one participant is aware of the wiretap and consents to it, even if the person recording the call is the one providing consent. But California is a two-party consent state, which means that everyone involved in the call or chat must agree to it being recorded. If just one party does not provide consent, then recording the conversation constitutes a violation of the CIPA and can result in both criminal and civil penalties.

Out-of-State Businesses

Even if the person who called you or chatted with you was not located in California, you can still bring a lawsuit under the Invasion of Privacy Act as long as you were in the state at the time of the call or chat. That’s because out-of-state businesses must still comply with California laws when communicating with someone who is in the state.

California Penal Code Section 632: Eavesdropping

Section 632 of the California Penal Code addresses the crime of eavesdropping. Many times, a wiretapping case also involves eavesdropping offenses where the offending party both taps a phone line and listens in on the conversation. The main difference between the two is that eavesdropping does not necessarily involve the tapping of a phone line.

The statute defines “eavesdropping” as the use of a hidden electronic device to listen to a confidential communication. Significantly, the law is not limited to phone conversations. When someone intentionally eavesdrops on an in-person conversation, they may be subject to criminal charges and a civil suit for damages. The types of electronic devices that are often used to illegally eavesdrop include telephones, video cameras, surveillance cameras, microphones, and computers. If the device was concealed from one of the parties, it may constitute a violation of California’s eavesdropping laws.

Can You Sue for Invasion of Privacy in California?

Although the California Invasion of Privacy Act is technically a criminal statute, Cal. Pen. Code §637.2 gives victims of wiretapping and eavesdropping the ability to bring a civil suit against the person or company that illegally recorded the conversation. If you learn that someone was listening in on your private conversation without permission, you may be able to file a lawsuit to recover statutory damages. Additionally, §638.51 gives consumers the ability to file a lawsuit against companies that use trap & trace devices to illegally monitor website visits without consent.

If you learn that someone was listening in on your private conversation without permission, you may be able to file a lawsuit to recover statutory damages.

How to Prove Invasion of Privacy Under the CIPA

To win your CIPA claim, you will need to prove that the conversation was illegally recorded in the first place. In some cases, this will be obvious because the business will reveal that they are monitoring and recording the call or chat. In other cases, consumers may learn about illegal wiretapping during the discovery process when the defendant is forced to turn over company records.

The other elements of a CIPA claim that you will need to establish at trial include:

The defendant intentionally used an electronic device to listen in on and/or record the conversation.
You had an expectation that the conversation would not be recorded.
You or at least one other person on the call did not consent to having the conversation recorded.
You suffered some kind of harm or injury as a result of your privacy rights being violated by the defendant.

The use of a cellular phone can change the burden of proof needed to win a CIPA claim. That’s because courts will typically use a strict liability standard when at least one of the participants on the call was using a cell phone. This means that the context and circumstances of the call won’t matter; the court will automatically presume that there was an expectation of privacy. Additionally, strict liability will apply to the defendant even when they did not realize that the other person on the call was using a cell phone.

What Is the Penalty for Invasion of Privacy?

The criminal penalties for violating the California Invasion of Privacy Act (CIPA) include possible jail time and significant fines. Businesses that violate the CIPA may also be exposed to civil penalties when a consumer files a lawsuit in state court.

Criminal Penalties

The CIPA gives criminal prosecutors wide latitude to charge an offense as either a misdemeanor or a felony, depending on the facts of the case. If a CIPA violation is charged as a misdemeanor, the defendant could be sentenced to one year in jail and ordered to pay up to $2,500 in statutory fines for each violation. If the violation is charged as a felony, the possible jail time could increase to three years. Additionally, anyone convicted of a second wiretapping offense could face more substantial fines.

Civil Penalties

The CIPA lists statutory penalties that may be imposed against companies or individuals who violate the statute. The court can order the defendant to pay $5,000 in statutory damages for each illegally recorded conversation, or three (3) times the actual economic damages you suffered because of the privacy breach. The judge in your case will have the option to choose whichever amount is greater: the statutory damages or the actual damages.

Depending on the circumstances of your case, you might also be able to file a right of publicity lawsuit. That’s because right of publicity claims and invasion of privacy claims often overlap, especially when a business attempts to profit from someone else’s image or likeness without consent.

California Invasion of Privacy Statute of Limitations

It is very important that you take immediate action and speak with a qualified consumer protection attorney as soon as you suspect that a company may have violated your privacy during a communication. That’s because the California Invasion of Privacy Act (CIPA) requires plaintiffs to file a civil suit within one (1) year of the date on which the conversation happened. Failure to bring your case before one year has passed could result in your lawsuit being dismissed.

The statute of limitations period typically begins when the plaintiff knew about the defendant’s illegal wiretapping. But what happens when the plaintiff did not learn about the invasion of privacy violation until later? In these cases, the court usually applies a reasonable person standard, which means that the court will attempt to determine the point at which a reasonable person standing in the shoes of the plaintiff would have known about the unlawful act by the defendant. In other words, should the plaintiff have discovered the privacy violation before the statute of limitations expired?

Contact the Los Angeles Consumer Protection Lawyers at Tauler Smith LLP

If a company invaded your privacy by secretly recording a conversation without your permission, you may be eligible to file a civil suit to recover statutory damages. The first step you should take is to speak with an experienced Los Angeles consumer protection attorney at Tauler Smith LLP. We can help you decide how to best proceed with your case.

Call 310-590-3927 or email us today.

Right of Publicity & Invasion of Privacy Claims

September 17, 2022/in Intellectual Property /by taulersmith

Right of publicity & invasion of privacy claims often intersect and overlap, depending on the circumstances of the particular case. California’s privacy laws apply broadly to everyone. When someone else uses your name, image, voice, or other aspect of your identity without permission, they may be violating your right to privacy. Although celebrities do relinquish some of their privacy rights by virtue of being in the public eye, they do not surrender their publicity rights under either California or federal law. Whether you are a celebrity or a non-celebrity, you have the right to keep others from exploiting your image or likeness for commercial purposes.

To learn more about the differences between right of publicity claims and invasion of privacy claims, keep reading this blog.

Publicity Rights vs. Privacy Rights in California

The right of publicity falls into the category of “intellectual property rights” that are protected by both state and federal law. Rights of publicity are similar to something known as an invasion of privacy claim, which is a legal claim that seeks to prevent anyone from interfering with your personal communications or disclosing personal information about you to others.

There are important differences between publicity rights and privacy rights. For instance, an individual’s publicity rights include their image, photo, name, voice, and likeness, while an individual’s privacy rights typically extend to their name or likeness. Additionally, publicity rights are usually limited to uses that involve advertisements or sales from which the defendant derives a commercial benefit.

Statute of Limitations

There is also an extended statutory time period for right of publicity claims in California, with plaintiffs having a post-mortem right under Cal. Civ. Code Section 3344.1 to bring a claim on behalf of a deceased person’s likeness for another 70 years after their death.

Damages

While the damages in a right of publicity case necessarily concern commercial losses suffered by the plaintiff when their likeness is used without authorization, the right of privacy typically concerns emotional distress suffered by the plaintiff when their private affairs or information are shared without permission.

Defamation Claims and the Right of Publicity

A related law that is often cited in these cases is the law against defamation, which prohibits anyone from making disparaging or otherwise defamatory statements about you in certain circumstances.

Defamation claims differ from right of publicity claims primarily when it comes to the truthfulness of the information that is disclosed to the public. When the information about the plaintiff is true, the appropriate legal action is probably a lawsuit for right of publicity misappropriation since the defendant is essentially stealing the plaintiff’s identity. By contrast, when the information about the plaintiff is false, then a claim for defamation of character may be appropriate since the defendant is possibly causing harm by lying about the plaintiff.

California Right of Publicity Claims

What about more traditional right of publicity claims that don’t involve privacy rights? A right of publicity gives you legal control over how certain personal aspects are used by others to promote their goods or services. These aspects that qualify for protection under the law include your name, image, voice, and likeness.

California’s publicity rights law recognizes the inherent commercial value in the average person’s likeness. Once that value has been exploited for a financial benefit, then the person to whom it belongs may have a cause of action to take legal action when someone infringes on their likeness. This means that the plaintiff in a California right of publicity lawsuit needs to establish that they have attempted to benefit financially from their likeness at some point before the defendant tried to do the same.

Contact an Experienced Los Angeles Right of Publicity Lawyer

In an invasion of privacy case that involves the right of publicity, you are going to want to be represented by a lawyer who has a firm grasp of both intellectual property law and internet law. The Los Angeles intellectual property attorneys at Tauler Smith LLP have extensive experience litigating cases involving right of publicity law, privacy law, and trademark claims. We can help you decide the most appropriate next step in your case.

Call us at 310-590-3927 or email us today.

Best Defenses to Trade Secret Claims

August 9, 2022/in Intellectual Property /by taulersmith

California and federal trade secret laws are supposed to protect businesses against the unlawful acquisition, use, or disclosure of their proprietary information. But these legal protections can also open the door for the filing of bad faith claims by business owners who may have a grudge against a former employee or a competing company. If you are being sued for trade secret misappropriation, it is important that you speak with an attorney who understands both state and federal intellectual property law and who can advise you on the best defenses to trade secret claims.

To learn about the best defenses that may be available in your California trade secret case, keep reading.

What Defenses Are Available in California Trade Secret Cases?

One of the main ideas behind trade secret laws is that businesses should have a way to prevent others from disclosing and/or using their confidential information. In fact, these laws are so robust and plaintiff-friendly that plaintiffs are often able to win and collect substantial monetary damages. This is one reason why any defendant in a trade secret action should be represented by an experienced California trade secret lawyer who can raise strong defenses on their behalf.

These are just a few of the possible defenses in a California trade secret case:

The information was not a “trade secret.”
The information was not misappropriated.
The defendant had whistleblower immunity.
The statute of limitations expired.

The Information Was Not a “Trade Secret”

The federal Defend Trade Secrets Act (DTSA) defines a trade secret as information that is valuable because it cannot be readily ascertained through proper means. A potential defense available in federal trade secret claims filed under the DTSA is that the information was “readily ascertainable” through lawful means. For example, the defendant may be able to show that they acquired the data in material that was published online or in books. This would mean that the information was not confidential since it was, by definition, generally available to others. This exact defense is not available in claims filed under the California trade secrets statute because the California Uniform Trade Secrets Act (CUTSA) defines a trade secret more broadly. But it is still possible for a defendant in a CUTSA action to argue that the information does not qualify as a trade secret because it was “generally known to the public.”

A related defense that may be an option in some California trade secret cases is that the plaintiff failed to take sufficient steps to protect their proprietary information. Both the DTSA and the CUTSA require plaintiffs to make reasonable efforts to ensure that their information remains confidential. When the business owner fails to do at least the bare minimum to maintain the secrecy of the information (e.g., imposing restrictions on which employees can potentially access it), then it may not qualify as a “trade secret” under the law.

The Information Was Not Misappropriated

Even if the plaintiff establishes that the information at issue in the case qualifies as a trade secret, the defendant may be able to argue that there was no misappropriation because the information was lawfully acquired. Under both the California Uniform Trade Secrets Act (CUTSA) and the federal Defend Trade Secrets Act (DTSA), a person or entity is liable for trade secret misappropriation only if the information was acquired through “improper means.” This typically means actions such as theft, espionage, misrepresentation, bribery, or breach of a duty to maintain the secrecy of the information. By contrast, a good example of a lawful action to acquire trade secrets is reverse engineering of a formula or recipe by a rival company. Since this information would have been discovered through publicly available means, it does not violate trade secret law.

The Defendant Had Whistleblower Immunity

When Congress passed the Defend Trade Secrets Act (DTSA), they included provisions that explicitly protect individuals who reveal trade secrets in certain situations. For example, a whistleblower who discloses confidential information to a government official while reporting illegal activity by their employer would be immune from prosecution and from civil liability in a trade secret lawsuit. The same is true for a whistleblower who discloses proprietary information to an attorney in the context of reporting unlawful actions by their employer.

The Statute of Limitations Expired

Defendants in some trade secret cases may be able to raise a defense that the statute of limitations for filing a trade secret claim has expired. In California trade secret actions, the plaintiff has just three (3) years to bring a lawsuit, and the clock starts as soon as the plaintiff has either actual notice of the misappropriation or constructive notice of the misappropriation. (“Constructive notice” means that the plaintiff had reason to investigate and should have discovered the trade secret theft or use.)

Contact the Los Angeles Trade Secret Litigation Attorneys at Tauler Smith LLP

If you have been accused of misappropriating a company’s trade secrets by disclosing information to a competitor or using information without permission, you are going to want a skilled attorney assisting you. The Los Angeles trade secret attorneys at Tauler Smith LLP have extensive experience representing defendants in California trade secret lawsuits, and we are prepared to help you raise strong defenses to win at trial or get the claim dismissed before trial.

Call us at 310-590-3927 or email us to schedule a free consultation.

Statute of Limitations for Trade Secret Claims

August 1, 2022/in Intellectual Property /by taulersmith

The legal system has many complexities, such as a requirement that plaintiffs not wait too long to file lawsuits in either California courts or federal court. This is one reason why it’s so important for any business owner with valuable intellectual property to have a solid understanding of California IP laws, including the statute of limitations for trade secret claims. The reality is that an individual’s failure to file their civil suit within a time period set forth by the applicable statute could bar them from ever getting compensation, even if their claim is valid. The best way to ensure that you do not miss the statute of limitations and lose you right to bring a lawsuit is to speak with a knowledgeable California trade secret lawyer as soon as possible.

To learn more about the statute of limitations for California trade secret claims, keep reading.

How Long Do You Have to File a Trade Secret Claim in California?

Under California law, anyone who wants to bring a trade secret claim must do so within three (3) years. Failure to take prompt action could permanently bar your claim and prevent you from getting any of the remedies available in trade secret litigation.

The critical factor here is determining exactly when that three-year period begins. The law requires plaintiffs to file their claims no later than three years after either of the following has occurred:

When the plaintiff actually learns about the defendant’s misappropriation of trade secrets.
When the plaintiff should have learned about the defendant’s misappropriation of trade secrets.

When Does the Statute of Limitations Start in California Trade Secret Lawsuits?

Most obviously, the clock starts ticking on the trade secret statute of limitations when the misappropriation is first discovered. Once the plaintiff has actual notice of trade secret misappropriation, they must bring a legal claim within three (3) years.

But what happens when the plaintiff does not have notice of trade secret misappropriation? There is another way for the clock to start: when the misappropriation should have been discovered. This potentially gives defendants in trade secret actions some possible defenses because courts will typically apply a looser standard of proof in circumstances where the plaintiff failed to exercise reasonable diligence to discover the trade secret infringement. If a business owner suspects or otherwise believes that their trade secret was stolen or disclosed to competitors, then the business owner may have a legal obligation to investigate. Moreover, that investigation should occur in a timely fashion. Failure to take prompt action to investigate could open the door for the defendant in a later trade secret action to seek dismissal of the case, particularly if the claim was filed more than three (3) years after the misappropriation began.

Courts will use a “reasonable person standard” in these cases to determine whether the plaintiff should have taken faster action to investigate the possible trade secret use. This means that the court will ask whether a reasonable person would have acted as the plaintiff did, or whether a reasonable person would have investigated their suspicions about trade secret theft.

Tolling the Statute of Limitations in California Trade Secret Cases

The three-year statute of limitations for trade secret claims filed under the California Uniform Trade Secrets Act (CUTSA) doesn’t necessarily run continuously. That’s because the statute of limitations can be tolled (temporarily stopped) in certain circumstances where the defendant leaves the state. This applies when a defendant is a California resident and then temporarily goes to another state with the expectation of returning later. It also applies when a defendant is a resident of a different state and has not yet entered the state of California. The idea behind this exception to the statute of limitations is that defendants should not be able to avoid communications or being served notice in a case where the plaintiff has limited time in which to file.

Importantly, the clock does not stop when there is more than one instance of a defendant misappropriating the trade secret. In a lot of trade secret cases, the defendant commits multiple violations by continuing to use or disclose the confidential information. Under California law, this does not affect the statute of limitations. The clock does not restart in trade secret claims each time the defendant commits another infringement. That’s because California courts have held that only the initial misappropriation triggers the statute of limitations, and each subsequent misappropriation is viewed as a related violation.

Free Consultation with Los Angeles Trade Secret Lawyers

Tauler Smith LLP is a California law firm that focuses on intellectual property law. We represent both plaintiffs and defendants in cases involving trade secret claims, and we regularly appear in federal and state courtrooms. One of our experienced Los Angeles trade secret attorneys will speak with you about your case and help you determine the appropriate steps to take. Call 310-590-3927 or email us to schedule a free initial consultation.

Texas Deceptive Trade Practices Act

May 27, 2022/in False Advertising /by taulersmith

Texas has strong consumer protection laws that safeguard residents against scams, deceptive sales calls, and other illegal practices. Chief among these laws is the Texas Deceptive Trade Practices Act (DTPA), which gives plaintiffs the ability to recover additional damages when they have been defrauded by false, misleading, or deceptive business practices. When state lawmakers passed the DTPA, the intent behind the bill was that companies should think twice before committing any kind of fraud against consumers. Texas consumer protection lawyers know just how effective the DTPA can be at holding fraudsters accountable for their unethical actions.

To learn more about the Texas Deceptive Trade Practices Act, keep reading this blog.

What Is the Texas Deceptive Trade Practices Act?

The Texas Deceptive Trade Practices Act, or DTPA, is a consumer protection law that prohibits businesses from making false or misleading statements in advertisements, contracts, and any transactions involving consumers. The DTPA gives consumers a cause of action for a civil suit when they have been misled by a business. The text of the statute casts a wide net by explicitly forbidding businesses from knowingly deceiving customers in advertisements, marketing materials, and sales transactions. This includes “false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.”

The DTPA applies to several different types of consumer transactions, including the sale or lease of commercial goods, products, services, or property. The Texas DTPA law has a lengthy list of examples of deceptive business acts, including the following:

Passing off goods or services as those of another.
Confusing consumers about the true source of goods or services.
Lying about the certification status of a product or service.
Misrepresenting whether a product or service has received sponsorship or approval.
Lying about the geographic origin of goods or services.
Misrepresenting the ingredients of goods such as food products or nutritional supplements.
Selling an item as “new” when the product is used or reconditioned.
Lying about the quality or grade of a product.
Using misleading statements to disparage a competitor’s goods or services.
Advertising items as available for sale when they are unavailable or there is only a limited supply.
Lying about the reasons for a price reduction.
Misrepresenting the need for additional parts, replacement, or repairs.
Falsely presenting a salesperson as having the authority to negotiate final terms of a transaction.
Secretly resetting the odometer on a motor vehicle for sale.
Lying about a “going out of business” sale when the store is not going out of business.
Using “corporation” or “incorporated” in the name of a business when it has not been incorporated.
Falsely representing that a solicitation has been sent on behalf of a governmental entity.
Price gouging during a natural disaster.

Additional Damages Available Under the DTPA

The damages and compensation that may be available to plaintiffs filing lawsuits under the Texas Deceptive Trade Practices Act include actual damages (i.e., economic damages), mental anguish damages, and attorney’s fees. The actual damages could involve things like the money spent on the purchase, as well as repair or replacement costs after the transaction.

Additionally, when a plaintiff in a DTPA case wins their claim, they may be eligible for up to three (3) times the usual damages awarded in a Texas civil suit.

Mental Anguish Damages

If the judge or jury finds that the defendant knowingly deceived the plaintiff, then it may be possible for the plaintiff to receive an award for mental anguish damages. The ability to recover damages for mental anguish is unique in DTPA claims because business transactions typically don’t involve the same kinds of mental or emotional harms as personal injury and wrongful death claims.

Treble Damages

The DTPA also allows for the recovery of treble damages, which means that the judge may impose a multiplier on the judgment or ruling and award up to three times the damages amount. When a defendant’s conduct is deemed egregious, it is not uncommon for plaintiffs to be awarded significantly higher damages as a way of sending a message and discouraging unethical behavior by other businesses in the future.

DTPA Waiting Period & Deadlines

Texas law requires victims of business fraud to wait at least 60 days before filing a DTPA lawsuit. The statute specifically requires plaintiffs to send a demand letter to the business owner or individual so that they have an opportunity to address the alleged fraud and potentially resolve the matter before a legal claim is necessary. Once 60 days have passed since the demand letter was sent to the defendant, then the plaintiff may choose to formally file their lawsuit in a Texas court.

Just as there is a waiting period on the front end of any DTPA claim, there is also a time limit for the plaintiff to take legal action. The deadline for a consumer to file a DTPA lawsuit is two (2) years from the date on which the false or deceptive business practice occurred. This statute of limitations is half the time that a plaintiff typically has available to file a breach of contract lawsuit in Texas.

Contact the Texas Consumer Fraud Lawyers at Tauler Smith LLP

The Deceptive Trade Practices Act (DTPA) gives Texas consumers the right to file a lawsuit and pursue damages when they have been victimized by a scammer or fraudulent business. If you have been misled or deceived in a commercial transaction, the Texas consumer fraud attorneys at Tauler Smith LLP can help you file a DTPA claim. Call 972-920-6040 or email us today to go over your options.

What Is the Consumers Legal Remedies Act?

April 28, 2022/in False Advertising /by taulersmith

California consumer fraud lawyers know that the state has been at the forefront of the consumer rights movement for a long time. In 1970, the California State Legislature passed the Consumers Legal Remedies Act (CLRA) to safeguard customers against deception by businesses. The CLRA makes it unlawful to engage in unfair or misleading acts when selling goods or services to consumers. The CLRA is often applicable in cases involving false advertising claims and/or consumer fraud. For example, when a company uses a misleading advertisement to persuade someone to purchase a product or service, the misrepresentation may constitute a violation of both the CLRA and the Unfair Competition Law (UCL). The same is true when a deceptive or intentionally confusing ad causes a customer to trigger an automatic renewal policy.

To learn more about the Consumers Legal Remedies Act, keep reading this blog.

What Deceptive Business Practices Does the CLRA Prohibit?

The California Consumers Legal Remedies Act, or CLRA, is a consumer statute that’s codified in Cal. Civil Code §§ 1750. The law allows plaintiffs to bring private civil actions against companies that use “unfair methods of competition and unfair or deceptive acts or practices in a transaction.”

The CLRA explicitly prohibits certain deceptive business practices, including the following acts:

Selling counterfeit goods.
Misrepresenting the source of a good or service.
Lying about a professional affiliation, certification, or endorsement.
Lying about the geographic origin of a product.
Selling a used or reconditioned item as new.
Misrepresenting the quality of a good or service.
Making false statements that disparage another business’ products.
Advertising items as being available for sale when they won’t be.
Advertising furniture as available for sale without disclosing that it is unassembled.
Telling a customer that a repair or replacement is necessary when it isn’t.
Offering a rebate or discount with hidden conditions.
Falsely presenting a salesperson’s authority to negotiate and finalize a transaction.
“Robo-calling” individuals who are not already customers.

One of the advantages of the CLRA is that victims of business fraud in California are not limited to filing lawsuits under the statute. This means that a consumer could bring multiple claims citing both the CLRA and other state or federal laws.

What Remedies Are Available to California Consumers in CLRA Cases?

The CLRA gives California consumers a powerful tool to hold businesses accountable for deceptive practices because the statute allows plaintiffs to recover different kinds of damages. The law is often interpreted broadly by courts to provide strong protections against consumer fraud, false advertising, and unfair business practices. When a consumer has been defrauded, they can file a lawsuit in a California Superior Court.

Consumers who bring a claim under the CLRA may pursue several remedies for any harm they suffered, including:

Actual monetary damages.
Punitive damages.
Restitution of property to the plaintiff.
An injunction against the defendant.
Attorney’s fees and court costs.
Any other relief the court deems proper.

Actual Damages & Attorney’s Fees

The first remedy available under the CLRA – actual damages – has a statutory minimum of $1,000 for each deceptive act or practice. The last remedy – “any other relief the court deems proper” – is a catch-all provision that gives courts wide latitude when determining what kind of monetary relief should be available to plaintiffs in CLRA actions.

In addition to getting damages for fraud, a plaintiff filing a claim under the CLRA may also be able to get attorney’s fees from a defendant who is found to have violated the Act. This can make it financially feasible for a plaintiff to bring a CLRA claim – since the defendant would have to pay the legal costs for both sides if they lose the case.

Additional Damages for Senior Citizens & Disabled Persons

A couple of special categories of consumers may be eligible for additional damages: senior citizens and disabled persons. As set forth by the CLRA, a “senior citizen” is defined as anyone over the age of 65. (In California, a senior citizen is usually defined as anyone over the age of 62, with the age threshold being lowered to 55 years old when the person lives in a senior citizen housing development.) California law defines “disabled person” quite broadly to include just about anyone who has a physical or mental condition that substantially limits at least one major life activity. For both seniors and disabled persons, the CLRA allows an award of up to $5,000 in damages to be tacked on by the court.

Proving a CLRA Violation

Although the Consumers Legal Remedies Act gives plaintiffs many options when seeking damages for consumer fraud, there are still ways for defendants to avoid paying maximum compensation. For example, if the defendant did not intentionally violate the CLRA, and they subsequently made a good faith attempt to correct the mistake, then the court might not award damages to the plaintiff. The complexities of the statute are one reason why it’s so important for you to have a knowledgeable California business fraud attorney handling your case.

Who Is Allowed to Bring a Lawsuit Under the Consumers Legal Remedies Act?

Private Civil Actions & Class Actions

The CLRA may serve as the basis for a civil suit in any consumer transaction where goods changed hands or services were provided, including transactions with a shipping insurance surcharge. Anyone who can show damages having been caused by one of the acts prohibited by the CLRA can file a lawsuit, either individually by the consumer or in a class action involving other consumers who were deceived or defrauded. For class action litigation, the cases must be substantially similar. An experienced California consumer protection lawyer can assist you with a CLRA class action lawsuit and help get your class certified.

Exclusions from the CLRA

Certain types of transactions and business owners are excluded from the Consumers Legal Remedies Act: (1) real estate transactions, and (2) newspapers and other advertisers. Although the CLRA applies to most commercial transactions, the statute cannot be used as the basis for a legal claim when the transaction involved the sale of either a residential property or a commercial property. Additionally, the CLRA cannot be used to bring a lawsuit against the owner of a newspaper, magazine, radio station, or any other advertising medium unless the plaintiff can prove that the business owner knew that the ads were deceptive before disseminating them.

How Long Do You Have to Bring a CLRA Claim?

Three-Year Statute of Limitations

It is important for you to speak with a qualified CLRA attorney as soon as possible because you do not want the statute of limitations to expire before you attempt to bring a claim. The general rule is that a consumer has three (3) years from the date on which the unfair business practice occurred to file a lawsuit under the Consumers Legal Remedies Act. If you miss this deadline, you may be barred from bringing a legal action.

Business Owner’s Opportunity to Cure

In addition to making sure you file within the statute of limitations, an experienced attorney can also ensure that you meet any other important deadlines and filing requirements. For example, before the CLRA suit can proceed in court, the consumer must notify the defendant in writing about the alleged violation. This must happen at least 30 days before the lawsuit is filed, and the business owner will then have an opportunity to take appropriate action to fix or otherwise “cure” the harm. (E.g., repairing or replacing a damaged item that was sold to the consumer.)

Defending Against CLRA Claims in California

It is very important for injured consumers to have an experienced consumer protection attorney handling their case throughout the legal process. The same is true for businesses that are accused of consumer fraud or false advertising. If you have been sued for allegedly violating a California consumer protection law like the CLRA, you need to speak with a qualified defense attorney as soon as possible.

Contact the California CLRA Lawyers at Tauler Smith LLP

Tauler Smith LLP is a Los Angeles law firm that focuses on consumer fraud litigation. Our attorneys are extremely familiar with the Consumers Legal Remedies Act, and we have filed both private civil actions and class action lawsuits on behalf of consumers. If you were a victim of business fraud or false advertising in California, we can help you take legal action and get you the financial compensation to which you are entitled. Call or email us to discuss your eligibility to file a CLRA claim.