Richard Newman
In New England Country Foods, LLC v. VanLaw Food Products, Inc., the California Supreme Court recently held that California Civil Code section 1668 prohibits contractual limitation of liability clauses that limit liability for harm caused by intentional misconduct.
In pertinent part, Section 1668 provides:
“All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”
Manufacturer VanLaw was sued by a barbecue sauce company that it provided manufacturing services on behalf of, for for allegedly trying to copy its barbecue sauce and sell it to Trader Joe’s. New England Country Foods’ claims sounded both in contract and tort. In response, VanLaw argued that a contract between the parties limited damages for injuries caused by intentional actions and were therefore against public policy.
In response, the plaintiff asserted that the contractual limitation of liability provision was not enforceable pursuant to California Civil Code Section 1668 because it it permitted the defendant to engaged in intentional tortious conduct with impunity.
The applicable limitation on damages clause stated, in pertinent part:
“In no event will either party be liable for any loss of profits, loss of business, interruption of business, or for any indirect,
On May 9, 2025, the Federal Trade Commission voted to defer the compliance deadline for the amended Negative Option Rule (“Click-to-Cancel”) Rule by sixty (60) days. The amended Rule expands the scope of the prior version to cover any goods or services involving a negative option, automatic renewal plan, free trials and subscriptions. Additionally, it imposes restrictions that in some instances are more onerous that various state automatice renewal laws.
Of note, the recent amendments to the Negative Option Rule (f/k/a “Click-to-Cancel”), which went into effect on January 19, 2025, provide that misrepresenting any material facts while offering any good or service with a negative-option feature is an unfair or deceptive act or practice in violation of Section 5 of the FTC Act. This applies regardless of whether the misrepresentation is related to the negative option feature, or not. This feature of the amended Negative Option Rule already became effective in January 2025. It, as well as other features of the amended Rule, are presently the subject of judicial challenge.
The rest of the amended Rule pertaining to disclosures, consent and cancellation of negative option features were to become effective May 15, 2025. However, the FTC has now deferred enforcement of these provisions through July 2025. Starting then, in the absence of judicial intervention, covered businesses will be required to be in full compliance with the amended Negative Option Rule. .
“But the Commission’s decision to defer enforcement necessarily acknowledged that compliance entailed some level of difficulty,”
The FTC’s Rule on the Use of Consumer Reviews and Testimonials went into effect on October 21, 2024 and addresses deceptive and unfair conduct involving consumer reviews and testimonials. You can also review the FTC’s other guidance on reviews and testimonials, including FAQs relating to the agency’s Endorsement Guides.
Here are 10 things that marketers must be aware of concerning the Rule in order to avoid liability exposure, including the initiation of regulatory investigations. Consult with an FTC review and testimonial rule lawyer if you or your company have received an access letter, a civil investigative demand (CID) or if you are interested in discussing the implementation of preventative compliance measures.
- The Rule authorizes courts to impose civil penalties for knowing violations and is important because fake, false or otherwise deceptive reviews and testimonials have, according to the agency, polluted the marketplace. There is no private right of action under the Rule.
- There is a difference between a consumer review and a testimonial. A consumer review is a consumer’s evaluation, or a purported consumer’s evaluation, of a product, service, or business that is submitted to and published on a website or platform dedicated in whole or in part to receiving and displaying such evaluations. So, consumer reviews could appear, for example, on a site dedicated to consumer reviews or on product pages of retailer websites. A testimonial, one type of endorsement, is an advertising message that consumers are likely to believe reflects the opinions,
As contemplated by FTC defense lawyer in December 2024, the Federal Trade Commission’s operations during the first two months under the second Trump Administration have been chaotic. Unsurprisingly, the policy focus appears to be de-regulation and an enforcement focus on bread-and-butter fraud and deception (for example and without limitation, bogus business opportunity offers, unsubstantiated earnings claims and unlaw debt collection), privacy, telemarketing, big technology moderation and the protection of competition in labor markets.
Last week, President Trump fired the remaining two Democratic commissioners. Both have stated that they believe their termination is unlawful and may challenge the dismissals judicially. Two Republican commissioners remain to make regulatory, investigation and enforcement-related decisions.
The Federal Trade Commission has traditionally been considered an independent agency. However, President Trump recent issued an Executive Order seeking to vest control of various federal agencies and financial regulator within his control, including the FTC. In doing so, the Trump administration seemingly seeks to exert some degree of control over the strategic priorities of the agencies and regulators.
Historically, an FTC commissioner may only be removed by the President for “inefficiency, neglect of duty or malfeasance in office.” In fact, in Humphrey’s Executor v. United States (1935), the Supreme Court ruled that FTC commissioners cannot be removed over policy differences.
Importantly, however, in Selia Law v. CFPB (2019), the Supreme Court held that restricting removal of the Consumer Financial Protection Bureau director to “for cause” only is unconstitutional.
On February 18, 2025, the Federal Trade Commission announced that Chairman Andrew N. Ferguson appointed David Shaw as Principal Deputy Director and Kelse Moen as Deputy Director of the agency’s Bureau of Competition, and Douglas C. Geho as Deputy Director of the Bureau of Consumer Protection.
Shaw is an experienced antitrust lawyer with expertise in high-stakes litigation and contentious merger review. During the first Trump Administration, Shaw served in the Department of Justice’s Antitrust Division in a variety of roles, from the front lines as a trial attorney to the front office as acting chief of staff. As a trial attorney, Shaw served on multiple trial teams, including the first litigated vertical merger challenge in forty years.
While serving in DOJ’s front office, he held a leadership role in the Big Tech investigations and successfully coordinated a bipartisan coalition of state attorneys general joining the DOJ complaint in the Google search monopolization case.
In addition to his government service, Shaw was a partner in the antitrust practice of a large international law firm.
Moen is an experienced antitrust attorney, with a career in both government service and private practice. Most recently, he served as senior counsel to the U.S. Senate Judiciary Committee for Senator Lindsey Graham, where he focused on antitrust, technology, and intellectual property issues, a position that he held until his appointment to the FTC.
Before joining the Judiciary Committee staff, Moen spent nearly a decade practicing antitrust law at major international law firms,
On the eve prior to its effective date, the FCC’s One-to-One Consent Rule which sought to redefine the meaning of “prior express written consent” under the Telephone Consumer Protection Act, was postponed for one year by order of the FCC’s Consumer and Government Affairs Bureau. Just minutes thereafter, the rule was struck down by the U.S. Court of Appeals for the Eleventh Circuit.
Background
The Telephone Consumer Protection Act (TCPA) , in part, requires callers to possess “prior express consent” when making non-emergency telephone calls to cell phones using an automatic telephone dialing system, or artificial or prerecorded voice; and telephone calls to residential telephone lines using an artificial or prerecorded voice (with limited exceptions).
In 2012, the Federal Communications Commission established that the foregoing calls (including SMS text messages) for marketing purposes must have “prior express written consent,” defined as “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.”
The Federal Communication Commission Government Affairs Bureau Postpones Effective Date of the TCPA One-to-One Consent Rule
On January 24, 2025, the FCC announced that it has postponed the effective date of the one-to-one consent rule. “By this Order,
The Federal Trade Commission’s initial findings from its surveillance pricing market study revealed that details like a person’s precise location or browser history can be frequently used to target individual consumers with different prices for the same goods and services.
The staff perspective is based on an examination of documents obtained by FTC staff’s 6(b) orders sent to several companies in July aiming to better understand the “shadowy market that third-party intermediaries use to set individualized prices for products and services based on consumers’ characteristics and behaviors, like location, demographics, browsing patterns and shopping history.”
Staff found that consumer behaviors ranging from mouse movements on a webpage to the type of products that consumers leave unpurchased in an online shopping cart can be tracked and used by retailers to tailor consumer pricing.
“Initial staff findings show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person’s location and demographics, down to their mouse movements on a webpage,” said FTC Chair Lina M. Khan. “The FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.”
The FTC’s study of the 6(b) documents is still ongoing. The staff perspective is based on an initial analysis of documents provided by Mastercard,
On Friday, December 27, 2024, the Justice Department issued a final rule to address “urgent national security risks posed by access to U.S. sensitive personal and government-related data from countries of concern and covered persons.” The final rule was posted publicly and addresses “continued efforts of countries of concern to access, exploit, and weaponize Americans’ bulk sensitive personal and U.S. government-related data.”
This rule reflects the Department’s careful consideration of the comments received in response to the March 5, 2024 Advance Notice of Proposed Rulemaking (“ANPRM”) and the October 29, 2024 Notice of Proposed Rulemaking (“NPRM”) as well as feedback from hundreds of representatives from companies and organizations and extensive consultation with dozens of other U.S. Government agencies and offices, along with engagement foreign partners.
As previewed in the ANPRM and NPRM, the final rule establishes a national-security program within the Justice Department’s National Security Division that restricts and in some instances prohibits U.S. persons from engaging in certain categories of data transactions with six “countries of concern” (including covered persons and entities subject to coercion by those countries) because such transactions pose unacceptable national-security risks of giving those countries, entities, or persons access to U.S. bulk sensitive personal data or government-related data.
The rule will become effective 90 days after publication. Certain affirmative compliance obligations will be phased in with a later effective date of 270 days after publication.
The Department also intends to continue engaging with industry and other stakeholders to determine whether any general licenses are appropriate as this program goes into effect.
On January 1, 2025, an amendment to California’s existing false advertising law will become effective. The amended legislation takes aim at deceptive digital ad representations that lead consumers to believe that they are purchsing owership rights in a product when, in fact, only a revocable license is being conveyed.
With limited exception., AB 2426 prohbitis sellers of digital goods from using terms such as “buy,” “purchase” or similar terms when the net impression thereof objectively leads a reasonable person to believe that they are purchasing an unrestrictice ownership interest. The exception to the foregoing restriction is when a seller of digital products obtains affirmative acknowledgement from the buyer of a complete list of restrictions and conditions of the license, and that access to the digital product may be unilaterally revoked by the seller (e.g., if the seller no longer has the right to license). Additionally, prior to completing the sale, the seller must provide the buyer with a hyperlink, QR code or other means of accessing the license terms and conditions, a a clear and conspicuous disclosure that purchase of the digital product merely constitutes a license.
The new legistlation defines “digital goods” broadly. The law also sets forth exclusions, such as any distribution of television, video or radio service. The new law also does not apply to specifically enumerated subscription-based services and digital goods such as those advertised for no monetary consideration.
Violation of the amended statute can result in civil penalties of up to $2,500 per violation. It couls also potentially exposure a violator to class action litigation pursuant to California’s UCL law.
On December 19, 2024, the Federal Trade Commission announced that a group of 10 car dealerships and their parent company will be required to pay $20 million to settle allegations they systematically defrauded consumers looking to buy vehicles as a result of a lawsuit by the Federal Trade Commission and state of Illinois.
In addition to paying $20 million, which will be used to refund harmed consumers, the proposed settlement also would require the companies to make clear disclosures of a car’s offering price—the actual price any consumer can pay to get the car, excluding only required government charges—and get consent from buyers for any charges.
The $20 million proposed monetary judgment is the largest the FTC has secured against an auto dealer.
“Working closely with the Illinois Attorney General, we are holding these dealerships accountable for unlawfully extracting millions of dollars from consumers through a textbook bait-and-switch scheme, and bolstering their poor reputation with fake reviews,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue our work to ensure that consumers are not being overcharged for cars, and that honest dealers do not need to compete with firms that cheat.”
“This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission,” said Illinois Attorney General Kwame Raoul.
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About This Blog and Hinch Newman’s Advertising + Marketing Practice
Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/judicial process. This blog is sponsored by Hinch Newman LLP.