Antitrust Law Daily Wrap Up, ADVERTISING—D.D.C.: Consumers fail to state deceptive ad claims against hair removal device maker, (Mar 31, 2015)

By Greg Hammond, J.D.

False advertising and consumer protection claims brought against Radiancy, Inc.—the manufacturer and marketer of the no!no! Hair removal device—and the company’s CEO were dismissed for lack of personal jurisdiction and for failure to state a claim. The federal district court in Washington, D.C. determined that the CEO did not transact any business within the District of Columbia and the fraud-based consumer protection claims were not pleaded with particularity (Mouzon v. Radiancy, Inc., March 30, 2015, Kollar-Kotelly, C.).

Background. Radiancy allegedly marketed the no!no! device as capable of permanent or “long term” hair removal by suppressing hair growth. The plaintiffs, consisting of 13 individual consumers from different states, filed a putative class action against Radiancy and its CEO, Dolev Rafaeli, alleging that the no!no! hair removing claim was false and that the device cannot destroy hair follicles or suppress the ability of hair to regrow. The consumers additionally alleged that Radiancy engaged in a deceptive marketing campaign and that Rafaeli “personally supervised, controlled, directed, and profited from” the marketing campaign.

The consumers asserted: (1) claims under New York deceptive practices law, alleging that defendants engaged in a “scheme to deceive customers and the public”; (2) claims brought pursuant to state consumer protection laws on their behalf and on behalf of the respective putative state subclasses; and (3) warranty-based claims. Rafaeli moved to dismiss for lack of personal jurisdiction and Radiancy moved to dismiss for failure to state a claim.

Personal jurisdiction. The consumers opposed the defendants’ motion to dismiss, arguing that Radiancy’s transaction of business in Washington, D.C., should be “imputed” to Rafaeli because of his role at the corporation, relying on the “more than an employee” exception of the fiduciary shield doctrine. Even assuming that Rafaeli qualified as “more than an employee” of Radiancy, as the chief executive of the company, and that he was not shielded by the fiduciary shield doctrine, the court noted that the plaintiffs were still required to establish that the court has personal jurisdiction over Rafaeli based on his own actions. The court concluded that Rafaeli, in his personal capacity and on his own behalf, did not transact any business within the District of Columbia, and the plaintiffs did not suggest in their complaint that Rafaeli took any specific actions to target the District of Columbia or that he directly profited from business conducted there. Jurisdiction was therefore not proper under the District of Columbia’s long-arm statute. The court consequently lacked personal jurisdiction and the motion to dismiss Rafaeli was granted.

Failure to state a claim. With regard to Radiancy’s motion to dismiss for failure to state a claim, the court determined that, despite the consumers’ allegations that Radiancy developed the deceptive marketing scheme in New York, there were no allegations suggesting that plaintiffs purchased the product in New York, were exposed to any part of a marketing campaign in New York, or used the product in New York. The deception was therefore determined to have occurred outside of New York, and the complaint failed to state a claim pursuant to the New York deceptive practices law. The New York claims were therefore dismissed with prejudice.

Consumer protection claims. The consumers also alleged claims pursuant to the consumer protection laws of California, the District of Columbia, Florida, Illinois, Maryland, Virginia, West Virginia, Colorado, and Pennsylvania, based on alleged deceptive advertising, including affirmative misrepresentations and omissions with respect to the hair removal device. The court first determined that each of these consumer protection claims were based on fraud and included allegations of affirmative misrepresentation. The Rule 9(b) particularity requirement for pleading was therefore required.

Although the complaint included various allegations concerning the advertising campaign and the alleged fraud underlying it, the court found that none of the allegations included any other facts regarding the consumers’ exposure to the campaign and the impact the exposure had on their purchasing decisions. Missing basic facts included whether each individual plaintiff watched the infomercial and purchased the device in their state of residence. Absent any detail regarding the consumers’ experiences led the court to conclude that the plaintiffs failed to plead their state consumer protection claims with the requisite particularity. The claims were therefore dismissed without prejudice.

Because the plaintiffs did not attach a proposed amended complaint or suggest how an amended complaint would fix any technical defects within the complaint, the consumers’ request to file an amended complaint was denied.

The case number is 14-722 (CKK).

Attorneys: Aaron M. Levine (Aaron M. Levine & Associates) for Jan Mouzon. Mark J. Biros (Proskauer Rose LLP) for Radiancy, Inc.

Companies: Radiancy, Inc.

Cases: Advertising ConsumerProtection DistrictofColumbiaNews