Antitrust Law Daily Wrap Up, ADVERTISING—D. N.J.: Picture goes out on fraud claim on Sharp’s television marketing, (Jun 13, 2016)

By Michael Menzhuber, J.D., LL.M.

A putative class action, alleging that Sharp Electronics Corporation falsely marketed and advertised certain of its televisions as LED televisions, failed to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b) and was, therefore, denied by the federal district court in Newark, New Jersey (Popejoy v. Sharp Electronics Corporation, June 9, 2016, Martini, W.).

Jason Popejoy, Joe Sawyer, and Daniel Sullivan filed a putative class action, alleging that Sharp engaged in mass consumer fraud by falsely marketing, advertising, and deceptively labeling some of its televisions as LED televisions. The plaintiffs’ complaint was dismissed without prejudice after the court found that a reasonable consumer could not be deceived by Sharp’s marketing assertions on the carton containing the television.

The plaintiffs subsequently filed an amended complaint on the basis that Sharp’s marketing materials (Internet advertising, newspaper/magazine advertising, brochures, and other channels) were false and misleading. Sharp responded by filing a motion to dismiss for failure to meet the heightened pleading standard of Rule 9(b) or, alternatively, to strike the nationwide class allegations from the amended complaint.

The plaintiffs argued that their generalized allegations that Sharp made misrepresentations through a wide variety of marketing channels were sufficient at the pleading stage. The court disagreed. It determined that the plaintiffs did not specify: (1) the "who"—whether Sharp or some unidentified retailer made the alleged marketing assertions; (2) the "what"—the specific marketing assertions, point of sale materials, or internet content viewed; (3) the "when"—at what point each plaintiff viewed the materials; or (4) the "where"—the specific websites, newspapers, magazines, or brochures containing the marketing assertions. The plaintiffs did assert "how" the Sharp’s marketing materials were misleading. However, they did not confirm whether the marketing materials contained disclosures that the LED televisions had LCD displays.

The court also determined that the plaintiffs’ fraud claims failed to the extent that they relied upon representations on Sharp’s website. The plaintiffs’ fraud claims failed because Sharp’s website contained a clear disclosure for each "LED" television model that Sharp’s LED televisions were, in fact, displayed on LCD panels.

Because the plaintiffs’ complaint failed to meet the heighted pleading standards of Rule 9(b), the court granted Sharp’s motion to dismiss. Because the plaintiffs’ complaint was dismissed, Sharp’s motion to strike the nationwide class allegations from the complaint was denied as moot.

The case is No. 2-14-06426 (WJM).

Attorneys: Scott A. George (Seeger Weiss, LLP) for Jason Popejoy. Kevin Harry Marino (Marino Tortorella & Boyle, PC) for Sharp Electronics Corp.

Companies: Sharp Electronics Corp.

Cases: Advertising NewJerseyNews