Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Activity tracker false ad claims lose steam, (Dec 31, 2014)

By Jody Coultas, J.D.

A fitness-tracker wristband purchaser failed to state California consumer protection law claims against AliphCom based on alleged misrepresentations of its Jawbone UP wristband, the federal district court in San Francisco has held. The claims were dismissed with leave to amend (Frenzel v. AliphCom, December 29, 2014, Orrick, W.).

Jawbone UP tracks a user’s daily movements and sleep patterns. The purchaser, a Missouri resident, alleged that each generation of Jawbone UP had been “plagued with . . . power problems” that left the device “effectively useless.” Jawbone offered a refund to purchasers of the first generation Jawbone UP, or a replacement device in the form of a second generation Jawbone UP. However, the second generation Jawbone UP also allegedly had power problems, despite AliphCom’s representations that the issues had been fixed. When the purchaser’s second generation Jawbone UP died, AlphiCom did not offer any recourse.

Choice-of-law. The purchaser’s individual and class claims were dismissed based on California’s choice-of-law rules. Under those rules, consumer protection claim are governed by the laws of the jurisdiction in which the transaction took place. The purchaser noted that many courts have declined to apply choice of law analysis at the pleading phase, instead deferring the issue until class certification. However, the court found a choice-of-law analysis appropriate at this stage because further development of the factual record was not likely to impact the choice of law determination. Here, each class member’s claim should be governed by the consumer protection laws of the jurisdiction in which the transaction took place.

Even if the purchaser alleged that he could state California claims based on AliphCom’s terms of use, the court would reject that argument. The terms of use for Jawbone’s website included a choice of law provision selecting California law. However, the opening paragraph of the terms of use makes clear that the word “use” in “terms of use” refers to the use of Jawbone’s website, while “the purchase of any product or service through the [website] is governed by the terms of sale,” not the terms of use. The purchaser bought the Jawbone UP from a third party store, not AliphCom’s website.

Heightened pleading standard. None of the purchaser’s allegations were sufficient to state California consumer protection law claims against AliphCom, according to the court. Because the consumer protection law claims sounded in fraud, the purchaser was required to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The California laws required the purchaser to show that members of the public were likely to be deceived by the advertising at issue. The purchaser alleged that AliphCom misrepresented that the power problems with the first generation Jawbone UP had been fixed, deceived the public by representing that the device would record a user’s daily movements and sleep patterns when the power defects prevented the product from working at all, and falsely stated that a second generation Jawbone UP’s battery lasted “up to 10 days.” However, the purchaser failed to allege any specific representations made by AliphCom about the power problems having been fixed in the second generation Jawbone UPs. Vague statements about general functionality, such as those cited by the purchaser, are not actionable under the California statutes. Also, the position that any statement by Jawbone regarding the device’s functionality was deceptive to a reasonable consumer because the purchaser’s second generation Jawbone UP eventually “died” was wrong as a matter of law. Finally, the allegations that the Jawbone UP “could not retain a charge” and “died” at some unspecified point was insufficient to show that the battery life claim was false or misleading.

The purchaser’s claims also failed under Rule 9(b) based on a failure to allege with sufficient detail what representations he reviewed, when he first reviewed them, or which ones he relied on in deciding to purchase his Jawbone UP, according to the court.

Injunctive relief. The court denied the purchaser injunctive relief because he was unlikely to purchase another Jawbone UP, and could not plausibly allege that he was likely to be fraudulently induced by the same representations he now claims he knows are false.

CLRA notice requirement. Because the purchaser did not comply with the California Consumer Legal Remedies Act notice rule, the court dismissed the CLRA claims for damages insofar as they are based on representations regarding the first generation Jawbone UP and the Jawbone UP24. A plaintiff must provide notice regarding each particular product on which his CLRA damages claims are based, even where the products qualify as substantially similar. The notice letter sent to AliphCom did not provide notice that the claims extended to the first generation Jawbone UP or the Jawbone UP24, but merely used the term “Jawbone UP” without distinguishing between the three generations of the device.

The case is No. 14-cv-03587-WHO.

Attorneys: Julia A. Luster (Bursor and Fisher, PA) for Robert Frenzel. Mortimer H. Hartwell (Vinson & Elkins LLP) for AliphCom, Inc.

Companies: AliphCom, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews