Antitrust Law Daily Wrap Up, ADVERTISING—S.D. W.Va..: Youth football league’s claim against helmet maker takes a big hit, (Aug 11, 2015)

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

A youth football organization’s claim that a football helmet manufacturer’s marketing efforts violated the West Virginia Consumer Credit and Protection Act (WVCCPA) was dismissed by the federal district court in Charleston. The court dismissed the claim because it focused on “literal falsity” and, on a subsequent briefing, the claim was abandoned (Midwestern Midget Football Club, Inc. v. Riddell, Inc., August 10, 2015, Copenhaver, J.).

Background. Midwestern Midget Football Club, Inc. (Midwestern), a non-profit youth football organization, annually purchased several Revolution Helmets (helmets) from Riddell, Inc. Riddell asserted that these helmets contained reduction technology that putatively reduced the incidence of concussion. Riddell’s market price for these helmets reflected its safety claims as compared to other helmets.

Midwestern brought an action against Riddell, alleging a violation of the WVCCPA. Midwestern asserted that Riddell’s marketing claims were knowingly false because: (1) Riddell’s assertions were based on a statistically unsound study paid for by Riddell and co-authored by a Riddell employee; (2) the study was publically criticized by third-party scientists; and (3) the scientific studies and other data of which Riddell was aware indicated that their helmets made no material difference to concussion risk as compared to traditional helmets. As a result of Riddell’s alleged deceptive marketing, West Virginia consumers were exposed to Riddell’s false representations and relied on them in purchasing Riddell’s higher priced helmets.

The court denied Riddell’s motion to dismiss. However, the following day, the Fourth Circuit decided In re GNC Corp., 789 F.3rd 505 (2015), holding that “marketing statements that accurately describe the findings of duly qualified and reasonable scientific experts are not literally false.” In response to this decision, the court vacated its ruling and requested the parties to brief the extent to which, if at all, the In re GNC decision impacted disposition of the motion to dismiss.

Standing. Riddell asserted that Midwestern did not have standing under the WVCCPA because the organization was a “person” and that the WVCCPA applied only to “consumers.” The court, however, determined that the legislative history of the statute supported Midwestern’s position that it had standing and that narrowing the statute to cover only those qualifying as a “consumer” would constitute a judicial amendment of the provision. Consequently, since Midwestern plainly qualified as a “person” for purposes of the statute, the standing requirement was satisfied.

Literal falsity claim. In light of In re GNC decision, Midwestern abandoned its claim of “literal falsity,” but asserted that its putative claim for “misleading advertising” was untouched by that decision. The court determined that there was a difficulty with Midwestern’s assertion of a “misleading advertising” claim because the central allegations of the pleading were focused on a claim of “literal falsity”. If Midwestern intended to assert a claim for misleading advertising, it was incumbent upon the organization to plead sufficient plausible allegations. Accordingly, Riddell’s motion to dismiss was granted without prejudice in order to permit Midwestern to pursue a claim of “misleading advertising.”

The case is No. 2:15-00244.

Attorneys: Marc R. Weintraub (Bailey & Glasser) for Midwestern Midget Football Club Inc. John H. Tinney, Jr. (The Tinney Law Firm) and Joseph A. Boyle (Kelley Drye & Warren) for Riddell, Inc.

Companies: Midwestern Midget Football Club, Inc.; Riddell, Inc.

Cases: Advertising StateUnfairTradePractices WestVirginiaNews