ERA agrees and is now weighing in to support Lunada Biomedical, a dietary supplement company with a case pending before the California Supreme Court.
The question is whether declaratory relief is available to advertising companies under the California Legal Remedies Act (CLRA) — a consumer protection statute. This statute is often subject to abuse by unscrupulous plaintiffs who bring meritless lawsuits in order to extort quick payouts.
The facts of the case are familiar to anyone in direct response television: Lunada received a demand letter from an “unidentified” plaintiff, alleging CLRA violations for false advertising and seeking a quick settlement to “avoid bad publicity” under California false advertising laws. Rather than paying off, Lunada sued for relief under the CLRA to prove that its direct response advertising was not false.
However, the case was dismissed and the Court of Appeals affirmed, holding that declaratory relief is not available to direct response advertising companies under the CLRA.
The practical effect of this decision is to severely limit the responses available to direct response advertising companies threatened with CLRA litigation, and will open the door to more CLRA abuse.
Lunada has petitioned the California Supreme Court for review, and is seeking direct response industry support. ERA Counsel in this matter at Toledo Don LLP has prepared an amicus letter, urging the California Supreme Court to review (and reverse) the Lunada decision. Here is a copy of ERA's amicus letter, as well as the Court of Appeals decision and the petition for review.
Please let me or Amy Mudge, this year's GA Committee Chair, know if you have questions about this proceeding.
Photo Credit (link):The Stanley Mosk Library and Courts Building Sacramento, CA by Wikipedia User Coolcaesar.