August 2, 2016

Ninth Circuit Provides Guidance for Pleading Reliance On False Advertisements

Seller Beware: Consumer Protection Insights for Industry

Last month, the Ninth Circuit clarified the requirements for pleading a fraudulent advertising claim. In Haskins v. Symantec Corp., the court ruled that a plaintiff seeking damages for fraudulent advertising must allege reliance on specific advertisements to avoid dismissal under Federal Rule of Civil Procedure 9(b) ("FRCP 9(b)"). The court distinguished plaintiff's factual allegations from those in the Tobacco II case, which recognized an exception to FRCP 9(b) for ubiquitous and widespread advertising campaigns.

In Haskins, plaintiff asserted multiple causes of action under California's Unfair Competition Law and Consumers Legal Remedies Act alleging that Symantec Corp., an antivirus software maker, had fraudulently concealed that hackers had stolen the secrets to its antivirus software, which left computers relying on Symantec's products more vulnerable to hackers. The district court dismissed the plaintiff's first three complaints under FRCP 9(b) because they each failed to cite any specific advertisement the plaintiff had relied upon when she made her decision to purchase Symantec's software. The plaintiff attempted to work around her inability to cite a specific advertisement by citing Tobacco II's exception to the usual pleading requirements of FRCP 9(b).

In Tobacco II, the plaintiff class was allowed to pursue fraudulent advertising claims against a number of tobacco companies without citing any specific advertisements that class members had relied upon, by convincing the court that the defendant tobacco companies' advertisements were so widespread and pervasive that they had "saturated" California. Proving a plaintiff's reliance on any single advertisement would be unrealistic in those circumstances, the court decided.

The Haskins court found Tobacco II inapposite, however, because the plaintiff had failed to allege that Symantec had saturated the California market with advertisements in the same way as the Tobacco II defendants had. Accordingly, the plaintiff would have to plead reliance on a specific Symantec advertisement prior to her purchase to survive a motion to dismiss.

This decision will pose an obstacle to consumer advertising class actions in California federal courts. To satisfy FRCP 9(b), plaintiffs will have to allege they relied on specific advertisements, which will make class certification less likely where each plaintiff relies on distinct and individualized facts.

© Arnold & Porter Kaye Scholer LLP 2016 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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