New Laws Impact Marketers in 2008

The California legislature passed several bills of interest to marketers in 2007 – the Governor signed some and rejected others.

The heirs of celebrities are the beneficiaries of SB 771, which clarifies that the statutory publicity rights of celebrities who have died since 1915 may be transferred by will, trust or contract. The bill was aimed to reverse recent court rulings adverse to those asserting the publicity rights of Marilyn Monroe, who died in 1962. It means that marketers should exercise caution before commercially using the name, voice, signature, photograph or likeness of any celebrity who has died within the past century – they may be sued for infringement of postmortem publicity rights unless they first obtain permission from the celebrity's rightful heirs.

Famous musicians were also winners in 2007. The Governor signed AB 702, dubbed the “Truth in Music Advertising Act.” The bill was sponsored by former Sha Na Na leader, Jon “Bowzer” Bauman, chair of the Truth in Music Committee at the Vocal Group Hall of Fame. It aims to protect both concert goers and recording artists from imposters who deceptively use the name of a legendary artist. Modern-day performers can link themselves to greats of the past if they both (1) consistently identify their shows as a salute or tribute, and (2) avoid names that are confusingly close to the persons they emulate.

Meanwhile, retailers breathed a sigh of relief after the Governor vetoed AB 1673, which would have required retailers who advertise net prices of items after rebates to provide the discounted price to customers at the time of sale. Retailers argued that the law would lead to the elimination of rebate offers and were understandably reluctant to shoulder the burden of seeking rebates from manufacturers.

The Governor also deflated a bill aimed to protect local sellers of flowers and balloons. AB 1282 would have prohibited vendors of such products from misrepresenting their geographic location by listing local telephone numbers or using fictitious business names that misrepresented their geographic location.

Website Developers Should Consider Accessibility

In October 2007, a federal judge in San Francisco ruled that California's civil rights laws reach commercial websites and thus protect legally blind individuals who visit those sites. The plaintiffs in the case allege that target.com is not accessible to blind individuals because the retailer failed to include “alternative text,” i.e., invisible code, that screen reading software can use to orally describe the content of the webpage. Notably, the court ruled that California disability law is more protective than its federal counterpart. While the Americans with Disabilities Act requires a link between an attempt to access a website and the actual denial of access to a physical store, the court held that the California statutes require no such connection. While the ruling has not yet been tested on appeal, it means that website developers should consider accessibility issues in designing websites that are aimed at California consumers since the sites may be evaluated for accessibility without regard to the accessibility of the brick-and-mortar premises. National Federation of the Blind v. Target Corp., 2007 U.S. Dist. LEXIS 73547 (N.D. Cal., Oct. 2, 2007).

Internet Sellers Must Comply with California-Specific Marketing Restraint

Since 1991, state law has required those who sell water treatment devices to California consumers to obtain certification prior to making any health claims, such as a statement that a device removes lead from drinking water. Other states do not require such advance certification. This landscape raises compliance challenges for those who sell uncertified devices over the Internet. A Nevada corporation that primarily marketed via the Internet challenged the validity of the California law on federal constitutional grounds, but a state appellate court rejected its arguments, finding that the website could have been modified so that health claims were not made to California purchasers. The Court observed: “[T]here is no need to create completely different websites targeted at every state. There is only a need to inform customers from particular states about the relevant law of those states.” People v. PuriTec, 153 Cal.App.4th 1524 (Aug. 7, 2007).

Unsolicited Fax Marketers on the Hook for Four Years

Woe to businesses who market by unsolicited fax. The California Court of Appeal held in 2003 that private party recipients of such faxes can sue in state court under federal law, and the federal statute allows plaintiffs to seek up to $1,500 per violation without proving actual injury. In October 2007, the Court of Appeal held that the statute of limitations in such actions is four years, meaning that fax marketers will have a long tail of potential liability. Sznyter v. Malone, 155 Cal.App.4th 1152 (Oct. 2, 2007). The risk of suit is not theoretical – one plaintiff filed five fax marketing lawsuits in Sacramento County Superior Court on the same day in October 2007.

For more on the federal and state laws restricting fax marketing, see the May 2006 Downey Brand Advertising & Marketing Law Update.

UC Regents Must Keep Promises Regarding Professional Fees

Starting in the 1990s, the University of California promised professional students that it would not raise certain fees over the duration of their enrollment. When budget shortfalls led the UC Regents to increase the fees, the students sued for breach of contract. The students won at the trial court and the Court of Appeal affirmed. Kashmiri v. Regents of the University of California, 156 Cal.App.4th 809 (Nov. 2, 2007). It held that an implied contract was created when the students accepted the offer of enrollment. The specific promise not to raise the professional fees trumped general notices that fees could be changed without notice. This case is extraordinary – it is a rare day when any government entity is held monetarily liable under what is essentially a truth-in-advertising theory.

State/Local Prosecutors Continue to Focus on Weights and Measures Cases

California prosecutors announced several substantial enforcement actions against retailers in 2007 based on allegations that checkout scanners were not programmed with the lowest advertised prices. Office Depot paid over $2.5 million in civil penalties and costs and Toys “R” Us paid $300,000. AutoZone paid a total of $1.5 million based on allegations of overcharging customers and mishandling hazardous waste. Meanwhile, Baskin-Robbins paid almost $500,000 in response to allegations that its hand-packed “one pint” ice cream containers often were about four ounces short on volume.

 

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