Navigating Legal Risks and the Effective Use of Outside Counsel

Masters of Advertising Law Conference attendees: Scroll down for CLE materials

A panel featuring in-house counsel for Whole Foods and Hertz and outside counsel discussed the struggle between successful marketing and the risk of class action lawsuits, providing real world examples of what their brands and law practices are doing to keep brands out of hot water.

Key Takeaways

With the proliferation of auto-dialers and text communications, courts are beginning to crack down and more rigorously enforce 1991's Telephone Consumer Protection Act (TCPA). There is a renewed focus on do-not-call lists, artificial voices used in marketing calls, and ringless voicemails. This heightened focus on these tactics means marketers must be more cautious in how they contact consumers by phone. In addition, 2003's Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) is seeing more attention from the courts, particularly as it relates to email campaigns and the need to clearly disclose what your business is and avoid deceptive language in emails.

To manage the risk posed to brands by the heightened focus on these two laws, in-house, counsel should:

  • Ensure regular communication between legal counsel and the marketing group.
  • Conduct regular risk tolerance reviews.
  • Manage expectations for the business as they relate to new technologies.
  • Rely on outside counsel to stay ahead of legal trends.

Because of the number of competitors in the marketplace, the volume of information available to consumers, the proliferation of technology platforms available to marketers, and evolving social trends, it is harder than ever for brands to stay competitive and stand out from the pack. This environment sometimes prompts marketers to take risks in hopes of grabbing consumer attention, especially when making claims on packaging.

For this reason, Whole Foods and its legal team have tightened their approval process for new products sold at its stores. For example, the brand now reviews all claims on packages from potential partners to ensure that there are no false or misleading claims. Though Whole Foods itself does not manage these products or their packaging, the brand still feels the need to protect its reputation when dealing with partners and ensure it is not susceptible to legal action.

New data privacy laws are cropping up and creating new challenges for brands, as well. As a result, marketers must now be even more careful with how they track website clicks and movements due to multiple state wiretap statutes. One such example is the Video Privacy Protection Act, which focuses, in part, on how businesses use pixels to capture and transfer user information.

This statute was initially passed to prevent brands like Blockbuster from unduly influencing consumers in their choice of videos to rent. Today, it is being applied to online video in class action lawsuits. For example, if a user watches a video online with a pixel embedded that is transferring data to a third-party website without clear disclosure of this arrangement, that transfer of data is now viewed as a violation of this statute. Compounding the problem, every single view of that video in this example is considered a violation, exposing brands to huge statutory damages.

This has created interesting scenarios for Hertz because it has access to data generated by cars it rents to customers. In most instances, Hertz is prohibited from collecting data from a car while a customer is using it. However, the legality of using car data enters a gray area when a rental car is stolen. In the past, Hertz has argued that it should be able to use data when a car is stolen because there is a legitimate business purpose (recovering a stolen asset). The legality of using data in such a circumstance is still being debated and sorted in the courts. Laws related to this vary by state and by country, so it has been imperative for Hertz's in-house counsel to remain aware of what data restrictions exist in which territories.

CLE Materials

Source

"Navigating Legal Risks and the Effective Use of Outside Counsel." Kristine Argentine, partner, national chair of consumer class actions group at Seyfarth Shaw LLP; Aaron Belzer, partner at Seyfarth Shaw LLP; Jessica De Bella, senior principal legal counsel at The Hertz Corporation; Urmi Patel, senior principal legal counsel at Whole Foods Market, Inc. 2022 ANA Masters of Advertising Law Conference, 11/9/22.

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