Monthly Archive for January, 2012

FTC Puts The Brakes On Deceptive Online Acai Berry Advertisements

Man, and just when I pumped all my money into those acai berries.  Now how am I supposed to lose those extra pounds before swimsuit season?

Just kidding, we all know the key to weight loss is and always has been magic.

In all seriousness though, if you haven’t heard the news already about the latest Federal Trade Commission crackdown, then you might be surprised to hear that the FTC has just succeeded in permanently shutting down those annoying acai berry pop-up ads you see online.  The ads usually were fashioned to look like official news reports and contained logos from well-known news organizations including ABC, FOX News, CNN and so forth – an example to your right.  The advertisement exalted the miracles of the acai berry as a natural weight loss solution.

And looking at the ads, it’s easy to see how people would be fooled into thinking the claims in them were pure truth rather than puffery.  That, of course, was also the FTC’s problem with them and about nine months ago the agency began putting their plan to stop these deceptive practices into action.  Fast forward nine months later and the FTC has entered into settlement agreements with six acai berry marketers to stop the sneaky ads and also to pay damages of $500,000 under a federal false advertising statute.

Personally I’m quite glad to see these acai berry advertisers go down.  In all honesty, even I was fooled the first time one of these ads popped up on my screen.  The illusion was all the more convincing in my case since at the time I was also browsing through a legitimate news site and assumed the ad was a special report.  Thus you can probably see why they were probably a bad thing.

Though, interestingly enough some in the blogosphere seem to be opposed to the FTC’s actions.  Their main beef seems to be that they think the FTC’s restrictions on the acai berry advertisers violate the First Amendment’s freedom of speech protection.  As we all know, the First Amendment does indeed grant anyone, even businesses, the right to say what they want.  Therefore, this sub-group of people (who probably also hold stock in acai berries) believe that by the FTC cracking down on how these advertisers present their information, it in fact infringes upon their First Amendment rights.

Wow, some people can be real whack-jobs, huh?  Fortunately though, none of the comments I’ve read so far have been crazy enough to argue that the ads aren’t in violation of federal false advertisement laws, because for the reason that, well, they clearly are.

Under current federal law, false advertising comes in two flavors: fraudulent content, which is when the statements made in an ad are false beyond mere marketing puffery, and deceptive practices, which is when the ads are presented in a way that will trick consumers into think it’s something else other than an advertisement.

The acai berry ads clearly fall into the latter category, and arguably also the first, but let’s not split hairs about whether or not acai berries can really help a person lose weight.  The acai berry ads were designed to look like news articles.  The ads had headlines and even author bylines, the formatting and fonts look like they were ripped straight out of CNN, not to mention all the legitimate news organization logos all over the place.  To any objective person the ads at first blush would seem like real news stories and not advertisements.  Therefore, they’re deceptive ads.

But back to the original question, did the FTC violate these advertiser’s first amendment rights?  Well, the answer is still no.  This will be a good lesson to any people out there who are thinking about launch ad campaigns similar to the acai berries.  That’s because while it’s true the First Amendment protect one’s freedom of speech, when that speech is commercial in nature, than the speech may be regulated if it is found to be false or deceptive.

See the beautiful circle here?  Because the acai berry advertisements are clearly deceptive under federal law, then the ads aren’t afforded First Amendment protection.  But let’s just say for argument sake that they aren’t deceptive.  Even in that circumstance the government still has a right to restrict commercial speech if the government can prove that the restriction would serve a substantial government interest, directly advance that interest, and the restriction itself isn’t beyond what’s necessary to advance that government interest.

Now I won’t bore you with a long dissertation of what is a “substantial government interest”, but suffice to say that if you’re running a business, an easier way to think about how you advertise is that you better not say anything fraudulent or deceptive because it’s pretty easy for the government to restrict commercial speech.

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Defendant Entitled to New Trial After Computer Virus Destroys Court Transcripts

How’s this for an object lesson in backing up your data? A court has just ruled that a defendant who was convicted of murder is entitled to a new trial because a computer virus destroyed the entire transcript from his first trial.

The court reporter apparently committed an epic screw-up: court transcripts are ordinarily recorded simultaneously digitally, and on paper. However, the reporter forgot to bring enough rolls of paper for the stenograph, and relied only on the digital copy. She then transferred all the data to her personal computer, and erased the transcript from the stenograph. Her computer got a virus, and the only written record of the defendant’s trial in existence was erased.

Not surprisingly, the court reporter was fired.

This means that the court system will have to go through the additional expense of a new trial, all the witnesses will have to endure the inconvenience of showing up again to testify, and, most importantly, the friends and family of the victim will have to endure the heartache of having this whole process dragged out for however long a second trial takes.

Needless to say, this was a monumental blunder on the part of that court reporter, and it was right for her to be fired for it. “The record” is absolutely essential in any judicial proceeding. Essentially, the record includes all the documents and other items introduced as evidence, as well as a full transcript of the trial and other proceedings related to the case. When the ruling of a trial court is appealed because the losing side believes the court committed a legal error, the appeals court has to examine the record to see if any mistakes were made. So, when the conviction was appealed, and the appeals court realized that no transcript of the trial could be found, it had no choice but to order a new trial.

As I said, this was a spectacular screw-up.

However, I fear that isolated incidents like this will be used by certain people as an avenue to attack the legitimacy of America’s judicial system. This is almost a perfect storm of a defendant “getting off on a technicality,” and incompetence of a judicial employee.

These are common avenues of attacks on the judicial system from people who have a vested interest in weakening that branch of government. Rather than coming out and stating that they have an ideological agenda which does not leave room for a strong and independent judiciary, anti-court crusaders often take on the roll of the “concern troll” – expressing “concern” about the state of the judicial system, and arguing that it needs “reform.” Of course, these “reforms” are usually shortsighted attention-grabbers, or cynical efforts to undermine the judiciary’s power to protect the economic interests of a particular group. But I’ve gone into the topic of tort “reform” before, so I’m not going to spend too much time dwelling on it.

But, I will concede one point: incidents like this one, rare though they are, do demonstrate that our court system needs improvement. Of course, I don’t believe that these improvements would come in the form of laws meant to limit the rights of civil plaintiffs, and draconian “tough-on-crime” legislation.

Instead, I think the improvements should come in the form of better funding for the court system (which is a popular target for budget cuts when governments are running big deficits), and more comprehensive and uniform training and oversight of the various court systems in the United States.

The best way to preserve the legitimacy of the judicial system is to ensure that it operates effectively and efficiently. Obviously, this blunder provides an example of a court system that is not effective or efficient. Hopefully, it will serve as a wakeup call that many of the court systems in the U.S., particularly at the state and local level, are in need of some serious attention.

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Helpful Legal Hints for Employers

A lot of HR departments have trouble with some basic legal issues.  TheWashington Post recently wrote an article for small businesses on how to handle some common “HR nightmares.”  The article lists the following as common issues employers tackle:

  • Misclassifying Workers
  • Overtime
  • Breaks
  • Firing Procedures
  • Discrimination and Harassment

Below are some suggestions on how to handle such issues:

Am I Dealing With an Employee or Independent Contractor?

It is very important for employers to understand the difference between an employee and an independent contractor.  Basically, if an individual has control over their hours, working instruments, and method of work they are an independent contractor.  If an employer sets the hours, provides instruments and strategies procedures/working methods, an employer is dealing with an employee.  There are numerous lawsuits every year because employers have violated labor laws by treating an employee as an independent contractor, or vice versa.

The best thing to do is to read the labor law of your state, extract the definitions set forth for “employee” and “independent contractor,” and refer to it before classifying an employee.  Such small efforts can easily avoid later litigation. 

Overtime—To Pay or Not to Pay?

Since these laws vary state to state, it is important for every employer and/or HR department to understand its state laws on what is considered overtime, and when to pay it.  There are also tricky nuances.  For instance, California views an employee working over eight hours per day as overtime.  However, over forty hours per week is also considered overtime.  Many lawsuits have arisen because employees, who have wanted longer weekends, agreed to work over eight hours a day Monday through Thursday, in order to have Friday off.  Although the amount worked totaled forty hours per week, since employees were working over eight hours a day, labor laws required them to be paid for overtime.

A lesson to take from this is that when reading laws, pay attention to conjunctions such as “and” or “or,” because they hint towards small nuances, which, if not followed, can lead to litigation. 

Breaks—Employees Need to Step Away from Their Work.  It is the law!

It is very important for workers to take proper breaks.  Some workers choose to eat lunch at their desks or skip break because “they have too much to do” or are “almost finished with something.”  Sometimes, employers themselves are in meetings with employees, these meetings run long, and break time passes.  Employers often then encourage everyone to “get back to work” rather than instruct them to go out and make up their break time.  Such behavior from both employees and employers can get employers into trouble.  Why?  Later on, these same employees may claim to have been working diligently during their allotted break times, bringing employers into trouble for violation of labor laws.

What to do?  A lot of companies now have break rooms where no work can be conducted, or require workers to leave the premises during their breaks.  This is a great idea.  Overall, employers need to be proactive and ensure that employees take breaks.  If in a meeting, employers should be conscious and either announce a break during the meeting, or instruct employees to take their break after the meeting is over.  Otherwise, employers should create break rooms and/or have signs up that require employees to physically leave the office area during allotted break times. 

Firing Procedures

The major issue here is that employers establish firing procedures in the company handbook, and do not follow them.  This gives employment lawyers ample ammunition against you in court.  For instance, perhaps the company handbook will state that there will be a review process with the Board of Directors before firing someone.  However, that was not followed when an employee was terminated.  This can get employers into trouble.

To stay away from litigation, follow the procedure your company has established when firing someone.

Discrimination and Harassment—What Employers Think It is and What the Law Says It Is May Be Different

Most of the time, discrimination and harassment are not obvious.  Small comments on appearances guised as “compliments,” or harsh words with multiple meanings during a heated conversation can be discrimination or harassment.  People often associate extreme cases with these concepts; however discrimination and/or harassment instances can be subtle acts in workplace communication.  Many HR departments and employers do not understand this.

A great solution is to first understand the statutory meaning of these two terms.  Then, along with the usual description and “no tolerance policy” written in most corporate handbooks, it is a great idea to have a workshop for employees and management personnel on discrimination and harassment in the work place.  This not only will educate one’s work force, but will also make the company’s “no tolerance” policy clear to everyone.  Such small efforts are a great way to avoid any potential lawsuits. 

Of course there are more solutions to tackle these problems.  Employers should educate themselves and their HR departments, and have lengthy discussions with the corporate attorney(s) to ensure that the company is protecting itself from any potential lawsuits.   This article has some suggestions, and meeting with your corporate attorney will definitely yield more!

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Towns Creating Their Own Currency May Violate The Constitution

It’s no secret that times are tough.  Everyone’s hurting for money and people are always looking for ways to cut corners, while also earning some more dough.  Apparently, some towns have figured out a much better and faster shortcut to solve their community’s cash woes: print their own money.

Alright, you got me, my lead-in paragraph was a little deceptive.  It’s not really a complete contravening of the federal currency system (but in some cases, it’s pretty darn close).

Regardless, it’s an interesting trend to say least.  Small towns across the country from Massachusetts to New York to Oregon have started printing out their own version of currency to be used within their community.  One might be thinking: what would be the point seeing as we already have a national currency that works fine right now (other than the constant inflation, of course).

It’s not as pointless of an exercise as it might initially seem to be.  These local currencies generally hold a higher exchange rate than regular old US dollars in their respective communities.  For example, in Southern Berkshire, Mass., that town’s created currency, dubbed BerkShares, trades at 100 BerkShares to $95.  The little bit of extra money can go a long way in these hard times of ours.  And so far in the communities that have started currency programs like it, spending has gone up within these respective towns injecting some much needed money into their local economies, while also allowing residents to get a little more bang for their buck.

Now it’s always nice to hear when financially struggling people, or in this case a town, figure out a way to help dig themselves out of the red.  However, since this is a law blog, you’ve probably already deduced that I’m likely about to say something to ruin the party.

And you’d be right.  Because as far as I can tell, I’m pretty sure what some of these towns are doing may very well be in direct opposition to the Article I, section 10, clause 1 (aka the Contract Clause) of the U.S. Constitution, which states in relevant part that “No State Shall . . . coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts . . .”  The Contract Clause basically makes it unconstitutional for states to make their own currency, as the power to coin money is one that is reserved for the federal government.

Yeah, I know, I’m a party pooper.  But before you guys start tossing your hate mail at me, let me reiterate that these currency programs only might be unconstitutional.

The link I put up shows ten towns that have enacted their own form of currency.  Of the ten, nine of them seem to be perfectly constitutional because their currency acts more like a bartering or discount services program, ala a Groupon or Living Social deal, rather than a usurping of congressional power.  These nine currency programs were started privately by individuals or organizations who worked out deals with local business to accept their currency which in turn was “exchanged” or rather purchased by locals using actual dollars.  In this sense, these nine currencies are more akin to privately sold coupons than actual money since there are fewer places that actually accept them and treat them like money.

The main issue I have is with Southern Berkshire’s BerkShares, as that one seems to be closest to functioning as actual money.  Over 13 banks in their town accept and deal in it; these banks charge a percentage fee to exchange them, over 400 businesses in town accept them and there have been over 3 million BerkShares issued since the currency was launched in 2006.

However, the most important characteristics that set BerkShares apart from other local currency is that it appears to be endorsed by the local town’s government body and it also is more valuable than U.S. dollars in the community since $95 will get you 100 Berkshares.  These two characteristics of government authorization and devaluation of US currency have been viewed by the courts to be essential to the determination of an illegal currency.

Now it might not seem like a big deal if a town wants to create its own money, but it really is.  The reason is because the creation of unauthorized currency can cause financial instability in the country.  For instance, if a state is independently wealthy using its own money, it would have less incentive to adhere to federal guidelines.  It would in a sense become its own true sovereignty, and while states do have this right to some extent under the Constitution’s state police powers, allowing a state to print its own currency is a step too close to succession.

For now it doesn’t seem like too big of a deal to the federal government as no one other than me appears to have noticed this possibly unconstitutional action over in Southern Berkshire.  It’s helping their community and so far hasn’t led to any declarations of independence, so I guess more power to them.

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Arizona Bans “The Tempest” and Any Other Book that Might Encourage Discussions about Racism

Arizona is on a roll. First, it passes one of the most restrictive anti-immigration laws in the country, on the (false) premise that the federal government is becoming lax in its enforcement of existing immigration laws. Its largest county continues to elect a sheriff who blatantly disregards the constitution, and fails to investigate hundreds of sexual assault cases because he’s devoted all his resources to going after immigrants.

And now, another one of that state’s brilliant and not-at-all-racist laws is having some…interesting consequences. A recent state law bans public schools from teaching ethnic studies courses. This effectively bans schools from teaching subjects like Mexican-American studies.

The law officially bans public schools from teaching any subjects that “promotes the overthrow of the United States Government, promote resentment toward a race or class of people, are designed primarily for pupils of a particular ethnic group, or advocate ethnic solidarity instead of the treatment of pupils as individuals.” Taken at face value, this law seems pretty reasonable. However, it’s had the effect (which was its intended effect) of banning just about any class that seeks to educate students about other cultures.

An Arizona court has just ruled that Shakespeare’s play The Tempest cannot be taught in class. This is because The Tempest is about a banished duke who seeks revenge through magic, and deals with themes such as colonialism, slavery, and racism. Apparently, it’s just not OK to discuss those subjects in the classroom.

As you can imagine, I’m not in favor of this action, or the law that prompted it. I’m not sure what’s going on in Arizona, but it’s definitely nothing good. In a school district where close to 60 percent of the students are Latin American, a law that effectively bans schools from teaching students about that group’s history and culture sends a pretty clear message, whether it was intended or not: your culture has so little value that we feel the need to ban public schools from teaching any classes about it.

Laws like this will probably be short-lived, as Latin-Americans are by far the fastest growing demographic in Arizona, and contrary to the apoplectic ravings of talk radio hosts, most of them are there legally, and of those, a large percentage are U.S. citizens, meaning that they can vote.

To be honest, I don’t even have much of an opinion on the educational value of ethnic studies programs in public schools. However, this law pretty obviously is not motivated by an honest, good-faith belief that these programs lack educational value and that school resources are best spent elsewhere. It seems to be motivated by antipathy towards, or at least suspicion of, Latin-American culture, and Latin-Americans in general.

From a legal standpoint, however, I don’t know if there’s anything that can be done to stop this. States are free to regulate the curriculum of public schools, and there’s nothing in the Constitution that stops them from doing so. Unless Arizona begins segregating its schools by race, it’s unlikely that the federal courts can do anything about it. And, frankly, I think it might be counterproductive for the federal courts to intervene at this time.

We live in a time where many people are extremely suspicious of the motives, and even the very legitimacy, of the federal government. So, if the federal courts were to intervene, there’s a chance that Arizona officials could simply refuse to comply with whatever the court orders, regardless of the order’s legal merits. This would leave the federal government with an incredibly unpleasant decision: give the government of a state a pass on obeying the law, or taking more forceful measures to enforce a court order.

Given the current political climate, nobody wants that.

Ultimately, I hope that our country moves past this nativist, xenophobic phase we’re going through. It seems that we go through a phase like this every few decades, and they usually coincide with economic hardship and/or social unrest. And they eventually pass.

Hopefully, what we’re seeing now is also just a phase. Of course, I should note that the concerns that these laws, and others like them, mean to address are not entirely imaginary. Illegal immigration is a real issue, and we need a sane policy to deal with it. Personally, I think that the solution to illegal immigration, to the extent one exists, is to simplify the entire immigration process, and to make it easier to come into this country legally.

I hope, in the long run, that cooler heads will prevail on the issue of immigration.

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