False advertising cases almost never go to trial. They get resolved behind closed doors at the Better Business Bureau’s National Advertising Division, or end at the preliminary injunction stage.
After all, ads are fleeting. Do you really want to fight over a 30-second spot four years down the road?
If you’re vacuum cleaner maker Dyson Inc., the answer is yes.
On Monday, Dyson and its lawyers from Kirkland & Ellis led by Gregg LoCascio prevailed before a federal jury in Chicago, which found rival SharkNinja, represented by Jones Day, engaged in false advertising.
The jury awarded $16.4 million in damages for ads that ran during a four-month period in 2014. Because the conduct was willful, enhanced damages and legal fees may still be added to the total.
Jenna Greene“Dyson prides themselves on their products and innovation,” LoCascio said. “They were willing to go to trial and publicly prove their case—and to spend the time and effort and money to let us do it.”
Founded by British inventor Sir James Dyson—whom we can thank for developing the bag-less vacuum cleaner—Dyson entered the U.S. market in 2002 touting its “cyclone” technology, and quickly established itself as a market leader.
According to the complaint, competitor Shark promoted its (allegedly inferior) vacuums “as being ‘as good as’ Dyson’s vacuums, but at a lower price.”
But when Shark in infomercials, TV and print ads and product packaging began claiming independent tests showed that its Shark Rotator Powered Lift-Away Vacuum “has more suction and deep-cleans carpets better than Dyson’s best vacuum,” Dyson cried foul.
Unbeknownst to the rest of the world, there are standards governing how vacuum cleaners are supposed to be tested. (That would be ASTM F608, in case you’re wondering.) One rule is that the testers have to follow the instructions in the user’s manual.
According to Dyson, the Shark testers did not—at Shark’s request, they allegedly used the “turbo” mode on all carpets, which produced misleading results.
Shark “never had ‘independent’ testing to support its better carpet cleaning claim, because [the tester] was not ‘free from outside control’ in connection with the tests,” argued the Kirkland team, which included Robin McCue and Megan New.
As the case headed to trial, LoCascio suggested that the court allow the jurors to ask questions—something which he’d never done before, but had long been interested in trying. Opposing counsel John Froemming of Jones Day and U.S. District Judge Gary Feinerman both agreed.
Letting jurors submit written questions after witnesses testify is one of those ideas litigators have been talking about for 20 years as a way to modernize the jury system, but it’s still not standard in most jurisdictions.
LoCascio was enthusiastic about the experience, noting that the questions “provided a window into what [the jurors] were thinking” and what they didn’t understand. It also kept the panel engaged throughout the 10-day trial. “Some of the best admissions and most telling testimony came from jury questions,” he said.
Shout-Out: Cravath’s $11B Save for Credit Suisse
A team from Cravath, Swaine & Moore led by partner Richard W. Clary scored a major win for Credit Suisse—and the rest of the banking industry—on Tuesday before the New York State Court of Appeals, in a decision that sharply curtails the statute of limitations for certain fraud cases.
The allegations are familiar: The New York Attorney General sued Credit Suisse in 2012, alleging that the bank committed fraudulent and deceptive acts in connection with the creation and sale of residential mortgage-backed securities in 2006 and 2007. According to the AG’s office, Credit Suisse led investors to believe that they had “carefully evaluated–and would continue to monitor” the quality of loans underlying the RMBS.
In reality, many of the loans were flawed, and the shoddy securities helped trigger the 2008 financial crisis. The state sought $11 billion in damages.
But did the AGs office wait too long to sue under New York’s anti-fraud law, the Martin Act? The state argued that its suit is timely because the relevant statute of limitations is six years, but the Cravath team countered it’s actually only three years.
In a split opinion, New York’s highest court ruled the claims are time-barred, siding with Cravath in ruling that the statute of limitations is three years.
Oddly, this exact issue had not come up before. “Despite the scope and detail of the statutory scheme, there is no provision stating the applicable statute of limitations and, although the Martin Act is nearly a century old, we have never had occasion to consider the issue,” wrote Chief Judge Janet DiFiore.
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