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FDA Allows Unapproved E-Cigarettes & Skechers Lawsuit · Bloomberg Law

• 0:02
  Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
• 0:08
  Speaker 1: A new FDA rule will allow companies to sell unapproved
• 0:12
  Speaker 1: electronic cigarettes and nicotine patches, and that includes fruit flavored vapes,
• 0:18
  Speaker 1: which are especially appealing to kids. All the companies have
• 0:22
  Speaker 1: to do is submit an application that the agency has
• 0:25
  Speaker 1: agreed to review that goes against the way the FDA
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  Speaker 1: has traditionally worked, where the approval process is normally rigorous
• 0:34
  Speaker 1: and involves multiple steps. According to the Associated Press, senior
• 0:39
  Speaker 1: officials in the agency's Tobacco Center were blindsided by the
• 0:44
  Speaker 1: new guidelines. Earlier this month, the FDA authorized fruit flavored
• 0:49
  Speaker 1: vapes for the first time. Of the more than one
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  Speaker 1: point six million middle and high school students who currently vape,
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  Speaker 1: nearly ninety percent use flavored East six ats, with fruit
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  Speaker 1: flavors being the most popular, followed by candy, desserts or
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  Speaker 1: other suites. My guest is healthcare attorney Harry Nelson, a
• 1:10
  Speaker 1: partner at Leech Tishman Nelson Hardiman. Harry tell us about
• 1:14
  Speaker 1: these new rules.
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  Speaker 2: So we have this law, the Tobacco Control Act, which
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  Speaker 2: requires that new tobacco products can't be legally marketed without
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  Speaker 2: pre market authorization, and the law gives the FDA the
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  Speaker 2: power to deny this pre market authorization unless there's a
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  Speaker 2: showing that the product would appropriately protect the public health.
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  Speaker 2: And so what's happened now is that the administration has said,
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  Speaker 2: the FDA put out a guidance, a statement that it's
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  Speaker 2: not going to prioritize enforcement against certain unauthorized e cigarette
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  Speaker 2: products and nicotine oral nicotine pouch products. So and meaning
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  Speaker 2: the government basically said, even though these products are not
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  Speaker 2: legally on the market, the government is not going to
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  Speaker 2: go after them. That's basically what happened in the last
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  Speaker 2: couple of days here.
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  Speaker 1: And this breaks with the FDA policy of requiring scientific verification.
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  Speaker 2: Yeah, this is definitely a relaxation of the federal policy
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  Speaker 2: of being tough on tobacco products and being concerned about
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  Speaker 2: public health.
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  Speaker 3: And it's basically the.
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  Speaker 2: FDA saying this is a low priority and even though
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  Speaker 2: what you're doing is not legal, let's call it at
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  Speaker 2: best gray market. These products can stay on the shelves
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  Speaker 2: the stores even though they're still in scientific review, even
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  Speaker 2: though the FDA.
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  Speaker 3: Has not ruled on them.
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  Speaker 2: And this is really a flip from where we were,
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  Speaker 2: you know, just a year and a half ago, where
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  Speaker 2: the FDA rejected the idea that having an application on
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  Speaker 2: file was sufficient to create a safe harbor to allow
• 2:48
  Speaker 2: these products to be out there. So previously the FDA
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  Speaker 2: would not allow these products to be on shelves, and
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  Speaker 2: now it sounds like the enforcement climate is really completely
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  Speaker 2: gone one hundred and eighty degrees and the FDA is
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  Speaker 2: going to basically soften this position and allow a new
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  Speaker 2: lane kind of for grain market tobacco products.
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  Speaker 1: I mean, is this odd timing because it was posted
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  Speaker 1: just days before the former FDA commissioner resigned. Was it
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  Speaker 1: pushed through? It just sounds like the timing is weird.
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  Speaker 3: Yeah, it's interesting.
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  Speaker 2: It definitely seems like this was This kind of reflects
• 3:24
  Speaker 2: a little bit of the chaos that is going on
• 3:28
  Speaker 2: in the FDA. A lot of the reporting around the
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  Speaker 2: story has emphasized that the senior leadership within and the
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  Speaker 2: staff within the Tobacco Center were basically blindsided and that
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  Speaker 2: this appeared just before Commissioner McCary resigned. So there seems
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  Speaker 2: to be a lot of upheaval and a little bit
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  Speaker 2: of chaos at the FDA, and certainly nobody who's in
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  Speaker 2: the Tobacco Regulation Group at the FDA saw this coming
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  Speaker 2: or seems to be supportive of this new relax on action.
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  Speaker 1: So the FDA spokesperson said, this approach strengthens protections against
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  Speaker 1: youth nicotine addiction while supporting evidence based alternatives for adult
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  Speaker 1: smoke or seeking to move away from combustible tobacco products whatever.
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  Speaker 2: That it's interesting, right, Certainly, even the folks in the
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  Speaker 2: administration who are supporting the relaxation of tobacco are trying
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  Speaker 2: to emphasize that this is for adult products and that
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  Speaker 2: they are not loosening standards on tobacco products that are
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  Speaker 2: being used by miners. So they're trying to, you know,
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  Speaker 2: still reserve the right to be more aggressive in enforcement
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  Speaker 2: against products that appeal to teens and to focus on
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  Speaker 2: just letting adults have more leeway and just not investing
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  Speaker 2: enforcement dollars into this product market.
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  Speaker 1: Hasn't the FDA resisted approving flavor vapes for kids, but
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  Speaker 1: yet the mango and blueberry flavored vapes who are okayed
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  Speaker 1: during the FDA Commissioner's last.
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  Speaker 2: Week, right, there's, by the way, there's there's something like
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  Speaker 2: over forty e cigarette products and already twenty of these
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  Speaker 2: these like flavored pouch varieties out there. I think the
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  Speaker 2: FDA has been trying to walk a line, and I
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  Speaker 2: think the line shifted a little bit this week. But
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  Speaker 2: I think even now, you know, the administration's position is
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  Speaker 2: that protecting teen smokers from products that are clearly appealing
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  Speaker 2: to kids is still a problem and still something they're
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  Speaker 2: going to pursue. But the real message that they're trying
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  Speaker 2: to emphasize, I think was loosening the rules on adult
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  Speaker 2: tobacco products.
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  Speaker 1: The number of underaged vapors has gone down. I don't
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  Speaker 1: know if that plays any part in.
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  Speaker 2: This, To be honest me, I'm not totally up to
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  Speaker 2: speed on where underage vaping is. I know that a
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  Speaker 2: lot of the you know, the efforts of the last
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  Speaker 2: couple of years have definitely reduced use, particularly in and
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  Speaker 2: around schools. There was a lot of attention obviously to
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  Speaker 2: you know, the Nicodeen addiction risk, the potential effect on
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  Speaker 2: brain development of like anxiety and add ADHD mood issues
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  Speaker 2: coming up from these, and just the kind of significant marketing.
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  Speaker 2: And we saw a lot of schools cracked down on this.
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  Speaker 2: We saw like social media, you know, sort of really
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  Speaker 2: tamping down, so it would not surprise me if there
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  Speaker 2: has been a reduction, although I still think there's still
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  Speaker 2: is clearly a significant use of flavored disposable vapes among teens,
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  Speaker 2: and still a problem of you know, social networks being
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  Speaker 2: used to get kids who are too young getting them vapes.
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  Speaker 2: There still is a problem of you know, illegal retail
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  Speaker 2: sales happening, and I think, honestly, I think one of
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  Speaker 2: the big pieces of the story is that we're going
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  Speaker 2: to see We're likely to see states, particularly filling the void,
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  Speaker 2: you know, as we've seen in other areas of federal enforcement,
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  Speaker 2: when the federal government sort of steps back a little bit,
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  Speaker 2: We're going to see many states kind of step up
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  Speaker 2: and crack down much more on this.
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  Speaker 1: Right now, California, Massachusetts, New Jersey, New York, and Rhode
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  Speaker 1: Island in for statewide bands on most are all flavored
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  Speaker 1: vaping products, and other states have more limited bands. And
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  Speaker 1: you're right that about one point sixty three million middle
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  Speaker 1: and high school students currently vape. That's a decrease from
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  Speaker 1: two point one three million in twenty twenty three, but
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  Speaker 1: still a huge number, almost six percent of kids. Harry,
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  Speaker 1: I'm wondering if these new rules have anything to do
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  Speaker 1: with Trump, who when he came to office, promised that
• 7:34
  Speaker 1: he would save the vaping industry, and big tobacco companies
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  Speaker 1: have made contributions to Trump and his causes.
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  Speaker 2: Yeah, it's definitely there's no question that this is a
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  Speaker 2: case where the federal government is sort of throwing a
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  Speaker 2: bone to the tobacco industry that they're really giving them
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  Speaker 2: a little bit of room here to ramp up sales
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  Speaker 2: and signaling kind of a more permissive environ So I
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  Speaker 2: do think this is clearly a big win for big
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  Speaker 2: tobacco and a setback for everybody who invested in, you know,
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  Speaker 2: public health a sort of anti tobacco efforts. So the
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  Speaker 2: companies that are you know, particularly companies that have applications
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  Speaker 2: or pending, are going to benefit by being able to,
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  Speaker 2: you know, promote those products more. They don't have to
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  Speaker 2: be as nervous about the you know, the unapproved status
• 8:27
  Speaker 2: of their applications. So those are going to be the
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  Speaker 2: biggest winners within the tobacco industry.
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  Speaker 1: Because I can't think of any reason to do this
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  Speaker 1: as far as public health is concerned.
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  Speaker 2: You know, I think this is a little bit of
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  Speaker 2: a signal that the federal government is kind of moving
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  Speaker 2: out of I don't know what you want to call it,
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  Speaker 2: the nanny state, you know, sort of the it spends.
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  Speaker 2: You know, a lot of the public health protections that
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  Speaker 2: we see where we've seen federal you know, stepping back
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  Speaker 2: have been about individual choice even where it's not consistent
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  Speaker 2: with public health.
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  Speaker 3: Right.
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  Speaker 2: We've seen that with like federal rollbacks on environmental uh
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  Speaker 2: and climate regulation. Right that I think I think we've seen, uh,
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  Speaker 2: you know, we've seen it. We've seen we see we
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  Speaker 2: see that the states are are getting more aggressive uh
• 9:18
  Speaker 2: and and and and then a lot of directions the
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  Speaker 2: federal governments moving in the opposite direction. And I think
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  Speaker 2: it partly is by by by some skepticism about broad
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  Speaker 2: federal administrative power and ways in which when people perfectly
• 9:33
  Speaker 2: on the right are talking about smaller government, part of
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  Speaker 2: what that means is less activist laws limiting commerce.
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  Speaker 3: Right.
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  Speaker 2: I think I think this is one of those examples.
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  Speaker 1: Okay, stay with me, Harry. Coming up next on the
• 9:46
  Speaker 1: Bloomberg Law Show, we'll take a look at the legal
• 9:49
  Speaker 1: fight over the abortion pill. I'm June Grosso, and you're
• 9:53
  Speaker 1: listening to Bloomberg. A divided Supreme Court allowed a widely
• 10:00
  Speaker 1: used abortion pill to continue to be dispensed by mail
• 10:03
  Speaker 1: about two weeks ago, putting on hold a federal appeals
• 10:07
  Speaker 1: Court decision that had briefly required patients to make an
• 10:11
  Speaker 1: in person visit to a provider. In a one paragraph
• 10:15
  Speaker 1: order that gave no explanation, the justices granted requests from
• 10:19
  Speaker 1: the drugs manufacturers to keep it fully available while the
• 10:23
  Speaker 1: legal fight goes forward. Louisiana is seeking to upend the
• 10:27
  Speaker 1: FDA's decision during Joe Biden's presidency to permit remote prescriptions
• 10:33
  Speaker 1: for MiFi pristone, a drug the FDA first approved in
• 10:37
  Speaker 1: two thousand. The case could have upbended abortion access nationwide,
• 10:42
  Speaker 1: but the reprieve may only be temporary. The FDA under
• 10:46
  Speaker 1: President Donald Trump says it's conducting a safety review of
• 10:50
  Speaker 1: MiFi pristone, and it could try to impose new restrictions
• 10:55
  Speaker 1: down the road. I've been talking to healthcare attorney Harry Nelson.
• 11:00
  Speaker 1: Fight over MiFi pristone is going to come back to
• 11:02
  Speaker 1: the court again, isn't it.
• 11:04
  Speaker 2: I mean, my read on the Supreme Court decision is
• 11:08
  Speaker 2: that you know, clearly the Supreme Court does not want
• 11:12
  Speaker 2: to get in the way, you know, very clear that
• 11:15
  Speaker 2: the Supreme Court really doesn't want to revisit this, but
• 11:19
  Speaker 2: but clearly, you know, the States remain very you know,
• 11:23
  Speaker 2: actively involved in it. And so this is definitely not
• 11:26
  Speaker 2: going to be the last, the last case where the
• 11:29
  Speaker 2: Spring Court is dealing with mephipristone. The States are are
• 11:32
  Speaker 2: still going to keep arguing that the FDA is exceeding
• 11:34
  Speaker 2: its authority under the Food, Drug and Cosmetic Act, the
• 11:37
  Speaker 2: same exact claim that was made in this case, that
• 11:39
  Speaker 2: the FDA improperly loosened the risk Evaluation and Mitigation Studies
• 11:45
  Speaker 2: REMS restrictions and so and we're going to see you know,
• 11:49
  Speaker 2: continued fights right about how much deference the courts should
• 11:53
  Speaker 2: give the FDA on its scientific judgment. And we're going
• 11:56
  Speaker 2: to still going to see activist states, you know, abortion
• 11:59
  Speaker 2: restricts of states arguing that they have the right to
• 12:03
  Speaker 2: so second guests the FDA and that they can override
• 12:07
  Speaker 2: kind of a national drug approval based on their state policy.
• 12:09
  Speaker 2: So we're still in this environment where the states are
• 12:12
  Speaker 2: increasingly trying to compete in their different you know, regulatory
• 12:17
  Speaker 2: frameworks for this, and we're going to continue to see
• 12:20
  Speaker 2: a number of states trying to be more restrictive, blocking mailing,
• 12:24
  Speaker 2: blocking teleealth access, and this issue is not going anywhere.
• 12:29
  Speaker 2: And you know, I think for people on the you know,
• 12:32
  Speaker 2: on the reproductive rights protection side of this fight, I
• 12:35
  Speaker 2: think it is good news that the Supreme Court is
• 12:38
  Speaker 2: at least holding true to what it said when it
• 12:41
  Speaker 2: repealed re Vweight, which was that it really wanted to
• 12:43
  Speaker 2: send this issue back to the States and wasn't going to,
• 12:46
  Speaker 2: you know, to intervene to support broader restrictions. So this
• 12:50
  Speaker 2: is at least one way in which the Supreme Court
• 12:52
  Speaker 2: has lived up to that to that signal that it gave.
• 12:55
  Speaker 2: And so for all the frustration that so many people
• 12:58
  Speaker 2: have about the decision to get rid of Roe v. Wade,
• 13:02
  Speaker 2: I do think it's a positive sign that the Supreme
• 13:04
  Speaker 2: Court is not wanting to get in the way of
• 13:08
  Speaker 2: the FDA, not wanting to get in the way of pharmacies.
• 13:10
  Speaker 2: And by the way, one of the biggest things we
• 13:12
  Speaker 2: haven't spoken about is, you know, the question of whether
• 13:14
  Speaker 2: the FDA takeover will ultimately lead to restriction internally. That's
• 13:20
  Speaker 2: really an incredible tell on where the Trump administration sits
• 13:24
  Speaker 2: within this whole question.
• 13:26
  Speaker 1: How many studies were done to show that MiFi pristone
• 13:29
  Speaker 1: was safe, and now the FDA is doing a new study,
• 13:32
  Speaker 1: and Bloomberg News reported in December that the FDA was
• 13:37
  Speaker 1: slow walking its safety study until after the midterm elections,
• 13:42
  Speaker 1: although Health and Human Services deny the report.
• 13:46
  Speaker 2: Yeah, it's very interesting. This is clearly a place where
• 13:49
  Speaker 2: the administration is not in a hurry to create political upheaval.
• 13:54
  Speaker 2: Obviously this issue has been such a galvanizing one in
• 13:58
  Speaker 2: past election cycles, so the FDA has actually, you know,
• 14:01
  Speaker 2: I think a lot of people are surprised. A lot
• 14:03
  Speaker 2: of people thought that this administration would would reverse you know,
• 14:07
  Speaker 2: on the safety and effectiveness of mefipristone. It's been, by
• 14:10
  Speaker 2: the way, twenty six years since a clinical review, and
• 14:14
  Speaker 2: really there is no record of serious adverse events. So
• 14:18
  Speaker 2: the people who are saying that it's unsafe have to
• 14:20
  Speaker 2: point to its actual intended effect to claim that it's unsafe.
• 14:24
  Speaker 2: That it's unsafe essentially because it terminates pregnancies, right, So
• 14:28
  Speaker 2: it's interesting, you know, the FDA is clearly under you know,
• 14:32
  Speaker 2: competing political pressures, and it's clearly a much more complicated
• 14:37
  Speaker 2: landscape than a lot of people anticipated.
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  Speaker 1: And what about rfk's position. Is he solidly in place
• 14:45
  Speaker 1: at the head of aj jess or is it wobbing.
• 14:48
  Speaker 2: It's super interesting that he has not been like it's
• 14:51
  Speaker 2: a really good question why. Clearly, is one of the
• 14:54
  Speaker 2: most visible and controversial members of this cabinet he is
• 14:59
  Speaker 2: he is not seem to be in jeopardy. I do
• 15:02
  Speaker 2: think that he has some there's several advantages he has.
• 15:05
  Speaker 2: He has because of the MAHA you know, make America
• 15:08
  Speaker 2: Healthy Again political base that remains very loyal to him.
• 15:12
  Speaker 2: He's got, he's got. There is I think some concern
• 15:15
  Speaker 2: about what his removal would mean to part of the
• 15:18
  Speaker 2: Trump you know, voting base. And he's remained aligned with
• 15:23
  Speaker 2: President Trump on a number of very populist themes about
• 15:27
  Speaker 2: you know, under investment in chronic disease, you know, the
• 15:31
  Speaker 2: food and chemical regulation, skepticism towards big pharma. So he's
• 15:36
  Speaker 2: got his anti establishment messaging is actually something that I think,
• 15:39
  Speaker 2: you know, resonates with President Trump. But I do think
• 15:43
  Speaker 2: he is less stable today than he was a year ago.
• 15:47
  Speaker 2: And clearly some of his most controversial appointees have already
• 15:51
  Speaker 2: been you know, forced to resign or withdrawn and We've
• 15:54
  Speaker 2: seen the courts blocking some of his vaccine related actions,
• 15:58
  Speaker 2: so he's he definitely seems to be in a weaker position,
• 16:01
  Speaker 2: even though he remains the public face of the you
• 16:04
  Speaker 2: know here and so I think he's he's navigating some
• 16:08
  Speaker 2: tricky waters in terms of, you know, the Maha populist
• 16:12
  Speaker 2: base that wants to see radical FDA reform on vaccines,
• 16:17
  Speaker 2: on confronting big pharma. He's got to navigate the traditional
• 16:21
  Speaker 2: stakeholders within healthcare who are very wary of him, and
• 16:25
  Speaker 2: of course all of the you know, Trump political operatives.
• 16:28
  Speaker 2: So I think in the near term it doesn't look
• 16:30
  Speaker 2: like he's going anywhere, but I wouldn't bet that, you know,
• 16:33
  Speaker 2: he's going to make it through the entire Trump second term.
• 16:36
  Speaker 1: Thanks so much for joining me tonight, Harry. That's healthcare
• 16:39
  Speaker 1: attorney Harry Nelson of Leech Tishman Nelson, Hardiman Sketchers is
• 16:48
  Speaker 1: facing a class action lawsuit seeking millions of dollars in damages.
• 16:53
  Speaker 1: A judge has refused to dismiss the lawsuit that accuses
• 16:57
  Speaker 1: the footwear and apparel company of repeated sending deceptive promotional
• 17:02
  Speaker 1: emails with phrases like the clock is ticking or today
• 17:07
  Speaker 1: only to pressure consumers into making purchases in a hurry.
• 17:12
  Speaker 1: For example, one email on May twenty sixth of last
• 17:15
  Speaker 1: year said long weekend savings and tonight in the heading,
• 17:20
  Speaker 1: but an email the next day said surprise, long weekend
• 17:24
  Speaker 1: savings extended for today and Sketchers is not the only
• 17:29
  Speaker 1: retailer facing lawsuits over deadline focused subject lines under Washington
• 17:35
  Speaker 1: State's Commercial Electronic Mail Act. Joining me is Sean Collins,
• 17:39
  Speaker 1: a partner at Straddling and an expert in consumer litigation
• 17:43
  Speaker 1: and enforcement. Sean tell us about this lawsuit.
• 17:47
  Speaker 4: So it's a Washington law that Washington has been enforcing
• 17:53
  Speaker 4: a lot lately. Effectively what catches a lot of people
• 17:58
  Speaker 4: off guard about this particular So the Washington passed this law.
• 18:05
  Speaker 4: It's predicated on the federal law, which is the can
• 18:08
  Speaker 4: Spam Act. So I don't know if you're familiar with
• 18:11
  Speaker 4: the can Spam Act, but it's something that people haven't
• 18:14
  Speaker 4: really talked about a lot lately. Can Spam Act was
• 18:17
  Speaker 4: passed back when we were still using fax machines, okay,
• 18:21
  Speaker 4: and so it was created because people were abusing fact
• 18:25
  Speaker 4: machines similar to how they abuse emails nowadays, where people's
• 18:29
  Speaker 4: fax machines. So I remember when I first started practicing law,
• 18:32
  Speaker 4: back in like ninety nine and two thousand timeframe, it
• 18:35
  Speaker 4: was my job as a young clerk to go over
• 18:37
  Speaker 4: to the fax machine and pull off all the factes
• 18:39
  Speaker 4: and then take them to the respective partners.
• 18:42
  Speaker 3: And you know, I would fall victim to it.
• 18:45
  Speaker 4: You go over there and there would be like this
• 18:46
  Speaker 4: headline that would come off on the facts, like, oh,
• 18:50
  Speaker 4: would you be interested in going to an Astros game today?
• 18:52
  Speaker 4: I was clerking in Houston at the time, and I
• 18:54
  Speaker 4: remember it would catch my attention.
• 18:55
  Speaker 3: I'm like, I would love to go to an Astro's game.
• 18:57
  Speaker 4: So then you pull it off, you start reading it
• 18:59
  Speaker 4: and had nothing to do with an Astros game. It's
• 19:01
  Speaker 4: them trying to sell you some type of bubblegum or
• 19:04
  Speaker 4: soda or.
• 19:05
  Speaker 3: Something like that.
• 19:06
  Speaker 4: And so they created the can Spam MAC because people
• 19:09
  Speaker 4: were tired of their fax machines getting clogged up with
• 19:12
  Speaker 4: unwanted solicitations and advertisements. So can Spam MAC was a
• 19:16
  Speaker 4: federal law that was passed that said, hey, stop clogging
• 19:20
  Speaker 4: up people's fax machines with unimportant stuff, and you have
• 19:23
  Speaker 4: an obligation to tell them what you want, all right,
• 19:26
  Speaker 4: So Washington passed this law to basically kind of update it,
• 19:30
  Speaker 4: bringing into the modern era whereby they don't want people
• 19:35
  Speaker 4: kind of duping people with emails, okay, and so Washington
• 19:40
  Speaker 4: has started to enforce this law.
• 19:43
  Speaker 3: So you'll see this lawsuit.
• 19:44
  Speaker 4: Is very focused on what's being presented to people in
• 19:49
  Speaker 4: the form of emails, Like, is the headline of your email,
• 19:55
  Speaker 4: you know, creating a false impression or a misleading lead
• 20:01
  Speaker 4: to the person that's the recipient of that email. So
• 20:04
  Speaker 4: obviously here they're focused on the fact that the headline
• 20:07
  Speaker 4: of these emails was creating a false time clock in
• 20:10
  Speaker 4: people's head today only the clock is ticking and you know,
• 20:16
  Speaker 4: long weekend savings end tonight, creating a false sense of urgency.
• 20:20
  Speaker 1: Tell us what Skechers argue to try to get the
• 20:23
  Speaker 1: case thrown out.
• 20:24
  Speaker 4: One of the arguments that the Skechers' attorneys tried to
• 20:28
  Speaker 4: make was the preemption argument, meaning that the federal can
• 20:31
  Speaker 4: Spam law preempts the Washington law, meaning that if I,
• 20:35
  Speaker 4: as a company Sketchers, if I'm complying with the federal law,
• 20:38
  Speaker 4: I shouldn't have to create a separate mechanism to comply
• 20:41
  Speaker 4: with the Washington law as well. Now, so the first
• 20:45
  Speaker 4: argument there was that the federal can Spam Act displaces
• 20:48
  Speaker 4: the state level claims. So the court rejected that argument. Now,
• 20:51
  Speaker 4: there was one other argument, which I think was actually
• 20:53
  Speaker 4: a very clever argument that was made by the Skechers.
• 20:57
  Speaker 3: Team was well, hey, you know, that loss.
• 21:01
  Speaker 4: Similar to the can Spam Act was effectively saying that
• 21:05
  Speaker 4: the information had to be false, meaning it was a
• 21:09
  Speaker 4: lie what you put in the in the heading. They
• 21:12
  Speaker 4: were basically saying that, you know, when we put today
• 21:15
  Speaker 4: only cell extended in the heading, that that was not
• 21:19
  Speaker 4: false or misleading because Sketchers was essentially saying, look, you know,
• 21:25
  Speaker 4: as a company, it's our prerogative if we want to
• 21:27
  Speaker 4: extend our cell, and that's actually a benefit for the consumer.
• 21:31
  Speaker 3: So typically in a consumer protection context, the.
• 21:34
  Speaker 4: Argument is is your conduct beneficial for the consumer or
• 21:39
  Speaker 4: is it detrimental to the consumer. They're saying, we're extending
• 21:42
  Speaker 4: a cell and even though the sale was supposed to
• 21:45
  Speaker 4: end on Memorial Day, we extended it to the following day,
• 21:48
  Speaker 4: the Tuesday after Memorial Day. So that's a net benefit
• 21:51
  Speaker 4: for the consumer because they're getting the extra twenty four
• 21:53
  Speaker 4: hours to make this purchase, and so the State of
• 21:57
  Speaker 4: Washington rejected that argument. I keep in mind that they
• 22:00
  Speaker 4: just basically rejected their motion to dismiss in this case,
• 22:03
  Speaker 4: so just you know, for context, they were just trying
• 22:06
  Speaker 4: to get went on emotion to dismiss, which is basically
• 22:09
  Speaker 4: saying you didn't even state claims that could withstand litigation.
• 22:15
  Speaker 4: And so the court was saying, I'm going to give
• 22:17
  Speaker 4: the plaintiffs an opportunity to prove these claims now in
• 22:20
  Speaker 4: a court of law, as opposed to dismissing them at
• 22:23
  Speaker 4: the pleading phase. So sketchers still has an opportunity to
• 22:28
  Speaker 4: prevail in this case. I think they will ultimately end
• 22:31
  Speaker 4: up prevailing in this case. But it was an interesting
• 22:35
  Speaker 4: interpretation of the law from the state, from the court,
• 22:39
  Speaker 4: just from the standpoint of, you know, effectively, the court
• 22:45
  Speaker 4: has said that even though what you're saying in your
• 22:48
  Speaker 4: heading might be literally true, meaning sale extended for twenty
• 22:53
  Speaker 4: four hours, don't miss out on the opportunity the planiffs.
• 22:57
  Speaker 4: So they're saying it was false from the standpoint of
• 23:00
  Speaker 4: it seemed like it was only a Memorial Day cell
• 23:03
  Speaker 4: and there may have been consumers that rushed to purchase
• 23:06
  Speaker 4: this over the weekend, when in reality, this was not.
• 23:09
  Speaker 3: A limited time sell, it was a cell that was
• 23:12
  Speaker 3: going to be going on for a while.
• 23:13
  Speaker 4: You just duped the consumer into believing that they had
• 23:16
  Speaker 4: to purchase now or else they would miss the opportunity.
• 23:18
  Speaker 1: Do we really think that consumers to consumers or the
• 23:22
  Speaker 1: plaintiffs went to a lawyer and said, we want to
• 23:24
  Speaker 1: sue over this, or is this a class action plaintiff's
• 23:28
  Speaker 1: lawyer looking for plaintiffs to file suit over this.
• 23:32
  Speaker 3: So that's a great question, So a little bit of both.
• 23:36
  Speaker 4: So these cases in California, they refer to them as
• 23:40
  Speaker 4: pricing law cases, and so I have been seeing numerous
• 23:44
  Speaker 4: I've probably seen ten of these over the past two
• 23:47
  Speaker 4: years from my clients here in the state of California,
• 23:50
  Speaker 4: because the state of California has a pricing law on
• 23:52
  Speaker 4: the books that basically says that you cannot offer a
• 23:56
  Speaker 4: sell price for longer than ninety days if you have
• 24:00
  Speaker 4: not sold that product at the actual retail price within
• 24:03
  Speaker 4: the last ninety days. So if I offer you June,
• 24:07
  Speaker 4: I tell you, I say, hey, I have this, you
• 24:09
  Speaker 4: know this skin care product that I'm offering, I typically
• 24:13
  Speaker 4: sell it for.
• 24:14
  Speaker 3: Forty nine ninety nine, but I'm only going to.
• 24:17
  Speaker 4: I'm going to put it on sale for nineteen ninety
• 24:19
  Speaker 4: nine for you if I have not sold that product
• 24:23
  Speaker 4: at forty nine ninety nine within the last ninety days.
• 24:27
  Speaker 3: The State of.
• 24:28
  Speaker 4: California says that is a false representation to a customer
• 24:32
  Speaker 4: because you're basically trying to create the mental impression that
• 24:35
  Speaker 4: they're getting a twenty dollars discount, when in reality, you've
• 24:38
  Speaker 4: never sold that product at the forty nine ninety nine
• 24:41
  Speaker 4: price point. It's always been nineteen ninety nine. But you're
• 24:45
  Speaker 4: making them believe they're getting a discount when in reality
• 24:48
  Speaker 4: you're just selling it at the actual price that it's worth,
• 24:51
  Speaker 4: which is nineteen ninety nine. So in California we call
• 24:54
  Speaker 4: them pricing law cases because you can't have a product
• 24:58
  Speaker 4: on sale perpetually.
• 25:00
  Speaker 3: Now, that case came out of Coals.
• 25:02
  Speaker 4: That was the first big case that happened like that,
• 25:04
  Speaker 4: and I want to say that was maybe ten or
• 25:06
  Speaker 4: twelve years ago. Coals got in trouble for that because
• 25:09
  Speaker 4: pretty much the entire Coals department store have price tags
• 25:13
  Speaker 4: on it with stripe through. Pricing is what is referred to,
• 25:16
  Speaker 4: and it makes the customer who's walking through the store think, oh,
• 25:20
  Speaker 4: this thing used to be ninety nine, ninety nine or
• 25:22
  Speaker 4: one hundred dollars and I'm now getting it for thirty bucks.
• 25:25
  Speaker 4: What a great deal, seventy percent off, when in reality
• 25:28
  Speaker 4: Coals has never sold that thing for one hundred dollars,
• 25:31
  Speaker 4: that the actual price is probably thirty dollars.
• 25:34
  Speaker 1: That seems more harmful to consumers are more deceptive than this,
• 25:39
  Speaker 1: which is what instead of buying it the day after
• 25:43
  Speaker 1: Memorial Day or whatever, I'm rushed to buy it buy
• 25:46
  Speaker 1: Memorial Day. I mean, it just seems like, what are
• 25:48
  Speaker 1: the damages here or is it just the damage is
• 25:51
  Speaker 1: stated under this law because it doesn't seem like they
• 25:53
  Speaker 1: lost really anything.
• 25:55
  Speaker 4: That's true, And that's why I think Sketchers is making
• 25:58
  Speaker 4: great arguments. I think ultimately they probably going to prevail,
• 26:01
  Speaker 4: but great question. So in those California pricing cases, there's
• 26:06
  Speaker 4: usually a dual claim, and so all of my clients
• 26:09
  Speaker 4: using and look, there's no law that says you can't
• 26:11
  Speaker 4: do this, but you've probably.
• 26:13
  Speaker 3: Seen it when you're checking out online.
• 26:15
  Speaker 4: Sometimes they'll put up a timer or a clock and
• 26:18
  Speaker 4: it says this price is only available for the next
• 26:20
  Speaker 4: ten minutes, and then that timer's sitting right there above
• 26:23
  Speaker 4: the purchase button and it's counting down on you, and
• 26:26
  Speaker 4: then it gets down to two or three minutes, and
• 26:28
  Speaker 4: as a consumer, you feel a sense of urgency to
• 26:31
  Speaker 4: purchase now so I don't miss this seventy dollars discount.
• 26:34
  Speaker 3: So the courts are kind of split.
• 26:36
  Speaker 4: The circuits are split on it as well as to
• 26:38
  Speaker 4: whether or not a timer is unlawful, because there's no
• 26:42
  Speaker 4: statute that says a timer is unlawful. So what Washington
• 26:46
  Speaker 4: is doing right now, they're trying to use this Washington
• 26:50
  Speaker 4: law to effectively say timers or representations that a sale
• 26:55
  Speaker 4: is for a limited time only are false and misleading
• 26:59
  Speaker 4: because you are basically pushing.
• 27:01
  Speaker 3: A consumer into purchasing something that they may.
• 27:04
  Speaker 4: Otherwise not want, but they're purchasing for fear of missing
• 27:09
  Speaker 4: out on the discount, and they're saying you're creating a
• 27:12
  Speaker 4: false narrative about how long this discount will be available
• 27:15
  Speaker 4: to them.
• 27:16
  Speaker 3: That's the allegation here against sketchers.
• 27:18
  Speaker 1: This is not the only lawsuit like this.
• 27:20
  Speaker 4: There are others like this in Washington, So this is
• 27:23
  Speaker 4: not new, but it's new from the standpoint that Washington
• 27:26
  Speaker 4: is kind of following suit with California. So in the
• 27:30
  Speaker 4: absence of having the pricing law that California has, they're
• 27:33
  Speaker 4: trying to use their own version of this law to
• 27:37
  Speaker 4: make it apply to representations in banners of emails that
• 27:42
  Speaker 4: create the false impression that a seal is about to expire.
• 27:46
  Speaker 1: Have any of these cases been appealed beyond the trial
• 27:50
  Speaker 1: court level?
• 27:51
  Speaker 3: They have, like this Sketcher's case.
• 27:54
  Speaker 4: One of the reasons why you're starting to see it
• 27:56
  Speaker 4: more prevalent now is because there was a Washington Supreme
• 27:59
  Speaker 4: Court case in twenty twenty five.
• 28:01
  Speaker 3: It was Brown versus Old Navy.
• 28:03
  Speaker 4: And Old Navy was accused of the exact same thing
• 28:05
  Speaker 4: that Sketchers is being accused of here right now, which
• 28:09
  Speaker 4: is effectively saying that the state's email marketing law covers
• 28:12
  Speaker 4: not just whether a message is commercial in nature, but
• 28:15
  Speaker 4: also whether the claims about the promotion.
• 28:17
  Speaker 3: Dates are accurate.
• 28:18
  Speaker 4: And so, like I say, the can SPAMAC came from
• 28:21
  Speaker 4: the standpoint of federal law was created back in the
• 28:25
  Speaker 4: eighties and nineties when people were trying to say, hey,
• 28:27
  Speaker 4: stop sending commercial advertisements over my fax machine.
• 28:30
  Speaker 3: This fact machines for business.
• 28:32
  Speaker 4: Then it pivoted to stop sending people emails to their
• 28:36
  Speaker 4: business account when you're trying to solicit them for commercial purposes,
• 28:40
  Speaker 4: when it's supposed to.
• 28:41
  Speaker 3: Be designed for business.
• 28:42
  Speaker 4: Now they're trying to say that this Washington marketing law
• 28:46
  Speaker 4: covers messages that are not just commercial in nature. So
• 28:49
  Speaker 4: it's not focused on whether or not somebody's unlawfully soliciting you,
• 28:53
  Speaker 4: but it's also focused on whether or not people are
• 28:55
  Speaker 4: making false claims in the email marketing context. So they're
• 29:00
  Speaker 4: focusing on whether or not these promotion dates are.
• 29:02
  Speaker 1: Accur How forcefully has Washington been taking action under this law.
• 29:08
  Speaker 4: So, like I say, it was the Supreme Court case,
• 29:10
  Speaker 4: it was the Old Navy case, the Brown versus Old
• 29:12
  Speaker 4: Navy decision that am bold in the state of Washington.
• 29:16
  Speaker 4: So I'll say, you know, I have a state attorney
• 29:19
  Speaker 4: general practice. That's one of my big core practice areas
• 29:22
  Speaker 4: here in my law firm. You know, historically the states
• 29:25
  Speaker 4: that are the most aggressive when it comes to the
• 29:28
  Speaker 4: Attorney General's office and the consumer protection division within that
• 29:31
  Speaker 4: Attorney's general office, California and New York have always historically
• 29:36
  Speaker 4: been the most aggressive. For obvious reasons. They have the
• 29:38
  Speaker 4: biggest marketplaces. So there's forty million people in the state
• 29:42
  Speaker 4: of California. If we were on economy, we'd be the
• 29:44
  Speaker 4: fourth or fifth largest economy in the world. So obviously
• 29:46
  Speaker 4: our Consumer Protection Division acts a lot like a mini FTC,
• 29:51
  Speaker 4: same thing with New York As. Texas would be third.
• 29:53
  Speaker 4: But then Washington's right up there in terms of the aggressiveness.
• 29:56
  Speaker 4: So I'm saying that from this standpoint of right now,
• 29:59
  Speaker 4: Washington about over a hundred of these lawsuits pending against retailers,
• 30:04
  Speaker 4: basically alleging the same thing that they allege against sketchers,
• 30:07
  Speaker 4: that they're deadline focused subject lines. You know, the headline
• 30:11
  Speaker 4: up there's a deadline on this deal, you know, followed
• 30:14
  Speaker 4: by extensions or repeats of the same sales. They're saying
• 30:18
  Speaker 4: that that's false and misleading, and so I think everybody
• 30:22
  Speaker 4: should keep an eye on this for sure, especially if
• 30:25
  Speaker 4: you trying to sell products in the state of Washington,
• 30:27
  Speaker 4: because I don't think that the Attorneys General office in
• 30:31
  Speaker 4: Washington or the planet is born on Washington, They're not
• 30:34
  Speaker 4: going to slow Down's going to be more of these cases,
• 30:36
  Speaker 4: for sure. You know, I have lots of clients that
• 30:38
  Speaker 4: get sued for having timers on their their websites, and
• 30:42
  Speaker 4: there's no law that says.
• 30:43
  Speaker 3: It's not lawful.
• 30:44
  Speaker 1: I hate those timers, gotten to the point where I
• 30:46
  Speaker 1: don't even believe them.
• 30:47
  Speaker 3: It's like, you know what, if I'm not.
• 30:48
  Speaker 4: Ready to purchase, or if I still want to do
• 30:50
  Speaker 4: some other price comparisons, so be it.
• 30:52
  Speaker 3: I'll find the deal somewhere else, you know, So I
• 30:55
  Speaker 3: ignore them.
• 30:56
  Speaker 4: But you know, look, I've been presented with some data
• 31:00
  Speaker 4: from Attorney's General Offices consumer data, So Attorney's General would
• 31:04
  Speaker 4: like the consumer protection divisions of these offices. They do
• 31:07
  Speaker 4: a lot of market research, and there's a lot of
• 31:08
  Speaker 4: market research that suggests that that timer has a significant
• 31:14
  Speaker 4: influence on consumers making the decision to purchase the product.
• 31:17
  Speaker 1: I can see why. Thanks so much, Sean. That's Sean Collins,
• 31:22
  Speaker 1: a partner at Straddling. And that's it for this edition
• 31:25
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