Category: Litigation

Another Hurdle for GHG Suits as Ninth Circuit Affirms District Court Ruling in Kivalina v. ExxonMobil

The National Law Review recently featured an article by Xiaorong Jajah Wu and Jane E. Montgomery of Schiff Hardin LLP regarding GHG Suits:

 

In a unanimous decision last week, the Ninth Circuit Court of Appeals ruled that federal common law public nuisance claims regarding domestic greenhouse gas emissions have been displaced by the Clean Air Act (“CAA”) and the United States Environmental Protection Agency (“USEPA”) action the CAA authorizes. Native Vill. of Kivalina v. ExxonMobil Corp., 09-17490, 2012 WL 4215921 (9th Cir. Sept. 21, 2012).

On February 28, 2008, the Village sued ExxonMobil Corporation in federal court along with eight other oil companies, fourteen power companies, and one coal company. The suit was based on, among other things, the federal common law theory of public nuisance. The Village alleged that the companies named in the suit are substantial contributors to global warming because of their high volume of greenhouse gas emissions, and that the Village was directly harmed by global warming because the melting of sea ice exposed the Village to erosive coastal storms. The Village sought monetary damages for the defendants’ contributions to global warming. The district court dismissed the case, holding that (1) the political question doctrine precluded judicial consideration of the Village’s federal public nuisance claims and (2) the Village lacked standing under Article III. Native Vill. of Kivalina v. ExxonMobil Corp., 663 F. Supp. 2d 863, 868 (N.D. Cal. 2009).

The Ninth Circuit affirmed the dismissal on the grounds that the Village had failed to satisfy the threshold question of whether or not legislative action has displaced the theory of public nuisance under federal common law. The court stated that “[i]f Congress has addressed a federal issue by statute, then there is no gap for federal common law to fill.” Relying heavily on the recent Supreme Court ruling in American Electric Power Co., Inc. v. Connecticut, 131 S. Ct. 2527 (2011), the court held that, because the CAA already “provides a means to seek limits on emissions of carbon dioxide from domestic power plants . . . [the CAA and] the EPA actions it authorizes displace any federal common law right” the Village might have to seek damages based on federal common law nuisance. The Ninth Circuit also refused to allow the absence of a damages remedy under the CAA in this case to revive the federal common law damages action. In its decision, the appeals court declined to discuss the issues of political question or standing. The ruling poses another hurdle for greenhouse gas suits based on the theory of public nuisance. At least in the Ninth Circuit, federal common law suits based on transboundary pollution claims against greenhouse gas emitters are now foreclosed. Further, the decision provides additional backing to USEPA to implement the suite of rules regulating GHG emissions pursuant to the CAA.

While the Ninth Circuit backed USEPA’s authority to address global warming through the CAA, the Republican-controlled House passed a deregulatory bill on the same day titled “Stop the War on Coal Act of 2012” (H.R. 3409). The proposed bill would prevent USEPA from enforcing its recent GHG regulations and require the agency to consider the costs and economic impacts of certain regulations. However, the future of the bill is uncertain because the Obama administration has issued a veto threat (182 DEN A-11, 9/20/12), and it is unlikely to move through the Democratic-controlled Senate. Future actions to address these issues are unlikely until after the November elections. Text of the Stop the War on Coal Act of 2012 (H.R. 3409) is available here

Details on each of the amendments to the bill are available here and by clicking on “Amendments” tab.

© 2012 Schiff Hardin LLP

New Rules Incorporating Service of Divorce Pleadings via E-Mail

The National Law Review recently published an article regarding Divorce Pleadings and E-mail written by Rebecca L. Palmer of Lowndes, Drosdick, Doster, Kantor & Reed, P.A.:

 

In today’s society with letter writing taking a back burner to emailing, text messaging, Facebook, Twitter as well as other social media within our social lives, it isn’t a far stretch for businesses to begin operating and communicating in a like manner.  More e-mails are being sent between attorney’s, instead of letters being drafted for each issue.  On June 21, 2012, however, the Supreme Court of Florida issued a Second Corrected Opinion which adopted a new Florida Rule of Judicial Administration 2.516 that in turn changes the way everyone operates in the day to day of the legal world. Essentially, this rule mandates that all documents which are required or permitted to be served on another party, are now to be served by e-mail unless this new rule provides otherwise.

Specifically as it relates to Family Law, all attorneys in Florida (unless excused by court order within that specific case) are mandated to abide by the new rule beginning September 1, 2012.  This rule applies to ongoing cases, as well as new cases.

A power point presentation, Service by E-Mail and E-Filing, was prepared by the Florida Bar and is currently accessible from their home page as well as the link herein.  This power point, a mere 40 pages in length, is a great tool to better understand the rules surrounding service of documents by e-mail.  This presentation pinpoints the requirements and changes from the e-mail address(es) that should be utilized to send your e-mails (pg. 13), to the time of service (pg. 25), along with the format of not only the e-mail and the subject line (pg. 28 & 32) as well as the requirements of how the document being served is attached (pg. 27 & 30).

While this rule mainly affects the attorneys procedures in providing documents to another party, there are additional provisions relating to self-represented litigants.  If self-represented litigants choose to participate in service by e-mail, they may do so even though it is not required.  Amazing how life keeps changing and how technology keeps shaping things.  Please be aware of this new rule as you proceed forward with your case!

© Lowndes, Drosdick, Doster, Kantor & Reed, PA

When Can You Claim A Color As Your Trademark?

In its recent decision in Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., the Second Circuit held there was no “per se rule that would deny protection for use of a single color as a trademark in a particular industrial context.”  The Court found that the single color red on the sole of a women’s shoe that contrasted with the color on the upper portion of the shoe could be protected as a trademark in the fashion industry. A Federal District Court in California ruled recently, that a company’s use of the color orange for markings and text on its medical syringe could not be protected as a trademark since the color was “functional” when applied to that product. It determined that the color orange was functional in the medical industry because it signifies that a device is for oral use. So, how does this color-as-a-trademark work?

Many companies have successfully obtained trademark protection for a single color, for example,  United Parcel Service’s registration for the color brown for transportation and delivery services, Reg. 2901090; Tiffany’s multiple registrations for a particular color of  blue used on bags, boxes and various other products and services, Reg. Nos. 4177892, 2359351, 2416795, 2416794, 2184128; 3M’s registrations for yellow as a trademark for telephone maintenance instruments and POST-IT® notes, Reg. Nos. 2619345, 2390667; and Owens Corning’s registrations for the color pink for masking tape, insulation, and other products used in the building and construction industry, Reg. Nos. 3165001, 2380742, 2380445, 2090588, 1439132.

In Qualitex Co. v. Jacobson Prods. Co., the U.S. Supreme Court held that color alone may be protected as a trademark, “when that color has attained ‘secondary meaning’ and therefore identifies and distinguishes a particular brand (and thus indicates its ‘source’).” The Court held color may not be protected as atrademark when it is “functional”. There are two types of functionality: “utilitarian” and “aesthetic.” A color is functional under the utilitarian test if it is essential to the use or purpose of the product, or affects the cost or quality of the product.  A  color is aethestically functional if its exclusive use “would put a competitor at a significant non-reputation-related disadvantage”.   If color “act(s) as a symbol that distinguishes a firm’s goods and identifies their source, without serving any other significant function,” it can be protected as a trademark. So, how do you know if a color you are using or plan to use in your business can be protected as a trademark to the exclusion of your competitors?

Protecting color as a trademark can be a very powerful advantage if the color has no particular function or meaning in the industry in which it is used. However, in order to claim color as a trademark, the color must be showcased as a source indicator for products or services in its marketing campaigns and advertising materials. Good examples of this are UPS’s reference to itself as “brown” in its advertising and Owen Corning’s blatant use of the color pink in its advertising.  Both companies very clearly highlight a color in their ads and identify it strongly with their respective products and services. This type of careful and clever planning, implementation, and marketing strategy is critical to developing a strong, unique and highly recognized color trademark.

Whatever color is used, it must not be “functional” in any respect in the industry in which it is used. Various “functionality” tests have been developed by the courtsover time, and  some include:

  • whether the design (or color) yields utilitarian advantage
  • whether alternative designs (or colors) are available
  • whether advertising touts utilitarian advantages of the design (or color), and
  • whether the particular design (or color) results from a comparatively simple or inexpensive method of manufacture.

Functionality is evaluated within the context of the specific industry in which the goods or services for which color is claimed as a trademark will be offered. Had the markings on the medical devices been red instead of orange in the case before the Federal District Court in California mentioned above, it is possible that there would not have been a finding of functionality. Thus, know your industry before selecting a color on which to focus your marketing and advertising efforts.

Thinking outside the box when selecting trademarks and planning marketing strategy is critical in any industry. The explosion of social media and changes in traditional advertising and marketing methods have changed the way products and services are recognized. Companies need more unique and  nontraditional approaches for a competitive edge. Promoting non-traditional trademarks such as a color, or other unique source indicators such as sounds, scents, flavor, and product shapes, may provide a fresh method to attract and entice a wider audience.

So, get out those color wheels and start plotting a new course.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Varnum Wins Important Victory Against Blue Cross Blue Shield of Michigan for Recovery of Millions in Hidden Fees

Varnum LLP recently announced a major decision in an on-going class action lawsuit:

Varnum LLP

For more than a year, Varnum has pursued claims against BCBSM on behalf of more than a dozen companies that use BCBSM to administer their self-funded health benefit programs.  Four disputes have been settled, and Varnum is actively litigating ten more in federal court, each of which alleges that BCBSM violated federal law (ERISA) by charging hidden fees.  The pending lawsuits collectively seek repayment of many millions of dollars in fees charged by BCBSM.

The United States District Court recently entered summary judgment in favor of Varnum’s clients, holding that BCBSM engaged in self-dealing when it unilaterally decided how much in fees to pay itself.*  This was a clear violation of ERISA and established liability against BCBSM.  Those cases will now proceed to trial to determine the amount BCBSM owes the plaintiffs for its violations of law and whether the plaintiffs filed their claims in a timely manner (statute of limitations).

Hidden Access Fees

The central issue in these cases relates to hidden “network access fees” charged by BCBSM.  The hidden fees are in addition to the administrative fees BCBSM customers agree to pay.
Prior to 1994, BCBSM charged its self-funded customers various surcharges and subsidies to prop up its insured lines of business, but those surcharges and subsidies were disclosed on the bill. Over time, BCBSM’s self-funded customers started objecting to those charges. Some refused to pay them all together.

According to an internal BCBSM memo, BCBSM had become “its own worst enemy” because the subsidies and surcharges were “highlighted for all to see.”  The internal memo recommended against disclosing the surcharges and subsidies as billed items, and instead collecting more revenue by marking up hospital claims costs, and that is what BCBSM has been doing since 1994.  In other words, if an actual hospital claim was for $1,000, BCBSM would bill the customer a higher amount, say $1,100, and retain the additional $100 for itself.  According to the memo, “changes to these costs will be inherent in the system and no longer visible to the customer.”

Indeed, BCBSM reports hospital claims to its self-funded customers several times a year without mentioning the amount of access fees it keeps for itself.  In recent years the access fees are included on a pie chart, but the actual hospital claims reports continue to hide the amount of access fees BCBSM keeps.  BCBSM also does not include the amount it keeps in access fees when it discloses total compensation for federal reporting purposes.

Faced with this evidence, the District Court found the general term “Access Fees” to be “misleading,” and concluded that BCBSM “decided to hide the [Access Fees] by merging them with hospital claims on billing statements.”  The Court also noted that the customer bills were not itemized to indicate how much money was owed for the fees because “that would have defeated the purpose of the program.”

Copyright 2012 Varnum LLP

Seventh Circuit Reverses Course on Reassignment Accommodation, Leaving United Airlines Grounded

An article by R. Holtzman Hedrick of Barnes & Thornburg LLP regarding Reassignment Accommodations, recently appeared in The National Law Review:

 

In arguably its most significant decision under the Americans with Disabilities Act (ADA) in years, the Seventh Circuit, in EEOC v. United Airlines, Inc., reversed its own previous holdings regarding the viability of competitive transfer policies for disabled employees. The case can be found here.

For over a decade, employers in the Seventh Circuit have been able to rely onEEOC v. Humiston-Keeling, 227 F.3d 1024 (7th Cir. 2000), to adopt perfectly valid policies allowing for disabled employees who can no longer perform the essential functions of their current jobs to be considered for reassignment on a competitive basis.  In other words, if a more qualified candidate sought the same position as the disabled candidate, the employer could select the best-qualified candidate without running afoul of the ADA.  No longer, says the Seventh Circuit.

The circuit court held that under the Supreme Court precedent of U.S. Airways, Inc. v. Barnett, 535 U.S. 391 (2002) (requiring an employee to show that an accommodation is reasonable on its face, which then shifts the burden to the employers to demonstrate case-specific undue hardship), reassignment of a disabled but qualified employee to a vacant position is mandatory in the absence of an undue hardship.  Despite reaffirming its best-qualified candidate rule even after Barnett was decided (reasoning that that ADA does not require preferential treatment and that violating facially-neutral employment policies creates an undue hardship), the Seventh Circuit decided last week that it had been wrong all along:  the “ADA does indeed mandate that an employer appoint employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to that employer.”

The importance of this new automatic reassignment interpretation cannot be overstated.  Indeed, questions about an employer’s reassignment obligations are among the most frequently received inquiries by attorneys under the ADA.  United Airlines, whose policy in question provided for preferential treatment of disabled employees, although not for automatic reassignment for those who were qualified – meaning the company actually went beyond what the Seventh Circuit required it to do before last week – must feel blindsided by the court.  Indeed, this Seventh Circuit panel issued an earlier version of an opinion in this case dismissing the lawsuit under Humiston-Keeling before vacating that decision and issuing a new opinion.

Obviously, employers in the Seventh Circuit (and likely beyond, as the D.C. and Tenth Circuits provide for automatic reassignment, and the Eighth Circuit relied onHumiston-Keeling in deciding that competitive transfer policies were legal) will need to adjust their reassignment policies for disabled employees.  In light of this new ruling, it is critical to consult with experienced counsel to navigate what is likely uncharted territory.

© 2012 BARNES & THORNBURG LLP

D.C. Circuit Vacates CSAPR, Instructs USEPA to Continue Administering CAIR

Schiff Hardin LLP‘s Environmental Group recently had an article regarding CSAPR published in The National Law Review:

 

In a 2-1 decision, the Court of Appeals for the D.C. Circuit vacated the United States Environmental Protection Agency’s (“USEPA”) Cross-State Air Pollution Rule (“CSAPR” or the “Transport Rule”), USEPA’s attempt to “fix” the Clean Air Interstate Rule (“CAIR”) to regulate downwind state air pollution under the Clean Air Act (“CAA”). EME Homer City Generation LP v. EPA, D.C. Cir. No. 11-1302 (Aug. 21, 2012). In 2008, the D.C. Circuit struck down and remanded CAIR, with instructions to USEPA to continue administration of the CAIR until the replacement rule was implemented. Here, in light of the vacatur of the CSAPR, the D.C. Circuit has instructed USEPA to “continue administering CAIR pending [USEPA’s] promulgation of a valid replacement.”

By way of background, USEPA promulgated the Transport Rule in August 2011 in response to the court’s order in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008) remanding the CAIR, and to address the 2006 24-hour national ambient air quality standard (“NAAQS”) for fine particulate matter. The Transport Rule established an interstate program to require power companies in 28 “upwind” states to reduce emissions of sulfur dioxide (“SO2”) and nitrogen oxides (“NOx”) to enable downwind states to achieve and maintain NAAQS for ozone and fine particulate matter. Following challenges by affected states and industry, the D.C. Circuit stayed the Transport Rule on December 30, 2011. The stay remained in effect until today’s decision on the merits, where the D.C. Circuit provided two independent grounds for vacatur.

First, the court found that USEPA exceeded its statutory authority granted under Section 110(a)(2)(D), the so-called “good neighbor” provisions of the CAA, by potentially requiring an upwind state to reduce emissions in excess of its contribution to a downwind states exceedance of air quality standards. In so ruling, the court explained that USEPA may require an upwind state to “eliminate only its own ‘amounts which will . . . contribute significantly’ to a downwind State’s ‘nonattainment,'” and “may not require any upwind State to ‘share the burden of reducing other upwind states’ emissions.'” Moreover, while the court acknowledged that USEPA may consider the cost of pollution reductions to lessen the burden upon an upwind state, it may not, as the court found USEPA did in establishing emission reductions under the Transport Rule, use cost considerations to impose pollution reduction obligations above and beyond what was necessary for downwind states to meet air quality standards.

Second, the D.C. Circuit struck USEPA’s decision to require that each state comply with a federal implementation plan (“FIP”) to implement the emission reductions mandated by the Transport Rule rather than allowing each state to determine how best to achieve the reductions within the state, i.e., the FIP-first approach included in the Transport Rule. By imposing a FIP prior to allowing states to implement their own plans, USEPA had usurped a role that was clearly designated by statute to the states. With regard to the “good neighbor” provision, the court held that USEPA must first inform states of their reduction obligations and then provide the states time to develop and submit SIPs, just as it does for new NAAQS. USEPA may not impose a FIP that directs each state on how to achieve the requirements of the Transport Rule without first providing each state a “reasonable time to implement that requirement [under a state implementation plan] with respect to sources within the State.”

The D.C. Circuit advised that its “decision … should not be interpreted as a comment on the wisdom or policy merits of EPA’s Transport Rule” and that USEPA should “proceed expeditiously” to promulgate yet another replacement for CAIR consistent with this decision and, presumably, with the North Carolina decision. The decision in this case further clarifies USEPA’s role and obligations regarding identifying states’ air quality impacts on downwind states. It also emphasizes that the cooperative federalism concept embodied in the CAA is vital to successful implementation of the Act.

© 2012 Schiff Hardin LLP

Gearing Up Electronic Discovery to Handle the New Generation of Smart Devices

The National Law Review recently published an article regarding Electronic Discovery written by Marcus Evans Summits:

New technologies are presenting Chief Litigation Officers (CLOs) with additional challenges during eDiscovery, which was an already daunting, time-consuming and expensive process, says Jay Hagan, Chief Executive Officer, DriveSavers Data Recovery. As more people make use of smart phones, tablets and storage devices based on Solid-State Drive (SSD) and NAND flash technologies, CLOs are facing a new set of failure issues and recovery challenges, he adds.

Jay Hagan discusses the data vulnerabilities that new devices are adding to the eDiscovery equation and how to handle them.

What are the data storage vulnerabilities that CLOs should be aware of?

There is heightened demand for document preservation, fueled by changes to the Federal and State Rules of Civil Procedure, proliferation of Electronically Stored Information (ESI) and the growing number of information storage devices. It is imperative that documents of all types receive proper handling and storage throughout the eDiscovery process, as the failure to properly preserve and produce ESI in litigation can result in serious consequences, including court sanctions, loss of reputation and financial implications.

What new challenges do SSD technologies present for CLOs during eDiscovery?

Smart phones, tablets and other storage devices based on SSD and NAND flash technologies often contain digital records, forensic footprints, personal information and business-critical intellectual property. SSD technology continues to be in the design of mobile products for its many advantages to the user, but it presents a whole new set of failure issues and recovery challenges that adds variables to the eDiscovery equation.

While traditional magnetic data storage is well understood and reverse engineered with great success, we have far fewer “tools in the toolbox” for the new technologies. They are more difficult to reverse engineer or obtain cooperation, trust and proprietary tools from the original manufacturers. Vendor-specific SSD designs and encryption technologies, whether in the controller or in the NAND itself, are likely to be the norm and are creating new challenges from the data recovery perspective.

As the amount of valuable data stored increases, so does the impact of device failure and data loss. This is driving the need for a certified, secure, data recovery solution as part of the eDiscovery package.

How can CLOs minimize the cost of eDiscovery?

When making decisions on how to collect, preserve and produce ESI, CLOs will be required to balance convenience and security of the relevant data. For example, ensuring that ESI is protected from a breach during the eDiscovery process – from data collection and data analysis to data processing – is integral to a successful litigation, regulatory or investigation.

To avoid excessive cost, disputes, sanction or fine, a CLO must seek experts and consultants who can offer solutions customized to their case or specific project requirements. They also need to be prepared to not only utilize the best technology available, but also explain to the court or jury how and why it works for the case at issue.

It is impossible to achieve eDiscovery without the expertise, technology and methodology to successfully retrieve data from all storage devices, including smart phones and tablets.

 What are the data storage vulnerabilities that CLOs should be aware of?

There is heightened demand for document preservation, fueled by changes to the Federal and State Rules of Civil Procedure, proliferation of Electronically Stored Information (ESI) and the growing number of information storage devices. It is imperative that documents of all types receive proper handling and storage throughout the eDiscovery process, as the failure to properly preserve and produce ESI in litigation can result in serious consequences, including court sanctions, loss of reputation and financial implications.

What new challenges do SSD technologies present for CLOs during eDiscovery?

Smart phones, tablets and other storage devices based on SSD and NAND flash technologies often contain digital records, forensic footprints, personal information and business-critical intellectual property. SSD technology continues to be in the design of mobile products for its many advantages to the user, but it presents a whole new set of failure issues and recovery challenges that adds variables to the eDiscovery equation.

While traditional magnetic data storage is well understood and reverse engineered with great success, we have far fewer “tools in the toolbox” for the new technologies. They are more difficult to reverse engineer or obtain cooperation, trust and proprietary tools from the original manufacturers. Vendor-specific SSD designs and encryption technologies, whether in the controller or in the NAND itself, are likely to be the norm and are creating new challenges from the data recovery perspective.

As the amount of valuable data stored increases, so does the impact of device failure and data loss. This is driving the need for a certified, secure, data recovery solution as part of the eDiscovery package.

How can CLOs minimize the cost of eDiscovery?

When making decisions on how to collect, preserve and produce ESI, CLOs will be required to balance convenience and security of the relevant data. For example, ensuring that ESI is protected from a breach during the eDiscovery process – from data collection and data analysis to data processing – is integral to a successful litigation, regulatory or investigation.

To avoid excessive cost, disputes, sanction or fine, a CLO must seek experts and consultants who can offer solutions customized to their case or specific project requirements. They also need to be prepared to not only utilize the best technology available, but also explain to the court or jury how and why it works for the case at issue.

It is impossible to achieve eDiscovery without the expertise, technology and methodology to successfully retrieve data from all storage devices, including smart phones and tablets.

Interview with: Jay Hagan, Chief Executive Officer, DriveSavers Data Recovery

© Copyright 2012 marcus evans

Chief Litigation Officer Summit – September 13-15, 2012

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

The Chief Litigation Officer Summit will highlight the current challenges and opportunities through visionary conference sessions and keynote presentations delivered by your most esteemed peers and thought leaders from America’s leading corporations. The one-on-one meetings with leading service providers will offer vast expertise in the area of litigation. All this, seamlessly integrated with informal networking opportunities over three days, will provide a unique interactive forum. Do not miss this opportunity to network, establish new connections, exchange ideas and gain knowledge.

Chief Litigation Officer Summit – September 13-15, 2012

The National Law Review is pleased to bring you information about the upcoming Chief Litigation Officer Summit:

The Chief Litigation Officer Summit will highlight the current challenges and opportunities through visionary conference sessions and keynote presentations delivered by your most esteemed peers and thought leaders from America’s leading corporations. The one-on-one meetings with leading service providers will offer vast expertise in the area of litigation. All this, seamlessly integrated with informal networking opportunities over three days, will provide a unique interactive forum. Do not miss this opportunity to network, establish new connections, exchange ideas and gain knowledge.

‘Your Baby Can Read,’ Targeted for Dubious Ads, Closes Its Doors

An article by Rachel Hirsch of Ifrah Law, ‘Your Baby Can Read,’ Targeted for Dubious Ads, Closes Its Doors, was recently featured in The National Law Review:

After nearly a decade of persuading hundreds of thousands of parents that their babies were geniuses, the popular company, Your Baby Can Read, is shutting its doors. Its demise is the result of an FTC investigation prompted by the Campaign for a Commercial-Free Childhood advocacy group, which challenged claims by the company that newborns have the ability to absorb reading and spelling skills when they are as young as three months old. According to the company’s website, the cost of fighting these legal battles has left the company with no option but to close.

Your Baby Can Read consists of interrelated videos, flash cards and books designed to teach infants as young as three months old to read. Developed in the late 1990s by Robert Titzer, an educator with a Ph.D. in human performance from Indiana University, the product claims that babies have a small window in which they absorb spelling at an extraordinary pace. Although these claims have never been substantiated through any kind of credible research, fans of the products, which are priced at $200, have given them glowing reviews. More than a million families have used the products, which the company extensively advertised on TV, at exhibitions, and on its own website, Facebook page and YouTube channel.

In April 2011, a class of consumers who purchased the educational programs filed a class action complaint against the company in California challenging the effectiveness of the product. Additionally, the Boston-based Campaign for a Commercial-Free Childhood (CCFC) filed a complaint against the company with the FTC, leading the way for a series of campaigns against what critics call the “genius baby” industry. The national watchdog group previously successfully campaigned against the way that the “Baby Einstein” program marketed its products. In its complaint with the FTC, CCFC argued that Your Baby Can Read’s claims of teaching infants to read lacked scientific support. The group requested that the FTC stop the company from continuing its allegedly deceptive marketing practices and that the company offer full refunds to “all parents who have been duped.” According to CCFC director Dr. Susan Linn, the company “exploited parents’ natural tendency to want what’s best for their children” by making grandiose promises that find no support in science.

The problem with these types of educational products appears to be twofold. First, doctors and scientists who have tested the products have reportedly found that infants using the products are not reading, but rather are memorizing the shapes of the letters presented. Second, as the CCFC points out, the program can actually be harmful to children, as it encourages them to sit in front of television screens and computer monitors, getting them “hooked on screens” too early in life. In fact, the group notes that if parents follow the “Your Baby Can Read” instructions, by nine months, babies would have spent more than a full week of 24-hour days in front of a screen.

Although the company is going out of business, the FTC will not automatically cease its investigation. The FTC says it aims to protect the most vulnerable classes in society — and perhaps none are more vulnerable than young children, or, in this case, their overachieving parents who just want their bragging rights. It will be interesting to see which group of consumers will come out on top in the FTC investigation – the thousands of parents who were satisfied with the product or the class-action parents whose children were perhaps not as smart as they believed them to be.

© 2012 Ifrah PLLC