Do plaintiffs’ attorneys smell blood in the water? A raft of class-action suits recently initiated against dietary supplement manufacturers, alleging deceptive practices in the sale of fish oil products, suggests that they might.

These suits, filed in California federal courts (a favorite jurisdiction for the plaintiffs’ bar), are nearly identical in that they allege that the manufacturers’ fish oil products do not actually contain fish oil. To date, plaintiffs’ class action lawyers have already targeted well-known dietary supplement products, such as Dr. Tobias Omega 3 Fish Oil Triple Strength (by Mimi’s Rock) and GNC-brand Triple Strength Fish Oil (by International Vitamin and Nutra Manufacturing). More litigation may be forthcoming.

The allegations focuses on the process used to create fish oil supplements—transesterification. Transesterification is a chemical process used to obtain fatty acid ethyl esters from fish oil achieved by introducing an alcohol catalyst to the fatty triglycerides.

The lawsuits claim that the transesterification process intrinsically leaves the finished supplement products without any of the Omega-3 fatty acids DHA or EPA. The plaintiffs also allege that the resulting Omega-3 molecules in the finished post-transesterification product are different than the Omega-3 molecules naturally found in fish oil.

Thus, according to the lawsuits, “Once trans-esterified, fish oil is irrevocably transformed, such that it is no longer fish oil and therefore cannot be so named or labeled.” As a result, plaintiffs claim that these products mislead the public with false and deceptive labeling that is in violation of federal and state laws.

The lawsuits are still in their early stages, so their ultimate success remains to be seen. But the potential impact is substantial. Fish oil supplements constitute a large consumer market. Indeed, the lawsuits put that figure at almost $2 billion per year worldwide with an expectation of nearing $3 billion per year by the end of the decade.

Given the sheer size of the market, a lot of dietary supplement manufacturers potentially face copycat suits. And, were the plaintiffs to succeed on their theory that “once trans-esterified, fish oil is irrevocably transformed, such that it is no longer fish oil,” then dietary supplement manufacturers may also have to worry about the Federal Trade Commission pursuing civil liability or even an aggressive Department of Justice considering criminal charges.

Supplement companies can take action to mitigate potential risks from litigation. A manufacturer should always review and ensure adequate and solid substantiation for any and all claims (express or implied) about products.

Scores of insureds have sued their insurance carriers seeking coverage for business interruption losses stemming from the COVID-19 pandemic and related governmental closure orders. A vast majority have lost. Time and again, courts presiding over these cases have rejected them on the ground that there was no physical loss or damage to the insured’s property. In one Pennsylvania state court, that trend has changed.

In MacMilles, LLC d/b/a Grant Street Tavern v. Erie Insurance Exchange, Judge Christine Ward of the Court of Common Pleas of Allegheny County, Pennsylvania, recently awarded summary judgment to a tavern that was forced to close “[a]s a result of the spread of COVID-19 and the Governor’s orders.” Unlike other cases of this character, the court determined that MacMilles’ “loss of use of its property was both ‘direct’ and ‘physical’. The spread of COVID-19, and a desired limitation of the same, had a close logical, causal, and/or consequential relationship to the ways in which Plaintiff materially utilized its property and physical space.”

The Income Protection provision in the commercial general liability policy issued by Erie offered coverage for “direct physical ‘loss’ of or damage to Covered Property…caused by or resulting from a peril insured against.” The term “loss” was defined as the “direct and accidental loss of or damage to covered property.” Further, “Income Protection” was denoted as “loss of ‘income’ and/or ‘rental income’ you sustain due to partial or total ‘interruption of business’ resulting from ‘loss’ or damage to property…” “Interruption of business” was the period of time the applicable business was “partially or totally suspended.”

The court determined that the critical inquiry hinged on whether MacMilles had suffered “direct physical loss of or damage to its property.” The insurer, as insurers have done in courts across the country over the last 16 months, argued that “direct physical loss or damage” required a physical alteration or harm to the property itself. Demurring, plaintiff asserted that the operative phrase did not mandate a physical alteration of the property insofar as that loss of use of the property was also covered.

Recognizing that some courts had interpreted “‘direct physical loss of or damage to’ property to require some degree of physical alteration or harm to the property in order for coverage to attach, Judge Ward noted that such an interpretation conflated “direct physical loss of” and “direct physical…damage to”, and ignored the separate nature of these phrases, which were separated by the disjunctive “or.” Moreover, an interpretation not distinguishing these separate phrases would reduce some words in the policy to mere surplusage, and contradict the “vital principle of contract interpretation” that all words be given effect. Consequently, it was clear to Judge Ward that “due to the presence of … ‘or’”, “direct physical ‘loss’ of” meant something different than “direct physical …damage to.”

Turning next to the oft-cited Merriam-Webster Dictionary, the court determined that the ordinary meaning of “loss” included the act of losing possession and/or deprivation of property, rather than damage, destruction, or ruin to property. The distinction lied in the fact that “damage” could encompass all forms of harm to property, while “loss” could involve a deprivation of use of the property without any per se harm. The court also considered the meaning of “direct” which it saw as “‘proceeding from one point to another in time or space without deviation [and/or ] characterized by close logical, causal or consequential relationship’”; and, “physical”, which it defined as “of or relating to natural science…having a material existence…[and/or] perceptible…through the senses and subject to the laws of nature…’”

In granting summary judgment against the insurer, the court held that the tavern had indeed suffered a direct physical loss of use of the property absent any harm to the property itself. The spread of COVID-19 and the desire to stunt its proliferation had a causal/consequential relationship to plaintiff’s ability to utilize its physical space. Moreover, it was COVID-19’s spread and related social distancing measures (with or without the Governor’s orders) that, according to the court, caused the tavern to “physically limit the use of property and the number of people who could inhabit physical buildings at any given time, if at all.”

This holding does not appear to be a mere parsing of words by some renegade court. Its reasoning, while in the clear minority of cases dealing with COVID-19 related business interruption insurance disputes, indicates that courts will continue to make coverage determinations based on  the express terms of the specific contract of insurance at issue and applicable state law.

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “The Supreme Court Limits the Effective Reach of the Computer Fraud and Abuse Act.”

The following is an excerpt:

Those of us who deal regularly with cybersecurity matters have been waiting eagerly for the Supreme Court’s decision in Van Buren v. United States, which raised the question of whether the language of the Computer Fraud and Abuse Act of 1986 (CFAA), 18 U. S. C. §1030(a)(2), which subjects to criminal liability anyone who “intentionally accesses a computer without authorization or exceeds authorized access,” also forbids a person who accesses a computer with authorization “to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” §1030(e)(6). In an interestingly divided Court, six Justices, in an opinion written by Justice Barrett, have held that an individual “exceeds authorized access” when he accesses a computer with authorization, but then obtains information located in particular areas of the computer—such as files, folders, or databases—that are supposed to be off limits to him.

Click here to read the full post and more on SCOTUS Today.

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “A Placid Beginning to the Last Month of the Term.”

The following is an excerpt:

This morning begins what many are anticipating to be an exciting last month of the 2020 term. Among other things, we expect to find out about the continued viability of the Affordable Care Act, and several First Amendment matters, including the extent to which religious expression trumps antidiscrimination laws, and the ability of a school to sanction off-campus speech. These matters could produce divisive results. However, the month appears to be starting peacefully, with two unanimous opinions in cases that have not had Court watchers sitting at the edge of their seats.

Click here to read the full post and more on SCOTUS Today.

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “A Unanimous Court Rules That District Courts Can’t Modify Appellate Cost Awards.”

The following is an excerpt:

The case of City of San Antonio v. Hotels.com L.P. has ended with a long opinion, reaching a simple and direct conclusion. A unanimous Supreme Court, in an opinion written by Justice Alito, has held that Fed. R. App. P. 39 does not permit a district court to modify or eliminate an allocation of costs awarded by a court of appeals to a successful appellant. The judgment of a court of appeals, says SCOTUS, would mean little if it could be reviewed and changed by a lower court.

Click here to read the full post and more on SCOTUS Today.

The trend in New York State to provide relief for expired claims by waiving statutes of limitation in sex-abuse cases may be continuing. As its current session winds down, the New York State Legislature is considering legislation that would provide a “revival” one-year period of the statute of limitations within which survivors of adult sexual abuse may file civil claims against individuals, companies and institutions, even if the statute of limitations for the claims has expired, and/or the claims were previously dismissed because of late filing. Entitled “Adult Survivors Act” (S.66/A.648), the bill recognizes that New York’s current statute of limitations effectively bars individuals who were eighteen years old or older at the time of the alleged sexual abuse, from seeking civil redress because the statute of limitations fails to take into account the number of years it may take for survivors of adult sexual abuse to process the abuse and come forward to confront their abusers.

This is not the first time the New York Legislature has sought to temporarily waive the statute of limitations for abuse victims. In August of 2019, New York enacted the Child Victims Act. The Child Victims Act similarly permitted a one-year “revival” period of the statute of limitations for individuals who assert civil claims of child abuse to file claims against individuals and institutions, even if those claims had been previously time-barred or dismissed due to late filing. In August 2020, the Child Victims Act’s “revival period,” which was originally scheduled to close in August 2020, was extended through August 13, 2021. Over five thousand cases have been filed in New York State courts under the Child Victims Act, and many more are expected to be filed in the two and a half months leading up to the August 14th deadline.

Like the Child Victims Act, the Adult Survivors Act would establish special trial preference for cases filed pursuant to the revival of the statute of limitations and requires that the Chief Administrative Judge of the Office of Court Administration promulgate rules concerning the timely adjudication of claims revived by the Act. If the Adult Survivors Act, which would allow a claimant to file a civil suit against any company or institution – such as a workplace, school, house of worship, doctor’s office, etc. – where the abuse took place, is enacted, it will likely result in a similar, if not greater, number of cases being filed.

This blog will provide updates as the Legislative Session continues.

Our colleague Stuart Gerson authored an article in Bloomberg Law, titled “No-Poaching Agreements, Wage Fixing & Antitrust Prosecution.”

The following is an excerpt (see below to download the full version in PDF format):

Especially in difficult economic times, companies look for stability and predictability. Hence, while intent upon avoiding litigation charging wage fixing or its close cousin, no-poach agreements, experience suggests that there are companies that might be considering various ways to exchange information related to employment that can be used for “bench marking.”

Such efforts are intended to be lawful means to create and share data that are updated from time to time and that reflect prevailing levels and standards by which companies might be able to intuit what their competitors are doing and therefore can establish market rates and practices which presumably the individual members of the group might adopt.

Although such companies might be concerned only about information exchanges, and not agreements to fix wages or avoid poaching of competitors’ employees, the potential enforcement stance of the Department of Justice simply does not allow for this simplification.

Download the full article in PDF format.

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “A Unanimous Court Applies Unambiguous Statutory Requirements in Two New Decisions“.

The following is an excerpt:

The Court is in full-majority mode today, again focusing on text rather than more abstract notions of policy.

In Territory of Guam v. United States, a unanimous Court, in an opinion written by Justice Thomas, reversed the D.C. Circuit and revived Guam’s suit against the U.S. Navy, seeking $160 million because of pollution at a waste deposit site on the island. A decade after settling certain claims by the Environmental Protection Agency under the Clean Water Act, Guam sued the United States under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), alleging that the United States’ use of the dump exposed it to two possible actions under CERCLA, including recovery of the costs of a “removal or remedial action,” and also a “contribution” action under CERCLA §113(f), which provides that a party that “has resolved its liability to the United States … for some or all of a response action or for some or all of the costs of such action in [a] settlement may seek contribution from any person who is not [already] party to a [qualifying] settlement.” The D. C. Circuit rejected Guam’s CERCLA claims, holding that while Guam had once possessed a CERCLA contribution claim based on the 2004 consent decree, that claim was time-barred, and that Guam couldn’t assert a cost-recovery claim either. Reversing that holding, the Court agreed that Guam’s 2004 consent decree did not give rise to a viable CERCLA contribution claim, leaving Guam free to pursue a cost-recovery action.

Click here to read the full post and more on SCOTUS Today.

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “Court Grants Certiorari in Abortion Case, Issues Several Decisions, and Continues to Demonstrate an Essential Commitment to Textualism“.

The following is an excerpt:

The most widely reported action that the Supreme Court took this past Monday is its grant of cert. to review an en banc decision of the Fifth Circuit that, if reversed, would substantially undercut Roe v. Wade. That case won’t be argued until next fall and, for now, the readers of this blog will be more immediately interested in the actual decisions that were rendered by the Court yesterday. One of them, involving criminal verdicts delivered by non-unanimous juries, is the product of a strong philosophical division between the Court’s six conservatives (themselves having varied views) and its three liberals. However, two were unanimous decisions. What explains this is a point that I have been making repeatedly over the last several terms. While especially in procedural cases, and while there is not always unanimity in the outcome, there is an essential commitment across the Court to textualism and a recognition that it is Congress that makes federal law while the Court interprets the outcomes of that law in terms of what the Congress did, rather than what various Justices might prefer. This thesis isn’t always true, but I suggest that it is true enough. Indeed, it is at the core of the frequent agreement between the Chief Justice and Justice Kagan, whom I believe to be the most important of the liberal Justices. But, my general opinion aside, let’s turn to three cases actually decided.

Click here to read the full post and more on SCOTUS Today.

“Cowboy” Joe West is the best-known, longest-serving, and (to some) most reviled umpire currently active in Major League Baseball. For example, in 2010 he was named the second-worst MLB umpire, barely losing to CB Bucknor in a call at the plate that today could only be decided by the replay umpires in New York. At least he has his part-time country music career to fall back on. But West recently hit a home run in court, winning a $500,000 defamation verdict against a former player who accused him of trading a generous strike zone for personal favors. The court’s decision illustrates an important, but seldom-used way to prove damages in a defamation case.

The case arose in 2019 when Paul Lo Duca, a retired catcher, appeared on a sports podcast and told a story about a conversation he supposedly had about West with former Mets pitcher Billy Wagner. According to Lo Duca:

He [i.e., Wagner] literally throws 10 pitches and strikes out three guys; Joe rings up all three guys; eight out of the nine pitches were at least 3 to 4 inches inside, not even close. Guys were throwing bats and everything, Joe walks off the field. We get back into the clubhouse, and I’m like, “What the f—k just happened just right now?” And Wagner just winks at me, I’m like, “What’s the secret?” He’s like, “Eh, Joe loves antique cars, so every time he comes in town, I lend him my ‘57 Chevy so he can drive it around, so then he opens up the strike zone for me.”

West sued Lo Duca for defamation, arguing that the story was false and would hurt his chances of being inducted into the Hall of Fame. As noted in the court’s decision, “[a]s of the end of the 2020 season, [West] had umpired in 5,345 Major League Baseball games, surpassed only by the legendary umpire Bill Klem, who umpired in 5,375 games, and was the first umpire to be inducted into the Baseball Hall of Fame in Cooperstown.” West is “on track to break Klem’s record during the 2021 season.” But, West feared, with a cloud hanging over his “integrity and character” because of Lo Duca’s podcast, “he might not be elected for induction into the Hall of Fame for the same reasons as otherwise excellent players ‘Shoeless’ Joe Jackson, Pete Rose, and Barry Bonds had or have not been elected.”

Lo Duca defaulted when the case was filed and thus lost the ability to defend his remarks on the merits. West nonetheless offered compelling proof that the story was false. According to the record books, for example, he had never called three straight strikes in any game in which Wagner pitched to Lo Duca. And according to West, “during 2006 and 2007, the two years that Lo Duca played for the New York Mets with Billy Wagner, Joe West was the home plate umpire for a game between the Philadelphia Phillies and the Mets only once, Billy Wagner did not pitch at all, and the game ended on a home run, not on called strikes.”

Because of the default, the only issue left to decide was damages, and the court held a full evidentiary hearing on that issue. West argued that in addition to damages for mental anguish and emotional distress, he should be awarded damages for money that he plans to spend, but has not yet spent, on “expenses related to advertising and public relations that are meant to repair” his reputation in the eyes of Hall of Fame voters.

Courts are usually reluctant to award damages for future expenses to mitigate a defamatory publication for two reasons. First, future expenses are inherently speculative. Second, if the reputational harm really needs mitigation, why haven’t the mitigation efforts already taken place? But West had compelling responses to these objections that he presented with highly detailed expert testimony. He retained experts in digital forensics, reputation management, and public relations to show the extent to which Lo Duca’s claims were still present on the internet today, as well as to give a highly detailed plan to “push down” those negative stories and “overwhelm” the information market with positive stories about him. And, significantly, the public relations expert also testified that those efforts would be “ramped up at various times” in the future, such as when West “breaks the record for the most games as an umpire and when he retires.” The Court was convinced by this testimony and awarded West $250,000 for “past mental anguish and emotional distress” as well as an additional $250,000 to fund the public relations campaign the expert described.

Future mitigation damages may be recovered in a defamation action. But, as Cowboy Joe’s case illustrates, there must be compelling evidence, preferably from credible experts, to explain why the mitigation efforts have not yet taken place.