New Jersey Ethics Committee: Beware Marketers that “Lead” to Ethics Violations

Increasingly popular online “lead generation” services offering to connect attorneys with potential mass tort plaintiffs may expose counsel to ethics violations, the New Jersey Advisory Committee on Professional Conduct cautioned in two recent advisory opinions.

New Jersey attorneys are charged with the affirmative responsibility to “question whether the marketing company is improperly labeling its services,” the committee stated in a June 21, 2021 joint opinion with the Committee on Attorney Advertising.  On the same date, the Advisory Committee issued another joint opinion with the Committee on the Unauthorized Practice of Law offering further insight on the circumstances in which a permissible client lead becomes an improper for-profit referral.

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New FDA Policy on Homeopathic Drugs Survives Preliminary Injunction Appeal

Overview

The FDA’s recent policy shift regarding homeopathic drugs was recently supported by the D.C. Circuit Court of Appeals in MediNatura v. FDA, No. 20-5341 (D.C. Cir. 2021), when it upheld the denial of a preliminary injunction to block the FDA from withdrawing a longstanding enforcement policy regarding homeopathic drug products.

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Cosmetics Companies: Beware of PFAS

It’s no secret that the regulatory landscape of cosmetics and personal care products as we know it is changing. Over the last few years, Congress, along with industry and consumer groups, have made a combined effort to push for heightened regulation of these products. The latest effort, introduced in Congress on June 15, 2021, seeks to ban the addition of per- and polyfluoroalkyl substances (generally known as “PFAS”) in cosmetics and personal care products.

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Summary of HB1125: Deceptive Lead Generation

Lawsuit advertisements—specifically ones that target prescription drugs and medical devices—can be dangerous.  Nationwide, dramatized and exaggerated legal ads have flooded both televisions and the internet, often masquerading as “medical alerts.”  Some estimates have total spending on legal advertisements at around $1 billion annually.  As a result, state legislatures are beginning to take action to combat deceptive advertising and come up with solutions, including in Indiana, which recently passed House Bill 1125.  House Bill 1125 places several limitations on the practice of lead generation – the use of commercial communications to initiate consumer interest or inquiry into legal services intended to redress an alleged injury from a medical device or legend drug – and provides a private right of action for manufacturers and sellers of medical devices and legend drugs against deceptive lead generators.

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Strike Two for Amazon in the California Court of Appeal

A California Court of Appeal has held that Amazon may be strictly liable for injuries to customers who bought products from third-party sellers offered on Amazon’s website.  (See discussion of Bolger decision here).

In Kisha Loomis v. Amazon.com LLC, plaintiff sought damages from Amazon for burns allegedly caused by a defective hoverboard she purchased through Amazon’s website.  Amazon won summary judgment from the trial court, which held that Amazon did not fall within the chain of distribution and could not be liable under the “marketing enterprise theory.”

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CPSC’s Expanding Role under the Biden Administration

During the Trump administration, the number of consumer product safety recalls fell for three years in a row. When Robert Adler became Acting Chair of the U.S. Consumer Product Safety Commission (CPSC) in 2019, he compared his role to that of a caretaker. Now, under the Biden administration, the CPSC is undergoing a shift toward increased regulation and more aggressive enforcement. Acting Chair Adler confirmed the same earlier this year, stating that the Biden administration “clearly views product safety in different terms,” and that he “plan[s] to modify [his] job’s metaphor from caretaker to gardener.”

This shift in thinking is evident in the CPSC’s actions in recent months. Since President Biden’s inauguration, the CPSC has announced 57 product recalls in addition to a $7.95 million civil penalty settlement with Cybex International, Inc. for alleged failure to immediately report a known product safety defect related to its exercise equipment. And on April 17, the CPSC issued an urgent warning to consumers to stop using the Peloton Tread+ exercise machine around small children or pets. The CPSC noted that though its investigation of reported incidents of injury or death related to the machine was still ongoing, it had “found that the public health and safety requires this notice to warn the public quickly of the hazard.”

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