Boulder Business Law Advisor

The Lance Armstrong saga continues (we've written on Lance HERE, HERE, HERE)... this week saw a class action lawsuit filed against Lance Armstrong and various publishers on behalf of California consumers who claim they were misled by Defendants' statements and purchased Defendant Armstrong's books based upon the false belief that they were true and honest works of nonfiction.

When I first heard about the class action, I immediately thought "Are you kidding me?  Sure, we'd all like to sue Oliver Stone for subjecting us to JFK in 10th grade history class but this? ... come on."

SO, is this class action against Lance Armstrong legit? Actually, it might be.

Stutzman, et al v Lance Armstrong, et al, filed January 22, 2013 in the US District Court for the Eastern District of California, alleges Lance Armstrong et al, made multiple misrepresentations contained in Lance Armstrong's books, IT'S NOT ABOUT THE BIKE: My JOURNEY BACK TO LIFE and EVERY SECOND COUNTS, and advertisements and marketing for the books (including the front and back cover and flyleafs media press kits, during television and newspaper interviews, on Internet websites and at personal appearances made by Armstrong) as true and honest works of nonfiction when, in fact, Defendants knew or should have known that these books were works of fiction. Further, the lawsuit claims Lance Armstrong et al advertised marketed and sold these books as a works of nonfiction.

The Plaintiffs allege they were misled by Lance Armstrong's and the other Defendants' statements and purchased Lance Armstrong's books based upon the false belief that they were true and honest works of nonfiction. In their 59-page Complaint, Plaintiffs cite to the exhaustive and growing body of evidence and recent admissions by Lance Armstrong himself to support the allegations of misrepresentation and fraud regarding Lance Armstrong’s use of banned substances (EPO, blood doping, testosterone) during his professional cycling career.

Knowing that the mere claim that his success was due to superior physical training, proper diet and an extraordinary spirit and drive to succeed was not enough to quell suspicions and rumors that he doped, Defendant Armstrong wrote lengthy passages in IT'S NOT ABOUT THE BIKE: My JOURNEY BACK TO LIFE that were intended to convince readers and consumers - including Plaintiffs and the members of the Class - that the rumors of Armstrong's doping were unfair and untrue because of the extensive drug-testing regime employed by the DCI and the organizers of the Tour de France... Complaint ¶ 20

In order to survive a motion to dismiss, the Plaintiffs will have to overcome the pleading requirements of Federal Rule of Civil Procedure 9(b) which requires state-law claims grounded in fraud to be plead with particularity and requires a plaintiff to plead with particularity the circumstances constituting the fraud while malice, intent, knowledge, and other conditions of a person's mind may be alleged generally. “Averments of fraud must be accompanied by the ‘who, what, when, where, and how’ of the misconduct charged.” Yess v. Ciba–Geigy Corp. USA; Villegas v. Wells Fargo Bank, N.A. (N.D. Cal. Sept. 17, 2012).

The Complaint almost certainly meets Rule 9(b)’s requirements as to Lance Armstrong. As to the other named Defendants however, the Plaintiffs may not get so far. This lawsuit was brought in a Federal Court in the Eastern District of California – a court within the jurisdiction of the 9^th Circuit. The United States Court of Appeals for the 9^th Circuit has held that a book publisher owed no duty to a car dealership owner for allegedly publishing errors concerning emission systems in automobiles. Sinai v. Mitchell Books (9th Cir.1993). In 2000, a New York court followed the 9^th Circuit’s lead and supported the proposition that publishers have no duty to investigate the accuracy of its books.

The Sinai court stated that absent an express warranty, publishers have no duty to investigate the accuracy of the contents of the books it publishes and concluded that such a duty could not be created because a publisher's right to publish free of fear of liability is guaranteed by the First Amendment and the overriding societal interest in the untrammeled dissemination of knowledge. While the Sinai case is 20 years old and may be revisited or distinguished at this point, it may be that the “deep pockets” of the publishers in the case might not be reachable by the Plaintiffs. Which would leave Lance Armstrong alone to pay any judgment.

This case will be interesting to watch in light of Lance Armstrong's recent admissions, alleged recent lies, and anticipated flood of lawsuits resulting therefrom.  If the case is permitted to move forward it will no doubt be because of Lance Armstrong's years of agressive lies and denials about his drug use during his cycling career.  The crux of the case is the contention that the Plaintiffs would not have purchased the books had the truth not been withheld by Lance Armstrong. 

The Boulder Business Lawyers at Laszlo & Associates, LLC provide legal counsel for businesses on a variety of business needs, including products liability, risk management, corporate protection, and legal compliance.

There has been a lot of rumbling over Senate Bill 623 aka the “Sunshine in Litigation Act of 2011” lately.  Perhaps for good reason.  S. 623 provides in part that:

In any civil action in which the pleadings state facts that are relevant to the protection of public health or safety, a court shall not enter, by stipulation or otherwise, an order otherwise authorized under rule 26(c) of the Federal Rules of Civil Procedure restricting the disclosure of information obtained through discovery, an order approving a settlement agreement that would restrict the disclosure of such information, or an order restricting access to court records unless in connection with such order the court has first made independent findings of fact that--

‘(A) such order would not restrict the disclosure of information which is relevant to the protection of public health or safety; or

‘(B)(i) the public interest in the disclosure of past, present, or potential health or safety hazards is outweighed by a specific and substantial interest in maintaining the confidentiality of the information or records in question; and

‘(ii) the requested order is no broader than necessary to protect the confidentiality interest asserted.

It is certainly understandable why attorneys on either side of the v. would react strongly to S. 623.  Defendants certainly want to protect and direct litigation through discovery strategy.  Such tactics are necessary and effective.  Plaintiffs clearly would benefit from a defendant's fear that a scorched earth discovery effort could uncover damaging documents and that, those facts, if made public, would be highly detrimental to the business. 

S. 623 may be vunerable to loose interpretation resulting in unintended consequnses that inflict considerable damage to parties unable to protect information.  Yet, a middle ground has to be found on this issue.  Bringing a lawsuit cannot be made to give a plaintiff carte blanche to discover and make public anything it wants.  Likewise, a defendant should not be able to hide every single piece of information from public view – especially where public safety may be at issue.  

Further permitting parties to litigate behind closed doors will only hurt our legal system by depriving it of insight, analysis and precedent.  When issues are so intertwined with "confidential facts" that cannot be publicly disclosed, any court order or opinion will necessarily be sealed and will therefore be hidden, likely into perpetuity.  This no doubt will lead to inconsistent rulings, interpretation of laws and results.  Such a reality is a bad result for everyone. 

In keeping with our discussion on class certifications (see below), of note is the recent decision of the 11th Circuit vacating an order certifying a class this past Friday.  In Fitzpatrick v. Gen. Mills, Inc., the class consisted of consumers who purchased YoPlus yogurt.  The products liability case alleged that General Mills violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) by making false and misleading claims about the digestive health benefits of its YoPlus yogurt.  The District Court certified the class and held that recovery under FDUTPA does not hinge on whether a particular plaintiff actually relied on General Mills' claims about YoPlus' alleged health benefits, but rather, whether the deceptive conduct would deceive an objective reasonable consumer.

The District court concluded its order by defining the class as "all persons who purchased YoPlus in the State of Florida to obtain its claimed digestive health benefit."  Noticeably perplexed by the District court, the 11th Circuit concluded the definition of the class certified was in conflict with the District Court's sound analysis and threw into question what class it actually intended to certify.

The 11th Circuit stated simply that "the district court's analysis in its Order on Motion for Class Certification is sound and in accord with federal and state law. The reasoning reflected therein is well within the parameters of Rule 23's requirements for certification of a class. And, if the definition of the class had been in accord with the legal analysis, we would have readily affirmed." Fitzpatrick v. Gen. Mills, Inc., 10-11064, 2011 WL 1103005 (11th Cir. Mar. 25, 2011). 

While this products liability case appears to revolve around a technicality, it is important to consider the distinction here between the District court's analysis grounded in one definition of the would-be class and the conclusion that greatly limited the class by contradicting its own analysis.  It seems a foregone conclusion that the District court will simply redefine the class in accordance with its analysis and the 11th Circuit's guidance.