Following a recent uptick in influencer-related lawsuits, the Court of Appeals for the Eleventh Circuit recently affirmed a dismissal of a putative class action against apparel company Luli Fama. The complaint alleged that influencers had posted content promoting the company without adequately disclosing their material connections, such as payment.
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In the case, the plaintiff alleged violations of Florida’s Deceptive and Unfair Trade Practices Act, arguing he was misled by multiple influencer posts on a social media platform because he believed those posts were unpaid endorsements when in fact Luli Fama paid those influencers for the content.
In addition to suing Luli Fama, the plaintiff named the individual influencers as defendants. According to the plaintiff, these influencers wore Luli Fama apparel and tagged Luli Fama in the posts without disclosing the fact that the posts were sponsored. According to the complaint, the content creators allegedly failed to use the platform’s “paid partnership” disclosure tool or make disclosures like #ad or #sponsored. The plaintiff alleged that he was persuaded to purchase the featured products that “proved to be of lower value than the price paid and therefore suffered damages” due to the nondisclosure.
The Eleventh Circuit rejected these allegations, observing that the complaint on its face failed to establish which products the plaintiff purchased, which defendants’ endorsements led to his purchase, and the harm he suffered as a result.
Link to Court Rejects Sponsored Post Claims Court Rejects Sponsored Post Claims
The Eleventh Circuit also held that the plaintiff must meet the heightened pleading standard to adequately allege fraud, specifically that the complaint must “state with particularity the circumstances constituting fraud or mistake.”
As an initial matter, the court determined that the core of the plaintiff’s claims were based in fraud because they alleged that the influencers:
- Had a paid relationship with Luli Fama
- Had a paid relationship that is a material relationship
- Misrepresented the material relationship with the brand in their social media posts
However, the panel found that the plaintiff failed to identify a single social media post that he or any putative class members saw and relied on in which the influencer defendants wore Luli Fama products or tagged Luli Fama. Nor did he allege when those posts were made, when he saw them, if he saw those specific posts before purchasing Luli Fama products, or how those posts caused him to purchase the products. He also did not allege which products he bought or how the defendants inspired him to do so.
The decision could reflect a potential setback for plaintiffs asserting similar claims in a recent trend of lawsuits, given the inherent difficulties in alleging which specific social media post a consumer saw and when, and what product they were influenced to purchase because of a post.
The decision also raises questions about what allegations will be enough to overcome a motion to dismiss in other cases challenging influencer posts. Relatedly, it remains to be seen how courts will grapple with these and similar issues at the class certification stage, a burden that will be much more difficult for class action plaintiffs to meet.
Link to Brands Must Ensure Disclosure Compliance Brands Must Ensure Disclosure Compliance
Although the case was dismissed, other courts might not follow the Eleventh Circuit’s lead, and we expect future plaintiffs to allege more robust and thorough claims. Venable is tracking multiple ongoing influencer-related lawsuits, and we continue to see challenges to company influencer marketing at the National Advertising Division. We will continue to post updates as they develop. For more insights into advertising law, bookmark our All About Advertising Law blog and subscribe to our monthly newsletter. To learn more about Venable’s Advertising Law services, click here or contact one of the authors. And listen to the Ad Law Tool Kit Show—a podcast from Venable.