In a sweet win for food-and-beverage defendants, the Eastern District of California dismissed, with prejudice, a putative class action challenging the labeling of Carnation Breakfast Essentials Nutritional Drink products in Eric Testori v. Nestle Health Science US Holdings Inc. The plaintiff alleged that defendant misled consumers by marketing the product as a “nutritional drink” and emphasizing “10g protein” on the product’s front label, while failing to disclose with equal prominence that the product’s first two ingredients were water and sugar and that it contained 11 grams of sugar per serving. According to the plaintiff, those front-label statements created the misleading impression that the product was a balanced, healthful breakfast option, even though it was allegedly a sweetened beverage “primarily made of water and sugar.”

The court rejected that theory at the pleadings stage. First, the court held that all of the plaintiff’s state-law claims were preempted because the case turned on allegedly misleading “health” and “nutritional” messages arising from the product’s sugar content. The court emphasized that the Food and Drug Administration (FDA) has not treated sugar as a disqualifying nutrient in this context, and it adopted the view that state-law claims premised solely on the theory that high sugar content makes health or implied nutrient-content claims misleading are preempted. Relying heavily on the Ninth Circuit’s decision in Clark v. Perfect Bar, the court reasoned that allowing a California misbranding claim based on sugar-level content would indirectly impose a sugar-labeling requirement different from federal law.

The court also found the complaint independently deficient under the reasonable consumer standard. The front label identified specific nutrients, including “10g protein,” “21 vitamins + minerals,” “3x vitamin vs. milk,” and “2x calcium vs. Greek Yogurt,” but it did not make an overall claim that the product was “healthy” or part of a “balanced” diet. The court concluded that the plaintiff had not plausibly alleged that an ordinary consumer would view “Breakfast Essentials” or “Nutritional Drink” as an unambiguous representation that the product was nutritionally balanced or low in sugar. Because the front label did not mention sugar and the back label disclosed the amount of added sugar, the court held that a reasonable consumer would not be misled into believing that the product contained low amounts of added sugar.

The decision is a useful reminder that “health halo” complaints may be susceptible to early challenge based on (1) federal preemption and (2) plausible deception. Where a plaintiff’s theory is that disclosed sugar content undermines otherwise accurate nutrient or nutrition-related statements, courts may treat the claim as an impermissible attempt to impose state-law labeling obligations beyond federal requirements. And under the Ninth Circuit’s recent packaging cases, plaintiffs must plausibly allege that the front label is unambiguously deceptive before they can prevent courts from considering clarifying information elsewhere on the package.

For food and beverage manufacturers, the key takeaway is straightforward: accurate nutrient statements, clear Nutrition Facts disclosures, and the absence of an unambiguous front-label promise can be powerful tools to minimize litigation risk. Here, those tools helped the beverage manufacturer defendant secure dismissal of California Consumers Legal Remedies Act, False Advertising Law, Unfair Competition Law, fraud, and unjust enrichment claims with prejudice.

On April 29, 2025, the Supreme Court heard argument on an issue that has divided the circuits: “Whether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury?” The case is, and the court’s decision could have a significant impact on class action litigation across the country. But the justices’ questions at oral argument highlighted a procedural wrinkle that could prevent the court from resolving this hotly contested issue. 

The named plaintiffs in LabCorp are legally blind individuals who allege that they are unable to use the self-service check-in kiosks installed at LabCorp’s patient service centers. Based on these allegations, the plaintiffs assert claims for damages under the Americans with Disabilities Act and California’s Unruh Act.

In May 2022, the district court certified a damages class under Rule 23(b)(3) comprising all legally blind individuals in California who visited a LabCorp patient service center and “were denied full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations due to LabCorp’s failure to make its e-check-in kiosks accessible to legally blind individuals.” In August 2022, following a motion by plaintiffs to modify the class definition to eliminate any “fail safe” language (generally, a class defined in a way that depends on determination on the merits), the district court issued an order redefining the damages class as all legally blind individuals who visited a LabCorp patient service center “but were unable to use the LabCorp Express Self-Service kiosk.”  

LabCorp filed an interlocutory appeal from the district court’s May 2022 order, challenging certification on the ground that the class included members who lacked Article III standing. LabCorp argued that some legally blind individuals who visited a LabCorp patient service center preferred not to use a self-service kiosk. According to LabCorp, those individuals did not suffer any injury but would nonetheless be included in the class. 

The Ninth Circuit affirmed the district court’s order. Citing its decision , the Ninth Circuit explained that “LabCorp’s allegation that some potential class members may not have been injured does not defeat commonality at this time.” .

In its briefing in the Supreme Court, LabCorp framed the issue principally in terms of whether Article III of the Constitution forbids certification of a class that includes uninjured members. Alternatively, it argued that individualized issues will necessarily predominate over any common issues when a class contains an appreciable number of uninjured members, making certification improper under Rule 23(b)(3).

But at oral argument, the justices expressed concern about the fact that LabCorp only filed an appeal from the district court’s May 2022 certification order — not its subsequent August 2022 order that redefined the class to remove any “fail safe” language. That procedural quirk creates two potential problems for LabCorp and for the Supreme Court as it attempts to resolve this case. First, as plaintiffs’ counsel emphasized during oral argument, LabCorp’s arguments regarding uninjured class members appear to be directed primarily at the revised class definition in the August 2022 order, not the original class definition in the May 2022 order that was the subject of LabCorp’s appeal. Second, to the extent LabCorp is challenging the May 2022 order, that order has arguably been rendered a nullity by the district court’s subsequent August 2022 order.

A decision on the merits from the Supreme Court would bring much needed clarity to questions about Article III or predominance under Rule 23(b)(3). Following oral argument, it remains to be seen whether the court will actually reach the merits in this particular case. However, given the fact that the petition for a writ of certiorari was granted in LabCorp, the court clearly has expressed an interest in addressing the underlying issues at some point.

We will provide additional updates here once the Supreme Court acts. In the meantime, parties should pay careful attention to the governing law in their respective circuit, while keeping in mind that the law in this area could soon be clarified.

It is well-settled that under Article III of the Constitution, United States federal courts are limited to trying “cases and controversies.” Moreover, a case or controversy exists only if a plaintiff has standing to file the suit, requiring the plaintiff to demonstrate injury in fact, causation, and redressability. On February 19, 2025, the United States District Court for the Southern District of Florida issued a noteworthy decision and dismissed a putative class action lawsuit filed against lululemon athletica inc., and lululemon usa inc. (“Lululemon”) without leave to amend for lack of Article III standing.

A group of consumers filed the lawsuit alleging that Lululemon made “false, deceptive, and misleading representations” regarding the company’s products and actions as they relate to environmental initiatives in accordance with the company’s “Be Planet” campaign. Gyani v. Lululemon USA Inc., et al., 2025 WL 548405, *1 (S.D. Fla.). For example, the plaintiffs alleged that Lululemon’s website stated that it is “committed to making products that are better in every way-for…the planet.” Id. at *2. In fact, according to the plaintiffs, “Lululemon is responsible for significant GHG gas emissions, landfill waste, and release of microplastics into the environment.” Id. The plaintiffs claimed that they relied on various misrepresentations from the “Be Planet” campaign in deciding to purchase Lululemon products. Id.

The court dismissed plaintiffs’ claims, which were premised on alleged violations of various states’ consumer protection statutes. First, the court found the plaintiffs failed to adequately plead an injury in fact to support claims for monetary damages. The court highlighted that “mere allegations of having paid a price premium are insufficient — a plaintiff must tie the value of the product to any purported misrepresentations.” Id. at 4. On this point, the court found Valiente v. Publix Super Mkts., Inc., 2023 WL 3620538 (S.D. Fla. May 24, 2023) instructive. In Valiente, a plaintiff allegedly purchased cough drops due to the “phrase ‘honey lemon,’ the ‘pictures of these ingredients,’ and the statement that the product ‘soothes sore throats.’” The court dismissed the plaintiff’s claim for lack of injury because the plaintiff failed to allege that the cough drops were in any way “defective” or “worthless.” Id. at *5. The court in Gyani found the facts before it similar in that the plaintiffs’ complaint failed to allege Lululemon’s products were defective or worthless. 2025 WL 548405, *4. Moreover, the plaintiffs failed to allege deceptive or unfair acts as to the products themselves, failing to connect the allegedly problematic “Be Planet” statements to the price premium the plaintiffs alleged that they paid for Lululemon’s products. Id. at *5.

Next, the court held that the plaintiffs failed to plead an injury in fact to support a claim for injunctive relief. The court relied on Williams v. Reckitt Benckiser LLC, 65 F.4th 1243 (11th Cir. 2023) and Piescik v. CVS Pharmacy, Inc., 576 F. Supp. 3d 1125 (S.D. Fla. 2021), where the plaintiffs alleged that they “would like” to purchase the company’s products in the future “if” the defendant improved the products at issue. In Gyani, the complaint similarly alleged that the plaintiffs “would like” to purchase Lululemon’s products, however, “only if” the plaintiffs “can rely on Lululemon ‘to be truthful in their marketing statements regarding the sustainability and environmental impact of Lululemon’s products and actions.’” 2025 WL 548405, *5. The court held that such allegations failed to demonstrate harm that was actual or imminent.

Finally, the court refused to grant leave to amend. Id. at *6. The court held that the plaintiffs’ request was procedurally improper in that the plaintiffs embedded the request in their opposition brief rather than making the request via motion. Id.

Retailers and manufacturers concerned with risk associated with a growing number of environmental or “green” marketing claims will certainly welcome the Gyani decision. The ruling emphasizes that plaintiffs must demonstrate concrete economic injury linked to the at-issue marketing claims to pursue monetary relief as well as a real and immediate threat of future harm to seek injunctive relief; general allegations relating to a price premium and an equivocal desire to make future purchases are not enough. However, the decision certainly will not put an end to putative class actions asserting greenwashing claims. If faced with a similar lawsuit, retailers and manufacturers should consider whether to seek dismissal at the pleading stage when the complaint does not tie the alleged misrepresentations to the value of the product and/or does not adequately allege any real threat of future harm.

We previously reported on changes to leadership at the Consumer Financial Protection Bureau (CFPB), the halt of all activities at the CFPB, and the impacts to the financial services industry. The environment continues to evolve, intensifying uncertainty for regulation and the industry, as the federal agencies responsible for regulating the financial services industry, including the CFPB, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (collectively, “the Agencies”), are impacted by the new administration’s overhaul of regulatory agencies.

CFPB

As discussed in our previous articles, temporary leadership at the CFPB included Treasury Secretary Scott Bessent, named as acting director of the CFPB by President Trump on January 31, 2025, and the Director of the Office of Management and Budget (OMB) Russell Vought, named as acting director of the CFPB on February 7, 2025. Under Bessent and Vought, all CFPB activities were halted, the CFPB’s headquarters were closed beginning the week of Feb. 10, and the next CFPB funding draw from the Federal Reserve was canceled.

On February 11, 2025, President Trump appointed Jonathan McKernan to be the permanent Director of the CFPB, pending Senate confirmation. McKernan, most recently a member of the Board of Directors at the FDIC, will lead the CFPB following his confirmation hearing, leaving Vought head of the CFPB until then. Additionally, Mark Calabria, who headed up the Fair Housing Finance Administration (the current Receiver for Fannie Mae and Freddie Mac) during the first Trump administration, is reportedly working with the OMB as a liaison to the CFPB and working on centralizing the Agencies under OMB, pursuant to a February 18 (EO).

Amidst the halt to activities, it’s been reported that more than 70 CFPB employees have been fired and more than $100 million in vendor contracts have been canceled. The appointment of a permanent CFPB Director with extensive regulatory agency experience may be a sign that the CFPB will remain, albeit significantly reformed under the new administration. However, with President Trump and the Department of Government Efficiency’s (DOGE) Elon Musk calling for a complete dismantling of the CFPB, the future of the CFPB still remains to be seen.

FDIC & OCC

The FDIC staff has been significantly reduced in recent weeks, with approximately 500 employees accepting the Trump administration’s deferred resignation buyouts and 170 probationary employees terminated as well as the rescission of more than 200 job offers. The OCC similarly has begun layoffs, with around 76 employees reportedly terminated as of February 21, 2025.

Travis Hill was named Acting Chairman of the FDIC Board of Directors on January 20, 2025, and has since promised to conduct a wholesale review of bank regulations, guidance, and manuals. Hill most recently served as Vice Chairman of the FDIC and previously served as senior counsel at the United States Senate Committee on Banking, Housing, and Urban Affairs. At the OCC, Acting Comptroller Rodney Hood replaced then-Acting Comptroller Michael J. Hsu on February 7, 2025. Hood was most recently on the National Credit Union Administration Board (NCUA).

Potential Agency Consolidation or Centralization?

In addition to the above mentioned centralization of Agencies under the OMB, speculation in the industry was further fueled by that the OCC was planning to accept the transfer of employees from both the FDIC and CFPB. The OCC quickly denied these assertions.

The reports came a day after an EO, “Ensuring Accountability for All Agencies” which requires previously independent agencies to submit any new regulations to the White House, regularly coordinate policies and priorities with the White House, and establish White House Liaison offices. The EO applies to the FDIC, OCC, and FTC, among others, but specifically excludes the Board of Governors of the Federal Reserve System. Notably, and perhaps most controversially, the EO states that the president and attorney general have the sole authority to interpret laws for the executive branch and that no agency employee may provide interpretations that contravene that of the president and attorney general, including through “issuance of regulations, guidance, and positions advanced in litigation.”

Potential Impacts

While the implications of the EO and potential centralization are still unfolding, many in the industry have been eager to see either the elimination or reform of the CFPB. On the other hand, many are weary of the regulatory burden presented by an inconsistent state-by-state regulatory scheme in lieu of federal regulatory frameworks and the uncertainty stemming from these executive actions. However, the appointment of Agency heads and OMB officials with years of both industry and regulatory experience under their belts may be a sign that the Agencies aren’t going anywhere any time soon.

Legal challenges have already been levied against several of the above discussed actions, ensuring uncertainty regarding their near- and long-term effects. For example, the National Treasury Employees Union a temporary injunction to block further firings at the CFPB. Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia has issued an approving the pause on CFPB firings as well as prohibiting the deletion of CFPB data.

As discussed in our prior article, financial institutions should continue to comply with applicable laws and regulations, despite the current upheaval. While uncertainty over the enforcement and rulemaking authority at the Agencies continues, until a complete shuttering of certain agencies and/or recission of federal regulations, financial institutions should plan to comply with all applicable laws and regulations.

Additionally, we continue to expect increased state activity both in legislation and enforcement, which echo initiatives taken by the Agencies. For example, New York has already introduced to limit overdraft fees, similar to the CFPB’s finalized — but not yet effective — . A particularly efficient legislative development is (HB 2515), which was introduced January 8, 2025, and approved by Virginia’s legislature in a little over a month on February 18, 2025. HB 2515 amends the Virginia Consumer Protection Act by adding prohibited practices, including limitations on mandatory fees and mandating credit card surcharge disclosures.

Need Assistance?

We anticipate continued legal challenges in this space as well as increased state regulatory activity. We continue to monitor the situation at the Agencies and will provide updates as appropriate. If you have any questions relating to any of the issues discussed above, Âéśš´ŤĂ˝â€™s Financial Services Regulatory Group is well versed in federal and state laws and regulations impacting the financial services industry. Âéśš´ŤĂ˝ actively counsels clients on compliance issues as well as providing enforcement and litigation support. For more information, please contact any of the authors of this article or your Âéśš´ŤĂ˝ & Lardner attorney.

A version of this article was published in on May 2, 2025.

On Monday, January 27, 2025, the One-to-One Consent Rule (“the Rule”) promulgated by the Federal Communications Commission (the “Commission”) a year ago, on December 18, 2023, was set to go into effect.[1] Under this Rule, a consumer could not consent to a telemarketing or advertising robocall unless (1) he consents to calls from only one seller at a time, (2) he receives a clear and conspicuous disclosure that he will receive telemarketing calls or texts using an automatic telephone dialing system or an artificial or prerecorded voice, and (3) he consents only to calls whose subject matter is “logically and topically associated with the interaction that prompted the consent.”[2] The Commission viewed the Rule primarily as a way to prevent lead generators from using single consumer consent on the comparison shopping websites that often are the source of lead generation.[3] But the Rule was not limited to lead generators. Rather, it applied to all entities utilizing — themselves or through their vendors, affiliates, or other third parties — telemarketing calls or texts using regulated technology. The Rule thus required these businesses to overhaul their consent collection flows, revise contracts with vendors and other third parties, and otherwise reassess their business operations. The Rule also portended a substantial increase in Telephone Consumer Protection Act (TCPA) litigation, particularly as the key terms in the Rule — such as what it means to be “logically and topically associated with the interaction that prompted the consent” — were undefined.

Businesses subject to the One-to-One Consent Rule got their lucky break on Friday, January 24, 2025, the last business day before the Rule was set to go in effect. Initially, the Commission, acting sua sponte, issued an order postponing the effective date of the One-to-One Consent Rule by 12 months — to January 26, 2026 — or until the date specified in a public notice after the U.S. Court of Appeals for the Eleventh Circuit issues a decision on the petition filed by the Insurance Marketing Coalition (IMC) challenging the Rule (whichever is sooner).[4] The Commission found that, given the advanced stage of the judicial proceedings in the Eleventh Circuit, the litigation risks presented by the Rule for texters and callers acting in good faith, and concerns about the industry’s readiness for immediate compliance with the Rule, it was in the interest of justice to postpone the effective date of the rule.[5]

The Eleventh Circuit did not leave folks waiting for long. That same Friday afternoon, the court issued an opinion finding that the Commission exceeded its statutory authority under the TCPA because the new consent restrictions in the Rule “impermissibly conflict with the ordinary statutory meaning of ‘prior express consent.’”[6] In particular, the Eleventh Circuit noted that the term “prior express consent” as used in the TCPA statute only requires a consumer to “clearly and unmistakably” state that they are willing to receive the robocall — and says nothing about requiring one-to-one consent.[7] Nor does it say anything about the consumer’s consent being limited to calls that are “logically and topically associated with the interaction that prompted the consent.”[8] Thus, the requirements for a consumer to separately and independently consent to receive robocalls from each individual seller and for the robocalls to be “logically and topically associated with the interaction that prompted the consent” were contrary to the plain meaning of the statute; thus, they were in excess of the Commission’s statutory authority to implement the TCPA.[9] What is more, rather than remand the matter back to the agency, the Court altogether vacated the One-to-One Consent Rule.[10]

As a result of these two actions, the Commission is back to square one and will need to decide whether to pursue any further action to revive the One-to-One Consent Rule as well as whether it can be done in light of the Eleventh Circuit’s holding. More importantly, the business community does not need to worry about compliance with the Rule and can continue operating under the status quo, which still requires obtaining express written consent for marketing outreaches using regulated technology.

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1 Second Report and Order, In re Matter of Targeting and Eliminating Unlawful Text Messages, Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, Advanced Methods to Target and Eliminate Unlawful Robocalls, 38 FCC Rcd. 12247, 12258-69 (2023) (the “2023 Order”). The 2023 Order would, in relevant part, revise 47 C.F.R. § 64.1200(f)(9).

2 Id. at 12297.

3 Id. at 12258, Âś 30.

4 FCC Order dated Jan. 24, 2025, In re Matter of Targeting and Eliminating Unlawful Text Messages, Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, Advanced Methods to Target and Eliminate Unlawful Robocalls,issued by Eduard Bartholme III, Acting Chief, Consumer and Government Affairs Bureau.

5 Id. Âś 4.

6 Ins. Marketing Coalition Limited v. FCC, Case No. 24-10277 (Jan. 24, 2025), Slip Op. at 4.

7 Id. at 18.

8 Id. at 20-21.

9 Id. at 18-22.

10 Id. at 25.

On December 17, 2024, the U.S. Federal Trade Commission (FTC) announced its final “” (the “Final Rule” or “Rule”) to prevent certain practices related to pricing in the live-event ticketing and short-term lodging industries. The Final Rule requires businesses that offer a price for live-event tickets or short-term lodging to disclose the total price, inclusive of mandatory charges, and to do so more prominently than other pricing information. The Final Rule also prohibits businesses from misrepresenting fees or charges in any offer, display, or advertisement for live events and short-term lodging. Notably, the Final Rule does not prohibit any one type of fee, nor does it prohibit specific pricing practices, such as itemization of fees or dynamic pricing. Instead, the Rule focuses on ensuring that fees are clearly disclosed.

The FTC’s stated aim in passing the Final Rule is to curb perceived unfair and deceptive pricing practices in these two industries, specifically so-called “bait-and-switch” pricing that hides the total price of tickets and lodging by omitting mandatory fees and charges from advertised prices and misrepresenting the nature, purpose, amount, and refundability of fees or charges. The FTC pointed to evidence that these practices are prevalent in these two industries, where most transactions occur online. The FTC emphasizes that “truthful, timely, and transparent pricing” “is critical for consumers” and claims this rule will allow American consumers to make better-informed purchasing decisions in these instances.

The Rule was published in the on January 10, 2025, and is slated to go into effect 120 days later, putting its effective date as May 10, 2025. It is possible, however, that the incoming Administration will seek to change the rule or delay its effective date.

FTC Rulemaking Leading to Final Rule

The Final Rule is the culmination of the rulemaking process that the FTC initiated in November 2022, when it announced an Advanced Notice of Proposed Rulemaking under Section 18 of the FTC Act, to address certain purportedly unfair or deceptive acts or practices involving fees. The FTC specifically sought public comment on the prevalence of certain practices related to what it labeled “junk fees” and the costs and benefits of a rule that would require upfront inclusion of mandatory fees whenever consumers are quoted a price. After posing a series of questions to solicit data and commentary, the FTC received more than 12,000 comments in 90 days.

One year later, the FTC published a Notice of Proposed Rulemaking, which proposed a rule that prohibited misrepresenting the total price of goods or services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees. The proposed rule was not industry-specific; rather, it would have applied broadly to businesses across the national economy. The FTC then received 60,000 more comments on its proposed rule, most of which were supportive. The FTC interpreted this feedback as confirmation of the prevalence of the types of fee-related practices the FTC sought to address. The FTC estimated that its proposed rule would save consumers up to 53 million hours per year of wasted time spent searching for the total price of live-event tickets and short-term lodging, equating to more than $11 billion over the next decade.

In March 2024, the Biden Administration launched an interagency initiative, co-chaired by the FTC and U.S. Department of Justice, called the “Strike Force on Unfair and Illegal Pricing.” The Strike Force seeks to combat unfair and illegal pricing and lower prices for all Americans. Shortly after the announcement of the Strike Force, the FTC held a public hearing on its proposed rule while it continued to consider comments, leading to the announcement of the Final Rule last month.

Final Rule

The Final Rule prohibits hidden fees and makes it an unfair and deceptive practice for “any Business to offer, display, or advertise any price” of live-event tickets or short-term lodging without clearly and conspicuously disclosing the total price. Under Section 5 of the FTC Act, a representation, omission, or practice is “deceptive” if it is likely to mislead consumers acting reasonably under the circumstances and is material to consumers; that is, it would likely affect the consumer’s conduct or decisions regarding a good or service. Price, for example, is a material term. A practice is considered “unfair” under Section 5 if it causes or is likely to cause substantial injury, the injury is not reasonably avoidable by consumers, and the injury is not outweighed by benefits to consumers or competition.

As an example, in the commentary to the rulemaking, the FTC says that bait-and-switch pricing, where the initial contact with a consumer shows a lower or partial price without including mandatory fees, violates the FTC Act even if the total price is later disclosed.

The Final Rule specifies that the “total price” is the “maximum total of all fees or charges a consumer must pay for any good(s) or service(s) and any mandatory Ancillary Good or Service” (any additional goods or services offered as part of the same transaction). Government charges, shipping charges, and fees for ancillary goods or services may be excluded under the rule.

The total price must be displayed more prominently than any other pricing information. If a final amount is displayed before the consumer completes the transaction, it must be disclosed as prominently as the total price.

The total price also must be displayed clearly and conspicuously, which means easily noticeable (“difficult to miss”) and easily understandable by ordinary customers. The clear-and-conspicuous requirement also covers audible communications. In addition to the total price, a business must display clearly and conspicuously the nature, purpose, and amount of any optional fee or charge that has been excluded from the total price, what the fee or charge is for, and the final amount of payment for the transaction.

The Final Rule goes beyond disclosure: It affirmatively prohibits misleading fees. Under the Final Rule, it is unlawful to misrepresent any fee or charge in an offer, display, or advertisement for live-event tickets and short-term lodging, including the nature, purpose, amount, or refundability of any fee or charge and what it is for.

State Laws and Regulations on Fees

The Final Rule does not preclude state laws that are more restrictive pertaining to unfair or deceptive fees or charges, except to the extent such laws or regulations are inconsistent with the Final Rule (and then only to the extent of the inconsistency). According to the FTC, a state law or regulation is not inconsistent with the Final Rule if the protection it affords is greater than the protection under the rule.

Numerous states have passed laws aiming to increase transparency in pricing and fees, including California, Colorado, Connecticut, Maryland, Minnesota, New York, and Tennessee. Further, some states have provisions that violations of Section 5 of the FTC Act also constitute deceptive practices under their state consumer protection statutes. The Final Rule thus augments the government scrutiny of fee-related practices and conduct that businesses may receive.

Takeaways and the Future of the Final Rule

Once the Final Rule becomes effective, when businesses advertise or display a price for live-event tickets or short-term lodging, they must display the total price — including any mandatory fees — and ensure any explanations for fees or charges are truthful and not misleading. Businesses have discretion to list optional fees. For businesses that have not previously been subject to state laws or regulations, the Final Rule will now apply to those businesses.

Despite the Final Rule’s narrow applicability to live-event tickets and short-term lodging, the FTC made clear it has not given up on other industries. The FTC emphasized it may address unfair and deceptive practices in other industries, as discussed in its Notice of Proposed Rulemaking, but will do so using its existing Section 5 authority.

The Final Rule was approved with a 4–1 vote, with Republican Commissioner Holyoak voting for the rule and incoming Republican FTC Chair Andrew Ferguson dissenting. Although the agency under new leadership could look to withdraw the Final Rule, under the Administrative Procedure Act, the FTC would need to publish a notice in the Federal Register explaining the reasons for the withdrawal, allow opportunity for comment, and consider those comments before repealing the Final Rule. Although incoming administrations in the past have imposed moratoriums on regulations under development, the Final Rule has been published in the Federal Register, and a moratorium likely would not impact the rule going into effect. The incoming administration, however, might choose to delay the effective date of the Final Rule. The Final Rule also falls within the window for review under the Congressional Review Act, creating another potential avenue for its repeal.

Separately, on January 14, 2025, the Consumer Financial Protection Bureau (CFPB) released a report titled “.” In the report, the CFPB encourages states to continue to go after “junk fees,” citing the FTC’s Final Rule and the FTC’s findings on the prevalence of certain practices. The CFPB provides proposed language for states to consider adding to their “state prohibitions on unfair, deceptive, and/or abusive acts or practices.” The CFPB’s recommended statutory language is industry-agnostic, meaning more states may look to adopt broad fee-related rules.

Like the FTC’s recent rule on non-compete agreements, the Final Rule may be subject to potential legal challenge, including by industry groups and trade associations. The landscape for disclosure of fees continues to evolve, and businesses should watch for developments at both the federal and state level. If you have any questions about the Junk Fee Rule, contact the author or your Âéśš´ŤĂ˝ & Lardner attorney.

It is well-settled that fraud-based claims asserted in federal court need to satisfy not only Federal Rule of Civil Procedure 12(b)(6)’s plausibility pleading standard but also the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Rule 9(b) requires that a party plead fraud with particularity, which means that the complaint must identify the who, what, when, where, and how of the misconduct charged as well as what is false or misleading about the purportedly fraudulent statement and why it is false.

In Davidson v. Sprout Foods, the Ninth Circuit applied that standard to food labeling claims relating to nutrient content. 106 F.4th 842, 853 (9th Cir. 2024). The plaintiffs in Davidson alleged that nutrient content labels on defendant’s baby food pouches misled consumers into believing the products were good for babies when they were actually nutritionally and developmentally harmful. Id. at 844-45, 852. The nutrient content statement on an exemplar product stated “3g of Protein, 5g of Fiber and 300mg Omega-3 from Chia ALA.” Id. at 846. The Ninth Circuit held that plaintiffs failed to sufficiently allege why this implied message was false, i.e., that the products were in fact harmful. Id. at 854. In support of their contention that the defendant’s products are harmful, the plaintiffs offered two sets of allegations: (1) the “products contain high amounts of sugar and that sugars in pureed, pouch-based foods can lead to health issues such as tooth decay”; and (2) “articles and reports suggesting that pouch-based foods may lead to long-term health risks and hinder babies’ development.” Id.

The court held that plaintiffs’ allegations relating to harm were largely unspecific to defendant’s products and therefore did not satisfy Rule 9(b)’s pleading standard. Id. The court went on to observe that the only allegations specific to defendant’s products identified the amount of sugar in defendant’s products, but those allegations lack context. Id. Notably, plaintiffs did “not explain at what level sugars become harmful or why the level of sugar in these products, in particular, could cause harm.” Id. (emphasis added). Moreover, plaintiffs never actually alleged that defendant’s products cause any of the harms alleged. In other words, general allegations regarding harm are insufficient to pursue nutrition-based food label claims.

District courts within the Ninth Circuit have taken note. Just this month, a California federal judge considered a proposed class action accusing Gerber Products Co. of deceptively claiming health benefits on its labeling for pureed baby and toddler food pouch products. Howard v. Gerber Products Co., 3:22-cv-04779 (N.D. Cal.). During a hearing on defendant’s motion to dismiss, Judge Chhabria said that the Ninth Circuit’s decision in Davidson could doom plaintiffs’ claims. Specifically, Judge Chhabria noted that Davidson “stands for the proposition…just because you have a bunch of stuff on your label that makes it seem[] like a healthy product, that’s not enough to sue them for fraud.” Judge Chhabria compared the products to orange juice, observing that “We all know … you’re just drinking a bunch of sugar when you’re drinking orange juice from concentrate…But if I have a couple of glasses of orange juice on the weekend with my pancakes that’s just not a big deal.” He went on to state that if the products had a harmful substance in them, like fentanyl, that would be different, because you cannot really consume it occasionally or in moderation. In other words, Judge Chhabria’s interpretation of the Ninth Circuit precedent is that products that can be consumed occasionally without harm cannot be the basis for a fraud claim without more particularized allegations of fraud and more specific information of how the product might be harmful.

The recent Ninth Circuit precedent and district court’s application of it have meaningful implications for retailers and manufacturers’ class action litigation strategies in defending claims alleging that a consumer product’s label is false or misleading. The court’s application of Rule 9(b)’s particularity standard in the nutrition content context provides helpful guidance in considering whether to seek dismissal at the pleadings stage when the plaintiff fails to allege harm with particularity. Based on the Ninth Circuit precedent, courts will require that plaintiffs allege particular details regarding harm specific to defendants’ products. Pointing to general reports of harm untied to the products at-issue or hypothetical examples of harm is not enough.