Misrepresentation case law
This not presented a question, but merely the mention of a category of law involving fraud. “Misrepresentation case law” refers to the fraudulent provision of information known or believed to be false. It is often associated with consumer sales, as when a company knowingly misrepresents its product or service. Both criminal and civil cases are involved, sometimes both, sometimes only one or the other, and generally involves material loss on the part of the victim. When discussing “misrepresentation case law,” it is important to keep in mind that “intent” is a very important component of any criminal or civil case, although defendants can be found guilty or liable even if they argue persuasively that they were ignorant that the information they were providing was false or misleading.
Unsurprisingly, there is a body of case law associated with fraudulent activities. Additionally, law students should be aware of the sections of the United States Code – the volumes of federal laws pertaining to all manner of topics – relevant to the issue of misrepresentation. More importantly, students should know how to locate relevant sections of the Code of Federal Regulations, which are the very specific instructions dictating how laws are interpreted by the appropriate federal agencies involved. Very often, Congress passes laws that are not implemented by executive branch agencies for a year or more, depending upon the time it takes those agencies to issue implementing regulations. This is all elemental, and provided below are links to two easy-to-use and easily-available sources for conducting legal research, FindLaw.com and Cornell University School of Law’s Legal Information Institute.
Specific to misrepresentation case law, federal regulations relevant to misrepresentation include 22 CFR (for “Code of Federal Regulation”) 40.63 (Misrepresentation; Falsely claiming citizenship); 48 CFR 1203.405 (Misrepresentations or violations of the Covenant Against Contingency Fees); 20 CFR 655.184 (Applications Involving Fraud or Willful Misrepresentations); and 7 CFR 1430.220 (Misrepresentation and scheme or device). There are more, but these will suffice to help guide students in familiarizing themselves with the federal laws pertaining to misrepresentation. The U.S. Code includes a number of provisions addressing misrepresentation in various facets. What follows, for illustrative purposes, is the text of the federal law pertaining to fraudulent claims for unemployment insurance (5 U.S.C. 8507, False statements and misrepresentation):
(a) If a State agency, the Secretary of Labor, or a court of competent jurisdiction finds that an individual—
(1) knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact; and
(2) as a result of that action has received an amount as compensation under this subchapter to which he was not entitled;
the individual shall repay the amount to the State agency or the Secretary. Instead of requiring repayment under this subsection, the State agency or the Secretary may recover the amount by deductions from compensation payable to the individual under this subchapter during the 2-year period after the date of the finding. A finding by a State agency or the Secretary may be made only after an opportunity for a fair hearing, subject to such further review as may be appropriate under sections 8502 (d) and 8503 (c) of this title.
(b) An amount repaid under subsection (a) of this section shall be—
(1) deposited in the fund from which payment was made, if the repayment was to a State agency; or
(2) returned to the Treasury of the United States and credited to the current applicable appropriation, fund, or account from which payment was made, if the repayment was to the Secretary.
For the discussion of case law, the focus here will be on U.S. Supreme Court decisions. As such, this is not a comprehensive survey of all U.S. case law pertaining to misrepresentation, specifically, decisions made by lower courts, including appellate courts.
Altria Group v. Good 555 U.S. 70 (2008): This case involves as much the question of preemption as it does misrepresentation, but is considered important case law with respect to the latter issue. In this case, a group of smokers, led by Stephanie Good, sued the Altria Group, whose subsidiary, Philip Morris Corporation, is a leading cigarette manufacturer, claiming that the company misrepresented its product by labeling it “light” and “lower in tar and nicotine” when credible documentation supporting such labeling was absent. This case is considered a major preemption test because it involved the question of whether federal law preempted or overrode state law, in this case, pertaining to tobacco product labeling and advertising. The court found for the plaintiffs. [http://www.supremecourt.gov/opinions/08pdf/07-562.pdf]
AT&T Mobility LLC v. Concepcion 563 U.S. 321 (2011): The product of a class action suit brought against AT&T by irate cell phone customers who argued that the company fraudulently advertised free cell phones in exchange for service contracts, the Supreme Court, in an ideologically-divided 5-4 decision, ruled in favor of the defendant. AT&T, while providing the free phones, charged a sales tax predicated upon the value of the phone, a charge interpreted by the consumers, led by Vincent and Liza Concepcion, as a hidden, fraudulent fee. The specific grounds for the suit involved the question of whether the contracts allowed for class action suits vice allowing for arbitration of disputes, the costs of which would be borne by AT&T. [http://www.supremecourt.gov/opinions/10pdf/09-893.pdf]
Lexmark International Inc. v. Static Control Components (2014): An important trademark as well as misrepresentation case, Lexmark v. Static Control involved a tit-for-tat series of suits. In the first suit, Lexmark, a printer manufacturer, sued Static Control Components for patent infringement when the latter manufactured and sold component parts for Lexmark printers. Static Control’s replacement toner cartridges contained a microchip sufficiently similar to Lexmark’s to allow its use in Lexmark printers, thereby undermining the intent of Lexmark’s manufacturing and product maintenance strategy. Static Control countersued following Lexmark’s issuance of letters to its customer claiming that non-Lexmark replacement parts, especially the financially-lucrative toner cartridges, were incompatible with its computer printers and that use of a competitor’s cartridges was a violation of federal statute. Static Control’s suit contended that Lexmark’s information was fraudulent. The Supreme Court ultimately ruled in Static Control’s favor. Unlike the other 5-4 decisions, this one was unanimous. [https://www.law.cornell.edu/supremecourt/text/12-873]
POM Wonderful LLC v. Coca-Cola (2014): Another recent and important Supreme Court decision, this suit involved a classic case of food and beverage labeling. POM Wonderful LLC produces pomegranate and pomegranate-based juices and filed suit against Coca-Cola Company for fraudulently marketing its own allegedly pomegranate-based juices (specifically, a “pomegranate-blueberry juice that actually contained virtually none of either) that were actually 99 percent apple and grape juices. Coca-Cola argued that the main federal trademark protection and truth-in-advertising statute, the Lanham Act of 1946, was not applicable to food labeling. The Court essentially ruled in POM’s favor, concluding that the company could bring a case under the Lanham Act against Coca Cola. [http://www.supremecourt.gov/opinions/13pdf/12-761_6k47.pdf]
This is not a comprehensive list of relevant case law; time and space preclude production of such a list. The above four cases, however, do provide a good overview of U.S. Supreme Court decisions involving the issue of misrepresentation.