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The unusual case of a Sarasota weight-loss supplement company that allegedly forces customers to sign a gag order to not complain about its products has taken a step forward.
And while the case is in the early stages, Suzette Marteny, the attorney for the defendants, says potential ramifications loom large. “This could have a big impact on how businesses negotiate contracts,” Marteny, with the Tampa office of Shumaker, Loop & Kendrick, tells Coffee Talk. “It's going to be a question for the court to resolve.”
A trial is at least 18 months away, says Marteny, if the case doesn't settle. At stake: Can a company use contractual provisions to prevent a customer from talking bad, online or otherwise, about the business or a product?
Federal Judge Mary Scriven, responding to motions filed in a lawsuit the Federal Trade Commission brought against the weight-loss firm, Roca Labs, gave both sides a little bit of what they sought. Three prominent review websites, including Yelp and Avvo, an online attorney review portal, support the FTC in a friend-of-the-court-brief.
Roca Labs, writes Scriven, is mostly banned from its gag order practice on a preliminary basis. Roca, adds Scriven, based in district court in Tampa, “is barred from enforcing a contract with customers that “purports to prohibit purchasers from speaking or publishing truthful or non-defamatory negative comments or reviews.”
But Scriven also gives a little back to Roca Labs. The company can, in certain cases, enforce its contractual gag order against customers. Some of those cases require the FTC to review the “alleged untruthful and defamatory statement” over 14 days, Scriven states. Her ruling was handed down Oct. 29.
The Federal Trade Commission filed suit against Roca Labs Sept. 24. The company's products include Roca Labs Formula and Roca Labs Anti-Craving powder, which the company calls safe and effective alternatives to gastric bypass surgery. Roca, the FTC alleges in the original suit, has sold at least $20 million worth of weight-loss powder since 2010.
The FTC alleges Roca sued and threatened to sue consumers who shared their negative experiences online or complained to the Better Business Bureau. The company, contends the FTC, filed the suits because it says consumers violated the non-disparagement provisions of the terms and conditions they supposedly agreed to when they bought the products.
But Roca Labs, in court documents, says these suits and threatened suits are mutually agreed-on stipulations that are part of a free market. The company, according to an Oct. 19 filing, “admits that to purchase Roca Labs' products at a discount, customers were required to agree not to publicly disparage Roca Labs.” The company also “denies using any sort of clause that prohibits or restrains customers from selecting the product of their choice or that harms the public in any way.”
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