Can Red Bull Legally Claim It Gives You Wings? [e85]

August 25, 2014

The guys kick off the week by discussing the Red Bull lawsuit over false advertising. They then answer, “My employees are receiving small tips on credit card receipts and we get hit with a processing fee each time. Can we deduct the fee from our employees’ tips?”

meme_redbull

Full Podcast Transcript

NASIR: Welcome to Legally Sound Smart Business. This is Nasir Pasha.

MATT: This is Matt Staub.

NASIR: Welcome to the business legal podcast that covers business in the news and also answers some of your business legal questions that you, the listener, could ask a question at ask@legallysoundsmartbusiness.com.

MATT: Oh.

NASIR: By sending in an email address.

MATT: Terrible intro.

NASIR: Actually, the intro was good, but the conclusion of the intro was a little faulty.

MATT: It’s all right. I mean, there’s a little bit of leeway on Monday so I’m not going to hold it against you.

NASIR: True, just getting warmed up.

MATT: I shouldn’t give you the leeway because this isn’t being recorded on a Monday morning but people are listening to it on a Monday morning so maybe they’re not firing on all cylinders. They won’t even notice how bad that intro was – other than the fact that I’ve gone on about it for another minute.

NASIR: People are still trying to figure out if it’s Monday or not. I’m still trying to figure that out at least.

MATT: All right. Well, actually, we’ve got a good story that’ll help people wake up I guess indirectly – a lawsuit involving Red Bull – more accurately, a false advertising lawsuit. There’s a possible settlement, that’s not as important but basically it boiled down to this. It was a false advertising claim. I think everyone knows what Red Bull is, it’s an energy drink.

NASIR: It gives you wings.

MATT: Yeah, it gives you wings which does sound like false advertising right there, but the actual false advertising claim was it provided more benefits to consumers than a cup of coffee or a caffeine pill. And so, basic arguments – breach of express warranty, unjust enrichment, violation of other acts, things of that nature. I guess the moral of the story is, for any business, you have to watch out what you assert in terms of what your product or service can do for the customer.

NASIR: Yeah, also note that they’re alleged to have violated 30 different state consumer protection acts and we have a lot of clients and a lot of businesses sell their products and services – they also spell their products and services – they sell it on a nationwide basis and, though the consumer protection acts are pretty similar in the sense that what they intend to protect, there are differences. For example, California and New York are inherently more consumer-friendly than some of these other states. At the end of the day, especially when you’re selling on a national, you need to think about being very conservative of how you’re selling your product. What were their statements as far as what was told to be false?

MATT: I don’t know the exact quote but more benefits than a cup of coffee or a caffeine pill which I used to drink Red Bull a lot back in college but, if you’ve ever looked at the actual liquid or tasted it, there’s no possible way it’s going to be more beneficial than coffee. I mean, I don’t know about a caffeine pill but it just doesn’t seem natural. It has that Taurine in it which is supposedly very bad for you, so they say.

NASIR: Every time I drink it, it literally tastes like toxic waste to me. I feel like I’m drinking some chemicals. And the fact that it says that they provided more benefits compared to a cup of coffee and caffeine pill, that implies that Red Bull has benefits. It seems awkward to say that for some reason to me.

MATT: Yeah, and have you seen – and this is fresh on my mind because I watched the beginning of it the other day – the movie Role Models? The two main guys, their job – at least in the beginning – is going around, speaking at schools, talking about energy drinks.

NASIR: Is that the one where they go to the LARP?

MATT: Yeah.

NASIR: Yeah.

MATT: Paul Rudd and Seann William Scott.

NASIR: Yeah. I mean, it just seems ridiculous. We’ve all seen those Monster drinks and those energy drink guys out there trying to promote this stuff. It just seems like anything that they would say – besides it giving you wings – would be considered false advertising. Obviously, I joke around the wings aspect because no one actually believes that it does give you wings but, if they truly claim that was the case and it was reasonable to assume that’s what they were saying, then obviously that would be false advertising.

MATT: I’m reading the complaint now. It’s actually stated in there. The defendants spend millions of dollars misleading people about the superiority of their “functional beverage” and its ability to “give you wings” and provide energy and vitality. Red Bull states that, because of its unique combination of high-quality ingredients, Red Bull energy drink revitalizes body and mind. Interesting. We’ll link the complaint.

NASIR: Yeah, I’d like to see the complaint.

MATT: Obviously, no one would expect it gives you wings but the part about it being better than coffee or a caffeine pill… I’ve never taken a caffeine pill so I don’t know. I imagine it’s a similar sort of thing.

NASIR: That’s kind of a statement of fact, right? You have to kind of back that up that, okay, if you’re saying there’s more benefits, how and what’s your basis for that? We’ve all seen marketing kind of give a lot of leeway to these kinds of statements but whenever you make a comparison, you have to be very careful with this. One of the reasons why this happens very often with big companies – because, again, you would think, okay, there’s a whole team of lawyers that are reviewing this stuff but, in reality, it’s just like a small business. When you have the marketing end of things, they’re not the gatekeepers of what goes through. You know, the lawyers, the accounts are the gatekeepers. The marketing people are the doers. They just want to make the sale and get it done and those are competing kind of interests. And so, from a practical perspective, you do have to kind of put that into consideration when you’re dealing with marketing people.

MATT: That’s a really good point. If you have a legal team, you have a marketing team, I think their thoughts on this are going to be a little bit different in this. I’m going to go on one more thing because I think this question is going to be able to be answered pretty quickly so I’m not worried about that. I don’t know if you’ve ever seen the show on Comedy Central, Nathan for You with Nathan Fielder.

NASIR: I have not.

MATT: It’s a comedy show and he goes around trying to improve small businesses with extreme ideas. It’s kind of joking. One of his ideas – and it’s all in LA – some burger place and it advertised like, “The Best Burger in LA” or something like that and he went on the radio with this guy, the business owner, who was kind of just going along with it. He’s like, “You come to our place, if you don’t think it’s the best burger, we’ll give you a full refund.” It went out to millions of people. It’s hard to explain without seeing the show but it’s really funny. But that’s the whole point of this advertising. It has to be within reason.

NASIR: Yeah. Actually, we should cover the legal issues surrounding saying that you have the best coffee in Seattle or the best coffee in the world, best pizza in the world, best pizza in the country, you know. We’ll do that one day.

MATT: We can do that, that’s not a problem.

NASIR: I’m not saying it’s a problem.

MATT: I’ll have to link the other Nathan for You thing too. It’s pretty funny.

NASIR: No, I think we should just have a brainstorming session of topics for the future.

MATT: That’s what everybody wants.
[MUSIC]

MATT: Question of the day.

NASIR: Question of the day.

MATT: “My employees are receiving small tips on credit card receipts and we get hit with a processing fee each time. Can we deduct the fee from our employees’ tips?” This comes from someone in Santa Barbara.

NASIR: California. You know, actually, in some states, this is actually allowed. There was just a story, it seems like it was this week or even before then, I think it was a Minnesota company that was actually doing this because they were trying to get around the minimum wage increase and so forth and I don’t know the details of that case but, in Minnesota, apparently, it’s allowed. But in California? Definitely not.

MATT: Yeah. I mean, that’s the answer and, since this person’s in California, that’s pretty clear cut. That’s in the labor code that you can’t do this as an employer. I mean, why would you anyways? I don’t know how it works. Do they run the credit card and they go back and type the tip in later? Is it run two separate times or is it all considered one transaction? I don’t know the answer to that.

NASIR: I think I know the answer to that and, if anyone owns a restaurant, they can clarify. Basically, they run the credit card and it puts some kind of hold and then, at the end, they put in the actual number and they do some batch processing or something to that effect for the tips, right?

MATT: I think you’re right because, if you go back and look at your transactions, I think 95 percent of the time, it’s just one transaction. It’s very rare that you’ll have two transactions.

NASIR: Yeah, it’s always one transaction.

MATT: One with the thing and one with the tip. Occasionally, I’ll have that.

NASIR: Oh, really?

MATT: Yeah.

NASIR: They may just be overcharging you like, “Let’s just charge him for another dessert or something.”

MATT: Probably are. It’s a scam.

NASIR: I don’t know why you would either. I understand the sentiment because those credit card fees do add up. For those of you that don’t necessarily sell products or accept credit cards, merchant fees are very simple. Sometimes, they have a monthly fee, they almost always have a per transaction fee, and then they have a percentage fee of the actual ticket and so those three items are always negotiable and these credit card processors play with all those rates. But, generally, I think restaurants, because of the volume that they’re doing, the number of transactions, they usually try to keep the per transaction fee very low and the percentage maybe a little bit higher. I think that ranges three to five percent a lot of the time and three to five percent for each sale, that can add up, but I don’t know if you want to take that away or I guess just pay them less overall. It just seems strange to take that off the top of the waitresses or waiters.

MATT: Yeah. I mean, if you’re really that concerned, just put a minimum that people have to do to charge a credit card or just be a cash-only place.

NASIR: Yeah, and that can always kind of backfire too, obviously. I get frustrated with that kind of stuff sometimes. I don’t carry cash. For my sake, don’t do that.

MATT: Places like that usually have an ATM inside their place.

NASIR: Yeah, but then they charge like $2.50 or $3.50, right?

MATT: Yeah, that’s the challenge.

NASIR: Gosh. I feel poor all of a sudden. I need more cash.

MATT: When those situations arise and I don’t have cash, I just trade services for services.

NASIR: Yeah, that’s what I do, too.

MATT: I go back and wash dishes for 25 minutes.

NASIR: It would be kind of cool if you could do that. Why not?

MATT: Why not?

NASIR: All righty. I think that’s our episode, ending on a very high note.

MATT: With you talking about specific percentages of credit card fees. That’s what everyone wants to hear on a Monday.

NASIR: Well, I don’t know, I find it interesting because I know a lot of our clients, they get calls all the time wanting them to switch and they’re always trying to undercut over and over again the competitor. Well, anyway, okay, should we end it or should we just start talking for another five minutes?

MATT: Yeah, I’m going to drink a bunch of Red Bulls between this episode and the next.

NASIR: All right, it’ll give you wings. Have a good day, everyone!

MATT: Keep it sound and keep it smart.

Legally Sound | Smart Business

By

The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to info@legallysoundsmartbusiness.com.

Get Business Legal Updates

Please provide your full name.
Please provide a valid email address.
We respect your privacy, and we will never share your information. Unsubscribe at any time.
Legally Sound Smart Business cover art

Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
Apple Podcast badge
Google Podcast badge
Spotify Podcast badge

Latest Episodes

July 14, 2021

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

June 23, 2016

Nasir and Matt discuss the criminal charges facing FedExinvolving the alleged transportation of illegal drugs. They also talk about how business owners should address working with customers that may be breaking the law.

June 15, 2016

The guys return after a long break to discuss why Yahoo is auctioning off over 3,000 patents and how this decision will affect the longevity of the company.

May 25, 2016

Nasir and Matt discuss the increase in the salary thresholdfor exempt employees and how employerscan try to avoid paying overtime as a result.

May 18, 2016

Nasir and Matt discuss the Baltimore law that makes it very difficult to operate food trucks in the city. They also discuss all the legal restrictions tohaving a food truck.

May 11, 2016

Matt listens to Nasir recap the developing battle in his hometown of Vandalia, Ohio over whether a Dunkin Donuts can move into a location in close proximity to a local favorite donut shop. They then discusswhether the issue is more legal or personal.

May 9, 2016

The guys kick off the week by discussing a Nevada employee who is claiming she was fired for not supporting the Scientology beliefs of her employer.

April 27, 2016

The guys discuss the massive floods in Houston,how employers responded, and why one meteorologist became a local hero. They also discuss the steps businesses should take in preparing for storms outside the workplace.

April 20, 2016

The guys discuss the boycott of Amazon over the products of an unnamed presidential candidate. They also talkabout how a business should handle a boycott and whether it’s possible to exit one unscathed.

April 13, 2016

Click here to read HubSpot’s response on this topic. Nasir and Matt discuss the trend in startups to compensate programmers and other early employees with stock options and how the company culture at HubSpot isn’t what it seems.

April 6, 2016

Nasir and Matt discuss various lawsuits against social media platforms in which users are accused of artificially inflating their social currency.

We represent businesses.
That’s all we do.

Oh, and we love it.

We love our work. We love reviewing that lease for your new location. We thrive on closing that acquisition that nearly fell through. We’re fulfilled when we structure a business to grow, raise capital, and be legally protected.

We focus on developing close relationships with our clients by being like business partners. A partner who provides essential, personalized, proactive legal support.

We do all of this without utilizing the traditional billable hour model. You pay for the value we bring, not the time spent on calls, emails, and meetings.

Our team is made up of attorneys and staff that share these values and we are retained by clients who want the same.

Pasha Law PC operates in the states of California, Illinois, New York, and Texas.

Meet Our Team

Fractional General Counsel Services

Pasha Law Select offers the expertise of a high-end general counsel legal team for every aspect of your business at a fixed monthly rate. Pasha Law Select is deliberately designed to allow our legal team to be proactive, to anticipate, and to be comprehensive in serving our clients. To be great lawyers, we need to know our clients. We can’t know our clients unless we represent a select number of clients in the long-term. This is Pasha Law Select.

Learn More