Reliable, the nation’s largest enclosed auto transport company, sued new competitor Excellence for trademark infringement and unfair competition. Excellence counterclaimed for tortious interference, defamation, false advertising, and violation of the Michigan Consumer Protection Act. The court granted Reliable’s motion to dismiss the counterclaims.
Reliable’s trademark claims were based on alleged similarities in color and logo between the parties' respective transport trucks, but Excellence suggested that Reliable was attempting to suppress competition from its former contract truck drivers now running Excellence.
Tortious interference: though Excellence alleged that Reliable made disparaging statements about Excellence to the parties' common customers and falsely advertised in a harmful manner, Excellence failed to identify any specific business relationship or expectancy that was lost, and failed to allege that Reliable knew about it. Thus Excellence failed to state a claim.
Defamation: Excellence alleged that Reliable disparaged Excellence's financial condition, operational methods, and management practices by telling third parties that Excellence neglected to insure its shipments, failed to properly register with the Federal Department of Transportation, filed or intended to file for bankruptcy, and was in danger of having its equipment repossessed. But Excellence didn’t allege to whom the statements were made and thus didn’t make out the elements of a claim.
False advertising under the Lanham Act: Excellence alleged that Reliable falsely advertised that it had 350 trucks when it had only 208 trucks, and that it claimed 50 years of experience when it had only 30. Reliable argued that these allegations didn’t plausibly satisfy the materiality and harm-causation elements of a false advertising claim. According to Reliable, the differences between 30 and 50 years and 208 and 350 trucks were immaterial, especially as to the Reliable/Excellence choice: Excellence had fewer than 6 trucks (14 at the time of oral argument) and had been in service about 3 years. Excellence rejoined that if Reliable didn’t believe these characteristics were important it wouldn’t have included them in advertising. The court was unimpressed, particularly on the harm-causation issue, and dismissed the false advertising counterclaim.