Tuesday, August 20, 2013

advertisers couldn't go after publisher for competing fake ads

SuperMedia LLC v. Baldino’s Lock & Key Service, Inc., 2013 WL 4176955 (D. Md. Aug. 13, 2013) (magistrate judge)

Defendants contracted for directory and advertising services with SuperMedia; SuperMedia sued to collect unpaid money for services provided 2008-2010. The court denied leave to amend defendants’ counterclaims as futile.  They proposed to allege that SuperMedia “unilaterally flood[ed] the locksmith section of its print directories and superpages.com with false information that was designed to steal business of Baldino’s and other legitimate locksmiths.”  These unlicensed locksmiths allegedly didn’t pay SuperMedia for listing services, but rather SuperMedia got the information from phone companies and published it, in print and online, as part of a scam by the “phony” locksmiths to extort customers.  The judge held that there was no cause of action making SuperMedia liable to defendants for publishing false locksmith listings.

SuperMedia owed no duty of care to defendants based on the contract; it was only obligated to provide them with advertising and listing services and had no independent duty to monitor the content of other listings.  This was different than negligence with respect to an advertiser’s own information after the advertiser paid for a listing.

For similar reasons, the Texas Deceptive Trade Practices Act provided no help.  Defendants alleged that SuperMedia orally promised that it would remove the false listings in order to induce them to renew their contract.  But publishing ads for third party businesses didn’t make any representation about goods or services—such representations are made by the business listed, and the DTPA imposes no duty to monitor the listings for accuracy.  (That doesn’t quite seem responsive to the argument defendants made.)  A DTPA violation requires more than a breach of contract; oral representations inducing a party to contract aren’t enough, and that situation is governed by contract law.  And anyway, defendants’ documents stated that SuperMedia told them that only Verizon could remove the fake listings; after they contacted Verizon, the listings at issue were removed.

The Lanham Act didn’t apply because SuperMedia “did not make any representation in a commercial advertisement or otherwise.”  It just published information provided by defendants and other businesses.  Defendants didn’t have standing to bring a claim against the publisher of ads containing representations made by other advertisers (citing Am. Ass’n of Orthodontists v. Yellow Book USA, Inc., 434 F.3d 1100 (8th Cir. 2006), though secondary liability principles would’ve been a much more sensible way to deal with this, especially since the Lanham Act has a whole provision about this, 15 U.S.C. § 1114(2)(B)), and it would’ve avoided the need to discuss whether competition was required or a multifactor test should instead be used; the judge concluded that defendants lacked standing either way).

1 comment:

  1. Anonymous7:16 AM

    This is why Verizon should be required to re-institute" their validation of phone numbers and addresses that they add. They stopped doing it so that they could make more money on the backs of hard working locksmiths and un-aware consumers