Wednesday, November 18, 2015

Statement isn't literally false when plaintiff can't definitely be identified from it

Service Jewelry Repair, Inc. v. Cumulus Broadcasting, LLC, 2015 WL 7112334, No. 14–cv–1901 (M.D. Tenn. Nov. 13, 2015)
Service Jewelry provides jewelry sales and services; from 2010-2014, it promoted its products on a local radio station, WWTN-FM, by buying ads from the station’s owner, Cumulus.  Cumulus sells ad time to many Nashville-area businesses, including thirteen different jewelry sales and services companies. This action sprang from a May-July 2014 campaign by Service.
The campaign was prompted by an investigative news report on WSMV–TV, the Nashville NBC-affiliated television station, which questioned the manner in which a major competitor of Service Jewelry, Genesis Diamonds, graded the quality of its diamond products. In response, Service decided to run a series of on-air ads highlighting the report and directing consumers to Service Jewelry for assistance if they had concerns regarding the quality of their diamonds. The spots included pre-recorded advertisements and live radio endorsements by a WWTN radio personality, DelGiorno.  Service Jewelry provided DelGiorno with a list of talking points about the investigation and about how people might have been misled or gotten diamonds that were “hugely overgraded,” contrasted to Service Jewelry’s honesty.
To better understand the context of these talking points, DelGiorno reviewed a video of the investigative report, but didn’t conduct an independent investigation into the truth or falsity of the allegations made about Genesis in the video, and Service didn’t ask him or Cumulus to refrain from using Genesis’ name.  The contract didn’t impose obligations on content aired by Cumulus outside of paid ads or require Cumulus to use only language provided by Service Jewelry in the pre-recorded advertisements and live endorsements.
The first few live endorsements (out of a total of 16) didn’t mention Genesis by name.  Service Jewelry’s CEO then emailed DelGiorno, writing:
Genesis, once again, is advertising that “if you find a certified diamond that is similar to ours for a cheaper price, we will give you ours for free.” We want to take this guy completely down for this. I would like for you to add to your talking points, something to the effect, that we would like for anyone to take him up on this offer.
DelGiorno then mentioned Genesis by name in four live endorsements for Service Jewelry.  But Genesis was another of Cumulus’ advertisers, and a Genesis representative objected.  Cumulus agreed to air apologies for these endorsements:
We at WTN want to apologize for some very negative and unfair comments about Genesis [D]iamonds made during a series of advertisements by our host, Michael DelGiorno. Michael has apologized to the staff at Genesis for reading a commercial by a competitor which included some very strong and disparaging comments. We are proud to be associated with Genesis Diamonds and hold them in the highest regard. Genesis has a strong and positive reputation …. You don’t get to that level without doing business the right way, with integrity, superior products and unmatched customer service. We wish them years of continued success.
DelGiorno’s personal apology was similar, and included the statement: “To be honest, I did not do my own investigation about Genesis. I was given some commercial copy by the other jeweler and I relied entirely on the information provided in doing the commercials.… I should never have made such serious comments about another business in town, especially without doing my own homework.”  These were on the station’s website and DelGiorno read his apology 14 times on air.  WWTN-FM continued to air other ads for Service Jewelry that didn’t refer to Genesis; Service Jewelry had an upaid invoice of nearly $13,000 when it cancelled all its ad business with Cumulus.
Service Jewelry sued for (1) breach of contract; (2) defamation; (3) violations of the Tennessee Consumer Protection Act (TCPA); and (4) false advertising under the Lanham Act.  As evidence of its damages, it submitted a declaration indicating that a “[r]eputation for honesty is of primary importance in the jewelry industry,” and that the apologies “harmed Service Jewelry’s reputation and standing in the community and in the industry, ... [leading] to actual financial damages, including significant costs and expenses in attempting to set the record straight.” It presented no consumer surveys or market research demonstrating consumers’ reaction to the apologies.
False advertising: First, the court found that the statements in the apologies weren’t literally false.  Service Jewelry apparently challenged the attribution of DelGiorno’s statements about Genesis to Service Jewelry as well as the labeling of those statements as “untrue,” “unfair,” “derogatory,” and “disparaging.”  The apologies referred to “another jeweler in town” who gave DelGiorno “some commercial copy” containing the information on which he relied in commenting about Genesis, and also said that “a commercial by a competitor” was the subject of the Apologies. “None of these statements are literally false. The Apologies do not actually attribute the content in the commercials that were the subject of the Apologies to the other jeweler referenced”—dubious, but all right, but here’s the bit that goes against most Lanham Act cases:  Also, the apologies didn’t name Service Jewelry. Listeners would have to remember the advertiser’s identity from a month prior, and would have to “infer that all negative statements were provided to Mr. DelGiorno by that jeweler.” Usually, if there’s one competitor to whom a comparison clearly points, given other facts about the industry, that’s deemed a reference to that competitor.  Plus, DelGiorno’s statement that he “relied entirely” on Service Jewelry’s information could have multiple meanings—it could mean that the statements came from a script, or that he based his statements on information Service Jewelry provided.  “Based on the ambiguity in the language and the degree to which the listener must integrate statements in the Apologies with prior knowledge of Service Jewelry’s advertising, the court cannot conclude that the portions of the Apologies that allegedly attributed Mr. DelGiorno’s statements about Genesis to Service Jewelry were literally false.”
As for the characterization of the statements about Genesis as “unfair,” “derogatory,” and “disparaging,” those were unverifiable statements of opinion.  The use of “untrue” was also too ambiguous, since it was combined with “untrue or unfair.”  “A listener could also understand this language to mean, however, that Mr. DelGiorno simply did not know whether his statements about Genesis were untrue, whether they were only unfair, or whether they were both untrue and unfair.”  Service Jewelry didn’t show evidence of actual consumer deception, so it couldn’t prevail. 
Its defamation claim failed for the same reason: there was no evidence that Service Jewelry’s reputation was injured or that it suffered damages.  Its sole declaration on the subject contained just the sort of “[c]onclusory statements unadorned with supporting facts [that] are insufficient to establish a factual dispute that will defeat summary judgment.” The TCPA bars “unfair or deceptive acts or practices affecting the conduct of any trade or commerce,” including “[d]isparaging the goods, services or business of another by false or misleading representations of fact.”  But it too requires damages, specifically an ascertainable loss of money or property. 
The court also found that the apologies didn’t breach any contractual term.

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