Wednesday, March 08, 2006

Read all about it -- please, we need the numbers

Crab House of Douglaston, Inc. v. Newsday, Inc., --- F.Supp.2d ----, 2006 WL 522456 (E.D.N.Y.)

This case began with circulation misstatements by two Long Island newspapers, Newsday and Hoy (a Spanish-language paper launched by Newsday) – they’d overstated circulation by 40,000 daily/60,000 Sunday and 15,000/4,000, respectively. The supposedly independent auditor (ABC) tasked with monitoring actual sales wasn’t and didn’t. Two of the individual defendants even created a computer program called “Fudge ABC” to simplify the fraud. The court pointed out that “Newsday reported the scheme in its own pages.” That didn’t stop the lawsuit, though, filed as a class action on behalf of advertisers who’d overpaid for advertising, which is priced in part based on circulation.

The court dismissed RICO claims against a number of defendants for failure to allege the necessary elements – RICO, no less than ERISA, has become a “complex and reticulated statute,” for which you may read “mess” if you like. Perhaps some RICO-savvy blogger will analyze the decision, but I haven't the heart.

Plaintiffs' Lanham Act claims were dismissed because they were not plaintiffs' competitors. Standing under the false advertising portion of the Lanham Act requires a competitive injury, not an injury to the plaintiff in its role as consumer, which was what happened here. (Note: federal courts made this requirement up, because they didn't want to be small claims court for disgruntled consumers. Understandable, yet hard to find in the text of the statute, especially given that there's no such competition requirement for trademark. Harm to "commercial interests" could be in the statute and cover both trademark and false advertising. It just isn't.)

So the state law claims were dismissed, presumably to be refiled in state court.

Off to California; that's the end of this posting barrage, which reflected a backlog.

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