Wednesday, July 05, 2006

Suing the advertiser and the source of the advertiser's data

Arrow Rock International, Inc. v. Dex Media Inc., 2006 WL 1793554 (D. Idaho)

The parties compete in the market for telephone directories. Defendant Dex used flyers purporting to show that its directories were more heavily used than plaintiff’s, based on evidence obtained and prepared by defendant Wiese Research Associates at Dex’s request. The flyers caused Dex to gain business and plaintiff to lose business.

Wiese made the relatively unusual argument that the complaint didn’t properly plead that the flyer was part of interstate commerce. And, even more surprisingly, the argument succeeded – though both defendants are from outside the state, the complaint alleged only activity in the “Boise metropolitan area,” and that wasn’t good enough. But, of course, the court granted leave to amend. Practice tip: don’t forget those elements, even the most obvious ones!

Wiese also argued that neither its survey nor the reporting of the survey results to Dex were commercial advertising (even though Dex’s use of the results presumably would be). The complaint, however, alleged that Wiese acted at the direction of or in concert with Dex, and that Wiese knew its survey results would be used in a commercial advertisement. The court found that, at least at this stage, the complaint’s allegation that “the actions of Wiese and Dex together constitute the alleged violating commercial speech” (the court’s language, not the complaint’s) was enough to avoid dismissal, although the acts of conducting a survey and giving the results to Dex might not alone be commercial speech. Testing labs beware – this reasoning might put them on the hook for a lot of results used in ads. It's unlikely that truly independent testers could be held responsible for resulting ads; but waiting to show independence as opposed to collusion on summary judgment might be expensive. Keeping the testing agency as a defendant might also provide some leverage, as well as discovery advantages, but active practitioners are probably in a better position to evalute that.

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