MostChoice's brags succeed where its false leads don't

NetQuote, Inc. v. Byrd, 2008 WL 5225880 (D. Colo.)

Previous developments in this case of competitor sabotage, including a big damages award.

NetQuote moved for injunctive relief against MostChoice for false advertising. It identified three allegedly false statements: (1) that MostChoice's leads are "Better Than NetQuote Leads"; (2) that MostChoice's leads are "[f]rom a solid company ... [n]ot a 'fly by night' company like most lead companies"; and (3) that MostChoice's leads are better because they are subject to "Extensive Filtering for Highest Lead Quality."

The court found the statements had not been shown to be literally or implicitly false. The trial evidence tended to support the claim that MostChoice’s leads were better. NetQuote uses affiliate leads, and those tend to be poorer quality. By contrast, MostChoice’s leads during the relevant time period did not include affiliate leads, which the court saw as support for the “filtering” claim, because selecting the source of a lead can be viewed as a filtering process. Moreover, NetQuote sent each lead to a larger number of agents than MostChoice, diluting any single agent’s chance of closing a sale. The market price of MostChoice leads was higher, which the court also considered evidence that its leads were “better.”

As for the solid/fly-by-night claims, there was no evidence that MostChoice was a fly-by-night company, and even though NetQuote wasn’t either, that didn’t disprove MostChoice’s claim that “most” lead companies are fly-by-night. The court also considered this statement entitled to “leeway” because it was puffery.

The implicit falsity argument fared no better. NetQuote argued that, to the extent “Better Than NetQuote Leads” was true, it was only true because MostChoice deceptively submitted fake leads to NetQuote, and that undisclosed wrinkle made the claim misleading. However, NetQuote failed to prove that, but for the fake leads, MostChoice would not have been superior. Even before MostChoice began submitting fake leads, the indicators of greater quality identified by the court were present. (Which makes one wonder: what was MostChoice so afraid of? Perhaps low prices are a potent lure, even if they bring lower quality with them.) The false submissions also represented such a small percentage of NetQuote’s total leads that, though they were actionable for the harm they caused to specific agents, the court deemed it unlikely that they materially affected the overall quality of NetQuote’s leads.

In addition, NetQuote failed to show that consumers (insurance agents) were actually misled by the ads (as opposed to the fake leads). NetQuote argued that an intent to deceive justified a presumption of successful deception, but there was no evidence of deceptive intent with respect to the ad statements. Nor did NetQuote show actual or likely injury: it had no evidence that its customers ever visited MostChoice’s site. (I think this goes too far; suppose a credible consumer survey had shown extensive deception in likely consumers exposed to the ad. Asking the plaintiff to prove more than that serves very little purpose. Perhaps a defendant might be able to avoid monetary and even injunctive relief by showing that nobody ever saw the false claim at issue, but that’s the defendant’s problem at that point, not the plaintiff’s; the risk must be on the deceptive advertiser.)