The parties compete to represent clients in the greater
Philadelphia area, primarily in the fields of “small personal injury, social
security disability, and workers’ compensation law.” Such clients allegedly select lawyers based
on brand name or name recall, making advertising vital to business
success. Law firms seek “[m]ass reach,
constant messaging, [and] saturation,” ideally on 1) the exterior of buses; 2)
radio time slots just before and after traffic and weather updates; and 3)
inside sports arenas. Other
alternatives, such as phonebooks, internet ads, billboards, and inside-bus/bus
stop ads are allegedly less effective.
Pitt historically bought ad space on the exteriors of SEPTA
transit vehicles and bus stops, sold by a national ad agency, Titan. Lundy’s daughter Sara Lundy is an account
executive at Titan, responsible for SEPTA ads.
Titan gave Lundy the exclusive right to advertise legal services on the
outside of SEPTA buses, for which Lundy paid above market price. The contract is one-year and renewable. Pitt didn’t allege that it couldn’t make its
own offer for an exclusive contract, nor did it allege that SEPTA rejected
higher offers for exclusive contracts in favor of Lundy Law. Pitt received 142
client referrals from SEPTA ads (presumably including both interior and
exterior ads) in 2008, 160 in 2009, 197 in 2010, and 146 in 2011, but only 16
in 2012 and 12 in 2013 after it was barred from bus exteriors. Lundy made a similar exclusive deal to
advertise on the exterior of BARTA buses, another area company; obtained an
exclusive contract for rush hour ad slots around weather and traffic updates on
the KYW radio station; and had an exclusive contract with the Wells Fargo
Center sports and entertainment arena, all by paying “unusually high”
advertising fees. Naturally, Pitt’s antitrust claims failed.
However, its false advertising claim survived: Lundy Law allegedly
“advertises itself as a law firm representing clients in Social Security
disability and workers’ compensation cases, when in fact it refers such cases
to other firms in exchange for a referral fee, and does not actually represent
clients in such cases.” This was
sufficient to state a claim under the Lanham Act: if the facts were as
described such statements could be misleading and even literally false, and
Pitt sufficiently pled that advertising influences purchase decisions. However, Pennsylvania state law unfair
competition claims require acts that “substantially interfere[ ] with the
ability of others to compete on the merits of their products.” Because the
antitrust claims failed, so did the unfair competition claims. (This seems to
ignore the Restatement (Third) of Unfair Competition, which Pennsylvania
follows, which provides that unfair competition can come either from such
interference or from acts/practices
actionable under federal or state statutes—which clearly includes the Lanham
Act, the federal law of unfair competition; given that the Lanham Act claims
survived, the state law claims should have too.)
The court also dismissed Pitt’s tortious interference claim
for failure to sufficiently allege prospective contractual relationships or
wrongful interference—exclusive contracts aren’t inherently tortious.
Pitt also alleged that Lundy filed a meritless trademark
infringement lawsuit against Pitt for Pitt’s use of the phrase “Remember this
Number” in ads (a phrase Lundy also uses). Within hours of Lundy’s discovery
that Pitt’s insurer was defending the claim, the complaint alleged, Lundy
voluntarily dismissed the suit. “Pennsylvania’s
Dragonetti Act allows a civil suit for wrongful initiation of civil court
proceedings without probable cause and for a purpose other than securing
adjudication of a legal claim, when the proceedings end in favor of the
defendant.” Lundy argued that the
voluntary dismissal, early in the case, was insufficient to count as
termination in Pitt’s favor, but a motion for preliminary injunction was fully
briefed and pending and a hearing was scheduled. Thus, the claim could continue. However, the related abuse of process claim
was dismissed, because improper purpose was insufficient for abuse of process
without costs of defending beyond what was required to address the merits. Plus, Pitt’s costs were covered by its
insurer, and it didn’t allege any other injury.
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