Price claims are puffery, but fake Facebook page could be actionable

Imagine Medispa, LLC v. Transformations, Inc., 2014 WL 770810, No. 2:13–26923 (S.D. W. Va. Feb. 26, 2014)

The parties compete in the medical weight-loss and skin care industry, in overlapping geographic areas. Plaintiff David Rubio owns Imagine. Plaintiffs alleged that the defendants knowingly published false advertisements claiming that Transformations was “West Virginia’s Lowest Price Weight Loss & Skin Care Clinic.” Imagine’s prices for substantially identical products and services were allegedly lower. In addition, defendants allegedly “falsely advertised that they offered three weight loss drugs for $65.00 when in fact two of the so-called drugs offered were merely an over-thecounter nutritional supplement and a diuretic.”

Plaintiffs also claimed that the defendants created a fake Facebook profile using Rubio’s name, falsely stating that Rubio was formerly an Imagine employee and indicating that Rubio “liked” Transformations. In addition, defendants allegedly created a fake ad for a 2010 Chevrolet Camaro on Craigslist, which resulted in Rubio receiving scores of unwanted calls.

And defendants allegedly “contacted Imagine employees in an effort to learn trade secrets or other confidential information and/or to lure some of those employees away,” and also “falsely told Imagine’s clients and potential clients that Imagine used unlicensed doctors and had to change its name due to issues with the authorities.” Plaintiffs alleged that the false ads and fake Facebook profile diverted customers and lessened Imagine’s goodwill. (In their papers, plaintiffs also alleged that defendants created a second fake Facebook page under the name “Imagine Medispa,” which fraudulently induced Facebook members, including one Imagine employee, to “like” Transformations’ Facebook page—the court refused to consider those allegations absent amendment of the complaint.)

Plaintiffs sued for violation of the Lanham Act, tortious interference, defamation, and invasion of privacy. The court granted the motion to dismiss the false advertising claims, but left the others (though in a separate opinion I won’t say more about, it denied a preliminary injunction, mostly because of factual disputes, including whether defendants were in any way involved with the Facebook/Craigslist incidents—I wonder if subpoenas to those entities are forthcoming).

As for the price ads, defendants argued that they were just puffery. Some courts hold that “bald assertions of price superiority constitute puffery if they are so sufficiently general that a consumer is unlikely to rely on the statement.” The statements here—“West Virginia’s Virginia’s Lowest Price Weight Loss and Skin Care Clinic” and “Lowest Prices in WV!”—didn’t refer to any specific services or products, and drew no direct comparisons to Imagine or any other competitor. Instead, they were “broad, vague exaggerations or boasts on which no reasonable consumer would rely.” The claim about the three drugs for $65 failed because there was no allegation that the ad was distributed in interstate commerce.

False endorsement: the allegations about the fake Facebook profile in Rubio’s name which suggested that Rubio was a former Imagine employee and that Rubio “liked” Transformations did, however, state a claim for false endorsement. (Note that the court didn’t require Rubio to show secondary meaning of his name.) Assuming all factual allegations to be true, “it is plausible that the fictitious Facebook Profile misled Imagine clients and potential customers into thinking that Rubio was no longer affiliated with Imagine, and that he instead endorsed Transformations’ services.”

Tortious interference: defendants argued that the claims about attempting to learn trade secrets/disparaging Imagine were too vague. Notably, “wantonly and maliciously” inducing a competitor’s employees to break an employment contract by resigning may give rise to a claim for tortious interference under West Virginia law. However, the plaintiffs didn’t allege that defendants were successful in luring employees or obtaining trade secrets. Thus, they didn’t explain how these acts harmed Imagine: they didn’t allege, for example, that they were required to undertake efforts to persuade Imagine employees not to defect. Without a link between the challenged conduct and the alleged harms, there was no claim. These claims were dismissed without prejudice.

As to statements to Imagine clients, those too could ground a tortious interference claim. And though the allegations were thin, they were sufficient: it was plausible that existing Imagine clients who were told that Imagine was using unlicensed doctors could have been deterred from continuing to use Imagine’s services. Defendants argued that any claim was time-barred by the two-year statute of limitations, but that wasn’t apparent on the face of the complaint.

Defamation: as against one defendant, plaintiffs alleged that he made defamatory statements by publishing the fake Camaro ad and telling people that Rubio had had trouble with the authorities. The fake Camaro ad wasn’t defamatory, as it wouldn’t tend to harm his reputation. A false statement that Imagine had to change its name due to issues with the authorities, if focused on Rubio, would likely be defamatory; the same issue of the statute of limitations arose but also wasn’t apparent on the face of the complaint.

The invasion of privacy claim also survived. West Virginia recognizes various privacy torts, including unreasonable intrusion on seclusion, as allegedly occurred when unknown, unsolicited people called Rubio at all hours of the day and night about the Camaro. Although occasional telephone calls cannot constitute an intrusion upon seclusion, repeated, persistent calls at inconvenient hours can, as long as they rise to the level of what a reasonable person would find highly offensive. The allegations here were sufficient.

Plaintiffs also alleged that the fake Facebook profile appropriated Rubio’s name or likeness. The complaint sufficiently alleged an attempted commercial advantage and thus stated a claim. They further alleged that the fake Facebook profile gave unreasonable publicity to Rubio’s private life, and unreasonably placed him in a false light. Unreasonable publicity requires that the private facts disclosed were highly offensive and objectionable to a reasonable person of reasonable sensibilities. But here the allegations weren’t about disclosure of private facts, but rather about disinformation, and so the complaint failed to state a claim for unreasonable publicity. But false light was an acceptable theory: the false light must also be “offensive to a reasonable person,” and the subject of “widespread publicity.” On these allegations, creating a fake profile to associate Rubio’s name with Transformations, a competitor with which he had no reasonable connection, met that standard. (Annoying to a reasonable person, but offensive? How is this not defamation that doesn’t rise to the level of being defamatory?)