Monday, April 14, 2014

Standard false advertising case doesn't involve public benefit in Minn.

Select Comfort Corp. v. Tempur Sealy International, Inc., No. 13–2451, 2014 WL 1379082 (D. Minn. Apr. 8, 2014)

Select Comfort and Tempur Sealy compete to sell mattresses, with Select Comfort owning registered marks for Select Comfort and Sleep Number.  Defendant Mattress Firm is a large specialty retailer that sells a number of different brands, including Tempur-Pedic, though it no longer sells Select Comfort.  Select Comfort alleged that Mattress Firm engaged in false advertising about Select Comfort and trademark infringement through AdWords, manipulation of organic searches, and paid ads with third-party shopping sites.

Here, Mattress Firm sought to dismiss claims relating to violations of the Minnesota Unlawful Trade Practices Act (“MUTPA”), violations of the Minnesota False Statement in Advertising Act (“MFSAA”), and violations of the Minnesota Consumer Fraud Act (“MCFA”). Each requires that a private action have a public benefit. The court agreed that the claims should be dismissed.

While the public benefit requirement isn’t onerous, it is necessary.  Relevant factors: “the degree to which the defendants’ alleged misrepresentations affected the public; the form of the alleged misrepresentation; the kind of relief sought; and whether the alleged misrepresentations are ongoing.”  A public benefit is typically found when the primary relief sought by the plaintiff is aimed at altering the defendant’s conduct rather than at seeking remedies for past worngs.

Select Comfort argued that its claims addressed false advertising to the general public and thus stated a public benefit.  But while courts have found a public benefit in similar false advertising cases, they haven’t found that there’s a per se rule; something more is needed. Collins v. Minn. Sch. of Bus., Inc., 655 N.W.2d 320 (Minn. 2003), found a public benefit where the plaintiffs challenged alleged false advertising of a school’s sports medicine program.  The Minnesota Supreme Court held that when the defendant aired television advertisements and made a number of sales presentations, along with the high enrollment in the school and the number of people that could enroll, the defendant had “presented its program to the public at large” and the plaintiff’s claims established a public benefit. But Select Comfort failed to allege that the false advertising alleged here reached or affected the public to the same extent and in the same way as in Collins.

Select Comfort’s allegations of confusion/deception weren’t enough to show public harm: the harm was “the potential of ending up with a product that is not a Select Comfort product.” That alone was insufficient.  What about interference with the public’s ability to make accurate purchasing decisions?  That wasn’t enough—ensuring that consumers could make the most accurate buying decisions was merely an “attenuated collateral benefit.” “The real harm alleged here is Select Comfort’s loss of sales, goodwill, and reputation.”  That’s not what the consumer protection statutes contemplated; the harm to the general public was not the same as the harm to Select Comfort.

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