Alzheimer’s Disease Resource Center, Inc. v. Alzheimer’s Disease
and Related Disorders Association, Inc. 981 F. Supp. 2d 153 (E.D.N.Y. 2013)
Plaintiff ADRC is the former Long Island chapter of
defendant Association, dedicated to fighting Alzheimer’s. In 1998, the parties entered into a
“Statement of Relationship” (SOR) contemplating that they could part ways and
providing that the distribution of chapter assets would be subject to binding
arbitration in case of disagreement.
ADRC alleged that, over time, the Association breached the SOR by, among
other things, permitting the Association’s NYC chapter to fundraise on Long
Island. They disaffiliated in 2012, and
ADRC demanded arbitration, seeking to retain funds previously raised for the
Association.
ADRC sued the Association for unfairly competing with ADRC
by sending out 15 mass mailings under the name “Alzheimer’s Association—Long
Island Chapter” (ADRC’s former operating name) and for breaching an agreement
between the parties by using donor information it previously obtained from the
ADRC prior to the disaffiliation. ADRC
alleged that the Association lacked any presence on Long Island when the
letters were sent, and that the Association forged the signature of ADRC’s
leader in those mailings. Multiple donors allegedly mailed checks to the
Association based on the mistaken belief that the donations were going to ADRC.
Lanham Act claim: the court dismissed the §43(a)(1)(A)
aspect of the claim because ADRC conceded that it had no valid trademark in the
name “Alzheimer’s Association—Long Island Chapter” or a related expression. However, §43(a)(1)(B) was still
available. (This strikes me as an excellent use of channeling principles. It's true that the name is part of the confusion, but ADRC abandoned the name.) The court found that ADRC
plausibly alleged that the use of confusing addresses, coupled with the
inclusion of ADRC’s leader’s name on the mailings, had the capacity to deceive
a substantial portion of the intended audience about the recipient of their
donations. ADRC alleged the identity of
one such donor who was actually deceived.
The Association argued that ADRC failed to allege materiality, but the
identified donor indicated that she “felt deceived” by the mailings. Facts regarding the identity of other donors were
peculiarly within the knowledge of the Association, meriting discovery.
The NY GBL §349 claim: ADRC successfully pled a claim for
deceptive acts and practices. “Donors are the consuming public for charitable
fundraising activities and are deceived, when a check intended for one charity
is cashed by another.” There was a public interest in knowing who was receiving
charitable donations. Punitive damages
could be available on this claim, though not on the others.
There was no common law unfair competition claim, because
there was no protectable mark at issue, nor was there misuse of a trade secret
in using publicly available information like a name or ADRC’s address. “In the
Court’s view, the name of an organization’s executive and address does not
neatly fit within the categories typically associated with a common law claim
for unfair competition.” A conversion claim failed because there was no
specific identifiable fund to which ADRC was entitled. And tortious
interference with prospective economic advantage failed because there was no
sufficiently alleged “business injury,” as required. ADRC alleged injury in the form of lost
donations, but didn’t particularize the damage to its relationships with its
donors. And there was no fraud because
ADRC didn’t reasonably rely on any misrepresentations; allegations of third
party reliance were insufficient under New York law. The court also dismissed claims for breach of
contract based on the Association’s continued use of donor information after
disaffiliation. The Association’s
contractual obligations under the SOR ceased after disaffiliation, and what
counted as assets—including donor information—was expressly reserved for
arbitration. Likewise, even if the donor
lists constituted a trade secret, ADRC failed to allege that the information
was used “in breach of an agreement, confidential relationship or duty, or as a
result of discovery by improper means,” or in such a way as to constitute
common law unfair competition.
An unjust enrichment claim, however, survived (based on the
donations).
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