Lexmark applied to false association claims under 43(a)(1)(A)

Lundgren v. Ameristar Credit Solutions, Inc., 2014 WL 4079962, No. 3:12–263 (W.D. Pa. Aug. 18, 2014)

Ameristar is a “debt settlement and tax resolution business,” while Lundgren “was previously in the mortgage service industry and began offering tax resolution services in July 2010.”  (There is an untold story here about the economic crisis and eating all the parts of the pig up to and including the squeal.)  Lundgren is an enrolled agent with the IRS, which makes him authorized to represent taxpayers before the IRS.  Before his Ameristar employment, he was employed by another tax relief firm.  He signed an at-will employment agreement and a covenant not to compete for or solicit any of Ameristar’s customers, clients, or accounts either dirctly or indirectly.  Lundgren alleged that this wasn’t the entire agreement, because he had his own tax relief business with 6-8 clients before he joined; he maintained that Ameristar agreed that he could continue to serve these clients, though Ameristar disagreed and said he was just allowed to finish up a few clients.

When Lundgren began at Ameristar, he was the only enrolled agent, though others were then added, along with case workers.  At one point he had responsibility for 183 case files; files were expected to close within 12 months though that could vary.  Lundgren agreed to participate in Ameristar’s advertising and executed a “Talent Release Form” allowing Ameristar to use his name, title, likeness, image, and voice for a TV ad, though his ad was, according to Ameristar, not that successful.

Lundgren’s employment was terminated in 2012.  He sued for violations of the Lanham Act, state law privacy rights, wrongful termination, and breach of an implied contract for employment.  The court declined to exercise jurisdiction over the state law claims because it dismissed the Lanham Act claims.

Lundgren alleged both false association under §43(a)(1)(A) and false advertising: Ameristar allegedly misrepresented that he was an employee after he was terminated and used his name and likeness in an ad endorsing Ameristar’s services.  Under Lexmark, “a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.”  The court assumed, without deciding, that Lexmark stated the proper standard for both parts of §43(a), and that Lundgren’s claims failed.  (I’m not a civil procedure expert, but how can this really be true?  If Lexmark doesn’t provide the proper standard for false association claims, on what basis does the court kick Lundgren’s out?  The court also noted that Conte Bros. said there was no difference between the two prongs for standing purposes, and that part of the Third Circuit’s holding wasn’t addressed by Lexmark.)

The only damages Lundgren alleged with any specificity related to his wrongful termination, not from a Lanham Act violation.  In his deposition, he testified that his injury as the result of the ads was to “my reputation, particularly the guy here in Johnstown who saw me and was questioning me about that. Other people, colleagues who saw me. It just seems to … impede or whatever my image and who my alliance is with…. [It i]nfluences whether or not they can trust, I believe, what I say if they see me in other places, yet I’m practicing or trying to practice on my own.”  The court found these claims for “damage to his reputation” and/or “lost reputation and goodwill” vague and conclusory.  (And yet, how much do these statements differ from what courts routinely say about goodwill in trademark cases?)  He also cited no evidence that the ads featuring him were successful or affected Ameristar’s receipts positively.  Thus, at the summary judgment stage, he didn’t provide evidence raising a material issue of fact as to injury to a commercial interest in his reputation or sales.