Monday, June 06, 2016

business challenges BBB's claims about itself, lacks Lexmark standing

Wall & Associates, Inc. v. Better Business Bureau of Central Virginia, Inc. 2016 WL 3087055, No. 1:16-cv-119 (E.D. Va. May 31, 2016)
Wall runs a tax settlement business that received low ratings from several regional BBBs, so it sued them for false advertising, tortious interference with contract and business expectancy, and defamation. The court dismissed the complaint.
The BBBs are nonprofits that maintain websites with a free, searchable database of reviews of businesses in the region. A business review contains background information on a business, an indication of whether the business is BBB accredited, and a grade on a scale of A+ to F generated by thirteen “elements.” BBBs generate revenue through accreditation of businesses. The CBBB does not accredit businesses,   According to Wall, its efforts to understand the basis underlying its bad grades and a consumer alert posed by one BBB were marked by "a lack of transparency and a general contempt for the type of services that Wall offers."
On proximate causation, Wall alleged that the BBBs’ self-characterization of the rating system as a national, uniform, and unbiased standard when in reality it is implemented by regional, independent licensees applying their own “subjective, biased, and personal criteria” was false. Consumers believing that the ratings were neutral relied on them.  The court found that this causal chain was too attenuated to survive Lexmark, as compared to claims between competitors or direct commercial disparagement claims.  Lexmark didn’t require competition, but it did note that “a plaintiff who does not compete with the defendant will often have a harder time establishing proximate causation.” Wall argued that there overlap between the two businesses because the BBBs’ promotion of the rating system targeted individuals and businesses, and they must pay taxes and potentially need a tax-settlement business. “That is too flimsy a connection.”
Wall’s direct injury, if any, was from the BBB’s grades and “alert” on the page for Wall on the BBB’s site.  But those were nonactionable statements of opinion. 
Without the Lanham Act claim, the court declined to exercise jurisdiction over the pendent state law claims.

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