Wednesday, April 26, 2017

4th Cir. affirms dismissal where P didn't allege specific lost consumers or quantify lost sales

Wall & Associates, Inc. v. Better Business Bureau of Central Virginia, Inc., --- Fed.Appx. ----, 2017 WL 1437215, No. 16-1819 (4th Cir. Apr. 24, 2017)

The court of appeals affirmed the dismissal of Wall’s complaint for false advertising based on statements by the BBB.  Lexmark requires a plaintiff to show not only false or misleading advertising but also that such statements caused it actual damages.  Wall didn’t properly allege causation.  The false advertising alleged in the complaint was that the BBB falsely advertised and promoted a system for assigning letter grade ratings to businesses as “national, uniform, unbiased, and objective” when in reality the system was implemented based on “subjective, biased, and personal criteria.” Wall alleged that it was damaged by receiving received a letter grade rating resulting from “subjective, biased, and arbitrary decisions” when consumers believed that it had been subjected to a review process that is “national, uniform, unbiased, and objective” in nature.

Wall’s complaint, however, does not identify a single consumer who withheld or cancelled business with it or pointed to a particular quantum of diverted sales or loss of goodwill and reputation resulting directly from reliance on any false or misleading representations by Defendants of the letter grade rating system as objective and unbiased. Given the absence of such fact allegations, Wall did not adequately allege the necessary proximate cause between its alleged injury and Defendants’ allegedly violative conduct.

Does that mean that every plaintiff should identify consumers or allege quantified losses, or will more general allegations suffice when the harm is more direct/the advertising claim being challenged is more central to the decision?

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