Monday, October 23, 2017

9th Circuit rules failure to recognize labeled ads as such "implausible"

Novation Ventures, LLC v. J.G. Wentworth Co., No. 16-55289, 2017 WL 4711477 (9th Cir. Oct. 19, 2017)

District court opinion discussed here. The court of appeals affirmed the dismissal of this case against J.G. Wentworth arguing that its use of different names to advertise structured settlement products, creating the appearance of competition but allowing Wentworth to charge higher prices/driving competitors further down in search results, was misleading and anticompetitive.  Novation failed to allege antitrust injury; merely having a harder time competing isn’t actionable, and any harm to consumers would have made it easier for Novation to compete on price. Also, “the whole advertising market was open to Novation—that market was not Google alone, and, at any rate, Novation could compete for Google advertising.”

And here’s a quote that defense lawyers will like a lot: “the assertion that consumers are not wise enough to recognize labeled advertisements for what they are, or to scroll down farther than the first three entries they see, is itself not plausible.”  This indicates why the false advertising claim was doomed; Novation didn’t plead any literally or implicitly false statement by the ads, only that the separate entities didn’t advertise their affiliations. And it was implausible that consumers seeking to sell future payments from structured settlements would fail to exercise a relatively high degree of care in considering ads from structured settlement companies.

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