Tuesday, September 14, 2021

gold buyer's "up to 90%" payment claims were plausibly misleading

Express Gold Cash, Inc. v. Beyond 79, LLC, 2020 WL 9848431, No. 18-CV-00837 EAW (W.D.N.Y. Dec. 15, 2020)

Previous opinion.  The parties compete in the market for buying gold from ordinary people.

In 2010, the Today Show—a morning television show aired on the NBC network—aired a segment in which it mailed a single item of gold to ten different mail-in precious metals dealers and compared the prices offered. The Today Show received the highest offer from Defendant, which offered 90% of market value. From 2011 to the present, Defendant has published various advertisements stating that it is ranked or rated “#1” by the Today Show.

Previously, some false advertising claims were dismissed, but claims “based on the Today Show-related advertising” were sufficiently pled. Plaintiff sought to amend the complaint, omitting, inter alia, claims regarding “latest payouts” stock photographs but adding allegations that defendant “deceives customers by falsely advertising on its website that it offers the ‘highest payouts in the industry’ and ‘will pay you ... up to 90% for your precious metals.’ ” It sought to add additional allegations about customer reviews and test transactions, and about how defendant’s business operations materially changed since 2010.

Proposed new claims regarding defendant’s statements that it pays “up to 90%” of the value of gold and has the “highest payouts in the industry” were not futile. Plaintiff detailed three test transactions in which the potential sellers were initially offered 33-53% of the value of their gold items, only receiving final offers of up to 87% of the items’ value after a series of negotiations in which the defendant was unresponsive and gave false information. While the proposed complaint didn’t plausibly allege literal falsity—it didn’t show that defendant never pays 90% and it didn’t provide context on standard payouts in the industry—it did plausibly allege misleading advertising. That’s a question of fact. Further, the plaintiff identified “specific customer reviews that evidence confusion regarding the prices paid by Defendant, including reviews stating ‘[Defendant] should do what they advertise and pay 90% of what the gold/jewelry is worth,’” etc. These specific factual allegations were sufficient to make it plausible that consumers were confused or misled.

The defendant argued that these allegations improperly to hold it liable for “statements made directly to individual consumers.” True, wide dissemination is required for commercial advertising or promotion, but the ads challenged here were statements on defendant’s public webpage and otherwise disseminated to the public; individual consumers’ complaints were evidence of those statements’ effects.

Nor was the court persuaded that “highest payouts in the industry” were mere puffery or opinion. Particularly when coupled with the specific assertion that such payouts were up to 90% of an item’s value, that wasn’t vague or unbelievable.

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