Thursday, June 30, 2022

court presumes injury from comparative false advertising for injunctive relief, not monetary

Universal Life Church Monastery Storehouse v. American Marriage Ministries, 2022 WL 2317439, No. C19-0301RAJ (W.D. Wash. Jun. 28, 2022)

The parties compete to provide online ordinations to individuals who wish to perform marriage ceremonies and accuse each other of misconduct in advertising. This opinion grants partial summary judgment on ULC Monastery’s Lanham Act, Washington Consumer Protection Act, and defamation claims; AMM has some surviving counterclaims as of this opinion.

ULC Monastery was founded by George Freeman in 2006. It offers free online ordinations; most of its income comes from sales of proof of ordination and paraphernalia for performing religious ceremonies. Freeman “was previously an officer of an entity affiliated with the original Universal Life Church in Modesto, California, which had been subject to legal challenges,” though claims complete independence and lack of association with them.

AMM was founded by a former ULC Monastery employee and employs other former ULC Monastery employees. “It, too, offers free online ordination for individuals who wish to officiate marriages.” It has a main website, and also and  

The AMM-vs-ULC website compares the parties, stating that that the Universal Life Church “has been in and out of the courtroom ever since” the 1950s; “has had their IRS non-profit status revoked;” and “has been embroiled in fraud allegations.” It links to other webpages that include information about “court cases involving the Modesto ULC that pre-date the founding of ULC Monastery,” thus generating the alleged falsity.  

The AMM Legal website purports to answer “questions about getting ordained online to perform weddings.” ULC Monastery alleged that it contained multiple false and misleading statements, including that AMM is an “IRS 501(3)(c) Certified Non-Profit Ministry;” and that “[t]here are people who have millions of dollars selling ordinations” who are “behind that anonymous, and misleading website that incorrectly states that weddings ‘may not be legally valid.’ ” Deposition testimony acknowledged that this was a reference to ULC Monastery.

Could ULC Monastery show cognizable harm? On the Lanham Act claim, that required showing sales diversion or lessening of goodwill. The Ninth Circuit has “generally held . . . that ‘when a plaintiff competes directly with a defendant, a misrepresentation will give rise to a presumed commercial injury that is sufficient to establish standing.’” ULC Monastery didn’t put in specific evidence of damages, but sought to rely on the presumption of commercial injury.

Lexmark, the court held, didn’t supersede the presumption of injury for false comparative advertising. Thus, summary judgment wasn’t appropriate on the claim for injunctive relief. But—contrary to what some other district courts have done post-Romag—the court did grant summary judgment on the claims for monetary relief. Because awards must be compensatory and not penalties, the plaintiff “bears the burden to justify any monetary recovery” of either its damages or the defendant’s profits. “Here, ULC Monastery has not directed the court to any evidence that would support an award of monetary relief on its Lanham Act claim, nor has it cited any case that awarded monetary damages to a plaintiff based only on a presumption of commercial injury.”

WCPA claim: “The WCPA does not require a plaintiff to prove that it suffered monetary damages—rather, it requires only that the plaintiff establish that it has suffered an injury due to the unfair or deceptive act or practice.” In addition, although expenses incurred in bringing the WCPA claim itself are not cognizable, “[i]nvestigation expenses and other costs resulting from a deceptive business practice sufficiently establish injury.” However, ULC Monastery didn’t show that its attorney was retained only to “investigate [the websites], verify their falsity, and determine the author.” Attorney fees to “determine whether the defendant’s conduct was actionable” didn’t constitute an injury to business or property within the meaning of the WCPA. Nor did the time an employee spent reviewing AMM’s websites—which was less than an hour—without more. Summary judgment to AMM.

Defamation per se: Allows a presumption of damages. AMM cited no Washington cases holding that the presumption of injury was rebuttable by evidence that no damage actually occurred. “Furthermore, a jury is free to award nominal damages in a defamation per se case based on its assessment of the harm, if any, suffered by the plaintiff as a result of the defamatory per se statements.” Survived.

The individual defendant was also dismissed. “The Lanham Act imposes liability on corporate officers who authorize, direct, or participate in the unlawful acts, while “Washington courts find officers personally liable for the torts of a corporation where the officers ‘either knowingly committed wrongful acts or directed others to do so knowing the wrongful nature of the requested acts.’” The strongest evidence of the individual defendant’s involvement was that he reviewed a draft of the website copy before publication and didn’t object. This wasn’t enough to make him a “guiding spirit” or “central figure” in the underlying conduct.

No comments: