paying a referral fee is a consumer injury, not a competitor injury, for Lanham Act standing purposes

Lewis v. Acuity Real Estate Services, LLC, 63 F.4th 1114 (6^th Cir. 2023)

Acuity operates a website that connects people looking to buy or sell homes with a local real-estate agent in their area. Acuity offers its services for free to home buyers and sellers but requires realtors to pay a fee for referrals. Lewis’s employer required him to pay Acuity’s fee out of his commissions from home sales. Lewis sued under the Lanham Act, alleging false statements to home buyers and sellers.

Lewis lacked a “commercial injury” because he was suing as a customer—he alleged that the “product” he bought was defective and sought to recover the referral fee. (The facts do sound frustrating: Lewis paid a referral fee to a different site, which he considered the one that brought him the client, but because Acuity was also involved, it successfully sued him and also collected.)

The court held that “no reasonable person would describe Lewis’s payment of this referral fee as a commercial injury to his ‘reputation or sales.’” Rejecting Lewis’s specific factual situation as relevant, the court reasoned, “whenever this injury arose (that is, whenever Acuity requested its fee), Lewis will have gained, not lost, a sale.” (This arguably makes sense because the falsity alleged is misrepresentations that lead consumers to use Acuity’s site rather than continuing to search for agents on their own.) Lewis didn’t allege that his payment of this referral fee injured his status in the realtor market in any way. Nor did he allege any reputational harm from, say, Acuity’s online description of the realtors in its network (including Lewis) as “top talent.”

The court commented that other realtors could have standing:

To be sure, it is not difficult to imagine a potential commercial injury to realtors arising from Acuity’s allegedly false advertising. Instead of identifying the referral fee as the injury, suppose that a different group of realtors refused to join Acuity’s network. Suppose further that these realtors alleged that they lost business because Acuity’s purportedly false advertising caused home buyers and sellers to use Acuity’s referral services and the competing realtors in Acuity’s network. Even though this different group of realtors would not directly compete with Acuity (as compared to its network of realtors), this purported lost business may well qualify as “an injury to a commercial interest in ... sales” that falls within the Act’s zone of interests.

But that wasn’t the case presented.