proximate causation isn't as easy when there's no disparagement

HomeLight, Inc. v. Shkipin, No. 22-cv-03119-PCP, 2023 WL 6284738, --- F.Supp.3d ---- (N.D. Cal. Sept. 27, 2023)

HomeLight runs an online platform that matches real estate agents with homebuyers and sellers and requires any agent who accepts a referral resulting in a sale to pay 25% of their commission to HomeLight. Shkipin operates an alternative agent-matching platform, HomeOpenly, that does not charge referral fees and instead obtains revenue from advertising and auxiliary services. HomeLight sued him for false advertising and trademark violations, and Shkipin counterclaimed under federal antitrust law, federal false advertising law, and California’s UCL. I will only discuss the (unsuccessful) advertising-related claims.

Proximate cause: None of the challenged statements allegedly disparaged HomeOpenly, so Shkipin needed to allege how deceptive statements about HomeLight directed at shoppers on HomeLight’s own website “necessarily caused advertisers not to buy ads from HomeOpenly.” Even assuming a there is a direct relationship between the number of HomeOpenly visitors and its ability to sell ads, and that HomeLight’s deceptive statements resulted in some reduction in the number of shoppers visiting HomeOpenly’s website, this was “too attenuated to establish proximate cause.” This was especially true given the countercomplaint’s other plausible explanation for why online home shoppers might find HomeLight’s website but not HomeOpenly’s: HomeLight’s heavy spending on various forms of online and TV advertising that Shkipin characterized as “highly effective.”

Separately, he didn’t properly allege falsity/misleadingness. Challenged statement: “Our service is 100% free, with no catch. Agents don’t pay us to be listed, so you get the best match.” The countercomplaint alleged that the failure to mention that partner agents do pay referral fees is a “deceptive omission.” But this didn’t plausibly plead that the omission deceived a substantial segment of HomeLight’s audience, especially since the counterclaim included a HomeLight webpage specifying that “HomeLight receives a portion of the agent’s commission as a referral fee.”

Challenged statement: “HomeLight is operated in compliance with all state and federal housing laws.” Not actionable because it includes a legal conclusion rather than a statement of fact.

Challenged statement: “The agents we recommend on HomeLight typically can save you thousands on your home purchase.” Not a promise of specific results.

Challenged statements such as: “We’ve designed a solution that allows you to sort through over 2 million agents from all of the top real estate brokerages in order to find the perfect one for you.” No allegations of facts contradicting transaction/agent numbers and the rest was subjective non-actionable puffery.