court refuses to recognize Lanham Act false advertising contributory liability

CarShield, LLC v. Pelican Investment Holdings, LLC, 2026 WL 2920868, No. 4:25-cv-01566-MAL (E.D. Mo. Sept. 29, 2026)

The parties compete in the market for car extended warranties. CarShield alleged that most car extended warranties involve multiple actors, from the seller or marketing company that promotes the coverage, to the financing company that facilitates payments, to a third-party administrator that manages claims and is responsible for honoring coverage when issues arise. “CarShield’s edge in the business is that they do not outsource claims, but rather their warranties are administered by an affiliated, in-family administrator,” allegedly signaling  “accountability and reliability.”

Pelican allegedly called CarShield’s existing and prospective customers about switching their coverage to a Pelican plan, making false statements such as telling consumers that car dealers and repair shops no longer accept CarShield plans and that CarShield does not administer its own claims.

Defendant Mepco, which financed the policies sold by Pelican, sought dismissal of the claims against it and the court agreed, including by reasoning that Lanham Act false advertising doesn’t have contributory liability even though trademark does. No reasoning other than that most courts of appeals haven’t recognized false advertising contributory liability. Sigh.

CarShield also sought to use agency, apparent authority, and ratification to hold Mepco liable for its state and federal claims.

Agency: The court found that Mepco had no right to control Pelican in its advertising and marketing activities. The parties’ agreement “did not task Mepco with monitoring, supervising, or otherwise overseeing Pelican’s marketing calls to customers.” A provision requiring Pelican to follow all applicable federal and state laws, including laws relating to consumer protection and false advertising, didn’t matter because, “within the boundaries set by federal and state law, Pelican seems to have enjoyed free rein in deciding how to market and advertise the vehicle service contracts.” Without the right of control, alleged knowledge alone does not give rise to an agency relationship under Missouri law.

Apparent authority also failed. Apparent agency is created by “any conduct by the principal which, if reasonably interpreted, would cause a third person to believe that the principal consents to the acts of the agent.” Even if it were the case that Mepco represented that Pelican was acting on Mepco’s behalf, the complaint didn’t allege that customers believed Pelican possessed authority to act for Mepco and changed their position based on this.

Ratification arguments also failed because that requires a principal-agent relationship.