What’s UpCounsel? LegalForce thinks it’s false advertising

LegalForce RAPC Worldwide P.C. v. UpCounsel, Inc., 2019 WL
160335, No. 18-cv-02573-YGR (N.D. Cal. Jan. 10, 2019)
LegalForce’s litigation against various competitors in the
trademark registration world continues. 
UpCounsel “is an online marketplace for legal services that enables
users (primarily entrepreneurs and businesses) to find and hire attorneys via
its website.” LegalForce sued UpCounsel for false advertising and unfair
competition, including acting as an unregistered lawyer referral service.
Here, some of the false advertising claims were dismissed as
puffery, while others survived.
Law firm/virtual law firm: Exemplary statements included:
“We are the world’s largest virtual law firm for businesses of any size. We
allow businesses to get high-quality, cost-effective legal services. While our
lawyers serve as outside general counsel to many companies, we also assist with
specialized legal work like IP, immigration, commercial contracts, litigation,
and much more.” The “world’s largest” part was nonactionable puffery.  The “virtual law firm” part was not actionable
because of the context, which also introduced UpCounsel as a “startup” that enabled
others to “find” attorneys and thus indicated that UpCounsel was a platform
rather than a true firm.  I understand
the court to be reasoning that there are “tech platforms that enable individual
lawyers to communicate with clients” (Uber, but for lawyers) and there are “law
firms,” and because most of the challenged statements gestured at identifying
UpCounsel as a “platform,” all the rest of that understanding—including that
the lawyers would be individuals operating separately—would naturally follow.  On the one hand, seeking legal counsel does
require some care and attention from a reasonable consumer; on the other, (1)
the whole point of the service is to target people starting businesses fresh, who
may not know the ins and outs of the legal services market; (2) even experienced
nonlawyers may reasonably not know very much about the important differences
between a “law firm” and other means of getting legal services. Anyway, similar
statements were analyzed similarly, where there was mention both of a “virtual
law firm” and of independent contractors or a claim of “as good as using a law
firm.”
However, claims of the form “Top 5% of { Practice Area}  Lawyers in { City}” were not puffery.  LegalForce alleged that “[b]y indicating
‘5%’, UpCounsel implies that there exists an independent and publicly trusted
ranking system in each and every city and the attorneys that UpCounsel lists on
its city pages are chosen from the top 5% of such a list. In reality, no such
list exists.” It quoted a review by a customer of UpCounsel who said the reason
he selected UpCounsel was because he believed it was “a network for only the
most top notch legal reps in the area” and “[t]he attorneys offered with them
are at the top of their game and you will get what you pay for.” Another customer
wrote
that he was deceived when he saw an advertisement on a search engine “[o]ffering
‘Business Legal Services On-Demand by Top Attorneys’” and thought that a disruptive
startup would be a good, cheaper choice for a disruptive startup to use. He
concluded: “I wish I had never used UpCounsel and I’m warning all startups,
business and companies out there to never make the same mistake!” [Which goes
to show that you maybe shouldn’t hire a lawyer the way you’d summon a Lyft.]
Lanham Act claims based on the claim of “Top 5% of Trademark
Attorneys” already survived a motion to dismiss on the basis of puffery. Challenging
similar statements pertaining to other types of attorneys, namely patent,
intellectual property, copyright, and startup attorneys, didn’t change the
analysis. UpCounsel cited Hackett v. Feeney, No. 2:09-cv-02075-RLH-LRL, 2011 WL
4007531 (D. Nev. Sept. 8, 2011) to argue that, in order to be actionable, the
statement must answer the “critical question ‘[Top 5%] as determined by
whom[?]’ ” But that case involved a “voted
#1 best show in Vegas!”; not only is #1  particularly puffy, but voting on a best show
is also puffier than specifying a specific category of attorneys. Specifying a
specific practice area meant that “[i]t cannot be said that no reasonable
consumer would rely on such an assertion.”
UpCounsel argued that Google made the challenged statements,
not UpCounsel, but this didn’t work at the motion to dismiss stage.  “Plaintiffs allege that the search results ‘republish’
statements originally made by UpCounsel. The issue of who actually made the
statements (i.e., the search results) is a factual issue to be resolved at
summary judgment.”
The same result happened with “The 10 Best { Practice
Area}  Lawyers in { State}  NEAR ME,” which was allegedly false because “individuals
listed in each resulting page are not usually near the customer who did the
search, and often not even in the same state.” 
“A reasonable consumer reading these statements could conclude that
UpCounsel attorneys are objectively and measurably superior to other ‘{
practice area}  lawyers in { state}’ near
the consumer.” [And even if not, they could reasonably conclude that those were
lawyers “near” them.]

So too with “{ City} 
{ Practice Area}  Lawyers 5.0
***** Based on { X number of}  reviews,” e.g.,
“Cotati Intellectual Property Lawyers 5.0 ***** Based on 5450 reviews.” That
was allegedly false because “It is impossible for Cotati Intellectual Property
Lawyers to have 5,450 reviews on UpCounsel. Cotati is a small town in Northern California
with a population of 7,455. There are only 21 attorneys in the city of Cotati
licensed to practice law in California, and none of these 21 attorneys are
listed on UpCounsel.” (Among other things, one guy who allegedly never even
used the UpCounsel platform appeared as a “Top 5%” franchise lawyer in Santa
Rosa, California, “Top 5%” copyright lawyer in Coeur d’Alene, Idaho, and a “Top 5%” intellectual property
lawyer in Montgomery, Alabama, among other practice areas and cities.)  Invariably, LegalForce alleged, UpCounsel
would display a five-star rating, resulting from deceptively aggregating
reviews to make it seem as if the reviews came from actual customers in those
cities and states.” UpCounsel allegedly used code to “refresh” its reviews to
make them more attractive to Google.
UpCounsel argued that use of SEO techniques “as a means to
its advertising ends” didn’t state a claim under the Lanham Act because UpCounsel’s
“software code” wasn’t a statement that was seen or relied on by customers, and
that statements regarding five-star reviews were non-actionable puffery. The
first issue, whether the code is (or made) a statement that consumers saw and
relied on was a factual issue for summary judgment. The statements were not
puffery. [Among other things, that there were X number of relevant reviews is a
verifiable statement, even if the individual statements in the review might be non-factual.]
Similarly, LegalForce alleged that UpCounsel “intentionally
and purposefully, and in bad faith, attempts to deceive Google search crawlers
and the public that uses Google to search for legal services.” For example,
“UpCounsel’s tag for its 5450 fabricated reviews for attorneys in Cotati is
based on a fraudulent data field called ‘reviewCount’ which is printed on each
page,” and “UpCounsel’s page source for each of its tens of thousands of
reviews” includes code whose the sole purpose was to “trick search engines into
recognizing UpCounsel’s aggregate ratings as trustworthy.” Using this code
allegedly intentionally violated Google’s technical and content guidelines.
UpCounsel argued that its “software code” and HTML “page
source” weren’t statements that were seen and relied on by customers. Further, a
false advertising claim requires a false statement made by the defendant, so
UpCounsel argued that a claim couldn’t be based on search results that LegalForce
elicited from a search engine using words that LegalForce chose. The court
agreed that, standing on their own, the software code and HMTL page source weren’t
actionable statements. But LegalForce’s pleading “tied the software code and
HTML page source to specific actionable statements,” such that UpCounsel’s actions
caused search results to include false and misleading statements.  The software code and HTML page source were thus
allegedly evidence of intent to mislead consumers.
Next, LegalForce alleged that “UpCounsel deceives customers
by steering them to attorneys and non-attorneys who are not located anywhere
close to their city, or authorized to practice in their respective state” or in
any state. Among other things, UpCounsel listed patent agents as lawyers;
UpCounsel conceded that three examples cited in the complaint were in fact patent
prosecutors (among other things, a patent agent appeared as a “Top 5%”
immigration lawyer in Blackfoot Idaho and as an “Oregon Attorney[ ] &
Lawyer[ ] for Hire On-Demand” through UpCounsel). But UpCounsel argued that it didn’t
steer anyone to unlicensed attorneys and that nothing on its UpCounsel’s
website represents that these individuals are attorneys.
Comment: Google search results are answers to questions,
which thus could be false as answers—and potentially false advertising under
the right circumstances—even if they lack a true/false value standing alone. If
UpCounsel programs its site to respond to a search for lawyers with unlabelled nonlawyers
or lawyers outside the jurisdiction and use the headline “Top 5% of Patent
Lawyers in Oakland, California,” then the response can be as false as if I
asked for Diet Coke at a restaurant and was given undisclosed Diet Pepsi in
return (and though I am loath to admit it, the results for consumers could be
far worse).  There’s nothing inherently
false about Diet Pepsi; the falsity is in the use in response to a request for
something else. 
However, this formulation seems to foreground a §230 issue
that is not discussed in the opinion: does UpCounsel rely on what its (putative)
lawyer-contractors tell it?  Or does the
problem come from non-§230 protected decisions made by UpCounsel on how to
structure or label the website?  This formulation
also highlights that labelling may be the key here: there’s nothing wrong with
advertising an alternative to what the consumer is searching for, but even in
the comparatively more liability-happy area of trademark the courts have
understood that labeling is the key.  One
question is whether ultimately it should matter that, in the individual
description of the lawyer/patent agent on the page of “patent lawyers,” (1) that
description is provided by the user, or (2) the description is clear, which in
the case of the specific patent agent identified by the complaint it was not—he
offered “legal services” and “patent prosecution services” but didn’t disclose
that he was a nonlawyer, something another nonlawyer might not notice
especially among a page of lawyers offering similar services.  When I search Amazon I often get a set of results
that don’t make any sense (something to do with algorithmic manipulation
or something even
weirder
?); is Amazon falsely advertising to me because of those bad results,
which come from seller-provided information? 
My sense is that the answer is no, but then again the fact that some of
the results are bad is much easier to determine when I’m looking for girls’
pants size 10; I also think that it is different for a platform to claim to
provide access to legal services in particular, which structures consumer
expectations when looking at specific entries.
One problem seems to be that UpCounsel structured its own
page/headline creation algorithm to be so overenthusiastic that it recommended
lawyers far outside their practice areas or states of licensure.  Unless that came from data entered by
individual participants checking boxes for those practice areas/states, I think
that §230 would not pose a barrier to liability for such structuring.
Anyway, the court concluded: “Accepting as true plaintiffs’
allegation that the search results ‘republish’ statements originally made by
UpCounsel, as the Court must in analyzing UpCounsel’s motion to dismiss,
UpCounsel cannot reasonably argue at this stage that it has not made false
statements by way of the search results.”
UCL claims:  Allegations
of lost business and decrease in business value, and allegations of wrongfully
denied business opportunities, sufficed to plead standing under the UCL’s
expansive standing doctrine.  But could LegalForce
bring claims based on violations of other laws that didn’t themselves provide a
private cause of action? Usually, yes; the limit is that plaintiffs may not
“plead around an absolute bar to relief” by recasting the cause of action as a
claim under the UCL: “[t]o forestall an action under the unfair competition
law, another provision must actually ‘bar’ the action….” by explicitly
precluding private enforcement or expressly providing immunity for the conduct
alleged.
Some of the other rules that LegalForce alleged UpCounsel
violated thus allowed a bootstrapping UCL claim, such as the provision of the California
Business and Professions Code section that bars unregistered attorney referral
services. This was not enforceable by private parties, but its violation could
be borrowed to create a remedy under the UCL. However, the California ules of
Professional Conduct expressly provide: “These rules are not intended to create
new civil causes of action.”  Their
violation couldn’t be borrowed for a UCL claim. As for federal USPTO rules of
professional conduct, the court found no binding or citable authority that the
claims were impliedly preempted.
The UCL unfairness claim also survived. As a competitor,
LegalForce had to use the more limited definition of “unfair”: they had to
plead “conduct that threatens an incipient violation of an antitrust law, or
violates the policy or spirit of one of those laws because its effects are
comparable to or the same as a violation of the law, or otherwise significantly
threatens or harms competition.” UpCounsel argued that this couldn’t be done without
pleading “a reduction of competition in the market in general and not mere
injury to their own positions as competitors.” The court didn’t agree that
LegalForce had to state an antitrust claim to proceed.  They sufficiently pled that UpCounsel’s
actions “otherwise significantly threaten[ ] or harm[ ] competition,” given
allegations that UpCounsel gave itself an unfair advantage over legitimate,
rule-following competitors.

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