law firm alleging clients lost to competitor satisfies Lexmark, in part

Brave Law Firm, LLC v.
Truck Accident Lawyers Group, Inc., No. 17-1156-EFM-JPO, 2019 WL 2073872 (D.
Kan. May 10, 2019)
Brave, a personal
injury firm, sued various parties for violating the Lanham Act and Kansas state
law.  
It alleged that “from
2007 to at least 2017, Defendants created and disseminated false and misleading
advertisements regarding the amount of money they obtained as settlements and
jury verdicts for their clients.” For example, one ad claimed that they
obtained a settlement of $9 million for a past client, but Brave alleged that
they didn’t because they were fired by the client. They also allegedly falsely
advertised gross recoveries of $4.1 million, $2.4 million, $2.1 million, $1.1
million, and $1.6 million.
Brave pled three
specific examples of past clients who relied on the allegedly false
advertising. One hired one of the defendants in 2011. “During mediation, the
mediator told her that her case had a value of $360,000, but the highest
settlement offer [defendant’s entity] AAPLO obtained was $225,000 in exchange
for a full release to the tortfeasor. Consolver rejected that offer and
terminated AAPLO as her legal counsel. …. Consolver then hired Brave, who
pursued a different theory of recovery and obtained a settlement amount of
$360,000.”  Defendants/their entities filed
an attorney’s lien, reducing the amount of Brave’s fee.  The other examples were very roughly similar
though more complicated.

The court rejected defendants’ arguments that the statute of limitations barred
a Lanham Act claim relating to the first client and that it wasn’t sufficiently
pled under Rule 9(b). On the limitations issue, the court borrowed the Kansas
period for fraud, 2 years; Kansas uses a discovery rule, and Brave alleged that
defendants’ injury-causing conduct wasn’t reasonably ascertainable until within
the two-year period for filing.  Brave
hadn’t pled itself out of court by alleging facts making it clear that a
reasonably prudent person would have investigated Defendants’ actions in 2007
or 2012, when Consolver hired Brave.

Brave also identified specific allegedly false ads.  Although Brave didn’t allege which exactly
Consolver viewed or when she viewed them, it was enough to allege that defendants
“engaged in a false advertising scheme that exposed potential clients, such as
Consolver, to numerous false advertisements over a period of time. The
requirements of Rule 9(b) are relaxed when the alleged fraudulent acts are
numerous and occur over an extended time period.  Here, it would be unduly burdensome to
require Defendant to specify every false advertisement that Consolver relied
upon and when she saw that advertisement.”
Brave also
sufficiently alleged falsity by identifying specific claims about verdicts or
settlements achieved by defendants and alleging that they were false. For
example, ads reporting the $9 million settlement were allegedly “literally
false” because “the person that actually reached the settlement had terminated [defendants/their
entities] prior to any settlement being reached.” Defendants argued that the
claim was true because they were able to assert an attorney’s lien against the
former client when settlement was eventually reached and thus they contributed
to the ultimate resolution.  The court
wasn’t persuaded. The ad didn’t identify defendants as causally helping to
obtain a settlement: it said that one of them did obtain it.
As to another
client, defendants argued that the claim failed to satisfy Lexmark. The alleged “injury to a commercial interest in reputation
or sales” was that because it had ended up embroiled in litigation about the
attorney’s lien on that client’s recovery that (1) it “has been embroiled in
litigation and forced to deal with the abandoned lien issue for years”; (2) it
“has sustained injury to its reputation as well as been forced to spend
considerable time and expense defending frivolous litigation”; (3) “the
allegations that Brave Law Firm, LLC and its employees acted ‘illegally,
unethically[,] and immorally’ have been disseminated far and wide and damaged
its reputation both within the Kansas legal community and [with] potential
clients.” Proximate cause ordinarily requires “economic or reputational injury
flowing directly from the deception wrought by the defendant’s advertising; and
that occurs when deception of consumers causes them to withhold trade from the
plaintiff.” Here, the allegations of injury were “simply too remote” from the false
advertising.  Brave didn’t allege losses
of fees from an attorney’s lien, but rather from losses due to fighting with
defendants about the underlying case.
As for the third
client, it was sufficent to allege that Brave “likely” would have been her first
choice in the absence of advertising; it was not required to allege that she
definitely would have been. This third client’s claim was dismissed, allegedly because
of defendants’ missed deadlines, and allegedly would have resulted in a
multimillion-dollar recovery. Defendants argued that it wasn’t plausible to
conclude that Brave would have won, and won so big.  But it was enough to allege that the client’s
“case would not be one that was particularly difficult to win and, if properly
handled, would have generated a substantial attorneys’ fee upon successful
resolution.”
However, Brave didn’t
successfully plead tortious interference. Even if Brave pled the existence of a
business relationship or expectancy with the clients, nothing indicated that
defendants were aware of that when those clients initially hired defendants.

from Blogger http://bit.ly/2w0G6Ly

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