C&D to competitor’s clients can be “commercial advertising & promotion”

Matonis v. Care Holdings Gp., L.L.C., No. 19-cv-20247-UU, 2019
WL 3386378 (S.D. Fla. Jul. 25, 2019)
The defendant Care Companies engage in healthcare management
consulting, “advising healthcare providers on, inter alia, patient intake
strategies and revenue management.” 
Plaintiff Matonis is a healthcare management consultant who provided
consulting services to the Care Companies pursuant to a consulting agreement
with a confidentiality provision and a non-solicitation provision with respect
to the Care Companies’ employees, consultants, and agents. In 2016, while still
employed with the Care companies, Matonis founded her own consulting company
(Caliber) to help health care providers track their revenue. Defendants
allegedly explicitly authorized her work with Caliber (apparently after the
fact of founding). The Care Companies then offered Matonis a W-2 employment
contract, which she declined because the proposal contained a two-year
non-competition restriction and would have required her to shut down
Caliber.  The Care Companies transitioned
her clients to other Care employees and officially terminated the relationship.
During the winding down period and after, Matonis expanded
the healthcare consulting services provided by Caliber into patient intake and
revenue management, leading to direct competition with her former employer.
Defendants allegedly informed a number of Matnois’s Care clients that she was
still affiliated with the Care Companies but was unable to work because she was
suffering from ongoing health issues and had requested time off. She allegedly
found this out after clients reached out to her to check on her health. After
one such call, the client contacted Care employees, expressing his
dissatisfaction with their dishonesty. Quirk, an employee, assured the client
that at Matonis would continue to work with the Care Companies indefinitely and
was still available to be his point person, despite the fact that Matonis had
been terminated almost a month prior.
After numerous clients terminated their relationships with
the Care Companies, in-house counsel allegedly sent cease and desist letters to
Matonis’s Care clients and to Matonis directly. The letters asserted that
Matonis was still subject to “broad confidentiality and non-solicitation
provisions” in her Consulting Agreement and threatened legal action if Matonis
continued to solicit Care clients and/or if those clients sought Matonis’
services. In addition, the Care Companies allegedly created an “out of office”
auto-response message on Mantonis’ former email account at Care, allegedly
creating the false impression that she remained affiliated with the Care
Companies and tainting her reputation as a professional who promptly returns
her client’s messages.
Finally, Matonis alleged that defendant CareOptimize’s
website falsely advertises that it serves over twenty thousand healthcare
providers nationwide, when in fact it serves closer to five thousand healthcare
providers at any given time. The website allegedly misrepresents its client
base, listing two clients even after both companies terminated their
relationship with CareOptimize.
Matonis sued for false advertising/unfair competition under
state and federal law, defamation, tortious interference, and declaratory
judgment that she wasn’t barred from working with the Care Companies’ current,
former, or prospective clients.
False advertising: defendants argued that its C&D
letters weren’t commercial speech or advertising for purposes of the Lanham Act
and the allegedly false statements on Defendants’ website didn’t directly
disparage Matonis; neither argument succeeded.
Under the Gordon & Breach test (which, as a
reminder, has a prong requiring “commercial competition” that doesn’t survive Lexmark,
though that doesn’t matter here), these particular C&Ds were commercial
speech.  “Commercial speech encompasses
not merely direct invitations to trade, but also communications designed to
advance business interests ….” Matonis alleged that defendants utilized the
cease and desist letters as a tool to disparage her as someone who ignores
contractual obligations. Defendants allegedly stood to profit from them because
Matonis’ consulting company was now in direct competition with them and the
clients to whom the letters were sent were former Care clients who were
interested in Matonis’ services.  This
sufficed to avoid dismissal.
As for the website statements, disparagement isn’t required
for false advertising.  If the argument
was that Matonis failed to allege injury, it was enough to allege that the
parties were direct competitors and that defendants falsely represent the
number of clients they represent and the scope of the representation at this
Defamation per se: allegations that defendants falsely
represented that (1) Matonis was suffering from an ongoing health problem that
affected her ability to work on their accounts; (2) she is in violation of a
non-solicitation agreement by working with the Care Companies’ former clients;
and (3) continued work with her would expose them to legal liability sufficed
to allege defamation per se, which in Florida covers falsehods that are injurious
to the target’s trade and professional reputation.

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