individualized smear campaign wasn’t plausibly commercial advertising or promotion

Meredith Lodging LLC v. Vacasa LLC, No. 6:21-cv-326-MC, 2021
WL 2546273 (D. Or. Jun. 21, 2021)

The parties compete to manage vacation rental properties
located in Oregon. Meredith alleged that Vacasa “has embarked on a smear
campaign surgically targeted at [Plaintiff’s] homeowner customers, designed to
unfairly snuff out that competition.” The court found that the alleged
statements weren’t “commercial advertising” covered by the Lanham Act.

Allegations: With the goal of increasing its market share,
Vacasa “sent out promotional mailers to homeowners with properties located in
the same geographic areas where [Plaintiff] manages vacation rental
properties.” It “began a campaign to systematically contact and try to poach
business from Homeowners under exclusive contract with [Plaintiff]. In many
instances, [Defendant’s] representatives have made false or misleading
statements about [Plaintiff] to these Homeowners.”

The question was whether the alleged misrepresentations were
“sufficiently disseminated.” Ordinarily, “the actions must be ‘part of an
organized campaign to penetrate the relevant market,’ which typically involves
‘widespread dissemination within the relevant industry.’ ”

Each alleged falsehood came in the form of a phone call from
an employee or representative of Vacasa to an individual under contract with
Meredith to manage their vacation rental property. The purpose of each call was
to convince the individual to switch companies. There were five alleged
examples of false statements in calls to owners: (1) rep stated there were
“reviews on VRBO for [Plaintiff] stating that there is a lack of cleanliness,”
that Plaintiff “had no manager for negative reviews,” and claimed Defendant
“could manage the property better”; (2) rep stated that Vacasa “had heard a lot
of complaints about [Plaintiff] and its housekeeping teams”; (3) rep said that
homeowners had switched over a “lack of cleanliness,” but rep couldn’t corrpoborate
this; (4) rep said that Vacasa “had been talking to a lot of unhappy
[Plaintiff] customers”; (5) rep led owner to believe “during the first minutes
of the call that he was associated with [Plaintiff] (even though he was not)
before trying to persuade her to leave [Plaintiff] and switch management of
the” home to Vacasa.

Putting aside whether all these statements were falsifiable,
five calls to potential customers, even coming during a short period of time,
wouldn’t typically qualify as the “widespread dissemination within the relevant
industry” seen in false advertising claims. Although Vacasa allegedly had an
actual widespread promotional campaign in the relevant market, Meredith didn’t
allege that those advertisements contained any false or deceptive
representations.

True, “depending on the relative market at issue,
communications made to only one prospective customer may qualify as sufficient
dissemination under the right circumstances.” But the complaint didn’t allege
that the market for managing vacation rental properties was so limited that
communications reaching just five consumers was sufficient. It alleged only
that “there are a finite and relatively low number of homes suitable for short
term vacation rental management in the relevant geographic areas.”  This wasn’t specific and factual enough. The
market for hamburgers is also “finite,” but “a handful of phone calls from
Ronald McDonald himself to potential burger buyers falsely touting the health
benefits of Big Macs would not support a claim for false advertising under the
Lanham Act.” And the complaint also alleged that the relevant market was big
enough to justify both an Oregon Coast headquarters and a Central Oregon
headquarters, as well as “local offices and locally-based staff and support
teams in Bella Beach, Waldport, Depoe Bay, Neskowin, Pacific City, Manzanita,
Seaside, and Sunriver.” Further, the complaint alleged that the market is large
enough that Meredith has “multiple managers to manage negative reviews.” “That
Plaintiff requires multiple managers to respond to negative reviews in a market
with a ‘relatively low number of homes’ appears to confirm that either (1) the
market is larger than argued by Plaintiff or (2) Plaintiff has bigger problems
than Defendant’s allegedly misleading phone calls.” [Yikes.]

If Meredith did replead, the court would consider expedited,
targeted discovery about falsity, but signalled further skepticism by
commenting that “even the Ritz Carlton has guests unhappy with the
accommodations” while suggesting that it would be willing to find falsity if,
when Vacasa made the statements, it lacked knowledge that some of Meredith’s
customers switched to Vacasa over housekeeping concerns. Footnote: The court
also questioned whether it could take judicial notice “of the fact that there
are dozens of reviews online predating the allegedly false statements that take
issue with the cleanliness of properties managed by Plaintiff.” How would you
do that without considering their truth? The court seems to think that went to
reputation for cleanliness: “This is not to say Plaintiff necessarily has a
reputation for uncleanliness. Only that in the vacation rental industry, a
company essentially arguing that it had no reports of uncleanliness appears to
be patently unreasonable. This is akin to a restaurant, no matter how esteemed,
arguing it had never served one customer who walked away unsatisfied.”

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