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.
from Blogger https://tushnet.blogspot.com/2026/10/court-refuses-to-recognize-lanham-act.html
