allegedly perfidious salesman protected from passing off liability, but might have engaged in false advertising

Burton v. Label, LLC, No. 15-CV-5793 (VSB), 2018 WL 4759735
(S.D.N.Y. Sept. 30, 2018)
Label, founded by the Millers, sells bespoke and custom
men’s clothing throughout the United States. Schwartzman (for whom Burton is
the trustee) worked for Label as Vice President of Sales. While employed at
Label, he established his own bespoke tailoring and made-to-measure men’s
clothing company, named Trusgan, and thereafter provided his services to Label
as an employee of, and through, Trusgan. Label hired a company called ADP to
automate its employee payroll system, and began paying Trusgan for
Schwartzman’s services through ADP. Allegedly, as a result of an error, ADP
began paying Schwartzman’s salary twice through two payroll accounts, and
blamed him when it was discovered (after he told Label he was leaving). The
Label defendants allegedly began a “campaign of calumny” accusing Schwartzman
of fraud and embezzlement, and telling customers that Schwartzman’s claim that
he could offer Label’s products at a cheaper price is false because they’d
received commitments from their suppliers not to do business with Schwartzman.
Label counterclaimed, alleging various claims against
Schwartzman, including violation of the Lanham Act. The Millers allegedly began
receiving customer complaints about Schwartzman’s quality of service, and he
allegedly tried to steal customers for his own side business during Label work
hours and using Label resources. He allegedly surreptitiously contacted Label
clients, misrepresented that he was placing orders for them through Label, and
instead placed the orders through his own company. In one case, a supplier
asked whether the “orders were still under Label,” to which Schwartzman
replied, “all these orders are under me not Label,” and “I was only sending
them to you because I can’t risk them accidentally being sent through Label.” A
client allegedly complained to Label about the fit of the order, delivery
times, and customer service, believing that Label had been responsible.
Schwartzman allegedly told Label customers that he was opening up his own business
and that “he could continue to service these customers at this new business
where he would provide better customer service and pricing than Label, while
offering the same exact product.” The counterclaims told the alternate story in
which the salary double-dipping was indeed Schwartzman’s doing.
After Schwartzman left Label, Label allegedly discovered
that Schwartzman “represented … that he could easily handle former Label
clients through Trusgan, because Schwartzman had these Label clients’
measurements and other information regarding their previous orders from Label”
and that “he can beat LABEL’s pricing … by 20% to 30% while offering the
exact same product, from the same manufacturers and using the same fabrics.”
The Lanham Act counterclaims had two theories: first, while
employed by Label, Schwartzman sold what he represented to be Label products
but were not in fact Label products; second, after leaving Label, he told
customers that he could offer the same product, but cheaper. The court rejected
both claims on the pleadings.
False association: As an example, Schwartzman placed an
order with a Label supplier, explaining that the order was for Schwartzman, not
Label. Schwartzman’s client subsequently mistakenly complained to Label about
“the fit of the order, delivery times, and customer service.” Assuming that
Schwartzman was indeed using his position as a Label salesman to sell items
represented to be Label goods by placing orders with Label suppliers, “he was
simply unlawfully pocketing proceeds that belonged to his employer; he was not
falsely representing the origin of his own goods. Selling trademarked goods
under its trademarked name is not a violation of the Lanham Act.” Basically first sale, except not quite.
Label argued
that it offered not just clothes, but customer service, but that theory didn’t
work here. While “distribution of a product that does not meet the trademark
holder’s quality control standards” may result in devaluation of the mark and
thus not a genuine product, the trademark holder must allege that “(i) it has
established legitimate, substantial, and nonpretextual quality control
procedures, (ii) it abides by these procedures, and (iii) the non-conforming
sales will diminish the value of the mark.” Here, the quality-of-service
argument “makes no sense in light of the fact that Schwartzman was the Vice President
of Sales at Label, making the quality of service he provided one and the same
as the quality of service Label provided.” The complaint even alleged that
customer gripes about “the fit of the order, delivery times, and customer
service,” were of the type that “had become routine with respect to
Schwartzman’s work.” “Thus, there is no distinction between the goods
Schwartzman sold as Label goods and actual Label goods supplied under
Schwartzman’s watch.”
The false advertising claim had more purchase in theory, but
was inadquately pleaded. First, commercial advertising or promotion wasn’t
pled, merely “isolated disparaging statements” that “do not have redress under
the Lanham Act.” Label “makes no attempt to define the relevant market, but
claims to have over 750 clients,” and didn’t specify the number of the clients
Schwartzman allegedly contacted. 
Likewise, the allegations of falsity would need more specificity to
proceed; Label’s briefing indicated that it could replead to state that
Schwartzman lacked access to their fabrics and suit styles.

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Amazon not liable for use of TM in review

Sen v. Amazon.com, Inc., 2018 WL 4680018, No. 16-CV-01486-JAH-JLB
(S.D. Cal. Sept. 28, 2018)
Sen owns the trademark “Baiden” for skin-exfoliation
products. Amazon bought “Baiden” through Google’s AdWords program and on other search
engines. In 2012, Sen sued Amazon for this conduct and settled; the parties couldn’t
agree on the terms of a long-form agreement, but the court enforced the terms
of a settlement Memorandum of Understanding.
Now Sen sued again for infringement and false designation of
origin/false advertising, alleging the unauthorized use of the Baiden mark in
advertising as well as in an online review that promoted a competing
product.  The infringement claim based on
keyword/pay-per-click ads was barred by claim preclusion.
Contributory/vicarious liability for use in a review: Amazon
user “Nanners” wrote that she initially purchased the Baiden Mitten, but she
declared that a competing product is cheaper and delivers similar benefits.  This claim was barred by nominative fair use.
Nanners’s review used the trademark to identify her subject; she used it “only
to the extent necessary to identify the product she is reviewing” and didn’t
use Baiden’s logo [query: could she have posted a picture of the product she
received? I think the answer has to be yes]. 
Nothing else in the review suggested sponsorship or endorsement and indeed
the idea that there are “monumentally cheaper” competitors suggested the
opposite.
Tortious interference based on pay-per-click ads: precluded;
the claim shared a transactional nucleus of facts with the initial trademark
claim.  Tortious interference based on
the review: barred by CDA §230.

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Defamation, but not false advertising, claim survives against niche publisher that added wrong info about allegations of wrongdoing

MiMedx Group, Inc. v. DBW Partners LLC, No. 17-1925 (JDB), 2018
WL 4681005 (D.D.C. Sept. 28, 2018)
MiMedx, a seller of medical products, sued DBW, which offers
business and regulatory analysis to paid subscribers, for libel, slander,
defamation, false light invasion of privacy, tortious interference with
business relations, and false advertising under the Lanham Act after defendants
published articles that questioned MiMedx’s sales practices.  One article, “MiMedx: Channel Stuffing
Accusations Resurface in Recent Counterclaim; Former Employees Corroborate
Allegations; A Close Look at Potential Risk,” outlined allegations MiMedx’s
former employees made in court filings against MiMedx claiming that the company
had artificially inflated its sales and revenue figures by distributing more
products to retailers than the retailers could sell. An email described the
article: “we detail channel stuffing allegations and recent counterclaims which
may pose as a regulatory risk for the company. The article examines the
allegations made by customers & former employees, the company’s response to
these claims, and the potential legal risks for MiMedx” and ended with an
invitation to “schedule a call” with DBW for more information. DBW now acknowledges
that the reference to “customers” was a mistake.
As part of its “ongoing examination of allegations of
channel stuffing made by former MiMedx employees,” DBW also submitted a FOIA
request to the Department of Veterans Affairs, Office of the Inspector General
(OIG), and dermined that an OIG investigation “involve[d] documents related to
MiMedx.” MiMedx allegedly informed DBW “off-the-record that MiMedx had
initiated contact with the OIG, that MiMedx was voluntarily working with the
OIG, and that MiMedx was specifically not a target of the investigation.” DBW
published another article titled “VA Office of Inspector General Confirms
Investigation Involving MiMedx Documents,” relaying DBW’s conclusions from its
FOIA request, and also promoted the article via email. Both emails reached at
least some MiMedx shareholders.
DBW allegedly served “as a ‘shill’ for bearish traders in
MiMedx stock” including “friends, family, affiliates, and/or even … [DBW]
themselves.” MiMedx’s stock price declined after the two articles were published.
Libel, slander, defamation: DBW argued that falsity wasn’t
pled; the single word “customers” wasn’t defamatory in that it didn’t render
the first email substantially false and it didn’t cause any incremental harm
compared to the unchallenged bulk of the publication. MiMedx argued that “the
use of the word ‘customers’ … substantively changed the meaning of the entire
communication” because “there is a significant difference between allegations
by a company’s customers and its disgruntled former employees” and further
because it “made it appear that the article contained new or additional allegations
that might corroborate the former employees’ allegations.”
The court concluded that adding “customers” was at least
“capable of defamatory meaning” under DC law and allegations of wrongful
commercial practice would “tend[ ] to injure” MiMedx’s “trade, profession or
community standing.” Under Georgia law, whether the statement was defamatory was
ambiguous, when construed in context of the entire publication as required.  Either way, this survived a motion to dismiss.
 DBW argued, citing case law, that “[c]orporate
plaintiffs are treated as public figures as a matter of law in defamation
actions brought against mass media defendants involving matters of legitimate
public interest,” but MiMedx argued that DBW wasn’t a mass media defendant and the
court declined to judicially notice otherwise. MiMedx might be able to show
facts indicating that it was a private figure for these purposes.
The court didn’t specifically address the FOIA related allegations; it seems to me that those should have to go, as not reporting MiMedx’s preferred interpretation of what seem like uncontested facts doesn’t seem defamatory.
False light: a corporation has no personal right of privacy
and therefore no cause of action for false light invasion of privacy.
Tortious interference: this requires allegations of specific
lost business.  Pleading “customers,
investors, and creditors” isn’t enough, so this claim was also dismissed.
Lanham Act false advertising: MiMedx failed to allege a competitive
injury related to MiMedx’s commercial interests, such as customers withholding
trade or lost revenue; it didn’t even allege that the misleading communications
reached customers (as opposed to shareholders).

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Non-TM owner can plead false advertising claim for confusing use of TM it used to own

Desmond v. Taxi Affiliation Services LLC, 2018 WL 4589999,
No. 17 C 8326 (N.D. Ill. Sept. 25, 2018)
Desmond is the Chapter 7 Trustee for the Bankruptcy Estate
of Yellow Cab Affiliation, a former Chicago taxicab affiliation with over 1600
dues-paying members who licensed the design mark from YCA. He sued a bunch of
defendants for allegedly engaging in a scheme to render YCA insolvent, so that
it could not pay its creditors, and then establishing a new company that
appropriated YCA’s valuable trade dress. After a passenger was injured in a
taxi and sued YCA as a defendant, some of the defendants here allegedly
established defendant TAS to prevent creditors from reaching YCA’s assets. For
example, TAS collected and retained all payments from YCA members pursuant to
their affiliation agreements with YCA, then transferred some of that money,
disguised as “management fees” and “referral fees,” to YCA’s officers and
directors; some defendants bought and sold taxicab medallions using YCA’s money
but failed to distribute any of the profit to YCA.
After the injured passenger got a $26 million judgment
against YCA in 2015, YCA filed for bankruptcy and TAS refused to provide
further services, forcing YCA to shut down. Certain defendants quickly formed
New YCA (Yellow Cab Association, Inc.) to solicit members away from YCA. New
YCA used mobile data terminals and other taxicab equipment that belonged to
YCA. New also YCA used the same color scheme and design mark that YCA had used,
merely replacing “Affiliation” with “Association.” This allegedly tricked
customers into believing that New YCA and YCA were one and the same.
Lanham Act and coordinate state claims: Trademark ownership
is required for a likely confusion claim, but not for a false advertising
claim. YCA doesn’t own the design mark at issue, so this was a false advertising
claim. The allegations here satisfied Rule 9(b): the use of the color yellow,
the design mark, and a similar name plausibly constituted a false statement of
fact implying YCA’s affiliation with New YCA, and the other elements were
sufficiently alleged, at least as against New YCA.

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Another malware misattribution claim fails

PC Drivers Headquarters, LP v. Malwarebytes, Inc., 2018 WL
2996897, No. 18-CV-234-RP (W.D. Tex. Apr. 23, 2018)
PC Drivers “offers software designed to help customers
optimize the processing speed of their computers and identify software drivers
ready to be updated.” Malwarebytes sells software that blocks various programs
on its customers’ computers, including software deemed malicious or potentially
unwanted (the latter of which are called PUPs). PC Drivers contends that, in
January 2018, Malwarebytes inappropriately branded one or more of its programs
as a PUP, which can make PC Drivers’ software inoperable and block access to PC
Drivers’ website. This happened before, and when the software received
certification from a newly developed third-party certifier called AppEsteem,
Malwarebytes stopped labeling the programs as PUPs. PC Drivers alleged that it
continues to carry AppEsteem certification and that its programs have not
changed substantially.  PC Drivers sued
for false advertising, trademark infringement [what?], trademark dilution, tortious
interference with contractual relations; promissory estoppel; and related
claims.  (Similar
litigation against Malwarebytes discussed here:
§230 blocked liability.)
The court declined to grant a preliminary injunction, despite
evidence that Malwarebytes has not been cooperative with PC Drivers as PC
Drivers has attempted to figure out the problem. PC Drivers also argued that it
was the victim of an act of retaliation taken by Malwarebytes against AppEsteem
in response to AppEsteem’s threat to list Malwarebytes as a “deceptor.” But
that wasn’t enough.
Malwarebytes argued that §230’s statutory Good Samaritan protection
for blocking and screening of offensive material rendered it immune to all these
claims.
PC Drivers argued that Malwarebytes wasn’t an “interactive
computer service” under the statute, but it was, because the phrase is to be broadly
applied using the definition “any information service, system, or access
software provider that provides or enables computer access by multiple users to
a computer server ….” Malwarebytes “provide[s] users with access to the new
malware definition content that is available on its servers.”
PC Drivers also argued that the immunity didn’t apply to
Malwarebytes’ own statements, but “this requirement is present only in §
230(c)(1).”  I’m not sure this is
responsive: Malwarebytes might be immune for the blocking and any consequences
proximately caused by the blocking itself, but not immune for things it said
about the blocking, which could independently cause damage.
Finally, PC Drivers alleged that Malwarebytes did not act in
good faith. But § 230(c)(2)(A)’s good-faith requirement (for “any action
voluntarily taken in good faith to restrict access to or availability of
material that the provider or user considers to be obscene, lewd, lascivious,
filthy, excessively violent, harassing, or otherwise objectionable, whether or
not such material is constitutionally protected”) doesn’t extend to §
230(c)(2)(B) (“any action taken to enable or make available to information
content providers or others the technical means to restrict access to material
described in paragraph [A]”) under the statute.
Malwarebytes argued that PC Drivers’ federal unfair
competition claim fell under the safe harbor because it wasn’t an IP claim. “Although
the specific provision does not address intellectual property, it is a part of
the Lanham Act, which as a whole ‘pertain[s] to intellectual property,’” so
some courts call all 43(a) claims clawed back from §230 immunity, while others don’t.
The court didn’t resolve the issue because there was no likely success on the
merits regardless.
PC Drivers alleged that Malwarebyte’s designation of PC
Drivers’ software as a PUP was misleading. But this wasn’t false: the
designation “potentially unwanted program” “inherently carries with it the
acknowledgment that it is only a guess as to whether the program is or is not
unwanted,” and “unwanted” “looks more like a subjective opinion than a factual
assertion.”
Dilution: There was no evidence of fame.
Infringement: PC Drivers alleged that there was likely
confusion about association, authorization, endorsement, affiliation, or
sponsorship. Understating the matter, “the Court notes that this claim is
strange when viewed in conjunction with PC Drivers’ other claims.” Malwarebytes
invoked nominative fair use. There was no evidence that Malwarebytes used PC
Drivers’ mark in any way other than listing the name of the website to explain
what it is blocking. The PUP label “implies anything but endorsement; customers
told by Malwarebytes that PC Drivers’ software might be unwanted are not likely
to think that PC Drivers endorses Malwarebytes.” There was only one reference:
to the domain name download.driversupport.com. It was unclear how Malwarebytes could
the user of the name of the website it was blocking without using the domain
name. [Another case where “use as a mark” would also be useful to explain why
this is ok.]

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Blast from the past: nominative fair use avant la lettre

Polyglycoat Corp. v. Environmental Chemicals, Inc., 509
F.Supp. 36 (S.D.N.Y. 1980)

Found this in an unrelated search and it made me think about
the utility (if any) of the nominative fair use category. Plaintiff sued
defendant for advertising of defendant’s automotive silicone paint finish
remover called POLYCRACKER. Plaintiff’s Polyglycoat, a protective paint finish
sealant for automobiles, was heavily referenced on Polycracker’s label and its
launch ad in Auto Body Repair News, a trade journal:

The words “Polyglycoat TM Remover” appear conspiciously on
the POLYCRACKER label, one page of the ad consists solely of the bold-lettered
statement “WIPE AWAY POLYGLYCOAT TM”, and the body of the ad contains such
statements as “There’s nothing more troublesome for auto body shops than
silicone finishes like Polyglycoat” and “Take off Polyglycoat with the wipe of
a cloth.”
In terms of the Polaroid factors, the court found strong
secondary meaning in the relevant market, the use of an identical mark, product
relatedness sufficient to generate confusion, and an intent to “capitalize on
the popularity of the POLYGLYCOAT mark and product in the field.” There was no
evidence of actual confusion, but “a reasonable likelihood of confusion is
inferred from defendant’s use of plaintiff’s exact trademark to promote its
related product, the absence of a viable alternative explanation by defendant
for its appropriation of the POLYGLYCOAT mark, and other circumstances of the
relevant market.”
Thus, an injunction was warranted to keep Polyglycoat off
the Polycracker label “either as it now appears, or any other way by which the
mark is singled out as the generic, shorthand term standing for the species of
paint finish sealants which POLYCRACKER is said to remove.” Defendant was also
enjoined from singling out the mark in ads, e.g., “WIPE AWAY POLYGLYCOAT,”
“Take off Polyglycoat,” “normal prep solvents … do not remove polyglycoat,”
“The Polyglycoat wipes off easily,” and “say good-bye to Polyglycoat problems.”
However, in the absence of falsity or misleadingness,
defendant couldn’t be prevented from advertising that its product could remove
automotive silicone finishes including POLYGLYCOAT, “the most popular and
perhaps the most durable brand.” Thus, it could continue using the name “in
such conjunctive phrases as ‘silicone finishes like Polyglycoat R.’” In any
such use, the mark couldn’t appear in letters which distinguish it from the
other words in the conjunctive phrase by size, color, typeface or any other
characteristic. And a long disclaimer was required:
POLYGLYCOAT R is a registered trademark of the Polyglycoat
Corporation, Scarsdale, New York, for its protective coating and sealant for
automotive finishes. The term Polyglycoat as used herein means the product
manufactured and sold by that company, and is used without the permission of
Polyglycoat Corporation. POLYCRACKER is neither manufactured nor in any way
sponsored or authorized by Polyglycoat Corporation.
This disclaimer probably did nothing but increase
defendant’s advertising costs, since consumers weren’t particularly likely to
read it.  And aside from the required
disclaimer, this seems like pretty much the result you’d get from nominative
fair use today (since courts would probably interpret the initial ad, at least,
as using “too much” of the mark, as in the Playboy v. Welles case). 
What, if anything, does having nominative fair use as a
defined concept add?  The current Second
Circuit treatment is worse than nothing, since the NFU factors actually negate
the significance of the other key Polaroid factors, like strength and identity
of the marks, and can’t be weighed against them in an understandable way.  “Weighing” implies that enough strength and
similarity (always present in a NFU situation) ought to be able to overwhelm
the NFU factors, but they really don’t. The original concept from the Ninth
Circuit was a way to formalize the obvious fact that there are some cases in
which the multifactor test factors (particularly strength, similarity, and relatedness
of goods) don’t point to the correct result. 
In particular, the multifactor test doesn’t match our understanding of
cases in which the trademark is clearly being used as a comparator or subject
of discussion. I haven’t fully figured out my take on this, but I do think we
need some doctrinal indicator to judges that there are times when the
multifactor test is a bad idea, so that we don’t have to rely on the variable
common sense of individual judges and in particular district court judges’
understandable fear of getting reversed when courts of appeals say that you have
to use the multifactor test no matter what (except with Rogers, in the Second Circuit).

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Pa. Supreme Court fixes ridiculously overbroad holding of puffery

Commonwealth v. Golden Gate National Senior Care LLC, —
A.3d —-, 2018 WL 4570102, No. 16 MAP 2017 (Pa. Sept. 25, 2018)
The Pennsylvania Supreme Court reinstated a bunch of claims
against a bunch of nursing homes under the state Unfair Trade Protection and
Consumer Protection Law, though not unjust enrichment claims. In essence, the
nursing homes allegedly made materially misleading statements about the nature
and quality of the care provided to their nursing home residents. They
allegedly knowingly failed to provide the level of care they advertised, as
they purposefully understaffed the facilities so as to maximize their profits. Chain-wide
misrepresentations included brochures, videos, websites, and video
advertisements, with claims such as:
“Snacks and beverages of various
types and consistencies are available at any time from your nurse or nursing
assistant.”
“We have licensed nurses and
nursing assistants available to provide nursing care and help with activities
of daily living …. Whatever your needs are, we have the clinical staff to
meet those needs.”
“Clean linens are provided for you
on a regular basis, so you do not need to bring your own.”
“A restorative plan of care is
developed to reflect the resident’s goals and is designed to improve wellness
and function. The goal is to maintain optimal physical, mental and
psychological functioning.”
“A container of fresh ice water is
put right next to your bed every day, and your nursing assistant will be glad
to refill or refresh it for you.’ ”
“We work with an interdisciplinary
team to assess issues and nursing care that can enhance the resident’s
psychological adaptation to a decrease of function, increase levels of
performance in daily living activities, and prevent complications associated
with inactivity.”
In truth, residents allegedly routinely have to wait hours
for food, assistance with toileting, changing of soiled bed linens, and other
elements of basic care, and sometimes must forego them entirely.
On the individual facility level, the AG alleged misrepresentations
in the resident assessment and care plans created for each resident: services
promised in the care plans were not provided because of intentional
understaffing. Also, the facilities allegedly generated billing statements
which indicated that certain care was provided when it was not, which were then
paid by public funds when residents received Medicaid or Medicare. The facilities
allegedly further deceived the Pennsylvania Department of Health by temporarily
increasing the number of staff on hand during inspections and by willfully
creating inaccurate and/or falsified resident care records for review.
The Commonwealth Court found the marketing and advertising
materials to be mere puffery: too broad or vague, or merely expressing an
intent. Then the court held that resident assessments, care plans and bills
weren’t covered by the UTPCPL because they weren’t advertising but rather
isolated statements to potential customers, or in the case of resident care
plans were created after a customer was admitted to a facility. The court also
found that the allegations about care deviating from promises were too
conclusory and unspecific. The AG didn’t identify any  “particular care plan … from which the
Facility deviated, or … identify[ ] any specific bill for services that were
not provided.”  Further, the AG didn’t allege
“how a consumer could be misled by a billing statement to believe that he
received services or assistance that he had not in fact received, or how an
un-itemized per diem charge could convey to a consumer that a particular
service had been provided in the first place.”
Here, the state supreme court identified two types of
puffery: (1) “hyperbolic boasting or bluster that no reasonable consumers would
believe to be true” and (2) “claims of superiority over a competitor’s product,”
though the examples are “statements that a laboratory imaging device provided ‘unprecedented
clarity,’ or the advertisement of a product as ‘the complete sports drink,’” so
I’m pretty sure “claims of superiority” is implicitly modified by “vague or
general,” especially since the court continues by saying that a key
characteristic of puffery is that “consumers understand that the statements are
not to be takenliterally. … It is these characteristics – the patently
hyperbolic or excessively vague character that dissuades any reasonable
consumer from placing reliance thereon as fact – that render puffery
non-actionable under the UTPCPL.”
Puffery is usually a question of fact. It was so here:
We hesitate to conclude that
consumers seeking a nursing home would necessarily find statements promising to
provide food, water, and clean linens to be hyperbolic in any respect, or to be
vague statements of optimism or intent. To the contrary, for residents of
nursing homes, many of whom are physically compromised and require assistance
with day-to-day living activities, regular access to these items is essential,
and there is no reason to think that a consumer would not take these statements
seriously.
Plus, the lower court didn’t consider the overall
context.  For example, it held that, “We
believe that respecting your individuality and dignity is of utmost
importance[,]” qualified as puffery “based on the preface alone” – that is,
based on the use of the phrase “we believe,” which was impermissible slicing
and dicing (something that’s also basic First Amendment defamation doctrine). Nor
was “[a] container of fresh ice water is put right next to your bed every day,
and your nursing assistant will be glad to refill or refresh it for you” mere
optimism or vague, given the obvious message that “a resident will have ready
access to water every day,” something that would be highly relevant to an
immobile resident.
The lower court also erred in holding that statements in
patient assessments, care plans and billing statements weren’t actionable
because they weren’t ads, applying the definition of advertising elaborated by
judges under the Lanham Act. Though some provisions of the UTPCPL specifically
mention advertising, the court pointed to two relevant UTPCPL provisions
covering conduct other than advertising. Subsection (v) prohibits conduct
“[r]epresenting that goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits or quantities that they do not have or that a
person has a sponsorship, approval, status, affiliation or connection that he
does not have,” and subsection (xxi) prohibits “[e]ngaging in any other
fraudulent or deceptive conduct which creates a likelihood of confusion or of
misunderstanding.”  The court declined to
rewrite the statute to impose the “advertising” limitation on all the provisions.
It further pointed out that other subsections prohibit “failing to comply with
the terms” of a written guarantee or warranty and “making solicitations for
sales of goods or services” without first providing certain information, making
clear that the statute overall wasn’t intended to be limited to “advertising”
under the Lanham Act.
Likewise, the lower court erred in finding the complaint
insufficiently detailed. The AG pled factual allegations based on interviews
with former employees and residents’ family members, as well as on information
from the Centers for Medicare and Medicaid services; the complaint included
representative examples of the alleged failures.  “Pennsylvania is a fact-pleading
jurisdiction; as such, a complaint must provide notice of the nature of the
plaintiff’s claims and also summarize the facts upon which the claims are
based.” But there’s no requirement to plead the evidence upon which the pleader
will rely to later prove the claims. The defendants were informed of the claims
against them, even without identifying particular patients, care plans,
assessments, or bills.
In addition, the lower court erred in holding that the state
couldn’t seek return of monies spent because it wasn’t a “person” under the
statute. The relevant statutory phrase is “person in
interest,” that is, “those whose interests were
affected by the enjoined conduct, i.e., those who lost money or property
because of the enjoinable conduct that was found to violate the UTPCPL.” This included the state when it was the one that lost money, especially given the rule of construction that this consumer protection statute
is to be interpreted liberally.  

from Blogger https://ift.tt/2zwY7Ea

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