Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Pa.: Law firm’s statements about competitor did not constitute commercial advertising, (Oct 17, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a law firm against another firm for violations of the Lanham Act, statements made to members of a business association of which both firms had joined did not constitute commercial advertising or promotion, the federal district court in Philadelphia has ruled (Cronin v. Bergmann, October 16, 2014, Schiller, B.).

Attorneys Joseph Cronin and Renee Bergmann met through a chapter of Business Network International (BNI), an association of business professionals that encourages members to refer customers to each other. While each BNI is typically limits membership to one member per profession, Cronin and Bergmann were both permitted to join the chapter, since their practices focused on distinct fields. In December 2013, Bergmann and Cronin, on behalf of his firm, agreed that Cronin would represent a Bergmann client, Innovative Finishers, as lead trial counsel in a complex property damage coverage matter. Under the agreement, Cronin would be paid $250 per hour for his work for Innovative Finishers.

After Cronin was not paid for over 125 hours of work, distrust grew between Cronin and Bergmann. As a result of their disagreements, Bergmann withdrew as Innovative Finishers’ counsel and Cronin served as sole counsel in the coverage matter. Subsequently, Bergmann made statements to members of the BNI chapter regarding Cronin and his conduct during the Innovative Finishers case. Cronin and his law firm filed suit against Bergmann, alleging violations of the Lanham Act as well as unfair competition, trade disparagement, and defamation claims under state law. Bergmann moved for dismissal.

Commercial advertising or promotion. The court determined that Bergmann’s statements were not sufficiently disseminated to the public to constitute commercial advertising or promotion under the Lanham Act. Under the Lanham Act, a defendant’s representations must constitute: (1) commercial speech; (2) by a competitor of the plaintiff; (3) for the purpose of influencing consumers to buy the defendant’s goods or services; and (4) disseminated sufficiently to the relevant purchasing public.

In this case, Cronin did not allege that Bergmann made her comments for the purpose of influencing members of the BNI chapter to use her legal services or to refer clients to her firm and did not allege that Bergmann obtained pecuniary benefits from making the representations. The court noted that it was unlikely that Bergmann would have made comments to fellow BNI chapter members for the purpose of diverting legal referrals since Cronin and Bergmann were in different legal fields. If true, the comments would merely constitute reputational harm to Cronin and did not demonstrate an intention to encourage BNI members to retain Bergmann’s services.

Additionally, Cronin did not claim that Bergmann’s statements were sufficiently disseminated to the relevant purchasing public. While Cronin asserted that Bergmann made disparaging statements to some members of the BNI chapter, he made no allegations that a substantial amount of the firm’s business was generated by referrals from the BNI chapter or that the chapter had significant influence on the market for personal injury attorneys. Cronin’s Lanham Act claim was based on an unknown number of isolated statements made by Bergmann to BNI members, which may or may not have been republished to potential personal injury clients. Thus, the statements were not sufficiently disseminated to the public to constitute commercial advertising or promotion under the Lanham Act, the court concluded.

The case is No. 14-4663.

Attorneys: Stephen E. Skovron (Cronin Law Firm, LLC) for Joseph D. Cronin, and Cronin Law Firm, LLC. Elizabeth S. Fenton (Chamberlain Hrdlicka) for Renee F. Bergmann, and Bergmann & Good, LLC.

Cases: Advertising PennsylvaniaNews