Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Law firm’s false advertising claims dismissed based on lack of standing, (Dec 2, 2013)

By Jody Coultas, J.D.

The federal district court in San Francisco granted Judicate West’s motions to dismiss Stahl Law Firm’s Lanham Act and California Unfair Competition Law (UCL) claims for lack of Article III standing (Stahl Law Firm v. Judicate West, November 27, 2013, Henderson, T.). The court denied Judicate West’s previously filed motions for prevailing party anti-SLAPP attorney fees for lack of jurisdiction.

Judicate West provides private dispute resolution services and sponsors neutrals, including retired judges to serve as mediators and arbitrators. Stahl alleged its mediation services and ability to compete for mediation services was adversely impacted by Judicate West’s false and misleading advertising. Stahl never sponsored another neutral, never served as a mediator, and had only been involved in mediations as a representative of a client. Stahl advertised as a mediator to individuals over the phone or in person, but did not have any cases come in from the public in this manner.

Stahl lacked Article III standing to assert the Lanham Act and UCL claims, according to the court. To show an injury-in-fact sufficient for Article III standing, a plaintiff must present factual allegations to support at least the inference of competition between the parties. Stahl was not expected to prove lost sales or present evidence, but he was required to allege facts that plausibly showed how he could be injured as a competitor. Such allegations could include allegations of injury through probable market behavior or by creating a chain of inferences that show how Judicate West’s actions could injure Stahl’s business. Stahl’s only allegation was a statement that the parties competed for mediation services and that Judicate West’s advertising harmed his business. Stahl needed to show that he competed in the subservices offered by Judicate West as well.

Judicate West’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) was granted by the court. To state a Lanham Act claim, Stahl needed to show that he was or was likely to be injured as a result of the false statement, either by direct diversion of sales or by a lessening of the goodwill associated with its products. Stahl failed to present factual allegations beyond the mere legal conclusion that he was or was likely to be injured by the advertising.

The case is No. C13-1668 THE.

Attorneys: Norbert Stahl (Stahl Law Firm) for Stahl Law Firm. Benjamin C. Koodrich (Murphy Pearson Bradley & Feeney) for Judicate West.

Companies: Stahl Law Firm; Judicate West

Cases: Advertising CaliforniaNews