Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Tex.: Disclaimers about algorithmically -calculated composite tax rates deemed insufficient to dismiss false advertising claim, (Jun 12, 2025)

By Justin Marcus Smith, J.D.

The court found average representations of property tax rates in specific counties could be misleading, as underscored by one example the plaintiff provided and the allegations pertinent to it.

In a Lanham Act false advertising dispute between competing property tax consultancies, the federal district court in Dallas, Texas, held the plaintiff plausibly alleged that a tax rate the defendant quoted in advertising was an “exceptionally poor” representation that could have created a false impression about achievable tax savings after property reassessment. The defendant’s disclaimer that such quoted figures were geographical composites derived from an algorithm was “irrelevant” because, in the view of the court, suggestions of “average” rates in any particular geographical area were nonetheless false or misleading. The court also held the plaintiff satisfied the element of injury, albeit barely, by inference, to the extent the disputed advertising could have deceived consumers into “withholding trade” from the plaintiff. The court declined to grant the defendant consultancy’s motion to dismiss the Lanham Act false advertising claim and a state common-law unfair competition claim that closely tracked the false advertising claim. However, the court dismissed a Lanham Act unfair competition claim, with prejudice, because the plaintiff appeared to have abandoned that claim (Island Peak Group, LLC v. Ownwell, Inc., No. 3:24-cv-03135-D (N.D. Tex. Jun. 10, 2025)).

Background. Island Peak Group, LLC, doing business as Texas Tax Protest (TTP), brought a Lanham Act action against Ownwell, Inc. in connection with alleged Ownwell advertising practices. The parties were competitors in the property tax reduction consulting market. Property tax consulting firms help property owners reduce their property tax liability, by reassessment, in exchange for a percentage of the savings.

Among other false advertising allegations, the court focused on the TTP allegation that Ownwell diverted business from TTP by exaggerating tax rates quoted to prospective clients. TTP said that exaggerated predicted savings gave property owners a false impression of how much money Ownwell could save them, and this allegedly caused TTP to lose clients. TTP accordingly accused Ownwell of false advertising and unfair competition under §43(a) of the Lanham Act, 15 U.S.C. § 1125(a). TTP also asserted a supplemental state-law claim for unfair competition under Texas common law.

Ownwell moved for dismissal under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. TTP opposed. The court partly granted and partly denied dismissal on-the-papers.

Judicial notice. The court granted Ownwell’s request for judicial notice of discrete screenshots it submitted of its own website. TTP did not dispute authenticity. The court said it would consider the screenshots. However, the court declined to take judicial notice of Ownwell’s entire present website, even if the TTP complaint referenced it and Ownwell “attached” it to the motion to dismiss. The court reasoned that Ownwell’s present website was “immaterial” to TTP’s allegations about what was on the website at the time of the complaint. The court also declined TTP’s request to order Ownwell to “archive the website” because the court did not see any marginal utility in doing that.

False advertising. The court held TTP satisfied the elements of a Lanham Act false advertising claim. The parties specifically disputed whether TTP had plausibly pleaded the first and fifth elements of a prima facie claim, i.e., whether Ownwell made a false or misleading statement of fact about its services, and, if so, whether that was likely to have injured TTP.

Ownwell questioned the plausibility of TTP’s allegation that the tax rates Ownwell quoted prospective customers were false or misleading statements of fact. Ownwell said it used an algorithm to determine quoted tax rates that yielded varying results which it disclaimed as examples or geographically composite averages “not guaranteed to any consumer.” Ownwell also said TTP did not plausibly allege injury.

TTP maintained the quoted rates were not accurate, Ownwell used an algorithm to generate them, and the disclaimers Ownwell provided were irrelevant because suggestions of “average” rates in any particular geographical area were nonetheless false or misleading. As for harm, TTP also maintained that it lost long-time clients.

The court concluded that Ownwell’s use of, for example, a 2.5% tax rate pertinent to Travis County in its advertising materials was a false or misleading statement of fact. The inclusion of disclaimer language that the rate was an “average” or “estimate” was, in the view of the court, “not so clarifying that, as a matter of law, Ownwell’s use of that rate is not false or misleading.” Pertinent here, TTP alleged that 2.5% was not an accurate tax rate for most counties in Texas. TTP said the average rate for Travis County was about 1.85%, according to public tax records, and Ownwell’s website elsewhere stated the Travis County average tax rate was 1.31%. Accepting the allegations as true on a motion to dismiss, the court concluded TPP plausibly alleged that 2.5% was an “exceptionally poor” representation of the tax rate in Travis County and “therefore capable of creating a false impression in those consumers about the savings that Ownwell could achieve for them.”

As for injury, the court also concluded TPP plausibly alleged likely injury stemming from Ownwell’s representations about tax rates. The court acknowledged this conclusion was a close call, but the court said it could reasonably infer that TTP suffered economic injury if Ownwell’s advertising “deceives consumers into withholding trade from TTP.”

Unfair competition. The court declined to dismiss TTP’s common-law unfair competition claim because it was based on the same allegations as the Lanham Act false advertising claim, and Ownwell had challenged it on the same grounds the court already rejected. However, the court dismissed TTP’s Lanham Act unfair competition claim, with prejudice, because TTP appeared to have abandoned it.

The case is No. 3:24-cv-03135-D.

Judge: Fitzwater, S.

Attorneys: Worthy W. Walker (Shackelford, Bowen, McKinley & Norton, LLP) for Island Peak Group LLC d/b/a Texas Tax Protest. James David Tuck (Dentons US LLP) for Ownwell Inc.

Companies: Island Peak Group LLC d/b/a Texas Tax Protest; Ownwell Inc.

Cases: Advertising TexasNews