Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Ind.: Tax preparer’s radio commercials could be Lanham Act trade disparagement, (Jul 24, 2014)

By Linda O’Brien, J.D., LL.M.

A tax preparation service’s Lanham Act trade disparagement claims against a competitor for allegedly making false and disparaging statements in its radio commercials could proceed, the federal district court in Terre Haute, Indiana has held (Wabash Tax Service, Inc. v. Stadler & Co., Inc., July 22, 2014, Magnus-Stinson, J.).

Wabash Tax Service and competitor Stadler & Co. provide tax preparation services to clients. To prepare federal and state tax returns for their respective clients, Wabash and Stadler employees must hold a Preparer Tax Identification Number (PTIN); however there are no other licensure requirements for tax preparers imposed under federal and state law.

Wabash filed suit against Stadler, asserting claims of trade disparagement under the Lanham Act and defamation, after Stadler run two commercial advertisements on multiple radio stations. One commercial stated that tax preparers with offices on certain streets were unlicensed, while a second commercial stated that a tax preparation service with a $1,000 giveaway was a scam to attract clients. Wabash alleged that the advertisements clearly referred solely to Wabash and falsely stated that Wabash’s tax preparers were unlicensed. Stadler moved for dismissal.

The court found that dismissal of Wabash’s trade disparagement claims was improper. The Lanham Act prohibits the use of any false or misleading representations of fact, which in commercial advertising, misrepresents the nature, characteristics, or qualities of another person’s goods or services. In rejecting Stadler’s argument that the radio advertisement did not specifically identify Wabash’s services, the court noted that Stadler failed to present any legal authority setting forth the standard to apply when determining the types of statements sufficiently identifying the plaintiff as to be actionable under the Lanham Act.

Additionally, the statements in the commercial were not mere puffery, according to the court. Wabash alleged that it was the only tax preparer in the area with a $1,000 giveaway. The statements in the commercial that the competitor was unethical and its giveaway was scam were not meaningless or boasting. Rather, the statements were specific claims of wrongful conduct on the part of a competitor and did not constitute puffery, the court concluded.

The case is No. 2:14-cv-00052-JMS-MJD.

Attorneys: Robert Peter Kondras, Jr. (Hunt Hassler Lorenz & Kondras LLP) for Wabash Tax Service, Inc. Craig M. Williams (Hall, Render, Killian, Heath & Lyman, PC) for Stadler & Co., Inc.

Companies: Wabash Tax Service, Inc.; Stadler & Co.

Cases: Advertising IndianaNews