Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Va.: Surety marketing brochure made false claims about performance, payment bonds, (May 14, 2014)

By Jody Coultas, J.D.

American Demolition and Nuclear Decommissioning, Inc. (ADND) prevailed on a Virginia false advertising law claim against The IBCS Group, Inc. for falsely advertising its performance and payment bonds in a marketing brochure, the federal district court in Charlottesville, Virginia has held (American Demolition and Nuclear Decommissioning, Inc. v. The IBCS Group, Inc., May 13, 2014, Conrad, G.).

ADND, which provides demolition, decommissioning, and environmental remediation services, entered into a General Agreement of Indemnity with an individual surety and his risk management company, IBCS. IBCS presented ADND with a performance and payment bond, which ADND submitted as part of a bid to perform demolition work at a nuclear facility. The bond was rejected on the grounds that the asset pledged as security was unacceptable. IBCS eventually told ADND that it could not provide a satisfactory bond, forcing ADND to purchase a bond from another company in order to keep the demolition contract. IBCS refused to refund the bond.

The court entered judgment in favor of ADND based on the lack of any genuine dispute regarding the Virginia false advertising claim. IBCS’s marketing brochure stated that its bonds were backed by cash, cash equivalents, or readily marketable assets, and stated that IBCS would reverse a transaction if a bond was rejected. The brochure constituted a written advertisement under Virgina’s false advertising law. IBCS publicly disseminated the marketing brochure with the intent to promote the sale of individual surety bonds, and the brochure contained false statements. Contrary to the statement regarding the refund policy, IBCS’s refund policy expressly forbid refunds. The brochure also falsely stated that the bonds were backed by Federal Acquisition Regulations-compliant assets and backed by cash, cash equivalents, or readily marketable assets. ADND sufficiently proved a loss as a result of the false advertising, and that the statements induced ADND to purchase the bond from IBCS.

The case is No. 3:11CV00078.

Attorneys: Daniel C. Wennogle (Stinson Leonard Street LLP) for American Demolition and Nuclear Decommissioning, Inc. David W. Thomas (Michie Hamlett Lowry Rasmussen & Tweel PC) for The IBCS Group, Inc.

Companies: American Demolition and Nuclear Decommissioning, Inc.; IBCS Group, Inc.

Cases: Advertising VirginiaNews