Antitrust Law Daily Wrap Up, FALSE ADVERTISING—MDFla: Law Firm Must Compete with BBB to Bring Lanham Act False Ad Claim Over Negative Reviews, (Feb 15, 2013)

By Tobias J. Gillett, J.D., LLM.

A law firm cannot proceed with a Lanham Act false advertising claim against the Better Business Bureau of Central Florida, Inc. (“BBB”), the Council of Better Business Bureaus, Inc. (“Council”), and the president and CEO of the BBB over allegedly disparaging reviews of the firm published by the BBB because the law firm was not in commercial competition with the BBB and because the Florida court did not have personal jurisdiction over the Council, the federal district court in Orlando has ruled (Kaufman, Englett & Lynd, PLLC v. Better Business Bureau of Central Florida, Inc., February 13, 2013, Antoon, J.).

Florida law firm Kaufman, Englett & Lynd, PLLC (“KEL”) filed suit, alleging that the BBB had “published disparaging representations about its business—including an F rating—that were inaccurate and inconsistent with the [BBB’s] own criteria for evaluating businesses.” KEL asserted that these representations violated the Lanham Act’s prohibition on false and misleading advertising. The defendants moved to dismiss.

Commercial competition requirement. The court concluded that KEL had not stated a claim under the Lanham Act against the BBB and its president and CEO. The court explained that the Lanham Act requires that the allegedly false or misleading advertising must occur “in commercial advertising or promotion.” The BBB argued that KEL would have to be in commercial competition with the BBB in order to satisfy the test outlined in the Southern District of New York’s 1994 opinion in Gordon & Breach Science Publishers S.A. v. American Institute of Physics, 859 F. Supp. 1521, 1994-2 Trade Cases ¶70,707, and that KEL did not compete with the BBB.

Although KEL acknowledged that the Gordon & Breach test applied, it still argued that “commercial competition is not a necessary element of that test.” The court disagreed, finding that it had previously found the test “well-grounded,” that several circuits had expressly adopted the test, and that “the Eleventh Circuit has recently cited the Gordon & Breach test with approval.”

Having concluded that the “commercial competition” requirement applied, the court determined that KEL did not satisfy it. The court determined, contrary to KEL’s argument, that the facts that the BBB’s alleged misrepresentations may have caused current and prospective clients of KEL to take their business elsewhere, and that the BBB had published favorable reviews of other law firms, did not place the BBB in commercial competition with KEL. As the BBB’s alleged misrepresentations did not “constitute commercial advertising or promotion under the Lanham Act,” the court dismissed KEL’s claim with prejudice.

Personal jurisdiction. The court also dismissed KEL’s Lanham Act claim against the Council on the basis of lack of personal jurisdiction. The Council did not “own or control shares in BBB and exercise[d] no control over the daily operations of BBB.” As there was “no evidence that the Council exercise[d] operational control over BBB or that BBB otherwise exists solely to serve the Council,” KEL had not shown that Florida’s long-arm statute provided general jurisdiction over the Council. Moreover, as KEL stated the same failed claims against the Council as it did against the BBB, the long-arm statute did not confer specific jurisdiction over the Council.

As the Lanham Act claims represented the only claims over which the court had original subject matter jurisdiction, the court declined to exercise its supplemental jurisdiction over KEL’s state law claims, and granted the defendants’ motions to dismiss.

The case is No. 6:12-cv-31-Orl-28KRS.

Attorneys: Christopher H. Hunt (The Law Office of Kaufman, Englett & Lynd, PLLC) for Kaufman, Englett & Lynd, PLLC. Clay A. Deatherage (Shutts & Bowen, LLP) for Better Business Bureau of Central Florida, Inc.

Companies: Kaufman, Englett & Lynd, PLLC; Better Business Bureau of Central Florida, Inc.; Council of Better Business Bureaus, Inc.

Cases: Advertising FloridaNews