Asurion, LLC v. SquareTrade, Inc.
407 F. Supp. 3d 744
| M.D. Tenn. | 2019Background
- Asurion and SquareTrade are competitors in mobile-device protection: Asurion sells carrier-bundled mobile phone insurance (covers theft/loss + damage), SquareTrade sells an extended-warranty "Protection Plan" (covers defects/accidental damage but not theft/loss).
- Asurion challenged two SquareTrade advertisements (mailed and online) that compared SquareTrade’s monthly price side-by-side with carrier plans and used co-branding with Allstate, alleging the ads implied SquareTrade offered equivalent insurance coverage for less.
- Fine-print disclaimers in the ads stated that SquareTrade plans do not cover theft or loss and identified the plans compared; SquareTrade relied on these disclaimers as curing any potential misleading impression.
- Asurion sued under the Lanham Act (15 U.S.C. § 1125(a)) for false advertising and under the Tennessee Consumer Protection Act (TCPA), alleging disparagement and deceptive practices; SquareTrade moved to dismiss under Rule 12(b)(6).
- The Court denied SquareTrade’s request for judicial notice of third-party website printouts (because they were not referenced in the complaint) and denied the motion to dismiss as to both Lanham Act and TCPA claims, finding Asurion plausibly pleaded that the ads could mislead a substantial portion of reasonable consumers and that a competitor has TCPA standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ads are misleading under Lanham Act | Ads imply SquareTrade offers insurance and equivalent coverage to carrier plans, misleading consumers into thinking theft/loss covered | Fine-print disclaimers ("does not cover theft or loss") and consumer expectation that different-priced plans differ cure any deception | Denied dismissal: pleadings plausibly infer ads tend to deceive a substantial portion of intended audience; disclaimer not dispositive at pleading stage |
| Whether Asurion pleaded actual consumer deception | Not required at pleading stage; need plausible inference of tendency to deceive | Argues Asurion failed to plead consumers were actually deceived | Denied dismissal: actual confusion not required to survive motion to dismiss; plausible inference sufficient |
| Whether competitor (Asurion) has standing under TCPA | Asurion suffered ascertainable loss due to deceptive comparative ads and may sue under TCPA | SquareTrade contends competitors lack standing for TCPA claims | Denied dismissal: TCPA permits any person suffering ascertainable loss; competitor standing is viable when conduct disparages plaintiff’s offerings |
| Whether Court may consider third-party website materials on motion to dismiss | N/A (Asurion opposed judicial notice) | SquareTrade asked judicial notice of online ads from other companies to support dismissal | Denied: Rule 12(d) requires treating such materials as summary-judgment evidence and gives parties notice; materials not referenced in complaint so judicial notice denied |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: factual allegations must plausibly show entitlement to relief)
- Wysong Corp. v. APN, Inc., 889 F.3d 267 (6th Cir. 2018) (false-advertising standard for deceptive-but-not-literally-false claims; plausible inference of deception at pleading stage)
- Balance Dynamics Corp. v. Schmitt Indus., Inc., 204 F.3d 683 (6th Cir. 2000) (elements of Lanham Act false-advertising claim and distinction between liability and remedies)
- Fink v. Time Warner Cable, 714 F.3d 739 (2d Cir. 2013) (importance of context and disclaimers in consumer-deception analysis)