623 F.Supp.3d 371
D. Vt.2022Background
- Picket Fence Preview (Picket Fence), a paid FSBO (for-sale-by-owner) advertising publisher, sued Zillow alleging Zillow’s free online FSBO listings deceptively divert buyer inquiries to Zillow’s paid "Premier Agents," harming FSBO sellers and Picket Fence’s business.
- Picket Fence alleges Zillow’s site routes the site’s "contact" inquiries to Premier Agents, omits owner contact info on some listings, and thereby induces sellers to pay agent commissions or lose sales.
- Procedural posture: original complaint dismissed with leave to amend; Picket Fence filed a First Amended Complaint (FAC) asserting VCPA claims (deceptive practices and predatory pricing) and a Lanham Act false-advertising claim; Zillow moved to dismiss the FAC. Oral argument held; court takes motion under advisement.
- Picket Fence sought compensatory and exemplary damages and injunctive relief, alleging multimillion-dollar lost profits and market disruption.
- Court considered (and declined) the parties’ competing requests for judicial notice of web-page definitions; it treated Zillow’s website as not reliably authentic for the relevant time period and denied judicial notice of a plaintiff-created graphic.
- Court dismissed all third-party claims (claims asserted on behalf of FSBO sellers) for lack of standing and concluded Picket Fence failed to state viable VCPA or Lanham Act claims on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to assert claims on behalf of FSBO sellers | Picket Fence framed injuries to FSBO sellers as part of its claims and sought relief for that harm | Zillow argued Picket Fence lacked standing to sue for third-party (seller) injuries | Court dismissed any third-party claims for lack of standing (plaintiff failed to oppose this argument) |
| VCPA deceptive-practices claim (§ 2453) — standing and scope | Picket Fence argued it need not be a "consumer" to bring a deceptive-practices claim and sought a hybrid competitor/consumer theory | Zillow argued VCPA deceptive claims require consumer status and Picket Fence is not a consumer | Court held Picket Fence is not a consumer under § 2453, declined to adopt a new hybrid competitor-consumer claim, and dismissed the § 2453 claim for lack of standing |
| VCPA predatory pricing claim (§ 2461c) — plausibility of predatory pricing | Picket Fence alleged Zillow’s free listings are below cost and financed by diverting inquiries to paid agents, resulting in competitive injury to Picket Fence | Zillow argued listings are free to sellers, Picket Fence failed to plead below-cost pricing, dangerous probability of recoupment, or harm to competition | Court held Picket Fence failed to plausibly plead essential predatory-pricing elements (below-cost + probable recoupment + harm to competition) and dismissed the § 2461c claim |
| Lanham Act false advertising (15 U.S.C. § 1125(a)) — literal or implied falsity | Picket Fence alleged Zillow’s FSBO listings are not truly FSBOs because inquiries are diverted to agents, so Zillow’s advertising is false or misleading | Zillow argued it offers free listings to unrepresented sellers and never promises commission-free sales or no agent involvement; statements are not literally or impliedly false | Court found no identified statement that is literally or plausibly impliedly false; dismissed Lanham Act claim |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (constraining factual-pleading standards for plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (establishing plausibility pleading standard)
- Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635 (2d Cir. 2005) (Rule 12(b)(1) jurisdictional dismissal standard)
- Nicosia v. Amazon.com, Inc., 834 F.3d 220 (2d Cir. 2016) (when documents are "integral" to the complaint and judicial notice limits)
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (predatory pricing requires below-cost pricing and a dangerous probability of recoupment)
- Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., 549 U.S. 312 (predatory-pricing claims are rarely successful and require careful proof)
- Elkins v. Microsoft Corp., 817 A.2d 9 (Vt. 2002) (Vermont Supreme Court on standing/privity under the VCPA)
- Messier v. Bushman, 197 A.3d 882 (Vt. 2018) (Vermont Supreme Court reaffirming consumer requirement for § 2453 claims)
- Church & Dwight Co. v. SPD Swiss Precision Diagnostics GmbH, 843 F.3d 48 (2d Cir.) (elements for Lanham Act false-advertising claims)
- Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51 (2d Cir. 2016) (judicial notice of publicly available documents standard)