608 F.Supp.3d 566
M.D. Tenn.2022Background
- PCIC (insurer) and PWC (warranty administrator) had an Administration Insured Program Agreement with Securranty (warranty seller) effective Jan 1, 2020; PCIC issued CLIPs backing Securranty’s warranties in exchange for premiums and reporting data.
- PCIC issued an Agreement Cancellation Letter for unpaid premiums and missing data (July 30, 2021), tentatively withdrew it after payment (Nov 2, 2021) but reserved contractual rights.
- Securranty missed a December 10, 2021 premium payment and failed to furnish claim files; PCIC sent a Cease-and-Desist and then cancelled the Agreement effective Dec 30/31, 2021.
- Plaintiffs allege Securranty continued to represent warranties were insured by a “Plateau Insurance Company” after termination; they assert breach of contract and a Lanham Act (15 U.S.C. § 1125(a)) false-advertising claim.
- Securranty moved to dismiss the Lanham Act claim, arguing: (1) the alleged statements are not commercial advertising or promotion; and (2) Plaintiffs failed to plead customer loss/causation.
- The court granted the motion, holding Plaintiffs failed to plausibly allege the statements were commercial advertising or promotion as required under the Lanham Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Securranty’s warranty terms qualify as "commercial advertising or promotion" under § 43(a) of the Lanham Act | Terms stating warranties are insured by Plateau were used in commercial promotion and thus actionable | The references are buried in post-sale Terms and Conditions (and not shown to purchasers pre-sale) and therefore are not advertising or promotion | Court: Not advertising or promotion as pleaded; dismissal granted (Plaintiffs failed to allege representations were commercial speech aimed at influencing purchases) |
| Whether Plaintiffs adequately pleaded causation/consumer harm required by the Lanham Act | Plateau alleges reputational and commercial injury from Securranty’s statements | Securranty contends Plaintiffs did not plausibly allege loss of customers or proximate causation | Court: Did not reach merits in depth because failure on advertising element was dispositive; noted proximate causation must be adequately pleaded per Lexmark and Pom Wonderful |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards require factual plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Grubbs v. Sheakley Grp., Inc., 807 F.3d 785 (6th Cir. 2015) (defines "commercial advertising or promotion" under the Lanham Act)
- Lexmark Int’l v. Static Control Components, Inc., 572 U.S. 118 (2014) (proximate-cause requirement in Lanham Act claims must be pleaded)
- Pom Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014) (plaintiff class for Lanham Act includes those alleging commercial injury from misrepresentations)
- Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, 185 F.3d 606 (6th Cir. 1999) (elements of a Lanham Act false-advertising claim)
- Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir. 1999) (discussing scope of "advertising" under the Lanham Act)
- Wilchcombe v. Teevee Toons, Inc., 515 F. Supp. 2d 1297 (N.D. Ga. 2007) (post-sale inserts/manuals not "advertising" under the Lanham Act)
- Oakley, Inc. v. Bugaboos Eyewear Corp., 757 F. Supp. 2d 1050 (S.D. Cal. 2010) (warranty cards accessible only after purchase are not commercial advertising)