Reed Construction Data Inc. v. McGraw-Hill Companies
638 F. App'x 43
2d Cir.2016Background
- Reed Construction Data sued McGraw-Hill after McGraw-Hill ran an ad campaign comparing the companies’ databases, alleging false/misleading claims about the quantity of construction-project data each offered.
- Reed asserted claims under the Lanham Act § 43(a), the Sherman Act (monopolization via misleading advertising), and state-law tortious interference with prospective economic advantage.
- The district court granted summary judgment to McGraw-Hill; Reed appealed. The Second Circuit reviews de novo and affirms.
- The district court found some statements arguably literally false and others arguably misleading, but concluded none were material to customers’ purchasing decisions.
- Customer testimony showed a sophisticated market: most purchasers discounted advertising, performed independent evaluations, and only one customer (J & J Industries, Georgia) arguably relied on McGraw-Hill’s ads.
- Reed conceded that, if Georgia law applied to the tort claim, Georgia statutory preemption would bar it; choice-of-law analysis pointed to Georgia for the single affected customer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McGraw-Hill’s comparative ads violated Lanham Act § 43(a) as literally or impliedly false advertising | Ads were false or misleading and caused consumer deception and injury to Reed | Ads were not materially misleading to purchasers in the relevant market; customers are sophisticated and relied on independent evaluation | No Lanham Act liability: some statements arguably false/misleading but not material; summary judgment for McGraw-Hill affirmed |
| Whether misleading advertising supported Sherman Act monopolization claim | Misleading ads harmed competition and enabled market foreclosure | Any effect on competition was de minimis; Reed cannot show clear materiality and reliance required to overcome presumption | Sherman Act claim fails for lack of material effect on competition; affirmed |
| Whether Reed’s state-law tortious interference claim survives (choice of law and preemption) | Tort claim valid under applicable law | If Georgia law governs, Georgia Trade Secrets Act preempts claim; in any event, Reed cannot show causation to multiple customers | Choice-of-law points to Georgia for the sole affected customer; Reed conceded Georgia preemption; tort claim barred; affirmed |
| Whether exclusion of Reed’s damages expert on damages warrants reversal | Exclusion was erroneous and affected outcome | Expert was excluded only on damages; other dispositive grounds dispose of the appeal | No need to reach the expert exclusion issue because claims fail on materiality/other grounds; affirmed |
Key Cases Cited
- McElwee v. County of Orange, 700 F.3d 635 (2d Cir.) (standard of review for summary judgment)
- Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir.) (distinguishing literal vs. implied falsehood under § 43(a))
- National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir.) (materiality inquiry under Lanham Act)
- National Ass’n of Pharmaceutical Manufacturers v. Ayerst Laboratories, 850 F.2d 904 (2d Cir.) (presumption that misleading advertising has de minimis competitive effect)
- Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir.) (background on antitrust treatment of misleading advertising)
- White Plains Coat & Apron Co. v. Cintas Corp., 460 F.3d 281 (2d Cir.) (choice-of-law: state with greatest interest where customers and plaintiff are located)
- Gmurzynska v. Hutton, 355 F.3d 206 (2d Cir.) (appellate courts may affirm district court on any correct ground)
- Hotel Employees & Restaurant Employees Union v. City of New York Dep’t of Parks & Recreation, 311 F.3d 534 (2d Cir.) (judicial notice of facts readily determined from reliable public sources)
- Swindol v. Aurora Flight Sciences Corp., 805 F.3d 516 (5th Cir.) (use of state secretary-of-state public records to determine corporate domicile)