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Dependable Sales & Serv. v. TrueCar, Inc.

United States District Court for the Southern District of New York

July 12, 2019, Decided; July 12, 2019, Filed

15-cv-1742 (PKC)

Opinion

 [*371]  OPINION AND ORDER ON MOTION TO RECONSIDER

CASTEL, U.S.D.J.

Defendant TrueCar, Inc. ("TrueCar") has moved for [**7]  partial reconsideration of the Court's summary judgment decision pursuant to Local Civil Rule 6.3. The central holding was that the plaintiffs, 108 automobile dealerships suing individually under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), had failed to come forward with evidence of economic or reputational injury. Dependable Sales & Serv., Inc. v. TrueCar, Inc., 377 F. Supp. 3d 337, 2019 WL 1407440, at *8-12 (S.D.N.Y. Mar. 27, 2019). Because the plaintiff dealerships were not direct competitors of TrueCar, and TrueCar's false advertisements did not make comparative claims, plaintiffs were not entitled to a presumption of injury. 377 F. Supp. 3d 337, [WL] at *5-7. However, the Court further ruled that evidence of injury was not required in order to proceed with a claim for the disgorgement of profits from a defendant shown to have willfully violated the Lanham Act. 377 F. Supp. 3d 337, [WL] at *12-14. Whether and under what circumstances a showing of injury is a required element of a claim for disgorgement under the Lanham Act had not been a central focus of the parties' summary judgment briefs.

Having reexamined the Second Circuit's authority on the Lanham Act's disgorgement  [*372]  remedy and the Supreme Court's decision in Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 134 S. Ct. 1377, 188 L. Ed. 2d 392 (2014), the Court concludes that plaintiffs' failure to come forward with evidence of injury precludes their disgorgement claim, despite evidence of TrueCar's willful Lanham Act violations. TrueCar's [**8]  motion for reconsideration is therefore granted.

The remedies for a false-advertising claim are set forth in section 35(a) of the Lanham Act, 15 U.S.C. § 1117(a), which states in part that "[w]hen . . . a violation under section 1125(a) or (d) of this title . . . shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . subject to the principles of equity, to recover (1) defendant's profits . . . ." To make out a claim of false advertising, section 43(a) states that "[a]ny person who, on or in connection with any goods or services . . . uses . . . any . . . false or misleading description of fact, or false or misleading representation of fact, which . . . in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act." 15 U.S.C. § 1125(a)(1)(B).

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394 F. Supp. 3d 368 *; 2019 U.S. Dist. LEXIS 116455 **; 2019 U.S.P.Q.2D (BNA) 258205; 2019 WL 3067115

DEPENDABLE SALES & SERVICE, INC., et al., Plaintiffs, -against- TRUECAR, INC., Defendant.

Prior History: Dependable Sales & Serv. v. TrueCar, Inc., 377 F. Supp. 3d 337, 2019 U.S. Dist. LEXIS 52290 (S.D.N.Y., Mar. 27, 2019)

CORE TERMS

Lanham Act, disgorgement, advertisement, reputation, false advertising, false-advertising, supplemental jurisdiction, trademark, profits, summary judgment, direct competitor, actual injury, lost sales, reconsideration, plaintiffs', deterrence, consumer, deter, sales