Lanham Act False Advertising By Law Firm

April 30th, 2018 by Rieders Travis in Business and Corporations

Larry Pitt & Associates v. Lundy Law LLP, No. 2:13-cv-02398-CMR (February 15, 2018) Rufe, J.
In Pennsylvania, unlike in many other jurisdictions, an attorney or a law firm is permitted to refer a case to another attorney or law firm and earn a portion of the clients’ fees without performing any work on the case, so long as the arrangement is disclosed to the client and the fee is not excessive. However, a law firm may not actively advertise in its own name for certain categories of cases for the purpose of referring those cases to other law firms.

This case requires the Court to determine whether, and under what circumstances, a law firm can obtain relief against such advertising practices by its competitor. For years, Lundy Law, a personal injury law firm with offices in Philadelphia and surrounding counties in Pennsylvania, New Jersey, and Delaware, has advertised on television, public transit, and other media, using the slogan “Remember this Name” and its mnemonic hotline number 1-800-LUNDYLAW. Since at least 2008, Lundy Law’s advertisements have solicited workers’ compensation and social security disability cases, among other categories of cases. P

itt is another Philadelphia-area law firm, which has, for many years, advertised for personal injury, workers’ compensation, and social security disability cases. At some point, Pitt began using the slogan “Remember this Number” in conjunction with its own mnemonic intake number. On March 4, 2013, in a decision that set off the current legal battles between the two firms, Lundy Law sued Pitt for trademark infringement, but dismissed the suit voluntarily without prejudice on April 18, 2013. Pitt responded by filing this suit, asserting that Lundy Law’s trademark suit was a wrongful use of civil proceedings in violation of Pennsylvania’s Dragonetti Act. Pitt’s initial complaint also asserted that various aspects of Lundy Law’s advertising campaign violated the Sherman Antitrust Act, the Lanham Act, and Pennsylvania common law prohibitions against tortious interference and unfair competition.

Lanham Act False Advertising

The Court dismissed Pitt’s Sherman Act and tortious interference claims with prejudice but allowed Pitt to proceed on 1) its false advertising claim under the Lanham Act (Count Five), 2) its common law unfair competition claims based on deceptive marketing and trade secret misappropriation (Count Six); and 3) its Dragonetti claim (Count Eight). Pitt’s false advertising claim under the Lanham Act and deceptive marketing claim under Pennsylvania unfair competition law are both based on Lundy Law’s extensive advertisements for workers’ compensation and social security cases, which Lundy Law agreed to refer to certain other law firms in exchange for referral fees.

With respect to social security cases, between November 11, 2008 and February 2011, Lundy maintained an agreement with the Indiana-based law firm, Fleschner, Stark, Tanoos & Newlin, under which the two firms would share in the cost of Lundy Law’s advertising for social security disability cases in the Philadelphia area, and Lundy Law would refer all of its potential social security disability cases directly to Fleschner in return for referral fees. Between March 2011 and October 31, 2013, Lundy Law had a similar referral and advertising agreement with the Pennsylvania-based law firm, Pond Lehocky. In 2013, shortly after the filing of this lawsuit, Lundy Law entered into yet another referral agreement with the Carolinas-based law firm of Crumley Roberts, under which Lundy referred most of its potential social security cases to Crumley in exchange for referral fees. However, at the same time, Lundy Law engaged a social security attorney, Michele Squires, as part-time “of counsel” to the firm to handle “up to five” social security cases a month. With respect to workers’ compensation cases, beginning sometime between 2009 and 2012, Lundy Law has maintained a referral agreement with the Law Offices of Lenard A. Cohen, P.C. (“LOLAC”), under which LOLAC subsidizes the cost of Lundy Law’s workers’ compensation advertisements, and Lundy Law refers all its potential workers’ compensation cases in Pennsylvania to LOLAC in exchange for a referral fee. However, while LOLAC has remained an independent firm, Lenard A. Cohen himself has been covered under Lundy Law’s liability insurance policy as “of counsel” to the firm since 2009 and keeps Lundy Law business cards and a Lundy Law email address.

Since 2012, LOLAC’s offices have also been physically located within Lundy Law’s office in Philadelphia, and Mr. Cohen has attended Lundy Law attorney meetings and advertising meetings. Lundy Law’s advertisements throughout this time vary in the specificity with which they solicit social security and workers’ compensation cases. Many are banners featuring 1-800- LUNDYLAW in large font with the words “Injury and Disability Lawyers” or “Injury, Disability & Workers’ Compensation lawyers,” in smaller font above or below the telephone number. Some advertisements feature testimonials from purported social security disability or workers compensation clients that they were glad they “remembered the name.” Some of Lundy Law’s television commercials, however, specifically promote Lundy Law’s purported services for workers’ compensation and social security disability clients. For example, a commercial aired between June 2012 and January 2013 displays the message “Lundy Law gets you the social security benefits you deserve” and features the following statement from Leonard Lundy: People should always apply for Social Security Disability Benefits. We’ll help you through the process. That’s what we do. Another commercial aired during the same period features a similar statement from Mr. Lundy: Social Security benefits are available to people because they have a physical or mental condition that makes it impossible for them to work. It’s also available for people who have never worked. It’s really a cumbersome process. Our job is to get them the benefits after they’ve been denied. That’s what we do.

As Mr. Leonard speaks, the following messages appear on the screen: • Denied Social Security benefits? • Lundy Law gets more than retirement benefits from Social Security. • Lundy Law simplifies the Social Security process. • Lundy Law gets the Social Security benefits you need. Similarly, a workers’ compensation commercial aired in 2015 and 2016 features Mr. Lundy telling viewers: Injured on the job? We’re here to help. Call now to talk directly to a workers’ compensation lawyer. At Lundy Law, your own lawyer will guide you through every step of the process. In addition, at least one of Lundy Law’s paper advertisements specifically identifies “Social Security Disability” and “Workers’ Compensation” as two of Lundy Law’s “Practice Areas.” Pitt asserts that all of these advertisements are false and misleading because Lundy intended to refer, rather than handle, any potential workers’ compensation and social security cases. Pitt’s claim of unfair competition based on misappropriation of trade secrets focuses on a different aspect of Lundy Law’s advertising campaign: specifically, Lundy Law’s relationship with Titan (now known as Intersection Media), the exclusive advertising company for the Southeastern Pennsylvania Transportation Authority (“SEPTA”).

For many years, Lundy Law has purchased advertising space on SEPTA buses, trains, and transportation stops, and throughout that time, Leonard Lundy’s daughter, Sara Lundy, has been an account executive at Titan. In that role, she provided Lundy Law with photographs of advertisements used by other law firms and information on their locations as well as transit ridership information. Pitt alleges that these disclosures constituted misappropriation of confidential information concerning the advertising strategies of Lundy Law’s competitors, including Pitt. Pitt has not met its burden of raising a genuine question of fact as to whether Mr. Cohen is an attorney at Lundy Law, or even if he is not, whether the particular differences between Lundy Law’s relationship with Lenard Cohen and a law firm’s relationship with its own attorneys would be material to potential clients. Accordingly, Pitt has not provided sufficient evidence to support its Lanham Act claim based on Lundy’s workers’ compensation advertisements. Some, but not all, of Pitt’s advertisements for social security advertisements unambiguously represent that Lundy Law’s attorneys handle social security claims, the Court considers whether this message “conflicts with reality.”

There is a genuine dispute of fact over whether at least three of Lundy Law’s advertisements published during this time period were “literally false.” Plaintiff has not disputed that Ms. Squires was available and authorized to handle at least some social security cases at Lundy Law after November 2013, Lundy Law’s advertisements for social security cases since then are not “literally false.” Pitt has provided no surveys or consumer testimony that show clients would have responded differently to Lundy Law’s advertisements if they omitted references to its social security practice or expressly disclosed that Lundy Law would refer rather than handle social security cases. For the reasons discussed above, Lundy’s motion for summary judgment will be granted as to all remaining claims. The Court is aware that its decision today denies a plaintiff relief despite evidence of years of wrong-doing by the defendants.

There is every indication here that a prominent personal injury law firm in Philadelphia essentially rented out its name in exchange for referral fees and that its managing partner lied on television that his firm handled social security disability claims when it did not. But when a plaintiff fails to meet its burden of establishing causation of harm or likelihood of future violations, the Lanham Act and Pennsylvania law do not permit a court to grant relief based solely on a defendant’s past misrepresentations. Nonetheless, courts are not the only institutions to review deceptive attorney advertising; nor are they typically the most appropriate or efficient forum. In many instances, a complaint to the state attorney disciplinary boards may be the most effective means for quickly ending and sanctioning plainly unethical conduct. Thus the Court’s decision should not be read to condone or excuse Defendants’ alleged actions, but should instead serve as a reminder of the burden that plaintiffs bear when they choose to seek relief against their competitors in court.