Late last year, a Colorado federal court dismissed a law firm’s false advertising claims against a rival law firm on the grounds that the plaintiff firm could not sufficiently show that an anonymous online review about his business constituted false advertising under the Lanham Act. As regular readers of this blog know, there is no shortage of false advertising claims (or negative online reviews) between competing businesses. But as the blog’s resident ethics lawyer, this one caught my eye as it raises both advertising and ethics issues.
This case, Wilson v. AdvisorLaw, LLC, stemmed from a fractured business relationship between two financial services law firms – Wilson Law Ltd. and its principal Mark Wilson and AdvisorLaw LLC and its principal Dochtor Kennedy. Wilson and Kennedy had a business relationship which ended in October 2016. Shortly after the breakup, Wilson came across a negative online review about himself and his firm on the website ripoffreport.com. The review accused Wilson of dishonesty and fraudulent behavior and purported to be from an ex-client. According to the lawsuit, forensic evidence showed that the review was posted at 8:23 p.m. from Mr. Kennedy’s home. Although the evidence was not conclusive, it strongly suggested that Mr. Kennedy or one of the other two individuals in his home (his wife or a friend who was there for a brief period of time) posted the review. After discovering the source of the negative review, Wilson sued Kennedy and AdvisorLaw for, among other things, false advertising under the Lanham Act.
The Law on False Advertising and the Court’s Decision
To prevail on a Lanham Act claim (15 U.S.C. § 1125(a)), a plaintiff must show that the defendant made a materially false or misleading statement of fact in connection with the defendant’s “commercial advertising or promotion,” that the statement was made in commerce and misrepresented the nature of the plaintiff’s services and, as a result of the statement, the plaintiff suffered (or will likely suffer) injury. “Commercial advertising or promotion” in the context of the Lanham Act requires that the factual statement: (i) constitute commercial speech; (ii) is made by (or on behalf of) defendant who is in commercial competition with the plaintiff; (iii) is made for the purpose of influencing consumers to obtain the defendant’s services; and (iv) is disseminated sufficiently to the relevant audience so that it would constitute advertising or promotion within the relevant industry. In other words, as the court recognized, the statements at issue “must reach some significant number of actual or potential customers” in order to be actionable.
In this case, Kennedy argued that there was no evidence that the negative online reviews sufficiently reached Wilson’s potential clients and therefore the Lanham Act claim must be dismissed. Wilson made several arguments in response, most of which were based on an assertion that he was “having a hard time getting new clients” after the review was posted. But in the court’s view, Wilson did not provide any evidence specifically linking his difficulty obtaining new clients to the online review. Specifically, the court held: “Plaintiffs have only come forward with a theory that the Review was broadly disseminated to the Plaintiffs' prospective customers and that it had a tendency to discourage those customers from retaining the Plaintiffs, but they have not come forward with any particular proof that this is indeed what occurred.” As a result the court dismissed Wilson’s Lanham Act claim and left the parties to litigate the remainder of their competing state law claims in state court.
The Ethics Issues
The conduct between the parties (both of whom are lawyers) also raises a number of legal ethics issues. Although each state’s ethics rules are slightly different, most are based on the ABA Model Rules of Professional Conduct. With respect to attorney advertising, Model Rule 7.1 provides that a lawyer may not "make a false or misleading communication about the lawyer or the lawyer's services." Here, even assuming Kennedy wrote the online review, it is still probably not an advertisement under Rule 7.1 since it was not about AdvisorLaw's services (e.g. it did not purport to be an anonymous client saying “Wilson is a cheat, go hire AdvisorLaw, LLC instead!”). This highlights an important difference between false advertising claims, which are meant to remedy a wrong to a business competitor, and the attorney advertising rules, which are meant to protect the public from false and misleading lawyer advertisements.
But the anonymous review is problematic for other reasons. Model Rule 8.4(c) prohibits a lawyer from engaging in conduct involving “dishonesty, fraud deceit or misrepresentation.” Similarly, Model Rule 8.4(h) prohibits conduct that adversely reflects on a lawyer’s “honesty, trustworthiness or fitness as a lawyer.” Although the record in Wilson did not show conclusively who authored the negative review, the court recognized the likelihood that it was either Kennedy or someone in his immediate circle. This evidence could be enough for a disciplinary authority to intervene and, as a general rule, those bodies do not take kindly to lawyers disparaging each other in anonymous online reviews. In other words, even though one side may have won this battle, this could very well be a case where both sides end up losing the war.