Opinion ID: 763256
Heading Depth: 2
Heading Rank: 4

Heading: Lanham Act Claim Defenses

Text: 28 Hollenbeck and First American contended in their brief that the Lanham Act cannot apply to this case because of the McCarran-Ferguson Act. At oral argument, they withdrew this contention because of this court's decision in Merchants Home Delivery Service, Inc. v. Frank B. Hall & Co., 50 F.3d 1486 (9th Cir.), cert. denied, 516 U.S. 964, 116 S.Ct. 418, 133 L.Ed.2d 335 (1995). 7 We therefore need not address this issue further.
29 Hollenbeck contends that he cannot be liable to Coastal for false representations under the Lanham Act because he, as an individual, is not in competition with Coastal. It is true that in Halicki v. United Artists Communications, Inc., 812 F.2d 1213, 1214 (9th Cir.1987), we held that a false representation about a film did not violate the Lanham Act and we pointed out that the party making the false representation was not in competition with the victim. But the crux of Halicki was that the victim, although suffering a form of injury to reputation, had not suffered a competitive injury. See id. at 1214-15. As we stated in Waits v. Frito-Lay, 978 F.2d 1093 (9th Cir.1992), cert. denied, 506 U.S. 1080, 113 S.Ct. 1047, 122 L.Ed.2d 355 (1993): 30 The plaintiff's claim in Halicki was exclusively ... a false advertising claim, for it sought redress for a simple misrepresentation as to a product's quality, the content of a movie.... [W]here the misrepresentation simply concerns a product's qualities, it is actionable under section 43(a) only insofar as the Lanham Act's other purpose of preventing unfair competition is served.... In such cases, Halicki counsels that a discernibly competitive injury must be alleged. 31 Id. at 1109. In this case, there is no question that the injury to Coastal was competitive; Hollenbeck sought by his statements to divert business from Coastal to First American. The injury is the type that section 43(a) of the Lanham Act was intended to remedy. 32 A corporate officer or director is, in general, personally liable for all torts which he authorizes or directs or in which he participates, notwithstanding that he acted as an agent of the corporation and not on his own behalf. Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir.1985) (internal quotations omitted), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986). The jury found that Hollenbeck himself made the statement that we have found actionable under the Lanham Act-the statement that Coastal was not paying its bills. Having made the statement as an officer of First American, Hollenbeck cannot hide behind the corporation where he is an actual participant in the tort. Donsco, Inc. v. Casper Corp., 587 F.2d 602 (3d Cir.1978). The jury could properly find Hollenbeck liable as an individual. See Committee for Idaho's High Desert, Inc. v. Yost, 92 F.3d 814, 824 (9th Cir.1996).
33 The Lanham Act proscribes misrepresentation of another's goods or services in commercial advertising or promotion. 15 U.S.C. § 1125(a)(1)(B). Neither the Act's legislative history nor the Act itself defines advertising or promotion. See Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1383 (5th Cir.1996). The court in Gordon & Breach Science Publishers v. American Inst. of Physics, 859 F.Supp. 1521 (S.D.N.Y.1994), after reviewing the relevant case law, set forth four criteria for determining whether representations constitute commercial advertising or promotion. Id. at 1535-36. The court explained that: 34 In order for representations to constitute commercial advertising or promotion under Section 43(a)(1)(B), they must be: (1) commercial speech; (2) by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant's goods or services. While the representations need not be made in a classic advertising campaign, but may consist instead of more informal types of promotion, the representations (4) must be disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within that industry. 35 Id. In Seven-Up, the Fifth Circuit adopted these criteria as accurate and sound, 86 F.3d at 1384, and we, too, adopt them. The disputed component in our case is (4): was the representation that Coastal was not paying its bills on time sufficiently disseminated to the relevant purchasing public to constitute ... 'promotion' within that industry. (Emphasis added). 36 Coastal argued that, because the evidence showed that there were only two or possibly three institutions involved in the kind of nationwide refinancing operation conducted by Shearson, a representation to Shearson was a dissemination to a sufficient segment of the relevant purchasing public. The district court ruled that, if Coastal's view of the market were correct, then a representation could constitute a promotion even if made only to Shearson. In this ruling, we conclude that the district court was correct. 37 Where the potential purchasers in the market are relatively limited in number, even a single promotional presentation to an individual purchaser may be enough to trigger the protections of the Act. 38 Seven-Up, 86 F.3d at 1386. Here the district court, without objection, submitted to the jury the factual question of the nature of the market, by the following instruction: 39 To establish the existence of a commercial promotion for purposes of its Lanham Act claims, plaintiff has the burden of establishing that the relevant purchasing public to which plaintiff was marketing its services consisted only of customers operating nationwide programs for the refinance of residential mortgages. If you find that the relevant purchasing public to which plaintiff was marketing its services included any institutional lender or other purchaser of escrow services, you must find against plaintiff on its Lanham Act claims. 40 So instructed, the jury found that the defendants' statements were made in a commercial promotion. The jury's finding was supported by substantial evidence. We therefore reject the contention of First American and Hollenbeck that there was no promotion as a matter of law.