Kramer Levin Obtains Significant Victory for TrueCar, Securing Dismissal of Lanham Act False Advertising Case

On July 15, 2019, Kramer Levin secured the dismissal of a Lanham Act false advertising suit commenced against its client, TrueCar Inc., by 108 individual car dealers across the country.

This significant win was the culmination of a string of progressive victories for TrueCar. The Plaintiffs’ theory of the case was that they purportedly were injured by supposedly false advertising that TrueCar provides a car-buying experience without “haggling” or negotiation. 

First, on May 9, 2018, U.S. District Judge P. Kevin Castel of the Southern District of New York granted Kramer Levin’s motion to exclude Plaintiffs’ damages expert – who opined that Plaintiffs were entitled to recover in excess of $77 million – on the ground that he “failed to demonstrate injury and causation between TrueCar’s allegedly false advertisements and the resulting lost sales claimed by any plaintiff dealership.”

Next, on March 27, 2019, the Court granted partial summary judgment for TrueCar on injury, which is a required element of a prima facie false advertising case.  The Court noted that its exclusion of Plaintiffs’ damages expert was “[i]ntegral to an understanding of” its “decision on the summary judgment motion” in that, as a result of that decision, by their own admission Plaintiffs “failed to come forward with evidence of economic or reputational injury.”   The Court in its decision nevertheless held that Plaintiffs could pursue relief from TrueCar under the Lanham Act, reasoning that “evidence of injury was not required in order to proceed with a claim for the disgorgement of profits” under the statute.

On July 12, 2019, the Court granted TrueCar’s motion for partial reconsideration of the summary judgment decision.  Accepting TrueCar’s arguments, the Court “conclude[d] that a false-advertising plaintiff who does not come forward with evidence of injury proximately caused by defendant’s advertisements does not have a statutory interest in deterring willful violations of the Lanham Act,” and granted summary judgement “in [TrueCar’s] favor as to the entirety of the Lanham Act claim.”  Upon dismissing Plaintiffs’ only federal claim, the Court also accepted TrueCar’s argument that dismissal of Plaintiffs’ remaining claims was warranted, finding that because those claims “would look to the laws of 23 states as respectively applied to 108 plaintiffs,” “principles of judicial economy, fairness, convenience and comity [would] be best served by declining to exercise subject matter jurisdiction over the remaining state law claims.”