Meredith Lodging LLC v. Vacasa LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

MEREDITH LODGING LLC, an Oregon Case No. 6:21-cv-326-MC

limited liability company; MEREDITH

LODGING OREGON COAST LLC, an OPINION AND ORDER

Oregon limited liability company;

MEREDITH LODGING CENTRAL

OREGON LLC, an Oregon limited liability

company,

Plaintiffs,

v.

VACASA LLC, a Delaware limited liability

company,

Defendant.

_____________________________

MCSHANE, Judge:

Plaintiff Meredith Lodging LLC and two wholly owned subsidiaries (collectively,

“Plaintiff”) bring one claim of false advertising under the Lanham Act, 15 U.S.C. §

1125(a)(1)(B) against Defendant Vacasa LLC.1 The parties are market competitors, both

managing vacation rental properties located in Oregon. Plaintiff alleges Defendant “has

embarked on a smear campaign surgically targeted at [Plaintiff’s] homeowner customers,

1 Plaintiff also brings claims of defamation and trade libel under Oregon law. As mentioned below, the Court

declines to exercise supplemental jurisdiction over those claims.

1 – OPINION AND ORDER

designed to unfairly snuff out that competition.” Pl.’s Compl. ⁋ 1; ECF No. 1. Although the

Court suspected Plaintiff’s claim was fatally flawed, it granted Plaintiff an opportunity to clarify

why the specific market in question rendered just five phone calls sufficient to qualify as

widespread dissemination to the relevant consumer. Op. & Order 11, ECF No. 17. Defendant

again moves to dismiss, arguing Plaintiff’s amended complaint still lacks allegations of sufficient

dissemination necessary to constitute “commercial advertising” under the Lanham Act. Def.’s

Rep. 3, ECF No. 27. As outlined below, the Court agrees.

BACKGROUND

The Court outlined the relevant background in its previous opinion granting Defendant’s

initial Motion to Dismiss. Op. & Order 2-3. As the parties are familiar with the facts, the Court

will not repeat that background section here.

LEGAL STANDARD

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the

complaint requires a “short and plain statement of the claim showing that the pleader is entitled

to relief.” Fed. R. Civ. P. 8(a)(2). The complaint must contain sufficient factual allegations that

“state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 570 (2007). A claim is plausible on its face when the factual allegations allow the court to

infer the defendant’s liability based on the alleged conduct. Ashcroft v. Iqbal, 556 U.S. 662, 663

(2009). The factual allegations must present more than “the mere possibility of misconduct.”

Id. at 678.

While considering a motion to dismiss, the court must accept all allegations of material

2 – OPINION AND ORDER

fact as true and construe those facts in the light most favorable to the non-movant. Burget v.

Lokelani Bernice Pauahi Bishop Trust, 200 F.3d 661, 663 (9th Cir. 2000). But the court is “not

bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at

555. Once the complaint is stripped of conclusory statements, the judge then applies “judicial

experience and common sense” and considers “obvious alternative explanations” to determine if

the complaint states a plausible cause of action. Iqbal, 556 U.S. at 679, 682 (quoting Twombly,

550 U.S. at 567) (internal quotation marks omitted).

In addition to the general pleading requirements, a party alleging fraud “must state with

particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). This

heightened standard requires a party to allege “the time, place and specific content of the false

representation as well as the identities of the parties to the misrepresentation.” Swartz v. KPMG

LLP, 476 F.3d 756, 764 (9th Cir. 2007). The party must identify “‘the who, what, when, where,

and how of the misconduct charged,’ as well as ‘what is false or misleading about [the

purportedly fraudulent] statement, and why it is false.’” Cafasso, U.S. ex rel. v. General

Dynamics c4 Systems, Inc., 637 F.3d 1047, 1054-55 (9th Cir. 2011) (quoting Ebeid ex rel. United

States v. Lungwitz, 616 F.3d 993, 998 (9th Cir.2010)) (internal quotation marks and citations

omitted). The purpose of Rule 9 is three-fold:

(1) to provide defendants with adequate notice to allow them to defend the charge

and deter plaintiffs from the filing of complaints ‘as a pretext for the discovery of

unknown wrongs’;

(2) to protect those whose reputation would be harmed as a result of being subject

to fraud charges; and

(3) to ‘prohibit [] plaintiff[s] from unilaterally imposing upon the court, the

parties and society enormous social and economic costs absent some factual basis.

3 – OPINION AND ORDER

Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009).

DISCUSSION

To prevail on a false advertising claim under the Lanham Act, Plaintiff must allege:

(1) a false statement of fact by the defendant in a commercial advertisement about

its own or another’s product; (2) the statement actually deceived or has the tendency

to deceive a substantial segment of its audience; (3) the deception is material, in

that it is likely to influence the purchasing decision; (4) the defendant caused its

false statement to enter interstate commerce; and (5) the plaintiff has been or is

likely to be injured as a result of the false statement, either by direct diversion of

sales from itself to defendant or by lessening of the goodwill associated with its

products.

Wells Fargo & Co. v. ABD Ins. & Fin. Servs. Inc., 758 F.3d 1069, 1072-73 (9th Cir. 2014)

(quoting Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997)). As this

claim sounds in fraud, Plaintiff must meet the heightened pleadings standards of rule 9(b).

SKEDKO, Inc. v. ARC Prods., LLC, 2014 WL 585379, at *2 (D. Or. Feb. 13, 2014) (listing

cases).

As relevant here, not just any fraudulent misrepresentation suffices to form the basis of a

claim under the Lanham Act. Instead, the Act requires that the misrepresentation take place in

“commercial advertising or promotion.” Ariix, LLC v. NutriSearch Corp., 985 F.3d 1107, 1114-

15 (9th Cir. 2021) (quoting 15 U.S.C. § 1125(a)(1)(B)). In the Ninth Circuit, this means:

(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, and (4) that is sufficiently disseminated to the relevant purchasing

public.

Id. at 1115 (citing Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 735 (9th

Cir. 1999)).

4 – OPINION AND ORDER

This Court previously speculated that the relevant purchasing public was larger than

Plaintiff argued in its initial complaint. Op. & Order 10. In its amended complaint, Plaintiff

attempts to whittle down the potential purchasing public to homeowners under contract with

Plaintiff in Lincoln and Deschutes Counties, because the calls they specifically allege contained

false or misleading information were placed to homeowners in these counties. Def.’s Mot. 7,

ECF No. 20; see Am. Compl. ⁋⁋ 93, ECF No. 18. Plaintiff’s amended complaint, however, fails

to explain why Defendant, a competitor that allegedly targeted homes under management by

Plaintiff, would not target the vacation homes located in the two other counties where Plaintiff

alleges such homes are located (Tillamook and Clatsop Counties). Def.’s Rep. 4. Regardless,

even accepting Plaintiff’s strained attempt to minimize the relevant market results in a market of

approximately 520 homeowners. Am. Compl. ⁋ 94. Additionally, as in the original Complaint,

Plaintiff fails to demonstrate that the relevant market is unique or small enough where

Defendant’s alleged “handful of statements to customers” would qualify as sufficient

dissemination in a commercial advertising context. See Op. & Order 10 (quoting Newcal Indus.

Inc. v. IKON, 531 F.3d 1038, 1054 (9th Cir. 2008) (noting the allegations that Plaintiff has two

headquarters along with eight local offices, with numerous managers responding to negative

reviews, indicates the market “is too large to support Plaintiff’s claim based on a few isolated

communications.”).

The question here, as with the original Complaint, is whether Defendant’s alleged

misrepresentations were “sufficiently disseminated.” Ariix, 985 F.3d at 1115. Ordinarily, “the

actions must be ‘part of an organized campaign to penetrate the relevant market, which typically

5 – OPINION AND ORDER

involves ‘widespread dissemination within the relevant industry.’” Id. at 1121 (citations

omitted). The organized campaign alleged by Plaintiff in its amended complaint is virtually the

same as the organized campaign alleged in its initial complaint, consisting of 10 phone calls

placed by Defendant’s representatives to homeowners under contract with Plaintiff. While a

common theme of attempting to persuade homeowners to switch management companies existed

throughout, none of the calls followed a predetermined script.2 Additionally, instead of targeting

specific homeowners during specific times, these calls were placed sporadically throughout late

2020 and early 2021 and targeted homeowners who lived in different states and owned homes in

different parts of Oregon. See Am. Compl. ⁋ 22.

Plaintiff relies on a case out of the Sixth Circuit, Grubbs, to support their argument that

an organized campaign did take place. In Grubbs, the defendant sent identical emails to each of

the plaintiff’s 22 customers to inform them that defendant would be taking over plaintiff’s

responsibilities. Grubbs v. Sheakley Grp., Inc., 807 F.3d 785, 790 (6th Cir. 2015). The fact that

the defendant targeted all the plaintiff’s clients in Grubbs demonstrates how vastly different

Grubbs is from the case at issue. Calling 10 out of more than 500 customers and attempting to

persuade them to switch companies differs significantly from sending the same email to 22 out

of 22 customers and informing them that their business affairs would be handled by a new

company. The fact that Defendant’s representatives did not follow a script or target a specific

2 All 10 calls alleged by Plaintiff contained different content. As outlined in further detail below, two phone calls did

not allege false statements, three phone calls alleged cleanliness complaints, four phone calls alleged increased

revenue for switching, one phone call left a homeowner confused about a representative’s affiliation, and one phone

call left a homeowner confused about a representative’s affiliation and alleged that Defendant could better manage

the home.

6 – OPINION AND ORDER

subset of homeowners under contract with Plaintiff, coupled with Plaintiff’s misplaced

comparison of the case at hand to Grubbs, merely confirms that the alleged falsehoods were not

“an organized campaign” sufficient to constitute “widespread dissemination within the relevant

industry.” Ariix, 985 F.3d at 1121 (citation and quotations omitted)..

Consulting Ninth Circuit precedent is helpful for determining what can satisfy the

commercial advertisement provision of sufficient dissemination under the Lanham Act. If the

communication is not commercial advertising or promotion, the Lantham Act does not prohibit

it. Ariix, 985 F.3d at 1114-15. In Ariix, the plaintiff alleged that a nutritional supplement guide

written and distributed by the defendant was “specifically designed for and marketed to tens of

thousands of [a competitor’s] sales representatives,” prompting the court to hold that the

defendant sufficiently disseminated the guide. Id. at 1121-22. Similarly, in Newcal, the court

held that the defendant’s broad distribution of promotional literature to thousands of plaintiff’s

customers clearly constituted sufficient dissemination. Newcal, 513 F.3d at 1054. In Ariix and

Newcal, both pamphlets were disseminated to a wide audience and contained the same

commercial speech throughout. In the case at hand, Plaintiff alleges Defendant placed 10 phone

calls to a market of over 500 customers. Additionally, Defendant made the sporadic

communications over a period of several months and each call contained different alleged

falsehoods.3 The vast differences between the alleged scheme here, and those at issue in Grubbs,

Ariix, and Newcal merely confirms that Plaintiff’s allegations fail to show that Defendant’s

3 As demonstrated below, some of the calls did not contain any alleged falsehoods.

7 – OPINION AND ORDER

allegedly false statements were not sufficiently disseminated to qualify as commercial

advertising under the Lanham Act.

Under certain circumstances, communications made to a small number of customers may

qualify as sufficient dissemination. In Coastal, the relevant purchasing public consisted of three

entities, so communications made to only one specific customer qualified as sufficient

dissemination. 173 F.3d at 735. The instant case differs significantly from the situation in

Coastal, because only 10 customers out of over 500 were allegedly targeted by Defendant’s

representatives.4 Plaintiff’s amended complaint does not contain any specific factual allegations

that the market for managing vacation rental properties is so limited that communications

reaching 10 out of over 500 consumers is widespread dissemination sufficient to qualify as

commercial advertising.

This Court previously addressed the question of whether Defendant’s alleged

misrepresentations, which consisted of five phone calls to potential customers under contract

with Plaintiff, were sufficiently disseminated. Op. & Order 6. Plaintiff’s amended complaint

includes three new phone calls allegedly placed in late 2020 and early 2021 to Ms. Wright, Mr.

Kiel, and Mr. and Ms. Parrie. Am. Compl. ⁋⁋ 45-47; id. at ⁋⁋ 84-85; id. at ⁋⁋ 88-89.

During the phone call to Ms. Wright, Defendant’s representative allegedly told Ms.

Wright that he could not find her home on Airbnb or VRBO, and that her home “must be priced

incorrectly.” Id. at ⁋⁋ 46-47. A representative of Defendant left Mr. Kiel a voicemail and

allegedly seemed to represent herself as a potential renter, clarifying that she was a

4 Again, as outlined below, some of the calls contained no falsehoods at all.

8 – OPINION AND ORDER

representative of Defendant in a later phone call where she asked Mr. Kiel for details about his

rent and other aspects of the home. Id. at ⁋⁋ 84-85. Mr. Parrie was contacted via cell phone by a

representative of Defendant, and Ms. Parrie received a mailing from Defendant purporting to

guarantee that Defendant could improve revenue on the Parries’ home by $5,000. Id. at ⁋⁋ 88-89.

The Court is deeply skeptical that any of the new allegations arise to a false or misleading

statement under the Lanham Act. That said, the Court assumes, without deciding, that the new

allegations in fact qualify as misleading communications under the Lanham Act.

Turning to Plaintiff’s additional allegations, Plaintiff’s amended complaint simply repeats

the allegations from its original complaint and fails to allege new misrepresentations. These

allegations can be broken down into four categories: (1) phone calls that do not allege any false

statements; (2) phone calls alleging cleanliness complaints; (3) phone calls alleging increased

revenue for customers who switched to Defendant; and (4) phone calls where Plaintiff’s

customers were allegedly misled by Defendant’s representatives.

Phone Calls That Do Not Allege Any False Statements

1. On January 26, 2021, Ms. Sager was contacted by a representative of Defendant’s

who tried to persuade her to switch companies from Plaintiff to Defendant. Id. at ⁋

77. Ms. Sager informed Plaintiff of the phone call, stating that she was unaware

how Defendant had obtained her phone number. Id. at ⁋ 78.

2. On January 26, 2021, a representative from Defendant called Mr. Behr. Id. at ⁋

87. Another representative later emailed Ms. Behr. Id.

Phone Calls Alleging Cleanliness Complaints

9 – OPINION AND ORDER

1. In January 2021, a representative of Defendant called Mr. Tamayo and told him

there were “reviews on VRBO for [Plaintiff] stating that there is a lack of

cleanliness.” Id. at ⁋⁋ 51-52.5

2. On January 14, 2021, one of Defendant’s representatives called Mr. Sesar. Id. at ⁋

58. The representative told Mr. Sesar that Defendant “had heard a lot of

complaints about Plaintiff and its housekeeping teams.” Id. at ⁋ 60.

3. In or around January 2021, Mr. Reilly was contacted by a representative from

Defendant. Id. at ⁋ 64. In a later phone call, the same representative informed Mr.

Reilly that Defendant has had homeowners switch from Plaintiff because of a

“lack of cleanliness.” Id. at ⁋ 67.

Phone Calls Alleging Increased Revenue for Switching Companies6

1. On or before February 13, 2021, a representative of Defendant contacted Ms.

Gresh. Id. at ⁋ 70. The representative told Ms. Gresh that Defendant “could

guarantee the Greshes more revenue and bookings than they had with Plaintiff in

the prior year.” Id. at ⁋ 72.7

2. In or around January 2021, Mr. Reilly was contacted by a representative from

Defendant. Id. at ⁋ 64. This representative provided Mr. Reilly with a document

5 Plaintiff also alleges that Defendant’s representative told Mr. Tamayo that Plaintiff “had no manager for negative

reviews” and claimed Defendant “could manage the property better.” Id. at ⁋ 52. The latter statement is of a “kind of

general assertion [that] is classic puffery” and cannot support a Lanham Act claim. Newcal, 513 F.3d at 1053. And

as discussed in the opinion dismissing the original Complaint, the fact that Plaintiff “employs multiple managers to

manage negative revies,” Am. Compl. ⁋ 54, directly contrasts Plaintiff’s allegation that Defendant had no basis to

tell homeowners there were complaints regarding cleanliness at some of Plaintiff’s properties.

6 As discussed above, the new allegation regarding a mailing sent to Ms. Parrie also falls under this category.

7 Plaintiff additionally alleges that this representative told Ms. Gresh that Defendant “had been talking to a lot of

unhappy Plaintiff customers.” Id. at ⁋ 71.

10 – OPINION AND ORDER

purporting to compare the increased rental income he could earn if he left Plaintiff

and switched to Defendant. Id. at ⁋ 66.

Phone Calls Where Customers Were Allegedly Misled8

1. In or around February 2021, Ms. Browne was contacted by one of Defendant’s

representatives. Id. at ⁋ 81. The representative led Ms. Browne to believe that he

was a representative of Plaintiff before trying to persuade her to switch

companies. Id.9

Plaintiff also contends that circumstances reasonably suggest that Defendant has cold

called other homeowners under contract with Plaintiff and made similar false or misleading

statements. Id. at ⁋ 113. Instead of providing concrete examples of these circumstances, Plaintiff

essentially asks the Court to infer that because a false or misleading statement was allegedly

made to one homeowner it was also made to hundreds of others, therefore constituting sufficient

dissemination. Def.’s Rep. 2. The request that this Court infer hundreds of homeowners were

targeted circumvents the heightened pleading standards for parties alleging fraud under Federal

Rule of Civil Procedure 9(b) and is patently unreasonable. By imploring this Court to infer

sufficient dissemination without alleging any new false or misleading statements, Plaintiff

employs flawed logic and fails to clarify that Defendant’s alleged statements were sufficiently

disseminated to the relevant market. Without providing context as to why statements to just 10

customers can constitute dissemination sufficient to qualify as commercial advertising in a

8 As discussed above, the new allegation regarding a call placed to Mr. Kiel also falls under this category.

9 During this call, the representative also allegedly offered Ms. Browne $5,000 to switch to Defendant. Id. at ⁋ 82.

11 – OPINION AND ORDER

market of over 500 customers, Plaintiff proves they are unable to provide sufficient factual

allegations necessary under the Lanham Act.

Despite this Court offering Plaintiff a second chance to clarify why this specific market

renders a few phone calls sufficient to qualify as widespread dissemination to the relevant

consumer, Plaintiff has failed to do so. Plaintiff’s inability to comply with the Court’s request

proves that their claim under the Lanham Act is fatally flawed.

CONCLUSION

Defendant’s motion to dismiss, ECF No. 20, is GRANTED. Plaintiff’s Lanham Act claim

is DISMISSED, with prejudice. The Court declines to exercise supplemental jurisdiction over

Plaintiff’s state law claims and those claims are DISMISSED, without prejudice. 28 U.S.C.

§1367(c)(3).

IT IS SO ORDERED.

DATED this 15th day of November 2021.

______/s/ Michael McShane_____

Michael McShane

United States District Judge

12 – OPINION AND ORDER