Time Warner Cable Wins Deceptive Advertising Suit in 2nd Circuit
If you're going to file a class action lawsuit alleging an ISP’s ads are exaggerating its broadband speed, you'd better make sure the record contains the deceptive ad you're suing over. That’s the takeaway of Fink v. Time Warner Cable, decided Monday in the 2nd U.S. Circuit Court of Appeals. “Plaintiffs brought this lawsuit, and purported to do so based upon the specific text of a specific advertisement,” read the decision of the unanimous three-judge panel (http://1.usa.gov/16OhEfa). “They should not need discovery to tell them exactly what that advertisement said."
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Plaintiffs had challenged Time Warner Cable’s claims that its Road Runner Internet service provided an “always on connection” at a “blazing speed” that is “up to 3 times the speed of most standard DSL packages and up to 100x faster than dial-up,” and the “fastest, easiest way to get online.” Plaintiffs, seeking to represent a nationwide class of Road Runner subscribers, alleged the ads were false and misleading because TWC throttles some high-bandwidth applications.
There was one big problem: Upon reviewing a lower court’s decision to dismiss the case for failure to state a claim, the 2nd Circuit observed during oral argument that the ads in question weren’t in the record. “Because the precise formulation and context of Time Warner’s representations are pivotal to Plaintiffs’ claims, we asked Plaintiffs to supplement the record accordingly,” the court said in the unsigned opinion. It was supported by Judges Jose Cabranes, Denny Chin and Susan Carney.
Plaintiffs’ subsequent submission was “perplexing,” the court said. The ad was dated Aug. 7, 2009, nine months after plaintiffs sued. It only contained one of the four statements alleged in the complaint. That statement -- that Road Runner Internet was “up to” three times faster than most DSL and “up to” 100 times faster than dial-up -- could not support plaintiffs’ claims, the court wrote: The phrase “up to” would “lead a reasonable consumer to expect that speeds could be less than the advertised” speeds, the 2nd Circuit said, quoting the district court’s opinion.
In response to the court’s request, Time Warner Cable also submitted an ad that it had printed from the Internet when the original complaint was filed. That ad contained at least three of the statements alleged in the complaint, “closely accompanied by multiple disclaimers” explaining that “actual speeds may vary,” the court said. The court couldn’t understand why plaintiffs hadn’t submitted the original ad. “The Complaint purports to quote the offending advertisement verbatim; we would not have expected it difficult for Plaintiffs to produce. Plaintiffs’ failure to address -- much less explain -- the gaping hole in their submission is conspicuous,” the court wrote.
"A plaintiff who alleges that he was deceived by an advertisement may not misquote or misleadingly excerpt the language of the advertisement in his pleadings and expect his action to survive a motion to dismiss or, indeed, to escape admonishment,” the court wrote. “The allegations of the Complaint are materially inconsistent with the sole advertisement Plaintiffs have submitted. We therefore easily conclude that Plaintiffs’ claims lack the facial plausibility necessary to survive a motion to dismiss.” Plaintiffs’ attorney, Michael Reese of Reese Richman in New York, didn’t comment, nor did Time Warner Cable.
As a “strictly legal matter,” allegations in a complaint are assumed by the court to be true when considering a motion to dismiss, said Andrew Lustigman, an ad-law and litigation attorney at Olshan Law in New York who wasn’t involved in this case. However, courts are also now required to consider the “plausibility” of a claim, and so it’s important to include ads in the record, he told us. “Ordinarily, the absence of the ad would not be fatal. However, here, the court specifically asked the plaintiff to produce the advertising supporting the allegations. Under these circumstances, it would seem that the plaintiff should have either provided the ads or set forth a valid explanation as to why they were not being provided.”