“Like a good neighbor, State Farm is there.”® Most of us can hear the Barry Manilow jingle in our heads.
What happens when my State Farm agent fails to call me back after a car accident, or refuses to secure payment that I honestly think I deserve? Is he acting like a good neighbor? No. Can I bring a claim for false advertising or fraud premised on his failure to live up the company’s slogan?
Believe it or not, this question has come up a number of times in courts across the country.
The Eleventh Circuit recently upheld dismissal of a fraud claim premised on a State Farm agent’s representation that the company would treat the plaintiff policyholder like a “Good Neighbor.”
The court determined that the statement was not a misrepresentation of material fact—it was “mere opinion or puffery.”
The same result held sway in the Western District of Washington where an identical fraud claim was brought against State Farm and dismissed on the ground that the slogan was mere puffery.
State Farm is not alone in these cases. Allstate has had its fair share as well.
Courts in Connecticut, Pennsylvania, Louisiana, California, and New Jersey, just to name a few, have held that “You are in Good Hands with Allstate”® is not a statement of fact—it’s mere puffery.
Let’s be realistic. With all due respect to these plaintiffs, these are not surprising results.
However, puffery is not always so clear, and it provides a defense in more situations than you might expect.
Puffery can serve as a defense to a Lanham Act false advertising claim. The Act does not reach puffery—“exaggerated advertising, blustering, and boasting,” or “vague” and “general claim[s] of superiority”—on the theory that no reasonable person would rely on such statements. Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 496 (5th Cir. 2000).
In a case recently decided by the Fourth Circuit, Verisign, Inc. (the exclusive operator of the .com and .net top-level domains) filed a Lanham Act false advertising claim against XYZ.com LLC (the purveyor of a new top-level domain, .xyz), alleging that XYZ made false statements to consumers.
The first element of a false advertising claim requires a plaintiff to establish that the defendant made a false or misleading description or representation of fact in a commercial advertisement about his own or another’s product.
In Verisign, the veracity of three statements used by XYZ to advertise its products was at issue: “all the good [.com] real estate is taken;” “it’s impossible to find the domain name you want;” and “[t]he only thing that’s left is something with a dash or maybe three dashes and a couple of numbers in it.”
The district court determined that the first two statements were opinion or puffery, not statements of objective fact on which reasonable consumers could rely.
The third statement, while demonstrably false (because there are .com names left that don’t involve dashes or numbers), was still found to be puffery because the court read it in conjunction with “all the good [.com] real estate is taken.” Reading the two statements together, the overall message was that the available .com names are not “good” because they involve dashes and numbers.
XYZ made a false statement of verifiable fact when it said the “only [.com names] left” involve dashes and numbers. However, rather than interpreting this as a false representation of fact, the court viewed this as an exaggeration.
XYZ also improperly quoted an NPR reporter in its media efforts, saying that NPR had dubbed it the “next .com,” when in fact, the reporter said, XYZ “could try to become the next .com.”
Even though XYZ’s statement was inaccurate, the trial court concluded it was not false or misleading. On appeal, XYZ argued that the statement was true, or alternatively was mere exaggeration or puffery. The Fourth Circuit affirmed the trial court’s ruling—even though XYZ had made a false statement of verifiable fact.
What courts will consider puffery in an advertisement is broader than you might think.
If you are advertising products or services and need advice, or if you have been accused of fraud or false advertising, Astrachan Gunst Thomas can help. Please call Jim Astrachan at 410-783-3550 (jastrachan@agtlawyers.com) or Elizabeth Harlan at 410-783-3528 (eharlan@agtlawyers.com).
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