Consumer Law

Does the Lanham Act cover a campaign to get a particular job?

Does the Lanham Act cover a campaign to get a particular job?

Healthcare Integrity, LLC v. Rehoboth McKinley Christian
Health Care Servs., Inc., 2021 WL 4129248, Civ. No. 20-750 KG/LF (D.N.M. Sept. 9, 2021)

Plaintiffs, a healthcare management company and its
individual owner  alleged that a group of
medical providers at RMCHCS secured their ouster as management company/Chief
Executive Officer of RMCHCS through a campaign of false and misleading
information. Defendant CMO Wangler was allegedly motivated by a desire to
replace the individual plaintiff, Conejo, as CEO and secure a lucrative
management agreement for her own company.

Plaintiffs sought to amend the complaint to add, inter alia,
a Lanham Act false advertising claim, which the court held was not futile.

Footnote: Commercial advertising or promotion isn’t
necessarily straightforward. The court didn’t undertake any analysis of this
element at this stage.

The proposed amended complaint would allege that Wangler “in
connection with a professional service (i.e., managing a hospital system) made
false or misleading statements of fact regarding the hospital management
services Plaintiffs provided that, in fact, caused damage to Plaintiffs.” She
allegedly “embarked on a campaign to disparage the value and quality of the
management services Mr. Conejo and HCI were providing to RMCHCS” because she
“knew that Mr. Conejo was well-liked and respected” and that she would “need to
create a negative impression of Mr. Conejo … if she were to be successful in
ousting Mr. Conejo” and HCI so that she could “secure the CEO position for
herself under a management contract with her LLC[.]” She allegedly
“complain[ed] publicly about how Mr. Conejo had cancelled contracts with agency
nurses and proposed employee pay cuts and insist[ed] that his mismanagement and
desire to turn a profit was endangering patient lives and safety”; made
statements to the media suggesting that the entire RMCHCS medical staff had
voted “no confidence” in Conejo where, in fact, the majority of physicians and
nurses had not signed the No Confidence Declaration; accused Conejo of creating
patient safety risks and engaging in retaliatory suspensions; and made the
foregoing statements despite knowing that they were false or misleading.

Wangler also allegedly (1) disseminated the allegedly false
or misleading statements to the relevant purchaser of the services: the RMCHCS
Board, which had the authority to engage—and/or terminate—the services of a
hospital administrator of its choosing; (2) utilized multiple methods of
communication, including interviews with news media, email, Zoom
videoconferencing, and letters, to disseminate false or misleading statements
about the services Plaintiffs were providing; and (3) “made an express sales
pitch for the CEO contract” in a letter she submitted to the Board in May 2020.
Taking all this as true, the court couldn’t say that amending the complaint
would be futile.

Comment: The key move prefigured here is whether a specific
potential employer is the relevant audience for an individual’s services. Is
this an organized campaign to penetrate the relevant market? We can only know
once we understand the relevant market, and the answer might be different for
an ordinary company that could in theory provide services to many different
hospitals versus a very specific employment situation—or it could simply be
that soliciting a particular employer, no matter how desireable to that
would-be CEO, is not enough to be commercial advertising or promotion, since
the relevant skills are likely transferable in ways that, say, supplies for
Ford engines are not. That is, previous cases recognizing solicitations to a
single buyer as “commercial advertising or promotion” for Lanham Act purposes
have all, as far as I know, been about customized products that can only
realistically be sold to the specific buyer, like Ford or Coca-Cola. However,
it’s notable that the producers in those cases chose to customize their
products—there was a broader market out there; they just wanted to participate
in a very specific market. So at what point in time do we assess the relevant
market, and can the specificity of human factors be part of that?

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