At World Properties, LLC v. Baird & Warner Real Estate
Filing
89
MEMORANDUM Opinion and Order signed by the Honorable Andrea R. Wood on 8/27/2019. Mailed notice(ef, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
AT WORLD PROPERTIES, LLC, d/b/a
@properties,
Plaintiff,
v.
BAIRD & WARNER REAL ESTATE, INC.,
Defendant.
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No. 18-cv-01973
Judge Andrea R. Wood
MEMORANDUM OPINION AND ORDER
Defendant Baird & Warner Real Estate, Inc. (“B&W”) and Plaintiff At World Properties,
LLC, d/b/a @properties (“@properties”) are real estate brokerage companies serving the City of
Chicago and the surrounding area. Beginning in February 2018, B&W launched a series of
advertisements celebrating its accomplishments in 2017. Among B&W’s 2017 achievements
touted in those advertisements were its $8.8 billion in sales and 32,000 transactions. However,
according to @properties, B&W artificially inflated both of those figures. Therefore, @properties
filed the present lawsuit against B&W for false advertising under both the Lanham Act, 15 U.S.C.
§ 1125(a), and the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/2. Now before
the Court is B&W’s motion to dismiss the Second Amended Complaint (“SAC”) for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 77.) For the following
reasons, B&W’s motion to dismiss is denied.
BACKGROUND
Both B&W and @properties are residential real estate brokerage companies that compete
with each other in the real estate brokerage market in the City of Chicago, its surrounding
counties (known together with the City of Chicago as “Chicagoland”), and Wisconsin. (SAC ¶¶ 7-
–9, 14, Dkt. No. 71.) 1 At issue in this action are statements that B&W made in several
advertisements claiming that in 2017, B&W had $8.8 billion in sales and 32,000 transactions. (Id.
¶¶ 20, 29, 31.)
Contrary to B&W’s representations, an industry real estate data aggregator and distributor
known as Midwest Real Estate Data reported that in 2017, B&W’s total volume for properties
listed and sold was approximately $5.7 billion and its total number of sales was 17,168. (Id. ¶¶ 10,
33.) Similarly, a survey ranking the “nation’s Top 500 residential real estate firms by 2017 sales
volume” reported that B&W’s nationwide sales volume in 2017 for closed real estate transactions
was approximately $5.8 billion and its total number of transactions that year was 17,450. (Id.
¶ 34.) On the other hand, in 2017, @properties’s total volume for properties listed and sold was
approximately $8.5 billion and its total number of transactions was 17,153. (Id. ¶ 35.) According
to @properties, B&W inflated its sales and transactions figures by including not just its real estate
brokerage sales and transactions, but also mortgage originations and refinances performed by its
affiliate, Key Mortgage Services, Inc. (“Key Mortgage”), and title searches, title insurance
services, and other title-related services performed by its affiliate, Baird & Warner Title Services,
Inc. (“BWT”), as well as two other companies, Starck Title (“Starck”) and Landtrust National
Title (“Landtrust”). (Id. ¶ 36.) Those figures also included property rentals and leases for which
B&W acted as the agent. (Id.) Finally, @properties alleges that B&W inflated its sales and
transactions figures by double- or triple-counting certain transactions. 2 (Id. ¶ 123.)
For purposes of the motion to dismiss, this Court accepts as true the well-pleaded facts in the Second
Amended Complaint and views those facts in the light most favorable to @properties. Firestone Fin. Corp.
v. Meyer, 796 F.3d 822, 826–27 (7th Cir. 2015).
1
2
As an example, @properties alleges that,
if B&W acted as the real estate broker for the purchase of a property for $100,000, the
purchasers of the property obtained a mortgage from Key Mortgage in the amount of
2
The challenged representations first appeared in an advertisement published in an email
distribution from Chicago Agent Magazine, a publication catering to Chicagoland’s top real estate
agents, brokers, developers, and mortgage professionals. (Id. ¶¶ 21–22.) The email’s subject line
states “Our 2017 Stats Are Pretty Interesting.” (Id. ¶ 26.) In the body of the email, B&W’s
advertisement touts “IT’S OFFICIAL. WE CRUSHED 2017.” (Id. ¶ 27.) Below that exclamation
are two columns making several representations, including the challenged representations
concerning $8.8 billion in sales and 32,000 transactions. (Id. ¶¶ 28–32.) Nowhere in the
advertisement does B&W qualify the sales and transactions figures, explain its calculation
method, or provide a data source. (Id. ¶¶ 30, 32.) The advertisement also makes no mention of
Key Mortgage, BWT, Starck, or Landtrust. (Id. ¶ 37.)
The Chicago Agent Magazine advertisement also includes a hyperlink directing readers to
a blog post on B&W’s publicly-available website, titled “2017 Has Been Good to Us.” (Id. ¶¶ 68,
72.) That blog post again repeats the $8.8 billion in sales and 32,000 transactions figures. (Id.
¶¶ 73, 77.) In the opening paragraph, the post celebrates B&W’s 2017 as a year that “really seems
to stand out.” (SAC, Ex. 2, Dkt. No. 71.) Continuing, the next sentence states that, “[i]t’s almost
hard to believe everything that happened, and not just with our residential sales company, but with
our mortgage and title companies, too.” (SAC ¶ 78; SAC, Ex. 2.) The next paragraph states that
B&W “won Top Workplace in our industry for the sixth year in a row from the Chicago Tribune
and #1 Top Workplace in all of Chicago.” (SAC ¶ 79; SAC, Ex. 2.) It then claims that the “$8.8
$80,000, and the purchasers of the property used BWT as their title company, B&W
would have: (a) considered those three distinct transactions for purposes of the 32,000
transactions figure; and (b) added the $100,000 for the property purchase, the $80,000 for
the mortgage origination, and $100,000 for the title insurance or other services into the
“$8.8 billion in sales” figure, such that $380,000 would have been added to the “sales”
figure for what was a $100,000 transaction.
(SAC ¶ 123.)
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billion in sales and more than 32,000 transactions [B&W] did last year is evidence that [B&W’s]
clients and [B&W’s] agents across Chicagoland are onto something.” (SAC ¶ 73; SAC, Ex. 2.)
Again, B&W does not qualify those numbers, explain its calculation method, or provide a data
source. (SAC ¶ 74.) Four paragraphs in, the blog post notes that “[t]he other businesses in our
family had impressive results too,” expressly identifying BWT and Key Mortgage and extoling
accolades each company received in 2017. (SAC ¶¶ 81, 83; SAC, Ex. 2.) In particular, Key
Mortgage was named a “top employer” by National Mortgage Magazine and BWT was rated
among the “Top 3 Title Companies in Illinois” by Fidelity National Title Group. (SAC ¶ 83; SAC,
Ex. 2.) The blog post does not mention Starck or Landtrust. (SAC ¶ 87.)
In addition, B&W or its agents made one or both of the $8.8 billion in sales and 32,000
transactions representations in several internet advertisements posted on publicly accessible
websites and social media sites. (Id. ¶¶ 91–93.) On its Facebook page, B&W made a post on
February 16, 2018 stating, “2017 has been good to us, from winning Chicago Tribune’s Top
Workplace in our industry for the sixth year in a row to doing $8.8 billion in sales. Seems like
we’re on to something, and we don’t plan to stop here.” (Id. ¶ 98.) Similarly, a Facebook post on
B&W’s Oak Park/River Forest office read, “With over $8.8 billion in sales, over 500 new brokers,
3 new offices, No 1 [sic] Top Workplace… the list goes on and on. It’s official, we’ve crushed it
in 2017. #bairdwarner #itseasierhere #joinbw.” (Id. ¶ 104.) That same B&W Office also posted on
Instagram a photographic rendition of the body of the Chicago Agent Magazine advertisement
with its representations of $8.8 billion in sales and 32,000 transactions. (Id. ¶ 110.) Further,
several B&W real estate brokers have made one or both of the $8.8 billion in sales and 32,000
transactions representations on their personal websites or social media accounts. As with the
Chicago Agent Magazine advertisement and the B&W blog post, none of these internet
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advertisements qualify the numbers, explain how they were calculated, or provide a data source.
(Id. ¶¶ 99, 105, 111, 117.) Nor do any of the internet advertisements mention Key Mortgage,
BWT, Starck, or Landtrust. (Id. ¶¶ 101, 107, 113, 119.)
DISCUSSION
To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient
factual allegations, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). This pleading standard does not necessarily require a complaint to contain
detailed factual allegations. Twombly, 550 U.S. at 555. Rather, “[a] claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Adams v. City of Indianapolis, 742 F.3d
720, 728 (7th Cir. 2014) (quoting Iqbal, 556 U.S. at 678). For claims under the Lanham Act
alleging false advertising, the heightened pleading requirements of Federal Rule of Civil
Procedure 9(b) also apply. Conditioned Ocular Enhancement, Inc. v. Bonaventura, 458 F. Supp.
2d 704, 709 (N.D. Ill. 2006). Rule 9(b) requires a party alleging fraud to “state with particularity
the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). This means that the plaintiff must
plead “the who, what, when, where, and how” of the alleged fraud. Conditioned Ocular
Enhancement, 458 F. Supp. 2d at 709.
In its SAC, @properties sets forth deceptive advertising claims under both the Lanham
Act and the Illinois Uniform Deceptive Trade Practices Act. Specifically, @properties contends
that B&W’s claims of $8.8 billion in sales and 32,000 transactions in 2017 were both false
statements of fact because those figures included not just B&W’s real estate brokerage sales but
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also property rentals, leases, and mortgage and title services, many of which were performed by
Key Mortgage, BWT, Starck, or Landtrust.
The Lanham Act prohibits the use of any “false or misleading representation of fact” in
commercial advertising that “misrepresents the nature, characteristics, qualities, or geographic
origin of his or her or another person’s goods, services, or commercial activities.” 15 U.S.C.
§ 1125(a)(1). For a plaintiff to establish liability, it must prove that
(1) the defendant made a material false statement of fact in a commercial
advertisement; (2) the false statement actually deceived or had the tendency to
deceive a substantial segment of its audience; and (3) the plaintiff has been or is
likely to be injured as a result of the false statement. 3
Eli Lilly & Co. v. Arla Foods, Inc., 893 F.3d 375, 381–82 (7th Cir. 2018). There are two types of
actionable statements under the Lanham Act: “those that are literally false and those that are
literally true but misleading.” Id. at 382. Here, @properties has elected to proceed only on a
theory of literal falsity. A literally false statement is one that is “bald-faced, egregious,
undeniable, over the top.” Schering-Plough Healthcare Prods., Inc. v. Schwarz Pharma, Inc., 586
F.3d 500, 513 (7th Cir. 2009). “The inquiry asks whether the defendant made an explicit
representation of fact that on its face conflicts with reality.” Eli Lilly, 893 F.3d at 382. Where a
plaintiff contends that a statement of fact is literally false, it need not produce extrinsic evidence
of actual consumer confusion to prevail because such a statement “will necessarily deceive
consumers.” Id.
B&W argues that @properties’s SAC should be dismissed because neither the $8.8 billion
in sales nor the 32,000 transactions figure was literally false. B&W contends that the words
Where a complaint asserts both a Lanham Act claim and an Illinois Uniform Deceptive Trade Practices
Act claim based on the same underlying facts, the Illinois Uniform Deceptive Trade Practices Act claim
“must rise or fall based on the Lanham Act claim.” Dynamic Fluid Control (PTY) Ltd. v. Int’l Valve Mfg.,
LLC, 790 F. Supp. 2d 732, 739 (N.D. Ill. 2011).
3
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“sales” and “transactions” have expansive meanings that encompass not just real estate brokerage
sales and transactions but also all the other services it offers. Further, B&W asserts that including
in those figures the sales and transactions consummated not just by B&W but also by Key
Mortgage, BWT, Starck, and Landtrust was not literally false because those companies are B&W
affiliates and thus part of the B&W family. And even if it did make a false statement of fact in its
sales and transactions representations, B&W contends that @properties cannot establish that the
misrepresentations were material or caused any injury to @properties.
I.
False Statements of Fact
The Court first addresses whether B&W made false statements of fact when it claimed to
have enjoyed $8.8 billion in sales and performed 32,000 transactions in 2017. @properties claims
that these numbers are false because they include not just B&W’s real estate brokerage sales and
transactions, but also account for B&W’s property rentals and leases along with Key Mortgage,
BWT, Starck, and Landtrust’s mortgage and title services. By including those other services and
figures from other companies, @properties argues, B&W has artificially inflated its sales and
transactions numbers, thereby giving the false impression that B&W’s 2017 real estate sales and
transactions were higher than they actually were.
According to @properties, B&W’s representations concerning its sales and transactions
are literally false because the common definitions of the two terms refer to the transfer of real
property and do not include the property rentals, leases, and mortgage and title services that B&W
used to arrive at the $8.8 billion and 32,000 numbers. In assessing whether a statement is literally
false, courts should be mindful that “‘literal’ must be understood in the common colloquial sense
in which Americans . . . say things like ‘I am literally out of my mind.’” Schering-Plough, 586
F.3d at 512–13. Thus, “the meaning of the alleged literal falsehood must be considered in context
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and with reference to the audience to which the statement is addressed.” Id. In assessing the literal
falsity of a statement, a court must consider how the statement would be understood by a
“linguistically competent person.” Id. at 513. However, a statement that is ambiguous cannot be
literally false. See Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 158 (2d Cir. 2007)
(“[O]nly an unambiguous message can be literally false.” (internal quotation marks omitted));
Scotts Co. v. United Indus. Corp., 315 F.3d 264, 275–76 (4th Cir. 2002) (finding that where an
advertisement can reasonably be understood as conveying different messages, a literal falsity
argument must fail). Instead, where a statement is ambiguous or literally true but misleading in
context, the Lanham Act allows for an implied falsity claim. BASF Corp. v. Old World Trading
Co., Inc., 41 F.3d 1081, 1089 (7th Cir. 1994). But @properties opted against proceeding on such a
theory. In fact, @properties previously raised an implied falsity claim in its First Amended
Complaint but dropped it after amending the complaint a second time. (See First Am. Compl.
¶¶ 129–39, Dkt. No. 48.)
The SAC offers definitions of the words “sales” and “transactions” from Meriam
Webster’s Dictionary to show how neither term includes property rentals, leases, and mortgage
and title services. Notably, @properties selectively picks from the definitions provided to
highlight only the version that supports its preferred reading of the terms. For “sale,” the SAC
states that Merriam-Webster defines the word to mean “the act of selling; specifically : the
transfer of ownership of title to property from one person to another for a price.” (SAC ¶ 46.) Yet
that same entry goes on to define “sales,” plural, as the “operations and activities involved in
promoting and selling goods or services” or “gross receipts.” Sale, Merriam-Webster, available at
https://www.merriam-webster.com/dictionary/sale (last visited July 29, 2019). The first definition
explicitly recognizes that services are capable of being sold. Similarly, the definition of gross
8
receipts is “the total amount of value in money or other consideration received by a taxpayer in a
given period for goods sold or services performed.” Gross Receipts, Merriam-Webster, available
at https://www.merriam-webster.com/legal/gross%20receipts (last visited July 29, 2019)
(emphasis added); see also Gross Receipts, Black’s Law Dictionary (11th ed. 2011) (“Tax. The
total amount of money or other consideration received by a business taxpayer for goods sold or
services performed in a taxable year, before deductions.”). For “transaction,” the SAC cites
Merriam-Webster’s definition of “something transacted; especially : an exchange or transfer of
goods, services, or funds.” (SAC ¶ 47.) That definition again specifically recognizes that a
transaction may involve an exchange of services.
At the very least, the dictionary definitions create ambiguity concerning the scope of the
words “sales” and “transactions.” Indeed, it is difficult to see how the revenue derived from
property rentals, leases, and mortgage and title services cannot be deemed part of B&W’s “gross
receipts.” And the definition of “transaction” can certainly include property rentals, leases, and
mortgage and title services. Certainly, paying money for a mortgage origination or a title search
could constitute “an exchange or transfer of goods, services, or funds.” (SAC ¶ 47.) As one court
observed when addressing a comparable situation in which a real estate broker claimed to have
the “most total transactions,” “[t]he word ‘transactions’ in this context carries many potential
meanings—does it include leases and referrals; does it cover homes or all properties sold; does it
include the selling side of the transaction, the buying side, or both?” In re Century 21-RE/MAX
Real Estate Advertising Claims Litig., 882 F. Supp. 915, 923 (C.D. Cal. 1994). Ultimately, that
court concluded that because the “statement is ambiguous, it cannot be considered literally false.”
Id. The same logic applies here with respect to how B&W compiled its transactions number. And
given that “sale” is a synonym for “transaction”—a fact that @properties specifically highlights in
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the SAC (SAC ¶ 48)—the logic may further be extended to the word “sale.” Because of this
ambiguity, @properties cannot claim that B&W’s inclusion of these other services in its sales and
transactions numbers is literally false.
Nonetheless, @properties claims that “sales” and “transactions” are understood in the real
estate brokerage industry to refer “to the exchange of ownership interest and title of a parcel of
real property from one person or entity to another person or entity.” (SAC ¶ 54; Pl.’s Opp’n at 9
& n.5, Dkt. No. 78.) This argument, however, is better suited to an implied falsity claim, where
the inquiry focuses on “what does the person to whom the advertisement is addressed find to be
the message?” Johnson & Johnson * Merck Consumer Pharm. Co. v. Smithkline Beecham Corp.,
960 F.2d 294, 297 (7th Cir. 1992). It is not the domain of a literal falsity claim to evaluate the
specialized understandings of consumers in a particular market; rather, a literal falsity claim asks
only how an advertisement would be understood by a “linguistically competent person.”
Schering-Plough, 586 F.3d at 513. Moreover, to establish that potential real estate brokerage
clients have a specific understanding of the words “sales” and “transactions,” @properties would
necessarily have to introduce evidence such as consumer surveys. Again, the Seventh Circuit has
held that such evidence is not required for literal falsity claims. Eli Lilly, 893 F.3d at 382. In short,
the words “sales” and “transactions” are sufficiently ambiguous that a linguistically competent
person could understand them to include not just real estate brokerage sales, but also property
rentals, leases, and mortgage and title services. 4 To the extent @properties predicates its literal
falsity claim on the fact that B&W’s $8.8 billion in sales and 32,000 transactions numbers are not
limited to real estate brokerage sales, its claim cannot proceed.
The alleged double- and triple-counting does not alter this Court’s analysis. Using the example from
supra n.1, the actual property sale, mortgage origination, and purchase of title insurance are each discrete
sales and transactions. Thus, including all three in the count is not literally false.
4
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Yet there is a second component to @properties’s literal falsity contention. Not only do
B&W’s sales and transactions figures include property rentals, leases, and mortgage and title
services, but they also include sales and transactions consummated by Key Mortgage, BWT,
Starck, and Landtrust. Thus, @properties also asserts that B&W’s numbers are literally false
because they are artificially inflated by the inclusion of other companies’ sales. In response, B&W
argues that including those companies’ sales is not literally false because they are B&W affiliates.
It is a closer question whether a company claiming the sales of affiliated entities under its
own umbrella has made a literally false statement. Perhaps B&W would have a stronger case for
dismissal if only Key Mortgage and BWT’s sales and transactions were included in the $8.8
billion and 32,000 numbers. As even the SAC concedes, both Key Mortgage and BWT are B&W
affiliates. (SAC ¶ 36.) Especially with respect to BWT, which includes “Baird & Warner” in its
own name, a linguistically competent person may well understand B&W’s sales and transactions
figures to include BWT’s sales and transactions. Moreover, the blog post on B&W’s website
begins by noting that 2017 was a great year not just for “our residential sales company, but with
our mortgage and title companies, too.” (SAC, Ex. 2.) Later in the post, it expressly names Key
Mortgage and BWT as businesses in its family. (Id.) At least for the blog post, this additional
context could very well take the representations out of the literally false territory. Ultimately, the
issue may turn on the exact nature of the corporate relationship between the affiliates. While
B&W emphasizes that it previously pleaded in its answer to the First Amended Complaint that
Key Mortgage and BWT are B&W’s wholly-owned subsidiaries (Def.’s Reply at 3 n.3, Dkt. No.
80 (citing Def.’s Answer to First Am. Compl. ¶¶ 36–42)), at the motion to dismiss stage, the
Court will not consider facts outside of the SAC.
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In any case, the SAC does not allege that Starck and Landtrust are B&W affiliates. B&W
again attempts to “answer” @properties’s allegations by stating in its reply brief that Starck and
Landtrust are B&W affiliates. (Id.) However, even if this were a Rule 12(c) motion for judgment
on the pleadings (and a hypothetical answer to the SAC could be considered), the Court would
still have to “accept all well-pleaded allegations in the complaint as true and draw all reasonable
inferences in favor of the plaintiff.” Forseth v. Vill. of Sussex, 199 F.3d 363, 368 (7th Cir. 2000).
Under this standard, it is reasonable to infer from the SAC that Starck and Landtrust have no
relationship with B&W. And if, in fact, B&W included sales and transactions from wholly
unaffiliated entities in its $8.8 billion in sales and 32,000 transactions figures, it would have made
a literally false statement. For that reason, the Court cannot grant the motion to dismiss, insofar as
B&W argues that @properties did not sufficiently plead a literally false statement. 5
II.
Materiality
B&W additionally contends that even if it made a literally false statement concerning its
sales and transactions numbers, that falsehood was not material. For a literally false statement to
be actionable, the statement must be material. See Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d
813, 819 (7th Cir. 1999). A materially false statement is one that “is likely to influence [a
consumer’s] purchasing decision.” Id.; see also Marvellous Day Elec. (S.Z.) Co. v. Ace Hardware
Corp., 900 F. Supp. 2d 835, 842 (N.D. Ill. 2012) (“This [materiality] requirement is based on the
premise that not all deceptions affect consumer decisions.”), vacated in part on other grounds,
Nos. 11 C 8756, 11 C 8768, 2013 WL 2356008 (N.D. Ill. May 28, 2013).
Because it is sufficient for present purposes for the Court to conclude that B&W’s inclusion of Starck and
Landtrust’s sales and transactions would render B&W’s sales and transactions figures literally false, the
Court passes no judgment on whether including the sales and transactions of Key Mortgage and BWT in
B&W’s count would independently support a literal falsity claim. That issue may be resolved following
further factual development.
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In the SAC, @properties seeks to establish materiality by citing an article stating that a
“real estate broker’s sales volume and position in the real estate market are material to a
consumer’s decision regarding which real estate brokerage firm to choose.” (SAC ¶ 136 (citing
Kirk Wakefield, et al., What Do Consumers Expect From Real Estate Agents?, Keller Ctr.
Research Report (Nov. 2008)); see also Def.’s Reply, Ex. 1, Dkt. No. 80-1 (attaching cited
article).) However, B&W argues that @properties grossly mischaracterizes the article, which
focuses on a consumer’s selection of an individual agent rather than a brokerage firm. Indeed, at
times, the article appears to focus more on the individual agent rather than the real estate
brokerage firm the agent works for. But at other times, the article also recognizes how the
reputation of the brokerage company can boost an agent because it “can lead to greater
attractiveness or demand for the brand.” (Def.’s Reply, Ex. 1 at 2; see also id. (“So, it might seem
bothersome when another agency from the same realty company opens close to yours, but it may
help overall as customers begin to associate your realty brand with that area.”).)
In any case, it is reasonable to infer from the allegations in the SAC, that one sign of a
well-established agency is its number of sales and transactions, and thus a potential client would
be more likely to select a real estate brokerage company that has a high volume of sales and
transactions. At the pleading stage, that is sufficient to survive dismissal. Denying dismissal on
materiality grounds is particularly appropriate since materiality is generally an issue of fact. Cf.
Basic Inc. v. Levinson, 485 U.S. 224, 240 (1988) (interpreting materiality requirement of § 10(b)
of the Securities Exchange Act of 1934). To survive summary judgment, however, @properties
would be well-advised to adduce better evidence than a single article to support its claim that
potential clients looking to buy or sell real property would be materially influenced in their choice
of real estate brokerage company by representations concerning volumes of sales and transactions.
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III.
Injury
Finally, B&W claims @properties has not sufficiently alleged any injury suffered as a
result of the subject statements. To prevail on a literal falsity claim, a plaintiff must prove that it
suffered an actual injury, such as “a loss of sales, profits, or present value (goodwill).” Web
Printing Controls Co. v. Oxy-Dry Corp., 906 F.2d 1202, 1205 (7th Cir. 1990).
To allege injury, the SAC has several charts setting out the percentage change of
@properties’s and B&W’s respective real estate sales volume or number of real estate
transactions for each month January through September 2018 as compared to the same month in
2017. (SAC ¶ 139.) The charts portray a trend where, following the publication of the
advertisements at issue here, B&W’s real estate sales volume or number of real estate transactions
in both the City of Chicago and Chicagoland markets did one of the following: (i) increased at a
higher rate than @properties’s sales volume or number of transactions as compared to the same
month of 2017, (ii) increased while @properties’s sales volume or number of transactions
decreased, or (iii) decreased at a smaller margin than @properties’s sales volume or number of
transactions decreased. (Id.) In January 2018—the month preceding publication of the
advertisements—@properties generally saw either a greater increase or smaller decrease than
B&W in sales volume or number of transactions as compared to January 2017. 6 Thus, the
numbers support @properties’s contention that B&W’s advertisements diverted potential clients
from @properties to B&W. At the pleading stage, these allegations are sufficient to survive
dismissal.
Moving forward, however, @properties will need to come forward with evidence that
directly links the trends shown in the charts and any claimed reputational damage with B&W’s
The one exception is that in the City of Chicago, B&W saw a slight increase in number of transactions,
whereas @properties had a decrease.
6
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deceptive advertising. See Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118,
133 (2014) (“We thus hold that a plaintiff suing under § 1125(a) ordinarily must show economic
or reputational injury flowing directly from the deception wrought by the defendant’s advertising;
and that occurs when deception of consumers causes them to withhold trade from the plaintiff.”).
For now, because @properties has adequately pleaded facts showing B&W made a literally false
statement in its advertisements that was material and caused injury to @properties, it has pleaded
a literal falsity claim.
CONCLUSION
For the foregoing reasons, B&W’s motion to dismiss (Dkt. No. 77) is denied.
ENTERED:
Dated: August 27, 2019
__________________________
Andrea R. Wood
United States District Judge
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