Dependable Sales and Service, Inc. et al v. Truecar, Inc.
MEMORANDUM AND ORDER granting in part and denying in part 29 Motion to Dismiss. TrueCar's motion to dismiss is GRANTED as to the "bait-and-switch," "financing," "transparency" and "rebate" adverti sements. It is DENIED as to the "no haggle" and "factory invoice" advertisements. The Clerk is directed to terminate the motion. (Docket # 29.) (As further set forth in this Memorandum and Order.) (Signed by Judge P. Kevin Castel on 1/6/2016) (mro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DEPENDABLE SALES & SERVICE, INC.,
The plaintiffs are 162 auto dealerships located throughout the United States.
They allege that defendant TrueCar, Inc. (“TrueCar”) violated the Lanham Act and New York
law by falsely advertising a “no haggling” and “no negotiation” experience for car purchasers.
According to plaintiffs, TrueCar requires consumers to negotiate with auto dealerships as to price
and vehicle, thereby rendering its advertisements false. Plaintiffs also allege that TrueCar’s
advertisements misrepresent the company’s pricing and financing services, as well as the
availability of certain vehicle models.
TrueCar moves to dismiss the First Amended Complaint (the “Complaint”)
pursuant to Rule 12(b)(6), Fed. R. Civ. P. For the reasons explained, the motion is granted in
part and denied in part.
For the purposes of this motion, all non-conclusory factual allegations are
accepted as true, and all inferences are drawn in favor of the plaintiffs. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).
A. The Parties.
As noted, plaintiffs are 162 auto dealerships located throughout the country.
(Compl’t ¶¶ 5-166.) They contend that they have lost sales to TrueCar-affiliated dealers, and
that they have been “forced” to offer discounted prices in order to match TrueCar’s allegedly
misleading price guarantees. (Compl’t ¶ 293.)
TrueCar is a Delaware corporation with its principal place of business in
California. (Compl’t ¶ 168.) It operates a website that enables prospective automobile
purchasers to search for available vehicles. (Compl’t ¶ 179.) It advertises nationally and
participates in interstate commerce. (Compl’t ¶ 168.) TrueCar’s website states that it has more
than 9,000 affiliated auto dealerships nationwide. (Compl’t ¶ 169.) Among other things,
TrueCar’s site states that more than 500,000 customers have purchased vehicles from “TrueCar
Certified Dealers.” (Compl’t ¶ 169.)
B. TrueCar’s Website.
At TrueCar’s website, www.truecar.com, consumers can search for vehicles and
prices offered by dealerships affiliated with TrueCar. (Compl’t ¶ 179.) Search inputs include
vehicle year, brand, model and color. (Compl’t ¶ 179.) The site generates a vehicle report
covering that lists pricing information for the selected vehicle but does not identify the TrueCaraffiliated dealers that sell the vehicle. (Compl’t ¶ 180.) The dealers’ identities are disclosed only
after a consumer enters his or her name and contact information. (Compl’t ¶ 180.)
Once the consumer has submitted contact information and generated a vehicle
report, dealerships contact the consumer to solicit business. (Compl’t ¶ 181.) As characterized
in the Complaint, “Within mere minutes of the consumer providing his or her contact
information to TrueCar, the consumer may be contacted by multiple TrueCar Certified Dealers
who will begin a bidding war to win the consumer’s business.” (Compl’t ¶ 183.) “As a result,
instead of taking the ‘haggling’ out of car sales – as TrueCar advertises – TrueCar’s business
model facilitates and encourages haggling.” (Compl’t ¶ 183.) Plaintiffs allege that despite
dealer negotiations, consumers may ultimately pay prices higher than those offered through the
TrueCar website. (Compl’t ¶ 183.)
Once the vehicle report is available to the consumer, the consumer also may
download a “Guaranteed Savings Certificate.” (Compl’t ¶ 181.) According to the Complaint,
the “Guaranteed Savings Certificate” does not accurately reflect the eventual price paid by
TrueCar customers. (Compl’t ¶¶ 183-84.) As characterized by plaintiffs: “TrueCar is merely a
referral service providing customer leads to its affiliated automobile dealerships.” (Compl’t ¶
C. The Allegedly False and Misleading Statements in TrueCar’s Advertisements.
Plaintiffs allege that TrueCar’s advertisements misrepresent the company’s
services in six different areas.
Two categories of alleged misrepresentation go toward the purchasing process
and the availability of vehicle models. The Complaint alleges that TrueCar makes a “No-Haggle
Claim,” which promises a negotiation-free purchasing experience, when, by design, TrueCar
requires dealer negotiation. (Compl’t ¶¶ 186-210.) Plaintiffs separately allege that TrueCar uses
a “bait-and-switch” approach to its advertising, in which consumers select a specific vehicle
model before being prompted to submit personal contact information. (Compl’t ¶¶ 211-26.)
According to plaintiffs, TrueCar dealers often do not offer the vehicle models promised to
consumers, and dealers instead urge customers to purchase vehicles not originally selected.
(Compl’t ¶¶ 211-26.)
Plaintiffs also allege that TrueCar’s advertisements mislead customers on pricing
and financing matters, including misrepresentations about the prices that dealerships pay for
vehicles, the assessment of hidden costs and fees, the availability of financing options and the
use of rebates. (Compl’t ¶¶ 227-91.)
Plaintiffs’ allegations concerning the contents of the allegedly misleading
advertisements are discussed in greater detail below.
D. Plaintiffs’ Claims for Relief.
The Complaint brings three claims for relief. Count One alleges false advertising
under the federal Lanham Act, 15 U.S.C. § 1125(A)(1)(B). (Compl’t ¶¶ 307-17.) Specifically, it
asserts that TrueCar’s advertisements are literally false, or, in the alternative, impliedly
misleading as to the nature, characteristics or qualities of TrueCar’s services. (Compl’t ¶¶ 30910.) Count Two alleges unfair competition under New York common law and N.Y. General
Business Law § 360-o, “as well as the comparable unfair competition and deceptive practices
common laws” of other states where TrueCar advertises. (Compl’t ¶ 323.) Count Three alleges
that TrueCar engages in deceptive acts and practices and false advertising in violation of N.Y.
General Business Law §§ 349 and 350, “as well as the comparable unfair competition and
deceptive acts and practices statutory laws” of other states where TrueCar advertises. (Compl’t ¶
326.) Plaintiffs seek damages and injunctive relief. (Compl’t ¶ 317.)
RULE 12(b)(6) STANDARD.
To survive a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., “a complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible
on its face.’” Iqbal, 556 U.S. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Legal conclusions are not entitled to the presumption of truth, and a court assessing the
sufficiency of a complaint disregards them. Id. Instead, the Court must examine only the wellpleaded factual allegations, if any, “and then determine whether they plausibly give rise to an
entitlement to relief.” Id. at 679. “Dismissal is appropriate when ‘it is clear from the face of the
complaint, and matters of which the court may take judicial notice, that the plaintiff’s claims are
barred as a matter of law.’” Parkcentral Global Hub Ltd. v. Porsche Auto. Holdings SE, 763
F.3d 198, 208-09 (2d Cir. 2014) (quoting Conopco, Inc. v. Roll Int’l, 231 F.3d 82, 86 (2d Cir.
“[T]he purpose of Federal Rule of Civil Procedure 12(b)(6) ‘is to test, in a
streamlined fashion, the formal sufficiency of the plaintiff’s statement of a claim for relief
without resolving a contest regarding its substantive merits.’” Halebian v. Berv, 644 F.3d 122,
130 (2d Cir. 2011) (quoting Global Network Commc’ns, Inc. v. City of New York, 458 F.3d
150, 155 (2d Cir. 2006)). A court reviewing a Rule 12(b)(6) motion “does not ordinarily look
beyond the complaint and attached documents in deciding a motion to dismiss brought under the
rule.” Id. A court may, however, “consider ‘any written instrument attached to [the complaint]
as an exhibit or any statements or documents incorporated in it by reference . . . and documents
that the plaintiffs either possessed or knew about and upon which they relied in bringing the
suit.’” Stratte-McClure v. Morgan Stanley, 776 F.3d 94, 100 (2d Cir. 2015) (quoting Rothman v.
Gregor, 220 F.3d 81, 88 (2d Cir. 2000)).
The Lanham Act’s Prohibition against False Advertising.
Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), prohibits any person
“in commercial advertising or promotion, [from] misrepresent[ing] the nature, characteristics,
qualities, or geographic origin of his or her or another person’s goods, services, or commercial
activities . . . .” To state a false advertising claim under section 43(a), the plaintiff must
plausibly allege “that the statement in the challenged advertisement is false.” Merck Eprova AG
v. Gnosis S.p.A., 760 F.3d 247, 255 (2d Cir. 2014).
Falseness may be established through one of two theories: “‘that the challenged
advertisement is literally false, i.e., false on its face,’ or ‘that the advertisement, while not
literally false, is nevertheless likely to mislead or confuse consumers.’” Tiffany (NJ) Inc. v.
eBay Inc., 600 F.3d 93, 112 (2d Cir. 2010) (quoting Time Warner Cable, Inc. v. DIRECTV, Inc.,
497 F.3d 144, 153 (2d Cir. 2007)). “In either case, the injuries redressed in false advertising
cases are the result of public deception.” Id. (quotation marks omitted). In addition to falsity, a
plaintiff must plausibly allege that the defendant “misrepresented an inherent quality or
characteristic of the product,” that the false statement was made in interstate commerce, and that
the plaintiff was injured. Merck, 760 F.3d at 255 (quotation marks omitted).
The parties agree that plaintiffs’ claims brought pursuant to New York General
Business Law section 349 and New York’s common law of unfair competition are analyzed
using the same standard as the Lanham Act claim. (Def. Mem. 24; Pl. Mem. 7.) See also
Church & Dwight Co. v. SPD Swiss Precision Diagnostics, GmbH, 2015 WL 4002468, at *17
n.14 (S.D.N.Y. July 1, 2015) (Nathan, J.) (applying same standards for false advertising claims
under the Lanham Act and New York law); Samsung Display Co. v. Acacia Research Corp.,
2014 WL 6791603, at *5 (S.D.N.Y. Dec. 3, 2014) (Oetken, J.) (for false advertising claims,
“[t]he analysis applied under § 43(a) of the Lanham Act, New York common law, and § 349 of
the General Business Law is ‘substantially the same.’”).
TrueCar’s Motion Directed to the Falsity of the Advertisements Is Granted in Part
and Denied in Part.
A. The Motion to Dismiss the “No-Haggle” Claim Is Denied.
1. TrueCar’s Allegedly False Advertising Concerning “Haggling” and
TrueCar argues that the Complaint fails to state a false advertising claim as to
advertisements promising consumers a haggle-free, negotiation-free buying experience. As will
be discussed, this aspect of defendants’ motion is substantially premised upon defendants’
disagreement with the facts alleged. Because the Court must accept all non-conclusory factual
allegations as true, this portion of the motion is denied.
The Complaint asserts that TrueCar falsely advertises that its customers will enjoy
a haggle-free, negotiation-free purchasing experience. (Compl’t ¶¶ 186-210.) Plaintiffs allege
that TrueCar makes these misrepresentations in television, radio and social media ads. (Compl’t
¶¶ 186-210.) The Complaint recites numerous iterations of TrueCar’s advertisements concerning
negotiation-free transactions, including statements like, “There’s zero negotiation . . . .,” “You
get a negotiation free guaranteed savings and hassle free buying experience,” “Because I used
TrueCar there was no haggling about the price,” and “Enjoy guaranteed savings & a negotiationfree car buying experience . . . .” (Compl’t ¶ 188.) According to plaintiffs, these statements are
false because TrueCar facilitates dealership solicitations to consumers, the purpose of which is to
“haggle” and negotiate over the vehicle purchase. (Compl’t ¶ 189.)
Plaintiffs allege that by entering personal information and printing a Guaranteed
Savings Certificate, consumers are taking the first step in a process that leads to dealerships
contacting them directly to solicit their business and negotiate a transaction. (Compl’t ¶ 189.)
Plaintiffs acknowledge that certain TrueCar advertisements contain disclaimers, but assert that
they are inconspicuous and appear in fine print. (Compl’t ¶¶ 202-10.)
2. Whether TrueCar in Fact Guarantees Customer Savings Cannot Be
Resolved on a Motion to Dismiss.
TrueCar challenges the facts set forth in the Complaint. It argues that, in truth,
“TrueCar’s user experience does not involve negotiation,” and that “the customer is immediately
entitled to the Guaranteed Savings with the click of a mouse.” (Def. Mem. 14.) It further argues
that the Guaranteed Savings Certificate provides “a lump-sum discount.” (Def. Mem. 14.)
At the motion to dismiss stage, the Court cannot decide whether TrueCar’s
“Guaranteed Savings Certificate” actually guarantees customer savings or does not involve
negotiation. TrueCar has raised “a factual dispute that is inappropriate for resolution on a motion
to dismiss.” Fin. Guar. Ins. Co. v. Putnam Advisory Co., LLC, 783 F.3d 395, 405 (2d Cir.
2015). To the extent that TrueCar’s motion is premised on the factual assertion that consumers
are, in fact, entitled to guaranteed savings and not required to negotiate, its motion is denied.
3. The Effect of TrueCar’s Disclaimer Cannot Be Decided at this Stage.
TrueCar also argues that its website contains a disclaimer that states in relevant
part, “Guaranteed Savings represents the amount that a TrueCar Certified Dealer selected by you
guarantees that you will save off the Manufacturers’ Suggested Retail Price (‘MSRP’) on any instock vehicle that is the same make, model, and trim as your Ideal Vehicle. The Guaranteed
Savings is based on a vehicle without factory or dealer installed options and includes generally
available manufacturer incentives. . . . Each dealer sets its own pricing. Your actual purchase
price is negotiated between you and the dealer.” (Weinberger Dec. Ex. A.) According to
TrueCar, “[t]he presence of this disclosure alone belies the ‘no-haggle’ claim.” (Def. Mem. at
The Second Circuit has observed that “under certain circumstances, the presence
of a disclaimer or similar clarifying language may defeat a claim of deception.” Fink v. Time
Warner Cable, 714 F.3d 739, 742 (2d Cir. 2013) (per curiam); see also Tambrands, Inc. v.
Warner-Lambert Co., 673 F. Supp. 1190, 1195 (S.D.N.Y. 1987) (noting in findings of fact that
“a disclaimer, modification or qualifier is appropriate only if it effectively turns an otherwise
false advertising claim into a true one, in such a manner that the consumers are not misled.”)
(Cedarbaum, J.). A disclaimer is considered in the overall context of the advertisement. See,
e.g., Fink, 714 F.3d at 742 (“in determining whether a reasonable consumer would have been
misled by a particular advertisement, context is crucial.”); McNeil-PPC, Inc. v. Pfizer Inc., 351
F. Supp. 2d 226, 254 (S.D.N.Y. 2005) (concluding in a motion for preliminary injunction that
“[t]he few words of disclaimer are lost when the ads are considered as a whole.”) (Chin, J.).
While a disclaimer may be so plain, clear and conspicuous as to bar a claim as a
matter of law, this is not such a case. TrueCar asserts that consumers must log onto TrueCar’s
website or app in order to use TrueCar, and that the disclaimer is posted “on the Website . . . .”
(Def. Mem. 14-15.) At this stage, the Court cannot conclude whether the disclaimer “effectively
turns an otherwise false advertising claim into a true one, in such a manner that the consumers
are not misled,” Tambrands, Inc., 673 F. Supp. at 1195, or whether “[t]he few words of
disclaimer are lost when the ads are considered as a whole,” McNeil-PPC, Inc., 351 F. Supp. 2d
TrueCar’s motion to dismiss the “No-Haggle Claim” on the basis of the
disclaimer is therefore denied.
4. TrueCar’s Motion to Dismiss on Puffery Grounds Is Denied.
TrueCar argues that the statements cited in support of the “No-Haggle Claim” are
non-actionable puffery. Because the Court cannot determine at the Rule 12(b)(6) stage whether
the disputed statements amount to puffery, TrueCar’s motion is denied.
A defendant cannot be liable for advertisements that amount to puffery. Time
Warner Cable, 497 F.3d at 159. Statements of puffery are subjective claims about products that
“cannot be proven either true or false.” Id. (quotation marks omitted). The Second Circuit
Puffery is an exaggeration or overstatement expressed in broad,
vague, and commendatory language. Such sales talk, or puffing, as
it is commonly called, is considered to be offered and understood as
an expression of the seller’s opinion only, which is to be discounted
as such by the buyer. The ‘puffing’ rule amounts to a seller’s
privilege to lie his head off, so long as he says nothing specific.
Id. (quotation marks omitted). Puffery may occur in the form of “a general claim of superiority
over comparable products,” or, alternatively, as “an exaggerated, blustering, and boasting
statement upon which no reasonable buyer would be justified in relying.” Id. at 160 (quotation
marks omitted). For example, the Second Circuit concluded that a satellite TV company
engaged in puffery when it favorably compared its broadcast resolution quality to an
“unwatchably blurry, distorted, and pixelated” television image imputed to a cable TV
competitor. Id. The Second Circuit also has concluded that statements touting a product’s
“thorough[ ]” research into the English language and the origins of terms related animals were
subjective, and could not be proved true or false. Lipton v. Nature Co., 71 F.3d 464, 474 (2d Cir.
TrueCar argues that “to haggle” is a pejorative concept, which is opinion-based
and turns solely on “consumers’ subjective feelings and beliefs.” (Def. Mem. 10-11.) However,
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the parties offer contrasting dictionary definitions of “haggle,” which the Court is unable to
resolve based on the pleadings. TrueCar cites one definition of haggle as to “bargain in a petty,
quibbling, and naggingly quarrelsome manner.” (Def. Mem. 10, citing Random House
Dictionary of the Eng. Language 636 (unabr. ed. 1981).) Plaintiffs cite a different definition of
haggle as “to talk or argue with someone especially in order to agree on a price.” (Pl. Mem. 13,
citing Merriam-Webster Online. 1) The Court cannot resolve these competing definitions on a
Rule 12(b)(6) motion, which scrutinizes only the Complaint and the documents integral thereto.
The Complaint can be read to plausibly allege that the phrase “no haggled” is understood by lay
consumers to mean that the given price is the actual price, and that no negotiation is required.
Additionally, TrueCar’s puffery argument does not address other supporting
allegations concerning the allegedly false statements made in TrueCar’s advertisements. The
“No-Haggle Claim” recites numerous statements advertised by TrueCar, including: “No
Negotiation,” “No Surprises,” “No hidden costs or surprise fees. Ever.,” “the negotiation-free
car buying and selling mobile marketplace,” “we provide true up front pricing information and a
network of trusted dealers that guarantee savings without negotiation,” “There’s zero
negotiation”; “You don’t have to negotiate a thing . . . .,” “it’s negotiation free guaranteed
savings and a hassle free buying experience,” and “the negotiation-free car-buying platform.”
(Compl’t ¶¶ 186-88.) Although the Complaint uses the word “haggle” to describe the process of
purchasing through TrueCar, and certain advertisements reference a no-haggle experience,
several of the underlying statements in the Complaint go to whether TrueCar purchases are, in
fact, “negotiation-free” and whether TrueCar actually “guarantee[s] savings without
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negotiation.” (Compl’t ¶¶ 187-88.) TrueCar does not explain how these statements concerning
negotiation are mere puffery.
TrueCar’s motion to dismiss the “No-Haggle Claim” on grounds of puffery is
B. The Motion to Dismiss the “Bait-and-Switch” Claim Is Granted.
The Complaint asserts that TrueCar lures in customers by using a “bait-andswitch” approach in its advertisements. Plaintiffs allege that TrueCar’s advertising misleads
consumers into believing that they can select a specific vehicle at a guaranteed price. (Compl’t ¶
211.) However, not all TrueCar-affiliated dealers who contact consumers have the desired make
and model in their inventory, and will instead offer consumers different vehicles. (Compl’t ¶
211.) Plaintiffs contend that TrueCar dealerships do not provide either the specific vehicles or
prices purportedly guaranteed by their advertisements, and that numerous consumers have
reported being misled by TrueCar’s so-called “bait and switch.” (Compl’t ¶¶ 212-15.)
The Complaint does not identify statements by TrueCar that support the “baitand-switch” claim. To plausibly allege a claim for false advertising, the plaintiff must allege
“that the false or misleading representation involved an inherent or material quality of the
product.” Time Warner Cable, 497 F.3d at 153 n.3. As noted, a claim of false advertising may
be based on the theory “that the challenged advertisement is literally false, i.e., false on its face,”
or “that the advertisement, while not literally false, is nevertheless likely to mislead or confuse
Here, because the Complaint does not identify the allegedly false advertisements
that support a “bait-and-switch” claim, it fails to plausibly allege a false advertising claim. The
Complaint does not place TrueCar on notice of any allegedly misleading representation
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concerning its product, and identifies no statement or image that is claimed to be either literally
or impliedly false.
Because the “bait-and-switch” allegations do not plausibly allege a false
advertising claim, TrueCar’s motion is granted as to this portion of the Complaint.
C. The Motion to Dismiss the “Factory Invoice” Claim Is Denied.
According to the Complaint, TrueCar’s advertising misleads consumers into
believing that they can learn a vehicle’s “factory invoice” price through TrueCar, and that they
will receive “an exceptional offer” from TrueCar because they can purchase a vehicle for less
than the amount originally paid by the dealer. (Compl’t ¶¶ 227-28.) “For example, TrueCar’s
advertising includes pricing claims relating to a ‘factory invoice’ price for new automobiles.”
(Compl’t ¶ 227.) According to the plaintiffs, the advertising is misleading because the advertised
“factory invoice” price does not reflect rebates, incentives and other discounts that the
manufacturer provides to the dealer. (Compl’t ¶¶ 228.)
As support for the allegation, the Complaint cites to its Exhibit A, which appears
to be a screenshot of TrueCar’s online advertising. The fourth page of Exhibit A contains a
graph that identifies a “TrueCar Price” of $24,450, an “Average Paid” figure of $25,386, a
“Factory Invoice” price of $25,970 and a Manufacturers’ Suggested Retail Price of $26,445.
(Compl’t Ex. A.) The accompanying text, titled “Information is Power,” states, “As a data
company, we study millions of purchase transactions every year. . . . Within minutes, you can
get upfront pricing information from TrueCar Certified Dealers and know how those prices
compare to the current market.” (Compl’t Ex. A.) Plaintiffs describe the references to “factory
invoice” price in advertisements as intentionally deceptive. (Compl’t ¶¶ 229-33.)
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In moving to dismiss this claim, TrueCar again raises a series of factual
challenges to the Complaint’s allegations. First, it argues that any reasonable consumer would
believe that dealerships profit from their auto sales. But plaintiffs do not claim that TrueCar
somehow failed to disclose that dealers profited from sales – they allege that the “factory
invoice” price cited in advertisements is misleadingly high. 2 Second, TrueCar cites a TrueCar
web page describing factory invoices for the Toyota Corolla, which states that the factory
invoice “does not include discounts, dealer incentives, or holdbacks . . . .” (Def. Mem. 18.) At
the Rule 12(b)(6) stage, the Court cannot determine whether the “factory invoice” definition
contained on TrueCar’s web page discussing Toyota Corollas cured any allegedly misleading
advertisement citing a factory invoice price. See, e.g., Tambrands, 673 F. Supp. at 1195. Third,
TrueCar argues that the graphic at Exhibit A is not misleading “because TrueCar users on
occasion will pay less than the factory invoice price.” (Def. Mem. 19.) But the Court cannot
adjudicate on a motion to dismiss whether “users on occasion” pay less than the “factory
invoice” price. Halebian, 644 F.3d at 130 (courts do not resolve the “substantive merits” on a
motion to dismiss).
TrueCar’s motion to dismiss the “factory invoice” claim is therefore denied.
D. The Motion to Dismiss the “Financing Claim” Is Granted.
Plaintiffs allege that TrueCar’s advertisements falsely lead consumers to believe
that TrueCar will calculate the financing terms of a vehicle purchase, including monthly
payments. (Compl’t ¶ 243.) They cite to a TV advertisement stating that TrueCar’s price
TrueCar relies on Chiste v. Hotels.com L.P., 756 F. Supp. 2d 382, 404 (S.D.N.Y. 2010), in which Judge McMahon
dismissed a false advertising claim alleging that the defendant “fail[ed] to disclose that it was making a profit on
each reservation.” Judge McMahon observed that “[t]he argument attributes to consumers a level of stupidity that
the Court cannot countenance . . . .” Id. Here, the Complaint does not allege that TrueCar or its dealerships failed to
disclose that they were profit-making enterprises, but rather, that the quoted factory invoice figure misleads
consumers about the extent of their purported savings.
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estimate “tells you what you can expect to pay for the car you want.” (Compl’t ¶ 246.)
TrueCar’s website contains a feature that calculates an “Estimated Loan Payment” for the
particular vehicle selected by the consumer, which, plaintiffs allege, displays financing terms
that “are not available to all consumers.” (Compl’t ¶ 243.) Rather, consumers must apply
separately to financing companies, who calculate terms that vary based on the consumer’s credit
rating and other factors. (Compl’t ¶ 243.) Plaintiffs contend that TrueCar’s claim to provide an
“estimated loan payment” is therefore false and misleading, because consumers are not
guaranteed the estimated monthly rates. (Compl’t ¶ 244-45.)
The Complaint does not plausibly allege a false advertising claim as to the
“Financing Claim.” It alleges that TrueCar’s website provides a calculation that is denoted as an
“Estimated Loan Payment.” (Compl’t ¶ 243.) In expressly stating that the loan payment is
“[e]stimated,” the website is not purporting to offer actual financing terms to consumers. Like
the website, the TrueCar ad stating that the company provides a “price estimate which tells you
what you can expect to pay for the car you want” does not purport to offer financing terms to
consumers, and instead describes the financing information as an “estimate” that tells consumers
what they “can expect to pay . . . .” (Compl’t ¶ 246.) Therefore, accepting as true the
Complaint’s factual, non-conclusory allegations, it does not identify any literally or impliedly
false advertisements about the availability of consumer financing.
Plaintiffs’ “Financing Claim” is therefore dismissed.
E. TrueCar’s Motion to Dismiss the “Transparency Claim” Is Granted.
According to the Complaint, TrueCar’s advertisements tout the company’s
transparency with statements like, “you can trust that everything is upfront and out in the open.
No hidden costs or surprise fees.” (Compl’t ¶ 259.) Plaintiffs allege that in reality, TrueCar
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conceals costs and fees, because dealerships affiliated with TrueCar pay the company $299 for
every new vehicle and $399 for every used vehicle sold through a TrueCar referral. (Compl’t ¶
259.) The Complaint alleges that “these fees are inevitably passed along to the consumer,” and
amount to an undisclosed portion of the purchase price. (Compl’t ¶ 259.)
The Complaint does not plausibly allege that TrueCar’s statements concerning
“hidden costs or surprise fees” amount to false advertising. The Complaint expressly alleges that
fees are charged to dealerships, not consumers. (Compl’t ¶ 259.) With no citation to supporting
facts, the plaintiffs allege that “these fees are inevitably passed along to the consumer.”
(Compl’t ¶ 259.) But a fee included in an overall price quoted to a consumer is in no sense a
hidden fee or surprise cost or fee. Plaintiffs’ false advertising claim premised on hidden costs
and fees is implausible. “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.” Iqbal, 556 U.S. at 678. Plaintiffs must “nudge[ ] their claims across the
line from conceivable to plausible.” Id. at 570. Because the “Transparency Claim” does not
identify “hidden costs or surprise fees” that are charged to consumers, the Complaint fails to
plausibly allege a false advertising claim.
F. TrueCar’s Motion to Dismiss the “Rebate Claim” Is Granted.
TrueCar advertises “guaranteed savings” based on customer discounts. (Compl’t
¶ 276.) According to the Complaint, consumers “are led to believe that by using TrueCar’s
services, they will receive an accurate price quote for a specific vehicle requested by the
consumer. For example, TrueCar advertises ‘Guaranteed Savings’ that include discounts based
on factory incentives and rebates . . . .” (Compl’t ¶ 276.)
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According to plaintiffs, TrueCar’s advertisements are false because they imply
that consumers will receive the full discount advertised by TrueCar. (Compl’t ¶ 277.) In reality,
plaintiffs allege, certain rebates are only available to certain customers, such as loyalty rebates or
rebates offered to recent college graduates or members of the military. (Compl’t ¶ 277.) The
Complaint alleges that certain TrueCar customers have expressed confusion after receiving the
impression that they would be eligible for all rebates advertised by TrueCar. (Compl’t ¶¶ 27870.)
The Complaint does not identify advertisements that support the “rebate claim.”
Because it does not identify the allegedly false statements supporting the “rebate claim,” it fails
to plausibly allege a false advertising claim, and does not place TrueCar on notice of the
statements that it contends were literally or impliedly false. See generally Time Warner Cable,
497 F.3d at 153. Defendants’ motion to dismiss the “Rebate Claim” is therefore granted.
TrueCar’s Motion to Dismiss for Failure to Allege Injury Is Denied.
Lastly, TrueCar separately argues that plaintiffs do not plausibly allege an injury
because, to the extent that consumers may have been misled by advertising, “any such deception
is necessarily dissipated before the point of purchase.” (Def. Mem. 23.) According to TrueCar,
any claimed consumer misperception about TrueCar’s offerings “would be cleared up” when the
consumer was offered a vehicle by an affiliated dealership, because if a “hypothetical consumer
test-drove the near-match and decided to buy it,” any deception caused by advertisements would
have “long since dissipated.” (Def. Mem. 23.) This argument invites the Court to resolve the
substantive merits of the Complaint, which are not properly reached on a Rule 12(b)(6) motion.
Halebian, 644 F.3d at 130. The motion to dismiss for failing to plausibly allege injury is
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TrueCar’s motion to dismiss is GRANTED as to the “bait-and-switch,”
“financing,” “transparency” and “rebate” advertisements. It is DENIED as to the “no haggle”
and “factory invoice” advertisements. The Clerk is directed to terminate the motion. (Docket #
Dated: New York, New York
January 6, 2016
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