ROSENBAUM & ASSOCIATES, P.C. et al v. MORGAN & MORGAN et al

Filing 81

MEMORANDUM AND OPINION. SIGNED BY HONORABLE MARK A. KEARNEY ON 4/12/18. 4/12/18 ENTERED & E-MAILED.(fdc)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ROSENBAUM & ASSOCIATES, P.C., et
al

CIVIL ACTION

v.
NO. 17-4250
MORGAN & MORGAN, et al

KEARNEY,J.

April 12, 2018
MEMORANDUM

While the Supreme Court has long upheld a lawyer's First Amendment right to advertise
her services, federal law prohibits businesses - including law firms competing for personal injury
clients - from using false and deceptive advertising. A personal injury law firm losing revenue
may sue under federal law trying to affix responsibility for its lost business on a new
competitor's advertising campaign.

Our role is to evaluate whether the new competitor's

advertising campaign is false and deceptive and, even if so, whether the law firm losing business
can prove the false or deceptive advertising campaign caused its financial losses. In reviewing
allegations in a complaint, we evaluate only whether the affected law firm states a claim.

We

cannot today decide this type of false advertising case based on over 200 alleged advertisements
at this early stage based on challenges to the accuracy of selected words or phrases in an
extended advertising campaign. Instead, we evaluate whether the affected law firm can show the
new competitor's advertising campaign could, in the context of each advertisements, state a false
advertising claim.

We also must defer to allegations identifying parties responsible for the

advertising campaign. We do not now review evidence or whether the new competitor's
advertising campaign caused the financial losses. Those tasks remain after discovery or possibly
trial. We deny Defendants' partial motion to dismiss.

I.

Plead facts in the Second Amended Complaint.
Philadelphia law firm Rosenbaum & Associates, P.C. practices "almost exclusively" in

personal injury matters. 1 For the past fifteen years, Rosenbaum advertises its personal injury
legal services in the Philadelphia market through television advertisements. 2

Rosenbaum now

sues for lost business it attributes to a competitor's false advertising campaign. It claims losing
the opportunity to represent numerous personal injury clients and its ability to expand its
customer base. 3 Rosenbaum is losing the "ability to expand its client base" because many of its
clients come through existing clients so the loss is multiplied. 4 Rosenbaum alleges lost profits,
lost goodwill, and damage to its brand. 5

A. The Morgan Defendants' inter-relationships.
Rosenbaum affixes the responsibility for its lost business on an advertising campaign
touting entities and individual lawyers affiliated with Morgan & Morgan, PA, a law firm based
in Orlando, Florida with offices around the country. 6 Morgan & Morgan PA represents clients in
personal injury lawsuits. 7
Rosenbaum names two entities and four individuals affiliated with Morgan & Morgan,
PA as responsible for the advertising campaign. Rosenbaum alleges Morgan & Morgan PA is
the entity advertising legal services in the Philadelphia market. 8 Rosenbaum alleges another
entity, Morgan & Morgan Global PLLC, owns and controls Morgan & Morgan PA. 9 Morgan &
Morgan Global owns two trademarked phrases, "Morgan & Morgan" and "For the People"
which are used in the advertising campaign. 10 Rosenbaum mentions - but does not sue - an
entity named Morgan & Morgan Philadelphia, PLLC alleging it is "corporate shell and an
accounting artifice that [Morgan & Morgan PA and Morgan & Morgan Global PLLC] have

2

operated as an agent for and on [Morgan & Morgan PA and Morgan & Morgan Global
PLLC]." 11 Rosenbaum alleges Morgan & Morgan Philadelphia is managed by another nonparty, Morgan & Morgan Philadelphia Management, Inc. 12

Rosenbaum instead sues John B.

Morgan, Scott W. Weinstein, and Reuven Moskowitz who allegedly direct Morgan & Morgan
Philadelphia Management.

13

Rosenbaum alleges four individuals, John B. Morgan, Ultima Morgan, Scott W.
Weinstein, and Reuven Moskowitz, played some role in the deceptive advertising campaign.
Rosenbaum alleges John B. Morgan and Scott W. Weinstein are agents or employees of Morgan
& Morgan PA and Morgan & Morgan Philadelphia PLLC entities and they manage Morgan &
Morgan Global. 14 Rosenbaum alleges Ultima Morgan and Reuven Moskowitz are agents or
employees of Morgan & Morgan Global, Morgan & Morgan PA, and Morgan & Morgan
Philadelphia. 15
Rosenbaum alleges all named defendants started advertising Morgan & Morgan's
personal injury services in the Philadelphia market in December 2015. 16

At this early stage of

its Pennsylvania efforts, no attorneys worked on personal injury matters for a Morgan & Morgan
entity in a Philadelphia office. 17 At some point, Morgan & Morgan Philadelphia opened an
office in Philadelphia but Morgan & Morgan PA denies it has an office in Philadelphia. 18
In January 2017, Morgan & Morgan PA hired Pennsylvania attorney Jacob Sternberger

as the only attorney in its Philadelphia office. 19

As a newly licensed attorney, Attorney

Sternberger had "little to no experience" representing clients in personal injury matters. 20
Attorney Sternberger is the only Morgan & Morgan PA attorney regularly working in
Philadelphia and none of the Morgan & Morgan entities use this office to meet clients or practice

3

law but "to perpetuate the charade [all Morgan & Morgan entities] are handling personal injury
claims for clients in the Philadelphia market. 21
B.

Morgan & Morgan's advertising campaign in the Philadelphia market.

"[T]elevision commercials, billboards advertisements, internet marketing, and branded
website pages" advertise "Morgan & Morgan's" legal representation for personal injury cases. 22
1.

Morgan & Morgan's creation of advertisements.

John Morgan and Reuven Moskowitz approved the budget and the run times for the
television advertisements. 23 Reuven Moskowitz also assisted John Morgan in preparing the
scripts for the television advertisements. 24 John Morgan and Reuven Moskowitz also directed
the marketing company which handled the advertising campaign. 25 Morgan & Morgan PA' s
managing partner Scott Weinstein "approved and/or authorized" the television campaign shown
in the Philadelphia market. 26 The advertising campaign features attorneys John Morgan, Ultima
Morgan, Matt Morgan, Dan Morgan, and Mike Morgan. 27
2.

Morgan & Morgan's alleged false statements in advertising.

In these advertisements, "Morgan & Morgan" makes statements about its legal
representation sometimes by an identified attorney, sometimes by John Morgan or Ultima
Morgan, and sometimes by an unidentified speaker or voiceover. Rosenbaum alleges certain
statements are false or misleading because Morgan & Morgan PA attorneys imply they will
represent clients in the Philadelphia when they never intend to and do not represent clients in the
Philadelphia area. 28 Rosenbaum also alleges the Morgan & Morgan entities29 disclaimer "it is
not a referral service" is false or misleading because the Morgan & Morgan entities, in reality,
refer all or nearly all of cases from Philadelphia clients to other law firrns. 30

4

3.

Morgan & Morgan's billboard statements.

The Morgan & Morgan entities advertised personal injury legal services through
billboards around the Philadelphia area. 31

Rosenbaum alleges the billboards "feature John

Morgan's face prominently" and feature Morgan & Morgan Global's trademarks "Morgan &
Morgan" and "For the People."

32

The billboards state "Morgan & Morgan" has "Offices

Philadelphia." Rosenbaum alleges "Offices Philadelphia" is false because Morgan & Morgan
PA denies having an office in Philadelphia and instead states the separate entity Morgan &
Morgan Philadelphia owns the Philadelphia office. 33

4.

Morgan & Morgan's internet advertisements.

Similarly Rosenbaum alleges Morgan & Morgan PA's website has a false or misleading
statement because the website advises '"[Morgan & Morgan's] attorneys in our Philadelphia
office handle cases in the following practice areas,' referring to various types [of] personal injury
claims, and identifying [Morgan & Morgan] as 'Personal Injury Lawyers in Philadelphia."'34
Morgan & Morgan PA, however, denies having an office in Philadelphia.

C.

Morgan & Morgan's representations in Pennsylvania.

Rosenbaum alleges the Morgan & Morgan entities and attorneys "did not, do not, and did
not otherwise intend to represent any Prospective Clients and, if any, then a de minimis,
negligible or nominal number of Prospective Clients, regarding their personal injury claims."35
Rosenbaum alleges one or more Morgan & Morgan PA attorneys entered their appearance on
one personal injury client in Philadelphia but the matter "is being handled by a lawyer in
Mississippi and primary local counsel is the Philadelphia law firm Saltz Mongeluzzi. 36
Rosenbaum alleges the Morgan & Morgan entities and attorneys never intends to represent
personal injury clients in the Philadelphia area but refers "all or substantially all" potential clients

5

who contact Morgan & Morgan to another law firm. 37 Instead, the Morgan & Morgan entities
have a referral agreement with several Philadelphia law firms and the Philadelphia law firms are
responsible for litigating and financial costs for the client's case in return for a referral fee paid
to Morgan & Morgan. 38

II.

Analysis
Rosenbaum sued Morgan & Morgan Global PLLC, Morgan & Morgan, PA and John B.

Morgan, Ultima Morgan, Scott W. Weinstein, and Reuven Moskowitz39 alleging Morgan &
Morgan's advertisements violated the Lanham Act and Pennsylvania state law40 because they
contain false and misleading statements suggesting Morgan & Morgan attorneys will actually
represent clients when in fact prospective clients are referred to another law firm or attorney
without ever speaking to a Morgan & Morgan attorney.
Rosenbaum alleges the Morgan & Morgan entities and attorneys made numerous false or
misleading statements. We found an earlier Rosenbaum complaint sufficiently pleaded false or
misleading statements: (1) "I'm your lawyer;" (2) "We're all here for you" and "Our family is
here for your family;" (3) "You don't pay us unless we're successful;" and (4) "Not a referral
service." We held Rosenbaum pleaded a Lanham Act violation for statements implying Morgan
& Morgan PA and its attorneys would represent Philadelphia based clients when in reality

Morgan & Morgan had no intention of ever representing clients in the Philadelphia area. The
alleged statements "I'm your lawyer," "We're all here for you," and "You don't pay us unless
we're successful" all fall under this first umbrella because Rosenbaum alleges these statements
are literally false because Morgan & Morgan PA attorneys never represent, never are there for,
or never are successful for Philadelphia based clients.

6

We also found Rosenbaum sufficiently pleaded a Lanham Act violation for Morgan &
Morgan PA's statement it is "not a referral service" when Morgan & Morgan PA referred out all,
or nearly all, Philadelphia-based clients to other firms.
In its Second Amended Complaint after discovery, Rosenbaum alleges additional
statements are false or misleading and also sues other Morgan & Morgan entities and
individuals. To plead a false advertising claim, Rosenbaum must allege (1) Morgan & Morgan
made false or misleading statements as to its legal services; (2) if the statements are misleading,
those statements actually deceive or at least have a "tendency to deceive a substantial portion of
the intended audience;" (3) Morgan & Morgan's "deception is material in that it is likely to
influence purchasing decisions;" (4) "the advertised goods traveled in interstate commerce;" and,
(5) Rosenbaum will likely suffer injury from "declining sales, loss of good will, etc."41 Our
court of appeals instructs we analyze the alleged false or misleading statement "in the context of
the entire accused advertisement" not just the statement in isolation. 42
A.

Rosenbaum pleads a Lanham Act claim against Morgan & Morgan PA,
John Morgan, Ultima Morgan, and Reuven Moskowitz.

Morgan & Morgan PA, Ultima Morgan, John B. Morgan, and Reuven Moskowitz move
to partially dismiss Rosenbaum's Lanham Act claims arguing certain alleged statements are not
false or misleading and the billboard and internet advertising are not false or misleading. 43 They
move to dismiss Rosenbaum' s Lanham Act claims regarding statements not the same or
substantially similar to the four statements we earlier found could proceed into discovery.
In essence, Morgan & Morgan and the individuals are asking us to examine each

statement in a vacuum and strike Rosenbaum's allegations about certain statements because
those statements are not misleading in isolation.

We decline this exercise at the motion to

dismiss stage because it is not clear from Rosenbaum's allegations whether certain statements
7

also appear in an advertisement with the allegedly misleading disclaimer. The full factual record
of summary judgement is the time to examine each advertisement in context and determine
whether they are false or misleading instead of examining the statements in isolation based solely
on allegations. At this stage, Rosenbaum sufficiently pleads a claim under the Lanham Act
relating to Morgan & Morgan's television advertisements.
In an entirely new claim, Rosenbaum alleges the billboard advertisements and website
are false or misleading under the Lanham Act because they state "Morgan & Morgan" has an
office in Philadelphia but Morgan & Morgan PA and Morgan & Morgan Global deny having an
office in Philadelphia. 44 Morgan & Morgan PA moves to dismiss arguing "Morgan & Morgan
Offices Philadelphia" is not literally false because the billboard states "Morgan & Morgan" not
"Morgan & Morgan PA."
Rosenbaum sufficiently alleges a Lanham Act claim because it alleges the billboards in
the Philadelphia area use the trade name "Morgan & Morgan" through the trademark owned by
Morgan & Morgan Global to advertise an office in Philadelphia when it is literally false because
Morgan & Morgan Global and Morgan & Morgan PA deny having an office in Philadelphia.
Taking Rosenbaum's allegations as true, Morgan & Morgan PA's website is also literally false
under the Lanham Act because the website states it has an office in Philadelphia when allegedly
Morgan & Morgan PA denies having an office in Philadelphia.

B.

Rosenbaum pleads a Lanham Act claim against Morgan & Morgan Global.

Morgan & Morgan Global, PLLC also moves to dismiss all claims against it arguing
Rosenbaum fails to sufficiently its personal involvement in the alleged false statements.
Rosenbaum pleads a Lanham Act claim against Morgan & Morgan Global for false
advertising because it alleges Morgan & Morgan Global permitted its trademark "Morgan &

8

Morgan" to be used in billboard advertisements stating Morgan & Morgan has an office in
Philadelphia when allegedly neither Morgan & Morgan Global nor Morgan & Morgan PA have
an office in Philadelphia. Accepting Rosenbaum's allegations as true, Morgan & Morgan Global
allowed its "Morgan & Morgan" trademark to be used in an advertisement with a literally false
statement.

C.

Rosenbaum pleads Scott W. Weinstein's personal involvement.

Scott W. Weinstein, Esquire moves to dismiss arguing Rosenbaum fails to sufficiently
allege his personal involvement in the alleged false statements.
Rosenbaum alleges Morgan & Morgan PA's managing partner Attorney Weinstein
"approved and/or authorized" the television campaign shown in the Philadelphia market. 45 In
our January 8, 2018 Memorandum, we held "[a]t this stage accepting Rosenbaum's allegation
Attorney Weinstein personally authorized and approved the television advertisements featuring
the allegedly misleading statements as true, it is a sufficient allegation he "personally
... approved of [and] sanctioned" the advertisements for personal liability under the Lanham
Act.46
Attorney Weinstein argues "substantial discovery" does not support Rosenbaum' s
allegation of personal involvement. Wrong stage for a fact argument. We decline to revisit our
January 8, 2018 Order today because Attorney Weinstein's arguments Rosenbaum's allegations
lack factual support are appropriate at the summary judgment stage.

III.

Conclusion
We deny Morgan & Morgan PA, John B. Morgan, Esquire, Ultima Morgan, Esquire, and

Reuven Moskowitz's motion to dismiss specific allegations of false or misleading statements
from Rosenbaum's Lanham Act and Pennsylvania law claims. We deny both Morgan & Morgan

9

Global PLLC's and Scott W. Weinstein, Esquire's motions to dismiss all Lanham Act and
Pennsylvania law claims against it because Rosenbaum sufficiently alleges a claim against them.

1

Second Amended Complaint, ECF Doc. No. 57, ~~ 1, 140.

2

Id.~~ 141, 145.

3

Id~~ 147-151.

4 Id.
5

Id~ 154.

6

Id. ~~ 2, 20.

7

Id.~ 26.

8

Id.~~ 19, 20.

9

Id. ~ 14.

IO

Id.~~ 3, 14, 16-17.

11

Id.~ 3.

12

Id. ~ 104.

13

Id.

14

Id. ~~ 4, 8, 15.

15

Id. ~~ 6-8.

16

Id.~ 33.

17

Id. ~ 38.

18

Id.~~ 21-22.

19

Id. ~ 39.

20

Id.~~ 40-41.

10

21

Id. if 43.

22

Id. if29.

23

Id. if 100.

24

Id. if 103.

25

Id. if 102.

26

Id. if 106.

27

Id. if 35.

28

See id. if 78.

29

The disclaimer states the law firm responsible for this advertisement is "Morgan & Morgan"
but it is not clear which Morgan & Morgan entity it is referring to.
30

Id.if87.

31

Id.if118.

32

Id. ifif 16-17, 120.

33

Id. if 123.

34

Id. ifif 24, 128.

35

Id. if 49.

36

Id. if 47.

37

Id. if 51.

38

Id. ifif 56-57.

39

It is unclear from the Second Amended Complaint if Reuven Moskowitz is an attorney.

40

We analyze Rosenbaum's Lanham Act and Pennsylvania state claim together because the
elements are parallel "absent the requirement for goods to travel in interstate commerce." Reese
v. Pook & Pook, LLC., 158 F. Supp. 3d 271, 288 (E.D. Pa. 2016) (citing Leonetti's Frozen
Foods, Inc. v. Am. Kitchen Delights, Inc., No. 11-6736, 2012 WL 1138590, at *11 (E.D. Pa.
Apr. 4, 2012); KDH Elec. Sys., Inc. v. Curtis Tech. Ltd., 826 F.Supp.2d 782, 807 (E.D.
Pa.2011)); Louis Vuitton Malletier & Oakley, Inc. v. Veit, 211 F.Supp.2d 567, 582 (E.D.
11

Pa.2002) ("Under Pennsylvania law, the elements necessary to prove unfair competition
through false advertising parallel those elements needed to show a Lanham Act violation, absent
the requirement for goods to travel in interstate commerce.").
41

Groupe SEB USA, Inc. v. Euro-Pro Operating, LLC, 774 F.3d 192, 198 (3d Cir. 2014)
(quoting Pernod Richard USA, LLC v. Bacardi US.A., Inc., 653 F.3d 241, 248 (3d Cir. 2011)
and Warner-Lambert Co. v. Breathsure, Inc., 204 F.3d 87, 91-92 (3d Cir. 2000)).
42

See Pernod, 653 F.3d at 252-53 (internal citations omitted) ("This is not a trademark case, and
certainly not one addressing trademark registration, no matter how much Pernod may wish it
were. We are obligated in this false advertising case under § 43(a)(l )(B) to look at the words
"Havana Club" in the context of the entire accused advertisement, the label of the rum.")
43

In deciding a motion to dismiss under Rule 12(b)(6), we accept all well-pleaded allegations in
the complaint as true and draw all reasonable inferences in favor of the non-moving party, but
we "are not compelled to accept unsupported conclusions and unwarranted inference, or a legal
conclusion couched as a factual allegation." Castleberry v. ST/ Group, 863 F.3d 259, 263 (3d
Cir. 2017) (quoting Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013)). "To survive a motion
to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim
to relief that is plausible on its face.'" Edinboro Coll. Park Apartments v. Edinboro Univ.
Found., 850 F.3d 567, 572 (3d Cir. 2017) (quoting In re Vehicle Carrier Serv. Antitrust Litig.,
846 F.3d 71, 79 n.4 (3d Cir. 2017)). A claim satisfies the plausibility standard when the facts
alleged "allow[] the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Maiden Creek Assoc., L.P. v. US. Dep 't ofTransp., 823 F.3d 184, 189 (3d
Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). While the plausibility standard
is not "akin to a 'probability requirement,"' there nevertheless must be more than a "sheer
possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (citing Twombly, 550
U.S. at 556). "Where a complaint pleads facts that are 'merely consistent with' a defendant's
liability, it 'stops short of the line between possibility and plausibility of entitlement to relief."'
Id. (quoting Twombly, 550 U.S. at 557).
Our Court of Appeals requires we apply a three-step analysis under a 12(b)(6) motion: (1) "it
must 'tak[e] note of the elements [the] plaintiff must plead to state a claim;"' (2) "it should
identify allegations that, 'because they are no more than conclusions, are not entitled to the
assumption of truth;"' and, (3) "[w]hen there are well-pleaded factual allegations, [the] court
should assume their veracity and then determine whether they plausibly give rise to an
entitlement for relief." Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016)
(quoting Iqbal, 556 U.S. at 675, 679).
44

Id. ~~ 123, 128.

45

Id.~ 106.

46

ECF Doc. No. 39 at 14 (quoting General Steel Domestic Sales, LLC v. Chumley, No. 1300769, 2014 WL 2111107, at *6 (D. Col. May 20, 2014)).
12