November 17, 2008
Yellow Pages Publisher Hit with $1.5M Fraud Judgment for Publishing False Ad--Knepper v. Brown
By Eric Goldman
Knepper v. Brown, CC 9903-02495 (Or. Sup. Ct. Oct. 9, 2008)
A woman got a botched liposuction job (which plaintiff's expert described as an "uncorrectable disaster") from Dr. Brown, a dermatologist. She sued the dermatologist and Dex, the publisher of his Yellow Pages' ad, for fraud based on Brown's ad. The court describes the ad and the interplay between the doctor and Dex as follows:
In 1996, Brown placed a second advertisement in Dex's Yellow Pages -- this time under the subheading "Surgery, Plastic and Reconstructive." The new advertisement stated that Brown performed liposuction, wrinkle treatments, and sclerotherapy. It also stated that Brown was "Board Certified" -- without specifying any area of certification.
The new advertisements were added at the urging of a Dex sales representative, Mueller. Brown's office manager, Newman, told Mueller that Brown was interested in attracting more liposuction patients. Mueller met with Newman to help her "mock up" a new advertisement. Mueller told Newman that the "plastic and reconstruction surgery" subheading in the Yellow Pages would be the best place to reach that target market. Mueller also told Newman that the advertisement should identify Brown as "board certified," because "patients were expecting a [board certified] plastic surgeon to do these techniques." Newman repeatedly told Mueller that she was concerned that such an advertisement would be misleading, because Brown's board certification was in dermatology, not plastic and reconstructive surgery. Mueller continued to push for a nonspecific "board certified" designation under the "Surgery, Plastic and Reconstructive" subheading, and Brown, who had the final say, acceded to Mueller's advice.
Brown (probably wisely) settled, leaving Dex as the only defendant. After a mistrial, the jury in the second trial awarded the plaintiffs $1.5M for the fraud claim against Dex. The Oregon Supreme Court upheld this judgment.
There are a number of interesting points to observe about this case:
1) I'm sure all of the lawyers reading this post are shaking their heads at the apparently rogue salesperson!
2) I understand why Dex thought it could win on the legal merits, but this looks like the kind of situation where a jury will pay the plaintiff regardless of the legal merits. Given that the doctor had settled, Dex was the only target for the jury to nail. And that's exactly what they did.
3) The dermatologist's use of the undefined phrase "board certified" is a good example of an implied false representation. It also seems like something the medical profession ought to regulate. For example, for most lawyers, there are very specific rules about how lawyers can describe themselves as "specialists."
4) Assume that Google sold the keyword "liposuction" to Brown and Brown's ad included the undefined phrase "board certified." What result? 47 USC 230 almost certainly would protect Google in that case. Of course, the Dex salesperson allegedly did far more in encouraging the falsity than Google would likely do. If an online publisher/ad network's salesperson was similarly aggressive at pushing a false representation, it may be possible that the 47 USC 230 shield would drop. Even so, this is a good example of how 47 USC 230 may privilege online publishers over offline publishers in a way that grants significant competitive advantages to online publishers.
Tom Seery at RealSelf has more to say on the case.
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