The company that bills itself as the top real estate firm in Chicago will be allowed to continue its lawsuit against a rival, accused of false advertising in promoting its achievements in recent years.
On Aug. 27, a Chicago federal judge refused to dismiss the lawsuit brought by @Properties against competitor Baird & Warner Real Estate.
U.S. District Judge Andrea R. Wood ruled @Properties had shown enough at the early stages of the proceedings to demonstrate Baird & Warner had committed “literal falsity” in crowing about its sales activity, which could have, in turn, harmed @Properties’ reputation and business.
Jennifer Yule DePriest | Reed Smith LLP
The judge warned @Properties would need to bring more proof to the table in the future, however.
“… The numbers support @Properties’s contention that B&W’s advertisements diverted potential clients from @Properties to B&W,” Wood wrote. “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 deceptive advertising.”
@Properties had filed suit in Chicago federal court in 2018, asserting B&W lied in advertising about B&W’s 2017 performance.
Particularly, @Properties objected to B&W’s assertions it “had $8.8 billion in sales and 32,000 transactions” in Chicago and surrounding areas.
@Properties asserted B&W’s actual sales activity, as measured by independent sources, stood closer to $5.7 billion from a little more than 17,000 sales.
@Properties contrasted this with its total volume in 2017, which @Properties said stood at $8.5 billion on 17,153 sales.
@Properties said B&W “inflated its sales and transactions figures by including not just its real estate brokerage sales and transactions,” but also property leases in which B&W served as the leasing agent, plus mortgage originations, refinances and title-related services provided by its affiliates.
@Properties said the allegedly inflated figures appeared in various publications, including “Chicago Agent Magazine,” and in internet and social media advertising.
@Properties asserted the allegedly false advertising harmed @Properties’ reputation and steered would-be customers elsewhere. @Properties said B&W’s claims violated federal and Illinois deceptive trade practices laws.
B&W replied to the lawsuit by asserting its claims were not “literally false.”
“B&W contends that the words “sales” and “transactions” have expansive meanings that encompass not just real estate brokerage sales and transactions but also all the other services it offers,” Judge Wood wrote. “… 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.”
Judge Wood questioned why B&W shouldn’t be allowed to count “property rentals, leases and mortgage and title services” in its “gross receipts” or as “transactions.”
“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.
“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 claims cannot proceed.”
The judge, however, said she would allow the lawsuit to continue over the question of whether B&W made a “literally false statement” by counting transaction activity from its affiliates.
“Ultimately, the issue may turn on the exact nature of the corporate relationship between the affiliates,” the judge wrote.
The judge also said evidence introduced so far – charts comparing sales activity in the first nine months of 2018 vs the same period in 2017 – can appear to show the advertising was effective in steering business to B&W, at the expense of @Properties.
The judge, however, said @Properties must provide more evidence to support both its “literal falsity” claims and its claims of injury from the B&W advertising, if @Properties wishes its lawsuit to survive further stages in the proceedings.
@Properties is represented in the action by attorney Aaron H. Stanton and others with the firm of Burke, Warren, MacKay & Serritella PC, of Chicago.
Baird & Warner is defended by attorney Jennifer Yule DePriest, and others with the firm of Reed Smith LLP, of Chicago.