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TOWERS FIN. CORP. v. DUN & BRADSTREET

September 15, 1992

Towers Financial Corporation, Plaintiff, against Dun & Bradstreet, Inc., Defendant.

FREEH


The opinion of the court was delivered by: LOUIS J. FREEH

LOUIS J. FREEH, U.S.D.J.

 Plaintiff Towers Financial Corporation ("Towers") has moved, by Order to Show Cause, for a temporary restraining order barring defendant Dun & Bradstreet, Inc. ("D&B") from publishing a Business Information Report ("BIR Report") on Towers pending expedited discovery and hearing on Towers' motion for preliminary injunction. Towers alleges that because the proposed BIR Report is both false and misleading, it constitutes a violation of the Lanham Act, 15 U.S.C. § 1025(a)(2), and the New York State General Business Law, §§ 349 and 350, as well as the common law tort of unfair competition. D&B disputes Towers' claims, and argues that (1) the BIR Report is not advertising or promotion, as required under the Lanham Act; (2) the BIR Report is neither false nor misleading and (3) the BIR Report is protected by the First Amendment.

 For the reasons stated at oral argument and below, the Court finds that Towers is entitled to the requested relief. Accordingly, pending completion of expedited discovery and hearing on Towers' motion for a preliminary injunction, D&B is prohibited from publishing or otherwise disseminating either new or supplemental BIR Reports regarding Towers.

 BACKGROUND

 It is undisputed that D&B, a subsidiary of The Dun & Bradstreet Corporation (the "Corporation"), gathers and publishes business information, including credit reports, regarding millions of companies. D&B utilizes a standardized format for its Business Information Reports, which provide basic information regarding the subject company such as its history, finances, management, shareholders, credit history, and the suits, liens and/or judgments against it.

 Another of the Corporation's subsidiaries, Dun & Bradstreet Receivable Management Services, Inc. ("RMS"), engages in the commercial debt collection business. Towers alleges that it also engages in that business, although the extent to which Towers and RMS actually compete has been hotly disputed. In any event, it seems clear that Towers, like RMS, engages in at least a certain amount of commercial debt collection. *fn1"

 For a number of years, Towers has disputed the accuracy of the Towers BIR Report. Since May 1991, D&B has voluntarily refrained from publishing that Report while the parties have attempted to resolve their differences. Apparently, when it appeared to D&B that no resolution would be possible, it determined that it would resume publication of the BIR Report as of August 21, 1992. Towers filed the instant application for a temporary restraining order, which this Court heard in its position as the Part I judge. Because D&B requested additional time to brief the issues raised in Towers' motion and agreed to withhold publication pending a hearing on that motion, this Court adjourned the hearing until September 4, 1992.

 DISCUSSION

 The standard for a TRO is similar to that applicable to a preliminary injunction -- the moving party must demonstrate irreparable harm and either (1) a likelihood of success on the merits or (2) sufficiently serious questions on the merits to make them fair ground for litigation and a balance of hardships tipping decidedly in the moving party's favor. Local 1914 Int'l Longshoreman's Assoc. AFL-CIO v. New York Shipping Assoc. Inc., 965 F.2d 1224, 1228 (2d Cir. 1992); Reuters Ltd. v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir. 1990). Because we find that Towers has satisfied this stringent standard, D&B is enjoined from publishing or disseminating the Towers BIR Report pending expedited discovery and hearing on the motion for preliminary injunction.

 1. Irreparable Harm

 In the Court's view, Towers has demonstrated that it would be irreparably harmed should publication of the Towers BIR Report be permitted to resume at this time. If, as Towers alleges, the Report contains false and misleading information regarding Towers' history and financial condition, Towers' reputation among customers and potential customers will be severely damaged. Although D&B denies Towers' allegations that D&B employees utilize the BIR Report to denigrate Towers and lure away its customers, there can be little doubt that if such conduct does occur, the injury to Towers' reputation in the business community will be exacerbated. Because the potential injury to Towers is both imminent and "incapable of being fully remedied by monetary damages," Towers has made a sufficient showing of irreparable harm. Reuters, 903 F.2d at 907; Jacobson & Co., Inc. v. Armstrong Cork Co., 548 F.2d 438, 445 (2d Cir. 1977) (damage to reputation and goodwill constitutes irreparable harm); Fonar Corp. v. Deccaid Services, Inc., 787 F. Supp. 44, 48 (E.D.N.Y. 1992) ("Damages to reputation and goodwill, as well as difficulty in proving damages with certainty, prove a danger of irreparable harm.").

 2. Substantial Questions on the Merits

 Although we do not find that Towers has shown that it is likely to succeed on the merits of its claims, Towers has raised sufficiently serious questions on the merits to make its claims a fair ground for litigation. As noted previously, Towers alleges that D&B's conduct constitutes a violation of the Lanham Act, 15 U.S.C. § 1025(a)(2), the New York State General Business Law, §§ 349 and 350, and the common law tort of unfair competition. In order to establish a Lanham Act violation, Towers must demonstrate that (1) D&B made false or misleading factual representations regarding the nature, characteristics, or qualities of Towers' services; (2) D&B used the false or misleading representations "in commerce"; (3) D&B made the false or misleading representations in the context of commercial advertising or commercial promotion; and (4) D&B made Towers believe that it was likely to be damaged by ...


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