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The Buffalo v. Metro Group

January 26, 2013

THE BUFFALO NEWS, INC., PLAINTIFF,
v.
METRO GROUP, INC. AND ADS MEDIA GROUP, INC., DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

Plaintiff, The Buffalo News, Inc., ("The News"), brings this action against Defendants, Metro Group, Inc. ("Metro") and ADS Media Group, Inc ("ADS"), alleging that Defendants engaged in unfair and deceptive advertising practices in violation of New York law and the Lanham Act, 15 U.S.C. § 1125(a).

Both Defendants have moved to dismiss the complaint, and, in response, The News seeks leave to amend its complaint under Federal Rule of Civil Procedure 15(a)(2). Defendants oppose The News' motion on the ground that the proposed amendments are futile. Nonetheless, Defendants have addressed the News' proposed amended complaint and they are therefore not prejudiced by this Court considering the amended pleading, which was filed only one month after this case was removed to this Court. Thus, finding no "undue delay, bad faith or dilatory motive on the part of the movant," see Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir. 2002) (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 9 L. Ed. 2d 222 (1962), this Court will grant The News' motion and construe the motions to dismiss as against the amended complaint. See Fed. R. Civ. P. 15(a)(2) ("The court should freely give leave when justice so requires.").

So construed and for the reasons that follow, Defendants' motions are granted.

II. BACKGROUND

A. Facts*fn1 The News is the largest daily newspaper in the Buffalo metropolitan area, with a paid circulation of over 230,000 readers. (Am. Compl., ¶ 5; Docket No. 17-1.) Advertising "inserts," which are stand-alone advertisements (typically on high-gloss, colored paper) inserted into copies of the paper, are among the various types of advertising space sold by The News. The News contends that "the greater the number of inserts and the higher the name recognition of the other advertisers in the insert package, the more valuable the placement in the insert becomes, and the more likely [it becomes that an] advertiser is willing to pay to be included in the insert package." (Am. Compl., ¶ 7.) This premise is the foundation of their complaint.

The News asserts that Defendant Metro, a publisher of a number of weekly and biweekly local community newspapers that also uses inserts, competes with The News for advertisers. (Am. Compl., ¶ 8.) Beginning around November of 2011, Metro and Defendant ADS, a marketing company hired by Metro, began to solicit advertisers, including advertising customers of The News, for inserts to be included in various Buffalo-area community newspapers published by Metro. (Am. Compl., ¶ 9.) In so doing, The News alleges that ADS and Metro have been misrepresenting "the nature and extent" of the advertising they are capable of delivering in their insert packages. (Am. Compl., ¶ 10.) Specifically, The News contends that the promotional material -- which are essentially samples -- sent to potential advertisers contains more inserts, from more nationally recognized retailers, than Metro is typically able to produce. (Am. Compl., ¶ 10.) Thus, it argues that Defendants are "creating the impression that [] advertisers have agreed to participate when they have not." (Am Compl., ¶ 10.) As such, potential advertisers are lured to Metro and diverted away from The News. (Am. Compl., ¶ 11.)

B. Procedural History

The News commenced this action on June 26, 2012 by filing a complaint in New York state court. Shortly thereafter, Defendants removed this action and, shortly after that, Metro filed its motion to dismiss. (Docket No. 5.) ADS followed suit a few days later with its own motion to dismiss, in which it joined Metro's motion and raised one additional ground for dismissal. (Docket No. 11.) On September 24, 2012, The News filed its motion for leave to amend its complaint. (Docket No. 16.) Briefing on those motions concluded in October of 2012, at which time this Court took the motions under consideration.

III. DISCUSSION

A. Motion to Dismiss Standard -- Rule 12(b)(6)

Rule 12(b)(6) allows dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal pleading standards are generally not stringent: Rule 8 requires only a short and plain statement of a claim. Fed. R. Civ. P. 8(a)(2). But the plain statement must "possess enough heft to show that the pleader is entitled to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1966, 167 L. Ed. 2d 929 (2007).

When determining whether a complaint states a claim, the court must construe it liberally, accept all factual allegations as true, and draw all reasonable inferences in the plaintiff's favor. ATSI Commc'ns, 493 F.3d at 98. Legal conclusions, however, are not afforded the same presumption of truthfulness. See Iqbal, 556 U.S. at 678 ("The tenet that a court must accept ...


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