False Advertising Complaint

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Steven G. Ford – 016492 ALVAREZ & GILBERT, PLLC 14500 N. Northsight Blvd., Ste. 216 Scottsdale, AZ 85260 Tel: 602-263-0203 Fax: 480-686-8708 [email protected] Of Counsel: George J. Terwilliger, III WHITE & CASE, LLP 1155 Avenue of the Americas New York, NY 10036 Tel: (212) 816-8200 Fax: (212) 354-8113 [email protected] Attorneys for Plaintiff Cellco Partnership d/b/a Verizon Wireless

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, Case No. 2:09-CV-01480

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Plaintiff, COMPLAINT v.

19 SPRINT NEXTEL CORPORATION, 20 Defendant. 21 22

Plaintiff Cellco Partnership d/b/a Verizon Wireless (“Verizon Wireless”), by and

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through its undersigned counsel, as and for its Complaint against Defendant Sprint Nextel

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Corporation (“Sprint”), alleges as follows: I. SUMMARY AND NATURE OF THE ACTION.

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1.

This is an action to halt false and misleading advertising by Sprint.

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2.

Verizon

Wireless

and

Sprint

are

competitors

in

the

wireless

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telecommunications industry, a highly competitive business with over 250 million

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subscribers nationwide.

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3.

Sprint is falsely advertising that it was the sole recipient of J.D. Power and

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Associates’ (“J.D. Power”) “Highest Call Quality” award for the West region of the

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United States, when in fact J.D. Power awarded both Verizon Wireless and Sprint its

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“Highest Call Quality” award for the West region.

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4.

Sprint also is falsely advertising that it won the J.D. Power “Highest Call

Quality” award for areas other than the West region of the United States, when in fact Sprint received such recognition solely for the West region, and when in any event it shared such recognition with Verizon Wireless in that region. 5.

Sprint’s false advertising misleads consumers and irreparably harms

Verizon Wireless.

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II. PARTIES, JURISDICTION, AND VENUE. 6.

Cellco Partnership d/b/a Verizon Wireless is a general partnership

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organized under the laws of the State of Delaware, with its principal place of business in

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Basking Ridge, New Jersey.

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7.

Upon information and belief, Sprint Nextel Corporation is a corporation

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organized under the laws of the State of Kansas, with its principal place of business in

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Topeka, Kansas.

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8.

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U.S.C. § 1331 and 15 U.S.C. § 1121. 9.

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Venue is proper in this District under 28 U.S.C. § 1391(b).

Upon

information and belief, the false advertisements challenged in this Complaint have been displayed in this District and have run in publications distributed in this District, and Sprint conducts substantial business in this District. III. GENERAL ALLEGATIONS.

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This Court has jurisdiction over the subject matter of this action under 28

10.

Verizon Wireless and Sprint are two of the four major wireless carriers

providing wireless telecommunications services in the United States.

With

approximately 250 million domestic wireless subscribers and over $130 billion in annual 2

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revenues in the United States alone, the wireless telecommunications service industry is

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highly competitive. 1 11.

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In the first quarter of 2009 alone, Verizon Wireless added approximately

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1.3 million new subscribers. Thus, on average, Verizon Wireless adds nearly 15,000 new

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customers daily, and many of those customers enter multi-year contracts. 12.

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and Associates, The Gap in Call Quality Performance among Carriers Narrows As Competition Intensifies across the Wireless Service Industry,” (“J.D. Power Press Release”), in which J.D. Power reported that “Verizon Wireless . . . tie[d] with Sprint Nextel to rank highest in the West region.” A true and accurate copy of the J.D. Power Press Release, including the specific results for each region, is attached as Exhibit 2. 13.

Recently, Sprint began to advertise that it received J.D. Power’s “Highest

Call Quality” award in the West region. 2 Upon information and belief, a portion of such advertising took place within this District.

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On March 18, 2009, J.D. Power issued a press release entitled “J.D. Power

14.

An example of the advertising comprising Sprint’s campaign is the

following current Sprint billboard, located in Seattle, Washington:

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See Exhibit 3.

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15.

The following bus shelter advertisement is located in San Francisco,

California: 1

See Fed. Communications Comm’n, 13th Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, FCC No. 09-54, at 5-11 (2009) (copy attached as Exhibit 1). 2 As specified by J.D. Power in the J.D. Power Press Release, the West region includes Arizona, California, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming,. See Exhibit 2

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See Exhibit 4.

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16.

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Business Journal:

Sprint used the following print advertisement in the Minneapolis/St. Paul

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See Exhibit 5.

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17.

As set forth in the J.D. Power Press Release, J.D. Power awarded both

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Verizon Wireless and Sprint its “Highest Call Quality” award for the West region.

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Exhibit 2.

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18.

Sprint’s advertising hides the information that Sprint received the award in

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a tie with Verizon Wireless, putting the disclosure in much smaller print and, in

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billboards and bus shelter advertisements, placing it in a manner where it would be

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difficult if not impossible for consumers to see. Sprint plainly intends that consumers not

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see this material information in billboards and bus shelter advertisements. 19.

In certain of Sprint’s advertisements, Sprint claims that it won the J.D.

Power “Highest Call Quality” award, but then fails to disclose at all that it was solely for the West region, creating the false and misleading impression for consumers that Sprint won the award nationally, when in fact it did not but rather was rated below Verizon Wireless in each of the five other regions evaluated by J.D. Power. See Exhibit 2. 20.

Sprint’s advertisements regarding the J.D. Power award are false and

misleading.

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IV. CLAIMS.

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COUNT I – DECLARATORY JUDGMENT

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21.

Verizon Wireless repeats and realleges the prior allegations of the

Complaint as if set forth completely herein. 22.

Consistent with the allegations set forth above, Sprint makes claims adverse

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to Verizon Wireless’s interests, namely, that Sprint may advertise in the manner

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described above.

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23.

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An actual, present, and justiciable controversy exists regarding, among

other things, whether Verizon Wireless is entitled to a Court order prohibiting Sprint from advertising in the manner described above. 24.

In the event that a preliminary injunction is not issued, Verizon Wireless

will be irreparably harmed. 25.

Verizon Wireless is entitled to, and this Court is empowered to issue, a

judicial declaration stating, among other things:

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(a) that Sprint and its affiliates, agents, servants, employees, directors,

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officers and representatives, and all persons or entities acting in concert or

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participation with Sprint, are enjoined from: (i) claiming in any advertising that

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Sprint received J.D. Power’s “Highest Call Quality” award for the West region

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without prominently indicating in such advertising that such award was obtained

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in a tie and/or that Verizon Wireless also received the award; (ii) claiming in any

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advertising that Sprint received J.D. Power’s “Highest Call Quality” award

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without prominently indicating in such advertising that such award was obtained solely for the West region, in a tie; and (iii) displaying or causing to be displayed those specific print advertisements described above, or any similar advertisements; (b) that Sprint must forthwith use its best efforts to identify and to recall from any third party any and all false marketing, advertising, and promotional materials used in connection therewith; that Sprint must issue a corrective advertisement or notice to all third parties that Sprint has solicited with false advertisements, making clear that Sprint’s false statements were false; and

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(c) that Sprint must file with the Court and serve on Verizon Wireless’s

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counsel, within 30 days after entry of the Court’s injunction, a sworn statement as

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provided in 15 U.S.C. §1116, setting forth in detail the manner and form in which

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Sprint has complied with the injunction.

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COUNT II - VIOLATION OF THE LANHAM ACT (FALSE ADVERTISING) 26.

Verizon Wireless repeats and realleges the prior allegations of the

Complaint as if set forth completely herein. 27.

In commercial advertising and promotion, since approximately April 2009,

Sprint, in active commercial competition with Verizon Wireless, has falsely stated that J.D. Power awarded only Sprint its “Highest Call Quality” award for the West region of the United States and has falsely stated that J.D. Power awarded Sprint its “Highest Quality Award” by not limiting that statement to the West region. 28.

Upon information and belief, Sprint has made each of its false statements

with knowledge of their falsity, or willfully and with reckless disregard for their falsity.

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29.

Upon information and belief, Sprint’s statements have a tendency to

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deceive a substantial segment of their intended audience and have actually deceived a

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substantial segment of that audience.

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30.

Sprint’s deception is material as it relates to factors that a consumer would

consider in choosing a wireless service. 31.

Sprint caused its false advertising to enter interstate commerce, including

through print advertisements in national media publications. 32.

Verizon Wireless is likely to be injured by Sprint’s false advertising by a

diversion of business from Verizon Wireless to Sprint, as consumers of wireless telecommunications services are misled into believing that only Sprint received J.D. Power’s “Highest Call Quality” award in the West Region and also that it received that award nationally. 33.

Sprint’s false statements violate the Lanham Act, 15 U.S.C. §

1125(a)(1)(B). 34.

As a result of Sprint’s actions and omissions, Verizon Wireless has been

irreparably harmed, has no adequate remedy at law, and is entitled to injunctive relief. 35.

Verizon Wireless is entitled to monetary judgment against Sprint under this

claim in the amount of Sprint’s profits, pursuant to 15 U.S.C. § 1117. 36.

Verizon Wireless is entitled to monetary judgment against Sprint under this

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claim in the amount of damages caused by the false advertising, in an amount to be

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determined at trial.

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37.

Sprint’s intentional and willful violations entitle Verizon Wireless to

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recover three times its actual damages in an amount to be determined at trial pursuant to

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15 U.S.C. §1117(a).

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38.

Sprint’s intentional and willful violations entitle Verizon Wireless to

recover its costs and reasonable attorneys’ fees in an amount to be determined at trial pursuant to 15 U.S.C. § 1117(a). V. PRAYER FOR RELIEF WHEREFORE, Verizon Wireless prays that the Court:

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1

A.

Enjoins Sprint and its affiliates, agents, servants, employees, directors,

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officers and representatives, and all persons or entities acting in concert or participation

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with Sprint, from: 1.

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Claiming in any advertising that Sprint received J.D. Power’s

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“Highest Call Quality” award for the West region without prominently indicating in such

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advertising that such award was obtained in a tie and/or that Verizon Wireless also

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received the award; 2.

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Claiming in any advertising that Sprint received J.D. Power’s

“Highest Call Quality” award without prominently indicating in such advertising that such award was obtained solely for the West region, in a tie; and 3.

Displaying or causing to be displayed those specific print

advertisements described above, or any similar advertisements; B.

Directs Sprint to forthwith use its best efforts to identify and to recall from

any third party any and all false marketing, advertising, and promotional materials used in connection therewith; C.

Directs Sprint to issue a corrective advertisement or notice to all third

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parties that Sprint has solicited with false advertisements, making clear that Sprint’s false

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statements were false;

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D.

Directs Sprint to file with the Court and serve on Verizon Wireless’s

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counsel, within 30 days after entry of the Court’s injunction, a sworn statement as

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provided in 15 U.S.C. §1116, setting forth in detail the manner and form in which Sprint

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has complied with the injunction;

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E.

Awards Verizon Wireless a monetary judgment against Sprint in the

amount of Sprint’s profits, pursuant to 15 U.S.C. § 1117; F.

Awards Verizon Wireless a monetary judgment against Sprint for damages

caused by the false advertising, in an amount to be determined at trial; G.

Awards Verizon Wireless treble damages as a judgment against Sprint for

its willful violation of the Lanham Act; H.

Awards Verizon Wireless its costs and reasonable attorneys’ fees from

Sprint pursuant to the Lanham Act; and 8

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I.

Awards Verizon Wireless such other relief as may be just and proper.

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VI. DEMAND FOR TRIAL BY JURY

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Verizon Wireless respectfully requests a trial by jury on all matters so triable.

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DATED this 17th of July, 2009. ALVAREZ & GILBERT

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By s/Steven G. Ford Steven G. Ford 14500 N. Northsight Blvd., Ste. 216 Scottsdale, AZ 85260 Of Counsel: George J. Terwilliger, III WHITE & CASE, LLP 1155 Avenue of the Americas New York, NY 10036

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Attorneys for Plaintiff Cellco Partnership d/b/a Verizon Wireless

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CERTIFICATE OF SERVICE I hereby certify that on July 17, 2009, I electronically transmitted the foregoing document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing.

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By: s/Steven G. Ford

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