The lawsuit filed by @properties against Chicagoland rival Baird & Warner isn’t going away … for now. On Aug. 27, U.S. District Court Judge Andrea Wood denied Baird & Warner’s motion to dismiss a lawsuit from rival @properties, accusing the former of misleading advertising.
The Chicago-based @properties, ranked as the 18th most productive franchise in transaction sides on the 2019 Real Trends 500 — with Baird & Warner coming in at 19th — first sued Baird & Warner in March 2018, alleging the latter inflated its sales numbers and thereby misled consumers.
Baird & Warner, in a 2017 ad and blog post, claimed to have completed “$8.8 billion in sales” and “32,000 transactions” in 2017. In the complaint, @properties said that, according to data from local MLS MRED, Baird & Warner completed $5.66 billion in sales volume and 17,168 transactions in 2017 — nowhere near what the firm claimed in its ads.
However, Baird & Warner countered that it arrived at these sales figures by including in its criteria mortgage, title and rental transactions in addition to residential real estate sales.
Baird & Warner filed a petition to dismiss the lawsuit, claiming that the statement was not literally false, “because those companies are B&W affiliates and thus part of the B&W family.”
“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,” the petition for dismissal continued.
Judge Wood ruled that the complaint was sufficient enough to survive dismissal at the pleading stage, citing the lawsuit’s allegations that “one sign of a well-established real estate agency is its number of sales and transaction and thus a potential client would be more likely to select a real estate brokerage company that has a high volume of sales and transactions.”
Wood did, however, express skepticism that the claim of false advertisement could survive summary judgment.
“@properties would be well-advised to adduce better evidence than a single article to support its claim that potential clients looking to buy or sell real property would be materially influenced in their choice of real estate brokerage company by representations concerning volumes of sales and transactions,” Wood said in a memorandum.
In addressing the claim that @properties suffered from the alleged misleading advertising, @properties submitted charts that showed Baird & Warner’s sales volume and transactions sides either increased at a higher rate than @properties, increased while @properties’ decreased or decreased at a smaller margin than @properties.
The allegations from @properties that the numbers support the claim and that the advertisements diverted potential clients from @properties to Baird & Warner are sufficient to survive dismissal, according to Wood. But Wood also warned again that @properties would need more evidence.
“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,” Wood said.
At press time, both Baird & Warner and @properties had not responded to a request for comment.
Read the entire memorandum below:
