. . ."- SCANNED ON 41612009 I
Dated: New York, New York I April 3,2009
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
NEWS AMERICA MARKETING FSI, L.L.C. Index No.
Plaintiff, SUMMONS
V. Plaintiff designates New York
VALASSIS COMMUNICATIONS, INC. County as the place
Defendant.
TO: Todd Wiseley Valassis Communications, Inc. 19975 Victor Parkway Livonia, MI 48152
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a . . ..* . 1 , ,-,,\ , n
copy of your Answer on the Plaintiffs attorneys indicated below, Within twenty (LW) aays aner the service of this Summons, exclusive of the day of service, or within thirty (30) days after service is complete if this Summons is not personally delivered to you within the State of New York. In case of your failure to answer, judgment will be taken against you by default for the relief demanded in the complaint.
The basis of venue designated is C.P.L.R. $6 503 and 509.
.* - CONSTANTINE CANNON, LLP
'By: -
Sacha Boegem 450 Lexington Avenue, 17th Floor New York, New York 10017 Telephone: (212) 350-2700 Attorneys for Plaintiff
1 1 13291.1
Supreme Court Records OnLine Library - page 1 of 12
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
NEWS AMERICA MARKETING FSI L.L.C. 0 8 Index No.
Plaintiff, +a
_. O’3MPLAINT
attorneys, files this Complaint for damages and injunctive relief against
Communications, Inc. ((‘Valassis”) for defamation and unfair competition under the New York
General Business Law 5 349, stating as follows:
INTRODUCTION
1. This case concerns the defamatory, deceptive and underhanded actions of
defendant Valassis. In particular, it concerns Valassis’s campaign to defame News America by
publishing libelous statements on consumer advocacy group websites. It also concerns
Valassis’s attempt to unfairly compete against News America by purposely deceiving and
misleading consumers regarding News America.
2. News America and Valassis sell Free Standing Insert (,‘FSI”) coupon booklets,
which are inserted into Sunday newspapers and used by shoppers throughout the United States.
On February 1,2009, as part of an ongoing strategy to deal with declining newspaper circulation
and reduce cost, Valassis discontinued its “RedPlum” FSIs in many Sunday papers in favor of
mailing the coupons directly to consumers’ homes through shared (or junk) mail. This strategy
112357.4 1
Supreme Court Records OnLine Library - page 2 of 12
motivated Valassis to spend $1.1 billion to acquire Advo, then the leading provider of coupons
by junk mail. Valassis’s decision to pull its RedPlum FSIs and replace them with junk mail has
sparked a flurry of complaints on consumer advocacy websites from consumers outraged at
Valassis’s strategy. One such consumer website, www.bringbackthecoupons.com (“Bring Back
the Coupons”), was specifically created in the hope of encouraging the public to demand that
Valassis bring back RedPlum FSIs to the Sunday newspaper.
3. Concerned about the effect of consumers’ outrage, and presumably aware of the
financial impact such groups would have on its FSI business by alienating its consumer packaged
goods company (“CPG”) clients, Valassis developed a concerted campaign aimed at redirecting
consumer anger towards News America by making a number of fraudulent, misleading and
defamatory statements about its competitor,
4. The keystone of Valassis’s disinfomation campaign was to create several aliases
it could then use to post false information regarding News America on consumer websites.
Valassis used the aliases to deceptively represent itself as an “honest consumer” or as an
advertising executive working for a CPG. It then published false and defamatory statements
with the goal of improperly deceiving and misleading consumers (and News America’s CPG
clients) into believing that News America was actually the source of these websites. In this
manner, Valassis hoped to destroy consumer confidence in News America and undermine its
business relationships with CPG companies.
5. In one post on the Bring Back the Coupons consumer advocacy website, for
instance, a Valassis executive pretended to be “Max,” an “honest consumer” and coupon user
with consumers’ best interests in mind. Attempting to divert criticism away from Valassis and
towards News America, “Max” posted a number of patently false statements, including one
112357 4 2
Supreme Court Records OnLine Library - page 3 of 12
claiming that News America owned the Bring Back the Coupons website and that it had created
it to co-opt the consumer advocacy movement. Warning consumers -- potential News America
customers -- not to become “shill[s] for the man,” Valassis falsely accused News America of
“pretending to be concerned consumers with a grass-roots effort.. .” and “pretend[ing] to care
about [consumers] when [it] obviously [had] ulterior motives.” “Max” then suggested
boycotting News America by stating that he “would not support a company [News America] that
tries to use [him].” In other words, Valassis falsely accused News America of the very
underhanded tactic in which it was itself engaged.
6. In a separate post, a Valassis executive posing as “Jane,” falsely claimed that
News America and its employees were “particularly ruthless” and had been acting “illegally.”
Jane quoted from Valassis’s complaint against News America in actions pending in Michigan,
even though there has been no finding of illegality in that case, and any suggestion to the
contrary is patently and demonstrably false. Valassis did this in an effort to deceive and confuse
consumers and CPGs, and to unfairly compete by attempting to redirect consumer anger towards
News America.
7. These and other false, defamatory and unfair statements and actions by Valassis
have harmed News America. By attempting to destroy consumer confidence in News America’s
business and products, Valassis has harmed News America’s relationship with consumers and by
extension with its CPG clients.
8. To remedy the harm being done by Valassis, News America seeks injunctive
relief, along with recovery of general, actual and punitive damages resulting from the injury
caused by Valassis to News America’s business and property.
3 112357.4
Supreme Court Records OnLine Library - page 4 of 12
THE PARTIES
9. News America Marketing FSI L.L.C., is a Delaware Limited Liability Company,
with its headquarters and principal place of business in New York, New York. News America
does business throughout the United States, including in the State of New York,
10. Defendant, Valassis Communications, Inc., is a Delaware corporation, with its
headquarters and principal place of business in the City of Livonia, County of Wayne, State of
Michigan. Valassis does business throughout the United States, including in the State of New
York.
FACTUAL ALLEGATIONS
11. News America and Valassis compete to contract with CPGs that purchase space
in their FSIs to distribute coupons to consumers for name-brand products. Sunday newspapers
generally carry both Valassis’s FSI, known as “RedPlum,” and News America’s FSI, known as
“Smart Source.’’
12. Since at least 2001, trends in the marketing services industry, including declining
newspaper circulation, have impacted the FSI business. News America has responded to these
challenges by, among other things, cutting costs and reducing prices to its customers. These
tactics have allowed it to grow its FSI business and to attract new non-traditional customers into
the business.
13. Valassis, on the other hand, has responded to these pressures by, among other
things, scaling back its newspaper delivered FSI business and by turning instead to junk mail in
an increasing number of markets. Specifically, Valassis has now abandoned newspaper
delivered FSIs, and is instead relying on junk mail to deliver its FSIs, in locations such as Rhode
Island, Nevada, Ohio, Indiana, Pennsylvania, New Jersey, Utah, Virginia, North Carolina,
112357.4 4
Supreme Court Records OnLine Library - page 5 of 12
. . .
Maryland and Texas. As a result of these decisions, Valassis has angered consumers and
sparked an advocacy group to create a website, Bring Back the Coupons, which is specifically
devoted to encouraging Valassis to resume its RedPlum FSI in the Sunday newspaper. The
creators of the website have successfully used such tactics in the past to force grocery store Giant
Eagle to resume accepting double coupons.
14. As evidenced by the flurry of activity on consumer websites, Valassis’s decision
to discontinue its RedPlum FSIs substantially impacted end consumers and risked harming its
relationships with CPGs. Outraged consumers threatened to stop using RedPlum coupons if they
were mailed through junk mail. Consumers also threatened to stop using the products advertised
in RedPlum in order to force Valassis to reconsider its decision, and encouraged CPGs to start
using News America’s FSI, Smart Source, Recognizing that the consumer advocacy groups and
consumer websites were a significant threat to Valassis, Valassis responded with an underhanded
campaign to defame News America.
15. Valassis did this through a concerted campaign aimed at redirecting consumer
anger toward News America and away from Valassis, Valassis executed this strategy by
publishing defamatory statements against News America on websites while posing as
“concerned consumers” and “advertising executives” for CPGs.
16. Using the aliases “Max” and “Jane,” Valassis executives posed on these websites
as “concerned consumers,” “advertising executives,” and “media consultants,” who claimed to
use coupons on a regular basis. Valassis organized its comments on Bring Back the Coupons to
appear as though two consumers were responding to each other in informing the public of their
unique knowledge about News America.
5 112357.4
Supreme Court Records OnLine Library - page 6 of 12
17. For instance, on February 24,2009, a Valassis executive passing himselflherself
off as an “honest consumer” named “Max” published a comment on Bring Back the Coupons
titled “don’t be a corporate pawn.” In this comment, Valassis falsely stated that the creator of
Bring Back the Coupons was “News America Marketing, the suppliers of Smart Source!” and
that News America “owns this blog!”
18. This Valassis executive, as “Max,” then falsely accused News America of
creating Bring Back the Coupons to manipulate consumers to damage Valassis, maliciously
stating that News America intended to use consumers and potential News America CPG clients
as “shill[s] for the man.” Valassis then falsely accused News America of doing what Valassis
was in fact doing - posing as “concerned consumers” on a consumer advocacy website. “Max”
then feigned outrage, claiming that he had “heard about some low tactics, but pretending to be
concerned consumers with a grass-roots effort all in an effort to discredit your competition., .
Hey News America - don’t enlist me to fight your battles and don’t pretend to care about us
when you obviously have ulterior motives.”
19. Only nine minutes later, in direct response to “Max,” Valassis published a second
comment titled “Not surprising.” Masquerading as “Jane,” an “advertising executive,” a
Valassis executive agreed with “Max” and disparagingly and falsely claimed that the “News
America [sales staff] can be particularly ruthless.” “Jane” then falsely claimed that she based her
views about News America on her experience with CPGs in placing advertisements with News
America “for over 20 years” and that she was “pretty intimately involved and understands the
vendors., .”
20. Valassis’s defamatory campaign did not end there. Valassis subsequently
attempted to show CPGs and consumers how c‘ruthless” News America is by having “Jane”
112357.4 6
Supreme Court Records OnLine Library - page 7 of 12
pretend that she had located some information that described unproven and baseless allegations
Valassis has made in its Complaint against News America in actions now pending in Michigan
court. Again posing as “Jane,” this Valassis executive posted unsubstantiated allegations,
including that News America encourages its sales force and employees to act “illegally.”
Valassis posted this falsehood, even though it is well aware that no finding of illegality has been
made against News America.
2 1. On another consumer advocacy website, www,commonsensewithmoney.com
(I‘Common Sense”) -which had been encouraging consumers to boycott Valassis - Valassis
used tho same alias, “Jane,” to deceive and mislead consumers into thinking that “Jane” was a
disinterested or neutral third party that had “worked with Valassis and News America for over 20
years.” Valassis posted this falsehood, even though it was well aware that “Jane” never worked
with News America.
22. In order to address the false statements made by Valassis regarding the ownership
of Bring Back the Coupons, the real owners of the website tracked “Jane” and “Max’s” posts and
found that they were sent from a server in Livonia, Michigan that is registered to Valassis. The
website administrator, outraged at Valassis’s attempt to masquerade as concerned consumers,
published a comment showing that these IP addresses originated from servers registered to
Valassis. While Valassis’s fraudulent scheme has been exposed, the false messages remain on
the websites and continue to damage News America.
FIRST CAUSE OF ACTION
Defamation
23. News America repeats and realleges each and every allegation contained in
paragraphs 1 through 22 with the same force and effect as if here set forth in full.
7 1 1 2357.4
Supreme Court Records OnLine Library - page 8 of 12
‘ .
24. With knowledge of their falsity or reckless disregard for their truth, or, at a
minimum, in a grossly irresponsible, grossly negligent, or negligent manner, Valassis made false
allegations regarding News America’s business practices. Such statements included patently
false statements about News America encouraging its employees to engage in “illegal” conduct,
and thus, constitute libel per se.
25. These efforts were undertaken with the purpose and effect of injuring News
America. As a direct and proximate result of Valassis’s improper and illegal acts, News
America has sustained injury.
26. As of the date of this complaint, Valassis’s defamatory comments are still
available on the websites. The wrongful and illegal acts are therefore ongoing.
27. By reason of the foregoing acts, News America is entitled to recover such general,
actual and punitive damages as the Court may find appropriate.
SECOND CAUSE OF ACTION
Unfair Comwtition under N.Y.Gen.Bus.Law 6 349(a)
28. News America repeats and realleges each and every allegation contained in
paragraphs 1 through 22 with the same force and effect as if here set forth in full.
29. Valassis’s false and defamatory statements about News America, and its
intentional deception of consumers on advocacy websites, constitute dishonest and deceptive acts
and practices in the conduct of their business.
30. As a direct and proximate result of such dishonest and deceptive acts and
practices, News America has sustained injury.
3 1. As of the date of this complaint, Valassis’s defamatory comments are still
available on the websites. The deceptive and illegal acts are therefore ongoing.
Supreme Court Records OnLine Library - page 9 of 12
. * . *
32. By reason of the foregoing acts, News America is entitled to recover such actual
damages as News America is found to have sustained and an order permanently enjoining
Valassis from further committing such deceptive and improper conduct.
WHEREFORE, News America respectfully prays for relief against the Defendant as follows:
A. A judgment in favor of News America on each and every cause of action in the
Complaint and against the Defendant;
E. On the First Cause of Action, an award of actual, general and punitive damages;
C . On the Second Cause of Action, an award of actual damages as well as an
injunction against Defendant to refrain fiom unfair competition by use of deceptive acts or
practices;
D.
E.
A retraction by Defendant of the defamatory statements posted on the websites;
Reasonable attorneys' fees and costs, along with any other costs and
disbursements as may be allowed by law;
F. Such other and further relief as may be just and proper.
Dated: April 3,2009 New York, New York
CONSTANTINE CANNON, LLP
By:
AxelBernabe - Sacha Boegem
450 Lexington Avenue, 17th Floor New York, New York 10017 Telephone: (212) 350-2700 Attorneys for Plaintiff
9 112357.4
Supreme Court Records OnLine Library - page 10 of 12
. -. .. ... -. ... -. . . - . . . . . .. . .. . .
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
Plaintiff,
-V-
VALASSIS COMMUNICATIONS, INC. Index No,
Defendant.
SUMMONS
CONSTANTINE CANNON LLP Attorneys for Plaintix
450 LEXINGTON Avenue, 17th Floor New York, New York 100 17
(212) 350-2700
To Service of a copy of the within is hereby admitted.
Dated: ....................................................... 19 ........_. Supreme Court Records OnLine Library - page 11 of 12
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
1.
NEWS AMERICA MARKETING FSI, L . L C
Plaintiff,
-V-
VALASSIS COMMUNICATIONS, INC.
Defendant.
COMPLAINT
Index No.
CONSTANTINE CANNON LLP Attorneys for Plaintiff
450 LEXINGTON Avenue, 17th Floor New York, New York 100 17
(2 12) 350-2700
To Service of a copy of the within is hereby admitted.
Dated: ...................................................... 19 .......... Supreme Court Records OnLine Library - page 12 of 12