summoned .. and to servei.bnet.com/blogs/sock-puppet-comp.pdf · news america marketing fsi, l.l.c....

. . ."- 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


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


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


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


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


. . .

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


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


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


‘ .

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.


. * . *

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


. -. .. ... -. ... -. . . - . . . . . .. . .. . .


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


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

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