Facts
- Advance Music Corp. published popular songs and alleged it invested heavily in advertising and publicity to increase demand for its sheet music and licenses.
- American Tobacco Co. and its advertising agency produced a nationally broadcast Saturday-night radio program with a large audience.
- The program was marketed as presenting the week’s top songs in rank order based on an “extensive and accurate” nationwide survey, and weekly ranked lists were circulated to the public and industry participants.
- Advance alleged defendants did not conduct an accurate survey and instead selected and ranked songs arbitrarily or for undisclosed reasons unrelated to actual popularity.
- Advance claimed its songs, allegedly among the most popular, were omitted or ranked lower, reducing purchases by dealers and the public and causing economic loss.
- Defendants moved to dismiss the amended complaint as legally insufficient on its face; the trial court dismissed and the intermediate appellate court affirmed.
Issues
- Whether allegations that defendants falsely advertised their rankings as survey-based and omitted or downgraded plaintiff’s songs stated a claim for intentional interference with plaintiff’s economic interests.
- Whether any of the pleaded causes of action alleged an independently actionable wrong (e.g., unlawful means, actionable fraud, or interference with a definite contract or property right) sufficient to support recovery for lost sales.
Decision
- The court affirmed dismissal of the amended complaint for failure to state a cause of action.
- Even accepting as true that the “survey” representation was false and the rankings were arbitrary, the allegations did not show unlawful means or interference with a specific protected right.
- Any deception alleged was directed to the public and third parties, not pleaded as fraud actionable by the plaintiff (including lack of plaintiff reliance).
- Plaintiff’s alleged harm was loss of prospective sales and favorable publicity, treated as a general business expectancy not protected absent a recognized tort.
Legal Principles
- Liability for intentional interference with economic interests generally requires more than intentional conduct causing economic harm; the pleading must show a cognizable wrong such as unlawful means, actionable fraud supporting the plaintiff’s claim, or interference with a definite contract or property right.
- Misrepresentations to the public that allegedly influence third-party purchasing decisions do not, without more, create a fraud claim in favor of a competitor who does not allege its own reliance and other required elements.
- A business’s promotional or editorial choices about what to feature or how to rank products, even if economically harmful to others, are not actionable absent independently unlawful conduct.
Conclusion
The court held that a publisher could not recover for lost sales based on a competitor’s widely publicized, allegedly arbitrary and misrepresented song rankings because the complaint alleged only harm to general business expectancies and did not plead unlawful means, actionable fraud in plaintiff’s favor, or interference with a specific legal right.