## Facts

- Surdyk’s Liquor, Inc. operated a liquor store in northeast Minneapolis; MGM Liquor Stores, Inc. franchised a chain of Twin Cities liquor stores marketed as “MGM Liquor Warehouse.”
- MGM coordinated a “29th Anniversary Wine, Liquor & Beer Sale” across 23 franchised stores and published a multi-page newspaper flyer listing numerous wines with specific stock numbers and bottle/case sale prices, along with maps of participating locations.
- The flyer included general disclaimers that some items might be limited or unavailable and that MGM or suppliers might run out of certain products and vintages.
- On the day before the sale began, Surdyk’s hired investigators to visit ten MGM stores and attempt to buy case quantities of 18 advertised wines.
- Investigators reported that at each store the requested wines were out of stock or available only in very small quantities; in about half the stores, employees indicated the wines could be special-ordered with delivery in two days to a week.
- Surdyk’s complained to the Minnesota Attorney General, which sent MGM a letter warning that state law prohibits false or deceptive advertising and authorizes injunctive and other relief.
- Surdyk’s sued in federal court alleging false advertising under Lanham Act § 43(a) and related state-law theories, asserting MGM advertised wine bargains without stocking sufficient quantities to satisfy reasonably anticipated demand.
- MGM argued it did not control franchisees’ inventories, cited supply constraints in the wine market, and relied on the flyer’s disclaimers.

## Issues

1. Whether Surdyk’s was likely to succeed on its Lanham Act § 43(a)(1)(B) false-advertising claim based on allegedly misleading representations of product availability during a coordinated multi-store promotion.
2. Whether Surdyk’s, as a competitor, faced irreparable harm absent injunctive relief.
3. Whether the balance of harms and the public interest favored a preliminary injunction limiting MGM’s advertising practices.

## Decision

- The court granted the parties’ motions to supplement the record.
- The court granted Surdyk’s motion for a preliminary injunction.
- The court found Surdyk’s showed a likelihood of success on the merits that MGM’s advertising was false or misleading regarding availability of the advertised wines in meaningful quantities at the participating stores.
- The court concluded the flyer’s generalized disclaimers did not cure the overall misleading message of broad availability.
- The court rejected MGM’s franchise/inventory-control argument as a bar to liability where MGM orchestrated and disseminated the challenged advertising under its brand.
- The court found irreparable harm (including difficult-to-measure diversion of sales and harm to goodwill), and held the balance of harms and the public interest in truthful advertising favored injunctive relief.

## Legal Principles

- A Lanham Act § 43(a)(1)(B) claim may be based on advertising that misrepresents the availability of specific products at advertised prices during a promotional period.
- Detailed product listings tied to identified locations can convey an actionable message that the products will be available for purchase during the sale; evidence of widespread nonavailability can support a finding of falsity or misleadingness.
- General “limited quantities/subject to availability” disclaimers may be insufficient when the main net impression of broad availability is contradicted by actual stocking practices.
- An advertiser that coordinates and controls a branded promotional campaign may be responsible for false or misleading messages even if local inventory decisions are made by franchisees.
- In competitor false-advertising cases, likely success on the merits can support a finding (or presumption) of irreparable harm due to difficult-to-quantify loss of customers and goodwill.
- Preliminary injunctive relief is appropriate where narrowly tailored restrictions can prevent materially misleading advertising while still permitting accurate promotion.

## Conclusion

The court enjoined MGM from continuing materially misleading promotional advertising about wine availability because Surdyk’s showed likely Lanham Act liability based on widespread lack of advertised stock, and established irreparable competitive harm with the balance of equities and public interest favoring truthful advertising.


Surdyk’s Liquor, Inc. v. MGM Liquor Stores, Inc., 83 F. Supp. 2d 1016 (D. Minn. 2000)