Legal Environment of Business 8th Edition by Henry Cheeseman

Exercise 5

Standing to Sue McDonald's Corporation owns, operates, and franchises fast food restaurants. Over the course of years, McDonald's ran promotional games such as "Monopoly Game at McDonald's," "Who Wants to be a Millionaire," and other games where high-value prizes, including vehicles and cash up to $1 million, could be won. A person could win by collecting certain games pieces distributed by McDonald's. McDonald's employed Simon Marketing, Inc. (Simon) to operate the promotional games. An investigation by the Federal Bureau of Investigation (FBI) uncovered a criminal ring led by Jerome Jacobson, Director of Security at Simon, whereby he embezzled games pieces and diverted them to "winners" who collected more than $20 million in high-value prizes. After being caught, Jacobson and other members of the ring entered guilty pleas in connection with the conspiracy.
The Burger King Corporation, a competitor of McDonald's, owns, operates, and franchises fast food restaurants. One franchisee is Phoenix of Broward, Inc. (Phoenix), which operates a Burger King restaurant in Ft. Lauderdale, Florida. Phoenix brought a class action lawsuit in U.S. District Court on behalf of Burger King franchises against McDonald's, alleging that McDonald's engaged in false advertising in violation of the federal Lanham Act when it advertised that players had an equal chance of winning high-value prizes when in fact they did not because of the Jacobson's criminal conspiracy. Phoenix alleged that it suffered injuries of lost sales because of McDonald's false advertising claims.
McDonald's filed a Motion to Dismiss Phoenix's lawsuit, asserting that Phoenix had no standing to sue. Did plaintiff Phoenix have standing to sue McDonald's? Phoenix of Broward, Inc. v. McDonald's Corporation, 441 F.Supp2d 1241, Web 2006 U.S. Dist. Lexis 55112 (United States District Court for the Northern District of Georgia)