FORT LAUDERDALE BUSINESS LITIGATION: FRAUD CLAIMS AND DEFENSE OF “PUFFERY”

Disgruntled purchases of goods or services may later claim fraud by asserting that they relied on untrue statements made by the selling company when deciding to make the purchase. However, a purchaser generally may not rely on a statement that qualifies as “puffery.” A statement is puffery if it is merely a statement of opinion and does not otherwise contain a statement of objective fact. Sometimes the line between a statement of opinion and a statement of an objective fact can be blurry Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

A company may defend against business litigation claims that it misrepresented its products or services by asserting that the statements are mere “puffery.” Puffery is the “expression of an exaggerated opinion—as opposed to a factual misrepresentation—with the intent to sell a good or service.” Black’s Law Dictionary (10th ed. 2014). The puffery doctrine recognizes that purchasers should expect that sellers will exaggerate the quality of their goods or services and that the purchaser should be expected to form their own opinions.

The puffery doctrine has wide applicability in business litigation. Generally, statements which qualify as puffery cannot support a plaintiff’s claim of misrepresentation, fraud, a violation of the Florida Deceptive and Unfair Trade Practices Act, and other similar causes of action. Recent cases have also applied the doctrine of puffery to investor lawsuits under Rule 10b-5. Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307 (11th Cir. 2019) (holding the doctrine’s applicability under Rule 10b-5 within the Eleventh Circuit Court of Appeals, explaining “[e]xcessively vague, generalized, and optimistic comments—the sorts of statements that constitute puffery—aren’t those that a ‘reasonable investor,’ exercising due care, would view as moving the investment-decision needle—that is, they’re not material”).

Fundamentally, the puffery doctrine simply sets aside a certain category of statements from which a purchaser cannot reasonably rely. Statements of subjective opinion generally qualify as puffery. “It is […] well settled in Florida that in order to be actionable a fraudulent misrepresentation must be of a material fact, rather than a mere opinion or a misrepresentation of law.” Chino Elec., Inc. v. U.S. Fid. & Guar. Co., 578 So. 2d 320 (Fla. 3d DCA 1991). A statement is mere puffery if it is “not the sort of empirically verifiable statement that [could] be affirmatively disproven.” Next Century Communs. Corp. v. Ellis, 318 F.3d 1023 (11th Cir. 2003). “The status of being the ‘finest’ or the ‘best’ is a matter of opinion, and the allegations of fraud from the use of these terms cannot stand.” MDVIP, Inc. v. Beber, 222 So. 3d 555 (Fla. 4th DCA 2017). Similarly, “the characterization of a company’s performance as ‘strong’ constitutes mere puffery.” Next Century Commc’ns Corp. v. Ellis, 318 F.3d 1023 (11th Cir. 2003). “‘To say that a statement is mere ‘puffing’ is, in essence, to say that it is immaterial, either because it is so exaggerated (‘You cannot lose’) or so vague (‘This bond is marvelous’) that a reasonable investor would not rely on it in considering the ‘total mix of [available] information.’” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307 (11th Cir. 2019).

In business litigation, the puffery doctrine presumes that the purchaser is sophisticated enough to form his or her own opinion about a product and generally understands the difference between a sales pitch and a promise. “The puffery ‘doctrine’ presumes a relatively (but realistically) savvy consumer—the general idea being that some statements are just too boosterish to justify reasonable reliance.” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307 (11th Cir. 2019). “It is the responsibility of the buyer of a product or service to investigate the truth of any ‘puffing’ statements, as such declarations ‘do not constitute fraudulent misrepresentations.’” MDVIP, Inc. v. Beber, 222 So. 3d 555, 561 (Fla. 4th DCA 2017).

There are some exceptions to the puffery doctrine. In circumstances where the selling party is in a position of expertise, a purchaser can sometimes still rely on statements of opinion. E.g. Vokes v. Arthur Murray, Inc., 212 So. 2d 906 (Fla. 2d DCA 1968) (holding that statements made by a dance studio concerning a student’s potential and progress might not be mere puffery when these statements are false and the representing party has superior knowledge). Additionally, in business litigation a statement of opinion can often imply the truth of an objective fact, which can therefor support a claim of fraud. For example, in Marty v. Anheuser-Busch Companies, LLC, 43 F. Supp. 3d 1333 (S.D. Fla. 2014), the defendant sold beer that frequently referenced the country of Germany and that the beer was brewed under German purity laws, but was in fact brewed in the United States. Marty held that statements of pure opinion, like “German Quality,” might not qualify as puffery when it suggests the truth of a something which is objectively untrue, such as the country of origin of the product.

The puffery doctrine insulates from judicial scrutiny statements of opinion, even when the party making the statement knows that they are untrue. While the doctrine applies to a wide variety of causes of action related to fraud, its applicability in any given circumstance is dependent upon the relationship of the parties and other case-specific factors. Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.