Court Opinions: 10th Circuit Court of Appeals Opinion from June 14

The 10th Circuit Court of Appeals

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

Examination Board, et al. v. International Association, et al.

Two national associations of home inspectors, the International Association of Certified Home Inspectors, or InterNACHI, and the American Society of Home Inspectors, offer memberships to home inspectors. Currently, the organizations are the only two national associations, though many state-level associations exist. 

InterNACHI and ASHI offer similar benefits to members, including advertising by geographical location on their websites, providing free online education and resources and offering free logo designs. Members must pay monthly or yearly dues to maintain an active membership. 

ASHI has three membership classes: associate, inspector and certified inspector. ASHI requires no formal professional qualifications to join as an associate, but associates must complete the organization’s standards of practice and ethics modules within one year of joining the organization. To attain inspector or certified inspector status, a member must pass a national or state home inspector exam, conduct a specific number of home inspections and submit home inspection reports for verification, in addition to completing the ASHI standards of practice and ethics modules. All ASHI members who have held their membership for one year or more are also required to complete continuing education requirements to maintain good standing. 

One of the benefits of ASHI membership is a listing on ASHI’s “Find-an-Inspector” website tool, which allows prospective home buyers to search for an inspector by location and view their qualifications, membership level and contact information. Even though some ASHI associate home inspectors are novices and have never received training or conducted a home inspection, ASHI still advertises all its members as home inspectors. Unlike ASHI, InterNACHI does not promote novice home inspectors to the public on its website. 

In 2019, ASHI sued InterNACHI and its founder, Nick Gromicko, for defamation, alleging that Gromicko made disparaging comments about ASHI in an online forum. In response, InterNACHI filed a counterclaim against ASHI for false advertising for its slogan “American Society of Home Inspectors. Educated. Tested. Verified. Certified.” 

InterNACHI sued ASHI under the Lanham Act, which provides a private right of action against any person who uses false or misleading statements in commercial advertising, arguing that the tagline misleads customers. 

InterNACHI claimed the tagline constituted false advertising because it inaccurately portrayed ASHI’s entire membership as being educated, tested, verified and certified, even though its membership includes “novice” inspectors who have yet to complete training or become certified. InterNACHI argues this is misleading advertising and alleges ASHI’s willingness to promote novice inspectors to the public caused InterNACHI to lose potential members and dues revenue. 

InterNACHI claimed the misleading tagline harmed InterNACHI because novice inspectors were incentivized to join ASHI due to the organization’s willingness to advertise uncertified associate members as home inspectors through Find-an-Inspector.

The parties filed cross-motions for summary judgment. The district court granted summary judgment for ASHI on InterNACHI’s Lanham Act counterclaim and concluded that InterNACHI failed to show it was injured by ASHI’s tagline. The court concluded no rational jury could find that ASHI’s allegedly false commercial advertising injured InterNACHI commercially or reputationally. 

The 10th Circuit affirmed the district court’s grant of summary judgment in favor of ASHI. 

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