Oregon-based vacation rental management company, Meredith Lodging, has filed a false advertising and defamation complaint against Vacasa alleging that Vacasa is contacting Meredith’s homeowners with false and misleading information and statements about the company.
According to the complaint, “Frustrated by healthy and fair competition in its home-state from Meredith Lodging’s much smaller, local, and family-owned business, Defendant Vacasa LLC, has embarked on a smear campaign surgically targeted at Meredith Lodging’s homeowner customers, designed to unfairly snuff out that competition.”
David vs Goliath
The action has a David-vs-Goliath narrative. Meredith Lodging, founded by Jon and Meredith Oksenholt, is a family-owned and locally operated vacation rental management company with 700 units under contract and 200 staff members. By comparison, Vacasa has raised $634 million in funding and is, by far, the largest vacation rental (VR) management company in North America. The company recently announced that it is purchasing another large VR competitor, Turnkey Vacation Rentals ($120 million in funding and 6,000 units). With this acquisition, Vacasa reports that it will manage approximately 30,000 units with over 6,000 employees. With hundreds of millions in funding and over 150 acquisitions under its belt, Vacasa is looking ahead to an IPO, according to multiple sources.
Vacasa’s Alleged Harmful False and Misleading Statements
The lawsuit alleges that the problems started in January of this year. Before that, Meredith Lodging acknowledges that Vacasa has targeted its homeowners with consistent, but not defamatory, marketing campaigns.
However, “Starting in January 2021, Vacasa began a campaign to systematically contact and try to poach business from Homeowners under exclusive contract with Meredith Lodging. In many instances, Vacasa’s representatives have made false or misleading statements about Meredith Lodging to these Homeowners.”
The complaint details specific examples of Vacasa’s employees contacting homeowners in Meredith’s program making false or misleading statements, including:
- “Vacasa ‘had heard a lot of complaints about Meredith Lodging and its housekeeping teams.’”
- “There were ‘reviews on VRBO for Meredith Lodging stating that there is a lack of cleanliness’ and Meredith Lodging ‘had no manager review for negative reviews,’ all while claiming Vacasa ‘could manage the property better.’”
- “Vacasa has had homeowners switch over from Meredith Lodging because of what she called ‘lack of cleanliness.’”
- “Vacasa ‘had been talking to a lot of unhappy Meredith Lodging customers.’”
In several cases, Meredith’s homeowners were contacted via unpublished and undisclosed cell phone numbers to which only Meredith employees had access.
“The statements by Vacasa’s representatives that Meredith Lodging suffers from ‘lack of cleanliness’ and has ‘problems with its housekeeping crews’ when considered in conjunction with statements that ‘Vacasa could manage the property better,’ ‘Vacasa had heard a lot of complaints about Meredith Lodging and its housekeeping teams,’ and that ‘a lot of homeowners had switched over to Vacasa because of housekeeping problems’ are all literally false, false by necessary implication, or, at the very least, likely to mislead, confuse, or deceive consumers,” the complaint states.
According to Annie Roberson, Chief Legal Officer for Meredith Lodging, “An orchestrated campaign made using false and misleading statements as part of an advertising effort is unlawful under the federal Lanham Act.”
“We embrace competition and believe it’s important that consumers have choices and options between different companies,” said Roberson. “So it’s not about the competition for us. It’s about cold calling, disturbing people, and intentionally trying to disrupt a business relationship where everyone is satisfied, by falsely planting seeds of doubt. The proof is in the pudding with our homeowners staying loyal to us throughout this ordeal and all of the organic growth that’s recently occurred with homeowners deciding to join us from other companies.”
Deceptive Commercial Speech
The lawsuit points out that the language used during phone solicitations is “commercial speech,” and “based on the similarity of the statements made by Vacasa’s representatives in such a short period of time to the same target audience (homeowners currently under contract with Meredith Lodging), Vacasa’s management directed its sales representatives to contact homeowners who are managed by Meredith Lodging and disseminate false and misleading statements about Meredith Lodging as part of an organized campaign to penetrate the relevant market.”
The complaint added, “Because many, if not all, of Vacasa’s false statements were literally false or false by necessary implication, consumer deception is presumed.”
Relief and Damages
Meredith is asking the court to put a stop to Vacasa representatives soliciting homeowners by using false statements about the company’s performance. “Unless enjoined by this Court, Vacasa will continue to make misrepresentations and false misleading statements of fact that disparage Meredith Lodging in connection with Vacasa’s marketing and promotion of its own services, that will, in turn, likely confuse, mislead, or deceive homeowners and improperly draw homeowners to Vacasa, causing irreparable injury to the business, goodwill, and reputation of Meredith Lodging. This threat of future injury to Meredith Lodging’s business, goodwill, and reputation requires preliminary and permanent injunctive relief.”
Further, “Vacasa’s statements to homeowners . . . are defamatory because they are false, harm Meredith Lodging’s reputation, lower its estimation in the community, deter homeowners from associating or dealing with the company, and ascribe conduct and characteristics incompatible with the proper conduct of a lawful or quality business in the hospitality industry.”
The action further states, “Vacasa published these false allegations with actual malice because its primary purpose was to injure Meredith Lodging’s business.”
Meredith is seeking the following:
- Vacasa and its employees, contractors, agents, servants, offices, and/or members, and all other persons in active concert with Vacasa be enjoined and restrained from falsely advertising about Meredith Lodging.
- Vacasa be required to pay Meredith Lodging all damages Meredith Lodging has suffered as a result of Vacasa’s misrepresentations and false and defamatory statements, including, but not limited to, lost revenue, damages to goodwill, any and all other actual damages, and presumptive damages for defamation per se, in an amount to be proven at trial.
- Vacasa be required to pay Meredith Lodging’s reasonable attorneys’ fees, costs, and expenses.
- Meredith Lodging be granted such other relief as the Court deems just and equitable.
According to Reberson, “Despite these efforts, which we believe to be both unlawful and unethical, our homeowners continue to express loyalty to our program and refer us new homeowners. In fact, our homeowners went so far as to give us the courtesy of bringing this to our attention. Numerous homeowners in our program reached out after reading the news stories to offer words of solidarity and support. We are incredibly grateful for their loyalty and will continue to focus on putting our homeowners first.”
Interestingly, Vacasa has approached Meredith Lodging multiple times to purchase the company, demonstrating that Vacasa doesn’t view Meredith as a bad company that performs as poorly as its representatives are claiming to Meredith’s homeowner customers.
“Vacasa has asked on several prior occasions whether Meredith Lodging would be interested in selling the business to Vacasa,” Roberson said.
However, Meredith Lodging believes in its mission. “All of these vacation rental property management companies have access to similar technologies, but Meredith Lodging prefers to differentiate itself from its competitors by providing high quality services to its guests and homeowners, physical presence in the areas it operates, maximizing homeowner return on their property, and professionalism,” Roberson said.
“I’ve seen plenty of lawsuits, and this seems to be well put together,” said one vacation rental industry M&A expert. “I wonder what would [happen] if 50 managers filled the same lawsuit?”