Las Vegas Trademark Attorney

Wednesday, October 3, 2007

Publisher of the Las Vegas Fronteer Directory intensifies battle with former salesman/debt collector Steve Sanson by filing trademark infringement law
On October 2, 2007, Fronteer Directory of Nevada, Inc. (“FDN”) filed a lawsuit in the U.S. District Court for the District of Nevada against Steve W. Sanson and Fronteer Yellow Pages, LLC, alleging trademark infringement and unfair competition under §43(a), common law trademark infringement, conversion, tortious interference with a prospective economic advantage, and breach of loyalty. The complaint seeks injunctive relief, profits, treble damages, and attorney’s fees. A copy of the complaint can be downloaded here (courtesy of me).As many Las Vegas residents know, the Fronteer Directory is that miniature yellow pages that shows up on our doorsteps once a year and provides a more compact alternative yellow pages to keep in you car compared to the “other” bulky yellow pages book.FDN has been publishing the Fronteer Directory since 1995. The cost of producing the directory is paid for by advertisers appearing in the directory – both national accounts and local accounts. The directory is typically published once per year with printing done in three split runs approx. two weeks apart with each run producing about 200,000 directories. FDN relies upon the national accounts for the funds to produce the first run of directories and the local accounts for funds to produce the second and third runs.Sanson was originally hired by FDN as a sales employee, and later became FDN’s “credit manager” in charge of pursuing collection lawsuits against advertisers failing to pay their accounts. He has his own website - http://www.stevesanson.com/index.htm - where he promotes himself and his experience with small-claim debt collection in Nevada (much of which he gained while employed with FDN).According to the complaint, FDN’s President (noticeably never mentioned by name in the complaint) met with Sanson sometime in April 2007 regarding buying the company, around the time when FDN was about to begin producing the 2007 edition of the Fronteer Directory (supposedly a good time to sell the business). When Sanson allegedly could not meet the terms of the deal and no sale ever occurred, FDN moved forward with producing the 2007 edition of its telephone directory.FDN and Sanson also agreed that he would no longer be employed by FDN after June 28, 2006, and that they would work out an independent contractor arrangement thereafter. In addition, in order to reduce overhead, FDN moved out of its month-to-month leased office space in Henderson, Nevada, and agreed with Sanson to move FDN’s office to Sanson’s personal residence, with telephone and fax lines forwarded to Sanson’s residence. FDN and Sanson agreed that Sanson would continue to handle billing statements and bank deposits on a daily basis and would continue to monitor FDN’s post office box.Unbeknownst to FDN at the time, on June 4, 2007, Sanson filed Articles of Organization with the Nevada Secretary of State for Fronteer Yellow Pages, LLC. Sanson subsequently opened a bank account “doing business as” Fronteer Directory Company of Nevada, although no such Fictitious Firm Name appears on file with the Clark County Recorder’s office. When FDN confronted Sanson about the new checking account after discovering some blank checks and bank statements, Sanson allegedly indicated he wanted to start a telephone directory for the year 2009.The complaint alleges that Sanson converted FDN’s telephone number by changing the contact information to his own without FDN’s authorization, thereby preventing FDN from managing the account. Sanson opened a second post office box under FDN’s name without FDN’s authorization and had mail forwarded from FDN’s original post office box to this second post office box. When FDN discovered the second post office box, FDN directed Sanson to cancel the box. The complaint further alleges that Sanson received several checks from advertisers, but did not deposit them into FDN’s bank account and instead converted them for his own benefit.Around July 20, 2007, FDN informed Sanson that it intended to sell the company to another interested buyer that had expressed its interest with a written letter of intent.At this point, I must digress from the details of the complaint to focus on the very public battle that began to play out around this time in the media and online, which also provides some insights into how Sanson is likely to answer FDN's complaint.On July 24, 2007, Channel 3 News (KVBC, the local NBC affiliate) ran a story titled “Are Fronteer phone book advertisers getting what they paid for?” News 3 reporter Jesse Corona interviewed George Chehade, a former sales manager for FDN. Chehade told Corona that FDN has promised advertisers that 600,000 copies of the “valley-wide” directory would be published. But according to Chehade, only ¼ of the total 600,000 directors for 2007 were printed, while the owner of FDN continues to collect money from advertisers.Chehade suspected there was a problem when only 150,000 directories were printed and shipped in June. FDN’s owner, Albert Holtan, apparently informed Chehade that the company was shutting down. When Chehade asked about the remaining directories, Holtan said not to worry. Holtan then fired all the employees and closed FDN’s doors. Holton told News 3 that he relocated his office to his home and says he is not closing the business.Meanwhile, Holton continued to bill advertisers. Sales representatives informed their former clients about the situation, and several customers have said they no longer want to pay for an ad that only reached about one quarter of the audience they were promised. Holtan told Corona there was an issue with former employees stealing from him, but did not given any details about the theft or how it may have impacted printing.On July 26, 2007, News 3 ran a follow-up story titled “Investigators seize Fronteer Directory's financial, business records.” Jesse Corona reported that the Nevada Attorney General's Office had seized the financial and business records of FDN and Albert Holtan by executing a search warrant on Steve Sanson’s home and seizing computers, hard drives and all business records and bank statements dealing with Albert Holtan and FDN.The news report noted that the publicity still has not stopped Holtan from continuing to bill advertisers who were promised 600,000 copies of the Fronteer Directory would be distributed valley-wide. FDN apparently has filed 711 cases in small claims court against advertisers since January 1, 2000. The report noted that many of the cases were filed by Sanson.Corona contacted Holtan, who said he was not closing the business, but had simply relocated his office to his home – a mansion nicknamed "The Castle" located in the luxury area of Lake Las Vegas and which is listed for sale for almost $5 million (see listing and link to virtual tour here courtesy of yourvegashome.com). Chehade suspects that Holtan is planning to collect as much money as he can from advertisers before leaving town for good.Finally, on August 20, 2007, News 3 ran a third follow-up story titled “Former debt collector speaks out about Fronteer phonebook investigation.” This time, the person speaking out to Jesse Corona was Steve Sanson himself.According to Sanson, he has filed over 2,300 lawsuits against advertisers while he worked for FDN as its credit manager and in-house debt collector. Sanson now claims to have been manipulated by Holtan. Supposedly, Holtan expected Sanson to continue to file lawsuits against non-paying advertisers for the total amount owed (approx. $1.5 million) despite having only printed 150,000 copies of the 600,000 copies promised to advertisers. Sanson says Holtan strung employees and advertisers along for months with promises that more directories would be printed, only to then fire everyone and relocate the business.Sanson acknowledges that the phone lines, the fax lines, the computers were all moved to his house, but he says that once he realized Holtan planned to take the money and run, he notified the Attorney General's Office, which then executed search warrant and seized all of the business records from his house. Sanson said that he had already collected almost $700,000 before the Attorney General's investigation closed him down.On the heels of the August 20th News 3 story, Sanson, on August 24, 2007, published a lengthy article on LibertyPost.org titled “The Untold Story of Fronteer Directory Yellow Pages!” detailing his version of events and providing a very detailed history of the company. He posted an abridged version of his article on a Las Vegas Review Journal “eforum” website (link here) on September 15, 2007.In his online posting, Sanson asserts that the deal to purchase FDN fell apart because Holtan was unwilling to show federal tax returns, balance sheets, and corporate records and because the potential investors felt Holtan was hiding something, which apparently turned out to a liability of $753,000 for the printing bill for the 2006 directories on top of a $273,000 owed by FDN for the 2007 printing, the latter of which Holtan claimed was the business’ only outstanding liability. Sanson also notes that the 2007 Fronteer Directory did not have the words “Serving the Entire Las Vegas Valley” on the cover, which may have been some last minute attempt by Holtan to excuse the well-under 600,000 production that Holtan was planning. Sanson’s article does not explain why he organized Fronteer Yellow Pages, LLC nor does he provide any facts to explain the bank account.On September 12, 2007 (according to the complaint), Sanson sent a letter out to FDN’s advertisers asserting that FDN had misappropriated such advertisers’ funds and would continue to do so for the remainder of the year.The above media coverage is the basis for FDN’s allegations in the complaint that Sanson, during the months of July, August, and September, contacted the Nevada Attorney General’s office, contacted a local TV station, and wrote multiple articles, posted on various internet sites, stating that FDN mislead and defrauded advertisers and intended to shut down its business.One final curious addition to the complaint is that on August 10, 2007, Sanson contacted FDN seeking $4600 for work performed in July and August related to Sanson’s continued efforts to pursue collections. FDN supposedly informed Sanson at that time that he was not authorized to act on behalf of FDN. Nonetheless, on August 17, 2007, Sanson sent a demand letter on behalf of FDN to one of the advertisers that was past due, and on August 31, 2007, filed an action in Clark County District Court.While there may be many parts of the complaint that are factually inaccurate, this last one is easily contradicted. While many of Sanson’s past complaints were filed with the Las Vegas Justice Court, those court filings cannot be searched online. However, filings with the Clark County District Court (which hears claims exceeding $10000) can be seen online (link here) and the system shows one case filed on August 31, 2007, by Fronteer Directory Co Of Nevada Inc. against the Law Offices Of Barry Levinson (Case No. 07-A-547429-C). However, FDN’s counsel is listed as Charles M. Damus of Charles M. Damus and Associates – not Steve Sanson.And that’s the whole story (so far) leading up to and including FDN’s complaint.Comments:Focusing just on the trademark aspect of the case, Sanson does not appear to have used the mark on any such goods (telephone directories) . . .at least not yet. Thus, without additional factual allegations, FDN does not appear to have a strong claim for any money damages based on its claims of trademark infringement and unfair competition by Sanson. As for injunctive relief, FDN’s claim may have some merit to the extent that Sanson was going to continue his business plans and put out the Fronteer Yellow Pages (as the name of his LLC would suggest) as a competing directory.However, without a federal trademark registration, FDN’s trademark rights to the FRONTEER mark exist only so long as FDN legitimately intends to use the mark in commerce. An issue in dispute may likely be whether FDN has abandoned its directory business, and in effect, abandoned its trademark rights to the FRONTEER mark.I suspect that Sanson’s LLC may have just been his efforts to get prepared to take over the business – either through a buyout (using this LLC as the buyer) or as a new operating entity to continue publishing the Fronteer Directory after FDN goes out of business. Quite frankly, after all of the coverage that the Fronteer Directory has had, one wonders whether Sanson would even want to use the mark FRONTEER on his phone directory. So long as Sanson puts out a compact yellow pages much like what FDN published, people will continue to put them in their cars no matter what they may be called.With respect to the other parts of the complaint, it’s not clear at this stage if the complaint is legitimate or merely FDN’s attempt to try and to stop Sanson from his media campaign. However, Sanson seems like he can handle himself in a courtroom, so I cannot imagine that he will back down from a complaint such as this. If anything, it gives him another avenue towards letting the public know the truth about FDN.