A federal judge has dismissed a proposed class-action lawsuit that alleged Utah-based publisher Ziplocal purposefully shorted distribution of its Yellow Pages books in Montana and didn’t inform businesses that bought ads.
But a second proposed class-action suit against the Orem company based on similar allegations in Utah remains active in state court.
U.S. District Judge Dale Kimball tossed out the federal lawsuit that was filed in Montana but transferred to Utah, ruling that Ziplocal’s contract with advertisers allowed it to cut distribution without notice.
Both lawsuits alleged that Ziplocal sold Yellow Pages ads based on the understanding that an entire local area would receive copies of the books, only to cut back 50 percent or more in some cases without informing advertisers.
The allegations were generally backed by interviews with former employees and a distributor as well as company documents in a Salt Lake Tribune story last year.
Kimball, however, pointed to the contract between the company and advertisers that “states that 100 percent distribution is not guaranteed and not achievable.”
“This is not a case where Ziplocal had any duty of care to plaintiffs outside the contractural duties set forth in the service agreement,” the judge wrote.
Attorneys for the businesses had argued that Ziplocal had a duty to distribute books as close to 100 percent of businesses and residences in a local area as was practical. The language in the agreement, they added, did not mean the company could unilaterally trim distribution by a large percentage at the end of an ad sales period.
Kimball disagreed, writing that the agreement “actually allows Ziplocal discretion in determining the level of distribution.”
“The company is obviously pleased that the court, after carefully considering the evidence and arguments presented, found that plaintiff’s claims for breach of contract, fraud and gross negligence are without merit,” Dan Larsen of Snell & Wilmer, attorneys for Ziplocal, said in an email.
An email seeking comment from attorneys for the businesses who filed the suit was not returned.
In the state court, 4th District Judge Claudia Laycock last year dismissed two parts of the proposed class-action lawsuit but allowed it to go forward on the question of whether Ziplocal had breached contracts by drastically cutting distribution without informing clients.