Art Company Claims LivingSocial Stole Its Business Model

A new lawsuit against LivingSocial is accusing the online daily deal juggernaut of partnering with a company in Washington to offer a promotional deal for painting classes, only to turn around and steal the company's business model and offer classes of its own.

Seed Works Inc., which offers class under the name Uncork'd Art, organizes painting classes where participants are also treated to music and wine. The company is suing LivingSocial, which is based in Washington, for fraud, misrepresentation, breach of contract, unfair trade and other claims to the tune of $1.5 million.

According to the complaint (PDF), which was filed May 4 in District of Columbia Superior Court, Uncork'd Art staff contacted LivingSocial in March 2011 about offering promotional deals for Uncork'd Art’s classes. During these negotiations, the company claims LivingSocial representatives "implicitly communicated" that LivingSocial wouldn't try to compete with Uncork'd Art in the future.

Living Social offered a deal for Uncork’d Art classes in April 2011, but the complaint alleges that since then, Living Social has started offering painting-plus-wine-drinking classes of its own. According to the complaint, Living Social’s “competing classes are causing commercial damage to Uncork’d Art including a decline in revenues.”

Uncork’d Art’s owner and manager, Alabaje Francis, said Wednesday that he first learned Living Social was offering the classes at its building in downtown Washington in February. “I thought that they were here to promote for the small businesses and help build small businesses, and it actually was that they were looking to steal ideas and open up their businesses using the same small business models that they work with,” he said.

A spokesman for Living Social, Brendan Lewis, said in an e-mail that: “As a matter of practice, LivingSocial does not comment on or answer questions about any pending litigation, no matter how meritless they may be.”

Uncork’d Art is being represented by Washington solo practitioner Michael Trevelline.

An initial scheduling conference is scheduled for Aug. 24.

Comments

[municipal bond]

Hi Tillman, thanks for sharing this informative article. In my opinion Uncork’d Art have the right to file a case to Living Social for damaging its company reputation. Thats bad

[William]

Ripped OffI've had terrible eriexpences with Living Social. As well as the reasons listed above I tried to redeem two restaurant vouchers but the merchant claimed he would not accept them because we went on 27 December (a public holiday). This was not stated in the terms and conditions but LS have refused a refund. It has now been 5 weeks since I complained and they claim they are still investigating. They are a SCAM.I will be complaining to trading standards. Luckily I paid using Paypal so I can raise a dispute aand hopefully get my money back.I also use and KGB and have found them great compaired to LS.

[Caleb]

MsknoitallI believe Living Social and their sevcire providers to be scammers. I purchased two spa sevcires from them and when I attempted to redeem my coupons, both establishments claimed to not have available appointments before my coupons expired. One was 3 week s prior to expiration, the other was a month. I was told that the spas had no appointments and that if I wanted the sevcires after the expiration date, I would have to pay extra money. If this had happened once, than it would be understandable..but twice is more than a little suspicious. When I finally reached living social after three days of trying, they were less than helpful. I explained that it appears the spas had no interest honoring the coupons, i was quoted the policy regarding appointment availability by one monotone customer sevcire rep after the other. Living social had no interest in my complaints and made clear there was nothing I could do and no refund was forthcoming. When you think about it, when would a 2 person spa be able to accommodate hundreds of coupon customers? In my opinion, this is a scam and I for one will never purchase one again nomatterhow good it sounds!

[Business Writer]

Art is a premium source which reflects culture. Business also involves art. I think the art company’s claim is based on facts which are mentioned.