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.