Stahl Law Firm et al v. Judicate West et al

Filing 70

ORDER Granting 60 61 Defendants' Motions to Dismiss for Lack of Standing. Signed by Judge Thelton E. Henderson on 11/27/13. (tehlc2, COURT STAFF) (Filed on 11/27/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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STAHL LAW FIRM, et al.,

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Plaintiffs,

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v.
JUDICATE WEST, et al.,

ORDER DISMISSING CASE
FOR LACK OF STANDING

Defendants.

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For the Northern District of California

United States District Court

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NO. C13-1668 TEH

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This matter came before the Court on November 25, 2013, on Defendants’ motions to

13 dismiss. After carefully considering the parties’ written and oral arguments, the allegations
14 in the Second Amended Complaint, and relevant law, the Court now DISMISSES with
15 prejudice Plaintiffs’ Second Amended Complaint for lack of Article III standing pursuant to
16 Federal Rule of Civil Procedure 12(b)(1). The Court DENIES Defendants’ previous motions
17 for prevailing party attorneys’ fees under California’s anti-SLAPP statute because the Court
18 does not have the authority to award attorneys’ fees in a suit over which it has no
19 jurisdiction.
20
21 BACKGROUND
22

Because the parties are familiar with the facts of the case and the procedural history,

23 the Court offers here only a brief summary. See Docket No. 56; Stahl Law Firm v. Judicate
24 West. et al., No. C13-1668 TEH, 2013 WL 4873065 (N.D. Cal. Sept. 12, 2013). On April
25 12, 2013, Plaintiffs – attorney Norbert Stahl and his law firm, the Stahl Law Firm1 – filed suit
26 against Defendants Judicate West and Judge Vincent DiFiglia (Ret.) (collectively,
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1

While Plaintiff refers to himself and his law firm in the plural, for simplicity, the
28 Court refers to both as “Plaintiff.”

1 “Defendants”). Plaintiff’s complaint included four causes of action: unfair competition
2 under the Lanham Act, 15 U.S.C. § 1125; unfair competition under California Business and
3 Professions Code sections 17200 et seq.; fraud; and negligence. On June 21, 2013,
4 Defendants filed special motions to strike Plaintiff’s state law claims under California’s anti5 SLAPP statute, California Code of Civil Procedure section 425.16. Defendants also moved
6 to dismiss the complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6).2
7 Rather than oppose the motions, on June 25, 2013, Plaintiff subsequently filed his First
8 Amended Complaint (“FAC”), which eliminated the California causes of action and retained
9 only the federal cause of action under the Lanham Act, 15 U.S.C. § 1125. Claims brought

11 known as “false advertising” or “trade libel” claims. Zenith Elec. Corp. v. Exzec, Inc., 182
For the Northern District of California

United States District Court

10 pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B),3 are generally

12 F.3d 1340, 1347-48 (Fed. Cir. 1999). See also 5 J. Thomas McCarthy, McCarthy on
13 Trademarks and Unfair Competition § 27:24 (4th ed. June 2013).
14

The FAC alleged that Defendant Judicate West is a provider of private dispute

15 resolution services and sponsors neutrals, including retired judges such as Defendant
16 DiFiglia, to serve as mediators and arbitrators. FAC ¶¶ 7-14. The gravamen of Plaintiff’s
17 Lanham Act claim was that both Defendants misrepresented their qualifications, experience,
18 and reputation by failing to reveal in advertising or on Judicate West’s website a January 9,
19

2

All references to Rules hereinafter refer to the Federal Rules of Civil Procedure
20 unless otherwise specified.
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Section 43(a) provides, in relevant part:
(1) Any person who, on or in connection with any goods or
services . . . uses in commerce any word, term, name, symbol, or
device, or any combination thereof, or any false designation of
origin, false or misleading description of fact, or false or
misleading representation of fact, which-...
(B) in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic origin of his or
her or another person’s goods, services, or commercial activities,
...
shall be liable in a civil action by any person who believes that he
or she is or is likely to be damaged by such act.

28 15 U.S.C. § 1125(a)(1)(B).
2

1 2007 opinion of the California Commission on Judicial Performance in which DiFiglia was
2 issued a public admonishment. FAC ¶¶ 21-41. The FAC contained only conclusory
3 allegations that “Plaintiffs and Defendants compete for providing legal services” and that
4 Defendants “have made false and misleading statements about their services that harmed
5 Plaintiffs’ ability to compete.” FAC ¶¶ 44-45. Plaintiff did not allege in the FAC that he is a
6 provider of private dispute resolution services – like Judicate West – or that he is a mediator
7 – like DiFiglia. These omissions are important because in a Lanham Act false advertising
8 suit, “a plaintiff establishes Article III injury if some consumers who bought the defendant’s
9 product under a mistaken belief fostered by the defendant would have otherwise bought the

11 2011) (internal quotations and citation omitted).
For the Northern District of California

United States District Court

10 plaintiff’s product.” TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 825 (9th Cir.

12

In July 2013, Defendants withdrew their motions to strike and to dismiss the original

13 complaint and instead moved to dismiss the FAC pursuant to Rule 12(b)(6). Docket Nos. 3114 33, 35. Defendants additionally moved for prevailing party attorneys’ fees on their
15 previously filed (and withdrawn) motions to strike pursuant to the California anti-SLAPP
16 statute. Docket Nos. 39, 42. The Court heard argument on August 26, 2013. Prior to the
17 hearing, the Court distributed questions to counsel, including questions directed to Plaintiff
18 to ascertain whether Plaintiff, in fact, provides alternative dispute resolution services, how he
19 competes for the same customers as Defendants, how Defendants’ alleged misrepresentations
20 injured his business, and how his conclusory pleadings satisfied the injury-in-fact
21 requirement of Article III. See 2013 WL 4873065, at *3. During the extensive colloquy that
22 followed, Plaintiff was unable or unwilling to answer simple questions about whether he has
23 a mediation practice or how he otherwise competes with Defendants for the provision of
24 alternative dispute resolution services. 2013 WL 4873065, at *3-6. The Court found that
25 Plaintiff failed to allege that he competes with Defendants for the provision of alternative
26 dispute resolution services, and therefore failed to plead an injury-in-fact sufficient to
27 establish Article III standing. The Court therefore dismissed the FAC sua sponte for lack of
28 subject matter jurisdiction pursuant to Rule 12(b)(1), but granted Plaintiff leave to amend his
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1 complaint to include specific factual allegations that could establish his Article III standing.
2 2013 WL 4873065, at *6. See also Warth v. Seldin, 422 U.S. 490, 501-02 (1975) (in
3 determining constitutional standing, “it is within the trial court’s power to allow . . . the
4 plaintiff to supply, by amendment to the complaint . . . further particularized allegations of
5 fact deemed supportive of plaintiff’s standing. If, after this opportunity, the plaintiff’s
6 standing does not adequately appear from all materials of record, the complaint must be
7 dismissed.”) The Court additionally declined to rule on Defendants’ motions for anti-SLAPP
8 attorneys’ fees because it lacked jurisdiction.
9

On September 27, 2013, Plaintiff filed his Second Amended Complaint (“SAC”).

11 “Plaintiffs offer mediation services and Plaintiffs’ ability to compete for mediation services is
For the Northern District of California

United States District Court

10 Docket No. 58. The SAC is identical to the FAC, with two exceptions: Plaintiff now alleges

12 adversely impacted by Defendants’ false and misleading advertising,” SAC ¶ 45, and
13 “Defendants’ false and misleading statements in their internet advertising about their services
14 harmed Plaintiffs’ ability to compete,” SAC ¶ 46.
15

Defendants moved to dismiss the SAC pursuant to Rule 12(b)(1) on the grounds that

16 Plaintiff fails to allege Article III standing and pursuant to Rule 12(b)(6) because Plaintiff
17 fails to plead a Lanham Act claim. Defendant DiFiglia also moved to transfer venue in the
18 alternative.
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On November 25, 2013, the parties appeared for oral argument on the motions. In

20 response to the Court’s questions4, Plaintiff acknowledged that he: has never sponsored
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The Court posed the following questions to Plaintiff:

1.
2.

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25 3.
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27 4.
28 5.

In the Second Amended Complaint you state that you offer “mediation services.”
Describe with particularity what mediation services you offer.
Do you sponsor other neutrals, arbitrators, and mediators besides yourself? Do you
maintain and administer a program that sponsors these other alternative dispute
resolution professionals?
Do you serve as a mediator (i.e. act as a third party between two contending parties
with a view toward reconciling them or persuading them to adjust or settle their
dispute)? Note this definition does not include whether you have represented a party
in a dispute before a mediator.
If you serve as a mediator, how many times since 2010 have you served as a
mediator?
How do you advertise that you mediate or sponsor ADR services?
4

1 another neutral, aside from himself; has not had any cases where he served as a mediator
2 under the definition provided by the Court in Question 3; and has only been involved in
3 mediations where has represented a client as opposed to acting as a neutral. He represented
4 that he advertises his services as a mediator to individuals over the phone or in person, but
5 has not had any cases come in from the public in this manner.
6
7 DISCUSSION
8 I.

Rule 12(b)(1) Motion to Dismiss for Lack of Standing.

9

A.

A “lack of Article III standing requires dismissal for lack of subject matter jurisdiction

11 under Federal Rule of Civil Procedure 12(b)(1).” Maya v. Centex Corp., 658 F.3d 1060,
For the Northern District of California

United States District Court

10

Legal Standard.

12 1067 (9th Cir. 2011). To establish Article III standing, a plaintiff must establish injury-in13 fact, causation, and a likelihood that a favorable decision will redress the plaintiff’s alleged
14 injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Lopez v. Candaele, 630
15 F.3d 775, 785 (9th Cir. 2010). To establish an injury in fact, the plaintiff must show that he
16 or she has suffered “an invasion of a legally protected interest which is (a) concrete and
17 particularized, and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S.
18 at 560.
19

When ruling on a motion to dismiss for lack of standing, the Court “must accept as

20 true all material allegations of the complaint and must construe the complaint in favor of the
21 complaining party.” Warth, 422 U.S. at 501. Nonetheless, the plaintiff has the burden of
22 establishing Article III standing. See Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir.
23 1996). “At the pleading stage, general factual allegations of injury resulting from the
24 defendant’s conduct may suffice, for on a motion to dismiss [the Court must] presum[e] that
25 general allegations embrace those specific facts that are necessary to support the claim.”
26 Lujan, 504 U.S. at 561 (internal quotation marks and citation omitted). However, “[t]his is
27 not to say that plaintiff may rely on a bare legal conclusion to assert injury-in-fact.” Maya,
28 658 F.3d at 1068.
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1

B.

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The question before the Court is whether Plaintiff has succeeded on amendment in

Plaintiff’s Lack of Article III Standing.

3 alleging facts sufficient to establish Article III injury in a false advertising suit. He has not.
4 “In a false advertising suit, a plaintiff establishes Article III injury if some consumers who
5 bought the defendant’s product under a mistaken belief fostered by the defendant would have
6 otherwise bought the plaintiff’s product.” TrafficSchool.com, Inc., 653 F.3d at 825 (internal
7 quotations and citation omitted). The Court previously held that Plaintiff’s bid for Article III
8 standing failed because the FAC rested only on bare legal conclusions that “Plaintiffs and
9 Defendants compete for providing legal services” and that Defendants “made false and

11 ¶¶ 44-45 (emphasis added). The Court held that Plaintiff lacked Article III standing because
For the Northern District of California

United States District Court

10 misleading statements about their services that harmed Plaintiffs’ ability to compete.” FAC

12 he had failed to allege any facts showing that he: competes with Defendant Judicate West as
13 an administrator or provider of ADR services, competes with Defendant DiFiglia as a
14 mediator, or generally how he could be harmed as a competitor by Defendants’ alleged false
15 advertising. In sum, the Court concluded “[o]n a false advertising claim, Article III injury
16 requires some factual allegations in the pleading to support at least the inference of
17 competition. There are none here.” 2013 WL 4873065, at *3.
18

The principal case in this Circuit addressing Article III standing in the false

19 advertising context is TrafficSchool.com, 653 F.3d 820. In that case, plaintiffs – two
20 providers of driver’s education courses – alleged that defendant DMV.org committed false
21 advertising in violation of the Lanham Act by misleading consumers into believing that
22 referrals to certain driver’s education courses contained on DMV.org’s website were actually
23 recommended or endorsed by departments of motor vehicles from various states. They were
24 not. DMV.org earned money by selling sponsored links and collecting fees for referring
25 visitors from its website to vendors of traffic school courses and driver’s education lessons.
26 The plaintiffs competed with DMV.org because they marketed and sold traffic school and
27 driver’s education courses directly to consumers and vied with DMV.org for referral
28 revenue. 653 F.3d at 824. Plaintiffs argued that DMV.org’s misleading appearance of
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1 government endorsement enabled it to capture a larger share of the referral market – to
2 plaintiffs’ detriment. Id. at 826.
3

The Ninth Circuit reversed the district court’s grant of summary judgment for lack of

4 standing against plaintiffs, holding that the TrafficSchool.com plaintiffs established sufficient
5 injury for Article III standing in several ways. First, a plaintiff may prove his injury by
6 relying on “actual market experience and probable market behavior.” Id. at 825 (citation
7 omitted) (emphasis in original). The TrafficSchool.com plaintiffs introduced evidence that
8 they “compete with defendants for referral revenue” such that “[s]ales gained by one are thus
9 likely to come at the other’s expense.” Id. at 826. The court found that this evidence of

11 their injury isn’t ‘conjectural’ or ‘hypothetical.’” Id. Second, in the absence of data about
For the Northern District of California

United States District Court

10 “direct competition is strong proof that plaintiffs have a stake in the outcome of the suit, so

12 lost sales, plaintiffs presented testimony and survey evidence that indicated the appearance of
13 official DMV endorsement would influence consumer choice, which is the type of evidence
14 that could “establish an injury by creating a chain of inferences” showing how defendant’s
15 website could harm plaintiffs’ businesses. Id. at 825. On these facts, the TrafficSchool.com
16 plaintiffs established sufficient injury for Article III standing to survive summary judgment.
17

While at the motion to dismiss stage, Plaintiff is not necessarily expected to prove lost

18 sales or present evidence, he still must allege facts that plausibly show how he could be
19 injured as a competitor, which might include allegations of injury through probable market
20 behavior or by creating a chain of inferences that show how Defendants’ actions could injure
21 Plaintiff’s business. Id. For example, in Animal Legal Def. Fund v. HVFG LLC (“ALDF”),
22 939 F. Supp. 2d 992, 996 (N.D. Cal. 2013), the district court denied a motion to dismiss for
23 lack of standing because it found that a competitor had Article III standing to pursue its
24 Lanham Act claim because its complaint sufficiently alleged Article III injury, causation, and
25 redressability. Discussion of ALDF is instructive.
26

In ALDF, plaintiffs Animal Legal Defense Fund, a nonprofit advocacy organization,

27 and Regal Vegan, Inc. (“Regal Vegan”), a food supplier, alleged that defendants Hudson
28 Valley Foie Gras, LLC, and four of its officers (collectively “Hudson Valley”) violated the
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1 Lanham Act as well as California’s unfair competition and false advertising laws by
2 marketing their foie gras as “the humane choice.” 939 F. Supp. 2d at 996-97. According to
3 plaintiffs, this characterization misrepresented the truth because Hudson Valley’s foie gras
4 was not produced humanely. Id. Hudson Valley moved to dismiss pursuant to Rules
5 12(b)(1) and 12(b)(6).
6

Regal Vegan asserted facts that showed its product competes with foie gras. Regal

7 Vegan stated that it produced products that were marketed as animal-product alternatives,
8 were meant to substitute for animal-based favorites such as foie gras, were specially
9 formulated in order to “satisfy the same craving some have for pâtés” and, presumably, to

11 product’s name, Faux Gras, was a play on “foie gras” and its website described its product as
For the Northern District of California

United States District Court

10 compete for consumers who might otherwise crave, and buy, actual foie gras. Id. at 998. Its

12 a “pâté.” Id. Regal Vegan’s pleadings also relied on surveys that showed that customers will
13 preferentially choose otherwise-identical “humane” products over those that are not humane
14 and that meat substitutes like Regal Vegan’s product have gained a significant market share
15 in the humane products market space. Id.
16

The court determined that Regal Vegan alleged facts showing that it did and does

17 intend its product to replace foie gras and alleged that survey data supported that it competed
18 in the same market space; accordingly, the Court held that Regal Vegan alleged sufficient
19 facts in its pleadings that it may be competing with Hudson Valley for the same pool of
20 potential customers: those interested in purchasing humanely produced pâtés. Id. Thus,
21 Regal Vegan sufficiently plead injury-in-fact. The Court held that Regal Vegan’s allegations
22 satisfied the causation prong of standing analysis because in the market for humanely
23 produced pâtés, a statement by one competitor that its product is “humane,” if in fact it were
24 not, would plausibly disadvantage its humane competitor. Id. The court similarly concluded
25 that the injuries were redressable if an injunction were to issue, and on the basis of
26 allegations of injury, causation, and redressability found that Regal Vegan had Article III
27 standing to bring its claims.
28
8

1

In contrast to the abundant factual allegations in ALDF, Plaintiff’s threadbare

2 allegations here, even when viewed in a light most favorable to Plaintiff, do not establish an
3 injury-in-fact. Plaintiff here alleges only that he and Defendants “compete for legal
4 services,” specifically that Plaintiff offers “mediation services” and that Plaintiff’s ability to
5 “compete for mediation services is adversely impacted by” Defendants alleged false and
6 misleading advertising, which “harmed Plaintiff’s ability to compete.” SAC ¶¶ 45-46.
7 While on a motion to dismiss, a court may presume that “general factual allegations of injury
8 resulting from the defendant’s conduct may suffice, that is “not to say that plaintiff may rely
9 on a bare legal conclusion to assert injury-in-fact.” Maya, 658 F.3d at 1068 (internal

11 private dispute resolution services and also sponsors neutrals, SAC ¶¶ 7-14, and DiFiglia is a
For the Northern District of California

United States District Court

10 quotations and citations omitted). Given that Defendant Judicate West is a provider of

12 neutral, SAC ¶¶ 8, 16, Plaintiff needed to allege some facts that show how he competes with
13 each in these respective sub-specialties beyond the bald assertion that he too offers
14 “mediation services.” While the Court could read into Plaintiff’s vague invocation of
15 “mediation services” to embrace the specific non-alleged facts that he too administers ADR
16 services and sponsors neutrals like Judicate West or that he acts as a mediator like DiFiglia,
17 Plaintiff provides no factual allegations that support such an inference or that explicitly state
18 what “mediation services” he actually provides. The Court notes that it previously observed
19 that Plaintiff was unable or unwilling to give direct answer to simple questions related to
20 these issues at the previous hearing. See 2013 WL 4873065, at *3-6. Tellingly, during the
21 November 25, 2013 oral argument Plaintiff acknowledged that he has never sponsored
22 another neutral and has never served as a neutral in a mediation where he did not represent an
23 existing client.
24

Unlike the Regal Vegan plaintiff in ALDF, Plaintiff here does not allege facts showing

25 that he competes with Judicate West and DiFiglia for the specific services each provide, nor
26 does he prevent survey data that describe the likely marketplace, nor does he allege facts
27 sufficient to show that he may be competing with Defendants for the same pool of potential
28 customers. He fails to allege facts describing how he advertises or how Defendants’ alleged
9

1 false advertising might siphon away customers from him. He does not allege that he is a
2 direct competitor to either Defendant, or otherwise show that he has a “stake in the outcome
3 of the suit, so [his] injury isn’t ‘conjectural’ or ‘hypothetical.’” TrafficSchool.com, 653 F.3d
4 at 825-26.
5

Although “a false advertising plaintiff need only believe that he is likely to be injured

6 in order to bring a Lanham Act claim [under] 15 U.S.C. § 1125(a),” id. at 825, Plaintiff
7 nowhere even alleges “a chain of inferences showing how [Defendants’ alleged] false
8 advertising could harm [Plaintiff’s] business.” Id. Plaintiff acknowledged in open court that
9 he has never sponsored a mediator aside from himself and has never mediated as a neutral

11 the phone – and thus could conceivably compete with Defendants in the future – factual
For the Northern District of California

United States District Court

10 before. Although he represented that he advertises his mediation services in person and over

12 allegations supporting that assertion are not contained in the SAC. Indeed, without more,
13 such an assertion is the precise type of hypothetical or conjectural – rather than actual or
14 imminent – injury that the standing doctrine seeks to constrain. Lujan, 504 U.S. at 560.
15

In sum, Plaintiff fails to allege in his SAC that he suffered or will likely suffer the

16 type of injury-in-fact required to establish Article III standing in the false advertising context.
17 Accordingly, the Court need not analyze causation or redressability because Plaintiff’s
18 failure to establish an injury-in-fact dooms his bid for Article III standing. The Court
19 GRANTS Defendants’ Rule 12(b)(1) motions to dismiss for lack of jurisdiction. The
20 dismissal is with prejudice because Plaintiff was already given an opportunity to amend and
21 further leave would be futile. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1296 (9th Cir.
22 1998).
23
24 II.

Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim.

25

Even if the Plaintiff had alleged facts sufficient to establish Article III standing, the

26 Court would dismiss Plaintiff’s claim under Rule 12(b)(6) for failure to state a claim on
27 which relief can be granted.
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10

1

A.

2

In ruling on a motion to dismiss, a court must “accept all material allegations of fact

Legal Standard.

3 as true and construe the complaint in a light most favorable to the non-moving party.”
4 Vasquez v. Los Angeles Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007). A dismissal under Rule
5 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient
6 facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d
7 696, 699 (9th Cir. 1990). The court is not “bound to accept as true a legal conclusion
8 couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal
9 citations and quotation marks omitted). To survive a motion to dismiss, a plaintiff must

11 v. Twombly, 550 U.S. 544, 570 (2007). This “requires more than labels and conclusions, and
For the Northern District of California

United States District Court

10 plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp.

12 a formulaic recitation of the elements of a cause of action will not do.” Id. at 555.
13 Plausibility does not equate to probability, but it requires “more than a sheer possibility that a
14 defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.
15

B.

16

The five elements of a false advertising claim under Section 43(a) of the Lanham Act

Plaintiff’s Failure to Plead a Lanham Act False Advertising Claim.

17 are:
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19
20
21
22
23
24

(1) a false statement of fact by the defendant in a commercial
advertisement about its own or another’s product;
(2) the statement actually deceived or has the tendency to deceive
a substantial segment of its audience;
(3) the deception is material, in that it is likely to influence the
purchasing decision;
(4) the defendant caused its false statement to enter interstate
commerce; and
(5) the plaintiff has been or is likely to be injured as a result of the
false statement, either by direct diversion of sales from itself to
defendant or by a lessening of the goodwill associated with its
products.

25 Skydive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105, 1110 (9th Cir. 2012). The Lanham Act
26 permits “any person” to sue if he “believes that he . . . is likely to be damaged.” 15 U.S.C. §
27 1125(a) (emphasis added). A competitor need not prove past injury and may sue to enjoin
28 present conduct that might result in future injury. Harper House, Inc. v. Thomas Nelson,
11

1 Inc., 889 F.2d 197, 210 (9th Cir. 1989). But a plaintiff must still meet the minimum pleading
2 requirements and allege facts that would satisfy the elements of Section 43(a). Plaintiff here
3 does not.5
4

Plaintiff specifically fails to allege facts that satisfy the fifth element of Section 43(a).

5 He fails to allege in the SAC – beyond mere legal conclusions – facts that show he has been
6 or is likely to be injured as a result of Defendants’ alleged false statements, either by direct
7 diversion of sales from Plaintiff to Defendants or by a lessening of the goodwill associated
8 with his services.
9

Plaintiff erroneously contends that the SAC contains allegations that satisfy all

11 43(a), he argues:
For the Northern District of California

United States District Court

10 elements of a Lanham Act false advertising claim. Regarding the fifth element of Section

Plaintiffs are likely to be injured through diversion of sales or
lessening of goodwill since Plaintiffs and Defendants compete in
the same market, California (Plaintiffs office is in San Carlos,
San Mateo County, while Defendants solicit business through an
office in San Francisco – or about 20 miles apart). Also,
Plaintiffs and Defendants vie for sales of mediation services
because Plaintiffs are offering mediation services (SAC, ¶45) and
Defendants are offering mediation services, and do not dispute it.

12
13
14
15
16

17 Plfs. Opp. at 4-5, Docket No. 63. Plaintiff’s SAC contains no factual allegations that he has
18 been or is likely to be injured as a result of the Defendants’ alleged false or misleading
19 statements. He nowhere alleges in the SAC facts supporting his legal assertions in his brief
20 that he has or will experience “a direct diversion of sales from itself to defendant or by a
21 lessening of the goodwill associated with its” services. The Court is not “bound to accept as
22 true” this or Plaintiff’s other “legal conclusion[s] couched as [] factual allegation[s].” Iqbal,
23 556 U.S. at 678. See, e.g. SAC ¶ 47 (concluding on information and belief without
24 supporting factual allegation that Defendants alleged misleading statements “actually
25 deceived or have a tendency to deceive a substantial segment of their audience”); SAC ¶ 48
26
27

5

While the Court previously stated it would apply the heightened pleading standard of
Rule 9(b) to any amended complaint filed by Plaintiff, 2013 WL 4873065, at *7, the Court
28 notes that the SAC fails even under the more liberal pleading standard of Rule 8 for the
reasons set forth below.
12

1 (concluding on information and belief without supporting factual allegation that Defendants’
2 alleged misleading statements are “material, in that [they are] likely to influence” those
3 wanting to acquire legal services); SAC ¶ 49 (“Defendants’ acts have caused and continue to
4 cause competitive harm to Plaintiffs’” without supporting factual allegation).
5

Here, Plaintiff’s “formulaic recitation of the elements of a [Lanham Act false

6 advertising] cause of action will not do.” Twombly, 550 U.S. at 570. Because Plaintiff has
7 not made factual allegations beyond the mere legal conclusion that he “has been or is likely
8 to be injured as a result of the alleged false statement, either by direct diversion of sales from
9 itself to defendant or by a lessening of the goodwill associated with its products,”

11 prejudice pursuant to Rule 12(b)(6). However, the Court need not reach this alternative
For the Northern District of California

United States District Court

10 Quattrocchi, 673 F.3d at 1110, the Court would grant Defendants’ motions to dismiss with

12 disposition because the Court lacks jurisdiction pursuant to Article III, and dismisses with
13 prejudice on that basis. The Court also DENIES as moot Defendant DiFiglia’s motion to
14 transfer venue.
15
16 III.

Jurisdictional Inability To Award Attorneys’ Fees.

17

Defendants previously moved for prevailing party attorneys’ fees under California’s

18 anti-SLAPP statute based on the original complaint, which contained California causes of
19 action, and which Plaintiff withdrew after Defendants filed their anti-SLAPP motions. The
20 Court declined to rule on the issue of award of fees under the anti-SLAPP statute because it
21 lacked jurisdiction. 2013 WL 4873065, at *8 (citing Skaff v. Meridien N. Am. Beverly Hills,
22 LLC, 506 F.3d 832, 837 (9th Cir. 2007) (“Because the Court lacks subject matter jurisdiction
23 over the FAC due to Plaintiff’s failure to establish Article III standing, it also lacks the
24 authority to award attorneys’ fees”). As Plaintiff continues to lack Article III standing and
25 thus the Court continues to lack jurisdiction in this matter, the Court is without authority to
26 award the anti-SLAPP attorneys’ fees requested by Defendants. These motions are therefore
27 DENIED. Similarly, the Court DENIES Defendant DiFiglia’s request for leave to file a
28 separate motion for attorneys’ fees under the Lanham Act. Mot. at 14, Docket No. 60.

13

1 CONCLUSION
2

For the foregoing reasons, the Court GRANTS Defendants’ motions to dismiss the

3 SAC for lack of Article III standing. The dismissal is with prejudice. The Court DENIES
4 Defendants’ previously filed motions for prevailing party anti-SLAPP attorneys fees’ for lack
5 of jurisdiction.
6

On November 13, 2013 Defendant DiFiglia moved for sanctions pursuant to Rule 11.

7 The hearing on the motion is currently set for January 13, 2014. Notwithstanding dismissal
8 of Plaintiff’s SAC with prejudice, the Court retains jurisdiction to award sanctions pursuant
9 to Rule 11. See Branson v. Nott, 62 F.3d 287, 293 (9th Cir. 1995) (holding that a district

11 sanctions for filing a frivolous complaint), cert. denied, 516 U.S. 1009 (1995); Buster v.
For the Northern District of California

United States District Court

10 court’s lack of subject matter jurisdiction does not preclude it from imposing Rule 11

12 Greisen, 104 F.3d 1186, 1190 (9th Cir. 1997), abrogated on other grounds as recognized by
13 Fossen v. Blue Cross & Blue Shield of Montana, Inc., 660 F.3d 1102, 1112 (9th Cir. 2011).
14 Accordingly, the Clerk is directed to enter judgment.
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16 IT IS SO ORDERED.
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18 Dated: 11/27/13
19

THELTON E. HENDERSON, JUDGE
UNITED STATES DISTRICT COURT

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