Ameritox, LTD. v. Millennium Laboratories, Inc.
Filing
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ORDER granting 20 Motion to dismiss. Counts I and IV of Ameritox's Amended Complaint are DISMISSED WITHOUT PREJUDICE. If Ameritox intends to amend its complaint as to Counts I and IV, it is directed to do so on or before January 23, 2012. Signed by Judge Susan C Bucklew on 1/6/2012. (JMM)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
AMERITOX, LTD.,
Plaintiff,
v.
Case No.: 8:11-cv-775-T-24-TBM
MILLENNIUM LABORATORIES, INC.,
Defendant.
__________________________________________/
ORDER
This cause comes before the Court on Defendant Millennium Laboratories, Inc.’s
(“Millennium”) Motion to Dismiss (Doc. No. 20). Plaintiff Ameritox, Ltd. (“Ameritox”) filed a
Response in Opposition (Doc. No. 22), and Millennium filed a Reply (Doc. No. 26).
In this unfair competition dispute, Millennium moves the Court to dismiss Counts I and
IV pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court
grants the motion and dismisses Counts I and IV without prejudice.
I.
Standard of Review
In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the
Court must consider whether the complaint satisfies the pleading standard of Federal Rule of
Civil Procedure 8(a)(2). Federal Rule of Civil Procedure 8(a)(2) requires that a pleading must
contain a short and plain statement of the claim showing the pleader is entitled to relief in order
to give the defendant fair notice of what the claim is and the grounds upon which it rests. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Although Rule 8 does not require a claimant
to set out in detail the facts upon which he bases his claim, “it demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
(2009).
To survive a motion to dismiss, a complaint must allege sufficient facts, accepted as true,
to state a plausible claim for relief. Id. Where a complaint contains well-pleaded facts, if those
facts “do not permit the court to infer more than the mere possibility of misconduct,” the
complaint stops short of plausibility and does not show the plaintiff is entitled to relief. Id. at
1950. Furthermore, while a court must assume that all of the factual allegations in the complaint
are true, this assumption is inapplicable to legal conclusions. Id. at 1949. The door to discovery
will not open for a plaintiff “armed with nothing more than conclusions.” Id. at 1950.
II.
Analysis
In its Amended Complaint, Ameritox asserts four counts against Millennium. (Doc. No.
15). In Count I, Ameritox alleges that Millennium has engaged in false advertising in violation
of the Lanham Act, 15 U.S.C. § 1125. (Doc. No. 15, ¶ 50.) In Counts II and III, Ameritox
alleges that Millennium violated the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat.
§ 501.201, et seq. (See Doc. No. 15, ¶¶ 57–59, 67–69.) In Count IV, Ameritox submits that
Millennium has engaged in unfair competition. (Doc. No. 15, ¶ 78.) Millennium moves the
Court to dismiss Counts I and IV. (Doc. No. 20, ¶ 2.)
A.
Count I: False Advertising
Millennium argues the Court should dismiss Ameritox’s claim for false advertising under
the Lanham Act because Ameritox “does not allege sufficiently a false or misleading
advertisement that has materially deceived, or had the tendency to materially deceive,
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customers.” (Doc. No. 20 at 6). Under the Lanham Act, 15 U.S.C. § 1125(a), to state a claim for
false advertising, a plaintiff must allege:
(1) the advertisements of the opposing party are false or misleading
as to the party’s own product o[r] another’s; (2) the advertisements
actually deceived customers or had the tendency to deceive a
substantial portion of the targeted audience; (3) the deception is
material, meaning it is likely to influence purchasing decisions; (4)
the defendant’s advertised products traveled in interstate commerce;
and (5) the plaintiff has been or is likely to be injured as a result of
the false or misleading advertisements by [causally] related declining
sales or loss of goodwill.
Third Party Verification, Inc. v. Signaturelink, Inc., 492 F. Supp. 2d 1314, 1324 (M.D. Fla.
2007) (citing Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260–61 (11th Cir. 2004)).
Millennium makes a number of arguments that it contends support dismissal of Ameritox’s false
advertising claim.
1.
Whether Ameritox Sufficiently Alleged that the Millennium Billing
Letter is Commercial Advertising or Promotion?
First, Millennium contends that the Millennium Billing Letter is not actionable under the
Lanham Act because it is not commercial advertising or promotion. (Doc. No. 20 at 6). “‘To be
actionable under the Lanham Act, the speech at issue must be commercial in nature.’” VG
Innovations, Inc. v. Minsurg Corp., 2011 WL 1466181 at *5 (M.D. Fla. Apr. 18, 2011) (quoting
Futuristic Fences, Inc. v. Illusion Fence, Corp., 558 F. Supp. 2d 1270, 1279 (S.D. Fla. 2008)).
Speech constitutes commercial advertising or promotion when it is:
(1) commercial speech; (2) by a defendant who is in commercial
competition with plaintiff; (3) for the purpose of influencing
consumers to buy defendant’s goods or services. While the
representations need not be made in a “classical advertising
campaign,” but may consist instead of more informal types of
“promotion,” the representations (4) must be disseminated
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sufficiently to the relevant purchasing public to constitute
“advertising” or “promotion” within that industry.
Id. (quoting Gordon & Breach Science Publishers, S.A. v. Am. Institute of Physics, 859 F. Supp.
1521, 1535–36 (S.D.N.Y. 1994)).
Millennium argues that Ameritox failed to allege dissemination to the relevant
purchasing public because “the relevant purchasing public consists of referring medical
providers/physicians, [and] the Millennium Billing Letter, according to Ameritox’s own
allegations, is directed to patients.” (Doc. No. 20 at 8). In response, Ameritox argues that the
Billing Letter was “widely distributed to both medical providers and their patients,” and that
patients and health care providers are both part of the relevant purchasing public. (Doc. No. 22
at 5, 6–7).
“The requisite level of circulation and the relevant purchasing public will vary according
to the industry.” VG Innovations, Inc., 2011 WL 1466181 at *6. However, the plaintiff must
allege both (1) who comprises the relevant purchasing public and (2) how many consumers
within the relevant purchasing public received the advertisement. See Minsurg Int’l, Inc. v.
Frontier Devices, Inc., 2011 WL 1326863 at *4 (M.D. Fla. Apr. 6, 2011) (dismissing a false
advertising claim because plaintiff failed to allege “to whom the false advertisements were
made” and “the alleged breadth of the dissemination”); VG Innovations, Inc., 2011 WL 1466181
at *6 (refusing to dismiss a false advertising claim because the plaintiff alleged that the false
advertisements were made to its customers “across the country, to surgeons, including a
particular surgeon in Louisiana, and certain of [its] established doctor and hospital customers”);
accord Infection Prevention Tech., LLC v. UVAS, LLC, 2011 WL 4360007 at *22 (E.D. Mich.
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July 25, 2011) (dismissing a false advertising claim because plaintiff failed “to plead the relevant
market,” including “how many consumers in the relevant purchasing public” were contacted).
The Court concludes that the Amended Complaint failed to allege that the Millennium
Billing Letter was sufficiently disseminated to the relevant purchasing public. It is difficult to
discern whether Ameritox has alleged that the relevant purchasing public is healthcare providers,
patients, or both. Furthermore, Ameritox failed to allege sufficient dissemination because
Ameritox does not allege how many consumers in the relevant purchasing public Millennium
contacted. Ameritox alleges only that “Millennium’s services are offered, advertised, and sold to
customers throughout the country.” (Doc. No. 15, ¶ 54).
2.
Whether Ameritox Sufficiently Alleged How the Millennium Billing
Letter Misleads Consumer-Physicians?
Second, Millennium argues that Ameritox failed to allege how the Billing Letter misleads
consumer-physicians. (Doc. No. 20 at 9). Ameritox responds that the Amended Complaint
sufficiently alleges both how the Billing Letter misled consumer-physicians and consumerMedicare patients. (Doc. No. 22 at 10). A false advertising claim under the Lanham Act must
allege that “the advertisements of the opposing party are false or misleading.” Third Party
Verification, 492 F. Supp. 2d at 1324. Here, Ameritox alleged that the Billing Letter informs
patients that they are not responsible for co-pay or deductible charges, and this is misleading
because Medicare patients “by law, are not subject to any deductible or co-payments for clinical
laboratory services.” (Doc. No. 15, ¶¶ 31–32). Reading the Amended Complaint in the light
most favorable to Ameritox, the Court concludes that Ameritox has sufficiently pled that the
Billing Letter is misleading.
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3.
Whether Ameritox Sufficiently Alleged that the Millennium Billing
Letter Deceived or Was Likely to Deceive Consumers?
Third, Millennium argues that Ameritox failed to allege that the Billing Letter deceived
or was likely to deceive consumers. (Doc. No. 20 at 9–10). A false advertising claim under the
Lanham Act must allege that “advertisements actually deceived customers or had the tendency to
deceive a substantial portion of the targeted audience.” Third Party Verification, 492 F. Supp.
2d at 1324. Although Ameritox alleged that “Millennium’s statements are . . . likely to deceive a
substantial portion of the targeted customers” (Doc. No. 15, ¶ 51), this recital of one element of
the cause of action is a “‘naked assertion[],’ devoid of ‘further factual enhancement,’” and it
cannot survive a motion to dismiss. Iqbal, 129 S. Ct at 1949 (quoting Twombly, 550 U.S. at
557). Thus, the Court concludes that Count I must be dismissed because Ameritox failed to
plausibly plead the likelihood-to-deceive element of its false advertising claim.
4.
Whether Ameritox Sufficiently Alleged that the Millennium Billing
Letter had a Material Effect on Customers’ Purchasing Decisions?
Fourth, Millennium argues that Ameritox failed to allege that the Billing Letter had a
material effect on customers’ purchasing decisions. (Doc. No. 20 at 9–10). A false advertising
claim under the Lanham Act must allege that “the deception is material, meaning it is likely to
influence purchasing decisions.” Third Party Verification, 492 F. Supp. 2d at 1324. Here,
Ameritox alleged that “Millennium’s false or misleading statements have already, and will
continue to, influence materially purchasing decisions to the extent that customers choose
Millennium’s services instead of those offered by Ameritox.” (Doc. No. 15, ¶ 53). Although the
Court must assume all factual allegations as true, Iqbal, 129 S. Ct. at 1949, Ameritox’s allegation
provides nothing more than a legal conclusion. Therefore, Count I must be dismissed because
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Ameritox failed to allege sufficient facts to support the material-deception element of its false
advertising claim.
The Court recognizes that Ameritox bases its Lanham Act claim on advertisements other
than the Billing Letter, to include Millennium’s “representations that certain benefits Millennium
provides to its healthcare customers at below fair market value were in compliance with federal
and state laws” and “claims that physician customers who choose laboratories for confirmatory
testing other than Millennium are missing out on opportunities to increase their revenue.” (Doc.
No. 15, ¶ 52). However, these allegations, like the allegations based on the Billing Letter, fail to
state a plausible claim because the Ameritox never alleges to whom the statements were made,
the breadth of their dissemination, how the statements were false or misleading, and how the
advertisements deceived or tended to deceive a substantial portion of customers. Accordingly,
the Court concludes that Count I of Ameritox’s Complaint must be dismissed without prejudice.
B.
Count IV: Common Law Unfair Competition
Millennium argues the Court should dismiss Count IV of Ameritox’s Amended
Complaint for the same reasons that Count I should be dismissed. Millennium contends that
Ameritox’s claim for common law unfair competition necessarily fails because Ameritox failed
to state “‘an unfair competition claim under the Lanham Act under the theory of false
advertising.’” (Doc. No. 20 at 13 (quoting Natural Answers, Inc. v. SmithKline Beecham Corp.,
529 F.3d 1325, 1333 (11th Cir. 2008)).
Under Florida common law, unfair competition is an “‘umbrella for all statutory and
nonstatutory causes of action arising out of business conduct which is contrary to honest practice
in industrial or commercial matters.’” Third Party Verification, 492 F. Supp. 2d at 1325
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(quoting Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir.1974)). For
example, a party may claim unfair competition under a variety of theories, including trademark
infringement, Monsanto Co. v. Campuzano, 206 F. Supp. 2d 1252, 1267 (S.D. Fla. 2002), and
tortious interference with business relations, Mfg. Research Corp. v. Greenlee Tool Co., 693
F.2d 1037, 1040 (11th Cir. 1982). Therefore, there is no single set of “elements that apply
uniformly to all claims of unfair competition.” See Alphamed Pharm. Corp. v. Arriva Pharm.,
Inc., 432 F. Supp. 2d 1319, 1353 (S.D. Fla. 2006).
Accordingly, courts have applied elements from other established claims to unfair
competition claims, where appropriate, on a case-by-case basis. See Planetary Motion, Inc. v.
Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir. 2001) (using the elements of a federal
trademark infringement claim to a evaluate the sufficiency of an unfair competition claim based
on trademark infringement); Investacorp, Inc. v. Arabian Inv. Banking Corp. (Investcorp) E.C.,
931 F.2d 1519, 1521 (11th Cir. 1991) (same); Mfg. Research Corp., 693 F.2d at 1040 (applying
the elements of a claim for tortious interference to a claim for unfair competition based on
tortious interference); Alphamed, 432 F. Supp. 2d at 1354 (same).
In its Amended Complaint, Ameritox alleges that “Millennium has made false or
misleading statements in commercial advertisements that constitute unfair competition in
violation of Florida law.” (Doc. No. 15, ¶ 78). Because Ameritox bases its common law unfair
competition claim on the theory of false advertising, the Court has evaluated Ameritox’s
common law unfair competition through the lens of the Lanham Act, and based on the Court’s
conclusion above that Ameritox failed to state a plausible claim under the Lanham Act, its unfair
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competition claim is likewise insufficiently pled. Therefore, Count IV of Ameritox’s Amended
Complaint must also be dismissed without prejudice.
III.
Conclusion
Accordingly, it is ORDERED AND ADJUDGED that Millennium’s Motion to Dismiss
(Doc. No. 20) is GRANTED, and Counts I and IV of Ameritox’s Amended Complaint are
DISMISSED without prejudice. If Ameritox intends to amend its complaint as to Counts I and
IV, it is directed to do so on or before January 23, 2012.
DONE AND ORDERED at Tampa, Florida, this 6th day of January, 2012.
Copies to:
Counsel of Record
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