Merial Limited et al v. VELCERA INC et al
Filing
69
ORDER denying 24 Motion to Dismiss Complaint; finding as moot 41 Motion for Protective Order; finding as moot 41 Motion to Quash; finding as moot 44 Motion to Compel. Ordered by Judge Clay D. Land on 06/27/2012 (ajp)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
MERIAL LIMITED, and
MERIAL SAS,
*
*
Plaintiffs,
Counterclaim Defendants,
*
vs.
*
CASE NO. 3:11-CV-157 (CDL)
VELCERA, INC., and
FIDOPHARM, INC.,
*
*
Defendants,
Counterclaim Plaintiffs.
*
O R D E R
Merial Limited and Merial SAS (collectively “Merial”) filed
this action against Defendants Velcera, Inc. and FidoPharm Inc.
(collectively “Velcera”), asserting claims under the Lanham Act,
15 U.S.C. § 1125, and under Georgia law.
Velcera responded by
filing a Counterclaim against Merial for false or misleading
advertising
under
§
15 U.S.C. § 1125(a),
and
Georgia law.
43(a)
for
of
the
deceptive
trade
Lanham
Act,
practices
under
Presently pending before the Court are Merial’s
Motion to Dismiss Defendants’ Counterclaims based on lack of
standing and failure to state a claim (ECF No. 24), Merial’s
Motion
for
Protective
Order
to
Stay
Discovery
on
Velcera’s
Counterclaims (ECF No. 41), and Velcera’s Motion to Compel and
in the Alternative Motion to Amend Scheduling Order (ECF No.
44).
For the following reasons, Merial’s motion to dismiss (ECF
No. 24) is denied; Merial’s motion for protective order (ECF No.
41) is denied as moot in light of the denial of the motion to
dismiss; and Velcera’s motion to compel and amend scheduling
order (ECF No. 44) is likewise denied as moot given the rulings
which follow.
DISCUSSION
Merial’s “facial attack on the [Counterclaims] [for lack of
standing] requires the court merely to look and see if [Velcera]
has
sufficiently
alleged
a
basis
of
[standing],
and
the
allegations in [the Counterclaims] are taken as true for the
purposes of the motion.”
Orlando
(11th
Reg’l
Cir.
Healthcare
2008)
(per
Stalley ex. rel. United States v.
Sys.,
Inc.,
curiam)
524
F.3d
(internal
1229,
quotation
1232-33
marks
omitted); see also Phoenix of Broward, Inc. v. McDonald’s Corp.,
489 F.3d 1156, 1161 (11th Cir. 2007) (noting that on a motion to
dismiss for lack of prudential standing, courts “tak[e] as true
the
facts
as
they
are
alleged
in
the
complaint.”).
When
considering Merial’s 12(b)(6) motion to dismiss, the Court must
accept as true all facts set forth in the Counterclaims and
limit its consideration to the pleadings and exhibits attached
thereto.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007);
Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir.
2009).
“To survive a motion to dismiss, a [counterclaim] must
2
contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’”
Ashcroft v.
Iqbal, 556 U.S. 662, 678 (quoting Twombly, 550 U.S. at 570).
The
Counterclaims
“to
raise
a
must include sufficient factual allegations
right
to
relief
Twombly, 550 U.S. at 555.
above
the
speculative
“[A] formulaic recitation of the
elements of a cause of action will not do[.]”
Counterclaims
must
contain
level.”
factual
Id.
allegations
Although the
that
“raise
a
reasonable expectation that discovery will reveal evidence of”
Velcera’s claims, id. at 556, “Rule 12(b)(6) does not permit
dismissal of a well-pleaded [counterclaim] simply because ‘it
strikes
a
savvy
judge
that
actual
proof
of
those
facts
is
improbable,’” Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295
(11th Cir. 2007) (quoting Twombly, 550 U.S. at 556).
Taking the facts alleged in Velcera’s Counterclaims as true
and construing all reasonable inferences in Velcera’s favor, the
Court reads the Counterclaims to allege the following.
Merial’s
Frontline parasiticide products compete directly with Velcera’s
products in the market that consists of pet owners who seek
effective and safe treatment of their dogs and cats for fleas
and ticks.
As part of its marketing strategy, Merial advertises
that it sells its Frontline products only through veterinarians.
This strategy is intended to create the impression that its
products
are
subject
to
direct
3
veterinarian
supervision
and
scrutiny.
It has also allowed Merial to promote Frontline as
the brand most recommended by veterinarians, which implies that
veterinarians consider the products to be the safest and most
efficacious on the market.
Contrary to this marketing strategy,
Merial’s Frontline products are actually available outside of
the veterinarian-only sales channel and can be purchased in the
retail sales channel.
The good will developed through Merial’s
promotion and advertising that it sells Frontline products only
through
veterinarians
transfers
over
to
the
retail
channel.
When consumers find Frontline products in the retail channel,
they mistakenly believe that the Frontline products are “quasiprescription,” have a veterinarian seal of approval, and are
superior to other parasiticides, including Velcera’s products.
This marketing strategy makes it more likely that a consumer
will buy the Frontline product instead of Velcera’s product.
Because
Velcera’s
Frontline
products
products
compete
sold
the
in
directly
retail
with
channel,
Merial’s
Velcera
is
injured when a consumer purchases a Frontline product instead of
a
Velcera
Frontline
Velcera
product
product
product
based
is
more
due
to
on
the
consumer’s
efficacious
the
belief
that
the
safer
than
the
and/or
“veterinarian-only”
marketing
strategy.
These
factual
allegations
support
Article
III
standing.
See Phoenix of Broward, Inc., 489 F.3d at 1161-62 (noting that
4
to show Article III standing, a party must demonstrate that “(1)
he has suffered an actual or threatened injury, (2) the injury
is fairly traceable to the challenged conduct of the defendant,
and (3) the injury is likely to be redressed by a favorable
ruling,”
and
finding
the
plaintiff’s
damages
claim
asserting
that the defendant’s false advertising caused customers to be
diverted from the plaintiff sufficient to confer standing).
allegations
establish
in
the
prudential
Counterclaims
standing.
See
are
also
id.
at
sufficient
1163-64
The
to
(listing
factors for the Court to consider when determining whether a
party has prudential standing to assert a claim under § 43(a) of
the Lanham Act).
today
are
The Court hastens to add that its conclusions
based
on
a
facial
evaluation
of
Velcera’s
Counterclaims and do not suggest whether the Counterclaims can
be sustained against a future factual challenge to standing when
the record is more developed.
The
Court
also
finds
that
Velcera’s
factual
allegations
state a claim for relief under § 43(a) of the Lanham Act.
See
N. Am. Med. Corp. v. Axiom Worldwide, 522 F.3d 1211, 1224 (11th
Cir. 2008) (noting the elements of a false advertising claim are
as follows: “(1) the ads of the opposing party were false or
misleading,
(2)
the
ads
deceived,
or
had
the
capacity
to
deceive, consumers, (3) the deception had a material effect on
purchasing decisions, (4) the misrepresented product or service
5
affects interstate commerce, and (5) the movant has been—or is
likely to be—injured as a result of the false advertising.”).
Based
on
the
foregoing,
Merial’s
Motion
to
Dismiss
Velcera’s Counterclaims (ECF No. 24) for lack of standing and
for
failure to state a claim is denied.
In light of this
ruling, Merial’s Motion for Protective Order to Stay Discovery
on Velcera’s Counterclaims (ECF No. 41) is moot.
The Court also
finds that this ruling makes Velcera’s Motion to Compel and in
the Alternative Motion to Amend Scheduling Order (ECF No. 44)
moot, at least in part.
Velcera’s
Counterclaims
Now that the parties understand that
will
proceed,
they
should
reevaluate
previously asserted objections in light of this ruling.
The
Court orders the parties to confer in good faith in an attempt
to
resolve
all
existing
discovery
disputes,
including
related to electronic discovery (ECF Nos. 52 & 61).
those
Within
fourteen days of today’s Order, the parties shall inform the
Court
in
writing
of
any
remaining
discovery
disputes
that
require the Court’s involvement and shall also provide the Court
with an amended scheduling order that reasonably allows for this
action to proceed expeditiously toward resolution.
As guidance
during these good faith discussions, the Court observes that it
is
rarely
primarily
impressed
on
the
with
discovery
“hyper-counting
of
objections
subparts.”
that
Effort
rely
is
typically better focused on determining whether the discovery
6
request is reasonable and attempting to reach an agreement about
whether the suggested numerical limitation in the Court’s rules
should be altered under the circumstances.
Furthermore, while
the Court understands the complexities that sometimes arise with
electronic discovery, the Court would expect seasoned lawyers to
be able to resolve the
conflicts described in the presently
pending electronic discovery related motions, which conflicts
appear to remain because of a tepid attempt to resolve them in
good faith.
CONCLUSION
Merial’s Motion to Dismiss (ECF No. 24) is denied.
parties
shall
discovery
present
disputes
and
a
report
a
jointly
on
the
resolution
proposed
amended
order within fourteen days of today’s Order.
of
The
their
scheduling
Merial’s Motion
for Protective Order (ECF No. 41) and Velcera’s Motion to Compel
or in the Alternative Motion to Amend the Scheduling Order (ECF
No. 44) shall be terminated as moot by the Clerk.
IT IS SO ORDERED, this 27th day of June, 2012.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
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