Almblad v. Scotsman Industries, Inc. et al

Filing 39

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 8/28/2013. (nf, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ROBERT ALMBLAD,

)
)
Plaintiff,
)
)
v.
)
) Case No. 13-cv-1297
SCOTSMAN INDUSTRIES, INC. and
)
KEVIN FINK,
) Judge John W. Darrah
)
Defendants.
)
)
MEMORANDUM OPINION AND ORDER
Plaintiff Robert Almblad filed suit against Defendants Scotsman Industries, Inc. and
Kevin Fink on February 19, 2013. Almblad amended his complaint with leave of the Court on
April 15, 2013. Almblad asserts two claims against Defendants: (1) defamation and (2) false
advertising, in violation of the Lanham Act, 15 U.S.C. § 1125. Defendants move to dismiss the
Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6), for failure to state a claim upon which
relief may be granted. The Motion has been fully briefed. For the reasons provided below,
Defendants’ mMotion is granted in part and denied in part.
BACKGROUND
The following facts are based on the Complaint and are accepted as true for purposes of
the Motion to Dismiss. See Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 763 (7th Cir.
2010). Almblad is a citizen of Florida. (Am. Compl. ¶ 4.) Scotsman is a Delaware corporation
with its principal place of business in Vernon Hills, Illinois. (Id. ¶ 1.) Fink is the Group
Managing Director of Scotsman and a resident of Colorado. (Id. ¶ 3.) The amount in
controversy exceeds $75,000.00; accordingly, jurisdiction exists pursuant to 28 U.S.C. § 1332, as
there is complete diversity of citizenship among the parties.

Scotsman is in the business of manufacturing ice machines for commercial use. (Id. ¶ 2.)
Prior to February 28, 2012, Almblad initiated a process whereby he determined that ice made
from commercial machines, like Scotsman’s machines, was contaminated “because the design of
such machines allowed for the intake of sewer gas” during the ice manufacturing process. (Id. ¶
6.) Almblad informed Scotsman and other ice machine manufacturers of this contamination.
(Id.) Almblad invented and developed a device for commercial ice machines that eliminated this
contamination. (Id. ¶ 7.) He made this device available to Scotsman for licensing. (Id. ¶ 8.)
On or about February 28, 2012, Scotsman composed a written defamatory statement for
dissemination to the public, falsely asserting that its products did not have the design defect
identified by Almblad. (Id. ¶ 9.) This statement further falsely asserted Almblad made false
claims about his own inventions; “among other things Scotsman Industries Inc. falsely asserted
that engineering testing was conducted and it was determined that Scotsman Industries, Inc.’s ice
machines did not draw in sewer gas from drains and also that its ice machines were equipped
with a component that prevents dust from entering a food zone of the machines . . .” rendering
Almblad’s inventions unnecessary. (Id.) That same day, a telephone conference was held by
NSF1, a Michigan based standards organization, among representatives of ice machine
manufacturers and the general public. (Id. ¶ 10.) During this phone conference, Fink, on behalf
of Scotsman, verbally disseminated the defamatory written statement described above. (Id.) The
defamatory statements intended to and did cause injury and financial loss to Almblad,
diminishing his reputation in the ice machine industry. (Id. ¶ 11.)

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Defendants assert in their Motion that NSF is accredited to develop American National
Standards for commercial ice-making equipment. (Mem. in Support of Mot. at 2.)
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Almblad does not provide a copy of Fink’s statement with his Amended Complaint,
though Defendants attached it to their Motion, and it is properly considered part of the pleadings
as it is central to Almblad’s claim of defamation. Lott v. Levitt, 556 F.3d 564, 567 (7th Cir.
2009) (citing Continental Cas. Co. v. American National Insurance Co., 417 F.3d 727, 731 n.3
(7th Cir. 2005)). In this statement, Fink provided that Scotsman “appreciate[d] the opportunity
to address Mr. Almblad’s erroneous claims and mischaracterizations that are meant to serve his
commercial purposes.” (Mem. in Support of Mot. Ex. A at 3.) Fink went on: “[O]ur testing
refutes Mr. Almblad’s claims. In particular, his claim that gases are being sucked from floor
drains into the equipment is just flat wrong. None of our machines do this. . . . Mr. Almblad has
no scientific or medical evidence, and our experts cannot find anything in any medical or
scientific study, describing a single occurrence in which airborne contamination infected an ice
machine and caused an illness.” (Id. at 2-3.) Fink further stated that “Mr. Almblad misinterprets
the FDA Food Code to suit his commercial purposes.” (Id. at 3.)
In addition to the claim of defamation against Scotsman and Fink, Almblad asserts
Scotsman violated the Lanham Act, by making “false or misleading representations of fact and in
commercial promotion of its goods misrepresented the nature, characteristics and qualities of its
goods and those of Robert Almblad.” (Am. Compl. at 6.) Due to Scotsman’s actions in that
regard, Almblad asserts potential licensees of his inventions were misled as to the value of his
inventions and discouraged from transacting business with him. (Id.) Almblad seeks $200
million in damages on each count in his Amended Complaint.
Defendants move to dismiss Almblad’s claims, contending Almblad cannot state a claim
against Defendants upon which relief may be granted.

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LEGAL STANDARD
To properly assert a claim in a complaint, the plaintiff must present “a short and plain
statement of the claim showing that the pleader is entitled to relief and a demand for the relief
sought.” Fed. R. Civ. P. 8. Rule 8 “does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007)). While a court is to accept all allegations contained in a complaint as true, this
principle does not extend to legal conclusions. Iqbal, 129 S. Ct. at 1949.
A defendant may file a motion to dismiss a claim under Federal Rule 12(b)(6) for failure
to state a claim upon which relief may be granted. To defeat a motion to dismiss under Rule
12(b)(6), a plaintiff must plead sufficient factual matter to state a claim for relief that is
“plausible on its face.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). A claim is
facially plausible “when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at
1949.
However, “[w]here the well-settled pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ –
‘that the pleader is entitled to relief.’” Iqbal, 129 S. Ct. at 1950. For a claim to be plausible, the
plaintiff must put forth enough “facts to raise a reasonable expectation that discovery will reveal
evidence” supporting the plaintiff’s allegations. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir.
2009) (quoting Twombly, 550 U.S. at 556).

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ANALYSIS
Defamation Claim
“A federal court sitting in diversity applies the choice of law rules of the state in which it
sits. . . . [I]n multistate defamation cases, Illinois cases indicate that ‘the applicable law is that of
the victim’s domicile, period.’” Cook v. Winfrey, 141 F.3d 322, 329 (7th Cir. 1998) (quoting
Rice v. Nova Biomedical Corp., 38 F.3d 909, 916 (7th Cir. 1994), cert. denied, 514 U.S. 1111
(1995)). Therefore, the applicable law as to Almblad’s defamation claim is the law of his
domicile – Florida. “To state a claim for defamation under Florida law, a plaintiff must allege
that ‘(1) the defendant published a false statement (2) about the plaintiff (3) to a third party and
(4) that the falsity of the statement caused injury to the plaintiff.’” Basile v. Massaro, Case No.
6:10-cv-993-Orl-36DAB, 2012 WL 3940282, at *7 (M.D. Fla. Sept. 10, 2012) (quoting Valencia
v. Citibank Int'l, 728 So.2d 330, 330 (Fla. 3d DCA 1999)).
Defendants move to dismiss Almblad’s defamation claim on the basis that none of the
statements made by Fink on behalf of Scotsman were actually defamatory to him. In particular,
Defendants contend that much of what Fink stated about Almblad and whether or not his
products were necessary to keep Scotsman’s ice machines compliant with regulations was “pure
opinion” and “[w]hether a statement constitutes pure opinion is a question of law.” (Mem. in
Support of Mot. at 8.) Defendants further contend Fink’s statement was protected by the First
Amendment. (Id. at 9-10.)
Defendants’ argument regarding whether the statements made by Fink on behalf of
Scotsman are actually defamatory is premature. All that is required of Almblad at the pleading
stage is the allegation that Defendants published a false statement about Almblad to a third party,
and the falsity of this statement injured Almblad. Almblad has sufficiently pled as much in his
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Amended Complaint; he alleges Fink, on behalf of Scotsman, published statements to third
parties by “falsely asserting that Robert Almblad was making false claims about his own
inventions for his commercial advantage . . . .” (Am. Compl. ¶¶ 9-10.) Almblad further alleges
these defamatory statements caused him damage, financial loss, and injured his business
reputation. (Id. ¶ 11.) Almblad is not required to provide “detailed factual allegations;” he need
only give Defendants “fair notice of what the claim is and the grounds upon which it rests.”
Twombly, 550 U.S. at 555 (citation and quotations omitted). In considering all the facts alleged
by Almblad, it is apparent his claim of defamation meets the standard of facial plausibility.
Iqbal, 129 S. Ct. at 1949. Therefore, Defendants’ Motion to Dismiss Count I of the Amended
Complaint is denied.
Lanham Act Claim
Almblad’s second claim alleges Scotsman violated the Lanham Act, by making “false or
misleading representations of fact and in commercial promotion of its goods misrepresented the
nature, characteristics and qualities of its goods and those of Robert Almblad.” (Am. Compl. at
6.) Section 43(a) of the Lanham Act provides a civil action for false advertising:
(1) Any person who, on or in connection with any goods or services, or any
container for goods, 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-(A) is likely to cause confusion, or to cause mistake, or to deceive
as to the affiliation, connection, or association of such person with
another person, or as to the origin, sponsorship, or approval of his
or her goods, services, or commercial activities by another person,
or
(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,

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shall be liable in a civil action by any person who believes that he or she is likely
to be damaged by such act.
15 U.S.C. § 1125(a).
Defendants argue Almblad is unable to state a claim for false advertising under the
Lanham Act because Almblad is not a direct competitor of Scotsman and, therefore, lacks
standing. “To sue for false advertising under the Lanham Act, the plaintiff must assert a
discernible competitive injury.” Emerging Material Technologies, Inc. v. Rubicon Technology,
Inc., Case No. 09 C 3903, 2009 WL 5064349, at *3 (N.D. Ill. Dec. 14, 2009) (quoting Johnny
Blastoff, Inc. v. L.A. Rams Football Co., 188 F.3d 427, 438 (7th Cir. 1999)). Courts in this
district have held that “this requires the plaintiff and defendant to be direct competitors, in other
words, that it competes at the same level of business as the defendant.” Emerging Material
Technologies, 2009 WL 5064349, at *3 (citations omitted).
Nowhere in the Amended Complaint does Almblad allege he is a direct competitor of
Scotsman, or in the business of manufacturing ice machines for commercial use. At most,
Almblad alleges he made his ice-decontaminating device available for licensing by Scotsman.
(Am. Compl. ¶ 8.) Attempting to cure this deficiency of the Amended Complaint, Almblad
attached two affidavits to his response to the Motion to Dismiss. One affidavit is of Almblad
himself, in which he asserts his device, an air filter, would directly compete with Scotsman’s
products, which are designed to treat slime, mold, and airborne microorganisms in its ice
machines. (Resp. Ex. A ¶ 2.) The second affiant is John Broadbent, a consultant for
manufacturers in the refrigeration and food service industries and former employee of Scotsman.
(Resp. Ex. B ¶¶ 1, 3.) Broadbent also avers that Almblad’s air filter would “directly compete

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with Scotsman products sold to combat scale buildup and airborne slime buildup in machine
food zones.” (Id. ¶ 8.)
Almblad never alleges what the nature of his business is in his Amended Complaint.
What can be discerned from the Amended Complaint, read together with the affidavits, is that
Almblad has a patent on a device that filters particulates in ice machines, which he sought to
license to Scotsman. Scotsman is in the ice-machine manufacturing industry. Even under a
broad reading of the allegations in the Amended Complaint, Almblad has not sufficiently pled
facts to plausibly establish he is a competitor of Scotsman to support a false advertising claim.
See Emerging Material Technologies, 2009 WL 5064349, at *3 (internal quotation marks and
citation omitted); see also Gail Green Licensing & Design Ltd. v. Accord, Inc., Case No. 05 C
5303, 2006 WL 2873202, at *5 (N.D. Ill. Oct. 5, 2006) (designer and licensor of pet clothing
lacked standing to sue retailers and manufacturers of clothing and accessories for pets). Because
Almblad has not pled a claim of competitive injury against Scotsman, this claim is dismissed
without prejudice.

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CONCLUSION
For the reasons provided above, Defendants’ Motion to Dismiss is denied as to Count I,
the defamation claim, and granted as to Count II, the Lanham Act claim. Count II of the
Amended Complaint, Almblad’s claim of false advertising under the Lanham Act, is dismissed
without prejudice. Almblad may file an amended complaint to reallege this claim, if he can do
so consistent with the requirements of Fed. R. Civ. P. 11, within thirty days of the date of this
Order.
Date:

August 28, 2013

______________________________
JOHN W. DARRAH
United States District Court Judge

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