Maui Jim, Inc. v. SmartBuy Guru Enterprises et al

Filing 358

MEMORANDUM OPINION and ORDER: For the reasons stated herein, we grant Maui Jim's motion to dismiss Counts I, III, IV, V, and VI of SBG's second amended counterclaim. (Dkt. No. 184 , 196 , 278 .) We grant in part and deny in part Maui Ji m's motion to dismiss SBG's Count II. (Dkt. No. 184 .) We deny Maui Jim's motion to dismiss Count VII. (Dkt. No. 278 .) Finally, we grant Maui Jim's motion to strike SBG's first affirmative defense with prejudice, and fourth affirmative defense (unclean hands) without prejudice. Signed by the Honorable Marvin E. Aspen on 5/10/2019. Mailed notice (ags, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MAUI JIM, INC.,
Plaintiff and
Counterclaim Defendant,
v.
SMARTBUY GURU ENTERPRISES,
MOTION GLOBAL LTD.,
SMARTBUYGLASSES SOCIETA
A RESPONSABILITA LIMITATA,
SMARTBUYGLASSES OPTICAL
LIMITED,
Defendants and
Counterclaimants.

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No. 1:16 CV 9788
Hon. Marvin E. Aspen

MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, District Judge:
Before us is Plaintiff and Counterclaim Defendant Maui Jim, Inc.’s (“Maui Jim”) motions
to dismiss Defendants and Counterclaimants SmartBuy Guru Enterprises, Motion Global Ltd.,
SmartBuyGlasses Societá a Responsabilitá Limitata, and SmartBuyGlasses Optical Limited’s
(collectively “SBG”) amended counterclaims. (Dkt. Nos. 184, 196, 278.) 1 Maui Jim also moves
1

We previously terminated Maui Jim’s first two motions to dismiss as moot. (Dkt. No. 310.)
We did so because, after Maui Jim filed these motions, SBG filed a second amended
counterclaim. (2d Am. Countercl. (Dkt. No. 259).) It is generally black letter law that an
“amended pleading supersedes the original pleading.” Wellness Cmty.-Nat’l v. Wellness House,
70 F.3d 46, 49 (7th Cir. 1995) (citing Lubin v. Chi. Title and Trust Co., 260 F.2d 411, 413
(7th Cir. 1958); Nisbet v. Van Tuyl, 224 F.2d 66, 71 (7th Cir. 1955); Fry v. UAL Corp.,
895 F. Supp. 1018 (N.D. Ill. 1995)). “Once an amended pleading is interposed, the original
pleading no longer performs any function in the case.” Id. (quoting 6 C. Wright,
A. Miller, & Mary Kay Kane, Federal Practice and Procedure § 1476 at 556–57, 559 (1990)).
Although Maui Jim refers to its first two motions to dismiss in its latest motion to dismiss,
(Dkt. No. 278 at 1), it does not expressly renew its prior motions on what had become
superseded pleadings. The parties now jointly move to reinstate Maui Jim’s first two motions,
either by vacating our earlier termination of the motions, or by treating those motions and the

to strike two of SBG’s affirmative defenses. (Dkt. No. 278.) For the reasons stated below, we
grant Maui Jim’s motions to dismiss Counts I, III, IV, V, and VI of SBG’s second amended
counterclaim, grant in part and deny in part Maui Jim’s motion to dismiss Count II, and deny
Maui Jim’s motion to dismiss Count VII. In addition, we grant Maui Jim’s motion to strike
SBG’s first affirmative defense (inequitable restraint of trade) with prejudice and fourth
affirmative defense (unclean hands) without prejudice.
BACKGROUND
Much of this case’s background can be found in our memorandum and order on Maui
Jim’s earlier motion to dismiss SBG’s prior counterclaims. (Order (Dkt. No. 89).) We assume
familiarity with that opinion and repeat here only as necessary. At the motion to dismiss stage,
we accept all well-pleaded factual allegations in the counterclaim as true and draw all inferences
in the plaintiff’s favor. Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903
(7th Cir. 2011). Maui Jim is a designer, manufacturer, and provider of prescription and
non-prescription sunglasses. (2d Am. Compl. (Dkt. No. 257) ¶ 16.) SBG is an online retailer of
luxury designer eyewear. (2d Am. Countercl. (Dkt. No. 259) ¶ 13.) It sells products from more
briefing on them as renewed instanter. (Dkt. No. 311 at 4.) The parties argue that SBG’s second
amended counterclaim was filed “without change” from its previous version, and that Maui Jim
incorporated by reference its arguments to dismiss SBG’s other counterclaims in its latest motion
on the second amended counterclaim. (Id. at 3–4.) Of course, the amended and second amended
counterclaims are not identical. (Compare Am. Countercl. (Dkt. No. 131) ¶ 9, with 2d Am.
Countercl. ¶ 8 (stating same information at different paragraph number, with discrepancy
continuing throughout the remainder of the documents).) While we do not wish to foster
“needlessly duplicative pleadings and make-work for district courts” or for litigants,
Scott v. Chuhak & Tecson, P.C., 725 F.3d 772, 782 (7th Cir. 2013), the parties’ previous
submissions on now-superseded claims have required us to hold the various pleadings up to the
light to compare their content and ensure accurate exposition of the operative allegations and
arguments. However, the parties’ general argument is well taken that the issues remain the same
and the briefing adequate to address them. Accordingly, we grant the parties’ joint motion to
reinstate Maui Jim’s prior motions to dismiss instanter, and we consider those motions and
arguments in this opinion.
2

than 180 designer brands, including Maui Jim, on its websites in twenty countries.
(Id. ¶¶ 13, 16.)
Maui Jim alleges SBG entities have never been authorized retailers of Maui Jim
sunglasses, yet they sold and offered for sale counterfeit sunglasses under Maui Jim’s
trademarks. (2d Am. Compl. ¶ 2.) Maui Jim brought suit against SBG, asserting (as amended)
claims of trademark counterfeiting and infringement, unfair competition, false advertising, and
trademark dilution in violation of the Lanham Act, 15 U.S.C. § 1051, et seq. (Counts I–III);
copyright infringement in violation of the Copyright Act of 1976, 17 U.S.C. § 101, et seq.
(Count IV); unfair trade practices in violation of the Illinois Uniform Deceptive Trade Practices
Act, 815 ILCS 5/10, et seq. (Count V); and tortious interference with contract (Count VI).
(Id. ¶¶ 85–127.)
SBG alleges it procures genuine Maui Jim sunglasses primarily through affiliates and
distributors that purchase directly from Maui Jim. (2d Am. Countercl. ¶ 17.) SBG does not
contest that it sells Maui Jim prescription sunglasses without the genuine Maui Jim prescription
lenses. (Id. ¶ 21.) Instead, SBG asserts that the Maui Jim frames and non-prescription lenses
SBG sells are “100% genuine,” and that SBG customers also receive prescription lenses
“fabricated through [SBG] by a premium optical laboratory.” (Id.)
SBG’s amended responsive pleading asserts counterclaims against Maui Jim for trade
disparagement (Count I); defamation (Count II); violation of the Sherman Antitrust Act,
15 U.S.C. § 1, et seq. (Count III); violation of California’s Cartwright Act,
Cal. Bus. & Prof. Code § 16700, et seq. (Count IV), and California’s Unfair Competition Law,
Cal. Bus. & Prof. Code § 17200, et seq. (Count V); violation of Article 101 of the Treaty on the
Functioning of the European Union (Count VI); and in the alternative, unjust enrichment
(Count VII). (Id. ¶¶ 33–94.)
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SBG alleges it brings its counterclaims “to compensate it for, and put an end to, Maui
Jim’s ongoing illegal campaign to stifle competition.” (Id. ¶ 1.) According to SBG, Maui Jim
“seeks to eradicate lawful competition and monopolize control over its worldwide supply chain,
allowing it to illegally prop up prices of its eyewear.” (Id. ¶ 2.) SBG further alleges Maui Jim’s
efforts to stifle competition from discount retailers include Maui Jim’s alleged attempt to
“exploit recent xenophobia by engaging in a negative public relations campaign that painted
SmartBuyGlasses as a dishonest, foreign counterfeiter.” (Id. ¶¶ 2, 26.) In furtherance of its
efforts, SBG alleges Maui Jim issued a press release dated January 23, 2017, which included the
following statement from Maui Jim’s Vice President of Global Marketing:
Companies that utilize these types of disingenuous and misleading sales practices
undermine the integrity of the Maui Jim brand and the quality and technology it has
come to represent . . . . [Maui Jim] simply cannot allow our brand to be harmed by
the sale of counterfeit or non-genuine Maui Jim products that do not live up to our—
and most importantly our customers’—expectations.
(Id. ¶ 28.) SBG also alleges that Maui Jim’s corporate headquarters and customer service
representatives falsely instructed potential customers that SBG sells “fake” or inauthentic
products, and that SBG is “not an authentic website.” (Id. ¶ 29.) Maui Jim has allegedly made
the same claims of inauthenticity to United States customs officials. (Id. ¶ 30.) Moreover, SBG
asserts Maui Jim “used this case to discover and then attempt to eviscerate SmartBuyGlasses’
supply chain” by cancelling accounts with certain SBG suppliers after they were confidentially
disclosed in discovery. (Id. ¶ 31.) SBG alleges that it has been harmed in the marketplace as a
result of Maui Jim’s actions. (Id. ¶ 32.)
Separately, SBG alleges that Maui Jim has entered into anticompetitive agreements with
its distributors to maintain minimum retail prices and to restrict to whom distributors can sell.
(Id. ¶ 52.) Maui Jim has allegedly threatened to terminate and has actually terminated retailers
that have sold authentic goods to SBG. (Id. ¶¶ 56, 68.) As a result of these agreements, SBG
4

claims that consumers paid artificially high prices for Maui Jim sunglasses and that SBG’s
business was injured by Maui Jim’s efforts to eliminate SBG’s supply of Maui Jim sunglasses.
(Id. ¶ 58.)
In addition, SBG alleges that it “sources the vast majority of its Maui Jim product from
Member States within the European Union, and the alleged restrictive contracts at issue
(particularly with respect to Maui Jim’s tortious interference with contract claims) all involve
retailers in the European Union.” (Id. ¶ 88.) SBG claims that these contracts and Maui Jim’s
“actions to discover and close the accounts of [SBG’s] suppliers within the European Union”
caused SBG damage and violate European antitrust law. (Id. ¶¶ 89, 90.)
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) governs a motion to dismiss for failure to state a
claim upon which relief may be granted. We accept “the allegations in the complaint as true
unless they are ‘threadbare recitals of a cause of action’s elements, supported by mere
conclusory statements.’” Katz-Crank v. Haskett, 843 F.3d 641, 646 (7th Cir. 2016) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009)). The pleading must state a
claim that is plausible on its face to survive a motion to dismiss. Iqbal, 556 U.S. at 678,
129 S. Ct. at 1949; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007);
St. John v. Cach, LLC, 822 F.3d 388, 389 (7th Cir. 2016). “A claim has facial plausibility 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, 556 U.S. at 678, 129 S. Ct. at 1949. The
plausibility standard “is not akin to a ‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Id. at 1949 (quoting Twombly,
550 U.S. at 555, 127 S. Ct. at 1964–65). That is, while the plaintiff need not plead “detailed

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factual allegations,” the counterclaim must allege facts sufficient “to raise a right to relief above
the speculative level.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1964–65.
Maui Jim’s motion to strike is governed by Federal Rule of Civil Procedure 12(f), which
states that “[t]he court may strike from a pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Motions to strike are
generally disfavored because they “potentially serve only to delay,” and so affirmative defenses
“will be stricken only when they are insufficient on the face of the pleadings.” Heller Fin.,
Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989). To survive a motion to
strike, an affirmative defense must satisfy a three-part test: “(1) the matter must be properly
pleaded as an affirmative defense; (2) the matter must be adequately pleaded under the
requirements of Federal Rules of Civil Procedure 8 and 9; and (3) the matter must withstand
a Rule 12(b)(6) challenge.” Sarkis’ Cafe, Inc. v. Sarks in the Park, LLC,
55 F. Supp. 3d 1034, 1039 (N.D. Ill. 2014) (citation omitted). We follow the majority view of
district court decisions in this circuit, which apply the pleading standard set forth in Twombly,
550 U.S. 544, 127 S. Ct. 1955, and Iqbal, 556 U.S. 662, 129 S. Ct. 1937, to affirmative
defenses. See Edwards v. Mack Trucks, Inc., 310 F.R.D. 382, 386 (N.D. Ill. 2015) (“aligning
with the majority of courts in this district” in applying the Twombly-Iqbal standard); Sarkis’
Cafe, 55 F. Supp. 2d at 1040; Shield Tech. Corp. v. Paradigm Positioning, LLC, No. 11 C 6183,
2012 WL 4120440, at *8 (N.D. Ill. Sept. 19, 2012) (“[W]e believe that the test applicable to
affirmative defenses should reflect current pleading standards, and therefore adopt the majority
view that Twombly and Iqbal apply to affirmative defenses.”); Riemer v. Chase Bank USA, N.A.,
274 F.R.D 637, 639–40 (N.D. Ill. 2011) (collecting cases).

6

ANALYSIS
Maui Jim moves to dismiss with prejudice four counts in SBG’s amended counterclaim.
Specifically, Maui Jim argues SBG fails to allege the required elements of a trade disparagement
claim (Count I); fails to plead defamation (Count II) with particularity or fails to state a claim
because some of the allegedly defamatory statements are substantially true or constitute
non-actionable opinion statements; does not allege an antitrust injury or a plausible relevant
market in its federal antitrust claim (Count III); and fails to identify which counterclaimant has
standing to sue under European antitrust law (Count VI). (Dkt. No. 184 at 1.)
In addition, Maui Jim moves to dismiss SBG’s counterclaims under California law
(Counts IV and V) for failure to allege the requisite elements or connection to California, and
argues they are barred by the statute of limitations. (Dkt. No. 278 ¶ 1.) Maui Jim moves to
dismiss SBG’s European antitrust claim (Count VI) under forum non conveniens and principles
of international comity. (Dkt. No. 196 at 1–2.) Maui Jim moves to dismiss SBG’s unjust
enrichment counterclaim (Count VII) under the Noerr-Pennington doctrine. (Dkt. No. 278 ¶ 2.)
Finally, Maui Jim moves to strike SBG’s first and fourth affirmative defenses. (Id. ¶¶ 3–4.)
I.

TRADE DISPARAGEMENT (COUNT I)
SBG alleges Maui Jim published “false, disparaging, and highly damaging messages

about the products and services that SmartBuyGlasses sells, namely that SmartBuyGlasses is
selling and servicing counterfeit and non-genuine products.” (2d Am. Countercl. ¶ 34.) Maui
Jim argues this counterclaim must be dismissed because SBG fails to allege any connection to
Illinois—a required element for bringing a trade disparagement claim in this forum. (Mem. in
Support of Mot. to Dismiss (“Mem.”) (Dkt. No. 186) at 6–10.) Maui Jim contends SBG fails to
allege the circumstances related to the disputed transaction occurring “primarily and

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substantially in Illinois.” (Id. at 6–9.) Nor has SBG alleged any injury in Illinois, according to
Maui Jim. (Id. at 9–10.)
SBG argues “there are no territorial limits to common law claims.” (SBG’s Opp’n to
Pl.’s Mot. to Dismiss Countercls. I–IV in Defs.’ Am. Countercl. (“Resp.”) (Dkt. No. 231) at 3.)
However, as a federal court exercising supplemental jurisdiction over state law claims, we apply
the governing state law—here, Illinois. Illinois has codified the common law tort of trade
disparagement in the Uniform Deceptive Trade Practices Act (“UDTPA”), 815 ILCS 510/2(8).
Am. Wheel & Eng’g Co. v. Dana Molded Prod., Inc., 132 Ill. App. 3d 205, 211,
476 N.E.2d 1291, 1295 (1st Dist. 1985) (“Section 2(8) of the Uniform Act substantially
embodies the common law tort of commercial disparagement.”). Consequently, both common
law trade disparagement and statutory UDTPA claims “are subject to the same analysis: in order
to state a claim for trade disparagement and under the UDTPA a plaintiff must allege that
defendant published untrue or misleading statements that disparaged the plaintiff’s goods or
services.” Morton Grove Pharm., Inc. v. Nat’l Pediculosis Ass’n, Inc., 494 F. Supp. 2d 934, 943
(N.D. Ill. 2007).
Furthermore, as Maui Jim correctly observes, many courts have held that claims that a
defendant made false and misleading representations concerning the quality of plaintiff’s goods
must have a nexus to Illinois. Underground Sols., Inc. v. Palermo, No. 13 C 8407,
2014 WL 4703925, at *10 (N.D. Ill. Sept. 22, 2014). Thus, as we previously explained, “the
circumstances that relate to the disputed transaction [must] occur primarily and substantially in
Illinois.” Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100, 187, 835 N.E.2d 801, 854
(Ill. 2005); Green Light Nat’l, LLC v. Kent, No. 17 C 6370, 2018 WL 4384298, at *5
(N.D. Ill. Sept. 14, 2018) (“The [U]DTPA does not expressly confine its application to events or
circumstances arising in Illinois. However, a ‘long-standing rule of construction in Illinois holds
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that a statute is without extraterritorial effect unless a clear intent in this respect appears from the
express provisions of the statute.’” (quoting Avery, 216 Ill. 2d at 184–85, 835 N.E.2d at 852));
Underground Sols., 2014 WL 4703925, at *10 (collecting cases applying the reasoning in Avery
to UDTPA claims); LG Elecs. U.S.A., Inc. v. Whirlpool Corp., 809 F. Supp. 2d 857, 859
(N.D. Ill. 2011) (holding the rule stated in Avery applies to the UDTPA). There is “no single
formula or bright-line test” for determining whether a transaction occurs within Illinois.
Avery, 216 Ill. 2d at 187, 835 N.E.2d at 854; accord Phillips v. Bally Total Fitness Holding
Corp., 372 Ill. App. 3d 53, 58, 865 N.E.2d 310, 315 (1st Dist. 2007). Several factors, however,
are relevant to determining whether a transaction occurred “primarily and substantially” in
Illinois: “(1) the plaintiff’s residence, (2) where the misrepresentation was made, (3) where the
damage to the plaintiff occurred, and (4) whether the plaintiff communicated with the defendant
in Illinois.” Specht v. Google, Inc., 660 F. Supp. 2d 858, 866 (N.D. Ill. 2009); see
also In re Sears Roebuck & Co. Tools Mktg. & Sales Practices Litig., No. 05 C 2623,
2005 WL 3077606, at *1 (N.D. Ill. Nov. 14, 2005).
SBG makes no attempt to show any connection to Illinois, and for the same reasons we
previously dismissed its trade disparagement claim, we do so again for failure to allege a nexus
to Illinois. It is undisputed that none of the SmartBuy entities are residents of Illinois, but are
rather foreign businesses organized and with principal places of business in the Cayman Islands,
Hong Kong, and Italy. (2d Am. Countercl. ¶¶ 8–11.) While the second amended counterclaim
alleges that both this lawsuit and Maui Jim are located in Illinois, SBG fails to connect any of
Maui Jim’s alleged action forming the basis of its trade disparagement claim to Illinois. Avery,
216 Ill. 2d at 189, 835 N.E.2d at 855 (holding claims of non-Illinois plaintiffs insufficient where
the only connection to Illinois is the headquarters of the defendant and the fact that a scheme
“was disseminated” from Illinois); Van Tassell v. United Mktg. Grp., LLC,
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795 F. Supp. 2d 770, 782 (N.D. Ill. 2011) (dismissing claim where “Illinois is implicated only
because [one defendant] is headquartered in Illinois,” despite the fact it was alleged to have
carried out its part of the deceptive conduct there); Phillips, 372 Ill. App. 3d at 58,
865 N.E.2d at 315 (“The fact that a scheme to defraud was disseminated from a company’s
headquarters in Illinois is insufficient.”). Furthermore, a plaintiff’s claims are insufficient to
state a claim under the UDTPA where, as here, the plaintiff “exclusively offers evidence
of . . . nationwide, as opposed to Illinois-specific, conduct.” LG Elecs., 809 F. Supp. 2d at 862.
Nor does the counterclaim contain allegations permitting a plausible inference that SBG has
suffered any damage in Illinois. (See 2d Am. Countercl. ¶¶ 32, 39 (alleging broadly that SBG
has been damaged “in the marketplace” or in “global commerce”).) Accordingly, SBG has not
alleged facts that, if true, establish a factual nexus with Illinois as required to entitle it to the
relief it seeks in its trade disparagement claim. Count I is therefore dismissed, with prejudice.
II.

DEFAMATION (COUNT II)
Maui Jim also moves to dismiss SBG’s defamation counterclaim. (Mem. at 10–16.) To

state a defamation claim in Illinois, a claimant “must present facts showing that the defendant
made a false statement about [it], that the defendant made an unprivileged publication of that
statement to a third party, and that this publication caused damages.” Ludlow v. Nw. Univ.,
79 F. Supp. 3d 824, 836 (N.D. Ill. 2015) (quoting Green v. Rogers, 234 Ill. 2d 478, 491,
917 N.E.2d 450, 459 (Ill. 2009)). Certain categories of defamatory statements are considered so
damaging on their face that a plaintiff need not plead or prove damages. Bryson v. News Am.
Publications, Inc., 174 Ill. 2d 77, 87, 672 N.E.2d 1207, 1214 (Ill. 1996). Among those
categories of defamation per se are defamatory statements that “impute a person is unable to
perform or lacks integrity in performing her or his employment duties” and words that

10

“otherwise prejudice[] that person in her or his profession.” Solaia Tech., LLC v. Specialty Pub.
Co., 221 Ill. 2d 558, 580, 852 N.E.2d 825, 839 (Ill. 2006).
SBG identifies five paragraphs in its counterclaim that constitute its claim for defamation
per se because they either impute a want of integrity in SBG’s professional duties or prejudice
SBG’s business. (2d Am. Countercl. ¶¶ 26–30, 43.) 2 Maui Jim argues SBG fails to plead some
of the allegedly defamatory statements with the required specificity and argues the claim is
foreclosed because other alleged statements are substantially true or are not defamatory per se
under Illinois’ innocent construction rule. (Mem. at 10–16.)
A.

Paragraphs 29 and 30: Pleading Defamation Per Se

Maui Jim argues that paragraphs 29 and 30 of SBG’s defamation per se counterclaim is
not pleaded with the required particularity. (Mem. at 10.) 3 Maui Jim argues that these
paragraphs constitute “disjointed snippets” that are insufficient to meet Illinois’ standard for
pleading defamation per se. (Mem. at 11 (referring to 2d Am. Countercl. ¶¶ 29, 30).)
A claim in federal court for defamation per se is held to “the usual rules for notice
pleading established by Rule 8.” Muzikowski v. Paramount Pictures Corp., 322 F.3d 918, 926
(7th Cir. 2003). “The complaint must ‘give the defendant fair notice of what the plaintiff's claim
is and the grounds upon which it rests.’” McGreal v. AT & T Corp.,

2

The parties’ briefs refer to paragraph numberings in SBG’s amended counterclaim, which are
off by one from the paragraph numberings in the second amended counterclaim. (Compare
Am. Countercl. (Dkt. No. 131) ¶ 27, with 2d Am. Countercl. ¶ 26 (identical).) This opinion uses
the second amended counterclaim, as the operative pleading, see supra n.1, to reference the
relevant paragraphs and the parties’ arguments pertaining to them.
3

The parties’ arguments center on four paragraphs in SBG’s counterclaims.
(See 2d Am. Countercl. ¶¶ 26, 27, 29, 30.) The parties agree that paragraphs 26 and 27 of SBG’s
second amended counterclaim are not defamatory statements, and we thus do not consider them
in our analysis. (See Mem. at 11; Resp. at 3 (clarifying that these paragraphs are not defamatory
statements, but provide context in which defamatory statements are made).)
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892 F. Supp. 2d 996, 1016–17 (N.D. Ill. 2012) (quoting Swierkiewicz v. Sorema
N.A., 534 U.S. 506, 512, 122 S. Ct. 992, 995 (2002)). The complaint need not report the
allegedly defamatory statement verbatim, “but its substance must be pleaded with ‘sufficient
precision and particularity so as to permit initial judicial review of its defamatory content.’”
Ludlow v. Nw. Univ., 79 F. Supp. 3d 824, 836 (N.D. Ill. 2015) (quoting Green, 234 Ill. 2d at 492,
917 N.E.2d at 459). This standard does not amount to a heightened pleading requirement, but
instead constitutes the requirements to plead substantive elements for defamation per se under
Illinois law. Id.
The relevant paragraphs in SBG’s counterclaim sufficiently plead defamation per se
under the Rule 8 standard. SBG’s counterclaim alleges that, in responding to consumer
questions about SBG, “Maui Jim’s corporate headquarters and customer service representatives
have falsely instructed potential SmartBuyGlasses’ customers that SmartBuyGlasses sells
counterfeit goods, that the Maui Jim sunglasses SmartBuyGlasses sells are ‘fake’ or ‘not
authentic,’ and that SmartBuyGlasses ‘is not an authentic website.’” (2d Am. Countercl. ¶ 29.)
SBG also alleges that Maui Jim “contacted SmartBuyGlasses’ customers directly and claimed
that the sunglasses the customers purchased through SmartBuyGlasses are not genuine.” (Id.)
SBG claims that Maui Jim’s communications with SBG consumers cause SBG to “lose
substantial business from potential customers and to refund existing customers who returned
Maui Jim sunglasses solely because of Maui Jim’s false claims that the product
SmartBuyGlasses sold was counterfeit.” (Id.) These allegations detail who was speaking (Maui
Jim representatives), to whom (potential SBG customers), and what made the statements
defamatory (that Maui Jim sunglasses sold by SBG are fakes). Similarly, SBG alleges that
“Maui Jim has falsely claimed to customs officials that Maui Jim sunglasses shipped by
SmartBuyGlasses to U.S. consumers were ‘not genuine,’ causing the authentic sunglasses to be
12

seized by U.S. customs.” (2d Am. Countercl. ¶ 30.) Here too, SBG pleads who spoke (Maui
Jim), to whom (U.S. customs officials), and what was said (sunglasses were “not genuine”) with
sufficient precision to allow for initial judicial review. Ludlow, 79 F. Supp. 3d at 836.
Maui Jim relies primarily on McGreal v. AT & T Corp. to argue that SBG’s claims are
mere “snippets” of quotes that amount to “words or phrases without any context.”
(Mem. at 11–12 (quoting McGreal, 892 F. Supp. 2d at 1017).) The comparison is inapposite. In
McGreal, the plaintiff generally alleged the defendant made public statements against her
veracity and integrity by stating she made misrepresentations, concealed lies, schemed, had been
untruthful, made false statements, engaged in a conspiracy, was disingenuous, and made
“dishonest attempt.” 892 F. Supp. 2d at 1016. The plaintiff did not otherwise clarify who made
these statements or how they were published. Id. at 1017. She also failed to tie the statements to
her integrity in performing her employment duties beyond abstractly reciting that “veracity and
integrity are two required traits” for her profession. Id. By contrast, SBG alleges who made the
defamatory statements, how they were published, and the substance of those statements with
enough specificity to provide notice of its claim. See Ludlow, 79 F. Supp. 3d at 836–37.
Furthermore, SBG’s allegations tie the defamatory statements into categories of defamation per
se, namely words that impute lack of integrity in employment duties or that prejudice a person in
his or her profession. Green, 234 Ill. 2d at 492, 917 N.E.2d at 459.
Accordingly, SBG’s allegations in paragraphs 29 and 30 of its second amended
counterclaim are sufficiently pleaded. See Gehrls v. Gooch, No. 09 C 6338, 2010 WL 1849400,
at *3 (N.D. Ill. May 7, 2010) (“[A]t the motion to dismiss stage, plaintiff is entitled to all
reasonable inferences and the exact details and substance of the statements made will be
discerned through discovery.”) Maui Jim’s motion to dismiss SBG’s defamation claim is denied
as to these paragraphs.
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B.

Paragraph 28: Innocent Construction

Paragraph 28 of SBG’s counterclaim alleges that Maui Jim’s Vice President of Global
Marketing made defamatory statements in a press release issued by Maui Jim.
(2d Am. Compl. ¶ 28.) 4 The press release, which publicized Maui Jim’s present suit against
SBG, contains five paragraphs. (Press Release (Dkt. No. 131–1).) The first four paragraphs
discuss Maui Jim’s allegations against SBG. (Id.) The fifth paragraph contains the allegedly
defamatory quotes, as follows:
“Companies that utilize these types of disingenuous and misleading sales practices
undermine the integrity of the Maui Jim brand and the quality and technology it has come
to represent,” said Jay Black, Maui Jim Vice President, Global Marketing. “This lawsuit
was filed to protect our brand and the inherent value of its earned reputation, as well as
our customers and our authorized retailers. We simply cannot allow our brand to be
harmed by the sale of counterfeit or non-genuine Maui Jim products that do not live up to
our—and most importantly, our customers’—expectations.”
(Id.)
Maui Jim argues that these statements fall under Illinois’ innocent construction rule and
thus are not actionable as defamation per se. (Mem. at 14.) In Illinois, a statement that is
allegedly defamatory “will not be actionable per se if it is reasonably capable of an innocent
construction.” Tuite v. Corbitt, 224 Ill. 2d 490, 502, 866 N.E.2d 114, 121 (Ill. 2006); see also
Bryson, 174 Ill. 2d at 90, 672 N.E.2d at 1215 (“Only reasonable innocent constructions will
remove an allegedly defamatory statement from the per se category.”). “Whether a statement is
reasonably susceptible to an innocent interpretation is a question of law for the court to decide.”

4

Paragraph 28 indicates that the press release is “[a]ttached hereto as Exhibit A.”
(2d Am. Countercl. ¶ 28.) While the full press release was attached as an exhibit to SBG’s first
amended counterclaim, (see Dkt. No. 131–1), it is not attached to SBG’s second amended
counterclaim. Nonetheless, “pleadings may incorporate earlier pleadings by reference,
Fed. R. Civ. P. 10(c),” Macklin v. Butler, 553 F.2d 525, 528 (7th Cir. 1977). Accordingly, we
consider the full press release attached to SBG’s prior pleading as incorporated by reference in
SBG’s second amended counterclaim.
14

Bryson, 174 Ill. 2d at 90, 672 N.E.2d at 1215. In so deciding, “courts must interpret the words
‘as they appeared to have been used and according to the idea they were intended to convey to
the reasonable reader.’” Tuite, 224 Ill. 2d at 512, 866 N.E.2d at 127 (quoting Bryson,
174 Ill. 2d at 93, 672 N.E.2d at 1217).
The parties agree that the first four paragraphs of the press release are not defamatory
because they refer to Maui Jim’s allegations against SBG. (Mem. at 14; Resp. at 9
(distinguishing fifth paragraph from remainder of press release).) However, SBG argues that
“the fifth paragraph—which includes the defamatory statements—does not signal to the reader
that Maui Jim is referring to allegations in its complaint.” (Resp. at 9.)
On this score, SBG is incorrect: SBG’s second amended counterclaim excises a sentence
in the middle of the supposedly offending paragraph that refers to the lawsuit. (Compare Press
Release at 1 (including sentence that states “This lawsuit was filed to protect our brand and the
inherent value of its earned reputation, as well as our customers and our authorized retailers.”
(emphasis added), with 2d Am. Countercl. ¶ 28 (replacing this sentence with ellipses).) What is
more, the fifth paragraph is devoid of any reference to SBG. The only way the fifth paragraph
refers to SBG is if it is read in the context of the entire press release, the remainder of which
deals entirely with Maui Jim’s lawsuit against SBG. (Id.) When the press release is “read as a
whole and the words given their natural and obvious meaning,” the statements in the fifth
paragraph refer to Maui Jim’s lawsuit and its allegations against SBG, instead of a defamatory
attack that can be separated from the bulk of the press release. Tuite, 224 Ill. 2d at 502,
866 N.E.2d at 121.
Accordingly, Maui Jim’s motion to dismiss SBG’s defamation per se counterclaim is
granted as to the allegations in paragraph 28 of SBG’s second amended counterclaim, with
prejudice.
15

III.

ANTITRUST COUNTERCLAIM (COUNT III)
In Count III, SBG alleges Maui Jim has violated Section 1 of the Sherman Antitrust Act,

15 U.S.C. § 1. (2d Am. Countercl. ¶¶ 47–60.) SBG asserts Maui Jim enters into contracts with
authorized distributors, setting minimum retail prices and restricting resale “for the express
purpose of eliminating or suppressing price competition among retailers of Maui Jim
sunglasses.” (Id. ¶¶ 52, 55.) SBG further alleges Maui Jim has threatened to terminate retailers
that “failed to adhere to this anticompetitive policy, including retailers that sold authentic
products to SmartBuyGlasses.” (Id. ¶ 56.) As a result, SBG alleges Maui Jim’s anticompetitive
conduct caused consumers to pay artificially high prices for Maui Jim sunglasses and be
deprived of free and open competition in the market and caused injury to SBG’s business
through the restriction and elimination of its supply of Maui Jim sunglasses. (Id. ¶ 58.)
“The purpose of the Sherman Act is to protect consumers from injury that results from
diminished competition.” Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328, 334–35
(7th Cir. 2012). “To state a Section 1 claim, a plaintiff must plead facts plausibly suggesting:
(1) a contract, combination, or conspiracy (meaning, an agreement); (2) a resulting unreasonable
restraint of trade in a relevant market; and (3) an accompanying injury.” In re Dealer Mgmt. Sys.
Antitrust Litig., 313 F. Supp. 3d 931, 949 (N.D. Ill. 2018). Maui Jim does not take issue with the
first element, but argues that SBG’s counterclaim fails the second and third elements as it does
not allege a “relevant market” and fails to assert a cognizable injury. (Mem. at 17–21.)
A.

Antitrust Injury

Maui Jim argues SBG’s Section 1 claim must be dismissed because SBG has not alleged
an antitrust injury necessary to bring the claim as a beneficiary of the alleged antitrust violation.
(Mem. at 17–19.) To maintain a claim under the Sherman Act, “Plaintiffs must prove antitrust
injury, which is to say injury of the type the antitrust laws were intended to prevent and that
16

flows from that which makes defendants’ acts unlawful.” Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S. Ct. 690, 697 (1977).
“A competitor may not ‘recover damages for any conspiracy . . . to charge higher than
competitive prices,” because although “[s]uch conduct would indeed violate the Sherman Act,” it
cannot injure a claimant competitor because competitors “‘stand to gain from any conspiracy to
raise the market price.’” O.K. Sand & Gravel, Inc. v. Martin Marietta Techs., Inc.,
36 F.3d 565, 573 (7th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith
Radio, 475 U.S. 574, 582, 106 S. Ct. 1348, 1354 (1986)); see also JTC Petroleum Co. v. Piasa
Motor Fuels, Inc., 190 F.3d 775, 778 (7th Cir. 1999) (holding that there was no injury and
stating, “You want your competitors to charge high prices.”). SBG squarely characterizes itself
as a “direct competitor of Maui Jim.” (2d Am. Countercl. ¶ 54.) SBG’s allegations claim that
Maui Jim eliminated other competitors that did not adhere to Maui Jim’s alleged artificially high
price restraints. (2d Am. Countercl. ¶¶ 55–56, 58.) SBG’s antitrust claim therefore does not
allege antitrust injury because, as a “direct competitor of Maui Jim,” Maui Jim’s alleged
contracts resulted in “artificially high prices for Maui Jim sunglasses.” (Id. ¶¶ 54, 58.) See In re
Dealer Mgmt. Sys. Antitrust Litig., 313 F. Supp. 3d at 954 (finding no antitrust injury where “the
alleged market allocation [plaintiff] complains of would have helped [it] by eliminating its
alleged competitors and, after they raised prices, allowing it to undercut them”). On this ground
alone, SBG’s Sherman Act claim should be dismissed.
SBG nevertheless alleges it was harmed “because Maui Jim has unlawfully restricted and
seeks to eliminate [SBG’s] supply of Maui Jim sunglasses.” (2d Am. Countercl. ¶ 58.) SBG’s
brief characterizes this injury as impacting SBG’s business model and forcing SBG out of the
market because SBG “can no longer source [Maui Jim sunglasses] from certain distributors or
buy in bulk at a certain price.” (Resp. at 14.) SBG’s elucidation of this injury conflicts with
17

SBG’s clear framing of itself as Maui Jim’s direct competitor. (See 2d Am. Countercl. ¶ 54.)
O.K. Sand & Gravel, Inc., 36 F.3d 565, 572–73 (“Clearly, price increases could not be
considered an antitrust injury to competitors.”) Moreover, SBG cites no authority tying its
claimed harm to a recognized antitrust injury. (See Resp. at 14–15.) United States v. Cisneros,
846 F.3d 972, 978 (7th Cir. 2017) (“‘[P]erfunctory and undeveloped arguments, and arguments
that are unsupported by pertinent authority, are waived.’” (quoting United States v. Berkowitz,
927 F.2d 1376, 1384 (7th Cir. 1991)); see also Dunkin’ Donuts Inc. v. N.A.S.T., Inc.,
428 F. Supp. 2d 761, 775 (N.D. Ill. 2005) (“It is not this Court’s job to make parties’ arguments
for them, and it will not do so in this case.”).
B.

Single-Brand Market

In addition, Maui Jim argues that SBG’s antitrust claim cannot survive because SBG
improperly alleges a single-brand market. (Mem. at 19–21.) SBG identifies the alleged relevant
antitrust market as the “Maui Jim sunglasses market, specifically Maui Jim sunglasses that are
marketed and sold throughout the United States either online or through retail stores.”
(2d Am. Countercl. ¶ 50.) To establish a Section 1 claim, a plaintiff has the burden of
identifying the existence of a relevant product market. Agnew, 683 F.3d at 337. A relevant
product market is defined by “the reasonable interchangeability of the products and the crosselasticity of demand for those products.” Nucap Indus., Inc. v. Robert Bosch LLC, 273 F. Supp.
3d 986, 1011 (N.D. Ill. 2017) (quoting Ploss v. Kraft Foods Grp., Inc., 197 F. Supp. 3d 1037,
1070 (N.D. Ill. 2016)); see also In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig.,
767 F. Supp. 2d 880, 901 (N.D. Ill. 2011) (“In other words, the products in a market must have
unique attributes that allow them to be substituted for one another, but make them difficult to
replace with substitute products from outside the market.”).

18

“When a complaint limits the relevant market to a ‘single brand, franchise, institution, or
comparable entity that competes with potential substitutes,’ a court should dismiss the complaint
unless the complaint contains sufficient factual allegations that make it plausible there is no
substitute.” Int’l Equip. Trading, Ltd. v. AB SCIEX LLC, No. 13 C 1129,
2013 WL 4599903, at *4 (N.D. Ill. Aug. 29, 2013) (quoting Todd v. Exxon Corp.,
275 F.3d 191, 200 (2d Cir. 2001)). The requirement that a relevant product market for antitrust
purposes comprises more than a single brand “stems from the principle that antitrust law serves
to protect competition, not competitors.” House of Brides, Inc. v. Alfred Angelo, Inc.,
No. 11 C 07834, 2014 WL 64657, at *6 (N.D. Ill. Jan. 8, 2014) (citing 42nd Parallel N. v. E St.
Denim Co., 286 F.3d 401, 405 (7th Cir. 2002) (“Antitrust laws protect competition and not
competitors.”)). In limited circumstances, a relevant single-brand market has been found where
consumers were “locked in” to purchasing a future product or service or where the product is so
unique that there is no substitute. Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC,
136 F. Supp. 3d 911, 917 (N.D. Ill. 2015), aff’d, 870 F.3d 682 (7th Cir. 2017) (citing Eastman
Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 461–79, 112 S. Ct. 2072, 2079–89
(1992)); In re Dealer Mgmt. Sys. Antitrust Litig., 313 F. Supp. 3d 931, 961 (N.D. Ill. 2018) (“In
rare circumstances, a single brand of a product or service can constitute a relevant market for
antitrust purposes.” (quoting PSKS, Inc. v. Leegin Creative Leather Prod., Inc.,
615 F.3d 412, 418 (5th Cir. 2010)).
Although a single-brand market may exist, SBG has not pleaded facts demonstrating that
Maui Jim’s sunglasses are unique and cannot be substituted with other manufacturers’
sunglasses. SBG’s minimal allegations say nothing regarding cross-elasticities of supply or
demand. Int’l Equip. Trading, 2013 WL 4599903, at *4; see also House of Brides,
2014 WL 64657, at *6 (finding allegations that the brand had “an inelasticity of demand, and
19

little cross-elasticity of demand” between the product and competing products, along with
allegations that customers do not consider other brands suitable substitutes even in the face of a
“significant, non-transitory increase in the price,” fell short of “rendering it plausible that there
exist no interchangeable substitutes”). Consumer preferences do not create a single-brand
market. House of Brides, 2014 WL 64657, at *6 (citing Spahr v. Leegin Creative Leather
Prods., Inc., 2008 WL 3914461 at *9–10 (E.D. Tenn. 2008) (“While Brighton-brands may enjoy
some market loyalty, it cannot reasonably be argued that other handbags, wallets, shoes, jewelry
and the like do not serve the same purpose and have the same use as Brighton-brand products.”);
Global Discount Travel Servs., LLC v. Trans World Airlines, Inc., 960 F. Supp. 701, 705
(S.D.N.Y. 1997) (“The plaintiff’s argument is analogous to a contention that a consumer is
‘locked into’ Pepsi because she prefers the taste, or NBC because she prefers ‘Friends,’
‘Seinfeld,’ and ‘E.R.’ A consumer might choose to purchase a certain product because the
manufacturer has spent time and energy differentiating his or her creation from the panoply of
products in the market, but at base, Pepsi is one of many sodas, and NBC is just another
television network.”)). SBG’s counterclaim includes no allegation creating a plausible inference
that this is the rare case in which a single-brand market is actionable. See, e.g., Nucap Indus.,
Inc. v. Robert Bosch LLC, 273 F. Supp. 3d 986, 1012 (N.D. Ill. 2017) (dismissing antitrust claim
for lack of plausible relevant market, explaining “the counterclaims leave the matter to
speculation, which they cannot do”). The asserted single-brand market in Maui Jim sunglasses is
all the more implausible in light of SBG’s allegation that it sells “products from more than 180
of the world’s best-selling designer brands at attractive prices.” (2d Am. Countercl. ¶ 13.)
SBG’s counterclaim thus “contradicts its narrow market definition” by revealing that upward of
179 other sunglasses brands are competitive alternatives to Maui Jim sunglasses. Int’l Equip.

20

Trading, 2013 WL 4599903, at *4. SBG’s failure to plead a plausible relevant market renders
dismissal appropriate.
SBG argues that we cannot determine there are no interchangeable substitutes for Maui
Jim sunglasses without the aid of discovery. (Resp. at 13–14.) In support, SBG points to Maui
Jim’s allegation in its amended complaint that its sunglasses incorporate “patented, color-infused
lens technology” and this proprietary technology “distinguishes [Maui Jim] Sunglasses from its
competitors.” (Id.; see also Am. Compl. ¶ 20.) SBG’s only other allegation that Maui Jim
sunglasses constitute a market unto themselves states, “Maui Jim’s products are differentiated by
virtue of their labeling and design.” (2d Am. Countercl. ¶ 49.) “Although market definition is a
deeply fact-intensive inquiry, failure to offer a plausible relevant market is a proper ground for
dismissing an antitrust claim.” Right Field Rooftops, LLC v. Chi. Baseball Holdings, LLC,
87 F. Supp. 3d 874, 886 (N.D. Ill. 2015) (quotations omitted) (citing Todd v. Exxon Corp.,
275 F.3d 191, 199–200 (2d Cir. 2001); Nat’l Hockey League Players’ Ass’n v. Plymouth Whalers
Hockey Club, 325 F.3d 712, 719–20 (6th Cir. 2003); Tanaka v. Univ. of S. Cal.,
252 F.3d 1059, 1063 (9th Cir. 2001); Int’l Equip. Trading, 2013 WL 4599903, at *3). “That
market definition is often, or even usually, a fact-intensive exercise, however, says nothing about
whether the plaintiffs’ allegations of a single brand market in this case warrant further
discovery.” House of Brides, 2014 WL 6845862, at *4. Even though Maui Jim has alleged
some basis for the uniqueness of its sunglasses and the proprietary technology used therein, our
conclusion remains the same that the counterclaims do not permit an inference the sunglasses are
not interchangeable or that consumers are at all “locked in” to purchasing sunglasses only from
Maui Jim.

21

As SBG’s antitrust allegations fail on two essential elements of a Sherman Act claim and
further amendment would be futile, we grant Maui Jim’s motion to dismiss Count III of SBG’s
second amended counterclaim with prejudice.
IV.

CALIFORNIA COUNTERCLAIMS (COUNTS IV & V)
SBG’s second amended counterclaim asserts two violations of California law against

Maui Jim. Count IV of SBG’s counterclaim alleges that Maui Jim violated California’s antitrust
law, the Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq. (2d Am. Countercl. ¶¶ 61–76.)
Count V alleges that Maui Jim violated California’s unfair competition law, Cal. Bus. & Prof.
Code § 16720 et seq. (2d Am. Countercl. ¶¶ 77–85.) Maui Jim moves to dismiss these
counterclaims under Rule 12(b)(6). (Dkt. No. 278 at 1.)
A.

Cartwright Act Counterclaim

Count IV of SBG’s counterclaims alleges Maui Jim violated California’s Cartwright Act.
(2d. Am. Countercl. ¶ 71.) Maui Jim argues that SBG has no standing to bring the claim because
it has not adequately alleged injury under the Cartwright Act. (Dkt. No. 280 (“MJ Cal. Mem.”)
at 8–10.) As with the Sherman Act claim, Maui Jim argues that SBG benefits, as a competitor,
from allegedly higher prices of Maui Jim’s product. (Id. at 9–10.) SBG counters that standing
under the Cartwright Act is broader than under the federal Sherman Act. (Dkt. No. 289
(“SBG Cal. Resp.”) at 5.)
SBG is correct that federal and California antitrust standing are not coterminous.
“Interpretations of federal antitrust law are at most instructive, not conclusive, when construing
the Cartwright Act, given that the Cartwright Act was modeled not on federal antitrust statutes
but instead on statutes enacted by California's sister states around the turn of the 20th century.”
Aryeh v. Canon Bus. Solutions, Inc., 55 Cal. 4th 1185, 1195, 292 P.3d 871, 877 (Cal. 2013). The
Cartwright Act is broader in that it allows one whose business or property is injured by
22

prohibited conduct to sue “regardless of whether such injured person dealt directly or indirectly
with the defendant.” Cal. Bus. & Prof. Code § 16750(a); see also Cellular Plus, Inc. v. Superior
Court, 14 Cal. App. 4th 1224, 1233–34 (Cal. Ct. App. 1993) (analyzing Cartwright Act antitrust
standing under § 16750(a).) Nonetheless, to establish standing under the Cartwright Act, SBG
must still show actionable injury, which has four requirements: “(1) unlawful conduct,
(2) causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful,
and (4) that is of the type the antitrust laws were intended to prevent.” Knevelbaard
Dairies v. Kraft Foods, Inc., 232 F.3d 979, 987 (9th Cir. 2000) (quoting Am. Ad Mgmt.,
Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051, 1055 (9th Cir. 1999)).
SBG does not allege that it was overcharged by retailers of Maui Jim sunglasses because
of Maui Jim’s alleged price fixing, which is a typical form of injury. See, e.g.,
Clayworth v. Pfizer, Inc., 49 Cal. 4th 758, 784 (Cal. 2010) (characterizing a purchaser as injured
by an initial overcharge, even if that purchaser passed on the overcharge to a downstream
consumer); Cellular Plus, Inc., 14 Cal. App. 4th at 1234–35 (finding consumers “injured directly
by the alleged retail price fixing and indirectly by the alleged wholesale price fixing”). Nor does
SBG allege that it ever tried to purchase Maui Jim sunglasses from its California distributors.
Instead, SBG’s claimed injury is more tenuous. It first alleges that Maui Jim required its
distributors to agree to its General U.S. Policies, which contained within them a policy that Maui
Jim retailers may not sell below the manufacturer’s suggested retail price.
(2d Am. Countercl. ¶¶ 65–67.) Then, SBG alleges that Maui Jim threatened to terminate, and
did terminate, retailers who failed to adhere to the Policies, including retailers that sold to SBG.
(Id. ¶ 68.) As a result, SBG claims it lost revenue from its inability to sell Maui Jim sunglasses.
(Id. ¶ 73.)

23

SBG’s claimed injury is insufficient for at least two reasons. First, as discussed above,
SBG has alleged that it is Maui Jim’s direct competitor (id. ¶ 54), and thus it would stand to gain
by an agreement to raise Maui Jim prices. Am. Ad Mgmt., Inc., 190 F.3d at 1056 (“There can be
no antitrust injury if the plaintiff stands to gain from the alleged unlawful conduct. Competitors
who challenge a rival’s price-fixing are often unable to show injury.” (citation omitted)). Even
that aside, SBG does not claim that Maui Jim terminated retailers because of violations of its
alleged price-fixing policy. (See MJ Cal. Reply at 2.) SBG in fact alleges that Maui Jim
terminated retailers who sell to SBG for another reason: because of this litigation.
(2d Am. Countercl. ¶ 31 (alleging that Maui Jim closed accounts of SBG suppliers disclosed in
this litigation).) Injury under the Cartwright Act must “flow[] from that which makes the
conduct unlawful,” Knevelbaard, 232 F.3d at 987; see also Am. Ad Mgmt., Inc., 190 F.3d at 1056
(describing this requirement); Kolling v. Dow Jones & Co., 137 Cal. App. 3d 709, 723,
187 Cal. Rptr. 797, 807 (Cal. Ct. App. 1982) (under the Cartwright Act, “[a]n ‘antitrust injury’
must be proved; that is, the type of injury the antitrust laws were intended to prevent, and which
flows from the invidious conduct which renders defendants’ acts unlawful.”). SBG fails to draw
a plausible connection between Maui Jim’s alleged price fixing and its reason for terminating
retailers that sold product to SBG. See Twombly, 550 U.S. at 557, 127 S. Ct. at 1966 (requiring
antitrust allegations to cross the plausibility threshold).
Accordingly, we dismiss Count IV of SBG’s second amended counterclaim. SBG seeks
leave to amend to include additional facts produced in discovery. (SBG Cal. Resp. at 5.) SBG
added its California counterclaims without leave of this Court after it had already amended its
counterclaims against Maui Jim once. (Dkt. No. 131.) See Fed. R. Civ. P. 15(a) (a party may
amend a pleading once as a matter of course, and further “only with the opposing party’s written
consent or the court’s leave”). We see no reason to allow this claim to go to discovery only so
24

that SBG may conduct a “fishing expedition” that may result in a viable antitrust claim. In re
Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 801 F.3d 758, 766 (7th Cir. 2015); see also
Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 759 (7th Cir. 2002) (“It is well within
the province of the district court to deny leave to amend if, among other things, there is undue
delay or undue prejudice would result to the opposing party if the amendment were allowed.”).
We therefore dismiss Count IV with prejudice.
B.

Unfair Competition Law Claim

Count V of SBG’s second amended counterclaim asserts violations of California’s Unfair
Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200 et seq.
(2d Am. Countercl. ¶¶ 77–85.) The UCL proscribes both “unlawful” and “unfair” business
practices, and a claimant “can only assert an ‘unlawful’ practice insofar as it can assert violations
of other laws.” Orchard Supply Hardware LLC v. Home Depot USA, Inc.,
939 F. Supp. 2d 1002, 1011 (N.D. Cal. 2013). The factual allegations of Count V are the same
as those of Count IV. (2d Am. Countercl. ¶ 78 (“The conduct of Maui Jim and the retailers set
forth above in [SBG’s] Cartwright Act claim (Count III [sic]) constitutes unlawful practices”
under the UCL); id. ¶ 80 (same facts supporting “unfair” conduct under the UCL).)
The parties essentially agree that SBG’s UCL claim must rise or fall with SBG’s
Cartwright Act claim. (Compare MJ Cal. Mem. at 14 (arguing failure to establish Cartwright
Act claim requires dismissal of UCL claim), with SBG Cal. Resp. at 7 (“Because [SBG]
sufficiently alleges a Cartwright Act claim, its UCL claim is proper.”) As we have dismissed
SBG’s Cartwright Act claim, we also dismiss Count V. See Cascades Computer Innovation
LLC v. RPX Corp., No. 12 C 1143 YGR, 2013 WL 316023, at *15 (N.D. Cal. Jan. 24, 2013)
(“[B]ecause [Plaintiff’s] UCL claim is not materially different than its federal and state antitrust
claims, its UCL claim necessarily fails as well.”); Ingels v. Westwood One Broad. Servs.,
25

Inc., 129 Cal. App. 4th 1050, 1060, 28 Cal. Rptr. 3d 933 (Cal. Ct. App. 2005) (“‘If the
[underlying] claim is dismissed, then there is no ‘unlawful’ act upon which to base . . . the
derivative Unfair Competition claim.’”) (second alteration in original)). For the reasons stated
above, we do so with prejudice.
V.

EUROPEAN ANTITRUST COUNTERCLAIM (COUNT VI)
Count VI of SBG’s counterclaim (“EU Antitrust Claim”) alleges that Maui Jim’s

contracts with “authorized” distributors and its actions to uncover and close accounts of suppliers
of Maui Jim sunglasses to SBG violate Article 101(1)(a)–(c) of the Treaty on the Functioning of
the European Union (“TFEU”). (2d Am. Countercl. ¶¶ 87–89.) Maui Jim mounts three attacks
on this claim. First, in its Rule 12(b)(6) motion to dismiss, Maui Jim argues that SBG fails to
plead with specificity which defendant brings the EU Antitrust Claim. (Mem. at 21–22.) Second
and third, Maui Jim asserts in a separate motion that the EU Antitrust Claim should be dismissed
based on the principle of forum non conveniens, or, in the alternative, international comity.
(Dkt. No. 196.) Although principles of international comity are central to this claim, they are
best considered within the doctrine of forum non conveniens, which here counsels dismissal. As
we grant Maui Jim’s motion to dismiss on forum non conveniens grounds, we do not consider its
other 12(b)(6) arguments.
A.

Forum Non Conveniens Standard

The doctrine of forum non conveniens allows a federal court to dismiss a claim when a
foreign jurisdiction would provide a more convenient forum to adjudicate the matter, and
dismissal would serve the ends of justice. Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp.,
549 U.S. 422, 425, 127 S. Ct. 1184, 1188 (2007); Koster v. (Am.) Lumbermens Mut. Cas. Co.,
330 U.S. 518, 527, 67 S. Ct. 828, 833 (1947). “Stated more simply, a district court may dismiss
a case on forum non conveniens grounds when it determines that there are ‘strong reasons for
26

believing it should be litigated in the courts of another, normally a foreign, jurisdiction.’”
Deb v. SIRVA, Inc., 832 F.3d 800, 805 (7th Cir. 2016) (quoting Fischer v. Magyar Allamvasutak
Zrt., 777 F.3d 847, 866 (7th Cir. 2015)). District courts approach the doctrine with caution as it
is “an exceptional one that a court must use sparingly.” Id. As such, “[t]he exceptional nature of
a dismissal for forum non conveniens means that a defendant invoking it ordinarily bears a heavy
burden in opposing the plaintiff’s chosen forum.” Id. at 806 (citing Sinochem, 549 U.S. at 430,
127 S. Ct. at 1191).
To determine whether dismissal on forum non conveniens grounds is appropriate, a
district court must decide whether there is an available and adequate alternative forum to hear the
case and evaluate relevant private and public interest factors identified by the Supreme Court.
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, 102 S. Ct. 252, 258 (1981); Gulf Oil
Corp. v. Gilbert, 330 U.S. 501, 508–09, 67 S. Ct. 839, 843 (1947); Deb, 832 F.3d at 807
(7th Cir. 2016); Fischer, 777 F.3d at 867. The private interest factors to consider are:
[1] the relative ease of access to sources of proof; [2] availability of compulsory process
for attendance of unwilling, and [3] the cost of obtaining attendance of willing, witnesses;
[4] possibility of view of premises, if view would be appropriate to the action; and [5] all
other practical problems that make trial of a case easy, expeditious and inexpensive.
Clerides v. Boeing Co., 534 F.3d 623, 628 (7th Cir. 2008) (quoting Gilbert, 330 U.S. at 508,
67 S. Ct. at 843). The public interest factors to consider are:
[1] the administrative difficulties stemming from court congestion; [2] the local interest in
having localized disputes decided at home; [3] the interest in having the trial of a diversity
case in a forum that is at home with the law that must govern the action; [4] the avoidance
of unnecessary problems in conflicts of laws or in the application of foreign law; and [5]
the unfairness of burdening citizens in an unrelated forum with jury duty.
Id. (citing Gilbert, 330 U.S. at 508–09, 67 S. Ct. at 843). “The forum non conveniens
determination is committed to the sound discretion of the trial court. . . . [W]here the court has
considered all relevant public and private interest factors, and where its balancing of these

27

factors is reasonable, its decision deserves substantial deference.” Piper Aircraft Co.,
454 U.S. at 257, 102 S. Ct. at 266.
B.

Available and Adequate Alternative Forum

As an initial matter, the parties do not dispute that a European Union member state would
provide an available and adequate forum to adjudicate SBG’s EU Antitrust Claim.
(See Dkt. No. 233 (“SBG EU Resp.”) at 4 (“SBG does not dispute that there are several available
and adequate forums in EU member states that would possess jurisdiction over the TFEU
claim.”).) Thus, the first step in the forum non conveniens analysis is satisfied, leaving only the
requisite balancing of private and public interest factors. Sinochem Int’l Co., 549 U.S. at 429,
127 S. Ct. at 1190; Fischer, 777 F.3d at 867–68.
C.

Balancing of Factors

Turning to the balancing of factors, we first observe that, generally, “a plaintiff’s choice
of forum should be disturbed only if the balance of public and private interest factors strongly
favors the defendant.” Clerides, 534 F.3d at 628. Typically, the presumption in favor of the
plaintiff’s choice of forum “applies with less force when the plaintiff or real parties of interest
are foreign.” Piper Aircraft Co., 454 U.S. at 255, 102 S. Ct. at 266. In this case, Maui Jim’s
challenge to a sole SBG counterclaim for inconvenient forum is striking given that it was Maui
Jim, not SBG, who chose to litigate in this forum. However, the practice is not unprecedented in
this district. See, e.g., Nalco Co. v. Chen, No. 12 C 9931, 2013 WL 4501425, at *7
(N.D. Ill. Aug. 22, 2013) (considering and denying plaintiff’s motion to dismiss counterclaims
on forum non conveniens grounds). Moreover, our analysis of the relevant private interest
factors—and in particular the public interest factors—leads us to conclude that dismissal of
SBG’s EU Antitrust Claim on forum non conveniens is appropriate here.

28

1.

Private Interest Factors

Maui Jim argues that access to sources of proof and the availability of compulsory
process in Europe both weigh in favor of dismissal. (Dkt. No. 199 (“MJ EU Mem.”) at 8–9.) 5
See Clerides, 534 F.3d at 28. As Maui Jim points out, (MJ EU Mem. at 8–9), SBG’s allegations
reveal that the EU Antitrust Claim and underlying evidence are centered almost exclusively in
Europe. SBG alleges that it “sources the vast majority of its Maui Jim product from Member
States within the European Union, and the alleged restrictive contracts at issue . . . all involve
retailers in the European Union.” (2d Am Countercl. ¶ 88.) It also alleges that “Maui Jim’s
anticompetitive actions caused the restriction of trade between retailers in the European Union
and [SBG].” (Id.)
SBG faults Maui Jim for failing to identify specific witnesses or documents that would be
difficult to obtain outside of Europe. (SBG EU Resp. at 5–6.) SBG also argues that the
availability of compulsory process in Europe is at best a neutral factor because the subject matter
of Maui Jim’s affirmative Lanham Act and tortious interference claims cover the same subject
matter as SBG’s EU Antitrust Claim and would produce overlapping evidence. (Id. at 6–8.)
SBG contends further that documents concerning European supply chains and contractual
arrangements “are not only accessible but have also been accessed and are being produced.”
(Id. at 8.)
In reply, Maui Jim vigorously disputes that any such production of evidence from SBG
has occurred. (Dkt. No. 238 (“MJ EU Reply”) at 10; see also Dkt. No. 234 (Order staying

5

Maui Jim has filed two versions of its memorandum of law in support of its motion to dismiss
SBG’s EU Antitrust Claim, one public, the other under seal. (See Dkt. No. 199 (public);
Dkt. No. 200 (under seal); see also Dkt. No. 323 (granting filing under seal).) The two versions
are identical aside from select redactions in the text of the memorandum and three sealed
exhibits. This opinion refers only to the public version unless otherwise specified.
29

antitrust discovery).) Maui Jim also argues that while its tortious interference claim is limited to
the United States and Italy, SBG’s EU Antitrust Claim has a much wider potential scope
covering several European countries or the whole of Europe, while not including the United
States. (Id. at 3.) Maui Jim’s Lanham Act claims, moreover, do not appear to require
application of European law, and SBG does not explain how this subject matter would overlap
with its EU Antitrust Claim. (Id. at 6.)
We agree with Maui Jim that, while its affirmative tortious interference claim may
require evidence centered in Italy and the United States, the potential reach of SBG’s EU
Antitrust Claim weighs in favor of dismissal because most of the evidence regarding this claim is
likely to be in Europe. SBG’s point is well taken that compulsory process in Europe may be a
wash, depending on the course of litigation of Maui Jim’s claims regarding agreements in
European countries. On balance, though, the private interest factors weigh slightly toward
dismissal on forum non conveniens grounds.
2.

Public Interest Factors

Maui Jim and SBG also dispute relevant the public interest factors. Maui Jim contends
that congestion in this district warrants dismissal, that Europe’s local interest is better vindicated
by hearing SBG’s EU Antitrust Claim in a European Union member state, and that applying the
governing European Union law and burdening a domestic jury with European Union law favors
dismissal. (MJ EU Mem. at 10–11.) Maui Jim also advances an extended argument in the
alternative that principles of international comity require dismissal. (Id. at 11–15.) SBG
counters that Maui Jim does not analyze court congestion appropriately because it provides no
information as to how fast a disposition might be reached in a European court. (SBG EU Resp.
at 9.) SBG also argues that a domestic jury will be empaneled in any event should this case
reach trial, and having that jury decide the additional matter of its EU Antitrust Claim would
30

constitute a de minimis burden. (Id. at 11.) Moreover, SBG contends that its defenses to Maui
Jim’s counterclaims may require the Court to interpret European law, and that courts routinely
apply matters of foreign law when called upon to do so. (Id. at 11–12.)
While we consider all of the above public interest concerns, we find that “the local
interest in having localized disputes decided at home,” “the interest in having the trial of a
diversity case in a forum that is at home with the law that must govern the action,” and “the
avoidance of unnecessary problems in . . . the application of foreign law” weigh most heavily in
favor of dismissal. Clerides, 534 F.3d at 628.
Maui Jim’s persuasive comity arguments implicate each of these public interest factors.
(See MJ EU Mem. at 11–15; MJ EU Reply at 11–13.) “Comity refers to the spirit of cooperation
in which a domestic tribunal approaches the resolution of cases touching the laws and interests of
other sovereign states.” Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court for
S. Dist. of Iowa, 482 U.S. 522, 544 n.27, 107 S. Ct. 2542, 2556 n.27 (1987). As usually stated,
comity
is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good
will, upon the other. But it is the recognition which one nation allows within its territory
to the legislative, executive or judicial acts of another nation, having due regard both to
international duty and convenience, and to the rights of its own citizens, or of other
persons who are under the protection of its laws.
Hilton v. Guyot, 159 U.S. 113, 163–64, 16 S. Ct. 139, 143 (1895). Although some circuits
consider international comity a form of abstention doctrine when adjudication would implicate
sensitive matters of foreign law, e.g., Royal & Sun All. Ins. Co. of Canada v. Century Int’l Arms,
Inc., 466 F.3d 88, 92 (2d Cir. 2006), direct authority to decline to exercise jurisdiction on comity
grounds has not been so clearly spelled out in this circuit. See, e.g., Fischer, 777 F.3d at 854
(describing comity as incorporating a foreign exhaustion principle). However, the public interest
factors of forum non conveniens overlap with many articulated comity concerns. William S.
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Dodge, International Comity in American Law, 115 Colum. L. Rev. 2071, 2109–10 (2015)
(“Because the doctrine of forum non conveniens allows U.S. courts to restrain their exercise of
jurisdiction in deference to foreign courts, it is properly considered a doctrine of international
comity.”). As the Seventh Circuit has opined, “asking a U.S. court to wade into an area of EU
law that is fraught with uncertainty risks offending principles of international comity,” and these
“concerns can be more generally addressed under the auspices of the doctrine of forum non
conveniens.” Volodarskiy v. Delta Airlines, Inc., 784 F.3d 349, 356 (7th Cir. 2015).
To our knowledge, no United States court has entertained a claim under the TFEU’s
antitrust provisions or its equivalent predecessors. See In re Air Cargo Shipping Servs. Antitrust
Litig., No. MD 06-1775JGVVP, 2008 WL 5958061, at *31–34 (E.D.N.Y. Sept. 26, 2008), report
and recommendation adopted in part, 2009 WL 3443405 (E.D.N.Y. Aug. 21, 2009), aff’d,
697 F.3d 154 (2d Cir. 2012) (reasoning that EU antitrust claims under TFEU predecessor be
dismissed on forum non conveniens and international comity grounds, and observing that all
other known U.S. courts to consider such claims have refused to exercise jurisdiction over them);
In re Urethane Antitrust Litig., 683 F. Supp. 2d 1214, 1223 (D. Kan. 2010) (declining
supplemental jurisdiction over EU antitrust claim and reporting the parties were “unable to
identify any reported case in which a court in the United States exercised jurisdiction over
antitrust claims asserted under European law”); 7 Callmann on Unfair Comp.,
Tr. & Mono. § 28:5 (4th Ed. Dec. 2018 Update) (“Several private antitrust claims based on EC
[European Community] law have been filed in American courts, but those courts in their
discretion have declined to exercise jurisdiction.”).
Being the first U.S. court to adjudicate a TFEU antitrust claim would “undoubtedly raise
unsettled issues of EU antitrust law, because the private enforcement of EU antitrust law is
underdeveloped.” In re Air Cargo, 2008 WL 5958061, at *33. Concurring with this view, Maui
32

Jim submits by uncontested declaration an opinion on European Union law under Rule 44.1. 6
(Op. of Aidan Robertson, Queens Counsel (Dkt. No. 199–2).) The opinion states that the
“interpretation of EU . . . competition law remains in a state of development,” particularly
because “development of online retailing and online marketplaces has posed questions as to the
compatibility of restrictions on online activity imposed by suppliers on distributors and
retailers.” (Id. ¶ 27.)
Complicating matters is the dual-tiered system of adjudicating European antitrust claims,
where unsettled questions of law are determined first in a member state’s court, and then,
sometimes mandatorily, by recourse to the European Court of Justice (“ECJ”), the highest
European Union court. (Id. ¶ 28.) See generally In re Air Cargo, 2008 WL 5958061, at *32
(describing European antitrust litigation framework). As the well-reasoned report and
recommendation in In re Air Cargo Shipping Services Antitrust Litigation similarly found, “This
court would be forced to fly blind on these unsettled issues, because it does not have a
mechanism by which to obtain an opinion from the ECJ on an unresolved issue of EU antitrust
law.” Id. at *33. That court also concluded that “adjudication, by this court, or any other United
States Courts, of the EU claims asserted by plaintiffs could not operate within the framework
described above, would disturb the uniformity of EC competition law, and would undermine the
European interest in developing its own European antitrust law.” Id.
Applying the foregoing analysis to the relevant forum non conveniens public interest
factors, dismissing SBG’s EU Antitrust Claim would most saliently avoid “unnecessary
problems in . . . the application of foreign law.” Clerides, 534 F.3d at 628. And while there is a

6

Federal Rule 44.1 states, in relevant part, “In determining foreign law, the court may consider
any relevant material or source, including testimony, whether or not submitted by a party or
admissible under the Federal Rules of Evidence.” Fed. R. Civ. P. 44.1.
33

marginal interest in a court in this forum determining whether Maui Jim, an Illinois corporation,
engaged in anticompetitive practices, the local interest in alleged European Union antitrust
violations sits more comfortably in the European Union than here. See id. (enumerating public
interest factor of “the local interest in having localized disputes decided at home”). Likewise,
“the interest in having the trial of a diversity case in a forum that is at home with the law that
must govern the action” also points toward adjudication in a European Union member state. Id.;
see Volodarskiy, 784 F.3d at 353 (“One good reason to dismiss a case based on forum non
conveniens is to avoid the administrative or legal complications of interpreting and applying a
foreign country’s law. Relatedly, the doctrine permits dismissal in deference to a foreign
sovereign’s superior competence and public interest in adjudicating its own law.” (citations
omitted)).
Accordingly, because an available and adequate alternative forum for SBG’s
EU Antitrust Claim exists in European Union member states, and as the balance of private and
public interest factors weighs in favor of dismissal, we grant Maui Jim’s motion to dismiss this
counterclaim on forum non conveniens grounds.
VI.

UNJUST ENRICHMENT (COUNT VII)
Count VII of SBG’s second amended counterclaim alleges unjust enrichment.

(2d Am. Countercl. ¶¶ 91–94.) The claim is identical to that included in the first version of
SBG’s counterclaims (see Dkt. No. 20 ¶¶ 78–81), which we held survived a motion to dismiss in
our memorandum opinion and order on an earlier Maui Jim 12(b)(6) motion. (Order at 14–16).
Maui Jim now moves to dismiss SBG’s unjust enrichment claim under the
Noerr-Pennington doctrine. (Dkt. No. 278 ¶ 2; see MJ Cal. Mem. at 21–22.) The
Noerr-Pennington doctrine grants immunity from antitrust liability to those who petition the
government through courts to enforce trademark laws against their competitors. See E. R.R.
34

Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 136, 81 S. Ct. 523
(1961); Mine Workers v. Pennington, 381 U.S. 657, 670, 85 S. Ct. 1585 (1965); BE & K Const.
Co. v. N.L.R.B., 536 U.S. 516, 525, 122 S. Ct. 2390, 2396 (2002) (“These antitrust immunity
principles were then extended to situations where groups ‘use . . . courts to advocate their causes
and points of view respecting resolution of their business and economic interests vis-á-vis their
competitors.’” (quoting Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 511, 92 S.
Ct. 609, 612 (1972)). SBG’s counterclaim alleges in part that Maui Jim “knowingly and
intentionally used the trademark and copyright laws for the improper use of stifling competition
in the relevant market and therein enriched itself” to SBG’s detriment. (2d Am. Countercl. ¶ 92.)
Maui Jim argues that this allegation “seeks to penalize Maui Jim under an antitrust theory for
filing this lawsuit” in contravention of Noerr-Pennington. (MJ Cal. Mem. at 21.)
SBG counters that its unjust enrichment counterclaim encompasses conduct well beyond
Maui Jim’s present suit, including that Maui Jim defamed SBG and thereby caused SBG to
suffer harm in the marketplace. (SBG Cal. Resp. at 13; 2d Am. Countercl. ¶¶ 41.) Indeed,
similar allegations in SBG’s original counterclaims led us to conclude that its claim for unjust
enrichment could survive the earlier motion to dismiss. As we stated then:
Taking SmartBuyGlasses’ allegations as true, it has set forth a plausible claim that Maui
Jim publicized false allegations and commentary regarding SmartBuyGlasses’ products in
a press release, thereby wrongfully disparaging SmartBuyGlasses’ business and falsely
asserting it sells counterfeit products. (Counterclaim ¶¶ 2, 29, 34–35.) SmartBuyGlasses
alleges it has suffered harm in the marketplace as a result. (Id. ¶ 35.) The counterclaim
therefore connects Maui Jim’s unjust benefit (increased prices of its products due to its
allegedly anti-competitive and fraudulent conduct) to a detriment to SmartBuyGlasses
(disparagement of its products as counterfeit). Cleary [v. Philip Morris Inc.],
656 F.3d [511,] 518–20 [(7th Cir. 2011)]. As a result, SmartBuyGlasses’ allegations in
Count VIII [for unjust enrichment] are sufficient to survive dismissal at this stage.
(Order at 16.) Although, in the present opinion, we grant in part Maui Jim’s motion to dismiss
SBG’s defamation claim based on the press release referenced in the above passage, we also

35

deny in part that motion based on other alleged defamation that goes beyond this suit, see supra
Part II(A). “[I]f an unjust enrichment claim rests on the same improper conduct alleged in
another claim, then the unjust enrichment claim will be tied to this related claim—and, of course,
unjust enrichment will stand or fall with the related claim.” Cleary, 656 F.3d at 517. SBG’s
unjust enrichment claim encompasses all of its allegations, including those that make up its
defamation claim and which survive this opinion. (See 2d Am. Countercl. ¶¶ 29–30, 91.) The
Noerr-Pennington doctrine thus does not bar this claim, because it covers allegations going
beyond the current suit. We therefore deny Maui Jim’s motion to dismiss Count VII.
VII.

MOTION TO STRIKE AFFIRMATIVE DEFENSES
In addition to its motions to dismiss, Maui Jim also moves under Rule 12(f) to strike two

affirmative defenses that SBG pleaded in its answer. (Dkt. No. 278 ¶¶ 3–4.) We consider each
argument in turn.
A.

First Affirmative Defense

Maui Jim moves to strike SBG’s first affirmative defense, “inequitable restraint of trade.”
(Id. ¶ 3; Answer (Dkt. No. 259) at 31.) This affirmative defense reads:
Maui Jim’s use of its trademarks in violation of the antitrust laws precludes enforcement
of the trademarks at issue on both equitable grounds and under § 33(b)(7) of Lanham Act.
15 UCSC § 1115(b)(7). Plaintiffs are attempting to misuse their trademarks to acquire a
monopoly in violation of U.S. antitrust laws.
(Answer at 31.) Maui Jim argues first that this defense should be stricken because it depends on
SBG’s deficient Sherman Act claim. (MJ Cal. Mem. at 15.) Maui Jim also argues that under the
Noerr-Pennington doctrine, SBG is foreclosed from arguing that Maui Jim is using its suit
against SBG to violate antitrust laws. (Id. at 16–18.)
SBG agrees that its Sherman Act claim is “coterminous” with its first affirmative defense,
and the allegation that Maui Jim is “attempting to misuse their trademarks to acquire a monopoly

36

in violation of U.S. antitrust laws” refers to SBG’s Sherman Act claim, not to Maui Jim’s
lawsuit. (SBG Cal. Resp. at 9; Answer at 31.) As SBG’s Sherman Act claim is dismissed, see
supra Part III, its “coterminous” defense also fails.
However, SBG argues that Section 33(b)(7) of the Lanham Act can operate as an
independent affirmative defense. (SBG Cal. Resp. at 10–11.) Section 33(b)(7) allows a defense
if a “mark has been or is being used to violate the antitrust laws of the United States.”
15 U.S.C. § 1115(b)(7). Assuming only for purposes of this opinion that Section 33(b)(7)
provides an affirmative defense, SBG has no surviving claim that Maui Jim’s use of trademark
violates the antitrust laws. SBG’s affirmative defense alleges no ground for antitrust violation
that we have not already addressed. And SBG implicitly admits that its defense could not be
based on Maui Jim’s lawsuit. (SBG Cal. Resp. at 9 (arguing Noerr-Pennington not implicated
because the defense “relates to [SBG’s] Sherman Act claim rather than the mere fact that Maui
Jim filed the instant lawsuit” (citation omitted).) BE & K Const. Co., 536 U.S. at 525,
122 S. Ct. at 2396; California Motor Transport Co., 404 U.S. at 511, 92 S. Ct. at 612.
SBG’s cited authority is not to the contrary. SBG relies on Dell, Inc. v. 3K Computers,
LLC, No. 08-80455-CIV, 2008 WL 6600766, at *1 (S.D. Fla. Oct. 7, 2008), for the proposition
that Section 33(b)(7) is an affirmative defense. (See SBG Cal. Resp. at 10.) But that case found
an affirmative defense under Section 33(b)(7) could not stand because the defendant’s only
Sherman Act claim derived from the plaintiff’s lawsuit, and the Noerr-Pennington doctrine
barred the defense. Dell, Inc., 2008 WL 6600766, at *3 (because defendant’s only ground for
liability under the Sherman Act against plaintiff failed, “there is no longer a legal basis for
[defendant’s] § 1115(b)(7) affirmative defense”). Similarly, the other case SBG cites, Phi Delta
Theta Fraternity v. J.A. Buchroeder & Co., 251 F. Supp. 968, 975 (W.D. Mo. 1966), found that

37

Section 33(b)(7) was an affirmative defense when a violation of antitrust laws had also been
established. (SBG Cal. Resp. at 11.) Such is not the case here.
For these reasons, we strike SBG’s first affirmative defense for failure to “withstand a
12(b)(6) challenge,” with prejudice. Sarkis’ Cafe, Inc., 55 F. Supp. 3d at 1039; see also Thermos
Co. v. Igloo Prod. Corp., No. 93 C 5826, 1995 WL 745832, at *8 (N.D. Ill. Dec. 13, 1995)
(adopting Report and Recommendation that affirmative defense based on violation of antitrust
laws be stricken because it relied on antitrust counterclaims that failed to state a claim).
B.

Fourth Affirmative Defense

Maui Jim also moves to strike SBG’s fourth affirmative defense. (Dkt. No. 278 ¶ 4.) 7
This defense reads:
Maui Jim broadly asserts Lanham Act claims that unfairly and improperly intend to restrain
legitimate competition in genuine Maui Jim products sold outside distribution channels
that Maui Jim desires and the prosecution of these claims is undertaken with unclean hands,
rendering Maui Jim’s asserted rights unenforceable.
(Answer at 32.) Maui Jim argues that SBG’s unclean hands defense cannot stand because it
relies solely on the fact of Maui Jim’s suit against SBG. (MJ Cal. Mem. at 20–21.)
“The unclean hands doctrine provides that a party to a lawsuit may not obtain the relief it
seeks if it has engaged in wrongful conduct.” Smith v. United States, 293 F.3d 984, 988
(7th Cir. 2002). “The bad conduct constituting unclean hands must involve fraud,
unconscionability or bad faith toward the party proceeded against, and must pertain to the subject
matter involved and affect the equitable relations between the litigants.” Int’l Union, Allied
Indus. Workers of Am., v. Local Union No. 589, Allied Indus. Workers of Am., 693 F.2d 666, 672
(7th Cir. 1982) (internal quotations and citations omitted). Although unclean hands is not listed
7

Two of SBG’s affirmative defenses are labeled “Fourth Defense,” one for exhaustion and the
other for unclean hands. (Answer at 31–32.) Maui Jim’s motion to strike is directed at SBG’s
unclean hands defense. (MJ Cal. Mem. at 20.)
38

in the Lanham Act, “courts have recognized it as an affirmative defense to claims of trademark
infringement.” Sarkis’ Cafe, Inc. v. Sarks in the Park, LLC, No. 12 C 9686,
2016 WL 723135, at *2 (N.D. Ill. Feb. 24, 2016); see also R.J. Reynolds Tobacco
Co. v. Premium Tobacco Stores, Inc., No. 99 C 1174, 2001 WL 747422, at *2
(N.D. Ill. June 29, 2001) (“In appropriate cases, ‘unclean hands can constitute a bar to some or
all of the relief sought for trademark infringement or unfair competition.’” (quoting J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition § 31.47 (5th ed. 2001) (“McCarthy
on Trademarks”))).
“The allegedly unfair or improper filing of a trademark infringement lawsuit cannot
itself constitute a basis for an unclean hands defense to that lawsuit.” 6 McCarthy on
Trademarks § 31:51 (5th ed. March 2019 Update). This is because “[t]he act of bringing the
lawsuit is not the subject matter concerning which plaintiff seeks relief. Unclean hands must
relate to the getting or using the alleged trademark rights.” Id.; see also Coach, Inc. v. Kmart
Corps., 756 F. Supp. 2d 421, 429 (S.D.N.Y. 2010) (“Filing a trademark or trade dress
infringement lawsuit, therefore, cannot be a basis for an unclean hands defense to that lawsuit
because any bad faith or inequitable conduct in filing the lawsuit is unrelated to the plaintiff’s
acquisition or use of the trademark or trade dress rights.”); Ty, Inc. v. Publ’n Int’l, Ltd.,
No. 99 C 5565, 2004 WL 1588256, at *1–2 (N.D. Ill. July 16, 2004) (citing
McCarthy on Trademarks § 31:51 and finding that a trademark misuse defense based on the
plaintiff’s filing the present lawsuit could not stand).
SBG contends that its defense is not limited to Maui Jim’s filing of the instant suit, but
instead refers to Maui Jim’s “use” of its trademarks and its “intent” in filing the current suit.
(SBG Cal. Resp. at 12.) We do not agree. SBG’s defense states that “Maui Jim broadly asserts
Lanham Act claims that unfairly and improperly intend to restrain legitimate competition,” and
39

that Maui Jim’s “prosecution of these claims is undertaken with unclean hands.” (Answer at 32.)
The defense squarely alleges that Maui Jim has unclean hands because of its law suit, and as
such, it fails as a matter of law. Coach, Inc., 756 F. Supp. 2d at 429. We therefore grant Maui
Jim’s motion to strike this affirmative defense. However, because it may be possible for SBG to
adequately plead an unclean hands defense that relates to Maui Jim’s use of trademark beyond
this suit, we do so without prejudice.
CONCLUSION
For the foregoing reasons, we grant Maui Jim’s motion to dismiss Counts I, III, IV, V,
and VI of SBG’s second amended counterclaim. (Dkt. No. 184, 196, 278.) We grant in part and
deny in part Maui Jim’s motion to dismiss SBG’s Count II. (Dkt. No. 184.) We deny Maui
Jim’s motion to dismiss Count VII. (Dkt. No. 278.) Finally, we grant Maui Jim’s motion to
strike SBG’s first affirmative defense with prejudice, and fourth affirmative defense (unclean
hands) without prejudice. (Id.) It is so ordered.

______________________ _____________
Honorable Marvin E. Aspen
United States District Judge
Dated: May 10, 2019
Chicago, Illinois

40