Express Lien Inc v. Nationwide Notice Inc
Filing
28
ORDERED that Defendant's 22 Motion to Dismiss for Failure to State a Claim, Motion to Strike Claim for Attorneys' Fees, and Motion for Award of Attorneys' Fees is GRANTED in part and DENIED in part. It is FURTHER ORDERED that the motion to dismiss Plaintiff's trade dress infringement claim is DENIED. It is FURTHER ORDERED that the motions to dismiss Plaintiff's breach of contract and LUTPA claims are GRANTED. Plaintiff's breach of contract and LUTPA claims ar e DISMISSED WITHOUT PREJUDICE. Plaintiff is granted leave to file a second amended complaint with respect to the LUTPA and breach of contract claims within 21 days of this Order. It is FURTHER ORDERED that the motion to dismiss Plaintiff's fr aud claim is GRANTED. Plaintiff's fraud claim is DISMISSED WITH PREJUDICE. It is FURTHER ORDERED that the motion to strike Plaintiff's claim for attorneys' fees and treble damages pursuant to Plaintiff's LUTPA claim is GRANTED. It is FURTHER ORDERED that the motion for award of attorneys' fees and costs is DENIED. It is FURTHER ORDERED that Defendant's 8 Partial Motion to Dismiss for failure to State a Claim, Motion to Strike Claim for Attorneys' Fees and Treble Damages, and Motion for Award of Attorneys Fees and Costs is DENIED as moot. Signed by Judge Carl Barbier. (gec)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
EXPRESS LIEN, INC.
CIVIL ACTION
VERSUS
NO: 16-2926
NATIONWIDE NOTICE, INC.
SECTION: “J” (4)
ORDER AND REASONS
Before the Court is a 12(b)(6) Motion to Dismiss, Motion to
Strike Claim for Attorneys’ Fees and Treble Damages, and Motion
for Award of Attorneys’ Fees and Costs
Defendant,
Nationwide
Notice,
Inc.
(R. Doc. 22) filed by
(Defendant),
an
opposition
thereto (R. Doc. 24) filed by Plaintiff, Express Lien, Inc., doing
business as Zlien (Plaintiff), and a reply filed by Defendant (R.
Doc. 27).
Having considered the motion and legal memoranda, the
record, and the applicable law, the Court finds that the motion
should be GRANTED in part and DENIED in part.
FACTS AND PROCEDURAL BACKGROUND
According to its amended complaint, Plaintiff is a software
platform that serves parties in the construction industry by
providing accounts receivable and construction payment services.
(R. Doc. 20, at 3.)
Plaintiff offers its customers “self help”
resources, such as construction notices and lien forms, so that
its customers can exert and maintain control over their security
1
rights on construction programs.
Id.
services through its website, zlien.com.
Plaintiff offers these
Id.
Plaintiff alleges that it has invested substantial time,
money, and energy creating a website that will attract customers
and drive sales.
The website includes special features designed
to achieve this goal.
For instance, Plaintiff alleges that its
website has a feature that allows the user to obtain specific lien
information for each individual state (state-by-state resources).
Id. at 4.
Plaintiff alleges that the website’s state-by-state
resources include frequently asked questions for each state, a
chart displaying
unique lien information specific to each state,
and selected text from each state’s statutes on mechanics lien and
bond law.
Id.
Plaintiff alleges that each page of its website is
marked with a copyright notice.
Plaintiff alleges that Defendant, which provides a similar
construction document preparation and filing service through its
web platform, visited Plaintiff’s website and copied the material
therein.
In particular, Plaintiff alleges that Defendant has
copied the “resources” section of Plaintiff’s website, posted the
information on its own website, and now claims it as its own.
Plaintiff
also
alleges
that
Defendant
has
used
“misrepresentations, suppressions, and other unfair tactics” with
respect to Defendant’s website to unfairly compete with Plaintiff.
2
Plaintiff brought this suit on April 8, 2016.
(R. Doc. 1.)
On September 15, 2016, Plaintiff filed an amended complaint (R.
Doc. 20), alleging violations of 17 U.S.C. § 501 for copyright
infringement, and 15 U.S.C. § 1125(a) (§ 43 of the Lanham Act) for
trade dress infringement.
The amended complaint also alleges
violations of Louisiana law, including the Louisiana Unfair Trade
Practices and Consumer Protection Law (LUTPA) La. Rev. Stat. §
51:1401 et seq., and fraud under Louisiana Civil Code Article 1953,
and makes a demand for stipulated damages pursuant to Louisiana
Civil Code Article 2007.
Additionally, the amended complaint
requests that Defendant be enjoined from copying, posting, or
making any other infringing use or distribution of Plaintiff’s
protected materials.
Defendant
has
filed
this
partial
motion
to
dismiss,
requesting that the Court dismiss Plaintiff’s claims for trade
dress infringement, breach of contract, fraud, and unfair trade
practices.
(R. Doc. 22-1, at 1.) 1
Defendant also requests that
the Court strike Plaintiff’s demand for attorneys’ fees and treble
damages.
Finally, Defendant requests an award of reasonable
attorneys’ fees and costs incurred in bringing its motion to
dismiss Plaintiff’s LUTPA claim.
1
The only claim in Plaintiff’s amended complaint that Defendant does not
request the Court to dismiss is Plaintiff’s Copyright Act claim.
3
PARTIES’ ARGUMENTS
Defendant argues that Plaintiff’s Lanham Act, breach of
contract, LUTPA, and fraud claims should be dismissed pursuant to
Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)).
Defendant
contends
that
these
claims
Plaintiff’s Copyright Act claim.
are
all
First,
preempted
by
Additionally, Defendant argues
that Plaintiff’s amended complaint fails to plead the Lanham Act,
breach of contract, LUTPA, and fraud claims with sufficient factual
detail to survive Rule 12(b)(6) motion to dismiss.
Plaintiff argues that none of its claims are preempted by the
Copyright Act because they are causes of action entirely separate
from Plaintiff’s Copyright Act claim. Further, Plaintiff contends
that it has pled all of its claims with sufficient detail to
survive Defendant’s motion to dismiss.
LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a complaint must
contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
complaint must “give the defendant fair notice of what the claim
is and the grounds upon which it rests.” Dura Pharm., Inc. v.
Broudo, 544 U.S. 336, 346 (2005). The allegations “must be simple,
concise, and direct.” Fed. R. Civ. P. 8(d)(1).
“Under
Rule
12(b)(6),
a
claim
may
be
dismissed
when
a
plaintiff fails to allege any set of facts in support of his claim
4
which would entitle him to relief.” Taylor v. Books A Million,
Inc., 296 F.3d 376, 378 (5th Cir. 2002) (citing McConathy v. Dr.
Pepper/Seven Up Corp., 131 F.3d 558, 561 (5th Cir. 1998)). To
survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead
enough facts to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007)). A claim is
facially plausible when the plaintiff pleads facts that allow the
court to “draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. A court must accept all
well-pleaded facts as true and must draw all reasonable inferences
in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d
228, 232-33 (5th Cir. 2009); Baker v. Putnal, 75 F.3d 190, 196
(5th Cir. 1996). The court is not, however, bound to accept as
true legal conclusions couched as factual allegations.
Iqbal, 556
U.S. at 678.
DISCUSSION
Lanham Act Claim
Defendant’s first argument is that Plaintiff’s Lanham Act
claim is preempted by the Copyright Act because Plaintiff’s Lanham
Act claim is merely a restatement of its Copyright Act claim.
Defendant supports this position by referring the Court primarily
to cases where courts, upon motions for summary judgment, dismissed
Lanham Act claims when the Copyright Act provided a sufficient
5
remedy.
(R. Doc. 22-1, at 6-7.); see, e.g., Shaw v. Lindheim, 919
F.2d 1353, 1364-65 (9th Cir. 1990) (“We decline to expand the scope
of the Lanham Act to cover cases in which the Federal Copyright
Act provides an adequate remedy.”).
But the Fifth Circuit has
stated:
The
federal Copyright Act
does
not
preempt
the
federal Lanham Act, or vice-versa.
In fact, it is
common practice for copyright owners to sue for both
infringement under the 1976 Copyright Act and unfair
competition under the Lanham Act.
Such a litigation
posture has never been disallowed by the courts on
grounds of either preemption or impermissible double
recovery.
Alameda Films v. Authors Rights Restoration Corp., 331 F.3d 472,
482 (5th Cir. 2003) reh’g denied, (5th Cir. June 26, 2003).
In this case, Plaintiff’s Lanham Act claim is based upon the
allegation
that
Defendant’s
copying
of
certain
parts
of
Plaintiff’s website is likely to lead to “consumer confusion” and
“deceive as to the affiliation, connection, or association of
[Defendant] with [Plaintiff].”
(R. Doc. 20, at 12).
Though
similar, the Copyright Act claim and the Lanham Act claim are
distinct.
Thus, Defendant’s argument that Plaintiff’s Lanham Act
claim is preempted by the Copyright Act must fail at this stage of
litigation, especially when it is not clear whether Defendant’s
Copyright Act claim will provide an adequate remedy.
See Dastar
Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 34 (2003)
(“[I]n construing the Lanham Act, we have been careful to caution
6
against
misuse
protections
into
or
over-extension
areas
of
traditionally
trademark
occupied
and
by
related
patent
or
copyright.”) (internal citations omitted).
Defendant’s second argument is that Plaintiff’s Lanham Act
claim failed to provide enough factual detail to satisfy Rule 8(a).
The relevant portion of the Lanham Act, upon which Plaintiff’s
claim is based, provides:
a) Civil action
(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,
shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged by
such act.
15 U.S.C. § 1125(a).
The Fifth Circuit has articulated a two-step
analysis to determine whether a Lanham Act trade dress infringement
cause of action is available.
Allied Mktg Grp. Inc. v. CDL Mktg,
Inc., 878 F.2d 806, 813 (5th Cir. 1989).
7
The first step is to
determine whether the trade dress is protectable, which requires
inquiry into three issues: (1) distinctiveness, (2) secondary
meaning, and (3) functionality.
Id.
The next step is to determine
whether the trade dress has been infringed, which “is shown by
demonstrating that the substantial similarity in trade dress is
likely to confuse consumers.”
Id.
Defendant argues that Plaintiff’s amended complaint fails to
identify any protectable trade dress.
(R. Doc. 22-1, at 13.)
In
particular, Defendant argues that Plaintiff fails to sufficiently
synthesize the unique elements of its website to demonstrate how
those elements qualify as protectable trade dress.
It is true
that the amended complaint does not painstakingly describe the
protectable nature of the trade dress in its section setting forth
the Lanham Act cause of action.
However, the amended complaint
does clearly identify unique aspects of Plaintiff’s website.
In
particular, the amended complaint alleges that Plaintiff’s website
has a page providing state-by-state resources for lienholders.
(R. Doc. 20, at 4-5.)
The amended complaint also alleges that the
website’s design is “widely recognized by consumers and has become
a valuable indicator of the source and origin of the information
provided” therein.
(R. Doc. 20, at 11.)
This satisfies the first
requirement of trade dress protectability, at least at the pleading
stage.
See Express Lien, Inc. v. Nat’l Ass’n of Credit Mgmt., 13-
3323, 2013 WL 4517944, at *4 (E.D. La. Aug. 23, 2013) (finding
8
that plaintiff satisfied the pleading requirement for a Lanham Act
cause of action when the plaintiff alleged that aspects of its
website design were “widely recognized by consumers and [had]
become a valuable indicator of the source and origin of the
information” in the website).
Plaintiff also satisfies the second pleading requirement that
the substantial similarity in trade dress is likely to confuse
consumers.
The amended complaint lists five specific elements of
Plaintiff’s website which it alleges that Defendant copied, and
which contribute to the “look and feel” of Plaintiff’s website.
For example, Plaintiff alleges that Defendant copied the phrases
“Trusted by Thousands” and “Thousands trust us” from Plaintiff’s
website and that Defendant used them.
(R. Doc. 20, at 11.)
Additionally, the amended complaint alleges that Defendant copied
and used the state-by-state resources section, as well as the chart
format and layout from Plaintiff’s website.
These allegations are
sufficient to satisfy the pleading requirement.
Breach of Contract Claim
Defendant’s two arguments in favor of dismissing Plaintiff’s
breach of contract claim are (1) that the breach of contract claim
is preempted, and (2) that the factual allegations in the amended
complaint fail to provide enough factual detail to satisfy the
pleading stage.
9
The first issue is whether a claim for breach of contract is
preempted by the Copyright Act.
It is not.
Defendant argues that
Plaintiff’s breach of contract claim is no different than its
copyright claim, and that the Copyright Act preempts breach of
contract claim.
The Copyright Act’s preemption provision states
that “all legal or equitable rights that are equivalent to any of
the exclusive rights within the general scope of copyright as
specified by section 106 . . . are governed exclusively by this
title” and “no person is entitled to any such right or equivalent
right in any such work under the common law or statutes of any
State.”
17 U.S.C. § 301(a).
Courts in the Fifth Circuit employ
a two-part test to determine whether the Copyright Act preempts a
state law claim.
“First, the claim is examined to determine
whether it falls within the subject matter of copyright as defined
by 17 U.S.C. § 102.
And second, the cause of action is examined
to determine if it protects rights that are equivalent to any of
the exclusive rights of a federal copyright, as provided in 17
U.S.C. § 106.”
Spear Mktg., Inc. v. Bancorpsouth Bank, 791 F.3d
586, 594 (5th Cir. 2015) (internal citations omitted).
When determining whether state law claims are equivalent to
copyright, courts apply the “extra elements” test.
As the Fifth
Circuit has explained:
[I]f the act or acts of [the defendant] about which [the
plaintiff] complains would violate both misappropriation
law and copyright law, then the state right is deemed
10
“equivalent to copyright.”
If, however, one or more
qualitatively
different elements are
required
to
constitute the state-created cause of action being
asserted, then the right granted under state law does
not lie “within the general scope of copyright,” and
preemption does not occur.
GlobeRanger Corp. v. Software AG U. S. A, Inc., 836 F.3d 477, 485
(5th Cir. 2016) (citing Alcatel USA, Inc. v. DGI Techs., Inc., 166
F.3d 772, 787 (5th Cir. 1999)).
The Fifth Circuit has addressed
the preemption question in the context of a breach of contract
claim and held that the claim was not preempted by the Copyright
Act.
Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (5th
Cir. 1990). In that case, the breach of contract claim “involve[d]
an element in addition to mere reproduction, distribution or
display . . . ,” namely a contractual promise.
Id.; see also
Dorsey v. Money Mack Music, Inc., 304 F. Supp.2d 858, 865 (E. D.
La.
2003)
(“This
legitimate
breach
preemption.”).
circuit
of
has
consistently
contract
allegation
recognized
serves
to
that
a
defeat
Thus, Plaintiff’s breach of contract claim should
not be dismissed due to Copyright Act preemption.
Defendant’s second argument is that the amended complaint
fails to provide enough factual detail to satisfy the pleading
requirement.
The essential elements of a claim for breach of
contract under Louisiana law are “(1) the obligor's undertaking an
obligation to perform, (2) the obligor failed to perform the
obligation (the breach), and (3) the failure to perform resulted
11
in damages to the obligee.”
Favrot v. Favrot, 2010-986, p. 14-15
(La. App. 4 Cir. 2/25/11); 68 So. 3d 1099, 1108-09.
But before
there can be a breach of contract, a contract must exist in the
first place.
A contract is formed in Louisiana by the consent of
the parties established through offer and acceptance.
Code. art. 1927.
La. Civ.
There must be a “meeting of the minds” between
the parties to make a contract enforceable.
Read v. Willwoods
Cmty., 2014-1475, p. 5 (La. 3/17/15); 165 So. 3d. 883, 887.
Here, Defendant argues that no such meeting of the minds
occurred and that Plaintiff’s amended complaint fails to allege
any contractual undertaking on the part of Defendant.
22-1, at 16.)
(R. Doc.
This is because the alleged breach of contract stems
from Defendant’s use of Plaintiff’s website. The amended complaint
alleges that use of Plaintiff’s “websites, products, forms, data,
information, resources, or other services” is governed by its
website’s Terms of Use.
(R. Doc. 20, at 13.)
Plaintiff further
alleges that by using Plaintiff’s website, products, and services,
Defendant “agreed to be bound,” though the amended complaint fails
to identify what Defendant agreed to be bound to.
The amended
complaint also alleges that the Terms of Use on Plaintiff’s website
include
an
“Intellectual
Property
Information”
section
which
states that the information on Plaintiff’s website is protected by
copyright, and which sets forth stipulated and liquidated damages
for unauthorized copying and use of the content.
12
Notably
absent
from
the
amended
complaint
is
any
clear
allegation that Defendant knowingly entered into a contract with
Plaintiff.
Rather, the amended complaint relies upon the mere
existence of Terms of Use on Plaintiff’s website, and alleges that
use of the website obligates Defendant, and all other users, to
abide by the website’s Terms of Use.
The amended complaint fails
to claim that Defendant engaged in a meeting of the minds with
Plaintiff, or that Defendant was even aware of the Terms of Use.
The Court does not foreclose the possible existence of a
contractual relationship being consummated between a website host
and a website user through use of the website, but only concludes
that no such relationship has been alleged in Plaintiff’s amended
complaint.
760,
764-67
See Internet Archive v. Shell, 505 F. Supp.2d 755,
(D.
Col.
2007)
(finding
that
a
website
owner’s
allegation that its website included a copyright notice 2 which
stated that copying anything on the site would result in the user
entering into a relationship with the website owner satisfied the
existence of a contractual relationship at the pleading stage).
Accordingly, Defendant’s motion to dismiss the breach of contract
claim is granted.
2
The copyright notice stated: “IF YOU COPY OR DISTRIBUTE ANYTHING ON THIS SITE—
YOU ARE ENTERING INTO A CONTRACT. READ THE CONTRACT BEFORE YOU COPY OR
DISTRIBUTE. YOUR ACT OF COPYING AND/OR DISTRIBUTING OBJECTIVELY AND EXPRESSLY
INDICATES YOUR AGREEMENT TO AND ACCEPTANCE OF THE FOLLOWING TERMS:” Internet
Archive, 505 F. Supp.2d at 760.
13
LUTPA Claim
As
with
Plaintiff’s
the
previous
Louisiana
two
Unfair
claims,
Trade
Defendant
Practices
argues
and
that
Consumer
Protection Law (LUTPA) claim is preempted by the Copyright Act.
Once again, the Fifth Circuit has held otherwise: “Because a cause
of action under the Louisiana Unfair Trade Practices Act requires
proof of fraud, misrepresentation or other unethical conduct, . .
, we find that the relief it provides is not ‘equivalent’ to that
provided in the Copyright Act and, thus, it is not pre-empted.”
Comput. Mgmt. Assistance Co. v. DeCastro, Inc., 220 F.3d 396, 40405 (5th Cir. 2000).
Accordingly, Plaintiff’s LUTPA claim is not
preempted.
Defendant
also
argues
that
Plaintiff
has
failed
to
sufficiently allege a LUTPA claim. LUTPA prohibits “unfair methods
of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce.”
La. Rev. Stat. § 51:1405(A).
“Any person who suffers any ascertainable loss of money or movable
property,
corporeal
or
incorporeal”
due
to
practices has a right to bring a LUTPA claim.
51:1409(A).
Conduct
only
established public policy.
qualifies
as
the
unfair
trade
La. Rev. Stat. §
unfair
if
it
offends
Double-Eight Oil and Gas L.L.C. v.
Caruthers Producing Co., 41,451, p. 8 (La. App. 2 Cir. 11/20/06);
942 So. 2d 1279, 1284.
Courts are to decide on a case-by-case
basis whether a defendant’s behavior so qualifies, but “a plaintiff
14
must prove ‘some element of fraud, misrepresentation, deception,
or
other
unethical
conduct’
on
the
part
of
the
defendant.”
Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 2009-0871,
p. 10 (La. 4/23/10); 35 So. 3d 1053, 1059 (citing Dufau v. Creole
Eng’g, Inc., 465 So. 2d 752, 758 (La. App. 5. Cir. 1985)).
Furthermore,
LUTPA.
only
“egregious”
actions
are
sanctionable
under
Id. at 1060.
The
amended
complaint
alleges
that
Defendant
has
made
numerous misrepresentations on its website, and that Defendant has
used
these
misrepresentations
and
suppressions
of
truth
to
unfairly compete with Plaintiff in a manner which is against public
policy.
The amended complaint alleges that Defendant has used
these “misrepresentations, suppressions, and other unfair tactics”
to gain an unjust advantage.
(R. Doc. 20, at 18.)
In particular,
Plaintiff alleges Defendant violated LUTPA through the following
actions: 3
1. Defendant
violated
Plaintiff’s
copyrights
and
misrepresented or suppressed the truth about the material’s
authorship to Defendant’s customer base and to potential
customers.
3 The amended complaint also alleges that Defendant violated LUTPA through
behavior allegedly detailed in a case called NACM Tampa Inc., Et Al., v. Alexaner
Mensh, Et Al., which the amended complaint alleges was filed in the United
States District Court for the Middle District of Florida on July 30, 2015. (R.
Doc. 20, at 16.) The amended complaint alleges that the plaintiff in that case
alleged Racketeer Influenced and Corrupt Organizations Act, Florida Deceptive
and Unfair Practices Act, and theft of intellectual and proprietary property
claims against the Defendant. Id. The amended complaint vaguely alleges that
the referenced case is somehow related to the instant matter, but the connection
is entirely unclear. This allegation was not sufficiently pled.
15
2. Defendant violated the copyrights of parties other than
Plaintiff in an attempt to unfairly compete with Plaintiff.
3. Defendant misrepresented on its website that it was
“trusted by thousands” when the amended complaint alleges
that Defendant is not trusted by thousands of customers
because it does not have thousands of customers.
4. Defendant misrepresented on its website that “100% of
Nationwide Clients Experience Increased Productivity and
Streamlined Workflow,” when the amended complaint alleges
that Defendant has no study, survey, or information to
support this statement, and that it is not true.
5. Defendant misrepresented on its website that “97% of
Nationwide’s
Clients
Experience
Increase
in
Timely
Payments,” when the amended complaint alleges that
Defendant has no study, survey, or information to support
this statement, and that it is not true.
6. Defendant misrepresented on its website that “91% of
Nationwide’s Clients Avoid Collections,” when the amended
complaint alleges that Defendant has no study, survey, or
information to support this statement, and that it is not
true.
7. Defendant misrepresented on its website that “2 Hours [are]
Saved Per Notice by Nationwide Clients,” when the amended
complaint alleges that Defendant has no study, survey, or
information to support this statement, and that it is not
true.
8. Defendant misrepresented on its website that that the
company has been in existence or has experience of “more
than 20 years,” when the amended complaint alleges that
Defendant was first incorporated in 2011.
Allegation
number
1,
is
purely
referential
Copyright Act claim and is therefore preempted.
to
Plaintiff’s
But the other
allegations (numbers 2 through 8) are entirely independent from
Plaintiff’s
Copyright
Act
claim,
and
are
therefore
“equivalent” to actions prohibited by the Copyright Act.
16
not
The next question, then, is whether the allegations here
satisfy a cause of action under LUTPA.
As described above, the
Louisiana Supreme Court has instructed courts to analyze the
applicability
of
LUTPA
on
a
case-by-case
basis,
and
only
“egregious” acts of unfairness fall within the statutory scheme.
Cheramie Servs., Inc., 35 So. 3d at 1059-60. Defendant’s argument,
which focuses mainly on Copyright Act preemption and the conclusory
nature of Plaintiff’s LUTPA claim, does not include any case law
to support its assertion that the amended complaint fails to allege
that Defendant’s behavior was “immoral, unethical, oppressive, or
unscrupulous.”
(R. Doc. 22-1, at 19.); see Monroe Med. Clinic,
Inc. v. Hosp. Corp. of Am., 622 So. 2d 760, 781 (La. App. 2 Cir.
1993).
Neither has the Court identified any support for the
proposition that the type of conduct alleged by Plaintiff is not
egregious enough to state a LUTPA cause of action.
Nevertheless,
a
LUTPA
claimant
must
allege
that
it
has
suffered “an ascertainable loss” as a result of another person’s
unfair acts.
Cheramie Servs., Inc., 35 So. 3d at 1057 (referring
to La. Rev. Stat. § 51:1409(A)); see also Hurricane Fence Co. v.
Jensen Metal Prods., Inc., 12-956, p.7 (La. App. 5 Cir. 5/23/13);
119 So. 3d. 683, 688 (“To sustain a cause of action under LUTPA,
the petition must pass a two-prong test: (1) it must allege the
plaintiff suffered an ascertainable loss; and (2) the loss must
have resulted from another's use of unfair methods of competition
17
and
unfair
complaint
or
fails
deceptive
to
acts
identify
or
any
allegedly suffered by Plaintiff.
practices.”).
concrete
The
amended
ascertainable
loss
Accordingly, Plaintiff’s LUTPA
claim must fail.
Fraud Claim
Plaintiff’s fraud claim is based upon the same allegations as
its LUTPA claim, specifically allegations numbered “1-8” in this
Order’s “LUTPA Claim” section.
pursuant
to
Louisiana
Civil
Plaintiff brings his fraud claim
Code
Article
1953:
“Fraud
is
a
misrepresentation or a suppression of the truth made with the
intention either to obtain an unjust advantage for one party or to
cause a loss or inconvenience to the other.”
Fraud, as applied
here, is a vice of consent, the remedy for which is rescission of
a contract.
See Stutts v. Melton, 2013-0557, p. 9 (La. 10/15/13);
130 So. 3d 808, 814 (“Fraud vitiates consent . . . and thus is
grounds
for
rescission.”);
see
also
La.
Civ.
Code
art.
1958
(providing that damages and attorneys’ fees also may be available
in addition to rescission).
Furthermore, the correct party to
bring a claim for fraud is the victim of the fraud.
“The victim
of fraud is induced into an error through a misrepresentation or
suppression of the truth.” Saul Litvonoff, Vices of Consent, Error,
Fraud, Duress and an Epilogue on Lesion, 50 La. L. Rev. 1, 53
(1989).
18
The allegations in Plaintiff’s amended complaint do not
suggest that Plaintiff itself engaged in a contract with Defendant
based upon the alleged misrepresentations found in Defendant’s
website. 4
Rather, allegations numbers 1-8 in the LUTPA Claims
section of Plaintiff’s amended complaint allege that Defendant’s
misrepresentations have misled customers or potential customers.
In other words, the alleged misrepresentations have purportedly
misled individuals other than Plaintiff.
Because Plaintiff is not
itself claiming to be a victim of fraud as applied in Louisiana
Civil Code Article 1953, Plaintiff has not succeeded in stating a
claim.
Plaintiff’s fraud claim must therefore be dismissed.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s 12(b)(6) Motion to
Dismiss, Motion to Strike Claim for Attorneys’ Fees, and Motion
for Award of Attorneys’ Fees (R. Doc. 22) is GRANTED in part and
DENIED in part.
IT IS FURTHER ORDERED that Defendant’s motion to dismiss
Plaintiff’s trade dress infringement claim is DENIED.
4
An important distinction exists between Plaintiff’s breach of contract claim
and its fraud claim. The breach of contract claim alleges that the Defendant
entered into a contractual relationship with Plaintiff when Defendant used
Plaintiff’s website.
By contrast, Louisiana Civil Code Article 1953 only
provides a cause of action to a plaintiff whose consent to enter into a contract
was vitiated due to fraud. Because Plaintiff never alleged to have been induced
through fraud to enter in a contract with Defendant, the fraud claim is not
applicable to these facts.
19
IT IS FURTHER ORDERED that Defendant’s motions to dismiss
Plaintiff’s breach of contract and LUTPA claims are GRANTED.
Plaintiff’s breach of contract and LUTPA claims are DISMISSED
WITHOUT PREJUDICE.
Plaintiff is granted leave to file a second
amended complaint with respect to the LUTPA and breach of contract
claims within twenty-one days of this Order.
IT IS FURTHER ORDERED that Defendant’s motion to dismiss
Plaintiff’s fraud claim is GRANTED.
Plaintiff’s fraud claim is
DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that Defendant’s motion to strike
Plaintiff’s claim for attorneys’ fees and treble damages pursuant
to Plaintiff’s LUTPA claim is GRANTED.
Nothing in this Order
prohibits Plaintiff from requesting attorneys’ fees and other
damages available through LUTPA in a second amended complaint.
IT IS FURTHER ORDERED that Defendant’s motion for award of
attorneys’ fees and costs is DENIED.
IT IS FURTHER ORDERED that Defendant’s Partial Motion to
Dismiss for failure to State a Claim, Motion to Strike Claim for
Attorneys’
Fees
and
Treble
Damages,
and
Motion
for
Award
Attorneys’ Fees and Costs (Rec. Doc. 8) is DENIED as moot.
New Orleans, Louisiana this 5th day of December, 2016.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
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