SI03, Inc. v. Musclegen Research, Inc.
Filing
67
MEMORANDUM AND ORDER re: 63 MOTION to Dismiss Case filed by Defendant Musclegen Research, Inc. IT IS HEREBY ORDERED that Defendant Musclegen, Inc.'s Motion to Dismiss is GRANTED in part and DENIED in part; the Motion is GRANTED a s to Plaintiffs common law unjust enrichment claim in Count III, which will be dismissed without prejudice, and DENIED as to Counts I and II. [ECF No. 63] IT IS FURTHER ORDERED that Defendant shall file its Answer to the Complaint within the time permitted by Rule 12(a)(4). An appropriate Order of Partial Dismissal will accompany this Memorandum and Order. Signed by District Judge Ronnie L. White on 5/13/20. (CSG) (Main Document 67 replaced on 5/13/2020) (CSG).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
SI03, INC.,
Plaintiff,
v.
MUSCLEGEN RESEARCH, INC., et al.
Defendants.
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No. 1:16-CV-274 RLW
MEMORANDUM AND ORDER
This matter is before the Court on Defendant Musclegen Research, Inc.' s Motion to
Dismiss. (ECF No. 63.) Plaintiff SI03, Inc. ("Plaintiff') opposes the Motion and it is fully
briefed. Because Plaintiffs Complaint states a claim for relief under the Lanham Act, 15 U.S.C.
§ l 125(a), and for Missouri common law unfair competition, the Motion to Dismiss will be
denied as to Counts I and II. Plaintiff concedes that Count III, for Missouri common law unjust
enrichment, fails to state a claim and does not oppose its dismissal without prejudice. Count III
will be dismissed without prejudice.
Factual and Procedural Background
This is an action between competitors who manufacture and sell protein powder to
consumers. Plaintiffs Complaint (ECF No. 1) asserts claims against Defendant Musclegen 1
("Defendant") and Does 1-10 alleging false advertising under the Lanham Act, 15 U.S.C.
§ l 125(a) (Count I); unfair competition under Missouri common law (Count II); and unjust
enrichment under Missouri common law (Count III).
1
The Complaint refers to Defendant as "MuscleGen Research, Inc.," but Defendant refers
to itself as "Musclegen Research, Inc." The Court will use "Musclegen" except if quoting from a
document in the record.
In the Complaint, Plaintiff alleges that Defendant markets its Genepro2 protein powder
product by falsely claiming it contains 30 grams of protein in a roughly 11.15 gram (1
tablespoon) serving, when Genepro actually has 10 or fewer grams of protein per 11.15 gram (1
tablespoon) serving. (ECF No. 1 iii! 17-22.) Plaintiff also alleges that Genepro's marketing and
packaging statement that it contains "medical grade" protein is incorrect, false, and misleading,
as no industry or FDA standard exists for "medical grade" protein. (Id.
iii! 23-24.) Plaintiff
asserts that purchasers of Defendant's products are likely to be misled and deceived by
Defendant's product labeling, marketing, and advertising. (Id.
if 25.) Further, Plaintiff alleges
that Defendant's false and misleading advertising is damaging to Plaintiffs reputation and
goodwill, as these false and misleading representations are designed to deceive and entice
consumers to purchase Defendant's products over Plaintiffs competing products based upon the
false belief that Genepro is superior to other protein powders. (Id. iii! 26-27.)
Plaintiff alleges that Defendant's wrongful conduct has caused confusion in the protein
market, deprived Plaintiff of business, injured Plaintiffs relationships with current and
prospective customers, and resulted in increased sales of Defendant's protein powder product.
(Id. ifif 28-29.)
This action was filed in November 2016. Plaintiff obtained a Default Judgment and
Permanent Injunction against Defendant in December 2017, which enjoined Defendant from
claiming (1) that any amount of a nutritional supplement product contained more protein than
was actually present in such amount of the product; and (2) that any product contained protein
designated as "medical grade," unless such designation as approved by the U.S. Food and Drug
Administration. (ECF No. 28 at 7.) Defendant moved to vacate the Default Judgment and
2The
Complaint refers to Defendant's product as "GenePro," while Defendant refers to it
as "Genepro." The Court will use Genepro except if quoting from a document in the record.
2
Permanent Injunction on the basis that it was void because Defendant had not been properly
served with summons and complaint. After a lengthy discussion and careful consideration of the
facts and issues with respect to service on Defendant, the Court vacated the Default Judgment
and Permanent Injunction on December 9, 2019. (ECF No. 59.) Defendant filed the instant
Motion to Dismiss in January 2020.
Legal Standard
"To survive a motion to dismiss for failure to state a claim, the complaint must show the
plaintiff 'is entitled to relief,' Fed. R. Civ. P. 8(a)(2), by alleging 'sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face."' In re Pre-Filled Propane
Tank Antitrust Litig., 860 F.3d 1059, 1063 (8th Cir. 2017) (en bane) (quoting Ashcroft v. Igbal,
556 U.S. 662, 678 (2009)). In reviewing a Rule 12(b)(6) motion, the Court accepts all factual
allegations as true and construes all reasonable inferences in the light most favorable to the
nonmoving party. Usenko v. MEMC LLC, 926 F.3d 468, 472 (8th Cir.), cert. denied, 140 S. Ct.
607 (2019). The Court does not, however, accept as true a plaintiffs conclusory allegations or
legal conclusions drawn from the facts. Waters v. Madson, 921 F.3d 725, 734 (8th Cir. 2019).
The complaint must "allege sufficient facts that, taken as true, 'state a claim to relief that is
plausible on its face."' K.T. v. Culver-Stockton Coll., 865 F.3d 1054, 1057 (8th Cir. 2017)
(alteration in original) (quoting Igbal, 556 U.S. at 678) (internal quotation marks omitted). A
facially plausible claim is one "that allows the court to draw (a] reasonable inference that the
defendant is liable for the misconduct alleged." Wilson v. Ark. Dep't of Human Servs., 850 F.3d
368, 371 (8th Cir. 2017) (internal quotation omitted). In addressing a motion to dismiss, a court
"may consider the pleadings themselves, materials embraced by the pleadings, exhibits attached
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to the pleadings, and matters of public record." Mills v. City of Grand Forks, 614 F.3d 495, 498
(8th Cir. 2010) (cited case omitted).
Discussion
A.
Counts I and II
In Count I, Plaintiff alleges false advertising under § 43(a) of the Lanham Act for false
designations of origin and false deceptions. 15 U.S.C. § 1125(a). In Count II, Plaintiff asserts a
claim of unfair competition under Missouri common law. 3
To establish a claim of false
advertising under the Lanham Act, Plaintiff must demonstrate: (1) a false statement of fact by
Defendant in a commercial advertisement about its own or someone else's product; (2) the
statement actually deceived or has a tendency to deceive a significant portion of its audience; (3)
the deception is material in that it is likely to influence the decision to purchase the product; (4)
Defendant caused the false statement of fact to enter interstate commerce; and (5) Plaintiff has
been or is likely to be injured as a result of the false statement, either by direct diversion of sales
from Plaintiff to Defendant or by a loss of goodwill associated with Plaintiffs products. Buetow
v. A.L.S. Enters., Inc., 650 F.3d 1178, 1182-83 (8th Cir. 2011) (quoting United Indus. Corp. v.
Clorox Co., 140 F .3d 1175, 1180 (8th Cir. 1998)).
"A statement may be literally false,
conveying an explicit factual message and in fact be false . . . , or may be implicitly false,
conveying the implied message and thereby deceiv[ing] a significant portion of its recipients[.]"
Fair Isaac Corp. v. Experian Info. Sols., Inc., 650 F.3d 1139, 1151 (8th Cir. 2011) (internal
quotations and citations omitted).
3
Because the action under Missouri common law for unfair competition utilizes the same
elements as an action under the Lanham Act, Children's Factory, Inc. v. Benee's Toys, Inc., 160
F.3d 489, 491 n.2 (8th Cir. 1998), the Court will discuss only the alleged violation of the Lanham
Act.
4
Plaintiff alleges that Defendant's claim its Genepro product has 30 grams of protein in a
1 tablespoon serving size, and its use of the term "medical grade" in labeling, marketing, and
advertising, are false statements of fact that deceive or have a tendency to deceive a substantial
segment of Plaintiffs customers and potential customers, and likely influence the purchasing
decisions of Plaintiffs customers. (ECF No.
1~32.)
Defendant moves to dismiss Plaintiffs Lanham Act false advertising claim on the basis
that it no longer includes the phrase "medical grade" protein on its Genepro trade dress and
advertising, with the exception of three inadvertent instances that have since been corrected.
Defendant contends that Plaintiffs claims based on its prior use of "medical grade" protein
language on trade dress and in advertising are moot.
Defendant also moves to dismiss on the basis that Plaintiff fails to state a claim because
the protein equivalency and absorption rate statements in its trade dress and advertising (i.e., that
one scoop of Genepro "equates to 30G Protein**") are true and are not misleading as a matter of
law, because the asterisks following the equivalency statement on the trade dress and advertising
direct the reader's attention to a reference to a National Institute of Health clinical trial that
supports the equivalency and absorption-rate statements. Defendant asserts, "Any consumers
who may have doubts about the equivalency statements are directed to the clinical trial and given
enough information to find and review that trial." (ECF No. 64 at 7.)
The Complaint's factual allegations, as set forth above, are sufficient to state a claim for
violation of§ 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Defendant does not cite any
persuasive authority to establish that Plaintiffs claims concerning use of the term "medical
grade" on Genepro trade dress and advertising are moot. That Defendant asserts it revised its
packaging and advertising in the three years since the Complaint was filed raises fact issues, and
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does not absolve Defendant from potential liability for damages Plaintiff alleges it suffered as a
result of the allegedly false claim in Genepro' s trade dress and advertising.
Defendant's second argument, that Plaintiffs Complaint fails to state a claim because an
internet link on Genepro's packaging and advertising to a clinical trial renders its allegedly false
equivalency claims true, asks the Court to examine matters outside the pleadings on this Motion
to Dismiss, which the Court declines to do. To grant the motion to dismiss, the Court would
have to accept as true Defendant's assertion that the single clinical trial is scientifically valid and,
construing the factual allegations in the light most favorable to Plaintiff, conclude as a matter of
law that members of the public are not likely to be deceived by the challenged product packaging
and advertising statements. Defendant has not made such a showing and the Court finds this is
an argument appropriate for summary judgment, not a motion to dismiss. In sum, Defendant
seeks to "shortcut the discovery process and reach the substantive factual issue at the heart of this
case." Cynergy Ergonomics, Inc. v. Ergonomic Partners, Inc., 2008 WL 2064967, at *2 (E.D.
Mo. May 14, 2008) (internal citation omitted). Defendants' Motion to Dismiss will be denied as
to Counts I and II.
B. Count III
In Count III, Plaintiff asserts a claim for unjust enrichment under Missouri common law.
Unjust enrichment has three elements: "(1) the plaintiff conferred a benefit on the defendant; (2)
the defendant appreciated the benefit; and (3) the defendant accepted and retained the benefit
under inequitable and/or unjust circumstances." Binkley v. American Equity Mortg., Inc., 447
S.W.3d 194, 199 (Mo. 2014) (en bane) (quotation omitted).
Defendant moves to dismiss Plaintiffs unjust enrichment claim on the basis that Plaintiff
has not alleged it conferred any legally cognizable benefit on Defendant. Defendant asserts that
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while Plaintiff alleges its sales were of "falsely advertised products" and "came at the expense of
competitors, including Plaintiff," (ECF No. 1,
if 46), it is clear Plaintiff never conferred any
benefit on Defendant.
In response, Plaintiff interprets Defendant's argument to be that Plaintiff has not alleged
it purchased a unit of Genepro, and states it does not oppose dismissal of its unjust enrichment
claim without prejudice "so that it may purchase a unit of GenePro and amend its Complaint."
(ECF No. 65 at 10.)
Defendant replies that the unjust enrichment claim should be dismissed with prejudice, as
a renewed claim would be futile because Plaintiff cannot suggest it has been misled in its
proposed purchase of Genepro while simultaneously bringing this suit. In support, Defendant
cites to In re Bisphenol-A (BPA) Polycarbonate Plastic Products Liability Litigation, 2011 WL
6740338, at *1 (W.D. Mo. Dec. 22, 2011), in particular:
Coca-Cola held that consumers who would continue to purchase
fountain Diet Coke knowing it contained saccharin could not assert
MMPA [Missouri Merchandising Practices Act] or unjust
enrichment claims against Coca-Cola for the company's failure to
divulge its use of saccharin. According to Coca-Cola, these
consumers "suffered no injury." Likewise, consumers who knew
about BPA and purchased Defendants' products anyway suffered
no mJury.
Id. (citing State ex rel. Coca-Cola Co. v. Nixon, 249 S.W.3d 855, 862 (Mo. 2008) (en bane)
(internal citations omitted).
Defendant's cited cases concerning class certification under the Missouri Merchandising
Practices Act do not establish as a matter of law that Plaintiff could not bring an unjust
enrichment claim if it were to purchase Genepro. 4 As a threshold matter, the Missouri Supreme
4The
Court offers no comment as to whether Plaintiff could bring an unjust enrichment
claim if it were to purchase Genepro. The Court considers only whether Defendant has
established that Plaintiffs unjust enrichment claim should be dismissed with prejudice.
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stated that for purposes of its class certification analysis in Coca-Cola, it was not necessary to
distinguish and discuss separately the plaintiffs' MMPA and unjust enrichment claims. 249
S.W.3d at 858 n.2. It is not clear that Missouri case law concerning class certification under the
MMP A is persuasive in the analysis required in the separate context currently before this Court.
See,~,
Bratton v. Hershey Co., 2017 WL 2126864, at *10 (W.D. Mo. May 16, 2017) (denying
motion to dismiss Missouri unjust enrichment claim based on slack-filled product, although
Missouri MMP A claim based on same facts was subject to dismissal).
In Coca-Cola, the plaintiff alleged that "she and many other consumers would not have
purchased fountain Diet Coke if they had known it contained saccharin" and that "the deception,
itself, resulted in irreparable harm." 249 S.W.3d at 859. The trial court certified a class of all
purchasers of fountain Diet Coke during a specific time period but the Missouri Supreme Court
reversed, finding the class was impermissibly overbroad because it "undoubtedly includes an
extremely large number of uninjured class members, that is, those who did not care if the Diet
Coke they purchased contained saccharin." Id. at 862. The court stated the plaintiffs "own
expert witness indicated that only twenty percent of those who currently consume fountain Diet
Coke would not continue to do so if they knew it contained saccharin," which meant that "eighty
percent of the putative class suffered no injury." Id.
The Coca-Cola case does not hold that in every MMP A case there would not be an injury
if the plaintiff "did not care" about the alleged MMP A violation. The Missouri Supreme Court
emphasized that in Coca-Cola the "alleged injury was based on a subjective preference against
saccharin," so a purchaser who did not have that preference could not have been injured, but that
the result could be different in a case alleging an "economic injury ... based on an objective
characteristic," such that individual preferences were irrelevant. Id. at 863. Significantly, the
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court distinguished a Missouri Court of Appeals case that approved certification of a class of
cigarette purchasers who "thought they had purchased 'light' cigarettes, but the cigarettes they
received had the characteristics of regular cigarettes." Id. (citing Craft v. Philip Morris Cos., 190
S.W.3d 368, 387 (Mo. Ct. App. 2005)). In Craft, the plaintiffs alleged they "failed to receive the
qualities and economic value of a low tar, low nicotine cigarette." Coca-Cola, 249 S.W. 3d at
863; see also Hope v. Nissan N.A., Inc., 353 S.W.3d 68, 80 (Mo. Ct. App. 2011) (distinguishing
Coca-Col~
"where the basis of the injury was a subjective consumer preference," from a case
where the alleged injury is a diminished economic value of the product received by every
purchaser, even if the purchaser was unaware of it); Plubell v. Merck & Co., 289 S.W.3d 707,
715 (Mo. Ct. App. 2009) (where plaintiffs alleged prescription drug they purchased was worth
less than the product as represented, they stated an objectively ascertainable loss under the
MMPA using the benefit-of-the-bargain rule).
Assuming for purposes of argument that MMP A precedent is relevant to Plaintiffs
potential unjust enrichment claim, it is at least arguable Plaintiffs claim would be more similar
to the Craft, Hope, and Plubell cases than to Coca-Cola, as it appears to concerns an economic
injury based on an objective characteristic, not an injury dependent on subjective preferences.
Defendant's motion to dismiss Count Ill with prejudice will be denied.
Count III will be
dismissed without prejudice.
Conclusion
For the reasons discussed above, the Court will deny Defendant's Motion to Dismiss
Counts I and II of the Complaint, and will dismiss Count III without prejudice. The Court will
separately issue an order requiring the parties to file a Joint Proposed Scheduling Plan.
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Accordingly,
IT IS HEREBY ORDERED that Defendant Musclegen, Inc.'s Motion to Dismiss is
GRANTED in part and DENIED in part; the Motion is GRANTED as to Plaintiffs common
law unjust enrichment claim in Count III, which will be dismissed without prejudice, and
DENIED as to Counts I and II. [ECF No. 63]
IT IS FURTHER ORDERED that Defendant shall file its Answer to the Complaint
within the time permitted by Rule 12(a)(4).
An appropriate Order of Partial Dismissal will accompany this Memorandum and Order.
,;~
~ITE
UNITED STATES DISTRICT JUDGE
Dated this /.31'1ay of May, 2020.
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