Board-Tech Electronic Co., Ltd. v. Eaton Electric Holdings LLC et al
OPINION & ORDER re: 27 MOTION to Dismiss the Complaint. filed by Cooper Lighting LLC, Eaton Electric Holdings LLC. Eaton has moved to dismiss on two principle bases: (1) that by failing to specify which products are at issue (and instead only naming a range of products within three product categories), plaintiff has failed to comply with its basic Rule 8 pleading obligations, and (2) that in all events, plaintiff has failed to allege actionable falsity. (As further set fo rth in this Order.) For the reasons set forth above, the Court GRANTS the motion to dismiss. The Clerk of Court is directed to close the motion at ECF No. 27 and to terminate this action. (Signed by Judge Katherine B. Forrest on 10/31/2017) (cf)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
BOARD-TECH ELECTRONIC CO., LTD.,
EATON ELECTRIC HOLDINGS LCC,
COOPER LIGHTING LCC, and DOES 1
KATHERINE B. FORREST, District Judge:
DOC #: _________________
DATE FILED: October 31, 2017
OPINION & ORDER
In this case, Board-Tech Electronic Co., Ltd. (“Board-Tech”), a manufacturer
and seller of light switches, asserts that its competitor, Eaton Corporation and
Cooper Wiring Devices, Inc. (“Eaton”), 1 has engaged in false and misleading
advertising. The nub of plaintiff’s claim is that while defendants were authorized to
apply the “UL” certification mark to certain products, those products did not in fact
comply with the requisite safety standards. Eaton has moved to dismiss on two
principle bases: (1) that by failing to specify which products are at issue (and
instead only naming a range of products within three product categories), plaintiff
has failed to comply with its basic Rule 8 pleading obligations, and (2) that in all
events, plaintiff has failed to allege actionable falsity.
The complaint initially named Eaton Electric Holdings LLC and Cooper Lighting LLC as
defendants. On consent, Eaton Corporation and Cooper Wiring Devices have been substituted as
For the reasons set forth below, the Court agrees with the defendant and
GRANTS the motion to dismiss.
FACTS ALLEGED IN THE COMPLAINT
The facts set forth below are taken from the Second Amended Complaint. 2
While the Court accepts as true all well-pled factual allegations, it does not do the
same with regard to legal conclusions; to the extent such conclusions are cited
below, the Court’s purpose is solely to fully set forth plaintiff’s claims.
Plaintiff Board-Tech, a Taiwanese Corporation, and Eaton, an Ohio
Corporation, are competitors in the manufacture and sale of light switches. 3 Both
have sought and obtained authorization from Underwriters Laboratories to apply
its “UL” certification mark on products.
To protect against certain dangers, including electrical fires and the risk of
human injury, the U.S. government, retailers, businesses and consumers demand
that the electrical products being used comply with industry safety requirements.
(Second Amended Complaint (“SAC”), ECF No. 46, ¶ 18.) In the case of light
switches manufactured and sold by plaintiff and defendants, the prevailing
standard is UL 20, applicable to “General Use Snap Switches.” (Id.) The National
Electric Code (“NEC”) requires light switches in new buildings to be UL 20
Defendants have attached a number of exhibits to the Declaration of Serrin Turner, dated
September 22, 2017. (ECF No. 40.) The Court has only referred to Exhibits 3 and 4, the certification
mark registrations. A court may properly take judicial notice of such registrations in connection
with a motion to dismiss. See TCA Television Corp. v. McCollum, 839 F.3d 168, 173 (2d Cir. 2016)
(taking judicial notice of copyright registrations at motion to dismiss stage).
3 Defendant Cooper Wiring Devices, Inc. is a New York corporation acquired by Eaton Corporation in
compliant; the NEC has been adopted at the state or local level in all 50 states. (Id.
¶ 20.) Even where use of a UL 20 switch is voluntary under the law, consumers rely
on labeling that a product complies with safety standards at the time of purchase.
(Id. ¶ 21.) Many retailers, such as Wal-Mart, additionally require compliance for
products they sell. (Id.) “In practice, no manufacturer can expect to successfully
operate in the U.S. light switch market without representing that its switches
comply with UL 20.” (Id. ¶ 22.) “[T]he form of manufacturer representation that
governments and consumers routinely require is a certification by a third party
testing organization.” (Id.)
Entities that are designated as Nationally Recognized Testing Laboratories
(“NRTLs”), are tasked with rigidly testing products according to standards
developed by the Occupational Safety and Health Administration (“OSHA”). (Id.
¶ 23.) “Consumers and retailers have also come to rely on an NRTL approval,
certification or ‘listing’ as a mark of safety.” (Id.) Underwriters Laboratories serves
as an NRTL. (Id. ¶ 24.)
Underwriters Laboratories owns the “UL” certification mark. (Turner Decl.
Exs. 3, 4.) The 1964 UL mark registration states, “The certification mark is used by
persons authorized by applicant to indicate that representative samplings of the
products conform to the safety requirements used by the applicant.” (Id., Ex. 3, p.
2.) The 2000 registration similarly provides, “The certification mark as used by
persons authorized by applicant certifies that representative samplings of the goods
conform to the requirements of the applicant.” (Id., Ex. 4, p. 2.)
In order to be authorized to apply the UL mark, a manufacturer must provide
six sets of representative samples of switches they want certified to an NRTL, such
as Underwriters Laboratories, for testing. (Id. ¶ 29.) The light switches must then
pass a series of tests detailed in the booklet UL Standard for Safety for General-Use
Snap Switches, UL 20, May 10, 2010, revised February 17, 2012. (Id. ¶ 27.) “Of
course, an NRTL cannot test every product a manufacturer offers for sale prior to
sale, and cannot be certain the samples provided by the manufacturer are of the
same quality, or share the same properties as those the manufacturer sells to
consumers.” (Id. ¶ 29.) “Accordingly, NRTLs do not guarantee the products
actually sold by a manufacturer comply with the applicable safety requirements;
they only certify that a purportedly representative sample did.” (Id.) Thus,
according to plaintiff, “If a product carries [the UL Listing Mark], it means UL
found that a representative sample of that product met UL safety requirements
and the manufacturer is representing that the product meets those
requirements.” (Id.) (Citing a portion of the UL website) (emphasis in original).
Plaintiff further asserts that consumers rely on the certification mark or
listing, and base their purchases on the belief that every product containing a mark
or that is listed actually complies with the applicable written safety standards. (Id.
¶ 30.) After testing a product sample that meets requirements, “Underwriters
Laboratories authorizes the use of its certification marks, on their products,
packaging, and in their marketing and advertising, but according to the company, it
is the responsibility of the manufacturer to ensure that all of the products it sells
bearing the UL mark actually comply with the standards tested for, not just the
samples that were tested.” (Id. ¶ 31.)
“All of Defendants’ light switches at issue in this case have been ‘listed’ or
‘classified’ by Underwriters Laboratories.” (Id. ¶ 26.) Furthermore, “each of
Defendants’ light switches manufactured, marketed, advertised, and sold bearing
the UL mark have in fact been granted permission for such use and ‘listed’ by
Underwriters Laboratories as complying with UL 20.” (Id. ¶ 32.)
Plaintiff asserts that in 2015–2017, it tested samples of switches actually sold
by defendants, and that bear the UL mark. (Id.) The switches tested did not
comply with the UL 20 standards. (Id.) Plaintiff alleges that it tested eight sets of
six light switches (48 in total) from defendants’ 7500, 7600, and 7700 series of
products, for compliance with the UL 20 standards, and that all failed (Id. ¶¶ 37–
39.) Based upon this testing, plaintiff asserts that “none of the General-Use snap
switches identified in Exhibit A that Defendants advertise, market, and sell to
consumers as UL Certified and compliant with UL 20 standards actually complies
with those standards.” (Id. ¶ 48.)
Plaintiff alleges that because defendants’ light switches do not meet the UL
20 testing requirements, defendants’ advertising that their light switches are UL 20
compliant is actually false and misleading. (Id.)
Plaintiff has asserted claims for false advertising under the Lanham Act, 15
U.S.C. § 1125(a) (First Cause of Action), unjust enrichment (Eighth Cause of
Action), and various state law claims arising under the laws of New York (Second
and Third Causes of Action), California (Fourth and Fifth Causes of Action), Illinois
(Sixth Cause of Action), and Texas (Seventh Cause of Action). As discussed below,
all of the claims require some showing of falsity or other wrongful or inequitable
A. Motion to Dismiss
On a motion to dismiss, this Court accepts as true all well-pleaded factual
allegations. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This means that the
Court must accept plaintiff's factual allegations in its complaint as true and draw
all reasonable inferences in plaintiff's favor. See Famous Horse Inc. v. 5th Ave.
Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010). To withstand dismissal, “a complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
“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. In applying this standard, the Court
accepts as true all well-pled factual allegations, but does not credit “mere conclusory
statements” or “[t]hreadbare recitals of the elements of a cause of action.” Id. The
Court will give “no effect to legal conclusions couched as factual allegations.” Port
Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007) (citing
Twombly, 550 U.S. at 555). If the Court can infer no more than the mere possibility
of misconduct from the factual averments—in other words, if the well-pled
allegations of the complaint have not “nudged [plaintiff’s] claims across the line
from conceivable to plausible”—dismissal is appropriate. Twombly, 550 U.S. at 570.
B. Certification Marks Generally
Section 1054 of the Trademark Act provides for the registration of
certification marks. 15 U.S.C. § 1054. The statute provides that “when registered
they shall be entitled to protection provided herein in the case of trademarks, except
in the case of certification marks when used so as to represent falsely that the
owner or a user thereof makes or sells goods or performs the services on or in
connection with which such mark is used.” Id. A certificate of registration for such
a mark sets forth the rights and limitations of use with goods and services. 15
U.S.C. § 1057. Any person who believes that he has been damaged by dilution,
likelihood of dilution, dilution by tarnishment, may commence an action to cancel
the registration. 15 U.S.C. § 1064. With regard to a certification mark, such an
action may be commenced at any time on the ground that the registrant:
(A) does not control, or is not able legitimately to exercise control over,
the use of such mark, or (B) engages in the production or marketing of
any goods or services to which the certification mark is applied, or (C)
permits the use of the certification mark for purposes other than to
certify, or (D) discriminately refuses to certify . . .
15 U.S.C. § 1064(5). Certification marks are “designed to facilitate consumer
expectations of a standardized product, much like trademarks are designed to
ensure that a consumer is not confused by the marks on a product.” Idaho Potato
Commission v. M & M Produce Farm & Sales, 335 F.3d 130, 138 (2d Cir. 2003).
The certification mark regime “protects a further public interest in free and open
competition among producers and distributors of the certified product.” Id.
C. False Marketing and Advertising
Plaintiff’s First Cause of Action is for false and deceptive advertising and
marketing under the Lanham Act. Section 1125 of the Lanham Act provides:
Any person who, on or in connection with any goods or services . . . uses
in commerce any . . . false or misleading description of fact, or false or
misleading representation of fact, which . . . in commercial advertising
or promotion, misrepresents the nature, characteristic, 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)(1).
The first and most obvious element of a false advertising claim is a plausible
allegation of falsity. 4 Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 63 (2d
Cir. 2016). Falsity may be adequately alleged in two ways. First, a plaintiff may
allege facts plausibly supporting literal falsity—that is, that an advertisement is
false on its face. Id. In such a case, consumer deception is presumed. Id. “This
inquiry requires evaluating ‘the message conveyed in full context.’” Id. (quoting
Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 153 (2d Cir. 2007). When
read in context, if the words or images imply a false message, the advertisement is
literally false. Id. However, only unambiguous messages can be literally false. Id.
4 Falsity, deception or other wrongful or inequitable conduct is also an element of each of the state
(citing Time Warner Cable, 497 F.3d at 158). A second way of adequately alleging
falsity is to set forth facts plausibly supporting that the advertisement, while not
literally false, is nevertheless likely to mislead or confuse consumers. Id. (citing
Time Warner Cable, 497 F.3d at 153). To do this requires a comparison of the
impression left by the statement (and not the statement itself) with the truth. Id.
Defendants seek dismissal on two separate and independent bases: first, that
because plaintiff has failed to allege the specific products that failed its testing, it
has failed to provide adequate notice under Rule 8 of the Federal Rules of Civil
Procedure and has failed to allege a plausible set of facts entitling it to relief under
Twombly. Second, defendants assert that plaintiff’s allegations of falsity are
inadequate as a matter of law. The Court agrees that both bases require dismissal. 5
A. Lack of Adequate Specificity
Plaintiff has now twice amended its complaint. And twice it has failed to
specify the precise products at issue in this lawsuit. This is a significant failing.
See, e.g., Segedie v. Hain Celestial Grp., Inc., 14-cv-5029, 2015 WL 2168374, at *12
(S.D.N.Y. May 7, 2015) (finding a Lanham Act complaint to be insufficiently specific
where it stated that the products falsely labeled include ‘but are not limited to’ the
products listed by name in the complaint and allowing the claim to go forward only
for those products which had been specifically named).
As both of these issues apply to each of the state law claims, those claims are dismissed as well.
As Board-Tech alleges in the SAC, it is a direct competitor with defendants
for the manufacture and sale of light switches. (SAC ¶ 3.) Plaintiff alleges that it
has tested a sampling of defendants’ switches: eight sets of six light switches. Its
claims, however, broadly encompass several product lines: the 7500, 7600, and
7700 series. Somewhere in this series of products are those that were specifically
tested; they have not been identified. According to plaintiff, proceeding in this
manner is akin to proceeding according to “sampling” that has been accepted in
Plaintiff misconceives the concept and use of “sampling.” Under the
circumstances here, the lack of specificity dooms plaintiff’s claims under both
Twombly and Rule 8. Here, plaintiff’s claims are not, for instance, that very specific
loan files may serve as samples of a larger set. See, e.g., Fed. Hous. Fin. Agency v.
UBS Americas, Inc., 858 F. Supp. 2d 306, 324, 328 (holding that loan-sampling
results were “sufficiently suggestive of widespread accuracies” to meet the
plausibility standard, but only where the plaintiff pled with specificity as to certain
loan files and then extrapolated to the whole). In contrast, Board-Tech has been
non-specific as to any light switches at all.
Moreover, plaintiff has failed to state on what basis he can extrapolate from
his few non-specific switches to entire product lines. Under Twombly, this Court
cannot conclude that testing just six non-specific light switches provides a plausible
basis upon which to tether claims as to more than 125 others. 6 To extrapolate in
the manner that plaintiff has—from the relatively few to the many—plaintiff would
need to have included sufficient facts to support a conclusion that because of
similarities or characteristics of a particular nature, test results for certain switches
are indicative of what similar tests would reveal for other products. There are no
such allegations. Plaintiff simply (and without factual basis) asserts that its own
limited testing is enough to make claim that “none” of defendants’ “General-Use
snap switches in Exhibit A” comply with UL 20. (SAC ¶ 48.)
In addition, failure to provide any allegations as to which product(s) within a
broader product line failed is necessary in order for defendants to investigate the
claim and prepare a defense. A complaint also provides important guidance as to
what is likely to relevant discovery, and what is not. But by grouping all products
in the three lines together – most of which were never tested – plaintiff fails to
provide adequate notice.
Moreover, plaintiff was on notice of the instant Rule 8 and Twombly
deficiencies when defendants filed their initial motion to dismiss, and when the
Court discussed this issue at the initial conference. Despite having now twice
amended the complaint, plaintiff has not remedied the issue. Its refusal to specify
the particular products tested concerns the Court. It is plain that commencing such
a broad lawsuit is a declaration of war on a competitor. If allowed to proceed in
6 Plaintiff believes that the actual number of switches in the series is closer to 30, in a variety of
colors. (Plaintiff’s Opposition to Defendants’ Motion (“Pl.s’ Opp.”), at 7.) Whether plaintiff seeks to
extrapolate from six to 30 or from six to more than 100 does not change this Court’s analysis that he
has not alleged a factual basis for doing so.
such a broad manner, plaintiff would no doubt seek access to the internal design of
competitive products as well as highly sensitive technical data. Damages discovery
would involve all of defendants’ sales of this series of products.
Plaintiff has failed first to state with specificity which products failed UL
testing, and then to provide factual allegations as to why those products’
deficiencies can be extrapolated to other General Use snap switches. The Court
therefore concludes that it has not pled with the specificity required by Rule 8 and
B. A Lack of Falsity
As set forth above, the heart of a false advertising claim is falsity. Apotex,
823 F.3d at 63. Here, plaintiff alleges that inclusion of the UL certification mark
conveys the false impression that defendants’ light switches comply with UL 20.
Plaintiff alleges that NRTLs “do not guarantee the products actually sold by a
manufacturer comply with the applicable safety requirements; they only certify that
a purportedly representative sample did.” (SAC ¶ 29.) Plaintiff also acknowledges
that each of defendants’ products “have in fact been granted permission” to bear the
UL mark, (SAC ¶ 32), and that “[a]ll of Defendants’ light switches at issue in this
case have been ‘listed’ or ‘classified’ by Underwriters Laboratories . . . .” (Id. ¶ 26).
Plaintiff’s claim is based in the distinction between authorization to apply the
UL mark and actual compliance with the standards referenced by the mark. As set
forth above, plaintiff concedes authorization. It alleges, however, that despite such
authorization, the products fail to comply with the safety standards. (See SAC ¶¶
30–31.) Looked at another way, plaintiff’s claim is that even if defendants are
authorized to use the mark, they are deceiving customers by using it. In support, it
relies on Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767, 774 (2d Cir. 1984), for
the proposition that products bearing a UL mark can give rise to false advertising
under the Lanham Act, and on Midwest Plastic Fabricators, Inc. v. Underwriters
Laboratories, 906 F.2d 1568, 1569 (Fed. Cir. 1990) for the proposition that the
responsibility of ensuring compliance remains with the manufacturer. (Holding
that “the manufacturer agrees that it will ensure that the products bearing the UL
mark are in compliance with [UL’s] requirements” and that “a testing and
inspection program will be maintained by the manufacturer to assure continued
But plaintiff’s reliance is misplaced; in Burndy, defendants had made
changes to the advertised product after UL certification, never submitted those
changed products to UL for testing, and continued to apply the UL mark. Burndy,
748 F.2d at 769. Plaintiffs notified UL of the problem, UL tested the new products
and found them noncompliant, and only then did plaintiffs make their claim. Id. It
was, in fact, the unauthorized use of the mark that allowed a Lanham Act claim to
arise, and UL itself was the sole arbiter of whether the product in question was
compliant. No such circumstances are alleged here. There are no allegations that
defendants altered their products post-UL approval. Midwest Plastic, while finding
a continuing obligation of manufacturer compliance with UL standards, goes on to
define this compliance as, inter alia, maintaining a testing and inspection program
to assure compliance and providing access to UL inspectors. 906 F.2d at 1569–70.
Plaintiff does not allege that Eaton has failed to maintain a testing and inspection
program with regards to the Series 7500, 7600, or 7700 products. Rather, plaintiff’s
claim relies upon its own testing of the light switches—effectively attempting to
supplant UL’s responsibility to do so.
For plaintiff’s theory to support a claim in this case, the authorized use of the
mark must nonetheless be capable of being a deceptive use. It is not. The UL mark
is limited by the scope of its registration. Its registration explicitly states that the
“mark is used by persons authorized by applicant to indicate that representative
samplings of the products conform to the safety requirements used by the
applicant.” (Turner Decl., Ex. 3, p. 2.) Defendants’ use of the mark, as alleged by
plaintiffs, indicates only that a representative sampling has conformed to the safety
requirements; plaintiff here concedes that defendants’ light switches went through
United Laboratories’ approval process. (SAC ¶ 32.)
It may be that plaintiff’s own testing shows that certain of the light switches
that bear the UL mark do not in fact comply with the safety standards. The Court
accepts that allegation as true for purposes of this motion. But if defendants are
authorized to apply the mark (which plaintiff concedes they are), then plaintiff is
simply policing the mark. It is up to United Laboratories to police the mark. To the
extent plaintiff believes that the mark has been diluted – or tarnished – by a failure
to properly police it by United Laboratories, a remedy is available under 15 U.S.C. §
1064(5): plaintiff may seek to cancel the mark.
A number of thorny issues would arise if this Court were to allow this action
to proceed. First, it would allow a competitor to police a certification mark. Private
testing of a product against standards could be used to commence a lawsuit that
could expose competitive design and information to precisely the entity that should
not have it. While there are many cases in which competitors are proper plaintiffs –
and do obtain discovery – one should not open the floodgates to such litigation
without careful consideration. Careful consideration here requires dismissal.
For the reasons set forth above, the Court GRANTS the motion to dismiss. The
Clerk of Court is directed to close the motion at ECF No. 27 and to terminate this
New York, New York
October 31, 2017
KATHERINE B. FORREST
United States District Judge
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