RODNEY W. SIPPEL, District Judge.
This matter is before me on Counterclaim Defendants Blue State Digital, Inc. and PRCG/Haggerty LLC's Motions to Dismiss Counterclaim Plaintiff Blue Buffalo Company Ltd. ("Blue Buffalo")'s Second Amended Counterclaim. Blue Buffalo opposes these motions and the issues are fully briefed. For the reasons set forth below, I will grant in part and deny in part the Counterclaim Defendants' motions to dismiss.
On May 6, 2014, Nestle Purina PetCare Company ("Purina") filed suit against Blue Buffalo. Purina's complaint primarily alleges that Blue Buffalo has engaged in false and misleading advertising because its dog food products, which are advertised as being "grain free" and containing "no chicken by-product," actually do contain those ingredients. After it filed the complaint, Purina issued press releases about the suit and launched a website, www.PetFoodHonesty.com (the "Honesty website"), where it openly criticizes Blue Buffalo for its alleged false advertising. Blue Buffalo denies that its products contain chicken by-product meal or grain, or otherwise fail to meet the expectations of its customers. Blue Buffalo also asserts that the "independent testing" Purina relies upon for its claims against Blue Buffalo is unreliable.
On May 14, 2014, Blue Buffalo filed an action against Purina, alleging that Purina has engaged in false advertising and defamed Blue Buffalo through the various public statements it made upon its filing of this suit.
On September 19, 2015, Blue Buffalo sought leave to amend its complaint and add as counterclaim defendants Blue State Digital and PRCG/Haggerty LLC ("Advertising Defendants"). On November 17, 2014, I granted Blue Buffalo's motion to amend its counterclaim and add the Advertising Defendants. Blue Buffalo filed a First Amended Counterclaim on November 19, 2014. A Second Amended Counterclaim ("SAC") was filed on December 4, 2014.
On January 16, 2015, PRCG/Haggerty and Blue State Digital each filed motions to dismiss Blue Buffalo's SAC for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Blue State Digital incorporates and adopts PRCG/Haggerty's briefs in support of its own motion to dismiss, and both Advertising Defendants assert substantially similar arguments in their briefs. Accordingly, for purposes of this Memorandum and Order, I will address both motions together, distinguishing the counterclaim defendants where appropriate.
Blue Buffalo's SAC alleges that Purina and the Advertising Defendants engaged in false and misleading advertising in violation of Section 43(a) of the Lanham Trademark Act of 1946 ("Lanham Act"), 15 U.S.C. § 1125(a). The SAC also alleges violations of several related state law claims.
Blue Buffalo's counterclaims are based on Purina's advertising campaign and public statements following the filing of this suit. Specifically, Blue Buffalo claims that Purina has launched a "false and disparaging advertising campaign" against Blue Buffalo. The SAC alleges that PRCG/Haggerty "designed and built the advertising campaign." SAC at ¶ 12. "The centerpiece of Nestle Purina's campaign is a website (the "Honesty website"), designed and built by PRCG/Haggerty, that was launched on or about May 6, 2014."
For example, Blue Buffalo alleges that the following statements on the home page of the Honesty website are false or misleading statements regarding Blue Buffalo's products and marketing practices:
Blue Buffalo also alleges that Purina promoted the Honesty website on its facebook page and on Twitter. On Purina's facebook page, for example, Purina allegedly posted links to the Honesty website accompanied by statements such as, "Not all pet food companies are honest about the ingredients they use. Get the facts at www.Puri.na.Honesty."
Blue Buffalo alleges that Purina also promotes the Honesty website through certain Google advertisements, and that Blue State Digital "developed the content of advertisements challenged herein" and "arranged for these links to PetFoodHonesty.com to appear when Google.com users search for terms related to Blue Buffalo."
In ruling on a motion to dismiss, I must accept as true all factual allegations in the complaint and view them in the light most favorable to the plaintiff. Fed. R. Civ. P. (12)(b)(6);
Unlike state courts which often require detailed statements of fact in a petition, the federal rules require only notice pleading. Under Fed. R. Civ. P. 8(a):
In their motions to dismiss, the Advertising Defendants argue that (1) Blue Buffalo improperly lumps all counterclaim defendants together, failing the notice pleading standards of Fed. R. Civ. P. 8(a); (2) Blue Buffalo fails to allege that the Advertising Defendants, as opposed to Purina, made the allegedly false or misleading statements; (3) Fed. R. Civ. P. 9(b) applies to Blue Buffalo's counterclaims and requires Blue Buffalo to plead its allegations of fraud with particularity, which it has not done; (4) Under the Lanham Act, advertising agencies are only liable if they were active participants in the preparation of the advertisement and they knew or had reason to know it was false or deceptive, which Blue Buffalo has not alleged; and finally, (5) Regarding defendant PRCG Haggerty only, it is immune from liability under the Communication Decency Act, 47 U.S.C. § 230 et seq., because it is merely alleged to have built the website, not created the content of the ads. The Advertising Defendants also bring individualized arguments for dismissal of each of the state law claims.
Blue Buffalo opposes the Advertising Defendants' arguments, arguing that (1) Grouping the counterclaim defendants in the SAC is not improper here because the SAC gives the counterclaim defendants sufficient notice of who is alleged to have done what; (2) Advertising agencies may be liable under the Lanham Act if they actively participate in the creation of false or misleading ads for another, so the fact that Purina's name is on the ads is not fatal; (3) There is no "knowing" element in the Lanham Act following the 1988 amendment of the Act, and the cases that suggest there is one were based on older versions of the Act; (4) Rule 9(b) does not apply to the Lanham Act in general, nor should it here because fraud is not an element of a Lanham Act violation; and even if it does apply, there is sufficient detail in the SAC to meet the requirements of Rule 9(b); and finally (5) Immunity under the Communication Decency Act is an affirmative defense that Blue Buffalo is not required to plead around, and, even it were, PRCG/Haggerty is an unprotected "information content provider" under the Act.
Section 43(a) of the Lanham Act provides:
15 U.S.C. § 1125(a)(1). The language of the Act creates a cause of action against any person who engages in false advertising. Liability is not limited to direct competitors.
Unfortunately, there is not much case law discussing the liability of advertising and public relations agencies for Lanham Act false advertising violations. However, a handful of district courts around the county have addressed this issue, and these courts have held that advertising agencies may be liable under the Lanham Act.
The Advertising Defendants concede that advertising agencies may be liable under the Lanham Act, but argue that such is not the case here because liability will only be found where the agency "was an active participant in the preparation of the ad" and "knew or had reason to know that it was false or deceptive." PRCG/Haggerty's Reply Brief at 9 (quoting
Although an older version of the Lanham Act included a "knowing" element, Congress amended the Act in 1988 to remove that element.
Despite the clear language of the Lanham Act, the Advertising Defendants argue that the Lanham Act silently imposes a scienter requirement in actions against advertising agencies. The Advertising Defendants cite to
Advertising Defendants also rely on
Congress expressly removed the "knowing" element from the Lanham Act in the 1988 amendment, and the sparse case law cited by the parties has not convinced me that there is still a silent "knowing" requirement for claims against advertising agencies. As a result, I will not dismiss the complaint against the Advertising Defendants for failure to allege that the Advertising Defendants knew the advertisements they allegedly created were misleading or false.
The Advertising Defendants also argue that Blue Buffalo has failed to allege that they actively participated in the creation of any alleged false representation. Blue Buffalo argues that it has done so by pleading that PRCG Haggerty "designed and built" the Honesty website, and that Blue State Digital "developed the content" of the ads on Purina's facebook & Twitter accounts, arranged for social media posts relating to the Honesty website to be directed to pet food consumers' facebook & Twitter pages, and "arranged for these links to PetFoodHonesty.com to appear when Google.com users search for terms related to Blue Buffalo." SAC at ¶ 33-44.
Whether these allegations are sufficient to survive the motion to dismiss depends on the standard under which they must be plead. The Advertising Defendants contend that Fed. R. Civ. P. 9(b) applies to Blue Buffalo's Lanham Act claim, as well as its state law claims.
Allegations of fraud are subject to a heightened pleading requirement under Federal Rule of Civil Procedure 9(b). "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). To meet Rule 9(b) requirements, a pleading must include "such matters as the time, place and contents of the false representations, as well as the identity of the person making the misrepresentations and what was obtained or given up thereby."
It is undisputed that Rule 9(b) does not necessarily apply to Lanham Act claims for false advertising because the elements of a false advertising claim under the Act do not require proof of fraud or mistake. However, the Advertising Defendants argue that Rule 9(b) focuses on and applies to "allegations and averments," rather than "claims."
There is a split in authority over whether 9(b) applies to Lanham Act claims that are grounded in fraud.
These same reasons suggest that Rule 9(b) should not apply here. Proof of fraud is not a prerequisite to establishing liability under the Lanham Act. While Blue Buffalo does include allegations of fraud in its claims against the counter-claim defendants, successful resolution of those claims does not depend on those allegations. As a result, Rule 9(b) does not apply to Blue Buffalo's Lanham Act claim and the claim should not be dismissed for lack of particularity.
Construing the factual allegations in the light most favorable to Blue Buffalo, as I must, I find that Blue Buffalo's Lanham Act claim meets the notice pleading standards of Rule 8(a). Blue Buffalo pleads that there were false and misleading advertisements and statements made about their own products and Purina's products, and attaches or cites to several examples of such statements and advertisements from Purina's Honesty website, facebook page, Twitter account, and Google search results. Blue Buffalo further alleges that the Advertising Defendants participated in the design and creation of those ads. While Blue Buffalo's allegations against the Advertising Defendants are not particularly robust, it would be difficult for Blue Buffalo to plead many additional facts at this time without the benefit of discovery. As noted above, "this simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims."
Furthermore, even if Rule 9(b) did apply to Blue Buffalo's Lanham Act claim, Blue Buffalo has alleged sufficient details to notify the Advertising Defendants of the nature of the claims against them by citing to several specific ads, quoting language from those ads, and noting the dates on which those ads ran.
The Advertising Defendants argue that Blue Buffalo improperly groups the counterclaim defendants together in the SAC, referring to them collectively as "counterclaim defendants." The Advertising Defendants claim that grouping these separate entities together is contrary to the requirement of Fed. R. Civ. P. 8(a)(2) that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief" and to the particularity requirements of Fed. R. Civ. P. 9(b).
While there are some circumstances where grouping defendants together in a complaint would deprive the defendants of fair notice of the nature of the claims against it, such is not the case here.
PRCG/Haggerty briefly argues that it is immune from liability under the Communication Decency Act ("CDA"), 47 U.S.C. § 230 et seq., because Congress "made the legislative judgment to effectively immunize providers of interactive computer services from liability in tort with respect to material disseminated by them but created by others."
Under the CDA, "the term `information content provider' means any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service." 47 U.S.C. § 230(f)(3). The CDA does not protect internet "content providers" from responsibility for the content they transmit through the web.
In addition to the Lanham Act claim (Count I), Blue Buffalo brings several related state law claims. Under Missouri common law, Blue Buffalo bring claims for False Advertising (Count II); Unfair Competition (Count III); Injurious Falsehood (Count IV); Defamation (Count V); and Unjust Enrichment (Count VI). Additionally, Blue Buffalo bring claims for Unfair Competition (Count VII) and Defamation (Count VIII) under Connecticut common law. Blue Buffalo also brings a claim for "Violations of Trade Practice Statutes of the Several States" (Count IX).
The Advertising Defendants argue that Blue Buffalo's claim for false advertising under Missouri common law should be dismissed because Missouri courts have not adopted or recognized such a claim. Although Blue Buffalo argues that this is a recognized claim, a search by this Court has found no case law to support that conclusion.
The Advertising Defendants argue that Blue Buffalo's claims for unfair competition and unjust enrichment under Missouri common law should be dismissed because Blue Buffalo has failed to plead them with particularity under Rule 9(b). The Advertising Defendants argue that these claims are subject to Rule 9(b) because they are "premised upon the same alleged fraudulent conduct as all of the other claims." However, for the reasons stated above, Rule 9(b) does not apply to either of these claims because neither claim requires proof of fraud.
Furthermore, although the claims against the Advertising Defendants are not as detailed as might be desired, because Blue Buffalo has alleged that the Advertising Defendants designed and created the challenged statements and advertisements, and that these advertisements were used for commercial benefit, they have stated claims for unfair competition and unjust enrichment.
The Advertising Defendants argue that Blue Buffalo's claims for injurious falsehood and defamation under Missouri common law should be dismissed because Blue Buffalo has failed to allege that the Advertising Defendants made any false statements, published such statements, or that they had the requisite intent. They also argue that Rule 9(b) applies to these claims and that they have not been plead with the requisite level of particularity.
Under Missouri common law, a defendant's liability for injurious falsehood is established if "(a) he intends for publication of the statement to result in harm to interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and (b) he knows that the statement is false or acts in reckless disregard of its truth or falsity."
The elements of a defamation claim under Missouri common law are "1) publication, 2) of a defamatory statement, 3) that identifies the plaintiff, 4) that is false, 5) that is published with the requisite degree of fault, and 6) damages the plaintiff's reputation."
The Advertising Defendants correctly argue that both of these claims include a scienter element. However, Blue Buffalo properly alleges that the counterclaim defendants "knew that their published statements were false, or acted in reckless disregard [or negligence] of the truth or falsity of the statements." SAC ¶ 106, 111. While these allegations are quite general, even under Rule 9(b), "malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b).
Additionally, for the same reasons stated in my discussion of the Lanham Act claim, and construing the factual allegations in the light most favorable to Blue Buffalo, I also find that the SAC sufficiently alleges that the Advertising Defendants made the allegedly false statements through their participation in the creation of the Honesty website and social media posts. It is also clear that publication is alleged. The SAC states that "Counterclaim Defendants have published false statements identifying Blue Buffalo," and that they "intended for the publication of these false statements to result in reputational harm," or "pecuniary harm" to Blue Buffalo. SAC at ¶ 105-6; 109-110. Additionally, throughout the SAC, Blue Buffalo alleges that the challenged statements and advertisements were published on Purina's Honesty website, and on facebook, Twitter, and Google.
The Advertising Defendants argue that Blue Buffalo's claim for unfair competition under Connecticut common law should be dismissed because Blue Buffalo has failed to allege that they have misappropriated a commercial or business advantage. The Advertising Defendants base this contention upon Connecticut cases that have held that unfair competition claims must be brought by a "competitor." Since the Advertising Defendants do not compete with Blue Buffalo, they argue that Blue Buffalo's claim against them fails as a matter of law. Blue Buffalo argues that unfair competition under Connecticut common law is based on the same elements of a Lanham Act claim, citing to
Under Connecticut common law, "the word `competition' as used in `unfair competition' limits coverage to claims by competitors of the insured."
Because the Advertising Defendants, as advertising and public relations agencies, do not supply "similar goods or services" or compete with Blue Buffalo, a pet food company, they could not have "misappropriated a commercial or business advantage" from Blue Buffalo. The case cited by Blue Buffalo is not to the contrary. In
The Advertising Defendants argue that Blue Buffalo's claim for defamation under Connecticut common law should be dismissed because Blue Buffalo has not alleged that they made and published defamatory statements against Blue Buffalo which identified Blue Buffalo to a third person.
Under Connecticut common law, "[t]o establish a prima facie case of defamation, the plaintiff must demonstrate that: (1) the defendant published a defamatory statement; (2) the defamatory statement identified the plaintiff to a third person; (3) the defamatory statement was published to a third person; and (4) the plaintiff's reputation suffered injury as a result of the statement."
Blue State Digital argues that the First Amendment requires Blue Buffalo to prove that there was "actual malice" in making the allegedly defamatory statements because the subject matter at issue here is a matter of public controversy involving a public company.
In Count IX, Blue Buffalo alleges that the counterclaim defendants "have engaged in misleading, unfair or deceptive acts or practices in the conduct of trade or commerce throughout the United States." Blue Buffalo then summarily lists citations to statutes of twenty-six different states. It is not clear, on the face of the complaint, which violations the counterclaim defendants are alleged to have committed, what the elements of those violations are, or how any of the factual allegations in the SAC constitute a violation under those state statutes. As a result, I cannot say that the claims are plausible or provide the counterclaim defendants with notice of the claims against them. This type of vague pleading is surely insufficient under the standards of
For the reasons stated above, I will grant in part and deny in part the Advertising Defendants' motions to dismiss. Blue Buffalo's counterclaims in Counts I, III, IV, V, and VI meet the notice pleading standards of Fed. R. Civ. P. 8(a). However, because Blue Buffalo's allegations as to Counts II, VII, VIII, and IX do not state claims upon which relief can be granted, I will dismiss them from the counterclaim as they relate to the Advertising Defendants. Additionally, Count IX is dismissed as to all counterclaim defendants. However, pursuant to Fed. R. Civ. P. 15(a)(2), I will grant Blue Buffalo leave to amend its counterclaim within twenty (20) days of this Order to bring it into conformity with the pleading requirements of Rule 8(a) and the terms of this Order.
Accordingly,