Wednesday, January 11, 2012

Pleading standard dooms misleadingness claim

Ameritox, Ltd. v. Millennium Laboratories, Inc., 2012 WL 33155 (M.D. Fla.) 
Ameritox (a drug testing lab) sued Millennium for false advertising under state and federal law.  Millennium moved to dismiss the Lanham Act claim.  The allegedly false statements were contained in a billing letter to patients; Millennium argued that wasn’t commercial advertising or promotion because the relevant consumers were medical providers.  Ameritox contended that the letter was widely circulated both to medical providers and to patients, and that both groups were part of the relevant purchasing public.  The court found this insufficiently pled; among other things, Ameritox had to allege how many consumers in the relevant purchasing public Millennium contacted. 
Ameritox did sufficiently plead misleadingness: it claimed that the letter told patients that they weren’t responsible for [Millennium’s?] co-pay or deductible charges, and that this was misleading because Medicare patients by law aren’t subject to such charges for clinical lab work anyway.  However, Ameritox failed to plead deceptiveness: the claim that “Millennium's statements are ... likely to deceive a substantial portion of the targeted customers” was a naked assertion that couldn’t survive a motion to dismiss.  Left unclear is what Ameritox is supposed to plead.  Actual deception isn’t required, in theory; is Ameritox supposed to plead that it has a survey in hand? 
Likewise, Ameritox’s allegation that “Millennium's false or misleading statements have already, and will continue to, influence materially purchasing decisions to the extent that customers choose Millennium's services instead of those offered by Ameritox” was insufficient to plead materiality.  The Lanham Act claim was dismissed without prejudice.  The state law unfair competition claim, based on the same theory, was also dismissed (though note that it seems quite unlikely that the state law claim requires “commercial advertising or promotion” or, for that matter, an interstate commerce nexus in the same way as a Lanham Act claim; nonetheless courts don’t like to do two analyses where one will do, so there you go).

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