Monday, June 25, 2012

Association has standing to bring false advertising claim

American Optometric Soc., Inc. v. American Bd. of Optometry, Inc., 2012 WL 2135350 (C.D. Cal.)

The AOS sued the ABO for false advertising under California and federal law for its use of the terms “board certified” and “board certification,” long used to denote specialized competence, expertise, and training in the medical field.  Optometrists are not physicians, though they perform eye exams, check for vision problems and diseases, and prescribe corrective lenses.  The ABO was formed as a nonprofit in 2009 to administer a “board certification” program for optometrists, and the AOS is an nonprofit that represents optometrists opposed to the ABO’s program.  The AOS sought to enjoin ABO and its affiliates “from making any representation to the public ... through any medium, which refers to its program or certification as constituting ‘board certification’ or using the phrase ‘board certified’ to describe its members.”

The AOS’s evidence that “board certified” means special training/expertise was: (1) The ABO’s corporate designee admitted in deposition his belief “that people ask for and request board certified practitioners because they believe them to be more competent.”  (2) The ABO’s executive director testified that even before the ABO established its board certification program or disseminated any information about it, members of the public began to call him asking for board certified optometrists. The AOS drew the conclusion that the public attaches a special meaning to the term.  (3) The the AOS’s expert did a survey showing that more than half of the eye-care consumers surveyed believed that a board certified optometrist is more competent that one who is not. Sixty-one percent believed that a board certified optometrist has more training.  The ABO moved to exclude the survey. 

Finally, (4) The AOS argued that the ABO’s communications were designed to lead consumers to believe that the ABO’s board certification is equivalent to board certification for physicians.  One ABO website ad includes this optometrist’s quote: “Board Certification is a meaningful term to the public and to my patients. I now have the chance to participate in a process that other health professionals have had for many years.”  Another: “My residency has paid off in many ways—and now I can proudly tell my patients I am board certified. It is a term they recognize, and will help me stay current over the next ten years.”  Another: “Board certification provides an opportunity to demonstrate one's commitment to patient care that is easily identifiable to the public.”

The AOS contended that the ABO’s board certification lacked the essential characteristics of a medical board certification.  The ABO’s corporate designee testified that the ABO certification doesn’t demonstrate specialization or particular knowledge, skills and abilities, compared to a non-ABO certified optometrist. 

The ABO moved for summary judgment arguing standing and lack of falsity.  The AOS conceded that it lacked standing to assert its state law claims, but argued that it had associational standing under the Lanham Act, and the court agreed.  Associational standing can exist if an association’s members have standing to sue in their own right, and the ABO argued that the AOS’s members didn’t.  (If they’re competing membership organizations, it seems that the AOS would have standing for itself against the ABO, but not against the ABO’s members; those ads quoted above are targeted towards attracting optometrist members.  What if it’s true that consumers do react well to the term “board certification” even when that’s not an accurate description of what the ABO offers?  I’d still find falsity in such a case, since that’s like saying to retailers “you’ll do well when you advertise our 100% natural product” and the product is not 100% natural, but perhaps this is at its core a secondary liability case where there’s pretty clear inducement.)

The court began by noting that §43(a)(1)(A) and (a)(1)(B) have different standing requirements, though calling them “differing statutory standing requirements” implies that the statute somehow suggests as much, when in fact the language allowing “any person” to sue for injury is exactly the same.  Anyway, a false advertising plaintiff must show that it suffered a commercial injury based on a misrepresentation about a product (or service, or commercial activities).  It must also show that this injury is competitive: harmful to the plaintiff’s ability to compete.

The ABO argued that there was no “competitive” injury because the ABO doesn’t compete with the AOS’s members.  “This is a dodge.”  The parties’ members compete with each other.  “If their advertising includes a boast that they are board certified, it is because that representation is meant to help them stand out in the marketplace. Because ABO-certified optometrists compete with the AOS's members, AOS members have standing to challenge the ABO’s allegedly false statements” (emphasis added).  There was clearly a competitive injury of the kind the Lanham Act intended to address.  Two AOS members, for example, stated in declarations that they believed they’d lost patients to nearby ABO-certified optometrists, and the ABO’s own corporate designee stated that he believed that people look for board certified practitioners because they believe that signals greater competence.  Direct competition between the two organizations wasn’t necessary given this diversion of business from the AOS’s members.  (I of course think this is a fine result, despite my academic wish for slightly more conceptual clarity.)

The court also found a genuine issue of material fact on explicit falsity and on misleadingness.  (Frankly, I’d be tempted to grant the AOS summary judgment on the facts as described.)  The AOS offered sufficient evidence to allow a trier of fact to conclude that (1) “board certified” and “board certification” convey by necessary implication the claim that the ABO’s certification carries the same weight and implies the same kind of expertise as physicians’ board certification, and (2) in fact it lacks the essential characteristics of physicians’ board certification.  For example, the testimonial claiming that “Board Certification is a meaningful term to the public and to my patients. I now have the chance to participate in a process that other health professionals have had for many years,” necessarily implies that ABO’s certification is the same “meaningful term.”  Likewise “It is a term [my patients] recognize, and will help me stay current over the next ten years.”  The evidence also was sufficient to show that physicians’ board certification meant specialized expertise, and that the ABO’s didn’t.

The AOS also had evidence showing misleadingness: the testimony from the ABO’s executive director about consumers’ interest in board certified optometrists indicated that consumers attach a special meaning to the term.  The AOS’s expert’s survey was also relevant, though the Daubert motion wasn’t yet fully briefed.

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