Frompovicz v. Niagara Bottling, LLC, 2018 WL 2363475, No.
18-54 (E.D. Pa. May 24, 2018)
Frompovicz extracts spring water, and alleged that the
defendants, who extract, bottle, label, and sell their water as “spring water,”
thereby violated the Lanham Act and Pennsylvania’s unfair competition law by
mislabeling their water as “spring water.” One of the Defendants extracts water
and three of them bottle.
Spring water allegedly typically sells at a premium compared
to other bottled water, such as well water or tap water, but spring water sites
require substantially more resources to locate, develop, and maintain than
other sources. Defendants’ source comes
from a facility whose DEP permit allegedly identifies the site as a “well
water” site, and not a “spring water” site; the raw water extracted from the
facility allegedly does not satisfy the FDA definition of “spring water”; the
equipment or techniques used are allegedly inconsistent with a “spring water”
classification; and water from the facility has allegedly tested as containing
more particulates or trace elements than are otherwise permissible or
recommended under industry standards for spring water.
The court rejected a challenge to the plaintiff’s Article
III standing. Injury in fact is pretty
generous at the motion to dismiss stage, and the allegations that defendants’
marketing damaged his reputation and goodwill and hindered his sales
sufficed. DEP suspended plaintiff’s
license to extract water in 2015, but the statute of limitations is 6 years, so
he adequately alleged an injury within the relevant period. However, the court dismissed his claim for
injunctive relief because he wasn’t currently in business.
Traceability to the challenged conduct: ditto. “Since consumers prefer spring water, it is
reasonable to infer under the analytical rubric of a motion to dismiss that
Defendant Land’s sales siphoned sales away from Plaintiff.”
But did he have a right to sue under the Lanham Act?
Consumers of falsely advertised products don’t. Alleging that his spring water
sales were depressed as a result of defendants’ misleading labels came within Lanham
Act’s “zone of interests.” And he alleged proximate cause as to the defendant
facility: he was a direct competitor of the defendant facility. There was no “intervening
causal agent” between the defendant facility’s conduct – the “deceptive” sale
to bottlers – and his diminished sales to bottlers; both were selling what they
call “spring water” to bottlers.
[Actually, and relevant to the discussion below, there is an intervening
cause—the reactions of bottlers who believe, or believe their consumers will
believe, the “spring water” representation—it’s just not a legally relevant cause for Lanham Act purposes, as the Court said
in Lexmark.]
As for the bottler defendants, they weren’t in direct
competition. While suits against
non-competitors aren’t completely precluded, “in cases alleging liability based
on indirect injuries, more particularized allegations are required” and such a
claim is only viable in “relatively unique circumstances” such as those in Lexmark.
Plaintiff’s injury from the bottlers was indirect because, as in Lexmark, he was one step removed in the
distribution chain. There was an intervening causal agent between the bottler defendants’
actions and plaintiff’s lost sales: consumers’ purchases of the allegedly
mislabeled water. But the plaintiff didn’t sell to consumers; he sold to
bottlers. To allege additional facts as
necessary here, he’d need something like a one-to-one correspondence between
loss to direct competitors and loss to the plaintiff, or like direct
disparagement. Those allegations weren’t present, so the claim against the
bottlers was dismissed with leave to amend.
The remaining defendant also argued FDCA preclusion, which Pom Wonderful made unfruitful. The court’s summary of defendant’s argument
makes it look like one of the worst attempted distinctions I’ve ever seen: “Defendants
assert that POM Wonderful is distinguishable because it dealt with the
definition of juice mixtures and the present case involves the definition of
spring water.” However, a Lanham Act claim might be precluded if it
conflicted with “an agency judgment.” There was no allegation of such an
affirmative judgment about the facility’s water.
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