Afi Holdings of Ill., LLC v. Waterman Broad., Corp., Case No: 2:17-cv-491-FtM-99CM
| Decision Date | 22 June 2018 |
| Docket Number | Case No: 2:17-cv-491-FtM-99CM |
| Parties | AFI HOLDINGS OF ILLINOIS, LLC d/b/a Happy Leaves, Inc., Plaintiff, v. WATERMAN BROADCASTING, a Florida corp., GRAHAM HUNTER, LISA SPOONER, PETER BUSCH, and JOSEPH DORN, M.D., Defendants. |
| Court | U.S. District Court — Middle District of Florida |
This matter comes before the Court on review of defendant Joseph Dorn, M.D.'s Motion to Dismiss (Doc. #27) filed on April 13, 2018. Plaintiff filed a Response in Opposition (Doc. #36) on April 30, 2018. For the reasons set forth below, the Motion is denied.
On June 27, 2017, plaintiff AFI Holdings, LLC d/b/a Happy Leaves, Inc., ("AFI") filed suit in Lee County, Florida alleging defamation and commercial disparagement against Defendant Waterman Broadcasting ("Waterman"). The case was removed to the Middle District of Florida based on diversity jurisdiction. AFI filed an Amended Complaint (Doc. #22), adding the individual defendants. AFI alleges that defendants' statements during WBBH-TV's July 1, 2016 segment on AFI's sales of the hemp oil extract "Charlotte's Web" on Groupon defamed AFI and disparaged its product.
The Amended Complaint alleges as follows: AFI d/b/a Happy Leaves distributes hemp oil extract for another company named CW Hemp, Inc., which manufactures "Charlotte's Web" in Colorado. (Doc. #22, ¶ 12.) Charlotte's Web is a commercially available full plant hemp extract. The active ingredient in Charlotte's Web is cannabidiol (CBD). CBD can be harvested from both hemp and cannabis. (Id., ¶ 13.) CBD oils harvested from hemp, such as Charlotte's Web, have very low levels of tetrahydrocannadion (THC) compared to those harvested from cannabis and they are not regulated in the same way. (Id., ¶ 14.) Plaintiff alleges that according to Florida Bill 893.02, which became effective on July 1, 2014, the term "cannabis" does not include any cannabis that contains 0.5 percent or less of THC and more than 15 percent of CBD. (Id., ¶ 15.) The Charlotte's Web hemp oil extract sold by AFI on Groupon contains less than 0.3 percent of THC and does not fall within the definition of "cannabis" under Florida law. (Id., ¶¶ 16, 18.) Hemp oil extract is separate and distinct from marijuana and marijuana oil extract is sold legally throughout all 50 states. Hemp oil extract is not "pot" or "medical marijuana" and industrial hemp products are currently distributed inthousands of health and wellness stores across the United States. (Id., ¶¶ 17, 22.)
CW Hemp, Inc.'s business model allows for exclusive regional distributorships of Charlotte's Web. Prior to July 2, 2016, AFI enjoyed an exclusive agreement with CW Hemp, Inc. to sell Charlotte's Web on Groupon. AFI was CW Hemp's only distributor selling through Groupon. (Doc. #22, ¶ 23.) The Groupon account was particularly lucrative for AFI. In June 2016, AFI's monthly gross sales of Charlotte's Web on Groupon were approximately $75, 000. (Id., ¶ 24.)
On July 1, 2016, defendants Lisa Spooner and Peter Busch were on-air anchors, and Graham Hunter was an on-air reporter for WBBH-TV, located in Fort Myers, Florida. The station is owned and operated by Waterman Broadcasting. (Doc. #22, ¶¶ 25-28.) During WBBH-TV's 11:00 p.m. newscast on that date, defendants aired a segment about AFI and Charlotte's Web. The segment identified defendant Joseph Dorn, M.D. as an "expert" on the subject. (Id., ¶ 29.)
During the broadcast, defendants knowingly made false and/or reckless statements about AFI and Charlotte's Web in a way to sensationalize the story. (Doc. #22, ¶ 30.) Plaintiff alleges that defendants made the following statements: Ms. Spooner falsely claimed that Charlotte's Web was "medical marijuana" and that "200mg of Charlotte's Web Pot" could be purchased for "fortybucks." She stated that "pot" and "medical marijuana' could now be purchased on Groupon via AFI. (Id., ¶ 31.) Mr. Busch falsely stated that "only five dispensaries in Florida are allowed to sell it under Florida law" in reference to the Charlotte's Web to imply AFI was violating Florida law. He also stated that "Graham Hunter spoke to an expert about how it's actually being sold in this ad" in referring to AFI's advertisement on Groupon. (Id., ¶ 32.) Mr. Hunter falsely claimed that "there's really no way to know exactly what's in this stuff without buying it and testing it." (Id., ¶ 33.) Mr. Hunter also provided misleading pictures and videos for the segment, and also conducted street interviews. (Id., ¶¶ 34-35.) Hunter stated that he contacted Groupon to notify it of the story and sent an email to AFI's owner when in fact the email was only sent to AFI two hours before airing the segment, asking: "What is your product?" and "How is this legal to dispense to the U.S.?" (Id., ¶ 40.) The segment was aired before receiving a response.
Particularly relevant to the instant Motion, plaintiff alleges that Dr. Dorn stated during the segment in reference to AFI that "somebody like this, they're not playing by the rules, so who in the world knows what they're selling." (Doc. #22, ¶ 36.) Plaintiff alleges that this implies that AFI was violating Florida law by selling Charlotte's Web in Florida via Groupon. (Id.)
As a result of the segment, Groupon discontinued all sales of Charlotte's Web on its website. (Doc. #22, ¶¶ 43-44.) Plaintiffstates that Groupon would not have known about the story but for Waterman and Mr. Hunter notifying it. (Id., ¶ 45.) AFI was the only distributor of Charlotte's Web on Groupon and following the July 1, 2016 segment, AFI's total sales were reduced to zero. (Id., ¶ 46.)
On July 14, 2016, Waterman posted an online statement retracting its July 1, 2016 story about AFI and Charlotte's Web, stating:
(Doc. #22, ¶ 47.) However, between the retraction and at least November 21, 2017, Waterman continued to publish defamatory statements and images about AFI Holdings on its Facebook page. (Id., ¶ 49.) As a result of defendants' statements that AFI was violating Florida law, sales of Charlotte's Web were devastated. (Id., ¶ 50.)
Plaintiff's Amended Complaint alleges defamation per se and commercial disparagement against all defendants (Counts I-VI). Plaintiff seeks $1,200,000 in damages, as well as punitive damages. Dr. Dorn moves to dismiss the defamation per se claim brought against him (Count V). The remaining defendants filed answers.
A Complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This obligation "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(citation omitted). To survive dismissal, the factual allegations must be "plausible" and "must be enough to raise a right to relief above the speculative level." Id; See also Edwards v. Prime Inc., 602 F. 3d 1276, 1291 (11th Cir. 2010).
In deciding a Rule 12(b)(6) motion to dismiss, the Court must accept all factual allegations in a Complaint as true and take them in the light most favorable to plaintiff, Erickson v. Pardus, 551 U.S. 89 (2007), but "[l]egal conclusions without adequate factual support are entitled to no assumption of truth," Mamani v. Berzain, 654 F. 3d 1148, 1153 (11th Cir. 2011)(citations omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. "Factual allegations that are merely consistentwith a defendant's liability fall short of being facially plausible." Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012) (internal citations omitted). Thus, the Court engages in a two-step approach: "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679.
Plaintiff's Amended Complaint includes one allegedly defamatory statement made by Dr. Dorn: "somebody like this, they're not playing by the rules, so who in the world knows what they're selling." (Doc. #22, ¶ 36.) In moving for dismissal, Dr. Dorn argues that this was a statement of pure opinion, not defamation. Dr. Dorn also argues that his statement does not satisfy as defamation per se because Dr. Dorn never actually referenced plaintiff or its product; rather, the statement was about a larger and undefined group of products. Further, Dr. Dorn never stated that any law had been violated, but argues that it is currently illegal to sell plaintiff's product in Florida. Plaintiff disagrees that it is currently illegal to sell Charlotte's Web in Florida and Dorn's statement that AFI was not "playing by the rules" implies that AFI was violating the law, which was false. However, plaintiff states that even if it is shown that Charlotte's Web has become illegal to sell in Florida since the broadcast,that could go to damages, not the viability of AFI's claim against Dr. Dorn.
Defamation, which includes libel and slander1, is generally defined as "the unprivileged publication of false statements which naturally and proximately result in injury to...
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