Am. Addiction Ctrs., Inc. v. Nat'l Ass'n of Addiction Treatment Providers

• Decision Date: 25 January 2021
• Docket Number: NO. 3:19-cv-00376,3:19-cv-00376
• Citation: 515 F.Supp.3d 820
• Court: U.S. District Court — Middle District of Tennessee
• Parties: AMERICAN ADDICTION CENTERS, INC., Recovery Brands, LLC, and Addiction Labs of America, LLC, Plaintiffs, v. NATIONAL ASSOCIATION OF ADDICTION TREATMENT PROVIDERS, Defendant.

515 F.Supp.3d 820

AMERICAN ADDICTION CENTERS, INC., Recovery Brands, LLC, and Addiction Labs of America, LLC, Plaintiffs,

v.NATIONAL ASSOCIATION OF ADDICTION TREATMENT PROVIDERS, Defendant.

NO. 3:19-cv-00376

United States District Court, M.D. Tennessee, Nashville Division.

Filed January 25, 2021

Daniel Warren Van Horn, Butler Snow LLP, Memphis, TN, Gibeault C. Creson, The University of Tennessee Office of General Counsel, Knoxville, TN, for Plaintiffs.

Brian S. Faughnan, Lewis, Thomason, King, Krieg & Waldrop, P.C., Memphis, TN, Christen C. Blackburn, Lewis, Thomason, King, Krieg & Waldrop, P.C., Nashville, TN, for Defendant.

MEMORANDUM OPINION

ELI RICHARDSON, UNITED STATES DISTRICT JUDGE

Pending before the Court is Defendant's Motion to Dismiss First Amended Complaint (Doc. No. 31, "Motion"). Plaintiffs have responded to the Motion (Doc. No. 39), and Defendant has filed a reply (Doc. No. 43).

BACKGROUND ¹

Plaintiff American Addiction Centers ("AAC") is a for-profit corporation and leading provider of inpatient and outpatient substance abuse treatment services for adults struggling with drug addiction, alcoholism, and co-occurring mental/behavioral health issues. Plaintiff Recovery Brands, LLC ("Recovery Brands") operates a portfolio of informational websites that help those suffering from addiction to find information, including directories of treatment providers, about treatment options and recovery. Plaintiff Addiction Labs of America ("ALA") operates a testing laboratory, the customers or potential customers of which include patients being treated at both AAC and non-AAC treatment facilities. Plaintiffs together will be referred to herein as "Plaintiffs."

Defendant National Association of Addiction Treatment Providers ("NAATP") is

an addiction treatment industry trade association that boasts of a nationwide membership in excess of 600 different providers and more than 930 different treatment facilities. Plaintiffs allege that NAATP has positioned itself as the de facto regulator of the addiction treatment industry and has sought to damage Plaintiffs and their reputations through lying about Plaintiffs’ practices, excluding Plaintiffs from its membership, blocking Plaintiffs’ participation in online advertising platforms, threatening retaliation against its members who use Plaintiffs’ services, barring membership to all providers who own or operate online directories or use marketing channels not controlled or approved by NAATP, and applying its restrictive standards to Plaintiffs and not to others.

The 396-paragraph First Amended Complaint ("FAC") asserts causes of action for: (1) violation of the Lanham Act; (2) defamation; (3) tortious interference with business relationships; (4) breach of contract and breach of the duty of good faith and fair dealing; and (5) violation of the Tennessee Consumer Protection Act. Defendant has moved to dismiss all of Plaintiffs’ claims for failure to state claims upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6).

MOTION TO DISMISS STANDARD

For purposes of a motion to dismiss under Rule 12(b)(6), the Court must take all the factual allegations in the complaint as true. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. 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. Id. at 1950. A legal conclusion, including one couched as a factual allegation, need not be accepted as true on a motion to dismiss, nor are mere recitations of the elements of a cause of action sufficient. Id. ; Fritz v. Charter Township of Comstock , 592 F.3d 718, 722 (6th Cir. 2010), cited in Abriq v. Hall , 295 F. Supp. 3d 874, 877 (M.D. Tenn. 2018). Moreover, factual allegations that are merely consistent with the defendant's liability do not satisfy the claimant's burden, as mere consistency does not establish plausibility of entitlement to relief even if it supports the possibility of relief. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

In determining whether a complaint is sufficient under the standards of Iqbal and its predecessor and complementary case, Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), it may be appropriate to "begin [the] analysis by identifying the allegations in the complaint that are not entitled to the assumption of truth." Iqbal , 556 U.S. at 680, 129 S.Ct. 1937. This can be crucial, as no such allegations count toward the plaintiff's goal of reaching plausibility of relief. To reiterate, such allegations include "bare assertions," formulaic recitation of the elements, and "conclusory" or "bald" allegations. Id. at 681, 129 S.Ct. 1937. The question is whether the remaining allegations – factual allegations, i.e. , allegations of factual matter – plausibly suggest an entitlement to relief. Id. If not, the pleading fails to meet the standard of Fed. R. Civ. P. 8 and thus must be dismissed pursuant to Rule 12(b)(6). Id. at 683, 129 S.Ct. 1937.

On a Rule 12(b)(6) motion to dismiss, "[t]he moving party has the burden of proving that no claim exists." Total Benefits Planning Agency, Inc. v. Anthem Blue Cross and Blue Shield, 552 F.3d 430, 433 (6th Cir. 2008). That is not to say that the movant has some evidentiary burden; as should be clear from the discussion above, evidence (as opposed to allegations as construed in light of any cognizable matters outside the pleadings ) is not involved on a Rule 12(b)(6) motion. The movant's burden, rather, is a burden of explanation ; since the movant is the one seeking dismissal, it is the one that bears the burden of explaining—with whatever degree of thoroughness is required under the circumstances—why dismissal is appropriate for failure to state a claim.

DEFENDANT'S ALLEGED OVERARCHING DEFENSES

Defendant initially asserts that three overarching legal concepts "doom" Plaintiffs’ claims. The Court will address these defenses in turn.

A. Trade associations have an absolute right to make membership decisions.

Defendant contends that trade associations generally have unlimited discretion to grant or refuse admission or membership, citing to cases more than fifty years old from state courts in other jurisdictions. (Doc. No. 32 at 6). In response, Plaintiffs argue that the general discretion afforded to a trade association's membership decisions has no bearing whatsoever on Plaintiffs’ claims. (Doc. No. 39 at 2). The Court agrees with Plaintiffs. Plaintiffs do not ask this Court to force Defendant to admit any one of them into membership,² and only one of Plaintiffs’ claims seeks damages related to Defendant's exclusion of Plaintiffs from NAATP membership. (Doc. No. 27, Cause No. 4). That claim is one for breach of contract and is based upon an alleged contractual promise, not the lack or abuse) of discretion of the trade association with respect to membership issues. (Id. at ¶¶ 367-381).

Therefore, this "overarching legal concept" does not apply.

B. Defendant is entitled to absolute immunity and qualified privilege.

Defendant contends that it is absolutely immune³ for any communications with or testimony before members of Congress.⁴ Plaintiffs respond that they have not sued based upon communications with Congress or made during congressional hearings; rather, the only claims related to Defendant's alleged false and defamatory congressional testimony arise from Defendant's republication (to the public) of such testimonial statements—actions that fall outside the absolute-immunity doctrine upon which Defendant relies. In reply, Defendant claims that simply alerting a new audience to the existence of a preexisting statement does not republish it, citing Clark v. Viacom Int'l Inc. , 617 F. App'x 495 (6th Cir. 2015), without explaining how its asserted principle applies herein.

Defendant's reliance upon Clark under these facts is not well taken. Clark involved a defendant who made certain statements "continuously available" on its website, and the plaintiffs argued that the statements were "republished" each time there were changes in the commercial advertisements around the borders of the website. Clark , 617 F. App'x at 506-07. The court stated that an online statement is not republished every time its window dressing is altered and that "simply alerting a new audience to the existence of a preexisting statement does not republish it." Id. at 507. Clark certainly has something to say about when a statement should be deemed "republished." Clark does not say, however, that a statement entitled to absolute immunity when first made (based on the circumstances of such making) is subject to the same absolute immunity when made later under different circumstances; it is certainly conceivable, for all Clark indicates, that the answer is "no" even if the second making could be considered a "republication." Moreover, Clark is distinguishable on its facts, in particular because the "republication" in Clark was in form and substance much closer to the original publication than is the alleged republication in this case. Plaintiffs here allege that Defendant "republished" the statements made before Congress via entirely different means of communication (at its annual meeting and via websites and media outlets), not that Defendant simply changed the presentation to Congress or changed an existing presentation on its websites. (e.g., Doc. No. 27 at ¶¶ 58 and 136-141). The Court does not see a basis, from Cla...