Frompovicz v. Niagara Bottling, LLC

• Decision Date: 18 September 2018
• Docket Number: CIVIL ACTION NO. 18-54
• Citation: 337 F.Supp.3d 498
• Parties: Stanley F. FROMPOVICZ, Plaintiff, v. NIAGARA BOTTLING, LLC, Ice River Springs Water Co, Inc., Crossroads Beverage Group and James J. Land, Jr., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

337 F.Supp.3d 498

Stanley F. FROMPOVICZ, Plaintiff,

v.NIAGARA BOTTLING, LLC, Ice River Springs Water Co, Inc., Crossroads Beverage Group and James J. Land, Jr., Defendants.

CIVIL ACTION NO. 18-54

United States District Court, E.D. Pennsylvania.

Signed September 18, 2018

David J. Stanoch, Golomb & Honik, P.C., Philadelphia, PA, for Plaintiff.

Matthew A. White, Emilia L. McKee Vassallo, Leslie E. John, Ballard Spahr Andrews & Ingersoll LLP, Brett A. Datto, Lauren Schwimmer, Weir & Partners LLP, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION

WENDY BEETLESTONE, District Judge.

This dispute bubbles up before this Court again, presenting the question of who is selling genuine bottled "spring" water and who is not. See Frompovicz v. Niagara Bottling, LLC , 313 F.Supp.3d 603 (E.D. Pa 2018). Plaintiff, a water extractor, alleges that Defendants have violated the Lanham Act, 15 U.S.C. § 1125(a), and Pennsylvania's unfair competition law by mislabeling their water as "spring water." One of the Defendants extracts water and three of them bottle, sell, and label the extracted water as "spring water." As a licensed extractor of spring water, Plaintiff alleges that Defendants' labeling of their non-spring water as "spring water" has damaged his business because the labels are designed to entice purchasers to buy Defendants' products under the false belief that their "spring water" is at least equal, if not superior, to Plaintiff's true spring water. Plaintiff brings this case as a putative class action for "[a]ll persons in the United States who, within the applicable statute of limitations preceding the filing of this action through class certification, extract and/or bottle spring water for sale in the United States," as well as a Pennsylvania subclass.

Defendants have filed Motions to Dismiss under Federal Rules of Civil Procedure 12(b)(6). For the reasons below, Defendants' motions are granted in part and denied in part.

I. FACTS

The following facts come from the Amended Complaint. Plaintiff is Stanley Frompovicz, who operates a spring water extraction business as Far Away Springs.¹ Defendants are James Land,² who is also engaged in the business of extracting and marketing water, and three water bottlers and distributors who purchase Land's water, namely Niagara Bottling Co., LLC ("Niagara"), Ice River Springs Water Co. Inc. ("Ice River"), and Crossroads Beverage Group ("Crossroads") (collectively "Bottler Defendants").

The gist of Plaintiff's claim is that Defendant Land fraudulently markets and sells "well water" as the more desirable "spring water" to the Bottler Defendants, who turn around and knowingly sell the spuriously labeled water to consumers, thereby diminishing Plaintiff's market to sell legitimate spring water to bottlers and consumers alike. The marketing and labeling is misleading, according to the Complaint, for four reasons. First, Defendant Land's water "does not satisfy the FDA's definition of ‘spring water.’ " Second, Defendant Land's facility is permitted by the Pennsylvania Department of Environmental Protection (DEP) as a "well water" site, and not a "spring water" site. Third, water extracted from Land's facility "has been extracted, handled, or treated with equipment or techniques that are inconsistent with a ‘spring water’ classification criteria." Last, water from Land's facility "has tested as containing more particulates or trace elements than are otherwise permissible or recommended under industry standards for ‘spring water.’ "

Plaintiff alleges he suffered commercial harm as a result of the misleading marketing and labeling. Defendants Niagara and Ice River sourced spring water from Plaintiff before switching to Defendant Land's water in 2009 and 2013 respectively, resulting in lost sales for Plaintiff. And in 2014, Defendant Crossroads considered purchasing Plaintiff's spring water before choosing to source from Defendant Land instead. In addition, the Complaint alleges that Plaintiff "also bottled his own spring water and directly sold it to customers."

Finally, the Complaint also alleges that Defendants Land and Niagara falsely disparaged Plaintiff's products, thus further harming his commercial interests.

II. PROCEDURAL HISTORY

Plaintiff filed an initial Complaint in January of 2018. Defendants filed Motions to Dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The Court dismissed the Lanham and state law claims against the Bottler Defendants without prejudice, but not against Defendant Land. Frompovicz , 313 F.Supp.3d at 607. This Court also held that Plaintiff's Lanham Act claims were not precluded by the Food, Drug, and Cosmetics Act (FDCA). Id. at 616. Plaintiff filed an Amended Complaint in June of 2018 and Defendants again filed Motions to Dismiss under Federal Rules of Civil Procedure 12(b)(6).

III. LEGAL STANDARD

"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.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "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" recitations of the elements of a claim supported only by "conclusory statements" will not suffice. Id. at 683, 129 S.Ct. 1937. Rather, a plaintiff must allege some facts to raise the allegation above the level of mere speculation. Great Western Mining & Mineral Co. v. Fox Rothschild LLP , 615 F.3d 159, 176 (3d Cir. 2010) (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). In analyzing a motion to dismiss legal conclusions are disregarded, well-pleaded factual allegations are taken as true, and a determination is made whether those facts state a "plausible claim for relief." Fowler v. UPMC Shadyside , 578 F.3d 203, 210-11 (3d Cir. 2009).

IV. DISCUSSION

Defendants advance two separate arguments in their Motions to Dismiss. First, Defendants argue Plaintiff lacks a "right to sue" under the Lanham Act and, because the Pennsylvania common law cause of action for unfair competition is "virtually the same" as the Lanham Act, the Complaint should be dismissed in its entirety. Flynn v. Health Advocate, Inc. , 169 F. App'x 99, 101 (3d Cir. 2006). Second, Defendants argue that, whatever the merits of the Lanham Act claim, Plaintiff's state law claims are preempted by the FDCA. These two arguments are addressed in turn.

A. Lanham Claim

The Lanham Act "authorizes suit by ‘any person who believes that he or she is likely to be damaged’ by a defendant's false advertising." Lexmark Inter., Inc. v. Static Control Components, Inc. , 572 U.S. 118, 129, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). Despite the statute's expansive language, the Court explained in Lexmark that potential plaintiffs must make a more particularized showing to establish a statutory cause of action under Section 1125(a). Id. To survive a motion to dismiss under 12(b)(6), Plaintiff must sufficiently allege that: (1) he comes within "the zone of interest" implicated by the statute; and, (2) that the Defendants' violation of the statute proximately caused his damages.³ Id. at 129-34, 134 S.Ct. 1377.

i. Zone of Interest Test

As the Court explained in Lexmark , "to come within the zone of interests in a suit for false advertising under Section 1125(a), a plaintiff must allege an injury to a commercial interest in reputation or sales." Id. at 131-32, 134 S.Ct. 1377. Plaintiff alleges he suffered both loss of sales and reputational harm from Defendants' violation of 1225(a).

First, the allegations that Plaintiff's spring water sales were depressed as a result of Defendants' misleading labels come within the "zone of interests" protected by the Lanham Act. The specific allegations in the Amended Complaint are: "Businesses such as Plaintiff's have spent significant time, money, and resources to identify, develop, and maintain spring water sites;" "Defendants' marketing and sale of their deceptively marketed ‘spring water’ is damaging to the reputation, goodwill, and business of Plaintiff...;" "Defendants' wrongful conduct has resulted in increased sales of their own [spring water], hindering sales of Plaintiff's [spring water];" and "Plaintiff...is in the spring water business." Accepting those facts as true and drawing all reasonable inferences in favor of the non-moving party, Plaintiff plausibly alleges that the Bottler Defendants would have purchased more spring water from Plaintiff had Defendant Land's labels indicated that his water was other than spring water. See Industria de Alimentos Zenu S.A.S. v. Latinfood U.S. Corp. , 2017 WL 6940696, at *17 (D.N.J. 2017) (finding similar allegations sufficient to withstand 12(b)(6) challenge post- Lexmark ).

Plaintiff also alleges that Defendants Land and Niagara made disparaging remarks about his business resulting in "injury to Plaintiff's business and reputation, including lost sales or profits." According to the Amended Complaint, Defendant Niagara "falsely told industry participants that Plaintiff should not be dealt with, and has misrepresented to the public that Plaintiff's spring water...is contaminated." And Defendant Land "has disparaged Plaintiff and his business on multiple occasions," including "instigat[ing] frivolous DEP investigations into Plaintiff's operations in order to unfairly stymie competition." The alleged disparagement "was an additional independent and/or cumulative basis for Plaintiff's (and other class members') lost sales, profits, or reputational injuries." The alleged reputation harm satisfies the zone of interest test because it is plausible that disparaging remarks about Plaintiff's operation cost him sales to other industry participants. Lexmark , 572 U.S. at 132, 134 S.Ct. 1377 ("a plaintiff must...