Fuller Bros., Inc. v. International Marketing, Inc.

• Decision Date: 21 December 1994
• Docket Number: Civ. No. 93-1105-FR.
• Citation: 870 F. Supp. 299
• Parties: FULLER BROTHERS, INC., Plaintiff, v. INTERNATIONAL MARKETING, INC. and U.S. Technology Corporation, Defendants. INTERNATIONAL MARKETING, INC., Counterclaim Plaintiff, v. FULLER BROTHERS, INC. and Craig Fuller, Counterclaim Defendants.
• Court: U.S. District Court — District of Oregon

870 F. Supp. 299

FULLER BROTHERS, INC., Plaintiff, v. INTERNATIONAL MARKETING, INC. and U.S. Technology Corporation, Defendants.

INTERNATIONAL MARKETING, INC., Counterclaim Plaintiff, v. FULLER BROTHERS, INC. and Craig Fuller, Counterclaim Defendants.

Civ. No. 93-1105-FR.

United States District Court, D. Oregon.

December 21, 1994.

Randolph C. Foster, Joseph D. Cohen, Stoel Rives Boley Jones & Grey, Portland, OR, for plaintiff/counterclaim defendants.

James M. Callahan, Callahan & Shears, P.C., Portland, OR, Bruce H. Wilson, Oldham, Oldham & Wilson Co., L.P.A., Akron, OH, for defendant/counterclaim plaintiff Intern. Marketing, Inc.

OPINION

FRYE, District Judge:

The matters before the court are (1) the motion of defendant International Marketing, Inc. (International Marketing), to transfer (# 88); and (2) the motion of International Marketing for reconsideration (# 98-1) or, in the alternative, motion to dismiss (# 98-2).

BACKGROUND

In an opinion filed on July 14, 1994, this court granted summary judgment in favor of defendant International Marketing on the claim of the plaintiff, Fuller Brothers, Inc. (Fuller Brothers), for the intentional interference with economic advantage. 858 F.Supp. 142. The court stated the facts as follows:

Plaintiff, Fuller Brothers, Inc. (Fuller Brothers), manufactures, sells and distributes "Tire Life," a liquid formula that extends the life of truck tires when it is placed inside the tires at the time they are mounted.

Defendant International Marketing, Inc. (International Marketing) manufactures, sells and distributes "Equal," a dry, powder-like formula that reduces vibration and eliminates radial and lateral force variation when it is placed inside the tires during the wheel-assembly balancing procedure.

Tire Life and Equal do not perform the same function, and they cannot be used in a truck tire at the same time.

In April of 1993, Fuller Brothers filed a complaint against International Marketing with the regional office of the Occupational Safety and Health Administration (OSHA) in Harrisburg, Pennsylvania. In the complaint filed with OSHA, Fuller Brothers asserted that the product Equal releases formaldehyde gas and presents a health hazard to workers removing vehicle tires for repair because the inert urea formaldehyde component of Equal continuously breaks down, emitting formaldehyde at levels far greater than 0.1 parts per million.

On September 7, 1993, Fuller Brothers filed the complaint in this case against International Marketing alleging a claim for the interference with business relationships or prospective advantage. International Marketing then filed an answer to Fuller Brothers' complaint and counterclaims against Fuller Brothers for violation of the Lanham Act, libel, and tortious interference with business.

858 F.Supp. at 143.

On September 30, 1994, Fuller Brothers, with leave of the court, filed a first amended complaint stating three claims for relief as follows: (1) a claim for the violation of the Lanham Act; (2) a claim for unfair and deceptive business practices under the laws of the State of Oregon; and (3) a claim for the tortious interference with business relationship and prospective advantage under the laws of the State of Oregon.

Motion of Defendant International Marketing for Reconsideration or, in the Alternative, Motion to Dismiss

Fuller Brothers filed its first amended complaint with leave from the court. The motion of International Marketing to reconsider the motion to file a first amended complaint is moot. International Marketing argues next that this court should dismiss the first amended complaint. International Marketing contends that Fuller Brothers lacks standing as a non-competitor of International Marketing to assert a claim under section 43(a) of the Lanham Act, and that the court should dismiss the state law claims when the claim under section 43(a) of the Lanham Act is dismissed.

Fuller Brothers argues that the allegations in the first amended complaint adequately state a claim under section 43(a) of the Lanham Act because it has alleged some discernible competitive injury.

A motion to dismiss under Rule 12(b)(6) will only be granted if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Gibson v. United States, 781 F.2d 1334, 1337 (9th Cir.1986), cert. denied, 479 U.S. 1054, 107 S.Ct. 928, 93 L.Ed.2d 979 (1987). The review is limited to the complaint, and all allegations of material fact are taken as true and viewed in the light most favorable to the non-moving party. Cassettari v. Nevada County, Cal., 824 F.2d 735, 737 (9th Cir.1987).

In the first amended complaint, Fuller Brothers alleges, in relevant part:

7. Fuller Brothers manufactures, sells and distributes a number of products for motor vehicles including TIRE LIFE, a liquid formula that extends tire casing and rim life when placed inside motor vehicle tires.

8. Fuller Brothers has been distributing TIRE LIFE in interstate commerce since 1962, with annual sales of over $1 million.

9. IMI also manufactures, sells and distributes a number of products for motor vehicles including EQUAL, a dry formula placed inside motor vehicle tires. In its promotional literature, IMI claims, among other things, that EQUAL:

(a) Prevents tire and wheel vibration;

(b) Improves tire wear; and

(c) Eliminates the need for lead weight balancing of tires and wheels.

10. Fuller Brothers and IMI are competitors.

11. Fuller Brothers' TIRE LIFE product and IMI's EQUAL product are marketed to many of the same customers.

12. IMI instructs its customer that the EQUAL product should not be installed into tires with liquid in the tires.

13. For EQUAL to be effective in its intended application, it should not be used or combined with Fuller Brothers' TIRE LIFE product.

14. Consequently, the commercial and competitive effect of each sale of the EQUAL product is the reduction of the market for Fuller's TIRE LIFE product.

15. By use of an aggressive national advertising campaign, IMI has made, and is continuing to make, the following false or misleading representations or descriptions to consumers concerning the nature, characteristics or qualities of its EQUAL product:

(a) It is "non-toxic";

(b) It is "environmentally safe";

(c) It is "biodegradable";

(d) No formaldehyde gas is released from the product through its use or disposal;

(e) It protects the inner liner of a tire;

(f) It acts as a lubricant;

(g) It will not absorb moisture;

(h) It is "chemically inert" and will not break down or decompose;

(i) Its use, release and disposal will not implicate Federal or state occupational health or hazardous substance regulations or standards regarding exposure of employees to formaldehyde; and

(j) It is not a hazardous substance as defined under the Federal and applicable state hazardous substances and occupational safety acts.

16. IMI's false, deceptive, or misleading representations or descriptions are material to consumers' purchasing decisions. But for these representations, IMI would not have enjoyed the commercial success of EQUAL it has achieved.

17. As a result of IMI's false or misleading misrepresentations, Fuller Brothers has suffered lost sales of its TIRE LIFE product in an amount which exceeds $50,000.00 exclusive of interest and costs.

Fuller Brothers' First Amended Complaint, pp. 2-5.

Section 43(a) provides two bases for liability: (1) false representations concerning the origin, association, or endorsement of goods or services through the wrongful use of another's distinctive mark, name, trade, dress, or other device ("false association"), and (2) false representations in advertising concerning the qualities of goods or services ("false advertising"). Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1108 (9th Cir.1992). In a claim for false association, the plaintiff need not be a competitor to bring an action under the Lanham Act. However, "simple claims of false representations in advertising are actionable under section 43(a) when brought by competitors of the wrongdoer." Id. at 1109.

In Halicki v. United Artists Communications, Inc., 812 F.2d 1213 (9th Cir.1987), the plaintiff, a movie producer, had entered into a contract with a film distributor under which the plaintiff's movie would be advertised with a "PG" rating. Instead, it was advertised with an "R" rating, thereby limiting its marketing among young movie-goers. The plaintiff brought an action under section 43(a) asserting that the defendants had misrepresented the film in its advertising.

The United States Court of Appeals for the Ninth Circuit upheld the grant of summary judgment to the defendants by the district court on the grounds that the plaintiff had failed to show injury by a competitor. The court explained:

The final section of the Lanham Act — in a passage unusual, and extraordinarily helpful, in declaring in so many words the intent of Congress — states that "the intent of this chapter is to regulate commerce within the control of Congress ... to protect persons engaged in such commerce against unfair competition." We quote the operative language. The rest of the declaration of intent relates to the use of trademarks and is not relevant here. The statute is directed against unfair competition. To be actionable, conduct must not only be unfair but must in some discernible way be competitive. In oral argument, Halicki suggested that United Artists Communications in fact had films competitive with his which would have benefited by decreasing the box office attraction of his. The films were not identified. They were not a part of his case and reference to them came too late to save it. Halicki failed to show injury by a competitor.

If Section 43(a) is not confined to injury to a competitor in the case of a false designation, it becomes a federal statute creating the tort of misrepresentation,

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