Lamons Gasket Co. v. Flexitallic L.P., Civil Case No. H–14–0247.
| Decision Date | 26 March 2014 |
| Docket Number | Civil Case No. H–14–0247. |
| Citation | 9 F.Supp.3d 709 |
| Parties | LAMONS GASKET COMPANY, Plaintiff, v. FLEXITALLIC L.P., Defendant. |
| Court | U.S. District Court — Southern District of Texas |
OPINION TEXT STARTS HERE
Brian D. Roche, Jilliam L. Burstein, Vanessa Marti Heftman, Reed Smith LLP, Chicago, IL, Christopher Brian Watt, Reed Smith LLP, Houston, TX, for Plaintiff.
John Zavitsanos, Ahmad Zavitsanos et al., Houston, TX, for Defendant.
This case is before the Court on the Motion to Dismiss Pursuant to the Texas Citizens Participation Act (“Motion to Dismiss”) [Doc. # 12] filed by Defendant Flexitallic L.P. (“Flexitallic”), to which Plaintiff Lamons Gasket Company (“Lamons”) filed a Response [Doc. # 14], and Flexitallic filed a Reply [Doc. # 15]. Having reviewed the full record and governing legal authorities, the Court denies the Motion to Dismiss.
I. BACKGROUND
Plaintiff and Defendant both manufacture and sell spiral wound gaskets and other products used in the oil and gas industry to join and secure pipes. The American Society of Mechanical Engineers (“ASME”) has issued industry standards for spiral wound gaskets, known as ASME B 16.20.
Plaintiff alleges that beginning in January 2014, Defendant circulated a document (“Document”) to companies throughout the United States, including Plaintiff's actual and potential customers. The Document stated that Plaintiff's spiral wound gaskets do not comply with ASME B 16.20. See Document, Exhibit A–1 to Defendant's Reply. Plaintiff alleges that the statement by Defendant is false and misleading because Plaintiff's spiral wound gaskets comply fully with the ASME standard. Plaintiff alleges further that Defendant knowingly and intentionally made the false statements in order to “obtain an unfair competitive advantage over Lamons [and] to misappropriate Lamons' current and potential customers.” See Complaint [Doc. # 1], ¶ 22. In the Document, Flexitallicstates that the use of gaskets that are not in compliance with ASME B 16.20 could expose the customer to “third-party liability in the event of a failure,” and specifically invites recipients to contact it for assistance. See Document.
Plaintiff filed this lawsuit, asserting a federal claim under § 43(a) of the Lanham Act and a Texas common law claim for business disparagement. Defendant moved to dismiss, arguing that Plaintiff's claims are barred by the Texas Citizens Participation Act (“TCPA”). Although Defendant moved to dismiss both claims, Flexitallic now concedes that the TCPA does not apply to the Lanham Act claim. See Reply [Doc. # 15], p. 1 n. 1. The Motion to Dismiss has been fully briefed and is ripe for decision.
II. ANALYSISA. The TCPA1
The TCPA is intended “to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.” NCDR, L.L.C. v. Mauze & Bagby, P.L.L.C., 745 F.3d 742, 746, 2014 WL 941049, *2 (5th Cir. Mar. 11, 2014) (quoting Tex. Civ. Prac. & Rem.Code § 27.002). To achieve this goal, the TCPA allows a defendant to seek dismissal of certain claims in a lawsuit at an early stage. See id. (citing § 27.003). “If a legal action is based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association, that party may file a motion to dismiss the legal action.” Id. (citing § 27.003(a)). As noted above, the parties agree that the TCPA does not apply to Plaintiff's federal claim under the Lanham Act.
B. The “Commercial Speech” Exemption
The “commercial speech” exemption provides that the TCPA does not apply “to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of ... a commercial transaction in which the intended audience is an actual or potential buyer or customer.” Id. at 753, at *9 (quoting § 27.010(b)). The Fifth Circuit has concluded that the Texas Supreme Court would apply a four-part analysis to determine whether the “commercial speech” exemption applies. See id. at 753–54, at *9–10. The four factors are:
(1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services;
(2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person's or a business competitor'sbusiness operations, goods, or services;
(3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person's goods or services or in the course of delivering the person's goods or services; and
(4) the intended audience for the statement or conduct [is an actual or potential buyer or customer].
Id. at 754, at *10 () (alteration in original). The burden of proving that the commercial speech exemption applies is on the party asserting it. Id.
It is undisputed that Defendant is primarily engaged in the business of selling goods, namely spiral wound gaskets. It is further undisputed that Plaintiff's claims arise from Defendant's statements in the Document comparing Plaintiff's and Defendant's products. Defendant does not challenge that its statements in the Document were directed to actual or potential customers. Rather, Defendant argues that Plaintiff cannot prove that the statements were made for the purpose of securing sales of spiral wound gaskets and, therefore, that Plaintiff has not established the third element of the “commercial speech exemption” test.
Kris Kolb, Plaintiff's Vice President of Sales and Marketing US, has stated under oath that the Document Defendant sent to some of Plaintiff's customers “concludes with a reference to its own product's compliance with the ASME standard [and] invites customers to contact Flexitallic.” See Kolb Declaration, Exh. to Plaintiff's Response, ¶ 15. Kolb states also that Defendant's “false statements were made in a commercial context, directed to Flexitallic's and Lamons' customers and to Flexitallic's distributors, for the purpose of promoting sales of Flexitallic's competing gaskets.” Id., ¶ 17. The Document itself, attached as Exhibit A–1 to Defendant's Reply, supports...
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