N. Am. Olive Oil Ass'n v. D'Avolio Inc.

• Citation: 457 F.Supp.3d 207
• Decision Date: 30 April 2020
• Docket Number: 16-CV-6986 (SJF) (ARL)
• Parties: NORTH AMERICAN OLIVE OIL ASSOCIATION, Plaintiff, v. D'AVOLIO INC., O Live Brooklyn LLC, the Crushed Olive of Babylon, Inc., the Crushed Olive of Huntington, Inc., the Crushed Olive of Sayville, Inc., the Crushed Olive of Stonybrook, Inc., the Crushed Olive of Wading River, Inc., and Veronica Foods Company, Defendants.
• Court: U.S. District Court — Eastern District of New York

457 F.Supp.3d 207

NORTH AMERICAN OLIVE OIL ASSOCIATION, Plaintiff,

v.D'AVOLIO INC., O Live Brooklyn LLC, the Crushed Olive of Babylon, Inc., the Crushed Olive of Huntington, Inc., the Crushed Olive of Sayville, Inc., the Crushed Olive of Stonybrook, Inc., the Crushed Olive of Wading River, Inc., and Veronica Foods Company, Defendants.

16-CV-6986 (SJF) (ARL)

United States District Court, E.D. New York.

Signed April 30, 2020

Ami Bhatt, Danielle Marie Defilippis, Stephanie Su Spangler, Norris McLaughlin & Marcus, PA, New York, NY, for Plaintiff.

Thomas A. Catalano, Dennis M. Rothman, Lester, Schwab, Katz & Dwyer, LLP, New York, NY, for Defendant D'Avolio Inc.

Richard S. Schurin, Steven Stern, Stern & Schurin LLP, Garden City, NY, Evgeny Krasnov, Buzko Legal, New York, NY, for Defendant O. Live Brooklyn LLC.

Daniel Barrie Moar, Goldberg Segalla LLP, Buffalo, NY, Janice Berkowitz, Ahmuty, Demers & McManus, Albertson, NY, for Defendant the Crushed Olive of Babylon, Inc.

Daniel Barrie Moar, Daniel Walter Gerber, Goldberg Segalla LLP, Buffalo, NY, Chandran Iyer, Goldberg Segalla LLP, Baltimore, MD, JoAnne J. Romero, Goldberg Segalla LLP, New York, NY, for Defendants the Crushed Olive of Huntington, Inc., The Crushed Olive of Sayville, Inc., The Crused Olive of Stonybrook, Inc., The Crushed Olive of Wading River, Inc.

Adam J. Gutride, Pro Hac Vice, Seth Safier, Pro Hac Vice, Gutride Safier LLP, San Francisco, CA, for Defendant Veronica Foods Company.

MEMORANDUM & ORDER

FEUERSTEIN, District Judge:

Plaintiff North American Olive Oil Association ("Plaintiff" or "NAOOA") commenced this action against D'Avolio Inc. ("D'Avolio"), O Live Brooklyn LLC ("O Live Brooklyn"), the Crushed Olive of Bablyon, Inc., the Crushed Olive of Huntington, Inc., the Crushed Olive of Sayville, Inc., the Crushed Olive of Stonybrook, Inc., the Crushed Olive of Wading River, Inc. (together, "Crushed Olive"), and Veronica Foods Company ("VFC") (collectively, "Defendants"), alleging inter alia violations of section 43 (a) of the Lanham Act, 15 U.S.C. §§ 1051, et seq., and of state law. Currently before the Court are motions to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (" FED. R. CIV. P. " or "Rule") filed by VFC and O Live Brooklyn, and by Crushed Olive. See VFC and O Live Brooklyn's Motion, Docket Entry ("DE") [64]; Crushed Olive's Motion, DE [65]. Plaintiff has opposed both motions. For the reasons set forth below, Defendants’ motions are granted.

I. BACKGROUND

A. Factual History¹

NAOOA, a division of the non-profit Association of Food Industries, Inc., is a trade association based in New Jersey comprising marketers, packagers, producers and importers of olive oil. It was established in 1989 to "foster a better understanding of olive oil and its taste, versatility, and health benefits, and to ensure that olive oil sold in North American adheres to internationally recognized guidelines." Compl. ¶2. Its members pledge to abide by olive oil quality and purity standards established by the International Olive Council ("IOC"), and NAOOA "offers a Certified Quality Seal Program to indicate compliance with global trade standards." Id. NAOOA members account for approximately 55-60% of total olive oil sales in the United States. Id. ¶20.

VFC, which produces olive oil, is a foreign corporation with its principal place of business in California. VFC promotes its olive oils using the "Ultra Premium" designation ("UP mark"), a new category of olive oil created by VFC which purportedly represents the highest quality olive oil in the world. Compl. ¶25. VFC's website claims that the UP standard "is reserved for the finest extra virgin olive oils in the world, and as such, the UP grade exceeds all existing European, Italian, Spanish, Greek, North American, Californian, or any other standard for the grade known as extra virgin olive oil." Id. ¶30. VFC registered the UP mark and the word mark "UP ULTRA PREMIUM EXTRA VIRGIN OLIVE OIL CERTIFIED LAB TESTED SENSORY EVALUATED HIGHEST STANDARD" with the United States Patent and Trademark Office ("USPTO"). The UP mark is registered for commercial use and not as a certification mark. Id. ¶28. The UP standard and mark is used by VFC and its licensees. The Crushed Olive, D'Avolio, and O Live Brooklyn (the "Retail Defendants") are specialty retail stores that sell olive oil including items produced and distributed by VFC.

According to the complaint, Defendants are collectively "engaged in a targeted and concerted effort to attach the NAOOA and its members’ olive oil products sold in supermarkets" by using online statements, articles, and promotional pieces to focus on "an alleged lack of health benefits associated with the consumption of olive oils sold in supermarkets including NAOOA members’ olive oil products." Compl. ¶23. Defendants have also directly targeted NAOOA by publishing disparaging statements that attack its "reputation as an industry leader in providing quality and purity standards for olive oil in the United States." Id. ¶22. In addition, VFC has introduced a "new premium standard for olive oil" which Plaintiff claims is a marketing effort to deceive olive oil purchasers. Id. ¶21.

1. Disparagement of Olive Oil Sold in Supermarkets

VFC's website states, without support, that "[o]ver 50% of the oil produced in the Mediterranean area is of such poor quality that it must be refined to produce an edible product." Compl. ¶34. The complaint further alleges, upon information and belief, that VFC provides retailers with marketing materials containing false and disparaging information, which the retailers use to "target imported olive oil products sold in supermarkets, and specifically the brands sold by NAOOA members." Id. ¶33.

The complaint also contains allegations regarding misstatements made by the Retail Defendants, as follows:

• D'Avolio "distorts findings of an alleged industry report to represent to consumers that various brands sold in supermarkets hold no health benefits," Compl. ¶35, by on its website referencing a study undertaken by the University of California at Davis in 2010 (the "UC Davis Report"), and stating that the study examined "numerous supermarket brands" and found that 70% "failed to qualify chemically as Extra Virgin Olive Oil and was so old ... to hold no health benefit. This study not only demonstrated that extra virgin olive oil is a term that is often misused, but also that the organic certification process does not take in to account quality, authenticity, or health benefits." Id. ("D'Avolio Stmt")² ;

• O Live Brooklyn's owner gave an interview in which he stated that "if you're buying olive oil from a supermarket, it might not be real olive oil, or it might be old," Compl. ¶38 ("O Live Brooklyn Stmt 1"), in which case it has "lost all of the goodness and freshness in it." Id. ;

• O Live Brooklyn's owner gave another interview, advising readers to "avoid major brands. Those bottles have been sitting around on shelves for God knows how long," Compl. ¶39 ("O Live Brooklyn Stmt 2"), which, according to Plaintiff, suggests that this oil has lost its "quality and health benefits." Id. ; and

• The Crushed Olive's website states that "[t]he market has become flooded with these oils that are regulated by absurdly low standards and fostered by numerous trade associations that sacrifice quality for price." Compl. ¶40 ("Crushed Olive Stmt"). Plaintiff asserts that "[t]he reference to trade associations can only be to the NAOOA, which is widely recognized as the leading olive oil trade association in North America." Id.

The statements set forth above are the only statements or conduct attributed directly to the Retail Defendants.³

The complaint alleges that the "Retail Defendants, in concert with Defendant VFC, have engaged in a false and misleading advertising campaign and published false and misleading statements." Compl. ¶ 22. However, with the exception of the Crushed Olive Defendants who are defined by the complaint as a single entity, there are no allegations regarding any joint action taken by any two defendants.

2. VFC's Ultra Premium Standard

VFC and its licensees use the UP designation and mark to market VFC's products. Defendants market their olive oils to mislead consumers "into falsely believing that the recognized benefits of olive oil can only be achieved by consuming olive oil" meeting the UP standard and certification. Compl. ¶31. Defendants fail to advise the consumer that the UP mark cannot be displayed on the product of other olive oil producers because the standard and mark is the "intellectual property of Defendant VFC and its licensees." Id. As such, another producer cannot label its product with the UP mark even if its product meets or exceeds the UP standards. Id. ¶30. Plaintiff alleges that the UP mark and designation is false and misleading in that it leads the consumer to believe that the olive oil was certified, sponsored, or approved by a third party where in reality, the UP mark "is a self-created designation used exclusively by [VFC] and its retailers to sell [VFC] olive oil." Id. ¶29.

B. Procedural History

Plaintiff filed its complaint on December 19, 2016 asserting six (6) claims for relief: (1) false advertising pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) ; (2) unfair competition under New York law; (3) deceptive acts and practices in violation of New York General Business Law ("GBL") §§ 349 and 350 ; (4) product disparagement/trade libel; (5) defamation/slander; and (6) cancellation of VFC's UP trademark pursuant to Section 37 of the Lanham Act, 15 U.S.C. §§ 1119 et seq. NAOOA seeks damages, cancellation of VFC's UP mark, and injunctive and declaratory relief.

Defendants moved to dismiss the complaint on several grounds, including NAOOA's standing to bring suit. By Memorandum of Decision and Order dated November 2, 2017, District Judge Arthur D. Spatt granted Defendants’ motions to dismiss the complaint pursuant only to Rule 12(b)...