Precision IBC, Inc. v. PCM Capital, LLC
| Decision Date | 17 October 2011 |
| Docket Number | CIVIL ACTION NO. 10-00682-CG-B |
| Parties | PRECISION IBC, INC., Plaintiff, v. PCM CAPITAL, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
This case is before the Court on Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint (Doc. 153) and Plaintiff's Motion to Strike Defendants' Exhibits 5 Through 11 (Doc. 176). Based upon a careful review of the above-referenced motions, supporting briefs, briefs in opposition, and the case file, the undersigned RECOMMENDS that Defendants' Motion to Dismiss Plaintiffs' Second Amended Complaint (Doc. 153) be denied with respect to Plaintiff's false advertising claim under the Lanham Act and Plaintiff's conspiracy claim, and granted with respect to Plaintiff's defamation claim. Additionally, the undersigned recommends that Plaintiff's Motion to Strike
Defendants' Exhibits 5 through 11 (Doc. 176) be granted.
Plaintiff Precision IBC, Inc. (hereinafter "Precision") filed the instant action1 on December 10, 2010, againstDefendants PCM Capital, LLC (hereinafter "PCM"), Tote Liquid Systems Division (hereinafter "Tote Systems")2 , Van P. Finger (hereinafter "Van"), V. Palmer Finger, III (hereinafter "Palmer"), and HCB Publishing, Ltd. (hereinafter "HCB")3 . (Doc. 1). Plaintiff filed an Amended Complaint (Doc. 25) on January 17, 2011, and subsequent thereto, sought and was granted leave to amend its Complaint a second time. (Docs. 125, 127). On May 26, 2011, Plaintiff added new factual allegations, and added Tote Systems International, LP, as an additional defendant. (Doc. 131)4 .
In the second Amended Complaint, Plaintiff alleges that Precision and Defendants PCM, Tote Systems, Van, and Palmeroperate competing businesses that sell and lease intermediate bulk containers ("IBCs" or "tanks") designed to store and transport hazardous, degradable, and sensitive materials. According to Plaintiff, a portion of its 350-gallon stainless steel IBCs, which comprise 25% of its tank rentals, are imported from China and manufactured by China International Marine Containers (Group) Ltd. ("CIMC"). Plaintiff alleges that its products are manufactured of high quality materials and shipped in accordance with United Nations ("UN") and Department of Transportation ("DOT") specifications, including labeling which identifies the country of manufacture.
Plaintiff further alleges that Defendants are fully aware of Plaintiff's utilization of Chinese-made tanks, and have made statements that Chinese-made tanks are "lower quality" and have "serious quality issues" and have advised customers that they should "stay away from" Chinese IBCs, that they should "beware" of Chinese tanks and to "say no to Chinese IBCs", that the Chinese tanks are not UN/DOT compliant and may expose the consumer to "costly legal liability." Plaintiff alleges that the offending statements were made without prior knowledge of the safety of Chinese-made tanks and are literally false and intended to mislead IBC consumers about the nature, characteristics, and quality of Plaintiff's tanks, which were imported from China, in violation of Section 43(a) of the LanhamAct (15 U.S.C. § 1125(a)). (Doc. 131 at 9-13). Plaintiff also alleges that Defendants published these defamatory statements concerning Plaintiff's products, knowing that the statements were likely to injure Plaintiff's business, reputation, and goodwill; thus, they are liable for libel per se. Additionally, Plaintiff alleges that Defendants conspired together and agreed to disseminate false advertising materials concerning Precision and its products. Plaintiff seeks Defendants' profits, the costs of corrective advertising, attorneys' fees, and injunctive relief5 .
Attached to Plaintiff's second Amended Complaint is the "About Us" section of Defendant Tote's website (Exh. 1), Plaintiff's October 6, 2010 request to Defendants TSI, Van, and Palmer to cease publication of "A Pioneering Pedigree" (Exh. 2), Plaintiff's November 3, 2010 retraction demand to Defendants Van and Palmer Finger and a response from Defendants' attorney dated November 15, 2010 (Exh. 3), and a color flyer stating, and "Say NO to Chinese IBC's!" (Exh. 4).
On June 22, 2011, Defendants Van, Palmer, PCM, and Tote Systems filed the instant motion seeking the dismissal of Plaintiff's second Amended Complaint6 . In the motion, Defendants do not deny posting or sending out advertising materials7 containing the alleged statements but argue that Plaintiff's second Amended Complaint does not allege a concrete injury or causal relationship and should be dismissed for lack of subject-matter jurisdiction under Fed. R. Civ. P. 12(b)(1). According to Defendants, Plaintiff lacks Article III and prudential standing to bring a Lanham Act claim. Defendants also assert that Plaintiff has failed to state a false advertising claim under the Lanham Act, and has further failed to state a claim for either libel or conspiracy under Alabama law. (Id.)
Attached to Defendants' motion are a number of exhibits including, a trade journal article entitled "A Pioneering Pedigree" published in Hazardous Cargo Bulletin (Exh. 1); a printout of the FAQ section of Tote Systems' website before the offending statements were removed (Exh. 2); a flyer stating, and "Say NO to Chinese IBC's!" (Exh. 3)8 ; an email solicitationstating, "Chinese made Portable IBCs ... Not from us!" (Exh. 4); an accounting of all CIMC tanks returned between July 2010 and April 2011 (Exh. 5); an e-newsletter dated November 2010 which appears to come from Plaintiff's website (Exh. 6); the "Who We Are" section which purportedly comes from Plaintiff's website (Exh. 7); a section titled "Our Mission" which purportedly comes from Plaintiff's website (Exh. 8); a document with the heading "Precision Certified Safe" which purportedly comes from Plaintiff's website (Exh. 9); a printout of suppliers which purportedly comes from Plaintiff's website (Exh. 10); a chart listing the challenged statements and their purported sources (Exh. 11); and an affidavit from attorney Benjamin Coulter (Exh. 12). According to Defendants, the Court may consider Exhibits 14 without converting their motion into a motion for summary judgment because the materials are referenced in Plaintiff's second Amended Complaint and are central to Plaintiff's claim. (Doc. 154, at 2 n.1). Defendants state that exhibits 5-11 are submitted solely in support of their argument that this action is due to be dismissed under Fed. R. Civ. P. 12(b)(1). (Id. at 7 n.2; Doc. 183 at 3).
Plaintiff filed a brief in opposition to Defendants' motion, and a motion seeking to strike Defendants' Exhibits 5 through 11, which were attached to the motion to dismiss. (Doc. 176). Plaintiff argues that Defendants' exhibits 5 through 11are improper submissions of extrinsic evidence and that the Court's review, under Fed. R. Civ. P. 12(b)(6), is limited to the allegations in Plaintiff's second Amended Complaint, which are to be taken as true. (Id.) Plaintiff also argues that Defendants' exhibits 5 through 11 are irrelevant, inadmissible, and unauthenticated. (Id.) The instant motions have been fully briefed and are now ripe for resolution.
Rule 12(b)(1) and Rule 12(b)(6)
Defendants argue that the Court should evaluate that portion of its motion which challenges constitutional and prudential standing under Fed.R.Civ.P. 12(b)(1), and the portion of the motion which alleges that Plaintiff has failed to state a cause of action under Fed. R. Civ.P. 12(b)(6). Under Rule 12(b)(1), a defendant may move to dismiss a claim or claims for lack of subject matter jurisdiction. "Because standing is jurisdictional, a dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Rule 12(b)(1)." Stalley v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (llth Cir. 2008)(citations omitted). Challenges to subject matter jurisdiction can be either "facial" of "factual." See Spring Air Int'l, LLC v. R.T.G. Furniture Corp., 2010 U.S. Dist. LEXIS 114490, *4 (M.D. Fla. Oct. 19, 2010); McElmurray v. Consol.Gov't of Augusta-Richmond County, 501 F.3d 1244, 1251 (11th Cir. 2007). Facial challenges are limited to a plaintiff's allegations, taken as true for purposes of the motion, whereas factual challenges encompass matters outside the pleadings and allow a district court to weigh the factual record. Lawrence v. Dunbar, 919 F. 2d 1525, 1529 (llth Cir. 1990).
The parties dispute whether Defendants have waged a factual or facial attack on this Court's jurisdiction. The undersigned finds that it is not necessary to resolve this issue because Defendant's arguments regarding standing and subject matter jurisdiction are more appropriately viewed as a challenge to the merits of Plaintiff's claim under Section 43(a) of the Lanham Act. Indeed, a review of Defendants' standing argument reveals that it contains more than a few statements regarding the deficiency of Plaintiff's claim on the merits. The crux of Defendants' constitutional and prudential standing arguments is that Plaintiff has not shown injury in fact and that its alleged damages are attenuated, indirect and speculative. These arguments are "inextricably intertwined" with the merits of Plaintiff's Section 43(a) claim.
To bring a claim under Section 43(a) of the Lanham Act, a plaintiff must have both constitutional and prudential standing9 . Phoenix of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 1161 (11th Cir. 2007). Article III or constitutional standing requires that a plaintiff allege "that (1) he has suffered an actual or threatened injury, 2) the injury is fairly traceable to the challenged conduct of the defendant, and 3) the injury is likely to be redressed by a favorable ruling." Id. The...
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