Runberg, Inc. v. Victoria's Secret Stores, Inc., Case No. 2:12-cv-722
| Decision Date | 23 October 2012 |
| Docket Number | Case No. 2:12-cv-722 |
| Parties | RUNBERG, INC. d/b/a/ ZEPHYRS, Plaintiff, v. VICTORIA'S SECRET STORES, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
ORDER
This matter is before the Court on Defendants' Motion for Partial Dismissal of Plaintiff's Complaint with Prejudice (Doc. No. 24) and Plaintiff's Motion for Preliminary Injunction (Doc. No. 18). For the reasons that follow, the Court GRANTS IN PART AND DENIES WITHOUT PREJUDICE IN PART Defendants' motion and DENIES AS MOOT Plaintiff's motion.
Defendants Victoria's Secret Stores, Inc., Victoria's Secret Stores LLC, Victoria's Secret Stores Brand Management, Inc., Victoria's Secret Direct LLC, and Limited Brands, Inc. (together "Victoria's Secret") are based in Ohio and sell women's intimate and other apparel, personal care and beauty products and accessories through retail stores, internet sales, and catalogue sales. (Compl. ¶¶ 12-17; Doc. No. 6). Victoria's Secret has several suppliers for its products, and for several years Plaintiff Runberg, Inc. d/b/a Zephyrs ("Zephyrs") was one of those suppliers. Id. ¶¶ 20, 21.
In 2001, Victoria's Secret and Zephyrs entered into an Amended Master Sourcing Agreement ("MSA"). Id., Ex. 1. Under the terms of the MSA, Zephyrs acted as a sourcing agent, supplying goods to Victoria's Secret for sale in stores, through print catalogues, and onVictoria's Secret's website. Id. ¶¶ 2, 20, 21. Pursuant to subsequent purchase orders, Zephyrs sourced, among other things and most relevant to the Court's current consideration, hosiery products for Victoria's Secret. Id. ¶ 21. Victoria's Secret eventually stopped sourcing hosiery products through Zephyrs. Id. ¶ 28.
On August 9, 2012, Zephyrs filed this action against Victoria's Secret alleging claims for relief for breach of contract (Counts 1 and 2); claims for false advertising and unfair competition in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and the Ohio Deceptive Trade Practices Act ("Ohio DTP A"), Ohio Rev. Code § 4165.01 et seq. (Counts 3 and 4); and, claims for false advertising under New York, New Jersey, Connecticut, Pennsylvania, and California law (Counts 5 through 9).
In their false advertising claims, Zephyrs alleges that after Victoria's Secret began sourcing its hosiery products elsewhere, it continued to use packaging depicting the products originally sourced by Zephyrs. (Compl. ¶¶ 7, 28.) Zephyrs alleges:
[T]he Defendants are engaging in false advertising by misleading consumers about the nature and quality of the goods that they are offering for sale as those designed and previously supplied by Zephyrs, by falsely depicting Zephyrs' products on the packaging, when they are actually selling cheaper, lower quality "knockoffs."
Id. ¶7. See also id. at ¶28 (). The Complaint identifies three products at issue, all of which are hosiery products: "Lace Top Fishnet Stockings," "Fishnet Thigh-Highs With Backseam," and "Signature Stripe Thigh-High With Bows." Id. ¶ 29.
On September 20, 2012, Zephyrs filed its Motion for a Preliminary Injunction. (Doc. No.18.) In that motion, Zephyrs asks the Court to restrain Victoria's Secret from continuing to use the photographs that display Zephyrs' products on packaging that contain similar products not produced by Zephyrs. On September 21, 2012, pursuant to Local Rule 65.1, the Court scheduled a telephone conference for September 25, 2012. (Doc. No. 22.)
On September 24, 2012, Victoria's Secret filed its Motion for Partial Dismissal that is directed at all of Zephyrs' claims except those for breach of contract. In that motion, Victoria's Secret asserts that Zephyrs lacks constitutional and prudential standing to bring its false advertisement/unfair competition claims and that traditional conflict of laws rules dictate that only Ohio law applies to Zephyrs' tort claims, requiring dismissal of the state law claims based on the law of states other than Ohio.
On September 25, 2012, the Court held the telephone conference necessitated by Zephyrs' Motion for a Preliminary Injunction. (Doc. No. 26.) At that conference, the parties agreed that Victoria's Secret's Motion for Partial Dismissal (Doc. No. 24), which deals with this Court's subject matter jurisdiction,1 should be decided before addressing the injunctive relief motion. To that end, Zephyrs submitted that it will stand on its position asserted in its injunctive relief motion related to standing and Victoria's Secret was permitted to file a reply memorandum. Victoria's Secret's motion as it relates to standing is now ripe for review.
Victoria's Secret posits that Zephyrs lacks standing to bring its claims under the LanhamAct and the Ohio DTPA. Ohio courts look to decisions interpreting the Lanham Act for guidance when adjudicating claims under Ohio's DTPA. See Gascho v. Global Fitness Holdings, LLC, Case No. 2:11-CV-00436, 2012 U.S. Dist. LEXIS 42366, at *51-52 (S.D. Ohio Mar. 28, 2012) ().
"No principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies." Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37 (1976). "And, an important element of the case-or-controversy requirement is that [a] plaintiff have standing to sue." Taylor v. KeyCorp, 680 F.3d 609, 612 (6th Cir. 2012) (citing Raines v. Byrd, 521 U.S. 811, 818 (1997)). The Supreme Court has declared that "[i]n essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Warth v. Seldin, 422 U.S. 490, 498 (1975).
Supreme Court "cases have established that the irreducible constitutional minimum of standing contains three elements." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). "Failure to establish any one of them deprives a federal court of jurisdiction to hear the suit." Sutton v. St. Jude Med. SC., Inc., 419 F,3d 568, 570 (6th Cir. 2005) (citing Lujan v. Defenders of Wildlife, 504 U.S. at 560). First, Zephyrs must demonstrate it has suffered "an 'injury in fact' that is both concrete and particularized and actual or imminent." Id. (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167,180-81 (2000); Lujan v. Defenders ofWildlife, 504 U.S. at 560-61). Second, the injury must be fairly traceable to the challenged action of Victoria's Secret. Id. Finally, Zephyrs must show that "it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Id. (citing Friends of the Earth, Inc., 528 U.S. at 180-81.
The party invoking federal jurisdiction bears the burden of establishing these elements. See FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231 (1990); Warth, supra, at 508. Since they are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i. e., with the manner and degree of evidence required at the successive stages of the litigation. See Lujan v. National Wildlife Federation, 497 U.S. 871, 883-889 (1990); Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91,114-115, and n. 31 (1979); Simon, supra, at 45, n. 25; Warth, supra, at 527, and n. 6 (Brennan, J., dissenting). At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we "presum[e] that general allegations embrace those specific facts that are necessary to support the claim." National Wildlife Federation, supra, at 889.
Lujan v. Defenders of Wildlife, 504 U.S. at 561 (parallel citations omitted). The Supreme Court has also identified three prudential standing principles which require a party to: 1) generally assert only his or her own rights, not claims of third parties; 2) not allege generalized grievances more suitable for legislative or executive resolution; and, 3) raise a claim within the zone of interest protected by the statute or constitutional provision in question. See 15-101 Moore's Federal Practice - Civil § 101.51; see also, E.F. Hutton & Co., Inc. v. Hadley, 901 F.2d 979, 984-985 (11th Cir. 1990) ().
"To establish an 'injury in fact,' the plaintiff must be 'among the injured.'" Taylor, 680 F.3d at 612 (citing Lujan v. Defenders of Wildlife, 504 U.S. at 563). The "plaintiff must have a'personal stake' in the dispute, alleging an injury 'particularized as to him.'" Id. (citing Raines, 521 U.S. at 819).
Zephyrs first contends that "Victoria's Secret is specifically accused of using packaging and photographs that intentionally mislead consumers about the nature and quality of certain hosiery products that they are offering for sale in their network of nearly one thousand retail stores, and on the Victoria's Secret website." (Doc. No. 19 at 1.) Alleging an injury to consumers however, cannot satisfy Article III standing in false advertising cases. See, e.g., B. Sanfield, Inc. v. Finlay Fine Jewelry Corp., 258 F.3d 578, 580 (7th Cir. 2001). Zephyrs must be among the injured.
To that end, Zephyrs argues that, even though it and Victoria's Secret "are not direct 'competitors' for the same...
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