3:25-cv-00601
N.D. Tex.Sep 2, 2025Background
- CBL (maker of Proferrin, a heme-iron supplement) tested Three Arrows’ IronRepair products and alleges they contain little or no heme iron.
- The parties previously settled Lanham Act litigation on May 31, 2024; the Settlement Agreement required rebranding (remove "heme"), a no-misrepresentation covenant (effective Sept. 1, 2024), a non‑disparagement clause, and a payment to CBL.
- After rebranding, CBL alleges Three Arrows (owner posts, a brand ambassador, website deep-links, and Amazon listings) continued to imply or state the products contain heme iron and disparaged CBL.
- CBL sued in March 2025 for breach of the Settlement Agreement, Lanham Act false advertising/unfair competition, and business disparagement; Three Arrows counterclaimed for breach of the Settlement Agreement, breach of the NDA, Lanham Act and common‑law unfair competition.
- Both sides moved to dismiss various claims under Rules 12(b)(1), 12(b)(6), 12(b)(7), and Rule 19; the court granted in part and denied in part the motions, dismissed CBL’s business-disparagement claim for failure to plead special damages, denied dismissal of the Lanham Act and breach claims, rejected dismissal for failure to join Hartigan, and granted CBL leave to amend within 28 days.
Issues
| Issue | Plaintiff's Argument (CBL) | Defendant's Argument (Three Arrows / Counterplaintiff) | Held |
|---|---|---|---|
| Whether the Settlement Agreement release bars CBL’s claims | CBL: claims arise from post‑settlement conduct (after Sept. 1, 2024) and thus are not released | Three Arrows: release language covers all claims arising from past or current branding/labeling and bars pre‑agreement claims | Court: denied dismissal — CBL’s claims are based on post‑settlement conduct and not barred by the release |
| Common‑law business disparagement — sufficiency of special damages | CBL: factual allegations permit inference of lost sales and pecuniary harm from Facebook posts | Three Arrows: CBL pleads no specific lost sales or realized pecuniary loss; allegations are speculative | Court: granted dismissal — CBL failed to plausibly plead special damages |
| Lanham Act false advertising — whether statements constitute "commercial advertising or promotion" (sufficient dissemination) | CBL: Facebook group (166k members), website pages, and Amazon listings target purchasers and can constitute commercial promotion | Three Arrows: isolated group posts and mere website/Amazon listings without evidence of broad promotion are insufficient | Court: denied dismissal — pleadings sufficiently allege dissemination to relevant purchasing public at pleading stage |
| Rule 19 joinder — whether Hartigan is a required/indispensable party | CBL: injunctive relief against Three Arrows can bind agents under Rule 65(d)(2); Hartigan not required | Three Arrows: Hartigan’s Facebook posts are central and she must be joined | Court: denied dismissal — Three Arrows failed to show joinder infeasible and relief can be accorded against Three Arrows and its agents; Hartigan not required under Rule 19(a) |
| Breach of Settlement Agreement (CBL’s claim) — pleading damages causation | CBL: alleged harm to brand, market share, lost sales, goodwill from Three Arrows’ post‑Sept. 1 misrepresentations | Three Arrows: CBL did not tie damages specifically to contract breaches | Court: denied dismissal — allegations suffice at Rule 12(b)(6) stage to plausibly allege contract damages |
| Lanham Act counterclaim — Three Arrows’ standing (constitutional and statutory) | Three Arrows: CBL’s misstatements (e.g., exclusivity of U.S. heme‑iron manufacture, mislabeling) caused competitive injury and withheld trade | CBL: Three Arrows lacks constitutional and statutory standing; injuries are not proximately caused or are too remote | Court: denied dismissal — Three Arrows adequately pleaded injury‑in‑fact, traceability, redressability, and falls within Lexmark zone of interests and proximate‑cause pleading standards |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (scope of plausible factual allegations and dismissal for conclusory statements)
- Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379 (5th Cir. 1996) (requirements for "commercial advertising or promotion" under the Lanham Act)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (zone‑of‑interests and proximate‑cause requirements for Lanham Act standing)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (constitutional standing framework)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (injury‑in‑fact requirement for Article III standing)
- Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167 (Tex. 2003) (elements of Texas business disparagement)
- Hood ex rel. Miss. v. City of Memphis, 570 F.3d 625 (5th Cir. 2009) (two‑step Rule 19 indispensable‑party analysis)
- POM Wonderful LLC v. Coca‑Cola Co., 573 U.S. 102 (Lanham Act protects against misleading advertising and labeling)