EP HENRY CORPORATION v. CAMBRIDGE PAVERS, INC.
1:17-cv-01538
D.N.J.Oct 31, 2017Background
- EP Henry (plaintiff) and Cambridge Pavers (defendant) are competing sellers of concrete pavingstones; Cambridge markets a line as "ArmorTec" and advertises that the pavers will "look like new forever" and that "the color will never fade."
- EP Henry alleges Cambridge's claims are literally false and have misled consumers, causing EP Henry lost sales, reputational harm, and other commercial injury.
- EP Henry filed a seven‑count complaint (false advertising; deceptive marketing; negligent misrepresentation; unfair competition; common law fraud; declaratory judgment; Lanham Act § 43(a) claim); Cambridge moved to dismiss under Rule 12(b)(6).
- Cambridge argued the advertising is non‑actionable puffery and moved to dismiss each count for failure to state a claim or for lack of standing under state law and the Lanham Act.
- The Court found the advertising, taken with Cambridge’s claims of a unique proprietary "ArmorTec" process, could be more than mere puffery at the pleading stage, so the Lanham Act claim (Count Seven) survives; state common‑law and NJ consumer‑fraud based claims fail for lack of standing or required elements.
- Disposition: Counts One–Five dismissed with prejudice; Count Six (declaratory judgment) dismissed without prejudice as superfluous; Count Seven (Lanham Act § 43(a)) allowed to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the advertising statements are non‑actionable puffery | Cambridge’s slogans are verifiable factual claims (given statements about a unique "ArmorTec" process) and thus actionable | Phrases like "look like new forever" and "color will never fade" are indefinite, exaggerated puffery and not actionable | Not puffery as a matter of law at pleading stage when statements are tied to a claimed unique proprietary process; complaint survives on this theory |
| Whether Counts 1–2 (false advertising, deceptive marketing) state claims under New Jersey law / NJCFA standing | EP Henry asserts those claims or could recast them under the NJ Consumer Fraud Act as a competitor harmed by deceptive marketing | NJCFA standing is limited to consumers or competitors acting as consumers or engaged in consumer transactions; not all commercial competitors have NJCFA standing | Counts One and Two dismissed with prejudice for lack of NJCFA standing (amendment would be futile) |
| Whether negligent misrepresentation and common law fraud require plaintiff reliance and whether EP Henry adequately pleaded reliance | EP Henry contends customers relied on Cambridge and EP Henry altered its own advertising/business in response | EP Henry did not allege it personally relied on Cambridge’s statements; reliance by third‑party customers does not confer standing to sue on behalf of those customers | Counts Three and Five dismissed with prejudice for failure to plead reasonable/justifiable reliance by EP Henry |
| Whether EP Henry may sue under the Lanham Act (§ 43(a)) and satisfies the zone‑of‑interests / proximate cause requirements | EP Henry contends it is a direct competitor within the class Congress intended to protect and has plausibly alleged lost sales and reputational injury from customer deception | Cambridge argues EP Henry falls outside the zone of interests and lacks proximate causation evidence tying consumer deception to lost sales | Count Seven survives: EP Henry plausibly alleged injury to commercial interest in reputation and sales and falls within the class of plaintiffs Congress authorized to sue under § 43(a) at the pleading stage |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not accepted as true on a motion to dismiss)
- Castrol Inc. v. Pennzoil Co., 987 F.2d 939 (3d Cir.) (definition and treatment of puffery)
- Lexmark Int’l v. Static Control Components, Inc., 134 S. Ct. 1377 (scope of parties Congress authorized to sue under the Lanham Act and proximate‑causation rule)
- Warner‑Lambert Co. v. BreathAsure, Inc., 204 F.3d 87 (3d Cir.) (elements of a Lanham Act false advertising claim)
- Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160 (3d Cir.) (literal falsity dispenses with proof of actual consumer deception)