215 F. Supp. 3d 51
D.D.C.2016Background
- Watkins, a Minnesota pepper producer, sued McCormick alleging McCormick reduced pepper quantity in its iconic tins and grinders (about 25%) without changing container size or (allegedly) price, creating nonfunctional slack-fill that misled consumers.
- Watkins alleges the slack-fill caused consumer confusion and diverted sales from Watkins to McCormick.
- Claims: Lanham Act false advertising (15 U.S.C. §1125(a)(1)(B)), Minnesota, California, and Florida unfair trade practices statutes, and a common-law unfair competition tort.
- Case was transferred to this Court via MDL consolidation; Watkins filed amended complaints and McCormick moved to dismiss on multiple grounds.
- The court granted the motion in part and denied it in part: it sustained Lanham Act and state statutory claims past the motion-to-dismiss stage, found Article III and Lexmark statutory standing adequate, but dismissed the common-law unfair-competition count as conceded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing | Watkins alleges consumers were deceived and would have bought Watkins instead, so Watkins suffered injury fairly traceable to McCormick | Injury is speculative because it depends on third-party consumer choices | Watkins has plausibly alleged injury, causation, and redressability; Article III standing exists |
| Statutory standing under Lanham Act (Lexmark test) | Watkins’ injury (lost sales) is within the Lanham Act zone of interests and proximately caused by consumer deception | Indirect/third-party harm is too attenuated to satisfy Lexmark proximate-cause requirement | Watkins satisfies both Lexmark prongs; competitor diversion of sales is the paradigmatic Lanham Act injury |
| Elements of a Lanham Act false-advertising claim (advertising, falsity, confusion, injury) | Packaging size functions as commercial advertising; slack-fill can be misleading even if weight is disclosed; consumer confusion and lost sales are alleged | Container size is not commercial speech; accurate weight labeling precludes falsity; insufficient allegations of actual confusion or injury | Packaging size can constitute commercial advertising; allegations of nonfunctional slack-fill + parallel consumer complaints suffice to plead falsity, confusion, and injury at Rule 12(b)(6) stage |
| State-law unfair trade practice claims and choice-of-law | Watkins asserts MN, CA, and FL statutory claims and relies on federal/state law parity with Lanham Act | McCormick urges dismissal of CA and FL claims under Minnesota choice-of-law (arguing injury is at plaintiff’s principal place) and other standing limits | Court declines to resolve choice-of-law now (insufficient factual record); state statutory claims survive for now; dismissal of common-law unfair competition granted as conceded |
Key Cases Cited
- Lexmark Int’l v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (two-part test for Lanham Act standing: zone of interests and proximate cause)
- TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir.) (competitor may establish injury by chain of inferences when lost-sales data are lacking)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing standards: injury-in-fact, causation, redressability)
- Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186 (2d Cir.) (plaintiff need not plead precise damages; logical causal connection between false advertising and plaintiff’s sales position suffices)
- Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir.) (framework for what constitutes commercial advertising or promotion under the Lanham Act)
- Waldman v. New Chapter, Inc., 714 F. Supp. 2d 398 (E.D.N.Y.) (excessive slack-fill can state a false-advertising/consumer-protection claim)