Novation Ventures, LLC v. the J.G. Wentworth Co.
711 F. App'x 402
| 9th Cir. | 2017Background
- Novation Ventures and the Wentworth Entities compete in purchasing structured-settlement payment receivables (buying future scheduled payments from settlement recipients).
- Novation sued under federal antitrust laws, the Lanham Act (false advertising), and California’s Unfair Competition Law (UCL), alleging the Wentworth Entities’ advertising and market conduct harmed competition and misled consumers.
- The district court dismissed Novation’s Second Amended Complaint with prejudice under Fed. R. Civ. P. 12(b)(6) for failure to state plausible claims.
- The Ninth Circuit reviewed whether Novation plausibly alleged antitrust injury/foreclosure, literally or implicitly false advertising, and an independent UCL violation not entirely dependent on the federal claims.
- The court found Novation’s pleadings failed to show that Wentworth’s conduct injured Novation’s ability to compete, failed to allege any false or misleading statements in ads, and that the UCL claim collapsed with the deficient federal claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Antitrust injury/standing | Wentworth’s advertising and coordinated conduct injured Novation’s competition and foreclosed market access | Novation alleged only consumer harm and not injury to its own ability to compete; market remained open (including Google ads) | Dismissed — no plausible antitrust injury or foreclosure pleaded |
| False advertising (Lanham Act) | Wentworth’s ads misled by hiding affiliations, causing confusion and diverting customers | Ads were labeled, contained no literally or implicitly false statements, and consumers exercise care in this market | Dismissed — no plausible literal or implied false statement alleged |
| Restriction of advertising/market foreclosure | Wentworth’s practices prevented Novation from advertising effectively | Competitors could still advertise and pay for placement; selling under different brands is not per se wrongful | Dismissed — mere increased difficulty is insufficient to show anticompetitive foreclosure |
| UCL claim based on alleged federal violations | UCL claim alleges unlawful/unfair/fraudulent practices tied to the same facts | UCL derivative of the failed federal claims and not independently pleaded | Dismissed — UCL claim fails because it rests on deficient federal claims |
Key Cases Cited
- Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051 (9th Cir. 1999) (standing requires plaintiff to allege antitrust injury to its own competitive position)
- Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (U.S. 1977) (antitrust injury and standing principles)
- Pool Water Prods. v. Olin Corp., 258 F.3d 1024 (9th Cir. 2001) (diminished competition theories and competitive effects analysis)
- Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., 549 U.S. 312 (U.S. 2007) (plaintiff must show anticompetitive conduct that causes injury)
- Big Bear Lodging Ass’n v. Snow Summit, Inc., 182 F.3d 1096 (9th Cir. 1999) (consumer harm alone does not confer antitrust standing)
- Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011) (consumer sophistication and care can defeat Lanham Act deception claims)
- Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997) (Lanham Act false advertising standards)
- William H. Morris Co. v. Grp. W, Inc., 66 F.3d 255 (9th Cir. 1995) (pleading requirements for Lanham Act claims)