BERRY LAW PLLC, Appellant v. KRAFT FOODS GROUP, INC., Appellee.
No. 14-7001
United States Court of Appeals, District of Columbia Circuit.
Jan. 30, 2015
777 F.3d 505
Finally, the Commission justifies its two-RCT requirement on the ground that petitioners “have a demonstrated propensity to misrepresent to their advantage the strength and outcomes of scientific research” and “have engaged in a deliberate and consistent course of conduct.” Id. at 51. But by definition, every party subjected to a final FTC order has been found to have engaged in some unlawful advertising practice. The Commission does not explain how the two-RCT requirement is reasonably linked to the particular history of petitioners’ wrongdoing. The Commission does highlight petitioners’ history of selectively drawing on favorable studies while disregarding unfavorable results. Id. at 49. To the extent the two-RCT remedy aims to prevent petitioners from misleadingly highlighting favorable results alone, however, the order separately requires petitioners to base any representations on “competent and reliable scientific evidence that, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true.” FTC Final Order at 2 (emphasis added). With that baseline already established by the order, the contribution of the two-RCT requirement to the order‘s effectiveness in this regard is far from clear.
For those reasons, we hold that the Commission‘s order is valid to the extent it requires disease claims to be substantiated by at least one RCT. But it fails Central Hudson scrutiny insofar as it categorically requires two RCTs for all disease-related claims. That is not at all to say that the Commission would be barred from imposing a two-RCT-substantiation requirement in any circumstances. See Thompson Med. Co., 791 F.2d at 193-96. Rather, the Commission has failed in this case adequately to justify an across-the-board two-RCT requirement for all disease claims by petitioners.
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For the foregoing reasons, Part I of the Commission‘s remedial order will be modified to require petitioners to possess at least one RCT before making disease claims covered by that provision and, as modified, enforced. We deny the petition for review in all other respects.
So ordered.
Daniel S. Blynn, Darrell J. Graham, and John E. Bucheit were on the brief for appellee.
Opinion for the Court filed by Senior Circuit Judge WILLIAMS.
WILLIAMS, Senior Circuit Judge:
Berry Law PLLC appeals from the district court‘s dismissal of its implied-in-fact contract and quasi-contract claims against Kraft Foods Group, Inc. We affirm.
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In August 2010, Stephen R. Berry of Berry Law advised Kraft that it might have an antitrust claim worth tens of millions of dollars against News Corporation, News America Marketing FSI LLC, and News America Marketing In-Store LLC (collectively “News Corp.” or “News“). (All referenced facts come from the complaint.) The claim related to possible monopolization and tying in the “sale of in-store promotion services and free-standing-insert coupons placed in newspapers.” Kraft‘s chief litigation counsel, Douglas Cherry, asked Berry for further legal analysis of the possible claim.
Berry Law then prepared a 42-page evaluation memorandum for Kraft‘s top management analyzing liability and damages issues. Berry alleges that he completed that memo by November 10, 2010. At about the same time, Cherry noted that the matter was “moving pretty fast” and that he wished to brief Kraft‘s general counsel about the matter. The complaint says that “upon information and belief, [the evaluation memorandum] was forwarded at the very least to Kraft‘s General Counsel in early 2011.” It was presumably Cherry who did the forwarding.
Meanwhile, on October 28, 2010, Berry sent a “retention email” to Cherry. Cherry replied,
[Y]ou have asked about fees for work to create the proposal to share with management. FWIW [For what it‘s worth], we have never paid for that work as far as I know for any outside counsel. We‘ve viewed it as part of what we expect counsel to do in bringing to us a proposal to use their firm. I don‘t think this will be a big issue for you in view of the size of the ultimate payout should this matter proceed favorably, but if it helps you to get comfortable proceeding as I suggest, I can tell you that presuming we move forward, you will be our counsel on this matter. That requires no further approvals.
(Emphasis added in the complaint.)
Berry Law claims that it persisted, “ask[ing] that it be able to carry its evaluation time and bill it later if the matter ‘moved forward,‘” but does not claim that Kraft reconsidered its earlier denial. Rather, the complaint alleges that, in January or February of 2012, Kraft “‘moved forward’ with pre-Complaint discussion or negotiation” with News Corp. According to Berry, on February 19, 2012, Kraft “terminated Berry Law‘s representation, cryptically indicating that it did not believe that some of its purchases from News were overcharged and stating that its damages were uncertain.”
Berry Law then sent Kraft a ”quantum meruit fee statement” and other correspondence seeking $191,528.70 in legal fees and expenses that it believed it was owed. Kraft did not respond to Berry‘s communications. Berry then filed this action seeking that amount—i.e., “the value of services which enabled and facilitated Kraft‘s discussion or negotiation with News and its possible compensation by News“—based on an implied-in-fact contract or a quasi-contract theory. The district court dismissed the complaint.
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Berry Law‘s implied-in-fact contract claim fails because the complaint does not plausibly allege that Kraft was “reasonably notified” that Berry expected to be paid for any work completed before that point. The complaint alleges that Kraft told Berry that it had “never paid” “fees for work to create the proposal to share with management,” and “viewed it as part of what we expect counsel to do in bringing to us a proposal to use their firm.” Any expectation that Berry might have had that Kraft would pay for such work was thus unreasonable. See Jordan Keys & Jessamy, 870 A.2d at 62.
Cherry‘s statement that “presuming we move forward, you will be our counsel on this matter” might be read to support an implied-in-fact contract as to any work that Berry Law might complete after “moving forward.” Indeed, Cherry‘s email language, “I can tell you that presuming we move forward, you will be our counsel on this matter,” recited and emphasized in the complaint, suggests just that. But the complaint seeks something completely different: compensation for work performed before Kraft‘s “moving forward“—that is, “the value of services which enabled and facilitated Kraft‘s discussion or negotiation with News and its possible compensation by News.” Indeed the complaint explicitly claims not to be “seeking contingent compensation from any value received by Kraft from News.” There is thus a mismatch between Berry‘s claim and the character of the relief he seeks (and thus, implicitly, the character of the injury inflicted).
Berry Law‘s quasi-contract claim fares no better. To state such a claim, otherwise known as an unjust enrichment claim, Berry must plausibly allege that he conferred a benefit on Kraft, that Kraft retained the benefit, and that Kraft‘s retention of the benefit is unjust under the circumstances. Peart v. D.C. Hous. Auth., 972 A.2d 810, 813 (D.C. 2009).
Kraft told Berry that it would not compensate him for work completed prior to management approval. No compensation is due where the “plaintiff did not contemplate a personal fee, or the defendant could not reasonably have supposed that he did.” Bloomgarden, 479 F.2d at 212. Rather, in view of Kraft‘s unequivocally expressed position on preliminary work, Berry cannot reasonably have contemplated a fee for work completed before Kraft moved forward, nor could Kraft reasonably have known Berry contemplated any such payment. Instead, Berry completed the memorandum and other legal work in the hope that Kraft would retain him as counsel in the event that Kraft “moved forward.” Because Berry Law‘s “services were rendered simply in order to gain a business advantage,” its quasi-contract claim fails. Id. at 211.
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Affirmed.