*2 Before SMITH, BENAVIDES, and II.
PARKER, Circuit Judges. A.
Thе relevant portion of the Lanham Act JERRY E. SMITH, Circuit Judge: provides for a cause of action as follows:
I. (a) Civil action Kenneth Ford is an orthopedic surgeon who
has contracted with various health mainte- (1) Any person who, on or in connection nance organizations (“HMO’s”) as a specialist. with any goods or services, or any In May 1996, he sued the defendant HMO’s, container for goods, uses in commerce claiming multiple causes of action stemming any word, term, name, symbol, or from their allegedly deceptive advertising. All device, or any combination thereof, or of Ford’s claims were dismissed over a period any false designation of origin, false or of several years. misleading description of fact, or false
or misleading representation of fact, which SS Ford now appeals two of the district court’s
rulings: its 1999 decision to deny class certifi-
cation to a proposed Lanham Act plaintiff (A) is likely to cause confusion, or to class of all certified physicians who have con- cause mistake, or to deceive as to the af- tracted with the defendant HMO’s, and its filiation, connection, or assоciation of 2001 summary judgment dismissing Ford’s in- such person with another person, or as dividual Lanham Act false advertising claim on to the origin, sponsorship, or approval the ground that he lacks prudential standing. of his or her goods, services, or
commercial activities by another person, Ford contends that the HMO’s have used or
false advertising that claims that their manage-
ment techniques improve health care quality (B) in commercial advertising or and that they allow patients and doctors to promotion, misrepresents the nature, make their own treatment decisions. Ford charactеristics, qualities, or geographic argues that the defendants’ cost-control mea- origin of his or her or another person’s sures undercut quality and “ration” medical goods, services, or commercial care SS sometimes against the will of doctors activities,
and patients. Ford contends that the defen-
dants’ cost-control policies reduce the incomes shall be liable in a civil action by any of doctors, including his own. He also claims person who believes that he or she is or that, by attracting new customers to the is likely to be damaged by such act. HMO’s’ health plans, the allegedly deceptive
advertising further reduces doctors’ incomes
15 U.S.C. § 1125(a) (1994). The district
because it increases the HMO’s’ market power
court held that Ford lacks prudential Lanham
over the price of medical services. We affirm
Act standing under this section.
See Procter &
the dismissal of Ford’s claims for lack of
Gamble Co. v. Amway Corp.
,
termining prudential Lanham Act standing),
*3
cert. denied
,
sary SS raise it sua sponte . SEC v. Forex Asset
Mgmt., LLC , 242 F.3d 325, 328 (5th Cir. [The irreducible constitutional minimum 2001). [1] of standing contains three elements.
First, the plaintiff must have suffered an than Article III constitutional stаnding, because the basis of Lanham Act prudential standing rather contends that this case should be decided on the In his special concurrence, Judge Benavides [1] an invasion of a legally ‘injury in fact’ and particularized . . . and (b) actual or protected interest which is (a) concrete SS imminent not conjectural or hypothetical . . . Second, there must be a causal con- nection between the injury and the parties did not have an opportunity to brief the conduct complained of . . . Third, it latter. This issue ignores the fundamental point must bе likely, as opposed to merely that wherever possible, Article III standing must be addressed before all other issues “because it
determines the court’s fundamental power even to
Rivera
hear the suit.” ,
the ongoing dispute over Lanham Act prudential The Third Circuit has explicitly recognized that standing.
Lanham Act prudential standing cannot be
In any inquiry into Lanham Act prudential
addressed so long as Article III standing remains in
standing, the court must weigh “(1) the naturе of
doubt, because “[c]onstitutional standing is a
the plaintiff’s alleged injury: Is the injury of a type
threshold issue that we should address before
that Congress sought to redress in providing a
examining issues of prudential standing.”
Joint
private remedy for violations of the [Lanham
Stock Soc’y v. UDV N. Am., Inc.
,
Ford lacked prudential standing in part because he Even if we did have the authority to forego failed to provide adequate evidence of causation. consideration of Artiсle III standing, there would Despite this repeated challenge, Ford has not be no need to exercise it. As the special provided evidence demonstrating that he has suf- concurrence recognizes, “to the extent that identical fered even a small loss as a result of defendants’ issues have already been raised in the litigation, the advertising. He therefore has failed to meet his threat of procedural prejudice is greatly burden to “set forth by affidavit or other evidence diminished.” In this litigation, the issue of specific facts” validаting his right to standing.
(continued...)
Lujan
,
redressed by a favorable decision. Ford claims that his injury consists of a re- duction in his income from his medical practice Id. at 560-61 (quotations omitted). caused by the defendants’ restrictive cost-
containment policies, which allegedly have the “The party invoking federal jurisdic- effect of reducing payments to contract spe- tion” SS Ford SS bears the burden of proof in es- cialists. He contends that the HMO’s have tablishing all three elements. Id. at 561. been able to lower their payments to contract “Failure to establish any one [of them] physicians as a result of increased market pow- deprives the federal courts of jurisdiction to er gained by attracting patients through hear the suit.” Rivera v. Wyeth-Ayerst Labs. , deceptive advertising. This argument fails to 283 F.3d 315, 319 (5th Cir. 2002). At the satisfy the causation prong of standing. summary judgment stage, “the plaintiff can no
longer rest on . . . mere allegations, but must
To meet the causation requirement, Ford
set forth by affidavit or other evidence specific
would have to present evidence affirmatively
facts” validating his right to standing.
Lujan
,
proving that the reduction in his income was a
must provide evidence of both if he is to es-
[2]
Rivera
As we noted in , “there is a limited ex-
tablish the causation necessary for Article III
standing. Otherwise, he cannot show that his
injury is “fairly traceable to the challenged ac-
ception for suits in which the class certification is-
tion of the defendant.”
Lujan
,
U.S. 591, 612 (1997)); see also Ortiz v. Fibreboard Corp. , 527 U.S. 815, 831 (1999) that Ford’s income has in fact declined any (same). This exception does not apply here, more than would be expected as a result of however, for the same reason it was inapplicable in events completely unrelated to the HMO’s’ Rivera : “In the instant case, in contrast to Ortiz activities. When asked by opposing counsel and Amchem , the standing question would exist whether [the plaintiff] filed h[is] claim alone or as
part of a class; class certification did not create the
jurisdictional issue.”
Rivera
,
lost as a result of the defendants’ ads,” Ford
admitted that he could not. There is also no
evidence demonstrating that Ford ever re-
ceived a lower payment for his services than he
would have in the absence of the
advertisements.
In its ruling denying Ford’s petition for class certification, the district court noted that,
during the 1992-96 period, Ford’s income did
indeed decline, but the income of all of his
partners went up. Ford v. NYLCare Health
Plans, Inc.
,
1999). The district court also pointed out that
some or all of the decrease in Ford’s income
might have been a result of the fact that “he is
not employed full time as a physician . . . and
spends a significant period of time filming a
fishing show for a sports network.” Id. Ford
bears the burden of proving otherwise, and he
has not met it. [5]
AFFIRMED. *6 FORTUNATO P. BENAVIDES, Circuit Judge, Specially Concurring:
Although I would reach the same result as the majority, I write separately because I would base my analysis not on Article III standing, but on prudential standing under the Lanham Act. As the majority notes, Article III has never been raised as an issue in this case. It was never briefed by the parties, questioned by the district court , or even mentioned at oral argument. The parties did not have the benefit of a hearing to present evidence on the issue. Nevertheless, despite the complete absence of any suggestion that Article III standing might be deficient, the majority requires Dr. Ford to have adduced evidence of causation between the alleged false advertising and his asserted economic injury. Concluding that he has not met this burden, it holds that Article III standing is lacking.
Of course, the jurisdictional issue of standing may be raised
sua sponte
despite the parties’ failure
to raise it.
Henderson v. Stalder
,
Citing
Lujan
for support, the majority assumes that the summary judgment standard should govern
even when the issue is raised
sua sponte
by an appellate court without notice to the parties.
Lujan
,
however, does not go so far. It holds only that the summary judgment standard is appropriate in
*7
reviewing a party’s “
response to a summary judgment motion
.”
Id.
(emphasis added). This
distinction is significant because it implicates concerns of notice and fairness. If the defendant
challenges standing in a motion for summary judgment, then the plaintiff is able to direct the court
to the evidence that supports federal jurisdiction. Similarly, if the court provides an opportunity for
briefing after the issue is raised
sua sponte
, there is no risk of unfairness to the plaintiff. By contrast,
if the appellate court raises the issue
sua sponte
without notice to the parties, the plaintiff is deprived
of a meaningful opportunity to address the court’s concerns by identifying record evidence to satisfy
the standing requirements.
Cf. St. Paul Mercury Ins. Co. v. Williamson
,
In situations where a party has not been afforded an opportunity to respond to a court’s
sua sponte
concerns about standing, it would be unfair to broaden review beyond the sufficiency of the pleadings.
For example, in
Church v. City of Huntsville
,
Certainly, in some cases it will make no difference which standard is applied to a
sua sponte
challenge to standing. In such cases, the potential for prejudice is
de minimis
because the party’s
response will be futile. For example, a review of the record by the appellate court might indicate that
there is an independent factor that precludes the plaintiff from ever demonstrating that his injury flows
from the defendant’s wrongful conduct. Such a factor was present in
Joint Stock Soc’y v. UDV N.
Am., Inc.
,
In other cases, prejudice will be minimized by the fact that the party has notice оf the need to
adduce evidence in support of Article III even though neither the court nor the defendant makes a
formal motion. For example, in
Bischoff v. Osceola County, Fla.
,
Applying these principles to the present case, before reaching
sua sponte
the conclusion that Dr.
Ford has not met his summary judgment burden, I would ask whether a response would be futile.
Notwithstanding the majority’s well-written and thoughtful analysis, I am unconvinced that affording
Dr. Ford an opportunity to respond to our concerns about standing would be an exercise in futility.
There is no dispute that Dr. Ford could survive a challenge to standing based solely on the sufficiency
of his pleadings. His complaint alleges that the defendants have increased their customer base
through deceptively false advertising, have leveraged that increased customer base to obtain lower
fee arrangements for Dr. Ford’s contract services, and have therefore caused him economic injury.
*10
Clearly, these allegations satisfy thе requirements of Article III. The issue, as the majority notes, is
whether there is evidence to support these links in the causal chain. The majority cites several failings
in the record evidence, but none of them are fatal to Dr. Ford’s theory. It notes that in a deposition,
Dr. Ford was unable to identify a single patient lost as a result of the HMOs’ ads. Although such
evidence would undoubtedly be helpful to his case, it is by no means a necessary element. In Lanham
Act § 43(a) cases, it is often difficult, if not impossible, to point to specific evidence of lost sales.
See
Coca-Cola Co. v. Tropicana Products, Inc.
, 690 F.2d 312, 316 (2d Cir. 1982) (“It is virtually
impossible to prove that so much of one’s sales will be lost or that one’s goodwill will be damaged
as a direct result of a competitor’s advertisement. Too many market variables enter into the
advertising-sales equation.”);
Grant Airmass Corp. v. Gaymar Indus., Inc.
,
Similarly, the fact that Dr. Ford now spends part of his time hosting a fishing show on a sports
television network does not preclude standing. As the majority notes, this observation was part of
the district court’s analysis of Dr. Ford’s petition for class certification. Specifically, it found Dr.
Ford’s television work relevаnt to the typicality issue under Fed. R. Civ. P. 23(a)(3), as Dr. Ford’s
economic situation might not be similar to that of the other putative class members.
See Ford v.
*11
NYLCare Health Plans, Inc.
,
In sum, I think it is premature to apply the summary judgment standard to Dr. Ford’s standing
under Article III. He has not been given an opportunity to identify the evidence in support of
standing, and there has been no convincing argument that such an opportunity would be futile.
Accordingly, I would not decide this case on Article III grounds, but would reach the same result by
holding that Dr. Ford lacks prudential standing under the Lanham Act. Regardless of the oft-repeated
maxim that Article III standing is jurisdictional and must be resolved prior to any analysis of the
remaining issues in the сase, “it is entirely appropriate to deny standing on prudential grounds if that
course is easier, or more clearly right, than to rule on constitutional grounds first.” 13A Charles Alan
Wright, et al.,
Federal Practice and Procedure
, § 3531.15 (2d. ed. Supp. 2002);
cf. Steel Co. v.
Citizens for a Better Env’t
,
I would conclude that Dr. Ford has failed to satisfy his summary judgment burden on the issue of
prudential standing under the Lanham Act. In determining whether a plaintiff has prudential Lanham
Act standing, we have recently adopted the test articulated by the Third Circuit in
Conte Bros. Auto.,
Inc. v. Quaker State-Slick 50, Inc.
,
As the primary focus of the Lanham Act is on commercial harms that result from anti-competitive
behavior, the first factor looks to the nature of the plaintiff’s alleged injury.
See id.
at 563 (quoting
Conte Bros.
,
Turning to the second factor, we have never required a direct competitive relationship between
the plaintiff and the defendant. In faсt, the
Conte
test specifically rejected such a requirement.
See
Conte
,
Applying the third factor, which looks to “the proximity of the party to the alleged injurious
сonduct,” we have held that the justification for Lanham Act standing is diminished if there is “an
identifiable class of persons whose self-interest would normally motivate them to vindicate the public
interest” by bringing a Lanham Act claim.
P & G
,
The fourth factor, the speculative nature of the plaintiff’s damages, is neutral at best for Dr. Ford.
As the district court noted, Dr. Ford dropped his damages claim after class certification was denied,
but reserved it in the event that the district court’s decision was reversed. In his brief on appeal, he
concedes that quantifying any damages would be a complex task. Dr. Ford argues, however, that if
only injunctive relief is at issue, t his factor actually argues in favor of standing. He relies on the
Lanham Act doctrine that a plaintiff’s inability to definitively quantify his damages should not
preclude the granting of injunctive relief, as an injunction against false advertising benefits the public
without causing an undeserved windfall for the plaintiff.
See Am. Council of Certified Podiatric
Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc.
,
Perhaps the strongest reason for denying prudential standing is the fifth factor’s concern about “the risk of duplicative damages or the complexity of apportioning damages.” Id. Dr. Ford is but one of innumerable physicians who have contracted with the HMOs, and who therefore have probably lowered fees as a result of the HMOs’ bargaining power. If the HMOs’ ads were determined to be false, all of these physicians would have damages claims. Moreover, as Dr. Ford concedes, the cаlculation of these damages would be extremely complex. Finally, doctors are not even the most direct victims of any allegedly false ads, which harm rival health plans more than contracting physicians. In light of the complex and duplicative nature of such damages awards, the fifth factor militates strongly against prudential standing.
To summarize, Dr. Ford has suffered a commercial harm, but his injury is simply not the competitive harm that is protected by the Lanham Act. Of the five factors that are relevant to this analysis, none counsels in favor of prudеntial standing. Furthermore, there is nothing unfair or premature about resolving this case on prudential standing grounds and applying the more rigorous summary judgment standard, as Dr. Ford was fully aware of his burden to adduce evidence in support *16 of each element of prudential standing. Because I cannot say that he had a sufficient opportunity to address the majority’s concerns about constitutional standing, I respectfully concur in the result only.
Notes
[5] See Johnson v. Bd. of Regents of the Univ. of Ga. , 263 F.3d 1234, 1268 (11th Cir. 2001) (holding that “a plaintiff cannot serve as a class representative if she lacks standing to advance the class’s claim”).
