365 F.3d 278 | 4th Cir. | 2004
Before WILKINS, Chief Judge, and WIDENER and
MICHAEL, Circuit Judges. Affirmed by published opinion. Judge Michael wrote the opinion, in which Chief Judge Wilkins and Judge Widener joined. COUNSEL ARGUED: Joel David Joseph, JOSEPH & ASSOCIATES, Bethesda, Maryland, for Appellant. Joseph Paul Esposito, AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P., Washington, D.C., for Appel- lees. ON BRIEF: Michael L. Converse, AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P., Washington, D.C., for Appellees.
OPINION
MICHAEL, Circuit Judge: After concluding that consumers lack standing to sue under the Lanham Act, 15 U.S.C. § 1051 et seq ., the district court dismissed a consumer group’s claim alleging false advertisement in violation of the Act. We affirm.
I.
Made in the USA Foundation (or "the Foundation") filed its com- plaint against Phillips Foods, Inc. in the District of Maryland, on April 15, 2002. In our de novo review of the district court’s decision to dismiss the Foundation’s Lanham Act claim for lack of standing, we "accept as true all material [factual] allegations of the complaint," and we "construe [it] in favor of the complaining party." Warth v. Seldin , 422 U.S. 490, 501 (1975). The facts are straightforward and brief. Made in the USA Foundation is a nonprofit consumer organiza- tion with headquarters in Montgomery County, Maryland. The Foun- dation has 60,000 members who buy, to the extent possible, products that are made in the United States. Defendant Phillips Foods, Inc., a Maryland corporation, makes packaged crab cakes that it sells whole- sale to grocery stores and other retail establishments. In the three-year period before the Foundation sued, it and its members bought pack- ages of Phillips Foods’ crab cakes that were labeled "Made in the USA." These crab cakes, however, were made with 90 percent Asian crabmeat.
In its first claim, brought under the Lanham Act, the Foundation alleges that Phillips Foods mislabeled its crab cake packages by falsely designating the country of origin, in violation of 15 U.S.C. § 1125. The Foundation asserts that it and its members were harmed by this misrepresentation because they bought Phillips Foods’ crab USA F OUNDATION v. P HILLIPS F OODS 3 cakes "believing them to be Made in the USA when they were actu- ally imported from Thailand and other nations." J.A. 9a. The Founda- tion also asserts two state law claims, accusing Phillips Foods of intentional misrepresentation and deceptive trade practices.
Phillips Foods filed a motion to dismiss on the ground that con- sumers do not have standing to sue under the Lanham Act. The dis- trict court agreed, stating that "the Lanham Act is [only] intended to provide a private remedy to a commercial plaintiff whose commercial interests are being harmed." J.A. 14a. Noting that Made in the USA Foundation "does not dispute that it is suing as a consumer," J.A. 14a, the court dismissed the Foundation’s federal claim. Thereafter, the court dismissed the two state law claims, declining to exercise supple- mental jurisdiction. See 28 U.S.C. § 1367(c). The Foundation appeals the dismissal of the federal (Lanham Act) claim.
II.
Made in the USA Foundation brought this action "as a consumer and as a representative of consumers." Appellant’s Brief at 8. The Foundation argues that broad wording in § 43(a) of the Lanham Act confers standing on consumers who are damaged by false commercial advertising. The pertinent language is this: "Any person who . . . uses in commerce . . . any false designation of origin . . . which . . . in com- mercial advertising or promotion misrepresents the . . . geographic origin of his or her or another person’s goods . . . shall be liable in a civil action by any person who believes that he or she is . . . dam- aged by such act." 15 U.S.C. § 1125(a) (emphasis added). According to the Foundation, the words "civil action by any person" make it a proper plaintiff to sue Phillips Foods for falsely advertising that its crabmeat product is made in the United States. There is another rele- vant provision, however. Section 45 of the Lanham Act states that "[t]he intent of [the Act] is . . . to protect persons engaged in [congres- sionally regulated] commerce against unfair competition." Id. § 1127.
At least half of the circuits hold (and none of the others disagree) that the second of these Lanham Act provisions, § 45, or 15 U.S.C. § 1127, bars a consumer from suing under the Act. The Second Cir- cuit, in Colligan v. Activities Club of New York , 442 F.2d 686 (2d Cir. 1971), was the first to decide this. According to the Second Circuit, § 45 identifies those "‘engaged in . . . commerce’" as "the class of persons to be protected by the Act." Id. at 691 (quoting 15 U.S.C. § 1127). The decision thus concludes:
Congress’ purpose in enacting § 43(a) was to create a spe- cial and limited unfair competition remedy, virtually without regard for the interests of consumers generally and almost certainly without any consideration of consumer rights of action in particular. The Act’s purpose, as defined in § 45, is exclusively to protect the interests of a purely commercial class against unscrupulous commercial conduct.
Id. at 692 (footnotes omitted). Other circuits have followed the Sec- ond in denying Lanham Act standing to consumers. See Proctor & Gamble Co. v. Amway Corp. , 242 F.3d 539, 561 (5th Cir. 2001) (Sec- tion 45 of the Lanham Act "makes clear that the focus of the statute is on anti-competitive conduct in a commercial context," and the Act "limit[s] standing to a narrow class of potential plaintiffs possessing [competitive or commercial] interests" harmed by the targeted con- duct) (quoting Conte Bros. Automotive, Inc. v. Quaker-State Slick 50, Inc. , 165 F.3d 221, 229 (3d Cir. 1998)); Stanfield v. Osborne Indus. , 52 F.3d 867, 873 (10th Cir. 1995) ("to have standing for a false adver- tising claim [under the Lanham Act], the plaintiff must be a competi- tor of the defendant and allege a competitive injury"); Serbin v. Ziebart Int’l Corp., Inc. , 11 F.3d 1163, 1179 (3d Cir. 1993) (when Congress passed the Lanham Act, it "did not contemplate that federal courts should entertain claims brought by consumers"); Dovenmuehle v. Gilldorn Mortgage Midwest Corp. , 871 F.2d 697, 700 (7th Cir. 1989) (same); Barrus v. Sylvania , 55 F.3d 468, 470 (9th Cir. 1995) (same).
We have found one case, Camel Hair and Cashmere Institute of America, Inc. v. Associated Dry Goods Corp. , 799 F.2d 6 (1st Cir. 1986), that at first glance looks favorable to the Foundation. It is of no help in the end, however. In Camel Hair a trade group of cashmere garment producers filed a Lanham Act case alleging that a coat manu- facturer was misrepresenting the cashmere content of one of its prod- uct lines. In discussing standing, the First Circuit said: "the plaintiff [must have] a reasonable interest in being protected [against false advertising]. . . . [I]t is [not enough] for the plaintiff merely to estab- USA F OUNDATION v. P HILLIPS F OODS 5 lish a falsehood in the defendant’s advertising or marketing; the plain- tiff must also show a link or nexus between itself and the alleged falsehood." Id. at 11-12. The court concluded that the trade group had standing: "[although] none of the [group’s] members compete with the defendant . . . their position as manufacturers and vendors of fab- ric and clothing containing cashmere gives them a strong interest in preserving cashmere’s reputation as a high quality fibre." Id. at 12. The First Circuit’s Camel Hair decision does not say that consumers are barred from suing under the Lanham Act; that was not necessary, however, because the cashmere garment producers were not a con- sumer group. The underlying message of the decision is that a Lan- ham Act plaintiff must be suing to protect a commercial interest.
Camel Hair would make this a more difficult case if Made in the USA Foundation was a trade group of crabmeat producers. But it is not; it is simply a consumer group that has failed to "premise [its] claims upon any contention that [it has] been damaged or [is] likely to be damaged in any commercial activity." Dovenmuehle , 871 F.2d at 700. At most, Camel Hair reveals that there might be some mar- ginal differences in the circuits about what qualifies as a commercial or competitive interest for standing purposes under the Lanham Act. Compare Berni v. Int’l Gourmet Restaurants of America, Inc. , 838 F.2d 642, 648 (2d Cir. 1988) ("Although a [Lanham Act] plaintiff need not be a direct competitor . . . standing to bring a . . . claim requires the potential for commercial or competitive injury.") with Stanfield , 52 F.3d at 873 ("[Lanham Act] plaintiff must be a competi- tor of the defendant and allege a competitive injury"). In any event, the several circuits that have dealt with the question are uniform in their categorical denial of Lanham Act standing to consumers. See Seven-Up Co. v. Coca-Cola Co. , 86 F.3d 1379, 1383 n.5 (5th Cir. 1996) ("we have found no case which suggests that ‘consumers’ as such have standing under § 43(a)").
This is the first time we have been presented with the consumer standing issue. However, in an earlier case involving commercial par- ties, we noted in passing that the Lanham Act is "a private remedy [for a] commercial plaintiff who meets the burden of proving that its commercial interests have been harmed by a competitor’s false adver- tising." Mylan Laboratories, Inc. v. Maktari , 7 F.3d 1130, 1139 (4th Cir. 1993) ( quoting Sandoz Pharmaceuticals Corp. v. Richardson- Vicks, Inc. , 902 F.2d 222, 230 (3d Cir. 1990)). Our statement in Mylan Laboratories is consistent with the basic approach of other cir- cuits that requires the Lanham Act plaintiff to be engaged in commer- cial activity. We endorse that approach today and hold that a consumer does not have standing under the Lanham Act to sue for false advertising. Because Made in the USA Foundation sues as a consumer and as a representative of consumers, we affirm the district court’s order dismissing, for lack of standing, the Foundation’s Lan- ham Act claim.
AFFIRMED
