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FLP LLC v. Wolf

United States District Court, D. Arizona

October 19, 2017

FLP, LLC, an Arizona limited liabili company, Plaintiff,
v.
Kimberly Wolf, an individual, Defendant.

          ORDER

          David G. Campbell United States District Judge

         Defendant Kimberly Wolf moves to dismiss Plaintiff FLP, LLC's second and third claims, and part of Plaintiff's first claim pursuant to Rule 12(b)(6). Doc. 17. FLP opposes the motion and, in the alternative, requests leave to amend. Doc. 23. The motion is fully briefed (Docs. 23, 24) and neither party has requested oral argument. For reasons that follow, the Court will grant the motion and grant FLP leave to amend.

         I. Background.

         For purposes of ruling on the motion, Plaintiff's factual allegations must be accepted as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). FLP is in the business of selling household goods to retail and wholesale customers under a variety of trademarked names, including “Live It” and “Livit” (collectively, the “Marks”). Doc. 1 at 2, 4. The Marks “have come to be recognized around the world by the consuming public as being associated with fine household products, ” and FLP has “considerable profits to expect due to the sale of” products containing the Marks. Id. at 3, ¶¶ 2, 9. Wolf, as owner and manager of a competing company, Liv-IT! LLC, has advertised and sold wholesale household products containing the Marks. Id. at 4, ¶ 14. This has resulted in “confusing and misleading representations to the effect that Wolf is somehow affiliated” with the Marks. Id. ¶ 15. Wolf's use of the Marks allegedly constitutes “willful, wanton and callous disregard” of FLP's rights. Id. ¶ 17. Wolf's conduct has resulted in harm to the public and harm to FLP in the form of lessened competition between FLP and Wolf, lost profits, and “reduced prospective business advantages.” Id. at 4-5, ¶¶ 18, 22.[1]

         Based on these allegations, FLP asserts three claims against Wolf: violation of the Lanham Act, injurious falsehood, and interference with prospective advantage. Id. at 5-16. Wolf moves to dismiss the injurious falsehood and interference claims and the request for punitive damages under the Lanham Act. Doc. 17.

         II. Legal Standard.

         A successful motion to dismiss under Rule 12(b)(6) must show either that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support its theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss as long as it contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. / / /

         III. Analysis.

         A. Exhibits Attached to Plaintiff's Response.

         FLP's response includes a number of factual exhibits intended to support its injurious falsehood and interference with prospective advantage claims. Doc. 23-1. Wolf objects to these exhibits. Doc. 24 at 11. The Court's focus in ruling on a motion to dismiss under Rule 12(b)(6) is on the face of the complaint. The Court will not consider these factual matters and convert the motion to one for summary judgment.

         B. Punitive Damages Under the Lanham Act.

         The complaint seeks “exemplary and punitive damages” under the Lanham Act. Doc. 1 at 8, ¶ 5. Citing Duncan v. Stuetzle, 76 F.3d 1480, 1490 (9th Cir. 1996), Wolf argues that punitive damages are not available under the Lanham Act. Doc. 17 at 14. FLP responds that its allegation refers to treble damages, which are available under 15 U.S.C. § 1117(b). Doc. 23 at 16. But that section applies to cases brought under § 1114(1)(a) or 36 U.S.C. § 220506. The complaint does not allege a violation of either of those sections. See Doc. 1 at 5 (alleging a violation of 15 U.S.C. § 1125(a)). To the extent the complaint requests punitive or treble damages for the alleged violation of 15 U.S.C. § 1125(a), it will be dismissed.

         C. Injurious Falsehood.

         A claim for injurious falsehood requires: (1) publication of a false statement harmful to another's interests, (2) intent or knowledge that the publication will result in harm, (3) knowledge that the statement is false or in reckless disregard of the truth, and (4) resulting pecuniary loss. Restatement (Second) of Torts § 623A; Gee v. Pima Cty., 612 P.2d 1079, 1079 (Ariz.Ct.App. 1980). Wolf argues that FLP has not identified a specific statement that she made regarding ...


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