Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Mo.: Pet food company crafts sufficient false ad claims, (Apr 21, 2015)

By Greg Hammond, J.D.

Pet food company The Blue Buffalo Company Ltd. stated false advertising counterclaims against competitor advertising companies, arising from a website that exposed Blue Buffalo’s allegedly deceptive marketing practices. Certain state unfair competition and trade practices claims, however, were dismissed by the federal district court in St. Louis (Nestlé Purina PetCare Co. v. The Blue Buffalo Company Ltd., April 20, 2015, Sippel, R.).

Background. Pet food and nutrition company Nestlé Purina PetCare Co. initially filed suit against Blue Buffalo in May 2014, alleging a pattern of false and deceptive advertising concerning the nutritional claims and ingredients contained within Blue Buffalo’s pet food. Blue Buffalo also filed suit against Purina, alleging that Purina engaged in false advertising and defamed Blue Buffalo through various public statements. The actions were consolidated in June 2014 and Blue Buffalo’s claims became counterclaims. Blue Buffalo subsequently sought leave to amend its counterclaims and added Blue State Digital and PRCG/Haggerty LLC as counterclaim defendants, alleging that the advertising companies and Purina made various false statements on a website that accused Blue Buffalo of supposedly deceptive marketing practices. The counterclaim defendants moved to dismiss Blue Buffalo’s Lanham Act false advertising and state law false advertising, defamation, unfair competition, and trade practice counterclaims.

Lanham Act. In support of their motions to dismiss, Blue State and PRCG argued: (1) Blue Buffalo improperly lumped the counterclaim defendants together, failing the notice pleading standards of Federal Rule of Civil Procedure 8(a); (2) Blue Buffalo failed to allege that the advertising defendants made the allegedly false or misleading statements; (3) Blue Buffalo failed to plead its allegations of fraud with particularity; (4) the advertising defendants are not liable under the Lanham Act unless they knew or had reason to know the advertisement was false or deceptive, which Buffalo failed to allege; and (5) PRCG is immune from liability under the Communication Decency Act, because it built the website and did not create the content of the ads.

The court rejected all of the counterclaim defendants’ arguments, finding first that the Lanham Act no longer imposes a scienter requirement in actions against advertising agencies. In addition, the court noted that while the advertising claims included allegations of fraud, successful resolution of the Lanham Act claims would not depend on the fraud allegations. Consequently, Rule 9(b)’s heightened pleading standard did not apply to Blue Buffalo’s Lanham Act claim. Grouping the counterclaim defendants together was also not improper, the court found, because the amended counterclaim provided the advertising defendants with sufficient notice of the acts they allegedly committed, such as creating and designing the website at issue, in addition to Twitter, Facebook, and Google ads. Lastly, PRCG’s Communication Decency Act argument failed, because it is an affirmative defense that Blue Buffalo is not required to plead around.

State law claims. Blue Buffalo also adequately alleged its Missouri common law based claims for unfair competition, injurious falsehood, defamation, and unjust enrichment. However its Missouri common law claim for false advertising, Connecticut common law claims for unfair competition and defamation, and claim for “Violations of Trade Practice Statutes of the Several States,” were insufficiently pleaded and dismissed.

Specifically, the court found that Missouri courts have not adopted or recognized a false advertising claim under Missouri common law. The Connecticut unfair competition claim failed because the advertising defendants did not supply “similar goods or services” or compete with Blue Buffalo, and could therefore not have “misappropriated a commercial or business advantage” from Blue Buffalo. The Connecticut defamation claim also was dismissed, because Blue Buffalo failed to allege requisite actual malice. Finally, the violations of trade practice statutes of 26 states claim was dismissed because there were insufficient facts pleaded to give defendants notice of the claims against them.

The case number is 4:14 CV 859 RWS.

Attorneys: Carmine R. Zarlenga, III (Mayer Brown LLP) for Nestlé Purina PetCare Co. David A. Roodman (Bryan Cave LLP) for Nestle Purina PetCare Co. and PRCG/Haggerty LLC. Adeel A. Mangi (Patterson and Belknap) for The Blue Buffalo Company Ltd. Michael A. Kahn (Capes And Sokol) for Blue State Digital Inc.

Companies: Nestlé Purina PetCare Co.; The Blue Buffalo Company Ltd.; Blue State Digital, Inc.; PRCG/Haggerty LLC

Cases: Advertising MissouriNews