Antitrust Law Daily Wrap Up, ADVERTISING—M.D. Fla.: Meth lab cleanup firm’s Lanham Act counterclaims could not be swept away, (Jul 24, 2015)

By Michael Menzhuber, J.D., LL.M.

A meth lab cleanup company’s counterclaims, alleging that a competitor committed false advertising and unfair competition under the Lanham Act, survived a motion to dismiss. The federal district court in Tampa determined that company’s allegations of the competitor’s false, misleading, and derogatory statements were sufficient to state a claim under the Lanham Act (Meth Lab Cleanup, LLC v. Spaulding Decon, LLC, July 23, 2015, Moody, J.).

Background. Spaulding Decon, LLC and its owner, Laura Spaulding, filed amended counterclaims and a third-party complaint against Meth Lab Cleanup, LLC (MLC) and its owners, Joseph and Julie Mazzuca. The filing claimed several causes of actions, including: (1) a request for a declaratory judgment that Spaulding Decon’s use of the phrase “meth lab services” did not infringe on any of MLC’s trademarks, constitute unfair competition, or infringe on MLC’s common law rights; (2) unfair competition in violation of the Lanham Act § 43(a), based on MLC’s assertion of contractual and exclusive intellectual property rights in the phrase “meth lab services” and the Mazzucas’ false and derogatory statements; (3) a violation of the Lanham Act, based on false and misleading website advertising and the use of the company name, “Florida Meth Lab Cleanup”; and (4) a breach of several provisions of the confidential settlement agreement.

MLC and the Mazzucas moved to dismiss the amended counter claims and third-party complaint on the basis that the complaint was a “shotgun” pleading and failed to state a cause of action for Lanham Act violations.

“Shotgun”pleading. MLC and the Mazzucas argued that the complaint was a “shotgun” pleading, and should be dismissed, because it inappropriately “lumped” them together without identifying which party committed which act. The court disagreed. It determined that the allegations were sufficient to put MLC and the Mazzuccas on notice because the Mazzuccas were the owners and operators of MLC.

Declaratory judgment. A court’s discretion over whether to sustain a claim for declaratory judgment extends to cases where a direct action involving the same parties and the same issues have been filed. The court disagreed with MLC that Spaulding Decon’s count for declaratory relief was redundant of MLC’s claim because MLC’s complaint specifically addressed Spaulding Decon’s use of the URL, while Spaulding Decon sought a declaration regarding the use of the phrase “meth lab.”

Unfair competition under Lanham Act. To sustain a claim for unfair competition, a plaintiff must show that: (1) the plaintiff had an enforceable trademark right to the mark or name and (2) the defendant made unauthorized use of it such that consumers were likely to confuse the two. The court determined that Spaulding Decon’s allegations were sufficient to sustain this claim because: (1) Spaulding Decon alleged that it had a continuing right to use the term “meth lab” and (2) MLC and the Mazzucas had made derogatory statements about Spaulding Decon to other members of the meth lab decontamination industry, which interfered with their ability to do business.

False advertising under Lanham Act. To sustain a claim for false advertising, a plaintiff must establish that: (1) the advertisements were false or misleading; (2) the advertisements deceived, or had the capacity to deceive, consumers; (3) the deception had a material effect on purchasing decisions; (4) the misrepresented product or service affects interstate commerce; and (5) the plaintiff has been injured as a result of the false advertising. Spaulding Decon alleged that MLC and the Mazzucas made false advertising statements that have the capacity to deceive consumers and will have an effect on purchasing decisions. MLC and the Mazzucas argued that “will have”—as opposed to a past or present effect—is insufficient as a matter of law. The court disagreed and concluded that Spaulding Decon sufficiently stated a cause of action.

The case is No. 8:14-cv-3129-T-30TBM

Attorneys: John Mason Williams, IV (Widerman Malek, PL) for Meth Lab Cleanup, LLC. Nicole Marie Fluet (Galloway, Johnson, Tompkins, Burr & Smith, PLC) for Spaulding Decon, LLC.

Companies: Meth Lab Cleanup, LLC; Spaulding Decon, LLC

Cases: Advertising FloridaNews