Antitrust Law Daily Wrap Up, ANTITRUST—10th Cir.: Cosmetic surgeons unable to resuscitate claims over marketing campaign, (Aug 31, 2015)

By Linda O’Brien, J.D., LL.M.

Two Utah cosmetic surgeons failed to plausibly allege antitrust and false advertising claims over a marketing campaign conducted by several associations of plastic surgeons, allegedly with the intent of eliminating competition from the cosmetic surgeons, the U.S. Court of Appeals in Denver has ruled. Thus, the district court’s dismissal of the surgeons’ claims was affirmed (Vincent v. Utah Plastic Surgery Society, August 31, 2015, Murphy, M.).

Cosmetic surgeons Drake Vincent and Benjamin Dunkley filed suit against the Utah Plastic Surgery Society (UPSS), the American Society of Plastic Surgeons (ASPS), and the American Board of Plastic Surgery (ABPS), as well as certain Utah physicians, alleging monopolization claims under the Sherman Act and false advertising claims under the Lanham Act. The plaintiffs asserted that the defendants conducted a billboard advertising campaign intended to prevent cosmetic surgeons from competing with plastic surgeons in the cosmetic surgery market. In September 2013, the district court granted the defendants’ motion to dismiss, and the plaintiffs appealed.

Monopolization. The district court properly dismissed the plaintiffs’ Sherman Act claims. According to the appellate court, the plaintiffs failed to sufficiently allege that the defendants’ conduct had an anticompetitive effect in the relevant market or harmed competition. The complaint contained an unsupported assertion that the defendants’ conduct restrained “competition in the cosmetic surgery market.” The vague and conclusory allegation was insufficient to show an anticompetitive effect, and the complaint set forth no factual allegations that “raised a right to relief above the speculative level.”

False advertising. The district court also correctly concluded that the plaintiffs failed to allege a plausible claim that the defendants made false statements or misrepresentations, the appellate court found. The plaintiffs contended that the billboards and website maintained by the defendants misled the public into mistakenly believing that cosmetic procedures performed by cosmetic surgeons were risky and inherently dangerous.

In the appellate court’s view, the plaintiffs’ complaint did not allege that the defendants’ statements were literally false, either on their face or by necessary implication. To prevail on an implied falsity claim, a plaintiff must show “actual consumer deception.” In this case, the complaint contained no factual allegation on the issue of actual consumer deception. Any allegations in the complaint on public confusion were mere speculation.

The plaintiffs also failed to adequately plead damages. The complaint alleged that the plaintiffs lost sales and potential customers due to the defendants’ statements. According to the appellate court, the plaintiffs’ contention that they have been damaged as a result of the defendants’ false statements by the resultant market confusion, disruption in customer relationships, loss of potential customers, and damage to goodwill was wholly conclusory. The complaint failed to quantify the decrease in profits, goodwill, or number of lost potential customers since the defendants began the advertising campaign. Thus, the plaintiffs failed to plead sufficient facts to prove their entitlement to damages, the appellate court concluded.

The case is No. 13-4146.

Attorneys: Sonny J. Olsen (Axiom Legal) for Drake Vincent, MD. Paul M. Belnap (Strong & Hanni) for Stephen L. Ralston. Richard K. Glauser (Smith & Glauser) for Utah Plastic Surgery Society. David M. Bennion (Parsons Behle & Latimer) for American Society of Plastic Surgeons. Barton H. Kunz, II (Christensen & Jensen) for The American Board of Plastic Surgery.

Companies: Utah Plastic Surgery Society; American Society of Plastic Surgeons; The American Board of Plastic Surgery

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