FB Select LLC v. Ocean Blue Trading LLC

Background

FB Select LLC asserted two types of claims against Ocean Blue Trading LLC: false advertising under section 43(a) of the federal Lanham Act and tortious interference with contracts, business relations, and prospective economic advantages under state law. FB Select alleged that it was the exclusive Amazon distributor for products manufactured by Soho Flordis International under the Klaire Labs brand, including dietary supplements. It alleged that Ocean Blue resold Klaire products on Amazon without authorization and obtained them through authorized sellers who allegedly lacked the contractual right to resell them to Ocean Blue.

The opinion states that FB Select did not allege that Ocean Blue’s products were counterfeit or otherwise not genuine Klaire products. FB Select instead argued that Ocean Blue’s sale of the products impliedly represented that the products had the manufacturer’s guarantees or warranties and that the sellers had complied with their contractual obligations.

Lanham Act Claim

The court applied the standard for a motion to dismiss for failure to state a claim. Under that standard, a complaint must allege enough facts to make the requested relief plausible, and legal conclusions alone are not treated as true.

The court explained that a false-advertising claim requires a plaintiff to allege that the challenged message was literally or impliedly false, material, placed in interstate commerce, and caused actual or likely injury. FB Select’s Third Amended Complaint did not identify a particular false statement about the products or their origins. The court held that Ocean Blue’s act of selling the products on Amazon did not imply anything about the identity of the seller from which Ocean Blue obtained them or that seller’s contractual responsibilities to the manufacturer, the Klaire Labs brand, or FB Select.

The court also held that Ocean Blue had made no statement about any product guarantee or warranty. It rejected the theory that the alleged failure to disclose the sellers’ contractual status was actionable because FB Select did not connect that omission to an affirmative statement made misleading by the omission. The court therefore granted Ocean Blue’s motion to dismiss the Lanham Act claim, identified in the conclusion as the First Cause of Action.

Request to Amend

FB Select sought leave to file a Fourth Amended Complaint after the motion to dismiss had been fully briefed. The proposed amendment would add a false-designation-of-origin claim under the Lanham Act, a common-law unfair-competition claim, and a claim under New York General Business Law section 379. FB Select also indicated that the owner of relevant intellectual property might consider joining the action.

The court denied leave to amend. It noted that, before Ocean Blue filed its motion, the court had expressly given FB Select an opportunity to request another amendment and had warned that the pre-motion letter would be considered when deciding whether to allow further amendment. FB Select did not request amendment at that time, and the court concluded that it would not allow a further amended complaint at an unspecified future point with a possible additional plaintiff.

Remaining State-Law Claim and Supplemental Jurisdiction

The only federal claim against Ocean Blue was the Lanham Act claim. The remaining tortious-interference claim arose under state law, and the opinion states that FB Select did not allege diversity jurisdiction. Because the court dismissed the only federal claim, it directed the parties to submit letter briefs within fourteen days addressing whether the court should exercise supplemental jurisdiction over the state-law claim.

The court stayed Ocean Blue’s time to answer the remaining state-law claim pending a further order. Thus, the order did not dismiss that claim or decide whether the court would retain jurisdiction over it.

Disposition

Ocean Blue’s motion to dismiss the Third Amended Complaint was granted as to the Lanham Act claim. FB Select’s request for leave to file a Fourth Amended Complaint was denied. The deadline for Ocean Blue to answer the remaining state-law claim was stayed, and supplemental-jurisdiction letter briefs were ordered within fourteen days.