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Pacific Office Automation, Inc. v. Tracy

United States District Court, D. Oregon

February 10, 2018

PACIFIC OFFICE AUTOMATION, INC., an Oregon corporation, Plaintiff,
v.
DANIEL TRACY, and NORTHWEST IMAGING ANALYSTS LLC, an Oregon limited liability company, Defendants.

          Everett W. Jack, Jr. Aaron K. Stuckey Kaley L. Fendall Davis Wright Tremaine LLP Attorneys for Plaintiff

          Phil J. Nelson Keith A. Pitt Slinde Nelson Stanford Attorneys for Defendants

          OPINION & ORDER

          MARCO A. HERNÁNDEZ UNITED STATES DISTRICT JUDGE

         Plaintiff Pacific Office Automation, Inc. (“POA”) brings claims against Defendants Daniel Tracy and Northwest Imaging Analysts LLC (“NIA”) for false designation of origin and false advertising under the Lanham Act, 15 U.S.C. § 1125(a), common law unfair competition, and injunctive relief. Defendants move to dismiss Plaintiff's claims or in the alternative for a more definite statement under Rule 12 of the Federal Rules of Civil Procedure. Defendants' Motion to Dismiss [12] is granted.

         BACKGROUND

         POA is an office equipment and management solutions company that provides office technology products and related services to a variety of customers. Compl. ¶ 7, ECF 1. Tracy worked for POA from 2002 to 2010, initially as a sales representative and later as a field sales manager. Id. at ¶ 8. Tracy's wife, Megan Tracy, also worked for POA. Id. at ¶ 9. In 2010, Tracy left POA and formed NIA with his wife. Id. NIA directly competes with POA in Oregon, Washington, and California. Id. Plaintiff alleges that Defendants made “several false and/or misleading representations regarding [NIA's] business relationships and/or affiliations with certain office equipment manufacturers and supplies for which POA serves as an authorized dealer.” Id. at ¶ 11. Specifically, Plaintiff alleges that Defendants made false representations to current and former POA customers that it was authorized to sell and service products from certain manufacturers. Id. According to POA, Defendants are intentionally misleading customers into believing that they have business relationships or affiliations with manufacturers in order to divert customers from POA. Id. at ¶¶ 12-14.

         STANDARDS

         On a motion to dismiss, the court must review the sufficiency of the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A complaint is construed in favor of the plaintiff, and its factual allegations are taken as true. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). “[F]or a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (internal quotation marks omitted). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563 (2007). The court, however, need “not assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Id. “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do . . .” Id. at 555.

         DISCUSSION

         Defendants move to dismiss each of Plaintiff's four claims. First, Defendants argue that Plaintiff's Lanham Act claims for false designation of origin and false advertising should be dismissed for failure to meet the heightened pleading standard under Federal Rule of Civil Procedure 9(b). Defendants assert that Plaintiff has insufficiently alleged the circumstances constituting Defendants' fraud. Second, Defendants move to dismiss Plaintiff's common law unfair competition claim on the ground that Oregon common law does not allow such claims based on false designation of origin or false advertisement. Third, Defendants move to dismiss Plaintiff's claim for injunctive relief because it is a request for a remedy based on Plaintiff's substantive claims and is not a distinct claim for relief.

         I. Lanham Act Claims

         Plaintiff brings two claims for relief under the Lanham Act: (1) false designation of origin; and (2) a false advertising. See 15 U.S.C. § 1125(a)(1)(A), (B). Both claims substantially rely on allegations that Defendants made “false and/or misleading representations regarding their business relationships and/or affiliations with certain office equipment manufacturers . . . .” See Compl. ¶¶ 16-25. Defendants argue that Plaintiff's Lanham Act claims must be dismissed under Rule 9(b) because they have not been sufficiently pled and fail to put Defendants on notice of the particular misconduct that constitutes the alleged fraud.

         Rule 9(b)'s heightened pleading standard provides: “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). The parties dispute whether Rule 9(b) is applicable to Plaintiff's Lanham Act claims. While “fraud” is not a necessary element of Plaintiff's Lanham claims, the particularity requirement of Rule 9(b) may apply where the plaintiff alleges “a unified course of fraudulent conduct and rel[ies] entirely on that course of conduct as the basis of a claim.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003). Such claims can be said to be “grounded in fraud.” Id.

         The Ninth Circuit has not established that Rule 9(b) applies to false designation of origin and false advertising Lanham Act claims. However, “several district courts in this circuit have held that false advertising claims under the Lanham Act must be pleaded in accordance with Rule 9(b).” SKEDKO, Inc. v. ARC Prod., LLC, No. 3:13-cv-00696-HA, 2014 WL 585379, at *3 (D. Or. Feb. 13, 2014) (collecting cases); see also Nutrition Distribution, LLC v. New Health Ventures, LLC, No. 16-cv-02338-BTM-MDD, 2017 WL 2547307, at *4 (S.D. Cal. June 13, 2017) (recognizing that “[l]ower federal courts have applied this heightened pleading standard to claims under the Lanham Act ...


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