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Pacific Office Automation, Inc. v. Tracy

United States District Court, D. Oregon

June 21, 2018

PACIFIC OFFICE AUTOMATION, INC., an Oregon corporation, Plaintiff,
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


         Defendants Daniel Tracy and Northwest Imaging Analysts LLC (“NIA”) move to dismiss Plaintiff Pacific Office Automation, Inc.'s (“POA”) Amended Complaint. See Mot. to Dismiss, ECF 15. Plaintiff brings claims for false designation of origin and false advertising under the Lanham Act, 15 U.S.C. § 1125(a). The Court finds that Plaintiff has sufficiently alleged its Lanham Act claims. Accordingly, the Motion [15] is denied.


         POA is an office equipment and management solutions company that provides office technology products and related services to a variety of customers. Am. Compl. ¶ 7, ECF 14. POA is an authorized dealer for several office equipment manufacturers, including Canon, HP, Konica Minolta, Lexmark, Ricoh, and Sharp. Id. at ¶ 8. NIA was founded by Tracy and his wife Megan Tracy, both of whom were former POA employees. Id. NIA is not an authorized dealer of manufacturers' office equipment; rather, it claims that it is a broker that partners with some of the manufacturers listed above to provide office equipment and services to customers. Id. at Ex. 2. NIA seeks to sell and service office equipment and provide print and document services in direct competition with POA in Oregon, Washington, and California. Id. at ¶ 8.

         Plaintiff alleges that, by at least March 2017, Defendants intentionally confused, mislead, and/or deceived customers and potential customers into believing that NIA was also an authorized dealer of office products from the manufacturers for which POA is an authorized dealer. Id. at ¶ 10. Particularly, Plaintiff alleges that Defendants “have made false and/or misleading statements in the advertising, promotion, or sale of products and services” regarding its affiliation with certain office equipment manufacturers “which are intended to create the false impression that [NIA] is authorized to sell and service equipment from such manufacturers when it is not so authorized.” Id. at ¶ 11. Defendants allegedly used manufacturers' trade names and trademarks on NIA's websites and other promotion materials in addition to making false and misleading representations to current and former POA customers. Id.

         The Court previously granted Defendants' motion to dismiss Plaintiff's original complaint and granted Plaintiff leave to amend. See Feb. 10, 2018, Op. & Order, ECF 13. Plaintiff's Lanham Act claims were dismissed for failure to satisfy the particularity requirement of Rule 9(b) of the Federal Rules of Civil Procedure. Id. at 7. Plaintiff reasserted its Lanham Act claims in its Amended Complaint which Defendants now move to dismiss for failure to state a claim under Rule 12(b)(6).


         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.


         Plaintiff's Amended Complaint asserts two Lanham Act claims. First, Plaintiff alleges false designation of origin, claiming that Defendants' have made false and/or misleading representations to customers regarding Defendants' association with certain manufacturers. As a result, NIA has allegedly diverted customers from POA and damaged POA's goodwill and reputation. Second, Plaintiff alleges a false advertising claim based on the same course of conduct. Defendants move to dismiss Plaintiff's false designation of origin claim, arguing that there are no allegations, nor can there be, that Defendants ever represented themselves as authorized dealers. Likewise, Defendants move to dismiss the false advertising claim because Plaintiff cannot show that Defendants ever made any statement that was literally false or likely to mislead or confuse customers.

         As a threshold matter, Plaintiff argues that Defendants' Motion is precluded by Rule 12(g)(2) because Defendants should have raised their failure to state a claim argument in the first motion to dismiss. See Fed. R. Civ. P. 12(g)(2) (“[A] party that makes a motion under [Rule 12] must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.”). In the Motion currently before the Court, Defendants argue that they only represented themselves as “partners” with certain manufacturers as opposed to authorized dealers. Plaintiff argues that this defense was available to Defendants from the outset and should have been asserted in the first Rule 12 motion.

         The Court declines Plaintiff's invitation to deny Defendants' Motion under Rule 12(g)(2). Plaintiff's Lanham Act claims alleged in its original complaint were dismissed for lack of particularity. Plaintiff's Amended Complaint remedied that deficiency by including more detailed allegations. While the term “partner” may have been alleged throughout the original complaint, Plaintiff's Lanham Act claims failed to articulate the particular circumstances constituting the alleged fraud. In other words, Defendants could not have raised the failure to state a claim argument that they now assert based on Plaintiff's original ...

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