Int'l Code Council v. UpCodes, No. 21-826 (2d Cir. 2022)
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International Code Council, Inc. ("ICC"), a nonprofit organization that develops model building codes and standards, sued a for-profit competitor, UpCodes, Inc., for false advertising and false statements in violation of the Lanham Act, 15 U.S.C. Section 1125(a), New York General Business Law Sections 349 and 350-a, and New York's common law of unfair competition. ICC alleges that UpCodes falsely asserted that its codes were always up to date, that its codes integrated all amendments enacted by local jurisdictions, and that it was the sole provider of such integrated amendments.
The district court sua sponte and without notice converted the parties' pre-motion letters into a motion to dismiss and a response, and then granted that motion. On appeal, the Second Circuit concluded that the district court erred by failing to provide ICC with notice and an opportunity to fully defend the sufficiency of its complaint. However, because the parties have fully briefed the legal issues presented on appeal and we review a dismissal for failure to state a claim de novo, we reach the merits and reverse on nearly all grounds. The court concluded that the ICC sufficiently alleged the materiality of the challenged statements. Thus, the court affirmed the district court's decision only to the extent that it dismissed claims premised on UpCodes's promises that its customers would glean a "complete understanding" of relevant code, but we affirm that narrow dismissal on different grounds.
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