Bernard v. Donat, et al, No. 5:2011cv03414 - Document 47 (N.D. Cal. 2012)

Court Description: ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE re 13 , 21 . Signed by Judge Ronald M. Whyte on February 16, 2012. (rmwlc2, COURT STAFF) (Filed on 2/16/2012)

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Bernard v. Donat, et al Doc. 47 1 2 3 4 E-FILED on 2/16/12 5 6 7 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 United States District Court For the Northern District of California 8 SAN JOSE DIVISION 11 12 DON BERNARD, an individual, 13 14 15 No. 11-cv-03414-RMW Plaintiff, ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE v. ROBERT DONAT, DOES 1-5, individuals, [Re Docket Nos. 13, 21] 16 Defendants. 17 18 Defendant Robert Donat ("defendant"), proceeding pro se, moves to dismiss plaintiff Don 19 Bernard's ("plaintiff") First Amended Complaint ("FAC") alleging claims for "false advertising" 20 under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), defamation and intentional 21 interference with prospective economic advantage. Having considered the parties' moving papers, 22 the court finds that the FAC fails to state a claim under the Lanham Act and therefore does not 23 present a federal question upon which subject-matter jurisdiction can be based. Accordingly, the 24 court grants the motion to dismiss without prejudice. 25 26 27 28 ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE No. 11-cv-03414-RMW EDM 1 I. BACKGROUND 2 Plaintiff is an independent business consultant in the "energy/power and hunting/fishing 3 industries" who resides in the state of Montana. FAC ¶ 2. Defendant is also a Montana resident. Id. 4 ¶ 3. 5 In or about October 2010, defendant published the blog "Donald Ray Bernard, Glacial 6 Energy, Gemico Mining" (the "Blog") through the website FAC ¶ 12. The Blog 7 contained statements indicating that plaintiff, who is apparently also an attorney, had been convicted 8 of violating certain Texas Rules of Professional Conduct. Id. In early 2011, defendant posted 9 comments on two additional websites, and, stating that United States District Court For the Northern District of California 10 plaintiff had been found guilty of fraud in Texas. Id. ¶¶ 13-14. Plaintiff alleges that defendant’s 11 statements are false and defamatory, and that he "resigned in lieu of discipline from the State Bar of 12 Texas." Id. ¶ 18. 13 On June 27, 2011, plaintiff was named in a lawsuit filed in the U.S. District Court for the 14 Northern District of Texas alleging RICO violations and other Texas state law claims (the "Texas 15 Matter"). Id. ¶ 20. Subsequently, defendant allegedly sent "numerous emails" regarding the Texas 16 Matter to plaintiff's business associates "in an attempt to damage plaintiff's business relationships." 17 Id. ¶ 21. In addition, defendant uploaded documents related to the Texas Matter to the Internet 18 document repository under the user name "evildragonslayer9." Id. ¶ 23. According to 19 the FAC, defendant's conduct is part of an "Internet campaign to disparage [plaintiff] with false and 20 malicious statements and cause damage to his reputation." Id. ¶ 11. 21 22 23 II. DISCUSSION A. Lanham Act Claim 24 1. 25 Section 43(a) of the Lanham Act is intended "to protect persons engaged in ... commerce Competitive Injury 26 against unfair competition." Halicki v. United Artists Communications, Inc., 812 F.2d 1213, 1214 27 (9th Cir. 1987). In order to have standing to sue under Section 43(a)'s "false advertising" prong, a 28 plaintiff must allege: (1) commercial injury based upon a misrepresentation about a product, and (2) ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE No. 11-cv-03414-RMW EDM 2 1 that the injury was "competitive," or harmful to the plaintiff's ability to compete with the defendant. 2 Barrus v. Sylvania, 55 F.3d 468, 470 (9th Cir. 1995) (citing Halicki, 812 F.2d at 1214). "To be 3 actionable, conduct must not only be unfair but must in some discernible way be competitive." 4 Halicki, 812 F.2d at 1214 (no claim under section 43(a) where defendant was not a competitor of the 5 plaintiff); see also Jack Russell Terrier Network of Northern Ca. v. American Kennel Club, Inc., 407 6 F.3d 1027, 1037 (9th Cir. 2005) (same). The focus of the "competitive injury" inquiry is "whether 7 the statements in issue tended to divert business from the plaintiff to the defendant." National 8 Services Group, Inc. v. Painting & Decorating Contractors of America, Inc., No. SACV06-563CJC, 9 2006 WL 2035465, at *4 (C.D. Cal. July 18, 2006). United States District Court For the Northern District of California 10 Plaintiff's Lanham Act claim alleges that the purportedly false statements on the Blog, 11 and harmed plaintiff's reputation and caused damage to 12 his "business, goodwill, reputation and profits." FAC ¶ 34. The FAC, however, fails to allege that 13 plaintiff and defendant are commercial competitors. Indeed, while the complaint indicates that 14 plaintiff works in the energy and hunting industries, it offers no facts whatsoever describing the 15 nature of defendant's business or the relationship between the parties. Certainly, the FAC does not 16 assert that the allegedly unlawful statements were intended to divert business from plaintiff to 17 defendant. Compare Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 734 (9th 18 Cir. 1999) ("[Defendant's agent] sought by his statements to divert business from [plaintiff] to 19 [defendant]. The injury is the type that section 43(a) of the Lanham Act was intended to remedy."). 20 Without facts showing that plaintiff and defendant are competitors and that the accused statements 21 impacted the parties' ability to compete, plaintiff's claim is not cognizable under the Lanham Act. 22 In plaintiff's sur-reply brief, he alleges for the first time that both parties "operate in the 23 hunting and fishing industries and are each involved with big game hunting ranches in Argentina." 24 Dkt. No. 34 at 8. Such allegations are not properly before the court on a motion to dismiss under 25 Rule 12(b)(6). See Schneider v. Cal. Dep't. of Corr., 151 F.3d 1194, 1197 n.1 (9th Cir. 1998) ("In 26 determining the propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to 27 a plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to 28 dismiss."). Furthermore, even if the parties "operate" in the same market, it is not clear that ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE No. 11-cv-03414-RMW EDM 3 1 allegedly unlawful comments concerning plaintiff's law practice could harm his ability to compete 2 with defendant in the Argentine big game hunting market. The court therefore finds that the FAC 3 fails to allege competitive injury as required to have standing under Section 43(a) of the Lanham 4 Act. 5 2. 6 Defendant also argues that his statements are not actionable under the Lanham Act because Commercial Advertising or Promotion 7 they are not "commercial advertising or promotion" within the meaning of Section 43(a). See 15 8 U.S.C. § 1125(a)(1)(B). To constitute “commercial advertising or promotion” under the Lanham 9 Act, a statement must be: (1) commercial speech, (2) by a defendant who is a commercial competitor United States District Court For the Northern District of California 10 of the plaintiff, (3) for the purpose of inducing customers to buy defendant's goods or services, and 11 (4) disseminated sufficiently to the relevant purchasing public to constitute “advertising” or 12 “promotion” within the industry. Coastal Abstract Service, Inc., 173 F.3d at 735. The statement 13 need not be made in a “classic advertising campaign,” and may consist of less formal types of 14 “promotion.” Id. 15 As noted above, the FAC does not allege that plaintiff and defendant are commercial 16 competitors, nor that defendant's statements were made for the purpose of inducing customers to buy 17 defendant's goods or services. Moreover, the complaint fails to show that defendant's statements are 18 "commercial speech" as defined under First Amendment doctrine. See Proctor & Gamble v. 19 Haugen, 222 F.3d 1262, 1274 (10th Cir. 2000) ("[T]he meaning of 'commercial speech' in the 20 context of § 43(a)(1)(B) of the Lanham Act tracks the First Amendment 'commercial speech' 21 doctrine."). The Supreme Court has set forth three factors relevant in determining if a statement is 22 commercial speech: "(1) whether the statements are in a typical advertising format; (2) whether the 23 statements refer to a commercial product; and (3) whether the defendant had an economic or 24 commercial motivation for making the statements." New.Net, Inc. v. Lavasoft, 356 F. Supp. 2d 25 1090, 1111 (C.D. Cal. 2004) (citing Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66–68 26 (1983)). While all factors need not be present for speech to be commercial, no one factor is itself 27 sufficient. New.Net, Inc., 356 F. Supp. 2d at 1111. "Although the boundary between commercial and 28 non-commercial speech has yet to be clearly delineated, the core notion of commercial speech is that ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE No. 11-cv-03414-RMW EDM 4 1 it does no more than propose a commercial transaction." Nissan Motor Co. v. Nissan Computer 2 Corp., 378 F.3d 1002, 1017 (9th Cir. 2004). 3 The FAC indicates that the allegedly unlawful statements were made in the form of negative 4 "comments" on the websites and, as well as blog posts 5 on the website FAC ¶¶ 12-14. Plaintiff argues defendant's statements are 6 "commercial speech" simply because they were made on "commercial websites." Dkt. No. 34 at 9. 7 The court does not understand the definition of commercial speech to be so broad. First, plaintiff 8 cites no authority supporting his position that,, or the 9 Blog are "commercial websites," nor that all statements made on such websites are "commercial United States District Court For the Northern District of California 10 speech." Furthermore, in general, "negative commentary ... does more than propose a commercial 11 transaction and is, therefore, non-commercial." Nissan Motor Co., 378 F.3d at 1017 (finding that 12 links on the website, which was owned by Nissan Computer, to disparaging content 13 about Nissan Motor Company were not commercial speech and therefore entitled to full protection 14 under the First Amendment). Finally, the allegations do not suggest that defendant's statements were 15 advertisements for a product or service, nor that they proposed commercial transactions or were 16 motivated by defendant's commercial interests. Compare Bolger, 463 U.S. at 66–68. Accordingly, 17 the court finds that the FAC does not show that the accused statements constitute "commercial 18 speech," and therefore fails to state a claim under the Lanham Act. 19 B. 20 State Law Claims Dismissal of the Lanham Act claim leaves the complaint devoid of any federal causes of 21 action. As such, no federal question jurisdiction remains under 28 U.S.C. § 1331. Given the early 22 stage of the litigation, the court declines to exercise supplemental jurisdiction over plaintiff’s state 23 law claims. See 28 U.S.C. § 1367(c); Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351 (1988) 24 (“When the single federal-law claim in the action was eliminated at an early stage of the litigation, 25 the District Court had a powerful reason to choose not to continue to exercise jurisdiction.”). 26 C. 27 28 Leave to Amend Dismissal with prejudice is appropriate only where the complaint cannot be saved by any amendment. See Gadda v. State Bar of Cal., 511 F.3d 933, 939 (9th Cir. 2007). "Facts raised for ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE No. 11-cv-03414-RMW EDM 5 1 the first time in plaintiff's opposition papers should be considered by the court in determining 2 whether to grant leave to amend or to dismiss the complaint with or without prejudice." Broam v. 3 Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003) (citing Orion Tire Corp. v. Goodyear Tire & Rubber 4 Co., 268 F.3d 1133, 1137-38 (9th Cir. 2001)). 5 Here, plaintiff alleged that he and defendant are competitors in the Argentine big game 6 hunting market for the first time in his sur-reply brief. Because such allegations, along with 7 additional facts showing that the allegedly unlawful statements are commercial speech, may give 8 rise to a claim under the Lanham Act, the court grants plaintiff leave to amend his complaint within 9 thirty days of the date of this order.1 Given that defendant's motion to dismiss is granted under Rules United States District Court For the Northern District of California 10 12(b)(6) and 12(b)(1), the court does not reach the question of whether defendant has consented to 11 personal jurisdiction under Rule 12(b)(2). 12 III. ORDER 13 For the foregoing reasons, the court grants defendant's motion to dismiss without prejudice. 14 15 Plaintiff may file an amended complaint within thirty days of the date of this order. 16 DATED: 17 February 16, 2012 RONALD M. WHYTE 18 United States District Judge 19 20 21 22 23 24 25 26 27 28 1 Because the court grants plaintiff's motion to dismiss, the motion to strike defendant's surreply is denied as moot. See Dkt. No. 39. ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE No. 11-cv-03414-RMW EDM 6
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