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Mgm Resorts International v. Pacific Pillows, LLC

United States District Court, D. Nevada

May 28, 2014

MGM RESORTS INTERNATIONAL, et al., Plaintiff(s),
v.
PACIFIC PILLOWS, LLC, Defendant(s),

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court is plaintiffs'/counterdefendants' MGM Resorts International ("MGMRI"), CityCenter Land, LLC ("CityCenter"), Mirage Resorts, Inc. ("Mirage"), Mandalay Corp. ("Mandalay"), and Mandalay Resort Group ("MRG") (collectively "MGM") motion to dismiss counterclaims pursuant to Fed.R.Civ.P. 12(b)(6). (Doc. #18). Defendant/counterclaimant Pacific Pillows, LLC ("Pacific Pillows") has filed an opposition (doc. #21), to which plaintiffs/counterdefendants have replied (doc #22).

I. Background

The instant dispute centers around the sale of pillows and other bedding products using marks owned by MGM. Since 2004, Pacific Pillows has operated a website that allows patrons to purchase bedding products that are used in various hotels including several hotels owned by MGM. The website allows potential patrons to "shop by hotel" and choose a hotel from a drop-down menu to see what bedding products are featured in that particular hotel. Additionally, pillows sold by Pacific Pillows are named after hotels that MGM owns.

MGM has trademarked the names of its hotels as related to hotel services. Beginning in 2012 MGM began selling pillows and bedding products using the marks owned by MGM.

MGM brought suit against Pacific Pillows for trademark infringement, trademark counterfeiting, unfair competition, false advertising, common law trademark infringement and common law unfair competition. In its answer, Pacific Pillows alleges that MGM engages in false advertising and that MGM improperly contacted Pacific Pillows' suppliers and forced them to restrict the sale of products to Pacific Pillows.

Based on these allegations Pacific Pillows has raised nine counterclaims: (1) unfair competition under the Sherman Act; (2) unfair competition under the Clayton Act; (3 and 4) false advertising under the Lanham Act; (5) unfair competition under the Federal Trade Commission Act; (6) common law unfair competition; (7) common law wrongful interference with contractual relations; (8) common law wrongful interference with prospective economic advantage; and (9) invalidation in the alternative. MGM filed the instant motion to dismiss all counterclaims for failure to state a claim upon which relief can be granted.

II. Discussion

A. Standard of Review

A court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 1949. Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's complaint alleges facts that allows the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 1949.

Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged - but not shown - that the pleader is entitled to relief." Id. (internal quotations omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

B. Analysis

(1) Unfair competition under the Sherman Act

Accepting all the allegations in the counterclaim as true, it fails to provide any legal basis for Pacific Pillows' Sherman Act claims against MGM.

To state a claim under Section 1 of the Sherman Act, the claimant must show: (1) the existence of a contract, combination, or conspiracy among two or more separate entities that (2) unreasonably restrains trade and (3) affects interstate or foreign commerce. Jack Russell Terrier Network v. Am. Kennel Club, Inc., 407 F.3d 1027, 1033 (9th Cir. 2005). Pacific Pillows' counterclaim falls short because it does not allege that MGM acted in concert with Pacific Pillows' suppliers in order to unreasonably restrain trade. Pacific Pillows claims that MGM contacted Pacific Pillows' suppliers and demanded that the suppliers no longer do business with Pacific Pillows, but Pacific Pillows does not claim that MGM and the suppliers conspired to restrain trade. Pacific Pillows' description of MGM "demanding" that the suppliers comply with its wishes further ...


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