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Fan FI International, Inc. v. Interlink Products International, Inc.

United States District Court, D. Nevada

February 17, 2017

FAN FI INTERNATIONAL, INC. et al. Plaintiffs,
v.
INTERLINK PRODUCTS INTERNATIONAL, INC., Defendant.

          ORDER

          ROBERT C. JONES UNITED STATES DISTRICT JUDGE

         This Lanham Act case arises out of alleged false advertising. Pending before the Court is a motion to dismiss for failure to state a claim.

         I. FACTS AND PROCEDURAL HISTORY

         A. The New Jersey Actions

         On February 29, 2016, Interlink Products International, Inc. (“Interlink”) sued Fan Fi International, Inc. (“Fan Fi”) for patent infringement in the U.S. District Court for the District of New Jersey, alleging that Fan Fi's sale of certain dual showerhead products violated U.S. Patent No. 7, 299, 510. (See Compl., ECF No. 1 in D.N.J. Case No. 2:16-cv-1142). Interlink amended the complaint on June 23, 2016 to add ETL, LLC as a defendant. (See Am. Compl., ECF No. 14 in D.N.J. Case No. 2:16-cv-1142).

         On March 4, 2016, Interlink again sued Fan Fi in the U.S. District Court for the District of New Jersey, this time for trademark infringement and unfair competition under both federal and state law, based on Fan Fi's use of the “POWER SPA” mark. (See Compl., ECF No. 1 in D.N.J. Case No. 2:16-cv-1244). Interlink amended the complaint on June 23, 2016 to add ETL, LLC as a defendant. (See Am. Compl., ECF No. 13 in D.N.J. Case No. 2:16-cv-1244). On July 29, 2016, Fan Fi and ETL counterclaimed for a declaration of non-infringement and cancellation of the mark. (See Answer & Countercl., ECF No. 23 in D.N.J. Case No. 2:16-cv-1244).

         On August 2, 2016, Interlink sued Fan Fi and ETL for a third time in the U.S. District Court for the District of New Jersey for false advertising under the Lanham Act and several related state law causes of action based on advertising claims Fan Fi and ETL made in relation to their showerhead products. (See Compl., ECF No. 1 in D.N.J. Case No. 2:16-cv-4663).

         On September 28, 2016, the three New Jersey Actions were consolidated in that district, with the ‘1142 Case as the lead case. On November 17, 2016, Fan Fi and ETL moved to transfer the New Jersey Actions to this District under 28 U.S.C. § 1404(a). As of February 6, 2017, the motion is fully briefed but no hearing has been set, and a settlement conference has been set for February 23, 2017.

         B. The Present Action

         On November 16, 2016 (the day before they moved to transfer the New Jersey Actions to this District), Plaintiffs Fan Fi and ETL sued Defendant Interlink in this Court for false advertising under the Lanham Act and deceptive trade practices and unfair competition under state law. Plaintiffs allege that certain of Defendant's showerheads violate federal regulations because they permit a flow of greater than 2.5 gallons per minute (“gpm”) at 80 psi when the flow restrictor is removed and that the flow restrictors can be removed with less than eight pounds of force. Plaintiffs allege that Defendant's advertising claims that its showerheads comply with federal law are therefore false. Defendant has moved to dismiss for failure to state a claim.

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation “plausible, ” not just “possible.” Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009) (citing Twombly, 550 U.S. at 556) (“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.”). That is, under the modern interpretation of Rule 8(a), a plaintiff must not only specify or imply a cognizable legal theory (Conley review), he must also allege the facts of his case so that the court can determine whether he has any basis for relief under the legal theory he has specified or implied, assuming the facts are as he alleges (Twombly-Iqbal review). Put differently, Conley only required a plaintiff to identify a major premise (a legal theory) and conclude liability therefrom, but Twombly-Iqbal requires a plaintiff additionally to allege minor premises (facts of the plaintiff's case) such that the syllogism showing liability is complete and that liability necessarily, not only possibly, follows (assuming the allegations of fact are true).

         “Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. ...


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