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Nutrition Distribution, LLC v. Enhanced Athlete, Inc.

United States District Court, E.D. California

May 30, 2018

NUTRITION DISTRIBUTION, LLC, an Arizona limited liability company, Plaintiff,
v.
ENHANCED ATHLETE, INC., a Wyoming corporation, DOES 1 through 10, inclusive, Defendant.

          ORDER DENYING MOTION FOR SANCTIONS

          Troy L. Nunley United States District Judge

         This matter is before the Court pursuant to Plaintiff Nutrition Distribution, LLC's (“Plaintiff”) Motion for Sanctions (Mot. for Sanctions, ECF No. 8.) against Defendant Enhanced Athlete, Inc. (“Defendant”). Defendant filed an opposition (Opp. to Mot. for Sanctions, ECF No. 17), and Plaintiff filed a reply, (Reply to Mot. for Sanctions, ECF No. 20). For the reasons set forth below, the Court hereby DENIES Plaintiff's Motion for Sanctions. (ECF No. 8.)

         I. Factual and Procedural Background

         On September 17, 2017, Plaintiff filed a complaint against Defendant for false advertising in violation of the Lanham Act § 43(a)(1)(B). (ECF No. 1.) The complaint alleges that Defendant, who markets and sells supplements to body builders, gym users, fitness enthusiasts, and athletes, falsely advertised several of its products containing Selective Androgen Receptor Modulators (“SARMs Products”) on its website by “downplaying or expressly denying any negative side effects.” (ECF No. 1 at 2.) Specifically, Plaintiff alleges that medical experts have concluded that the sale of SARMs Products is “highly dangerous to public safety.” (ECF No. 1 at 2.) Therefore, Plaintiff alleges “Defendant knew, or should have known that its SARMS Products are not recognized as safe and effective for any of the uses suggested by Defendant[, ] and therefore Defendant has knowingly and materially participated in a false, misleading and dangerous advertising campaign to promote and sell its [SARMs Products].” (ECF No. 1 at 3.)

         On September 13, 2017, Defendant filed an answer. (ECF No. 6.) Shortly thereafter, on September 17, 2017, Defendant emailed a newsletter (“First Newsletter”) to its customers, informing them of the lawsuit Plaintiff filed against it, and encouraging them to take action and voice their opinions regarding the lawsuit. (ECF No. 8-2.) In addition to emailing the First Newsletter, Defendant also posted it on its website. (ECF No. 8 at 4.) The First Newsletter explained that Tauler Smith LLP, Plaintiff's attorney, had a history of filing these types of lawsuits and “ha[s] been fairly successful extorting small business owners for tens of thousands of dollars.” (ECF No. 8-2 at 1.) It stated that Plaintiff and his attorney “were attempting to take away your right to choose what you can and cannot experiment on yourself.” (ECF No. 2 at 1.) The First Newsletter then described actions taken in an “equally baseless” lawsuit, where the defendant's supporters contacted the plaintiff's law firm to express their views, and in some cases took improper action to disrupt the firm in an effort to persuade the plaintiff to withdraw the lawsuit. (ECF No. 2 at 2-3.) While the First Newsletter stated that the recipients should not engage in illegal conduct, it nonetheless provided the following list of actions taken in the other lawsuit:

Fax Machine: Sent 50-100 pages of all black paper as to burn through all their toner and overheat fax Machine[.] Put the number in a robodialer so no other faxes can be received since line constantly busy[.]
Phone number: Called to tell their opinion about the lawsuit[.] Called to tell their experience with SARMs and how it benefited them[.] Just called and hung up[.] Put number in robo dialer and/or signed it up to various promotion sites so it was constantly receiving phone calls from solicitors. Filled up voicemail so no other clients were able to leave messages[.] Kept phone line ringing 24/7 so no other clients could reach the attorney, thus crippling their ability to operate[.]
Web Site: Some of the more advanced customers were able to create a DDOS attack on the site, shutting it down entirely. Customers would go to the web site of the Plaintiff, make an order and then call their own credit card company and dispute the charge. Over 1% chargebacks results in the loss of credit card merchant account, thus shutting down the web site's ability to make online sales.
Emails: Fans emailed all members of the staff of the law firm multiple times a day asking legitimate questions or making valid statements so as not to run afoul of harrassment [sic] charges. They did this so that internal pressure from the office resulted in the law suit not being worth the loss of other business.
Physical Address: Fans would show up to the office and make it very clear as to what they thought about the attorney attempting to threaten their freedom of choice. Nails and other debris kept getting found all over the parking lot[.] Homeless people were paid to go into the office and make it a rather unpleasnt [sic] place[.]

(ECF No. 8-2 at 2-3.)

         The First Newsletter then sought the contact information of those personally involved with Plaintiff or Plaintiff's counsel, Tauler Smith LLP, including “[g]irl friend's or wive's names, places of employement [sic], phone numbers or addresses.” (ECF No. 8-2 at 3.) Additionally, it provided the email addresses of employees at Tauler Smith LLP, and told customers that a 50% off sale would be provided when the lawsuit was withdrawn. (ECF No. 8-2 at 3-5.)

         On September 18, 2017, the day after the First Newsletter was posted, Defendant issued a subsequent newsletter (“Second Newsletter”), urging its supporters to stay within the confines of the law, including exercising their free speech rights by expressing only positive messages. (ECF No. 8-5.) The Second Newsletter noted that Defendant did not want its supporters to take action that would detract from the positive message of consumer freedom to purchase lawful products. (ECF No. 8-5.) It specifically stated in bold: “We are sending this out to reiterate that we in no shape or form want you to participate in any illegal activity.” (ECF No. 8-5.) By September 20, 2017, three days after the initial posting, the portions of the First Newsletter that described improper conduct were removed from Defendant's website.[1] (ECF No. 11-1 at 74-77.)

         Following the two newsletters, several of Defendant's customers emailed and called Tauler Smith LLP. (ECF No. 8-3.) Many of these emails simply voiced people's discontent over the lawsuit and asked Plaintiff to reconsider the lawsuit. (ECF No. 8-3.) Other emails were crude or gibberish. (ECF No. 8-3.) For example, one email read: “What right do you have to tell us what what [sic] we can put in or body??? Alcohol is one of the number one killers in the world, but it's OK. Same with tobacco . . . Why don't you put your efforts towards shutting them down instead of a little suppliment [sic] site.” (ECF No. 8-3 at 1.) Another read as follows: “I am emailing you to voice my discontent over the lawsuit you are filing against Enhanced Athlete. As Americans our freedoms are shrinking everyday and this lawsuit perpetuates this trend. Think about some of the freedoms you enjoy everyday. Maybe its [sic] the occasional drink after a stressful day. Your cigarette smoke break or even the cup of ...


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