United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO
DISMISS RE: DKT. NO. 31
H. KOH, United States District Judge.
Factory Direct Wholesale (“Plaintiff”) sued
Defendant iTouchless Housewares & Products, Inc.
(“Defendant”) and alleged false advertising under
the Lanham Act, intentional interference with contract,
intentional interference with prospective economic advantage,
negligent interference with prospective economic advantage,
violations of California's Unfair Competition Law, and
trademark infringement. Before the Court is Defendant's
motion to dismiss. ECF No. 34. Having considered the
submissions of the parties, the relevant law, and the record
in this case, the Court GRANTS in part and DENIES in part
Defendant's motion to dismiss.
alleged in the First Amended Complaint (“FAC”),
Plaintiff and Defendant are competing sellers on the Amazon
e-commerce platform. ECF No. 28 ¶ 2 (FAC). Sellers on
Amazon are subject to established rules and policies that
govern their advertisements (i.e., listings) of their
products on the website. Id. ¶ 20. For example,
the Amazon Seller Agreement, which governs the seller's
access and use of Amazon's online marketplace, requires
the seller to represent and warrant that “any
information provided . . . to Amazon . . . is at all times
accurate and complete.” Id. ¶¶
20-21. Other policies, such as the Amazon Code of Conduct,
requires that sellers “not engage in any ‘unfair
behavior' or activities that (a) intentionally damage
another seller, including its listings or ratings, or (b)
manipulate or game the Amazon.com selling or buying process,
including Amazon's search results or sales
rankings.” Id. ¶ 24. “Sellers are
further prohibited from contributing false, misleading or
inauthentic content.” Id. (citation omitted).
The FAC alleges that both Plaintiff and Defendant agreed to
these terms with Amazon in order to sell their products.
Id. ¶¶ 22-23.
on Amazon are identified “through a unique combination
of 10 letters and numbers, referred to as an Amazon Standard
Identification Number or “ASIN”
designation.” Id. ¶ 31. “When a
vendor uploads information for a new product for sale,
” “Amazon assigns that new product a unique ASIN,
” which appears in the product's details and can be
used to search and find the product. Id.
Plaintiff's products have various unique ASIN
designations and are advertised on Amazon. Id.
“summer of 2018, ” Plaintiff discovered that
“false, deceptive, and unauthorized changes were being
made” to its product advertisements and listings.
Id. ¶¶ 34-35. These alterations included
changing product descriptions, providing improper ASIN
numbers, and changing the product's listing category
(thereby moving the product from Amazon's Home &
Kitchen category). Id. Plaintiff learned that a
third party was requesting Amazon to make these changes, and
as a result of Amazon's actions, Plaintiff's
products' ASINs were being merged into other products.
Id. ¶ 36.
reportedly discovered that Defendant was responsible for
making these requests and filed suit in the Northern District
of Georgia on August 29, 2018 (the “Georgia
action”). Id. ¶¶38-42; see also
Factory Direct Wholesale, LLC v. iTouchless Housewares &
Prods. Inc., No. 1:18-cv-04091-CAP, ECF No. 1 (N.D.Ga.
Aug. 29, 2018); ECF No. 31-1 Ex. A. Around October 23, 2018,
Plaintiff also discovered that Defendant was utilizing,
without authorization or license, Plaintiff's BESTOFFICE
trademark to advertise a 13-gallon trash can. FAC ¶ 73.
Plaintiff is the owner of the trademark for BESTOFFICE
(“Supplemental Mark”) and has used the
Supplemental Mark since December 7, 2013. Id. ¶
65-66. Defendant had used the mark since no later than
January 10, 2018 and sought to register the Supplemental Mark
on September 10, 2018. Id. ¶¶ 68-69. The
United States Patent and Trademark Office
(“USPTO”) rejected the registration on December
19, 2018 because the mark was too similar to Plaintiff's
Supplemental Mark. Id. ¶ 75. Plaintiff did not
bring suit for trademark infringement in the Georgia action.
the pendency of the Georgia action, Plaintiff alleges that
the “knowingly false and deceptive changes” to
its listings ceased. However, beginning in February 2019,
after the filing of the Georgia action, Defendant allegedly
“renewed its conduct in requesting that Amazon make
changes to [Plaintiff's] product listings that are
knowingly false, deceptive and unauthorized, and that mislead
the consuming public by misrepresenting Defendant's
advertised products as well as [Plaintiff's] products and
listings.” Id. ¶ 46.
example, in late February 2019, Defendant allegedly requested
unauthorized changes to one of Plaintiff's listings, the
“4ZB4 Listing.” As a result of these requests,
Amazon altered the 4ZB4 Listing such that it falsely
advertised the 4ZB4 product as a “product manufactured
and branded by Defendant”. Id. ¶ 49;
see Id. ¶ 50 (Defendant “caused Amazon to
make changes to the product image, title, and description
that falsely and deceptively changed FDW's 4ZB4 Listing
from the original 13-gallon trash can to an ‘iTouchless
EcoWise Compost Bin Container Dual Deodorizer Activated
Carbon Filters, 1.32 Gallon Kitchen Trash Can, Stainless
Steel Lid, Odor- Stopping Power White/Cream
alleges that during this time period starting in February
2019, Defendant attempted to make additional and similar
false and deceptive changes to other product listings
belonging to Plaintiff. See Id. ¶¶ 54-64.
According to Plaintiff, Defendant “falsely represented
to Amazon that [Plaintiff's] 4ZB4 Listing was a duplicate
listing that should be merged into [Defendant's]
Listing.” Id. ¶ 54. Amazon merged the two
listings such that the 4ZB4 Listing “no longer appeared
in customer searches on” Amazon. Id. ¶
also allegedly “attempted to falsely and
deceptively” merge two of Plaintiff's listings-the
“FQWE Listing” and the “JYK7 Listing,
” both of which are unrelated to the 4ZB4 Listing.
Id. ¶¶ 59-62. Plaintiff, however, does not
allege that Defendant's efforts were successful.
Id.. Finally, Plaintiff alleges that Defendant made
additional requests to Amazon in 2019, including (1)
“[f]alse and deceptive changes to the image(s) in
[Plaintiff's] listing; (2) “[f]alse and deceptive
changes to the description in [Plaintiff's] listing; (3)
“[f]alsely submitted an unfavorable review for
[Plaintiff's] listing; (4) [f]alsely and deceptively
removing [Plaintiff] from Amazon's vendor control.”
Id. ¶ 63.
The Georgia Action
August 29, 2018, Plaintiff sued Defendant in the Northern
District of Georgia. ECF No. 31-1 Ex. A (the “Georgia
complaint”). Plaintiff claimed that Defendant requested
unauthorized changes to Plaintiff's listings, including
providing improper ASIN variances, but the Complaint did not
allege that any of the changes were deceptive or misleading.
Id. ¶¶ 8-22. Plaintiff sued pursuant to
product listings with ASINs B071KZ91K1, B0727VDHZQ,
B072F1WBXW, and B07BTHQMPQ. Id. ¶ 11. Plaintiff
sued under the Lanham Act, the Georgia Uniform Deceptive
Trade Practices Act, and the Georgia Fair Business Practices
Act. Id. ¶¶ 23-36. Plaintiff also alleged
Georgia claims for tortious interference with contractual
relations and tortious interference with business relations.
Id. ¶¶ 37-49. For relief, Plaintiff sought
damages, costs, fees, and injunctive relief. Id. at
11-15 ¶¶ A-Z.
November 29, 2018, the court in the Georgia action granted
Defendant's motion to dismiss all claims with prejudice.
ECF No. 31-1 Ex. B (“Georgia Order”). As to the
Lanham Act claim, the court held that plaintiff
“allege[d] no facts regarding the defendant's
advertisements” and “ma[de] no allegation that
the changes made by Amazon at the defendant's request
deceived or had the capacity to deceive consumers.”
Id. at 4. As to the state statutory claims, the
court in the Georgia action concluded that the requested
changes “d[id] not even hint at deception.”
Id. at 5. Specifically, the court determined that
the complaint never alleged that the changes resulted in some
falsity or misrepresentation to the consuming public, that
defendant “misrepresented itself to Amazon as the
plaintiff, ” or that the changes defendant requested
were false or deceptive. Id. at 5-6. As to the
remaining tortious interference claims, the court disposed of
them by finding plaintiff did not allege “improper
conduct or wrongful actions by the defendant.”
Id. at 7.
The N.D. Cal. Action
March 6, 2019, Plaintiff filed a complaint in the instant
action. ECF No. 1. After Defendant filed a motion to dismiss
on April 16, 2019, ECF No. 20, Plaintiff filed the First
Amended Complaint (“FAC”) on May 7, 2019, ECF No.
28. Compared to the complaint in the Georgia action, the FAC
in the instant action contains additional detail about
Amazon's rules and policies, FAC ¶¶ 20-30, and
provides more specific allegations about Defendant's
purported actions and how the changes to Plaintiff's
listings “falsely advertised” or misrepresented
Plaintiff's products as products “manufactured and
branded by Defendant” id. ¶ 49; see
Id. ¶¶ 50-64.
example, Plaintiff alleges that Defendant requested that
Amazon make changes to Plaintiff's products and listings
to falsely advertise Plaintiff's 4ZB4 product “as a
product manufactured and branded by Defendant.”
Id. ¶ 49, 52. According to Plaintiff, Defendant
also “falsely represented to Amazon that
[Plaintiff's] 4ZB4 Listing was a duplicate listing that
should be merged into [Defendant's] Listing.”
Id. ¶ 54. Amazon merged the two listings such
that the 4ZB4 Listing “no longer appeared in customer
searches on” Amazon. Id. ¶ 55. “All
of the changes requested by Defendant in February 2019 to
[Plaintiff's 4ZB4] product listing . . . were knowingly
false and deceptive because they were not authored by
[Plaintiff]; they falsely advertised Defendant's
products; and they misrepresented inherent and material
qualities and characteristics of [Plaintiff's] products
to the consuming public, including the product title, image,
brand, manufacturer, and description of the 13-gallon trash
can.” Id.¶ 56.
Plaintiff claims that starting in February 2019, Defendant
also “attempted to falsely and deceptively” merge
Plaintiff's FQWE and JYK7 Listings, but Plaintiff does
not allege that Defendant's efforts were successful.
Id. ¶ 59-62. Finally, Plaintiff pleads that
Defendant made additional requests to Amazon in 2019,
including (1) “[f]alse and deceptive changes to the
image(s) in [Plaintiff's] listing; (2) “[f]alse and
deceptive changes to the description in [Plaintiff's]
listing; (3) “[f]alsely submitted an unfavorable review
for [Plaintiff's] listing; (4) [f]alsely and deceptively
removing [Plaintiff] from Amazon's vendor control.”
Id. ¶ 63.
basis, Plaintiff alleges six causes of action against
Defendant: (1) violations of the Lanham Act; (2) intentional
interference with contract; (3) intentional interference with
prospective economic advantage; (4) negligent interference
with prospective economic advantage; (5) violations of
California' Unfair Competition Law (“UCL”);
and (6) trademark infringement. FAC ¶¶ 79-151. For
the first five causes of action, Plaintiff purports to only
seek recovery for conduct occurring in or after February
2019. Id. ¶¶ 85-86, 98, 111, 125, 138-39.
21, 2019, Defendant filed a motion to dismiss the FAC. ECF
No. 31 (“Mot.”). On June 4, 2019, Plaintiff filed
an opposition to Defendant's motion, ECF No. 34
(“Opp.”), and on June 11, 2019, Defendant filed a
reply, ECF No. 35 (“Reply”). On June 18, 2019,
Plaintiff filed a motion to strike the reply brief for
allegedly raising a new argument concerning issue preclusion.
ECF No. 37. Defendant responded to the motion to strike on
July 2, 2019, ECF No. 42, and Plaintiff filed a reply on July
9, 2019, ECF No. 43. On September 17, 2019, the Court ordered
supplemental briefing regarding issue preclusion and denied
the motion to strike. ECF No. 45. Plaintiff and Defendant
each filed supplemental briefs on September 23, 2019, ECF
Nos. 46 and 47, and then filed supplemental replies on
September 27, 2019, ECF Nos. 48 and 49. The motion to dismiss
is now fully briefed and ripe for adjudication.
Motion to Dismiss Under Federal Rule of Civil Procedure
8(a)(2) of the Federal Rules of Civil Procedure requires a
complaint to include “a short and plain statement of
the claim showing that the pleader is entitled to
relief.” A complaint that fails to meet this standard
may be dismissed pursuant to Federal Rule of Civil Procedure
12(b)(6). The U.S. Supreme Court has held that Rule 8(a)
requires a plaintiff to plead “enough facts to state a
claim to relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). “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.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). “The plausibility
standard is not akin to a probability requirement, but it
asks for more than a sheer possibility that a defendant has
acted unlawfully.” Id. (internal quotation
marks omitted). For purposes of ruling on a Rule 12(b)(6)
motion, the Court “accept[s] factual allegations in the
complaint as true and construe[s] the pleadings in the light
most favorable to the nonmoving party.” Manzarek v.
St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031
(9th Cir. 2008).
Court, however, need not accept as true allegations
contradicted by judicially noticeable facts, see Schwarz
v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and
it “may look beyond the plaintiff's complaint to
matters of public record” without converting the Rule
12(b)(6) motion into a motion for summary judgment, Shaw
v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). Nor
must the Court “assume the truth of legal conclusions
merely because they are cast in the form of factual
allegations.” Fayer v. Vaughn, 649 F.3d 1061,
1064 (9th Cir. 2011) (per curiam) (internal quotation marks
omitted). Mere “conclusory allegations of law and
unwarranted inferences are insufficient to defeat a motion to
dismiss.” Adams v. Johnson, 355 F.3d 1179,
1183 (9th Cir. 2004).
Motion to Dismiss Under Federal Rule of Civil Procedure
sounding in fraud are subject to the heightened pleading
requirements of Federal Rule of Civil Procedure 9(b).
Bly-Magee v. California, 236 F.3d 1014, 1018 (9th
Cir. 2001). Under the federal rules, a plaintiff alleging
fraud “must state with particularity the circumstances
constituting fraud.” Fed.R.Civ.P. 9(b). To satisfy this
standard, the allegations must be “specific enough to
give defendants notice of the particular misconduct which is
alleged to constitute the fraud charged so that they can
defend against the charge and not just deny that they have
done anything wrong.” Semegen v. Weidner, 780
F.2d 727, 731 (9th Cir. 1985). Thus, claims sounding in fraud
must allege “an account of the time, place, and
specific content of the false representations as well as the
identities of the parties to the misrepresentations.”
Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir.
2007). In other words, “[a]verments of fraud must be
accompanied by ‘the who, what, when, where, and
how' of the misconduct charged.” Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.
2003) (citation omitted). The plaintiff must also plead facts
explaining why the statement was false when it was made.
See In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541,
1549 (9th Cir. 1994) (en banc), superseded by statute on
other grounds as stated in Marksman Partners, L.P. v. Chantal
Pharm. Corp., 927 F.Supp. 1297 (C.D. Cal. 1996).
an entire complaint . . . is grounded in fraud and its
allegations fail to satisfy the heightened pleading
requirements of Rule 9(b), a district court may dismiss the
complaint . . . .” Vess, 317 F.3d at 1107. A
motion to dismiss a complaint “under Rule 9(b) for
failure to plead with particularity is the functional
equivalent of a motion to dismiss under Rule 12(b)(6) for
failure to state a claim.” Id.
Leave to Amend
Court determines that a complaint should be dismissed, it
must then decide whether to grant leave to amend. Under Rule
15(a) of the Federal Rules of Civil Procedure, leave to amend
“shall be freely given when justice so requires,
” bearing in mind “the underlying purpose of Rule
15 to facilitate decisions on the merits, rather than on the
pleadings or technicalities.” Lopez v. Smith,
203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations
and internal quotation marks omitted). When dismissing a
complaint for failure to state a claim, “a district
court should grant leave to amend even if no request to amend
the pleading was made, unless it determines that the pleading
could not possibly be cured by the allegation of other
facts.” Id. at 1130 (internal quotation marks
omitted). Accordingly, leave to amend generally shall be
denied only if allowing amendment would unduly prejudice the
opposing party, cause undue delay, or be futile, or if the
moving party has acted in bad faith. Leadsinger, Inc. v.
BMG Music Publ'g, 512 F.3d 522, 532 (9th Cir. 2008).
seeks to dismiss the FAC on three grounds. First, Defendant
argues that claim preclusion bars this action. Second,
Defendant contends that if claim preclusion does not apply,
issue preclusion does and requires dismissal. Finally,
Defendant asserts that the claims fail on the merits. The
Court addresses each argument in turn.