Health Law Daily Spring water extractor had standing to sue other companies for alleged mislabeling
Tuesday, May 29, 2018

Spring water extractor had standing to sue other companies for alleged mislabeling

By Jeffrey H. Brochin, J.D.

A Pennsylvania spring water extractor had a right to sue for injuries under the Lanham Act (15 U.S.C. § 1125(a)) because he had commercial interests within the zone of interests protected by the statute, a federal district court in Pennsylvania has ruled. However, on the issue of proximate cause, although he could establish economic and reputational injury from the activities of a competing water extractor due to alleged mislabeling of their water as "spring water," his allegations were insufficient to connect his lost sales with the conduct of spring water bottlers who were not direct competitors (Frompovicz v. Niagara Bottling, LLC, May 24, 2018, Beetlestone, W.).

Allegations of mislabeling. A spring water extractor who was licensed to operate a spring water extraction site alleged that other companies that labeled their water as spring water were in fact extracting and bottling well water, a practice which damaged his business. He filed a putative class action for all persons who extract and/or bottle spring water for sale in the United States, and sought damages pursuant to the Lanham Act, which was created to provide protections from business interests being harmed as a result of false advertising. A competing water extractor and water bottlers filed motions to dismiss which, for the reasons stated below were granted in part and denied in part.

Right to sue under the Act. In determining whether the spring water extractor had a right to sue under the Lanham Act, the court considered whether he had sufficiently alleged that: (1) his interests came within "the zone of interest" implicated by the statute; and, (2) that the conduct of the competing water extractor and the bottling companies proximately caused his damages. In order to come within the within the zone of interests in a suit for false advertising under the Lanham Act, it must be shown that economic or reputational injury flowed directly from the deception practiced by the false advertiser.

The court further noted that the right to sue under the Lanham Act requires some kind of injury to a "commercial interest", and that the injury was "proximately caused," by the challenged conduct. Although a consumer or a business misled by a supplier into purchasing an inferior product may not bring a Lanham Act claim, a business whose commercial interests have been injured by a misleading use of marks in commerce may seek damages under the Lanham Act. The court found that the spring water extractor in fact met the zone of interests test required for a right to sue.

Distinction between extractor and bottler. As to the proximate cause prong of the right to sue test, the court found that the allegations against the competing water extractor—who was in the exact same business and was therefore a direct competitor of the spring water extractor—were sufficient to allege a viable theory of proximate harm caused to the spring water extractor. However, as to the water bottling companies, who were not in direct competition with the spring water extractor, the court found that the extra step in the chain of causation presented a more complicated issue: a Lanham Act claim asserting indirect injuries is only viable in relatively unique circumstances, and in the instant case, the court found a lack of sufficient allegations connecting the spring water extractor’s lost sales with the bottling companies’ actions. The Lanham Act claims were therefore dismissed as to the bottling companies.

The case is No. 2:18-CV-00054-WB.

Attorneys: David J. Stanoch (Golomb & Honik, PC) for Stanley F. Frompovicz d/b/a Far Away Springs. Brett A. Datto (Weir & Partners LLP) for James J. Land, Jr. d/b/a MC Resource Development a/k/a Pine Valley Farms Springs.

Companies: Far Away Springs; MC Resource Development a/k/a Pine Valley Farms Springs

MainStory: TopStory FDCActNews LabelingNews PennsylvaniaNews

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