3B Med., Inc. v. SoClean, Inc.

3B MEDICAL, INC., Plaintiff, v. SOCLEAN, INC., Defendant.

19 Civ. 3545 (KPF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

September 8, 2020

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

Plaintiff 3B Medical, Inc. manufactures a suite of devices that automatically sanitize continuous positive airway pressure ("CPAP") machines using UV-C light. Plaintiff brings this action against Defendant SoClean, Inc., a competitor that manufactures similar devices, albeit with the distinction that Defendant's devices use ozone as a sanitizing agent. Plaintiff alleges that Defendant has relied on false and misleading representations to consumers relating to Defendant's devices' use of ozone and the safety of said use, in violation of the Lanham Act, 15 U.S.C. § 1125(a), as well as various state-law claims. Defendant, in turn, has filed the instant motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiff has failed to state a claim upon which relief may be granted. For the reasons set forth below, the Court finds that Plaintiff has indeed failed to state a claim because of deficiencies in pleading injury, and therefore grants Defendant's motion to dismiss.

BACKGROUND¹

A. Factual Background

1. The Parties

Plaintiff is a Florida corporation with its principal place of business in Winter Haven, Florida. (Compl. ¶ 6). Since 2018 (see Galgay Decl., Ex. 1),² Plaintiff has produced and sold the Lumin and the Lumin Bullet, both of which are designed for individuals who suffer from sleep apnea (Compl. ¶ 12). Specifically, the Lumin and the Lumin Bullet use a UV-C light source to sanitize and disinfect CPAP equipment. (Id. at ¶¶ 22-23). Defendant — a Delaware corporation with its principal place of business in Peterborough, New Hampshire — offers competing products. (Id. at ¶¶ 7, 11). Unlike Plaintiff's devices, Defendant's SoClean devices use ozone gas to clean CPAP equipment. (Id. at ¶ 25). Defendant's devices have been on the market since at least 2012. (Id. at ¶ 2). Defendant commands 90% of the market for CPAP machine cleaners, while Plaintiff holds only 5%. (Id. at ¶¶ 159-60). The other 5% is controlled by three other competitors — Sleep8, VirtuClean, and Respify — allof which use ozone as well. (Id. at ¶¶ 161-62). Both parties' devices are offered to consumers as an alternative to handwashing their CPAP equipment. (Id. at ¶ 22).

2. The Alleged Misrepresentations

All of Defendant's devices use ozone as the primary sanitizing agent. (Compl. ¶ 25). Ozone is a toxic gas that can have a variety of serious health consequences to humans when inhaled. (Id. at ¶¶ 33, 47-56). Defendant's devices produce ozone at concentrations well above the limits allowed by the Food and Drug Administration (the "FDA"). (Id. at ¶¶ 37-38, 87-90, 97).

Plaintiff alleges that Defendant's marketing materials contain a host of misrepresentations that are designed both to obscure Defendant's use of ozone as a sanitizing agent and to mislead consumers about the health risks posed by Defendant's use of ozone. (See Compl. ¶ 3). Plaintiff points in particular to six different misrepresentations that have appeared in various SoClean marketing materials since at least 2012. (Id. at ¶¶ 101-45, 148). Those misrepresentations include the following:

• Defendant's marketing materials represent that its devices use "activated oxygen," instead of ozone (id. at ¶ 108);

• Defendant's marketing materials represent that its devices do not use "chemicals" or "harsh chemicals" (id. at ¶ 118);• Defendant markets its devices as "safe" and "healthy" (id. at ¶ 122);

• Defendant represents that its devices use the same sanitizing process as that used in hospitals (id. at ¶ 128);

• Defendant represents that the charcoal filter cartridges that accompany its devices are able to convert "activated oxygen" into "regular oxygen" (id. at ¶ 139); and

• Defendant represents that its devices are closed-loop systems, out of which no "activated oxygen" escapes (id. at ¶ 144).

Plaintiff alleges that consumers have reported adverse experiences with Defendant's devices due to the devices' use of ozone. (Compl. ¶ 156). Moreover, some consumers have reported that they decided to purchase the Lumin specifically because it does not use ozone. (Id. at ¶ 169). Based on the above, Plaintiff alleges that more consumers would learn of, and purchase, its products if not for Defendant's false advertising. (Id. at ¶¶ 170-72).

B. Procedural Background

Plaintiff initiated this action with the filing of a complaint on April 22, 2019. (Dkt. #1). On June 12, 2019, Defendant filed a letter with the Court requesting a conference to discuss an anticipated motion to dismiss. (Dkt. #20). Plaintiff responded on June 17, 2019 (Dkt. #22), and the Court set a pre-motion conference for August 27, 2019 (Dkt. #23). At the August 27, 2019 conference, the Court permitted Plaintiff to file an amended complaint and scheduled briefing for Defendant's motion to dismiss. (Minute Entry for August 27, 2019).

On September 16, 2019, Plaintiff filed the Complaint, alleging violations of the Lanham Act, 15 U.S.C. § 1125(a); New York General Business Law ("GBL") Sections 349 and 350; and a common-law claim for unfair competition. (Dkt. #42). Defendant filed its motion to dismiss, along with an accompanying memorandum and declaration, on October 25, 2019. (Dkt. #46-48). Defendant also requested that the Court schedule oral argument on the motion, and the Court indicated that it would schedule oral argument if it believed it to be necessary. (Dkt. #49-50). On December 2, 2019, Plaintiff filed its opposition brief. (Dkt. #53). On December 16, 2019, Defendant filed its reply brief. (Dkt. #54).

On the same day that Plaintiff filed its opposition brief, it informed the Court that it believed one of Defendant's exhibits — specifically, a user manual for a SoClean device — to have been falsified. (Dkt. #51). On January 14, 2020, Plaintiff filed a letter requesting a conference to discuss an anticipated motion for sanctions in regards to the allegedly falsified exhibit. (Dkt. #55). Defendant responded to Plaintiff's letter on January 17, 2020 (Dkt. #56), and the Court in turn scheduled a pre-motion conference for February 18, 2020 (Dkt. #57). At the February 18, 2020 conference, the Court expressed its belief that a motion for sanctions would not be successful. (Dkt. #63). However, theCourt permitted Plaintiff to file a sur-reply so that it could address the ways in which it believed Defendant's conduct had affected the briefing for the motion to dismiss. (Id.). On March 3, 2020, Plaintiff filed its sur-reply, closing the briefing for the instant motion. (Dkt. #62). The motion being fully briefed, and the Court finding that it can decide the motion on the papers, the Court now proceeds to the substance of this Opinion.

DISCUSSION

The Court Grants Defendant's Motion to Dismiss

A. Motions to Dismiss Under Fed. R. Civ. P. 12(b)(6)

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court must "draw all reasonable inferences in Plaintiff's favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief." Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (internal quotation marks omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ("To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." (internal quotation marks omitted)). A plaintiff is entitled to relief if he alleges "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007) ("While Twombly does not require heightened fact pleading of specifics, it does require enough facts to nudge plaintiff's claimsacross the line from conceivable to plausible." (internal quotation marks omitted) (citing Twombly, 550 U.S. at 570)).

That said, a court is not bound to accept "conclusory allegations or legal conclusions masquerading as factual conclusions." Rolon v. Henneman, 517 F.3d 140, 149 (2d Cir. 2008) (internal quotation marks omitted) (quoting Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir. 2002)); see also Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) ("[A]lthough a court must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal conclusions, and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." (internal quotation marks omitted) (quoting Iqbal, 556 U.S. at 678)). Moreover, "[w]here a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).

B. The Complaint Must Be Dismissed for Failure to Allege Injury

Section 43(a) of the Lanham Act, under which Plaintiff brings its primary claim, provides:

Any person who ... uses in commerce any ... false or misleading description of fact, or false or misleading representation of fact, which ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities ... shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1). In order to survive a motion to dismiss on a Lanham Act false advertising claim, a plaintiff must adequately allege that the challenged misrepresentations are (i) "either literally or impliedly false"; (ii) "material"; (iii) "placed in interstate commerce"; and (iv) "the cause of actual or likely injury to the plaintiff." Se...