Geomatrix, LLC v. NSF Int'l

82 F.4th 466

GEOMATRIX, LLC, Plaintiff-Appellant, v. NSF INTERNATIONAL; BioMicrobics, Incorporated;Hoot Systems, LLC; James Bell, Defendants-Appellees.

No. 22-1947

United States Court of Appeals, Sixth Circuit

Argued: July 26, 2023

Decided and Filed: September 12, 2023

Appeal from the United States District Court for the Eastern District of Michigan at Port Huron. No. 3:20-cv-13331—Robert H. Cleland, District Judge.

ARGUED: Devon P. Allard, Daniel L. Ravitz, THE MILLER LAW FIRM, P.C., Rochester, Michigan, for Appellant. Patrick M. McCarthy, HOWARD & HOWARD ATTORNEYS PLLC, Royal Oak, Michigan, for Appellee NSF International. ON BRIEF: Devon P. Allard, E. Powell Miller, Kevin F. O'Shea, THE MILLER LAW FIRM, P.C., Rochester, Michigan, for Appellant. Patrick M. McCarthy, Jonathan F. Karmo, HOWARD & HOWARD ATTORNEYS PLLC, Royal Oak, Michigan, for Appellee NSF International. William S. Cook, Matthew J. High, WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP, Livonia, Michigan, for Appellees BioMicrobics and James Bell. Fred K. Herrmann, Matthew L. Powell, KERR, RUSSELL AND WEBER, PLC, Detroit, Michigan, for Appellee Hoot Systems, LLC.

Before: McKEAGUE, GRIFFIN, and MURPHY, Circuit Judges.

GRIFFIN, J., delivered the opinion of the court in which McKEAGUE, J., joined and MURPHY, J., joined in part. MURPHY, J. (pp. 490-92), delivered a separate concurring opinion.

OPINION

GRIFFIN, Circuit Judge.

Plaintiff Geomatrix sells a septic system that substantially differs from those sold by its competitors. It asserts defendants, those competitors and NSF International (the primary standard-setting organization for the wastewater product industry), conspired to exclude its unique system from the marketplace. The district court dismissed Geomatrix's claims on several grounds, including the Noerr-Pennington doctrine and for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). We agree that dismissal is proper and affirm.

I.

Commonly known as septic systems, "onsite wastewater treatment and dispersal products" contain both a septic tank and a drain field. The tank isolates and contains the sewage, and the remaining wastewater flows through a drain field, where microorganisms treat the water. According to Geomatrix, customers largely have two options for private septic systems—aerobic treatment units (known as "contained systems"), or soil-based/open-bottom treatment systems ("Treatment and Disposal Systems," or "T&D systems"). In a contained system, the septic tank has aeration devices that treat the wastewater before it leaches into the drain field. A T&D system, however, does not need those devices. The drain field of a T&D system has more sandy surface area—that increases the available oxygen, which in turn increases the number of microorganisms that treat the wastewater. Geomatrix markets and sells GeoMat, a T&D system, while many of its competitors, including defendants Hoot Systems and BioMicrobics, sell contained systems.

NSF offers a certification for the wastewater treatment industry: Standard 40. In use since 1970, it "contains minimum requirements for residential wastewater treatment systems having [certain] rated treatment capacities." First Amended Complaint, R. 24, PageID 404-05 (quotation marks omitted). Companies involved in this industry have a financial incentive to obtain this certification, for "[i]nclusion in [these] standards is vital to the commercial success" of their products since it "provides [a] company access to the onsite residential wastewater market." Id. at 382, 406-07 (quotation marks omitted). Practically speaking, a manufacturer needs to obtain this certification before it can market products for sale in a given state—at least thirty-seven states have adopted Standard 40 in their own regulations, and others rely on it in making regulatory or product approval decisions. This standard, like all others promulgated by NSF, is developed through a voluntary consensus process, overseen by a joint committee staffed by NSF employees, state regulatory officers, industry manufacturers, and consumers.

Geomatrix sought and obtained a Standard 40 certification. Even though most septic systems certified under Standard 40 are contained systems, at least three T&D systems have received certification. NSF and Geomatrix agreed on a testing protocol in 2013 after NSF confirmed that GeoMat was eligible for Standard 40 certification. Then, after Geomatrix completed the testing protocol, it received Standard 40 certification in July 2014.

Geomatrix alleges that competitors in the wastewater industry then began conspiring against T&D systems. It claims that those competitors, including Hoot Systems and BioMicrobics, conspired with NSF to limit the market for Geomatrix products, to preserve the market for certain NSF customers, and to protect their own private interests without regard for scientific evidence. These alleged conspirators questioned whether T&D systems should be entitled to Standard 40 certification—this questioning allegedly "began the process of eroding confidence in Treatment and Dispersal Systems by state regulatory authorities." Id. at 427-28.

As to the particulars of the conspiracy, Geomatrix alleges that it began in September 2017 when an NSF employee circulated a paper to the joint committee suggesting that T&D systems be removed from Standard 40 certification and placed in a new, separate standard. The underlying, but allegedly unfounded, concerns about T&D systems have been raised at every joint committee since. And Geomatrix contends that certain actions or statements disparaged the efficacy of T&D systems, including: 1) individuals employed by manufacturers of contained systems (including defendant James Bell) "dominat[ing]" joint committee discussions; 2) adopting the disparaging term "uncontained" for T&D systems; 3) unsupported questioning of the reliability or efficacy of T&D systems; 4) falsely accusing T&D systems of clogging problems; 5) proposing double standards or straw polls weighted in favor of contained systems; 6) failing to adopt a fair test for T&D systems with the opportunity to prove performance; 7) proposing that T&D systems be eligible for certification under an entirely different standard, Standard 240, which has been adopted in only one state; and 8) developing a new proposed standard, Standard 441, for high-strength wastewater systems (used, for example, by restaurants) that would exclude T&D systems. In short, Geomatrix alleges that these actions demonstrate a conspiracy that harmed its business. Per its complaint:

The Defendants in concert disparaged Treatment and Dispersal Systems, falsely asserted that they did not fit within the NSF/ANSI Standard 40, giving the impression that these technologies did not adequately protect public health and/or the environment, and attempt [sic] to create new standards in which to move Treatment and Dispersal Systems knowing that, if successful, it would take many years for those standards to be adopted; effectively shutting down their competitors.

First Amended Complaint, R. 24, PageID 460.

This alleged conspiracy affected Geomatrix's business by preventing it from obtaining state regulatory approval for GeoMat, even though its Standard 40 certification should have made it possible to do so. Ultimately, because of this uncertainty, Geomatrix decided to withdraw its NSF certification: in February 2018, it informed NSF that, "due to the uncertainty surrounding which, if any, states will allow use of certified open bottom technologies" it did not know if continued certification would be beneficial and did "not intend to continue its active certification with NSF." R. 30-5, PageID 687. This happened despite GeoMat still being eligible for Standard 40 certification—as of today, NSF has not adopted the new Standard 441, as those discussions remain ongoing.

Plaintiff filed a complaint against NSF, BioMicrobics, Hoot Systems, and James Bell raising a host of claims, including violations of the Sherman Act, the Lanham Act, and Michigan law. Defendants moved to dismiss for two reasons: 1) for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) because Standard 441 had not yet been approved or rejected; and 2) for failing to state a claim upon which relief could be granted under Rule 12(b)(6), because, among other reasons, defendants' petitioning activity was immunized under the Noerr-Pennington doctrine or because Geomatrix failed to state any plausible claim, whether antitrust or otherwise.

The district court agreed with defendants. It determined that, while much of Geomatrix's case centered on unripe injuries related to the adoption of Standard 441, claims for present "disparagement" injuries established standing. Yet this did not save Geomatrix's case from dismissal. The court concluded that the antitrust claims, Michigan common law business tort claims, and the Michigan Consumer Protection Act claims were based on immunized conduct protected by Noerr-Pennington or that those claims otherwise failed to state a claim. Geomatrix further failed to show the proximate cause required for the federal and state unfair competition claims, and its promissory estoppel claims were based on statements that did not state a sufficiently definite promise. Claiming error, Geomatrix timely appeals.

II.

Before turning to the merits of Geomatrix's complaint, we must assure ourselves of jurisdiction. Defendants raise two jurisdictional arguments: 1) Geomatrix's injuries are not ripe because they stem from a future, possible injury based on whether Standard 40 or 441 will exclude T&D systems, and 2) Geomatrix's case is moot because it declined to renew its Standard 40 certification. We agree with both contentions but still conclude that we have subject-matter jurisdiction.

"To establish Article III standing, a plaintiff must show (1) an 'injury in fact,' (2) a sufficient 'causal connection between the injury and the conduct...