Golo, LLC v. Higher Health Network, LLC

GOLO, LLC, Plaintiff, v. HIGHER HEALTH NETWORK, LLC, and TROY SHANKS, Defendants.

Case No.: 3:18-cv-2434-GPC-MSB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

February 5, 2019

ORDER:

GRANTING DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM

[ECF No. 45]

DENYING DEFENDANTS' SPECIAL MOTION TO STRIKE PURSUANT TO CAL. CODE CIV. PROC. § 425.16

[ECF No. 46]

Before the Court is Defendants' Motion to Dismiss Amended Complaint for Failure to State a Claim and also Defendants' Special Motion to Strike pursuant to Cal. Code Civ. Proc. § 425.16. ECF Nos. 45, 46. Plaintiff GOLO, LLC, sells a weight loss program. GOLO also offers a proprietary supplement to help promote weight loss. Defendants published a review of this supplement, but GOLO alleges that this review was replete with inaccuracies, misleading statements, and blatant falsehoods. Accordingly, GOLO advances claims under federal and state law against Defendants for their allegedly false statements.

Defendants move to dismiss GOLO's claims on the basis that GOLO has failed to state a plausible claim for relief. Defendants also move to strike GOLO's state law trade libel claim under California's anti-strategic lawsuit against public participation ("anti-SLAPP") statute. For the reasons set forth below, the Court finds that GOLO has not sufficiently pleaded its claims. The Court will GRANT Defendants' motion to dismiss. Furthermore, because Defendants have not carried their initial burden of making a prima facie showing that GOLO's claim arises from an act in furtherance of Defendants' right of petition or free speech in connection with a public issue, the Court will DENY Defendants' special motion to strike.

I. BACKGROUND

A. GOLO's Amended Complaint

Plaintiff GOLO, LLC, filed its Amended Complaint against two Defendants: Troy Shanks and Higher Health Network, LLC, d/b/a Supplement Police and/or SupplementPolice.com f/k/a Higher Health Foundation Ltd. ("HHN"). Am. Compl. at 1, ECF No. 18. Shanks is the owner of HHN. Id. ¶ 7.

1. GOLO

GOLO owns and sells a weight loss program named GOLO ("GOLO Program"). Id. ¶ 9. GOLO Program promotes weight loss with: 1) dietary modification; 2) regular exercise; and 3) nutraceutical supplementation. Id. ¶ 12. GOLO Program is offered through GOLO's membership-based website. Id. ¶ 14. This website provides members access to health coaching, member support, and a health library. Id.

As to dietary medication, the GOLO Diet employs a specific, customized meal plan. Id. ¶ 17. GOLO's website provides members the opportunity to purchase GOLO Release, which is GOLO's proprietary supplement. Id. ¶ 14. GOLO Release contains a proprietary blend of ingredients that work in conjunction with the GOLO Diet to helpmanage glucose, insulin, and stress, in order to promote weight loss and minimize muscle loss during the weight loss regimen. Id. ¶ 16.

2. Shanks and HHN

According to the Amended Complaint, "Shanks and HHN compete with GOLO in the diet and weight-loss industry." Id. ¶ 24. Shanks is an entrepreneur and marketer who, either individually or through one of his companies, owns and operates websites and internet-based enterprises. Id. ¶ 25. Shanks specializes in search engine optimization ("SEO"), which optimizes a website's visibility in search engines. Id. ¶ 27. YouTube videos describe Shanks as an "SEO genius" who can generate significant amounts of traffic to internet-based businesses. Id. ¶ 28.

To further his internet-based business interests, Shanks formed a series of companies, including HHN. Id. ¶ 30. The Amended Complaint alleges, on information and belief, that HHN and Shank's other companies are pass-through corporations "used primarily as a vehicle for enriching Shanks personally." Id. ¶ 31. Shanks, either individually or through HHN, has purchased and created dozens of information websites that generate revenue exclusively through advertising sales. Id. ¶¶ 32-33.

3. Supplement Police

SupplementPolice.com is one of the informational websites that Shanks owns and operates through HHN. Id. ¶ 34. Supplement Police claims to be a "product review website" aiming to introduce "honesty and transparency to the world of online reviews" through "detailed reviews of popular products" such as nutritional supplements. Id. ¶ 35. Supplement Police also claims that it provides "intelligent" reviews of such products from real customers, without any bias or favoritism. Id. ¶ 36. Supplement Police alleges that it "doesn't currently accept affiliate income from any company in exchange for favorable reviews - instead, it makes it money exclusively from [Google] AdSense revenue." Id. ¶ 37.

The Amended Complaint alleges that on information and belief, Supplement Police's reviews are "predominantly bogus," not based on any testing or analysisconducted by Supplement Police, biased, and designed solely to benefit Defendants rather than the public. Id. ¶¶ 40-42. The Amended Complaint further alleges on information and belief that Supplement Police provides significant financial benefits to and a competitive advantage for Defendants by promoting and linking to products Defendants are affiliated with, manufacture, and/or sell. Id. ¶ 43.

4. SilaLive

Supplement Police provides a positive review of SilaLive Silica. Id. ¶ 44. Supplement Police asserts that SilaLive is a "health supplement combining organic silica and pure food grade diatomaceous earth designed specifically to health the human body by safely flushing and eliminating harmful toxins and excess waste." Id. ¶ 45. SilaLive can be used to improve overall health, help "detox," or kickstart a diet. Id. Supplement Police gave SilaLive an overall score of 4.6 out of 5 and asserts that it is clearly a product that works for a lot of people. Id. ¶ 46.

In its review, Supplement Police provides multiple links to the SilaLive website, where consumers can purchase the supplement. Id. ¶ 47. Supplement Police readers are not informed that Shanks and HHN are affiliated with, and manufacture, distribute, and/or sell SilaLive, and own and/or operate the SilaLive website. Id. ¶ 48. Rather, Supplement Police actively hides its association with SilaLive, Shanks, and HHN. Id. ¶ 49. The Amended Complaint alleges that Supplement Police's review of SilaLive contains false statements, including that SilaLive is "formulated with the greatest quartz crystals" and that its main ingredient will help fight common health problems "from the inside," giving a healthier more permanent solution that artificial cures cannot promise. Id. ¶ 50.

5. Supplement Police's GOLO Review

In 2016, Supplement Police published on its website a review of GOLO Release titled, "GOLO - Insulin Resistance for Weight Loss?" Id. ¶ 52.

[T]he GOLO Review inaccurately describes how GOLO was created, as well as what GOLO "promises," and falsely states that:

GOLO's Release Supplement should be taken "30 minutes before a meal" in order to "enjoy health benefits while also purportedly normalizing your insulin levels"; and

"Out of all of the ingredients listed [in the Release Supplement], only Salacia bark has been linked to reduced diabetes symptoms . . . Meanwhile, none of the other ingredients in Release have been linked to weight loss or normalized insulin levels."

Id. ¶ 54.

Moreover, "the GOLO Review includes bolded headlines that pose misleading questions which would cause readers to doubt GOLO's effectiveness and/or decide not to purchase GOLO." Id. ¶ 55.

B. Procedural History

1. Pleadings

On June 2, 2017, GOLO filed its Complaint in the Eastern District of Pennsylvania. Compl., ECF No. 1. On January 10, 2018, GOLO filed an Amended Complaint in the Eastern District of Pennsylvania. Am. Compl., ECF No. 18. The Amended Complaint advances three claims against Defendants.

Count I brings a claim for Unfair Competition and False Advertising under 15 U.S.C. § 1125 of the Lanham Act as to GOLO. Id. at 12. GOLO claims that Defendants' publication of false statements regarding GOLO, praising SilaLive and other products Defendants are affiliated with, and directing readers to SilaLive and those other products constitutes unfair competition and/or false advertising. Id. GOLO claims that it has been injured as a result of Defendants' false statements, either by direct diversion of sales from GOLO to SilaLive and Defendants' other affiliated products, the costs to GOLO for corrective advertising to counteract Defendants' misrepresentations, or by a lessening of the goodwill associated with GOLO's goods and services. Id. ¶ 78.

Count II brings an Unfair Competition and False Advertising Lanham Act claim pursuant to 15 U.S.C. § 1125 as to SilaLive and affiliated products, programs, and plans. This count alleges Defendants made false statements about SilaLive and Defendants' other affiliated products. Id. at ¶ 82. GOLO claims that it has been injured either bydirect diversion of sales or by a lessening of goodwill. Id. ¶ 85. In Count III, GOLO brings a claim for trade libel under "Pennsylvania common law." Id. ¶¶ 88-95. This claim alleges that Defendants made false statements concerning GOLO. Id.

2. Transfer of Venue

On September 26, 2018, the district court entered an order to show cause why the case should not be transferred to the Southern District of California. Order, ECF No. 28. The court noted that GOLO is a Delaware corporation with its principal place of business in Delaware, Shanks resides in California, and HHN is a California corporation with its principal place of business in California. Moreover, the court stated that GOLO had not shown that this action has a greater connection to the Eastern District of Pennslyvania than to any other venue. The court ordered the parties to show cause why the case should not be transferred to the Southern District of California, where Defendants reside.

On October 10, 2018, the district court entered an order transferring this case to the Southern District of California. Order, ECF No. 34. The...