Champion Laboratories, Inc. v. Central Illinois Manufacturing Co.

157 F. Supp. 3d 759, 2016 U.S. Dist. LEXIS 4641, 2016 WL 164364
CourtDistrict Court, N.D. Illinois
DecidedJanuary 14, 2016
DocketCase No. 14 C 9754
StatusPublished
Cited by11 cases

This text of 157 F. Supp. 3d 759 (Champion Laboratories, Inc. v. Central Illinois Manufacturing Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Champion Laboratories, Inc. v. Central Illinois Manufacturing Co., 157 F. Supp. 3d 759, 2016 U.S. Dist. LEXIS 4641, 2016 WL 164364 (N.D. Ill. 2016).

Opinion

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

This is a false advertising dispute under the Lanham Act and the Illinois Deceptive [761]*761Trade Practices Act. Plaintiff and Counterclaim-Defendant Champion Laboratories, Inc. (“Champion Laboratories”) and Defendant and Counterclaim-Plaintiff Central Illinois Manufacturing Company (“CIM-CO”) are the leading manufacturers and suppliers of fuel dispensing filters in the United States. This Court previously denied CIMCO’s motion to dismiss. [37] Then CIMCO, in the same pleading [42], answered the Complaint, raised 11 affirmative defenses and brought a Counterclaim against Champion Laboratories. In its Counterclaim, CIMCO alleges that in certain advertisements Champion Laboratories falsely touted the benefits of its filters or made false claims about CIM-CO’s filters.

Champion Laboratories now moves to partially dismiss [47] CIMCO’s Counterclaim under Federal Rule of Civil Procedure 12(b)(6) and also moves to strike [47] CIMCO’s affirmative defenses under Rule 12(f). Both motions are granted in part and denied in part.

I. Legal Standard

The legal standard for a motion to dismiss a counterclaim is the same as for a motion to dismiss a: complaint. Cozzi Iron & Metal Inc. v. U.S. Office Equipment, Inc., 250 F.3d 570, 574 (7th Cir.2001). Under Rule 12(b)(6),. this -Court must construe the Counterclaim in the light, most favorable to the pleading party (here, CIMCO), accept as ..true all. well-pleaded facts, and draw reasonable inferences in their favor. Yeftich v. Navistar, Inc., 722 F.3d 911, 915 (7th Cir.2013); Long v. Shorebank Development Corp., 182 F.3d 548, 554 (7th Cir.1999). Statements of law, however, need not be accepted as true. Yeftich, 722 F.3d at 915. Rule 12(b)(6) limits this Court’s consideration to “allegations set forth in the complaint itself, documents that are attached to the complaint, documents that are central to the complaint and are referred to in it, and information that is properly subject to judicial notice.” Williamson v. Curran, 714 F.3d 432, 436 (7th Cir.2013).

To survive Champion Laboratories’ motion under Rule 12(b)(6), the Counterclaim must “state a claim to relief that is plausible on its face.” Yeftich, 722 F.3d at 915. “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.” Id.

II. Facts

This dispute involves the. purportedly false advertising of fuel dispensing filters. Fuel dispensing filters are incorporated in fuel dispensing equipment, such as gas pumps, and are designed to detect water and remove water particles from fuel .before they are dispensed into a vehicle. Counterclaim ¶¶ 3, 5.

-The parties here are competitors in the fuel dispensing filter market. Counterclaim ¶¶ 9-10. Champion Laboratories markets its filters under the brand name “Petro-Clear,” and CIMCO markets its filters under brand names including “Cim-Tek” and “Bio-Tek.” Counterclaim ¶¶ 3-4.

CIMCO brings Counterclaims-under the Lanham Act (Count I) and the Illinois Deceptive Trade Practices Act (Count II), alleging that in four advertisements, Champion Laboratories falsely touted the benefits of its filters or made false claims about CIMCO’s filters. Champion Laboratories moves to dismiss the claims associated with three of the four advertisements, and for the purposes of this Court’s analysis, these three advertisements will be referred to as “Advertisement 1,” “Advertisement 2” and “Advertisement 3,” as discussed below.

[762]*762III. Analysis

A. Motion to Dismiss

To state a false advertising claim under the Lanham Act, 15 U.S.C. § 1125(a)(1), CIMCO must show that Champion Laboratories: (1) made a false or misleading statement; (2) that, actually deceives or is likely to deceive a substantial segment of the advertisement’s audience; (3) on a subject material to the decision to purchase the goods; (4) touting goods entering interstate commerce; and (5) that results in actual or probable injury to CIMCO. B. Sanfield, Inc. v. Finlay Fine Jewelry Corp., 168 F.3d 967, 971 (7th Cir.1999); LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F.Supp.2d 940, 947-48 (N.D.Ill.2009).

The first element captures both statements that are literally false as a factual matter and statements that convey a false or misleading impression in context. B. Sanfield, 168 F.3d at 971-72; Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 819-20 (7th Cir.1999); Dyson, Inc. v. Bissell Homecare, Inc., 951 F.Supp.2d 1009, 1029, 1031 (N.D.Ill.2013). Because this Court must look at the context of a statement to determine if it is false, the question of whether a statement is false is an issue of fact, rather than law. Mead Johnson & Co. v. Abbott Laboratories, 209 F.3d 1032, 1034 (7th Cir.2000); B. Sanfield, 168 F.3d at 972 n. 3; Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 13 (7th Cir.1992); LG Electronics, 661 F.Supp.2d at 948 (collecting cases).1

Here, in support of its motion to dismiss, Champion Laboratories offers a different argument with respect to each advertisement, Champion Laboratories argues: (1) that Advertisement 1 is mere puffery; (2) that CIMCO’s challenge to Advertisement 2 is time-barred; and (3) that Advertisement 3 does not affect United States commerce, let alone Illinois commerce. This Court analyzes each advertisement in turn and, drawing all inferences in CIMCO’s favor, concludes that it is premature at this stage of the proceedings to dismiss CIMCO’s claims regarding the first two advertisements but not the thud.

1. Advertisement 1: “World’s Most Extensive Dispenser-Filter Research-And-Development Facility”

For an unstated period of time, Champion Laboratories has included the following statement on its homepage (www. petroclear.com): “Only PetroClear filters are rigorously tested in the world’s most extensive dispenser-filter research-and-development facility.” Counterclaim ¶ 14. The line appears as the topic sentence of the second paragraph on the PetroClear homepage, and the next sentence lauds “this doggedness” as a marker of the quality of PetroClear filters. Homepage Screenshot [42-4]. In its Counterclaim, CIMCO alleges that qualifying Champion Laboratories’ research-and-development facility as “the world’s most extensive” is false and misleading.

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157 F. Supp. 3d 759, 2016 U.S. Dist. LEXIS 4641, 2016 WL 164364, Counsel Stack Legal Research, https://law.counselstack.com/opinion/champion-laboratories-inc-v-central-illinois-manufacturing-co-ilnd-2016.