IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT _______________
m 01-20610 m 01-21255 _______________
KENNETH FORD, DR.,
Plaintiff-Appellant,
VERSUS
NYLCARE HEALTH PLANS OF THE GULF COAST, INC., ET AL.,
Defendants,
AETNA U.S. HEALTHCARE, INC., A TEXAS CORPORATION; THE METRAHEALTH CARE PLAN OF TEXAS, INC.; THE METRAHEALTH INSURANCE COMPANY; UNITED HEALTHCARE INSURANCE COMPANY, INC.; AETNA U.S. HEALTHCARE, INC., A PENNSYLVANIA CORPORATION,
Defendants-Appellees.
_________________________
Appeals from the United States District Court for the Southern District of Texas _________________________
August 1, 2002 Before SMITH, BENAVIDES, and II. PARKER, Circuit Judges. A. The relevant portion of the Lanham Act JERRY E. SMITH, Circuit Judge: provides for a cause of action as follows:
I. (a) Civil action Kenneth Ford is an orthopedic surgeon who has contracted with various health mainte- (1) Any person who, on or in connection nance organizations (“HMO’s”) as a specialist. with any goods or services, or any In May 1996, he sued the defendant HMO’s, container for goods, uses in commerce claiming multiple causes of action stemming any word, term, name, symbol, or from their allegedly deceptive advertising. All device, or any combination thereof, or of Ford’s claims were dismissed over a period any false designation of origin, false or of several years. misleading description of fact, or false or misleading representation of fact, Ford now appeals two of the district court’s whichSS rulings: its 1999 decision to deny class certifi- cation to a proposed Lanham Act plaintiff (A) is likely to cause confusion, or to class of all certified physicians who have con- cause mistake, or to deceive as to the af- tracted with the defendant HMO’s, and its filiation, connection, or association of 2001 summary judgment dismissing Ford’s in- such person with another person, or as dividual Lanham Act false advertising claim on to the origin, sponsorship, or approval the ground that he lacks prudential standing. of his or her goods, services, or commercial activities by another person, Ford contends that the HMO’s have used or false advertising that claims that their manage- ment techniques improve health care quality (B) in commercial advertising or and that they allow patients and doctors to promotion, misrepresents the nature, make their own treatment decisions. Ford characteristics, qualities, or geographic argues that the defendants’ cost-control mea- origin of his or her or another person’s sures undercut quality and “ration” medical goods, services, or commercial careSSsometimes against the will of doctors activities, and patients. Ford contends that the defen- dants’ cost-control policies reduce the incomes shall be liable in a civil action by any of doctors, including his own. He also claims person who believes that he or she is or that, by attracting new customers to the is likely to be damaged by such act. HMO’s’ health plans, the allegedly deceptive advertising further reduces doctors’ incomes 15 U.S.C. § 1125(a) (1994). The district because it increases the HMO’s’ market power court held that Ford lacks prudential Lanham over the price of medical services. We affirm Act standing under this section. See Procter & the dismissal of Ford’s claims for lack of Gamble Co. v. Amway Corp., 242 F.3d 539, Article III standing. 560-62 (5th Cir.) (outlining test for de- termining prudential Lanham Act standing),
2 cert. denied, 122 S. Ct. 329 (2001). Although Standing “is an essential and unchanging Article III constitutional standing was not part of the case-or-controversy requirement of raised by the parties or considered by the Article III.” Lujan v. Defenders of Wildlife, district court, we mustSSwhere neces- 504 U.S. 555, 560 (1992). sarySSraise it sua sponte. SEC v. Forex Asset Mgmt., LLC, 242 F.3d 325, 328 (5th Cir. [The irreducible constitutional minimum 2001).1 of standing contains three elements. First, the plaintiff must have suffered an ‘injury in fact’SSan invasion of a legally 1 protected interest which is (a) concrete In his special concurrence, Judge Benavides contends that this case should be decided on the and particularized . . . and (b) actual or basis of Lanham Act prudential standing rather imminent not conjectural or hypothetical than Article III constitutional standing, because the . . . Second, there must be a causal con- parties did not have an opportunity to brief the nection between the injury and the latter. This issue ignores the fundamental point conduct complained of . . . Third, it that wherever possible, Article III standing must be must be likely, as opposed to merely addressed before all other issues “because it determines the court’s fundamental power even to 1 hear the suit.” Rivera, 283 F.3d at 319. In the ab- (...continued) sence of Ar ticle III standing, we have no right to causation that is central to our holding on Article opine on issues of prudential standing. III standing was extensively contested as part of the ongoing dispute over Lanham Act prudential The Third Circuit has explicitly recognized that standing. Lanham Act prudential standing cannot be In any inquiry into Lanham Act prudential addressed so long as Article III standing remains in standing, the court must weigh “(1) the nature of doubt, because “[c]onstitutional standing is a the plaintiff’s alleged injury: Is the injury of a type threshold issue that we should address before that Congress sought to redress in providing a examining issues of prudential standing.” Joint private remedy for violations of the [Lanham Stock Soc’y v. UDV N. Am., Inc., 266 F.3d 164, Act]?; (2) the directness or indirectness of the 175 (3d Cir. 2001). Although the special asserted injury; (3) the proximity or remoteness of concurrence attempts to distinguish Joint Stock on the party to the alleged injurious conduct; (4) the its facts, the Third Circuit did not rest its hold- speculativeness of the damages claim; and (5) the ingSSthat Article III standing should be addressed risk of duplicative damages or complexity in firstSSon the specifics of the case before it, but apportioning damages.” Procter & Gamble, 242 instead adopted this principle as a broad general F.3d at 562. Causation is undeniably relevant to at rule. We see no reason to create a circuit split on least the second, third, and fourth prongs of this this issue. test, and defendants have consistently argued that Ford lacked prudential standing in part because he Even if we did have the authority to forego failed to provide adequate evidence of causation. consideration of Article III standing, there would Despite this repeated challenge, Ford has not be no need to exercise it. As the special provided evidence demonstrating that he has suf- concurrence recognizes, “to the extent that identical fered even a small loss as a result of defendants’ issues have already been raised in the litigation, the advertising. He therefore has failed to meet his threat of procedural prejudice is greatly burden to “set forth by affidavit or other evidence diminished.” In this litigation, the issue of specific facts” validating his right to standing. (continued...) Lujan, 504 U.S. at 561 (citations omitted).
3 speculative, that the injury will be B. redressed by a favorable decision. Ford claims that his injury consists of a re- duction in his income from his medical practice Id. at 560-61 (quotations omitted). caused by the defendants’ restrictive cost- containment policies, which allegedly have the “The party invoking federal jurisdic- effect of reducing payments to contract spe- tion”SSFordSSbears the burden of proof in es- cialists. He contends that the HMO’s have tablishing all three elements. Id. at 561. been able to lower their payments to contract “Failure to establish any one [of them] physicians as a result of increased market pow- deprives the federal courts of jurisdiction to er gained by attracting patients through hear the suit.” Rivera v. Wyeth-Ayerst Labs., deceptive advertising. This argument fails to 283 F.3d 315, 319 (5th Cir. 2002). At the satisfy the causation prong of standing. summary judgment stage, “the plaintiff can no longer rest on . . . mere allegations, but must To meet the causation requirement, Ford set forth by affidavit or other evidence specific would have to present evidence affirmatively facts” validating his right to standing. Lujan, proving that the reduction in his income was a 504 U.S. at 561 (citations omitted). The ques- consequence of the HMO’s’ restrictive policies tion of Article III standing must be decided and that those policies in turn were established prior to the prudential standing and class cer- or at least made more onerous as a result of tification issues raised in this appeal, “because increased market power created by the it determines the court's fundamental power acquisition of new customers through the de- even to hear the suit.”2 Rivera, 283 F.3d at fendants’ allegedly deceptive ads.4 Nothing in 319.3 Ford cannot prove the causation the record establishes the validity of either of necessary to establish Article III standing. the two links in this causal chain, and Ford must provide evidence of both if he is to es- tablish the causation necessary for Article III 2 As we noted in Rivera, “there is a limited ex- standing. Otherwise, he cannot show that his ception for suits in which the class certification is- injury is “fairly traceable to the challenged ac- sues are “‘logically antecedent to the existence of tion of the defendant.” Lujan, 555 U.S. at 560 any Article III issues.’” Rivera, 283 F.3d at 319 (quotations and ellipses omitted). n.6 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 612 (1997)); see also Ortiz v. There is no evidence in the record to show Fibreboard Corp., 527 U.S. 815, 831 (1999) that Ford’s income has in fact declined any (same). This exception does not apply here, more than would be expected as a result of however, for the same reason it was inapplicable in events completely unrelated to the HMO’s’ Rivera: “In the instant case, in contrast to Ortiz activities. When asked by opposing counsel and Amchem, the standing question would exist whether [the plaintiff] filed h[is] claim alone or as part of a class; class certification did not create the 4 jurisdictional issue.” Rivera, 283 F.3d at 319 n.6. See Joint Stock Soc’y, 266 F.3d at 178 (holding that Article III standing for a Lanham Act 3 Cf. Joint Stock Soc’y, 266 F.3d at 175 false advertising claim is lacking where the (holding that Article III “constitutional standing” plaintiff’s injuries cannot be traced to the must be addressed before considering Lanham Act defendants’ challenged advertisements “but are “prudential standing”). rather the result of an independent cause”).
4 whether he “could identify a single patient you lost as a result of the defendants’ ads,” Ford admitted that he could not. There is also no evidence demonstrating that Ford ever re- ceived a lower payment for his services than he would have in the absence of the advertisements.
In its ruling denying Ford’s petition for class certification, the district court noted that, during the 1992-96 period, Ford’s income did indeed decline, but the income of all of his partners went up. Ford v. NYLCare Health Plans, Inc., 190 F.R.D. 422, 426 (S.D. Tex. 1999). The district court also pointed out that some or all of the decrease in Ford’s income might have been a result of the fact that “he is not employed full time as a physician . . . and spends a significant period of time filming a fishing show for a sports network.” Id. Ford bears the burden of proving otherwise, and he has not met it.5
AFFIRMED.
5 See Johnson v. Bd. of Regents of the Univ. of Ga., 263 F.3d 1234, 1268 (11th Cir. 2001) (holding that “a plaintiff cannot serve as a class representative if she lacks standing to advance the class’s claim”).
5 FORTUNATO P. BENAVIDES, Circuit Judge, Specially Concurring:
Although I would reach the same result as the majority, I write separately because I would base
my analysis not on Article III standing, but on prudential standing under the Lanham Act. As the
majority notes, Article III has never been raised as an issue in this case. It was never briefed by the
parties, questioned by the district court , or even mentioned at oral argument. The parties did not
have the benefit of a hearing to present evidence on the issue. Nevertheless, despite the complete
absence of any suggestion that Article III standing might be deficient, the majority requires Dr. Ford
to have adduced evidence of causation between the alleged false advertising and his asserted
economic injury. Concluding that he has not met this burden, it holds that Article III standing is
lacking.
Of course, the jurisdictional issue of standing may be raised sua sponte despite the parties’ failure
to raise it. Henderson v. Stalder, 287 F.3d 374, 379 n.5 (5th Cir. 2002). The burden of establishing
standing, which rests on the party invoking federal court jurisdiction, varies depending upon the stage
at which standing becomes an issue. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). At
the pleading stage, we look only to the sufficiency of the allegations. Id. “In response to a summary
judgment motion, however, t he plaintiff can no longer rest on such ‘mere allegations,’” but must
adduce evidence in support of the elements of standing. Id. (quoting Fed. R. Civ. P. 56(e)). At the
final stage of the litigation, standing must be supported adequately by the evidence offered at trial.
Id.
Citing Lujan for support, the majority assumes that the summary judgment standard should govern
even when the issue is raised sua sponte by an appellate court without notice to the parties. Lujan,
however, does not go so far. It holds only that the summary judgment standard is appropriate in
6 reviewing a party’s “response to a summary judgment motion.” Id. (emphasis added). This
distinction is significant because it implicates concerns of notice and fairness. If the defendant
challenges standing in a motion for summary judgment, then the plaintiff is able to direct the court
to the evidence that supports federal jurisdiction. Similarly, if the court provides an opportunity for
briefing after the issue is raised sua sponte, there is no risk of unfairness to the plaintiff. By contrast,
if the appellate court raises the issue sua sponte without notice to the parties, the plaintiff is deprived
of a meaningful opportunity to address the court’s concerns by identifying record evidence to satisfy
the standing requirements. Cf. St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 435 (5th Cir.
2000) (requiring the district court to provide party with ten days notice and opportunity to respond
before summary judgment is entered sua sponte).
In situations where a party has not been afforded an opportunity to respond to a court’s sua sponte
concerns about standing, it would be unfair to broaden review beyond the sufficiency of the pleadings.
For example, in Church v. City of Huntsville, 30 F.3d 1332, 1336 (11th Cir. 1994), the Eleventh
Circuit confronted the issue of what standard to apply when the litigation had progressed beyond the
stage of a motion to dismiss, but without any challenge to standing in the district court. In that case,
the plaintiffs had obtained a preliminary injunction, but neither the defendants nor the district court
ever questioned the existence of standing. The Eleventh Circuit recognized that although it was
proper for the issue to be raised for the first time on appeal, “as a matter of fairness, the [defendant’s]
failure to question the plaintiffs’ standing in the district court does affect the standard to which we
will hold plaintiffs at this stage of the proceedings.” Id. A plaintiff should be expected, without
prodding from the court or the opposing party, to file a complaint that sufficiently alleges standing
and to prove such facts at trial. Still, the Eleventh Circuit understood that “[i]t might well be unfair,
7 however, to impose a standing burden beyond the sufficiency of the allegations of the pleadings on
a plaintiff seeking a preliminary injunction, unless the defendant puts the plaintiff on notice that
standing is contested.” Id. Accordingly, the court determined that the standing issue should be
judged based on the allegations in the complaint. Id. I see no reason why this same concern about
notice and fairness should not affect the standard of review at the summary judgment stage.
Certainly, in some cases it will make no difference which standard is applied to a sua sponte
challenge to standing. In such cases, the potential for prejudice is de minimis because the party’s
response will be futile. For example, a review of the record by the appellate court might indicate that
there is an independent factor that precludes the plaintiff from ever demonstrating that his injury flows
from the defendant’s wrongful conduct. Such a factor was present in Joint Stock Soc’y v. UDV N.
Am., Inc., 266 F.3d 164 (3d Cir. 2001), which is cited by the majority. In Joint Stock, the Third
Circuit affirmed a district court’s determination that constitutional standing was lacking in a Lanham
Act false advertising case brought by producers of Russian vodka against the American makers of
the “Smirnoff” brand of vodka. Id. at 168. The Russian producers alleged inter alia that the
Americans were misrepresenting the origin and historical pedigree of their Smirnoff vodka, which in
fact was made in the United States and not endorsed by the original Smirnov family. See id. at 177-
78. Holding that there was no evidence of a causal connection between the asserted injury and the
allegedly false ads, the court pointed to the fact that the plaintiffs did not have superior trademark
rights to the Smirnoff brand, without which they could not have marketed their vodka in the United
States under the Smirnoff name. See id. at 178. In light of this “independent cause,” the Russian
producers would be unable to use the Smirnoff name in the United States regardless of whether the
American makers were engaging in false advertising. See id. In cases like Joint Stock, where it will
8 be logically impossible to establish standing, there is no need t o provide the party with an extra
opportunity to identify evidence in support of a fatally flawed theory.
In other cases, prejudice will be minimized by the fact that the party has notice of the need to
adduce evidence in support of Article III even though neither the court nor the defendant makes a
formal motion. For example, in Bischoff v. Osceola County, Fla., 222 F.3d 874, 882 n.8 (11th Cir.
2000), the Eleventh Circuit held that it was proper for the district court to apply a summary judgment
standard on a sua sponte challenge to standing because the plaintiffs were on notice that standing was
an issue, as they raised it themselves in briefs. Similarly, to the extent that identical issues have
already been raised in the litigation, the threat of procedural prejudice is greatly diminished. See
Bridgeway Corp. v. Citibank, 201 F.3d 134, 140 (2d Cir. 2000) (recognizing reduced threat of
procedural prejudice where court’s sua sponte determination is based on issues identical to the raised
by the moving party). In the present case, although defendants had already attacked Dr. Ford’s
prudential standing under the Lanham Act, this issue is not identical to constitutional standing under
Article III.
Applying these principles to the present case, before reaching sua sponte the conclusion that Dr.
Ford has not met his summary judgment burden, I would ask whether a response would be futile.
Notwithstanding the majority’s well-written and thoughtful analysis, I am unconvinced that affording
Dr. Ford an opportunity to respond to our concerns about standing would be an exercise in futility.
There is no dispute that Dr. Ford could survive a challenge to standing based solely on the sufficiency
of his pleadings. His complaint alleges that the defendants have increased their customer base
through deceptively false advertising, have leveraged that increased customer base to obtain lower
fee arrangements for Dr. Ford’s contract services, and have therefore caused him economic injury.
9 Clearly, these allegations satisfy the requirements of Article III. The issue, as the majority notes, is
whether there is evidence to support these links in the causal chain. The majority cites several failings
in the record evidence, but none of them are fatal to Dr. Ford’s theory. It notes that in a deposition,
Dr. Ford was unable to identify a single patient lost as a result of the HMOs’ ads. Although such
evidence would undoubtedly be helpful to his case, it is by no means a necessary element. In Lanham
Act § 43(a) cases, it is often difficult, if not impossible, to point to specific evidence of lost sales. See
Coca-Cola Co. v. Tropicana Products, Inc., 690 F.2d 312, 316 (2d Cir. 1982) (“It is virtually
impossible to prove that so much of one’s sales will be lost or that one’s goodwill will be damaged
as a direct result of a competitor’s advertisement. Too many market variables enter into the
advertising-sales equation.”); Grant Airmass Corp. v. Gaymar Indus., Inc., 645 F.Supp. 1507, 1514
(S.D.N.Y. 1986) (rejecting requirement that plaintiff must identify “a lost customer actually misled
by the advertising literature”). This difficulty in identifying specific lost sales is further exacerbated
by the immense complexity of the market at issue in this case. Decisions about plans and providers
are influenced by a myriad of factors, and the ads are targeted at both the users (employees) and the
purchasers (employers) of the managed care plans. It is not unsurprising, therefore, that Dr. Ford
could not name a single lost patient, and his failure to do so certainly does not mean that standing is
Similarly, the fact that Dr. Ford now spends part of his time hosting a fishing show on a sports
television network does not preclude standing. As the majority notes, this observation was part of
the district court’s analysis of Dr. Ford’s petition for class certification. Specifically, it found Dr.
Ford’s television work relevant to the typicality issue under Fed. R. Civ. P. 23(a)(3), as Dr. Ford’s
economic situation might not be similar to that of the other putative class members. See Ford v.
10 NYLCare Health Plans, Inc., 190 F.R.D. 422, 426 (S.D. Tex. 1999). Typicality aside, however, the
possibility that Dr. Ford’s income has declined due to an increase in the hours he spends fishing does
not mean that he has not also suffered economic injury as a result of the defendants’ false ads. Such
evidence goes not to the existence, but the quantum of injury. All that is required for Dr. Ford to
have standing is “an identifiable trifle” of an injury. Assoc. of Cmty. Orgs. for Reform Now v. Fowler,
178 F.3d 350, 358 (5th Cir. 1999) (citations omitted). His work on the fishing program therefore is
practically irrelevant to the standing issue.
In sum, I think it is premature to apply the summary judgment standard to Dr. Ford’s standing
under Article III. He has not been given an opportunity to identify the evidence in support of
standing, and there has been no convincing argument that such an opportunity would be futile.
Accordingly, I would not decide this case on Article III grounds, but would reach the same result by
holding that Dr. Ford lacks prudential standing under the Lanham Act. Regardless of the oft-repeated
maxim that Article III standing is jurisdictional and must be resolved prior to any analysis of the
remaining issues in the case, “it is entirely appropriate to deny standing on prudential grounds if that
course is easier, or more clearly right, than to rule on constitutional grounds first.” 13A Charles Alan
Wright, et al., Federal Practice and Procedure, § 3531.15 (2d. ed. Supp. 2002); cf. Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 92 (1998) (disapproving of “hypothetical jurisdiction” cases
in which standing is assumed in order to address clear merits issue, but distinguishing “cases in which
a statutory standing question was decided before a question of constitutional standing”). In this case,
prudential standing was briefed by the parties and ruled on by the district court, so nothing prevents
us from holding Dr. Ford to his burden of identifying evidence demonstrating a genuine issue of
material fact on the issue.
11 I would conclude that Dr. Ford has failed to satisfy his summary judgment burden on the issue of
prudential standing under the Lanham Act. In determining whether a plaintiff has prudential Lanham
Act standing, we have recently adopted the test articulated by the Third Circuit in Conte Bros. Auto.,
Inc. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 233-34 (3d Cir. 1998). See Procter & Gamble Co.
v. Amway Corp., 242 F.3d 539, 562-63 (5th Cir 2001) (“P & G”). Under this test, five factors are
relevant to the prudential standing analysis: “(1) the nature of the plaintiff’s alleged injury . . . (2) the
directness or indirectness of the asserted injury; (3) the proximity or remoteness of the party to the
alleged injurious conduct; (4) the speculativeness of the damages claim; and (5) the risk of duplicative
damages or complexity in apportioning damages.” Id. at 563. Although technically distinct, these five
factors can be distilled into an essential inquiry, i.e., whether, in light of the competitive relationship
between the parties, there is a sufficiently direct link between the asserted injury and the alleged false
advertising. Cf. id. at 562 n.51 (citing Restatement (Third) of Unfair Competition § 3 cmt. f (1995)).
As the primary focus of the Lanham Act is on commercial harms that result from anti-competitive
behavior, the first factor looks to the nature of the plaintiff’s alleged injury. See id. at 563 (quoting
Conte Bros.,165 F.3d at 234). Dr. Ford’s asserted injury, while certainly a commercial harm, is
competitive only in the most attenuated sense. He describes his injury as the lost income resulting
from lower contract fees paid by HMOs. He attributes the HMOs’ ability to demand such reductions
to the increased bargaining power provided by a wider customer base, the fruits of the false
advertising. Dr. Ford’s essential complaint, therefore, is that the false ads are pulling customers away
from plans that compensate him better and into HMOs, which secure reduced fee arrangements. The
main competitive effect of the ads, therefore, is felt adversely by other insurance plans, not by Dr.
Ford. He himself is hurt only because the HMOs then exploit their competitive advantage over other
12 plans to press physicians to accept lower compensation arrangements. Because this harm is only
tangentially related to competition, it is not the “type that Congress sought to redress” in passing the
Lanham Act. See Conte, 165 F.3d at 234 (citation omitted).
Turning to the second factor, we have never required a direct competitive relationship between
the plaintiff and the defendant. In fact, the Conte test specifically rejected such a requirement. See
Conte, 165 F.3d at 231-32. Instead, the central issue is whether a plaintiff has “a reasonable interest
to be protected against false advertising.” Id. at 231. Again, the complexity of the relationship
between Dr. Ford and the HMOs cuts against Lanham Act standing. Even though a plaintiff can
suffer a Lanham Act injury through indirect competition, such competition between Dr. Ford and the
HMOs is so tenuous that it borders on the hypothetical. He does not provide health insurance and
the HMOs do not provide direct patient care. In the absence of managed care plans, patients would
come to Dr. Ford though traditional indemnity or fee-for-service insurance coverage. Theoretically,
patients could seek his services without going through an insurance plan, but Dr. Ford has provided
no evidence that such customers represent a significant portion of the market. In the absence of a
group of consumers that would come to him directly but for the HMOs’ deceptive ads, his injury is
too indirect to support Lanham Act standing.
Applying the third factor, which looks to “the proximity of the party to the alleged injurious
conduct,” we have held that the justification for Lanham Act standing is diminished if there is “an
identifiable class of persons whose self-interest would normally motivate them to vindicate the public
interest” by bringing a Lanham Act claim. P & G, 242 F.3d at 563 (citation omitted). As consumers
do not have standing under the Lanham Act, they should be irrelevant to this analysis. Cf. id. at 563-
64 (noting that consumers do not have standing under the Lanham Act and focusing on rights of
13 distributors). Moreover, we need not take into account consumers’ ability to sue for fraud.
Otherwise, as consumers would presumably almost always be able to bring an action for fraud, this
factor would never counsel in favor of standing. In the present case, however, Dr. Ford has presented
no evidence that physicians are the only class of persons motivated to bring a Lanham Act claim.
Certainly, we should exclude from the possible alternatives other HMOs, as the ads in question tout
the benefit s of HMOs in general, not some specific companies over others. Nevertheless, in the
broader health insurance market, HMOs compete with other plans, including fee-for-service or
preferred provider organizations (PPOs). Dr. Ford has provided no evidence that to the extent that
the defendants are making false claims about their HMO plans, purveyors of these other plans would
not be motivated to sue under the Lanham Act.
The fourth factor, the speculative nature of the plaintiff’s damages, is neutral at best for Dr. Ford.
As the district court noted, Dr. Ford dropped his damages claim after class certification was denied,
but reserved it in the event that the district court’s decision was reversed. In his brief on appeal, he
concedes that quantifying any damages would be a complex task. Dr. Ford argues, however, that if
only injunctive relief is at issue, t his factor actually argues in favor of standing. He relies on the
Lanham Act doctrine that a plaintiff’s inability to definitively quantify his damages should not
preclude the granting of injunctive relief, as an injunction against false advertising benefits the public
without causing an undeserved windfall for the plaintiff. See Am. Council of Certified Podiatric
Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 618 (6th Cir. 1999). This
confuses the issue under the test for prudential standing, which “is to determine whether the plaintiff
is ‘a proper party to invoke judicial resolution of the dispute and the exercise of the court’s remedial
powers.’” Conte, 165 F.3d at 225 (emphasis added) (quoting Bender v. Williamsport Area Sch. Dist.,
14 475 U.S. 534, 546 n.8 (1986)). In other words, our focus in resolving Lanham Act standing issues
is not whether the uncertain calculation of damages precludes injunctive relief at all, but whether this
particular plaintiff should be allowed vindicate the public interest. See Joint Stock, 266 F.3d at 184
(holding that plaintiffs may not circumvent the requirements for prudential standing by relying on
forms of relief that benefit the public at large). Accepting Dr. Ford’s argument would essentially
render this factor meaningless in every case where injunctive relief is sought, as any plaintiff would
be able to cast himself as the “vicarious avenger of the general public’s right to be protected against
potentially false advertisements.” Id. (internal quotations omitted).
Perhaps the strongest reason for denying prudential standing is the fifth factor’s concern about “the
risk of duplicative damages or the complexity of apportioning damages.” Id. Dr. Ford is but one of
innumerable physicians who have contracted with the HMOs, and who therefore have probably
lowered fees as a result of the HMOs’ bargaining power. If the HMOs’ ads were determined to be
false, all of these physicians would have damages claims. Moreover, as Dr. Ford concedes, the
calculation of these damages would be extremely complex. Finally, doctors are not even the most
direct victims of any allegedly false ads, which harm rival health plans more than contracting
physicians. In light of the complex and duplicative nature of such damages awards, the fifth factor
militates strongly against prudential standing.
To summarize, Dr. Ford has suffered a commercial harm, but his injury is simply not the
competitive harm that is protected by the Lanham Act. Of the five factors that are relevant to this
analysis, none counsels in favor of prudential standing. Furthermore, there is nothing unfair or
premature about resolving this case on prudential standing grounds and applying the more rigorous
summary judgment standard, as Dr. Ford was fully aware of his burden to adduce evidence in support
15 of each element of prudential standing. Because I cannot say that he had a sufficient opportunity to
address the majority’s concerns about constitutional standing, I respectfully concur in the result only.
16 17