United States District Court, W.D. Virginia, Charlottesville Division
Glen E. Conrad, Senior United States District Judge.
case is presently before the court on the plaintiffs motion
for leave to file a second amended complaint. For the reasons
set forth below, the court will grant the plaintiffs motion.
Rest, Inc. ("Savvy Rest") and Sleeping Organic, LLC
("Sleeping Organic") are competing retailers of
mattresses and other bedding products. On April 13, 2018,
Savvy Rest filed this action against Sleeping Organic,
alleging violations of the Lanham Act and Virginia law. Savvy
Rest asserts, among other claims, that Sleeping Organic
violated the Lanham Act by falsely advertising on its
commercial website that Sleeping Organic's mattresses are
free of chemicals and certified to meet the requirements of
the Global Organic Textile Standard ("GOTS").
7, 2018, Sleeping Organic moved to dismiss the case for lack
of personal jurisdiction and improper venue or, in the
alternative, to transfer the case to the District of South
Carolina. The court took the motion under advisement and
permitted the plaintiff to engage in limited jurisdictional
discovery. Upon the completion of such discovery, the parties
filed supplemental briefs on the issues of personal
jurisdiction and venue.
supplemental brief, Sleeping Organic argued for the first
time that Savvy Rest "lacks standing to bring any false
advertising claims in this case." Def.'s Supp'l
Br. 9, Dkt. No. 25; see also Id. at 1, 5,
7. In particular, Sleeping Organic asserted that "Savvy
Rest does not own the GOTS trademark nor have any
organizational interest that would provide standing for Savvy
Rest to assert a claim for false advertising from alleged
misuse of the GOTS trademark or of misstatements regarding
the organic makeup of Sleeping Organic's products."
Id. at 5. The court permitted the parties to file
additional briefing on this and other issues. The court has
since denied the motion to dismiss or transfer.
interim, Savvy Rest requested leave to amend its complaint on
two occasions. In its proposed second amended complaint,
Savvy Rest includes additional allegations relevant to the
issue of whether it can invoke the Lanham Act's cause of
action for false advertising. The request to amend has been
fully briefed and is ripe for review.
the period for amending a complaint as a matter of right has
expired, "a party may amend its pleading only with the
opposing party's written consent or the court's
leave." Fed.R.Civ.P. 15(a)(2). Rule 15 provides that
leave should be freely given when justice so requires.
Id. "The Supreme Court has declared that
'this mandate is to be heeded.'" Edwards v.
City of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999)
(quoting Foman v. Davis. 371 U.S. 178, 182 (1962)).
"The law is well settled 'that leave to amend a
pleading should be denied only when the amendment
would be prejudicial to the opposing party, there has been
bad faith on the part of the moving party, or the amendment
would be futile.'" Id. (emphasis in
original) (quoting Johnson v. Oroweat Foods Co.. 785
F.2d 503, 509 (4th Cir. 1986)).
review of the record and applicable caselaw, the court
concludes that leave to amend must be granted in this case.
There is simply no basis for the court to believe that the
proposed amendments would be prejudicial or that the
plaintiff has acted in bad faith. Additionally, for the
following reasons, the court finds the defendant's
standing arguments unpersuasive. Accordingly, the proposed
amendments would not be futile. See Save Our Sound OBX,
Inc. v. N.C. Dep't of Transp.. 914 F.3d 213, 228
(4th Cir. 2019) ("A proposed amendment is ... futile if
the claim it presents would not survive a motion to
43(a)(1)(B) of the Lanham Act creates a cause of action for
false advertising. Lexmark Int'l, Inc. v. Static
Control Components. Inc.. 572 U.S. 118, 122 (2014). This
provision forbids the use of 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
geographical origin of his or her or another person's
goods, services, or commercial activities." 15 U.S.C.
§ 1125(a)(1)(B). "The statute authorizes suit by
'any person who believes that he or she is likely to be
damaged' by a defendant's false advertising."
Lexmark. 572 U.S. at 129 (quoting 15 U.S.C. §
plaintiff seeking to bring suit under a federal statute must
show not only that it has constitutional standing under
Article III, but that it has a cause of action under the
statute. Id. at 125, 128. To satisfy Article
Ill's "minimum requirements," the
"plaintiff must have suffered or be imminently
threatened with a concrete and particularized 'injury in
fact' that is fairly traceable to the challenged action
of the defendant and likely to be redressed by a favorable
judicial decision." Id., at 125, 129 (citing Luian
v. Defenders of Wildlife. 504 U.S. 555, 560 (1992)). In
this case, the original and proposed amended complaints
allege that Savvy Rest suffered a loss of sales and goodwill
as a result of Sleeping Organic's actions. Such
allegations "give it standing under Article III to press
its false-advertising claim." Id. at 125
(finding "allegations of lost sales and damage to [the
plaintiffs] reputation" sufficient at the pleading
stage); see also Frompovicz v. Niagara Bottling.
LLC. 313 F.Supp.3d 603, 609 (E.D. Pa. 2018)
("Plaintiffs Complaint alleges that Defendants'
marketing and sale of their deceptively marketed spring water
is damaging to the reputation and goodwill of Plaintiff, and
that Defendants' actions hindered his sales. Thus,
Plaintiff has sufficiently alleged a legally protected
interest, and, thus, an injury-in-fact sufficient to confer
standing.") (internal quotation marks omitted).
court likewise concludes that Savvy Rest "falls within
the class of plaintiffs whom Congress has authorized to sue
under § 1125(a)." Lexmark, 572 U.S. at
128. "To invoke the Lanham Act's cause of action for
false advertising, a plaintiff must plead (and ultimately
prove)" (1) "an injury to a commercial interest in
sales or business reputation" (2) that was
"proximately caused by the defendant's
representations." Id. at 140. With respect to
the first element, Savvy Rest claims that the defendant has
misrepresented the nature, characteristics, and qualities of
the defendant's mattresses by falsely claiming that the
mattresses are GOTS-certified and chemical-free. Savvy Rest
alleges that the defendant "can sell its falsely
advertised mattresses for much lower prices" because it
"does not incur expenses which are required to
manufacture and sell... genuine GOTS Certified
Mattresses." 2d Am. Compl. ¶ 72, Dkt. No. 32-3.
Savvy Rest asserts that, as a result of the defendant's
false advertising, Savvy Rest "is losing sales and
profits it would otherwise have gained." Id.
¶ 80. Savvy Rest further alleges that the
defendant's actions have a tendency to make consumers
believe that Savvy Rest overcharges for its own organic
mattresses that are GOTS-certified, and thus that the
defendant's actions have also harmed Savvy Rest's
reputation and goodwill. Id. ¶¶ 78, 113.
The particular injuries alleged by Savvy Rest-- lost sales
and damage to business reputation--"are injuries to
precisely the sorts of commercial interests the Act
protects." Lexmark, 572 U.S. at 137.
Consequently, at this stage of the proceedings, the court
concludes that Savvy Rest's allegations satisfy the first
element. Id; see also Frompovicz v. Niagara Bottling.
LLC, 337 F.Supp.3d 498, 505-06 (E.D. Pa. 2018) (finding
this element met where the plaintiff alleged that its bottled
water sales were depressed as a result of misleading labels
on the defendants' water bottles); Outlaw Lab., LP v.
U.S. 1 Novelties LLC. No. 1:18CV02965, 2018 U.S. Dist.
LEXIS 222223, at *19 (N.D.Ga. Nov. 28, 2018) (holding that
the plaintiffs allegations of economic and reputational harm
were sufficient at the pleading stage to meet this element).
Rest has also sufficiently alleged that its injuries were
proximately caused by Sleeping Organic's purported
misrepresentations. See Lexmark. 572 U.S. at 132-33
(noting that the Court has "construed federal causes of
action in a variety of contexts to incorporate a requirement
of proximate causation" and that such requirement
"generally bars suits for alleged harm that is 'too
remote' from the defendant's unlawful conduct").
Unlike the parties in Lexmark. Savvy Rest and
Sleeping Organic are direct competitors. Thus, this case
presents a "classic Lanham Act false-advertising
claim" in which a competitor induces customers to
purchase its products by making false statements about its
own goods or the competitor's goods. Id. Along
the same lines, the diversion of sales alleged by Savvy Rest
is "the paradigmatic direct injury from false
advertising." Id. Consequently, the court
concludes that Savvy Rest's allegations also satisfy the
proximate cause inquiry. See Steer Mach. Tool & Die
Corp. v. SS Niles Bottle Stoppers. LLC. 331 F.Supp.3d
429, 434 (M.D. Pa. 2018) (finding this element ...