American Board of Internal Medicine v. Salas-Rushford ( 2024 )

United States Court of Appeals
For the First Circuit
No. 21-1571
AMERICAN BOARD OF INTERNAL MEDICINE,
Plaintiff, Appellee,
v.
JAIME A. SALAS RUSHFORD, MD,
Defendant/Third Party Plaintiff, Appellant,
CHRISTINE K. CASSEL; NAOMI P. O'GRADY; PEARSON EDUCATION, INC.;
JOAN M. VON FELDT; LYNN LANGDON; RICHARD DOE; DAVID L. COLEMAN;
RICHARD BARON; ERIC S. HOLMBOE; COMPANIES A,B,C; DOCTORS 1-2800;
JOHN DOE; RICHARD DOE,
Third Party Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Silvia Carreño-Coll, U.S. District Judge]
Before
Barron, Chief Judge,
Lipez and Thompson, Circuit Judges.
Andrew L. Schlafly for appellant.
Paul Lantieri, III, with whom Carlos A. Rodriguez-Vidal,
Goldman Antonetti & Cordova LLC, Hara K. Jacobs, and Ballard Spahr
LLP were on brief, for appellees.
August 29, 2024
LIPEZ, Circuit Judge. The American Board of Internal
Medicine ("ABIM") suspended the certification of appellant Dr.
Jaime Salas Rushford, a Puerto Rico physician, after concluding
that he improperly gave board exam questions to his test prep
instructor. ABIM then sued Salas Rushford for copyright
infringement in federal court in New Jersey. This appeal addresses
only Salas Rushford's counterclaims against ABIM and
ABIM-affiliated individuals (the "ABIM Individuals") alleging a
"sham" process leading to his suspension. The counterclaims were
transferred to Puerto Rico, where the district court granted
appellees' motion for judgment on the pleadings. The court also
denied Salas Rushford leave to amend his pleading. We affirm.
I.
We review an entry of judgment on the pleadings de novo,
"view[ing] the facts contained in the pleadings in the light most
favorable to the nonmovant and draw[ing] all reasonable inferences
in his favor." Zipperer v. Raytheon Co., 493 F.3d 50, 53 (1st
Cir. 2007). We may, however, "augment these facts and inferences
with data points gleaned from documents incorporated by reference
into the complaint." Haley v. City of Bos., 657 F.3d 39, 46 (1st
Cir. 2011). Here, accordingly, we recite the facts as alleged by
Salas Rushford and assume their veracity, gleaning factual content
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from documents Salas Rushford referenced in his complaint that
ABIM subsequently provided in its motion.1
A. Factual Background
1. Salas Rushford's Board Certification
Salas Rushford is a physician specializing in internal
medicine who is licensed to practice in Puerto Rico as well as
several states. After completing his residency, Salas Rushford
sought certification in internal medicine from ABIM. ABIM is a
private nonprofit offering certification in internal medicine and
numerous subspecialties. While board certification is not legally
required to practice medicine, it is a highly valuable credential,
as it is necessary to obtain admission privileges at most hospitals
and is a requirement for employment in many medical practices.
According to ABIM, it grants board certification in internal
medicine to physicians who meet certain requirements, including
completion of an accredited three-year residency and passing the
board exam, which is a ten-hour computer-based exam administered
at testing centers around the United States.2
Salas Rushford was scheduled to take the board exam on
August 20, 2009, at a testing center in Puerto Rico. According to
1 When helpful to provide context, we also refer to ABIM's
original complaint, though we do not assume the truth of its
allegations.
2 ABIM refers to the physicians it has certified as
"diplomates."
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ABIM, August 20 was the sixth day of its ten-day "examination
window" in August 2009. ABIM asserts that its exams are secure
and its exam questions confidential and copyrighted, as advance
access to this material would compromise the exam's integrity.
To prepare for the board exam, Salas Rushford enrolled
in a six-day review course offered by Arora Board Review ("ABR").
Salas Rushford's colleagues and professors highly recommended ABR
to him. The course was presented by a well-regarded physician,
Dr. Rajender K. Arora, had existed for two decades, was accredited
by a body with ties to ABIM, and was hosted by the City University
of New York. Salas Rushford attended the course in May 2009, along
with 350 other participants. Salas Rushford also participated in
several study groups, some of which included former ABR course
participants, and members of these groups exchanged study
material, including simulated exam questions, obtained from
multiple sources. Salas Rushford also remained in contact with
Arora, who welcomed students to discuss issues with him at any
time ahead of the exam.
According to ABIM, and unbeknownst to Salas Rushford,
ABIM had begun to investigate ABR after developing suspicions that
ABR was illicitly collecting and disseminating confidential,
copyrighted board exam questions after ABIM discovered actual exam
content on ABR's website. Salas Rushford alleges that ABIM sent
a "spy" to attend the ABR course he attended but never warned him
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or other attendees about its suspicions or took action to remove
potentially compromised questions from the exam. Ultimately, ABIM
sued ABR for copyright infringement, and the parties eventually
settled that lawsuit. ABIM claims that, during the process of
discovery in that litigation, it obtained several emails in which
Salas Rushford allegedly sent numerous exam questions to Arora
prior to sitting for the exam, thereby prompting the copyright
infringement claim against Salas Rushford.3
Salas Rushford took the board exam on August 20, 2009,
and passed. He practiced as a board-certified physician for
several years and was well-regarded among colleagues, patients,
and his community.
2. Suspension of Salas Rushford's Certification
On May 8, 2012, almost three years after taking the board
exam, Salas Rushford received a letter from Lynn Langdon, ABIM's
chief operating officer.4 The letter informed Salas Rushford that
3 ABIM alleges that Salas Rushford obtained some of these
questions from a colleague who had taken the exam earlier in the
examination window and that Salas Rushford also forwarded a
collection of several years' worth of material from past exams to
Arora. It also alleges that, in return, Arora sent Salas Rushford
questions obtained from other ABR students.
4 Salas Rushford incorporated this letter into his complaint
by reference, and ABIM attached the letter to its motion for
judgment on the pleadings. Thus, we recount the letter's content
to provide context for the dispute and "augment" the facts as
appropriate. Haley, 657 F.3d at 46. We do not, however, assume
the truth of factual allegations made in the letter. See
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during an investigation of ABR and its students, ABIM uncovered
evidence that Salas Rushford had "collected and compiled hundreds
of ABIM examination questions from multiple sources" and sent them
to ABR using multiple email addresses, including a "disguised email
address" under a "pseudonym," "Jimmy R."
The letter stated that ABIM intended to revoke Salas
Rushford's board certification. It cited as authority to do so
provisions within ABIM's "Policies and Procedures for
Certification" (the "Policies & Procedures"), which candidates
agree to follow when registering for the exam.5 The letter advised
Salas Rushford that he could contest his revocation through a
three-stage appeals process, during which the revocation would not
be considered final. Neither the existence nor the details of
this appeals process are specified in the Policies & Procedures.
Along with its notification to Salas Rushford, ABIM
updated its website to reflect Salas Rushford's certification
status as "Revocation Recommended." The website did not provide
Cebollero-Bertran v. P.R. Aqueduct & Sewer Auth., 4 F.4th 63, 73
(1st Cir. 2021).
5 According to Salas Rushford, the letter's reference to the
Policies & Procedures is spurious because the letter attached the
August 2009 Policies & Procedures, whereas Salas Rushford's
contract was governed by the October 2008 version of the document
in effect when he registered for the exam (the "October 2008
Policies & Procedures"). As we discuss, our resolution of this
dispute turns on a particular provision of ABIM's Policies &
Procedures that Salas Rushford does not dispute is contained within
the October 2008 document.
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the context for this recommendation, and ABIM refused to alter the
representation of Salas Rushford's certification status after he
denied wrongdoing.
Salas Rushford sought an appeal through ABIM's internal
process. He describes the process as a more than two-year-long
"tour de force in bad faith dealing and reputational damages,"
perpetrated by ABIM and the ABIM Individuals. During this
"improvised" process, ABIM refused to provide a copy of the October
2008 Policies & Procedures. Moreover, at his final appeals
hearing, ABIM "failed to cite a specific Rule, Policy or
Resolution" that he had violated. Nor did ABIM or the appeals
panel respond to his "request to specifically address the charges"
or "provide the applicable Policies and Procedures." ABIM also
failed "to provide the evidence to substantiate the allegations"
against him, which the panel instead simply "deemed credible and
proven." Lastly, ABIM and the panel refused to make available to
Salas Rushford the actual examination questions ABIM believed he
illicitly disseminated, thereby denying him an opportunity to
mount the defense that the questions he shared were not actually
confidential exam content.
According to a letter sent on behalf of ABIM, Salas
Rushford presented several defenses through counsel before and
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during his final appeals hearing.6 First, he made a contract-based
argument that the October 2008 Policies & Procedures did not
prohibit the conduct of which he was accused. Second, he argued
that he did not try to conceal his identity, as he regularly used
the email through which he sent the exam questions and uses "Jimmy
R." as a nickname.7 He also criticized the appeals process and
presented evidence of his good character and community standing.
However, he chose not to testify.
Finding his arguments "unpersuasive," the panel
concluded that "[t]he evidence of record -- which Dr. Salas
Rushford refused to address with the Panel -- demonstrates that
Dr. Salas Rushford failed to maintain satisfactory ethical and
professional behavior, acted in a manner that adversely affected
his professional integrity, and subverted the certification
process." The panel also "express[ed] its disappointment that Dr.
Salas Rushford chose not to answer its questions about his conduct
and the evidence, and refused to confront the core issues presented
by the evidence." The panel modified ABIM's recommended discipline
6Salas Rushford incorporated by reference in his pleading a
letter from the appeals panel describing this hearing, which the
appellees attached to their motion. Once again, we draw upon this
letter for context but do not assume the truth of factual
allegations contained within the letter.
7ABIM also accused Salas Rushford of violating a pledge of
honesty during the exam, which Salas Rushford denied signing. The
appeals panel, however, did not rely on the purported violation of
the pledge in resolving his case.
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to a seven-year suspension, retroactively beginning on December 7,
2012.
Following the panel's determination, ABIM updated its
website to display Salas Rushford's certification status as "Not
Certified." Immediately below, the website displayed the words
"INITIAL CERTIFICATION Internal Medicine: 2009."
Salas Rushford alleges that appellees' actions caused
him "professional and emotional harm," as well as loss of income.
B. Procedural Background
ABIM filed its original complaint against Salas Rushford
in October 2014 in the United States District Court for the
District of New Jersey.8 The complaint asserts violations of the
federal Copyright Act stemming from Salas Rushford's alleged
efforts to disseminate copyrighted exam questions.9
Salas Rushford filed a counterclaim and third-party
complaint (the "CTPC") against ABIM and the seven ABIM Individuals
who are officers of ABIM and members of the appeals panel that
finalized his suspension. The CTPC asserts three counts relevant
8 ABIM initially filed in federal court in New Jersey because
ABR and Arora are located in New Jersey, and thus Salas Rushford
allegedly transmitted copyrighted material into that state.
9The district court dismissed ABIM's complaint, but the Third
Circuit reversed that determination. See Am. Bd. of Internal Med.
v. Rushford, No. 14-cv-06428, 2017 WL 1024267 (D.N.J. Mar. 16,
2017) rev'd, 841 F. App'x 440 (3d Cir. 2020). The matter remains
pending. See Am. Bd. of Internal Med. v. Rushford, No. 14-cv-
06428 (D.N.J).
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to this appeal: a breach of contract claim against ABIM, a "general
torts" claim against the ABIM Individuals, and a claim of
"commercial disparagement" under the Lanham Act, 15 U.S.C. §§ 1051et seq., against six of the individuals.10
After the District of New Jersey transferred the CTPC to
the District of Puerto Rico, appellees moved for judgment on the
pleadings under Fed. R. Civ. P. 12(c). In his opposition, Salas
Rushford attached and made extensive reference to several
documents that were the fruits of discovery between the parties,
including depositions and expert reports. Salas Rushford's
approach prompted the district court, at the hearing on the motion,
to ask appellees if they wished to convert their motion to one for
summary judgment. Because appellees replied that they wished to
proceed under the judgment-on-the-pleadings standard, the court
did not consider the discovery-related documents Salas Rushford
had referenced. Therefore, they are not part of the record before
us on appeal.
10The CTPC included three other counts: (1) a claim under the
Copyright Act against numerous doctors who authored ABIM's exam
questions and the testing center that proctored the exam, which
was dismissed without prejudice and is not at issue in this appeal;
(2) a contract claim against the testing center, which Salas
Rushford has abandoned; and (3) a second general torts claim
concerning the publication of statements about his certification
status on ABIM's website, which the district court construed as a
defamation claim. Salas Rushford's only argument related to this
defamation claim appears in a two-sentence footnote in his reply
brief, and, accordingly, we deem the claim waived. See Hamdallah
v. CPC Carolina PR, LLC, 91 F.4th 1, 21 n.25 (1st Cir. 2024).
- 11 -
The district court resolved appellees' Rule 12(c) motion
in two phases. In its first opinion and order, the court dismissed
Salas Rushford's Lanham Act claim and the now-waived defamation
claim. See Am. Bd. of Internal Med. v. Salas Rushford ("Salas
Rushford I"), No. 19-1943, 2021 WL 214268 (D.P.R. Jan. 20, 2021).
The court held in abeyance the breach of contract claim and
remaining tort claim because the contract governing the parties'
relationship was not contained in either party's pleadings.
Appellees subsequently produced five documents, including the
October 2008 Policies & Procedures. After a dispute over that
document's authenticity,11 the district court accepted it as the
true document governing the parties' relationship.
The district court dismissed Salas Rushford's remaining
claims in a second opinion and order. See Am. Bd. of Internal
Med. v. Salas Rushford ("Salas Rushford II"), No. 19-1943, 2021 WL
2892837 (D.P.R. July 9, 2021). The court concluded that Salas
Rushford did not adequately allege breach of an express contractual
obligation by ABIM. The court further held that Salas Rushford
failed to state a claim for breach of the implied covenant of good
faith and fair dealing, reasoning that his allegation that ABIM's
11 Salas Rushford disputed the authenticity of the October
2008 Policies & Procedures because it made two references to "July
2008." Appellees authenticated the document, explaining via
affidavit that these stray references had not been updated from
the document's previous version.
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appeals process was a sham was belied by the record. The court
emphasized, in particular, that Salas Rushford had "refused to
address the allegations against him head-on." Id. at *7. Finally,
the court dismissed Salas Rushford's tort claim against the ABIM
Individuals, finding that Salas Rushford had identified no duty
that they breached.
The court dismissed all of Salas Rushford's claims with
prejudice, denying his request for leave to amend the CTPC.
II.
On appeal, Salas Rushford argues that the district court
erred in dismissing his contract claim against ABIM, his tort claim
against the ABIM Individuals, and the Lanham Act claim against six
of the ABIM Individuals. He also challenges the district court's
denial of his request for leave to amend.
A. Contract Claim
Under New Jersey law, the "essential elements for [a]
breach of contract claim [are] 'a valid contract, defective
performance by the defendant, and resulting damages.'" Globe Motor
Co. v. Igdalev, 139 A.3d 57, 64 (N.J. 2016) (quoting Coyle v.
Englander's, 488 A.2d 1083, 1088 (N.J. Super. Ct. App. Div.
1985)).12 The only element in dispute is ABIM's allegedly deficient
12 The district court determined that the law of New Jersey,
rather than Puerto Rico, governs Salas Rushford's breach of
contract claim. On appeal, the parties do not meaningfully dispute
the applicability of New Jersey law. Indeed, in his opening brief,
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performance of a contractual duty. Though Salas Rushford's precise
theory is not entirely clear, the CTPC alleges two discernable
contractual duties that ABIM may have breached.13 First, ABIM had
an ongoing contractual duty to maintain Salas Rushford's
board-certified status according to the terms of the Policies &
Procedures. Second, ABIM had an implied duty of good faith and
fair dealing. We address these theories in turn.
1. ABIM's Duty to Maintain Salas Rushford's
Certification
We limit our assessment of Salas Rushford's contract
claim to the section of the October 2008 Policies & Procedures
Salas Rushford does not cite any cases applying Puerto Rico
contract law at all (nor does he assert that Puerto Rico law
applies). To the contrary, both parties appear to agree that the
outcome would be the same under either New Jersey or Puerto Rico
law. While Salas Rushford does cite one case applying Puerto Rico
contract law in his reply brief and half-heartedly suggests, for
the first time, that Puerto Rico law should apply, we have been
clear that "[s]uch an untimely and incomplete presentation of"
choice of law issues constitutes waiver. Butler v. Deutsche Bank
Tr. Co. Ams., 748 F.3d 28, 37 (1st Cir. 2014). We will therefore
follow the lead of the district court and the parties, in their
initial briefing, in applying New Jersey law. See, e.g., Lluberes
v. Uncommon Prods., LLC, 663 F.3d 6, 23 (1st Cir. 2011) ("When the
parties agree on the substantive law that should govern, 'we may
hold the parties to their plausible choice of law, whether or not
that choice is correct.'" (quoting Perry v. Blum, 629 F.3d 1, 8
(1st Cir. 2010))); New Ponce Shopping Ctr., S.E. v. Integrand
Assurance Co., 86 F.3d 265, 267 (1st Cir. 1996) ("Generally, where
the parties ignore choice of law issues on appeal, we indulge their
assumption that a particular jurisdiction's law applies.").
13 In the district court, ABIM disputed that it had any
contractual obligation to Salas Rushford at all. The district
court disagreed, and ABIM has not renewed that argument on appeal.
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that formed the primary basis of the district court's decision.14
This provision states:
ABIM may, at its discretion, revoke or
rescind certification if the diplomate was not
qualified to receive the certificate at the
time it was issued, even if the certificate
was issued as a result of a mistake on the
part of ABIM. It may also revoke the
certificate if the diplomate fails to maintain
moral, ethical, or professional behavior
satisfactory to ABIM, or engages in misconduct
that adversely affects professional
competence or integrity.
The district court concluded that, even under "the most
benevolent reading possible of [the] CTPC," Salas Rushford's
contract claim failed because the Policies & Procedures "vested
ABIM with the ability to suspend or revoke his board certification
if he did not comply with certain standards and requirements as
14 As noted, though Salas Rushford disputed the authenticity
of the October 2008 Policies & Procedures document supplied by
ABIM, the district court accepted the document as authentic based
on an affidavit supplied by ABIM. It is not clear that a district
court may resolve a dispute over a contract's authenticity in this
fashion, without converting the motion into one for summary
judgment, as we have said that a court may consider
"documents -- the authenticity of which is not challenged -- that
are central to the plaintiff's claim or sufficiently referred to
in the complaint." Carrero-Ojeda v. Autoridad de Energía
Eléctrica, 755 F.3d 711, 717 (1st Cir. 2014) (emphasis added).
Salas Rushford, however, has not developed any argument on appeal
disputing that the revocation provision is included within the
October 2008 Policies & Procedures, and, indeed, his arguments
assume that it is. We thus deem any challenge to the district
court's reliance on this provision to resolve the contract dispute
waived. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990) ("[I]ssues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are
deemed waived.").
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set forth therein," including that he "maintain moral, ethical,
[and] professional" conduct. Salas Rushford II, 2021 WL 2892837,
at *5. Then, observing that ABIM had determined that "Salas
Rushford failed to maintain satisfactory ethical and professional
behavior," the court reasoned that "in order for a breach of
contract to materialize, Dr. Salas-Rushford was tasked with
pleading that he in fact did not contravene [these] postulates,
but that, even then, ABIM move[d] forward with the suspension of
his board certification." Id. Finding Salas Rushford to have
made no such allegation, the court dismissed his contract claim.
Salas Rushford argues on appeal that the CTPC does
contain such allegations. We agree. It would seem reasonable to
infer from the CTPC's strenuous disagreement with ABIM's
revocation decision that he has alleged that he did nothing wrong.
Indeed, the CTPC expressly alleges at paragraph 49, in response to
the allegations in ABIM's first disciplinary letter accusing him
of improper conduct, that those allegations were false.
ABIM does not pursue affirmance solely by defending the
district court's rationale, however. See United States v. George,
886 F.3d 31, 39 (1st Cir. 2018) ("We are at liberty to affirm a
district court's judgment on any ground made manifest by the
record, whether or not that particular ground was raised below.").
In its appellate brief, ABIM advances an interpretation of the
contract that reserved to ABIM broad discretion to revoke a
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diplomate's certification according to its subjective judgment of
a diplomate's conduct. Indeed, as ABIM puts it, "[r]egardless of
whether [Salas Rushford] agrees that he violated ABIM's policies,
the pleadings and other documents appropriately considered at this
stage would render implausible any allegation that ABIM breached
an obligation to him when it exercised the discretion afforded it
by the parties' contract to suspend his certification when it
concluded, after a robust process, that he had violated its
policies."
Despite ABIM's argument for affirming on an alternative
ground, Salas Rushford develops no argument in his reply brief
that the contract does not afford ABIM this level of discretion,
as a matter of plain text or New Jersey law. Salas Rushford simply
shrugs off ABIM's "one-sided interpretation of a document that it
alone drafted," without developing a contrary interpretation. We
have recognized that such a failure to address an appellee's
argument for an alternative ground of affirmance constitutes
waiver. See Furtado v. Oberg, 949 F.3d 56, 59 (1st Cir. 2020).
After all, as we have very often repeated, "[i]t is not enough
merely to mention a possible argument in the most skeletal way,
leaving the court to do counsel's work, create the ossature for
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the argument, and put flesh on its bones." United States v.
Zannino, 895 F.2d 1, 17 (1st Cir. 1990).15
Nonetheless, we choose not to rely on Salas Rushford's
potential waiver, as we find his breach of contract claim to
clearly fail on the merits of the alternative ground ABIM proposes.
First, as a matter of plain text, the provision states that ABIM
is entitled to revoke a diplomate's certification when it finds
that "the diplomate fails to maintain moral, ethical, or
professional behavior satisfactory to ABIM." (Emphasis added).
As we read that language, the revocation provision clearly vests
ABIM with the discretion to judge whether a diplomate has conducted
himself morally, ethically, and professionally, according to
ABIM's own standards. And the revocation provision contains no
Salas Rushford does make one specific argument that does
15
not directly address ABIM's broad discretion argument regarding
the revocation provision. He asserts -- again, without any
citation or further development -- that the requirement that he
"maintain" satisfactory behavior did not apply until after his
certification. For one thing, this argument would have applied
with equal force to the district court's reliance on the revocation
provision, and thus his failure to raise it until his reply brief
constitutes waiver for this reason as well. See Hamdallah, 91
F.4th at 21 n.25. In any event, Salas Rushford alleges that the
Policies & Procedures took effect once he registered for the board
exam (and thus before his alleged misappropriation of exam
material). There is no indication in the revocation provision
that ABIM must overlook immoral, unethical, or unprofessional
conduct committed by a candidate during their candidacy for board
certification but discovered by ABIM after certification, and
Salas Rushford supplies no basis for thinking so.
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language defining those standards of behavior or otherwise
constraining ABIM's exercise of its revocation authority.
Our review of New Jersey law further assures us that
ABIM's interpretation is correct. The revocation provision
expressly conditions ABIM's revocation authority on ABIM's
"satisfact[ion]." Under New Jersey law, such "satisfaction
clauses" are interpreted subjectively whenever "the extent and
quality of performance can[not] be measured by objective tests" or
the language of the contract otherwise compels a subjective
assessment. See Silvestri v. Optus Software, Inc., 814 A.2d 602,
606 (N.J. 2003) (holding that satisfaction clauses in employment
contracts are judged under a subjective standard absent language
to the contrary). Under such a subjective standard, "satisfaction
[is] dependent on the personal, honest evaluation of the party to
be satisfied." Id.; see also id. ("The party to be satisfied is
the sole judge of his or her satisfaction. . . . If the party to
be satisfied asserts in good faith that he or she is not satisfied,
there can be no inquiry into the reasonableness of his or her
attitude." (Quoting 13 Williston on Contracts § 38.23 (Lord ed.
2000))).
Here, the provision reserves to ABIM's judgment whether
"the diplomate [has] fail[ed] to maintain moral, ethical, or
professional behavior," criteria the provision does not define and
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that would seem to defy objective measurement.16 Indeed, the
provision expressly states that the diplomate's behavior must be
"satisfactory to ABIM." (Emphasis added). In fact, New Jersey's
highest court has applied a subjective standard to a contract
including somewhat similar criteria and using nearly identical
language. See Corn Prod. Ref. Co. v. Fasola, 109 A. 505, 505-06
(N.J. 1920) ("If at any time before shipment the financial
responsibility of the buyer becomes impaired, or unsatisfactory to
the seller, cash payment or satisfactory security may be required
by the seller before shipment." (Emphasis added)).
In short, ABIM's alternative ground for affirmance finds
ample support as a matter of the revocation provision's plain text,
as well as New Jersey law. We see no need to remand to the district
court a claim that, in our de novo review, is clearly meritless,
and we thus affirm the dismissal of the breach of contract claim
on the alternative basis advanced by ABIM.
2. The Implied Covenant of Good Faith and Fair Dealing
In support of his theory that ABIM breached the implied
covenant of good faith and fair dealing, Salas Rushford points to
16By way of comparison, Silvestri specifies that an objective
standard applies when the contract pertains to "operative
fitness," "mechanical utility," or "marketability." 814 A.2d at
606. Plainly enough, a contract pertaining to good morals, sound
ethics, and professionalism is of an entirely different sort.
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his allegations that describe ABIM's investigation and
disciplinary process as unfair.
(a) Background Law
New Jersey law recognizes an "implied covenant of good
faith and fair dealing" in "every contract." Sons of Thunder,
Inc. v. Borden, Inc., 690 A.2d 575, 587 (N.J. 1997). Though the
implied covenant "cannot override an express term in a contract,
a party's performance under a contract may breach that implied
covenant even though that performance does not violate a pertinent
express term." Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1126
(N.J. 2001). Indeed, a party "may breach the implied covenant of
good faith and fair dealing in performing its obligations even
when it exercises an express and unconditional right." Sons of
Thunder, 690 A.2d at 588 (holding that defendant breached the
implied covenant when exercising unilateral right to terminate
contract); see also Bak-A-Lum Corp. of Am. v. Alcoa Bldg. Prods.,
Inc., 351 A.2d 349, 352 (N.J. 1976) (similar).
Accordingly, even a party with unilateral discretion
under a contract does not possess "unbridled discretion." Wilson,
773 A.2d at 1130. Such a party "breaches the duty of good faith
and fair dealing if that party exercises its discretionary
authority arbitrarily, unreasonably, or capriciously, with the
objective of preventing the other party from receiving its
reasonably expected fruits under the contract." Id. In light of
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these principles, though we have concluded that ABIM had
considerable discretion in the exercise of its revocation
authority, it was nonetheless obligated to exercise that
discretion in good faith, meaning in a reasonable manner, without
"bad motive or [ill] intention." Id.; see also Silvestri, 814
A.2d at 607 (explaining that even when a satisfaction clause
relates to a party's subjective satisfaction, the party is
"oblige[d] . . . to act 'honestly in accordance with his duty of
good faith and fair dealing'" (quoting Beasley v. St. Mary's Hosp.
of Centralia, 558 N.E.2d 677, 682 (Ill. App. Ct. 1990))). Salas
Rushford asserts that ABIM breached its duty of good faith by
running a sham disciplinary process that did not give him a fair
opportunity to prove his innocence.
(b) Improper Factfinding
Salas Rushford argues that the district court
erroneously dismissed his good faith and fair dealing claim
because, contrary to the pleading standard, the district court
improperly resolved the central disputed fact of whether ABIM's
disciplinary process was an unfair sham by considering material
outside the pleadings. Specifically, the district court held that
Salas Rushford had not stated a claim for breach of the implied
covenant based, in large part, on its finding that the record
failed to show that ABIM conducted its disciplinary review in an
unfair and unreasonable manner. In so concluding, the court relied
- 22 -
heavily on the ABIM appeals panel's assertion, in its letter to
Salas Rushford, that he had "refused to address the allegations
against him head-on." Salas Rushford II, 2021 WL 2892837, at *7
& *7 n.17.
As we have explained, Salas Rushford incorporated that
letter into the CTPC by reference, and the district court was thus
entitled to consider its contents and even to "augment" the facts
as appropriate. Haley, 657 F.3d at 46. But even when a document,
such as a letter from the defendant, is properly before a district
court at the pleadings stage, the court may not "assume the truth
of . . . factual claims in that letter," particularly when doing
so would require it to abandon its obligation to "assume[] the
truth of [the plaintiff's] factual claims." Cebollero-Bertran v.
P.R. Aqueduct & Sewer Auth., 4 F.4th 63, 73 (1st Cir. 2021). Such
"weighing [of] competing claims [by] both parties" to support a
conclusion that the plaintiff's allegations stand on insufficient
evidence is incompatible with the pleading standard. Id. at 73-74.
The district court erroneously engaged in such weighing
here, testing the sufficiency of Salas Rushford's allegations
about a sham process not against the applicable legal standard but
against the competing allegation contained in the appeals panel's
letter that he failed to avail himself of ABIM's fundamentally
fair process. We thus agree with Salas Rushford that the court
strayed from the judgment-on-the-pleadings standard.
- 23 -
The district court's error notwithstanding, we are
entitled to affirm the district court's judgment on any ground
available in the record. See, e.g., Miles v. Great N. Ins. Co.,
634 F.3d 61, 64-65 & n.5 (1st Cir. 2011); see also Lefkowitz v.
Smith Barney, Harris Upham & Co., 804 F.2d 154, 156–57 (1st Cir.
1986) (per curiam) ("Even if we assume that the district court
erred by considering factual matters outside the pleading in
reaching its decision, such error would be harmless because the
dismissal can be justified without reference to the extrinsic
material."); Cebollero-Bertran, 4 F.4th at 74 ("Despite the
district court's legal error" of improperly assuming the truth of
factual claims in a letter attached to the complaint, "we could
affirm the decision on any basis available in the record.").
Salas Rushford's allegation that ABIM's appeals process
was a sham must plausibly state a claim under New Jersey law.
Here, that means he must have plausibly alleged that ABIM possessed
a bad motive and behaved unreasonably, rather than in a justifiable
exercise of its discretion. See Wilson, 773 A.2d at 1130. Our
analysis starts, and ends, with the bad motive requirement.
(c) Bad Motive Requirement
The bad motive requirement is a separate and no less
"vital" element of "an action for breach of the covenant" under
New Jersey law than an allegation that the defendant has acted
unreasonably. Brunswick Hills Racquet Club, Inc. v. Route 18
- 24 -
Shopping Ctr. Assocs., 864 A.2d 387, 396 (N.J. 2005); see also
Buck Consultants, Inc. v. Glenpointe Assocs., 217 F. App'x 142,
152 (3d Cir. 2007), as amended (Mar. 16, 2007) (explaining that
even a finding of unreasonableness under New Jersey contract law
does not establish a breach of the implied covenant absent a
further finding of "subjective, wrongful intent" (applying Wilson,
773 A.2d at 1130)).
"[B]ad motive may be established through circumstantial
evidence," including the defendant's statements, actions, and "the
surrounding circumstances." Wilson, 773 A.2d at 1132. For
instance, a plaintiff can show the defendant's bad motive by
pointing to "'[s]ubterfuges and evasions' in the performance of a
contract." Brunswick Hills Racquet Club, 864 A.2d at 396
(alteration in original) (quoting Restatement (Second) of
Contracts § 205 cmt. d (Am. L. Inst. 1981)). We have similarly
observed that "allegations of self-dealing" may support a showing
of bad motive in the exercise of contractual duties. Lass v. Bank
of Am., N.A., 695 F.3d 129, 139 (1st Cir. 2012) (holding that
allegation that bank purchased excess flood insurance at the
homeowner's expense to generate commissions stated a breach of
good faith claim under Massachusetts law); accord Brunswick Hills
Racquet Club, 864 A.2d at 399 (holding that landlord who engaged
in "a series of evasions and delays" to "unjustly enrich[] itself
with a windfall increase in rent at plaintiff's expense" breached
- 25 -
the implied covenant under New Jersey law); Wilson, 773 A.2d at
1131-32 (holding that evidence that the defendant "set prices
intending to destroy plaintiffs economically," in furtherance of
a change in business strategy, would establish a breach of the
duty of good faith).
The CTPC contains many conclusory assertions that ABIM
possessed a bad motive. It states that ABIM had set a "course to
destroy Dr. Salas Rushford's reputation and livelihood," put on a
"tour de force in bad faith dealing and reputational damages," and
"engaged in an ongoing campaign of appalling conduct intended to
destroy the personal and professional life of Dr. Salas Rushford."
Such "free-wheeling invective," of course, is not entitled to any
presumption of validity. Cordi-Allen v. Conlon, 494 F.3d 245, 250
(1st Cir. 2007). While these accusations imply that ABIM harbored
personal animus against Salas Rushford, he has not supported that
claim with any factual allegations plausibly demonstrating that
any such animus existed beyond the empty rhetoric quoted above.17
See Elliott & Frantz, Inc. v. Ingersoll-Rand Co., 457 F.3d 312,
329 (3d Cir. 2006) (rejecting claim under New Jersey law where
17In addition to the lack of any plausible support for Salas
Rushford's assertion that ABIM harbored personal animus towards
him, we note that the CTPC does not support an inference of any
self-serving motive on ABIM's part, as is frequently present in
New Jersey cases sustaining claims for breach of the implied
covenant. See, e.g., Wilson, 773 A.2d at 1131-32; Brunswick Hills
Racquet Club, 864 A.2d at 399.
- 26 -
"there are no facts to demonstrate, or from which to infer, bad
motive or intention," but "only conclusory allegations that [the
defendant] had such motives"); see also, e.g., Havlik v. Johnson
& Wales Univ., 509 F.3d 25, 33 (1st Cir. 2007) (stating that where
a claim involves a state of mind element like malice, "the
plaintiff cannot rest on naked assertions or bare conclusions but,
rather, must proffer facts sufficient to support a finding of" the
requisite state of mind).
Stripping away these bald assertions, the CTPC contains
no other allegations from which we can plausibly infer ABIM's bad
motive. At most, there are the allegations describing what Salas
Rushford characterizes as an unfair process: ABIM did not warn him
of its investigation into ABR or remove any compromised questions
from the exam; it oversaw an "improvised" appeals process in which
it refused to cite the rules or policies that he had violated; it
relied on the incorrect Policies & Procedures document; and it
refused to share its evidence, including the actual exam questions
he supposedly misappropriated.18 However, these allegations about
ABIM's disciplinary process, taken as true, do not plausibly
establish ABIM's bad motive. Indeed, each allegation gives rise
18The district court briefly addressed an additional
argument -- that ABIM had not interviewed Salas Rushford during
its investigation -- finding that there is no such allegation in
the CTPC. Though Salas Rushford repeats the same argument on
appeal, we decline to analyze it further for the same reason.
- 27 -
to an "obvious alternative explanation," Ashcroft v. Iqbal, 556
U.S. 662, 682 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 567 (2007)), about ABIM's motivations or is contradicted by
Salas Rushford's own pleadings.
Chiefly, Salas Rushford complains that in the course of
carrying out its "improvised process," ABIM would not divulge its
evidence against him, and, in particular, that it would not share
the actual test questions that he supposedly stole. While access
to that information might have been helpful to Salas Rushford in
his appeal, ABIM's alleged refusal to divulge those questions does
not demonstrate animus towards Salas Rushford, nor any other
improper motive. Rather, its refusal is "not only compatible with,
but indeed [is] more likely explained by" an anodyne motivation:
ABIM was unwilling to share that confidential, proprietary
material, particularly with a person it suspected of previously
misappropriating that material. Iqbal, 556 U.S. at 680. As the
CTPC states -- and as the materials it incorporates by reference
confirm -- ABIM informed Salas Rushford of what its evidence
showed: numerous emails in which Salas Rushford disseminated
hundreds of exam questions.19 It then provided him with layers of
19 ABIM's initial letter to Salas Rushford stated:
Evidence seized from Arora Board Review
demonstrates that between May 2009 and August
2009 you collected and compiled hundreds of
ABIM examination questions from multiple
sources in preparation for your ABIM
- 28 -
appellate review, even though -- as Salas Rushford points
out -- the Policies & Procedures did not require any appellate
review at all. ABIM did not have to prosecute its case against
Salas Rushford in his preferred manner and provide him with all
the process he wanted to exercise in good faith its authority to
revoke his certification.
Likewise, Salas Rushford's allegation that ABIM did not
warn him of its investigation into ABR does not plausibly establish
ABIM's bad motive. ABIM's decision not to tip off course
participants of its suspicions of ABR's wrongdoing is readily
explained by the fact that such an act would risk exposing its
investigative efforts, and thus this allegation also succumbs to
an "obvious alternative explanation" that we think more likely
examination and that you sent hundreds of ABIM
examinations questions to Arora Board Review
from your e-mail address "jsalasmd@yahoo.com"
and from a disguised e-mail address
"padrinojr@yahoo.com" under the pseudonym,
"Jimmy R." to conceal your identity.
Of course, we do not accept the truth of these charges.
Nonetheless, this text shows that ABIM provided enough information
to Salas Rushford to put him on notice of the allegations against
him and its source of proof. Indeed, the CTPC acknowledges Salas
Rushford's receipt of this letter and that the letter informed him
of his accused wrongdoing. Moreover, Salas Rushford does not
allege that he did not send the emails referenced in this letter
or that he was unable to access or locate these emails, which were
presumably in his possession. The CTPC only alleges that Salas
Rushford was unable to cross-reference these questions with ABIM's
question bank to independently verify ABIM's contention that the
questions he allegedly emailed were in fact actual exam content.
- 29 -
captures ABIM's motives than Salas Rushford's unsupported
assertions of bad intent. Twombly, 550 U.S. at 567.
Salas Rushford also argues that ABIM's disciplinary
process was unfair because ABIM did not cite the specific policy
he violated. This allegation, however, is flatly contradicted by
the material in his pleading and incorporated by reference. In
addition to detailing the charges against him, ABIM cited several
provisions of its Policies & Procedures that it said justified
revoking his certification. Namely, it invoked the requirements
that he "maintain moral, ethical [and] professional behavior
satisfactory to the Board" and refrain from "misconduct adversely
affecting the Diplomate's integrity."
Our review of other cases assessing claims under New
Jersey law that disciplinary proceedings violated the implied
covenant of good faith and fair dealing further assures us that
Salas Rushford's pleading is inadequate to state such a claim.20
In Donohue v. Capella University, LLC, No. 22-5634, 2023 WL
5425503, at *6 (D.N.J. Aug. 22, 2023), for instance, the district
court dismissed a doctoral student's complaint alleging that the
university breached the duty of good faith and fair dealing despite
20These cases involve the disciplinary proceedings of
educational institutions. We do not presume that this context is
perfectly analogous. Nonetheless, we find these cases informative
in our assessment of Salas Rushford's allegations regarding ABIM's
disciplinary procedures.
- 30 -
allegations of an unfair disciplinary process similar to those
alleged by Salas Rushford. The student, accused of plagiarism,
alleged that the school wrongfully relied on a plagiarism detection
software that it knew to be unreliable and that, after the school
assigned the student a remediation assignment, he was set up for
failure because he was locked out of the program needed to complete
the assignment, the school provided inadequate instructions for
the assignment, and the school did not provide feedback when he
failed the remedial assignment on his first attempt (after failing
a second attempt, he was academically dismissed). Id. at *1-2.
Notwithstanding these allegations, the district court observed
that the student's own allegations showed that he had received a
multi-layered disciplinary process and that the complaint
"fail[ed] to identify an ill motive or intention," and thus the
court could not conclude that the student had plausibly alleged
any breach of the implied covenant. Id. at *6; see also Donohue
v. Capella Univ., LLC, No. 22-5634, 2024 WL 3162921, at *4 (D.N.J.
June 25, 2024) (dismissing the student's subsequent amended
complaint because "Plaintiff's allegations are devoid of an ill
motive and Capella's conduct cannot be said to have no legitimate
purpose").
By contrast, cases that have sustained breach of good
faith claims against disciplinary proceedings have involved
specific allegations of a bad motive, backed up by allegations of
- 31 -
clearly unfair and unjustifiable conduct. See, e.g., Doe v.
Princeton Univ., 30 F.4th 335, 348 (3d Cir. 2022) (sustaining
breach of good faith claim where student's allegation of
discriminatory animus was supported by allegations that the
university systematically "disregarded exculpatory evidence [in
his favor] and incriminating evidence against [his accuser],
construed all discrepancies and inconsistencies in [his accuser's]
favor, and ignored evidence corroborative of [his] counter claims"
(internal quotation marks and brackets omitted)); Doe v. Rider
Univ., No. 16-cv-4882, 2018 WL 466225, at *14 (D.N.J. Jan. 17,
2018) (sustaining breach of good faith claim where student alleged
that the university official overseeing his disciplinary
proceeding had told him he was "going against" him).
We also find informative the court's analysis in
Napolitano v. Trustees of Princeton University, 453 A.2d 279,
283-84 (N.J. Super. Ct. Ch. Div. 1982). In that case, a New Jersey
trial court granted summary judgment against a student claiming
that her university's discipline of her violated the implied duty
of good faith and fair dealing. Though sympathetic to the
student's arguments that the school's discipline for suspected
plagiarism was harsh -- she had an unblemished academic record
before the incident at issue, her alleged plagiarism was
unintentional, and other similarly-situated students had received
less severe punishments -- the court reasoned that "the proper
- 32 -
role of a court is to permit private organizations to govern their
own affairs, unless the court's intrusion is warranted by conduct
so egregious as to constitute a breach of the parties' agreement."
Id. at 284. Because it could not "find that Princeton could not
in good faith have assessed the penalties it did," the court
exercised "[j]udicial restraint" and declined to disturb the
sanction. Id. The reviewing court affirmed, invoking New Jersey
Supreme Court precedent "afford[ing] [deference] to the internal
decision-making process[es]" of private institutions as "the
members of an association are generally bound by its private law."
Napolitano v. Trustees of Princeton Univ., 453 A.2d 263, 275 (N.J.
Super. Ct. App. Div. 1982) (citing Higgins v. Am. Soc. of Clinical
Pathologists, 238 A.2d 665, 671 (N.J. 1968)). We take a similar
view of Salas Rushford's effort to obtain federal judicial
intervention into ABIM's disciplinary proceedings -- absent any
allegations from which we can plausibly conclude that ABIM had a
bad motive in its dealing with Salas Rushford, and therefore
shirked its implicit duty to afford him a fair disciplinary
process, we decline to second-guess ABIM's approach to its internal
disciplinary matters.
In sum, Salas Rushford has not plausibly alleged that
ABIM possessed a bad motive, nor can we reasonably infer as much
from the facts he does allege. This glaring fault alone is a
sufficient basis to affirm the district court's dismissal of Salas
- 33 -
Rushford's good faith claim. See, e.g., Kolbe v. BAC Home Loans
Servicing, LP, 738 F.3d 432, 454 (1st Cir. 2013) (en banc) (lead
opinion of equally divided court) (rejecting claim of breach of
the implied covenant under New Jersey law where allegations of
"self-dealing . . . fail[ed] the standard of plausibility
necessary to survive a motion to dismiss"); Hassler v. Sovereign
Bank, 374 F. App'x 341, 345 (3d Cir. 2010) (dismissing claim under
New Jersey law where the plaintiff "does not allege any bad motive
on the part of [the defendant]"). Mindful that under New Jersey
law "an allegation of bad faith or unfair dealing should not be
permitted to be advanced in the abstract and absent improper
motive," Wilson, 773 A.2d at 1130, we cannot conclude that Salas
Rushford has stated a successful claim for breach of the implied
covenant.
B. Tort Claim
Salas Rushford asserts that the ABIM Individuals21 are
liable in tort for the way they carried out their investigation of
ABR and for the suspension of his certification.22
21In his briefing, Salas Rushford directs these arguments at
ABIM rather than the ABIM Individuals, whom the CTPC names in this
count. We construe his arguments to run against the ABIM
Individuals rather than ABIM.
22 ABIM argues that Salas Rushford's tort claim amounts to
nothing more than a disguised procedural due process claim
challenging ABIM's disciplinary process. This is an unduly narrow
view of his claim, as we explain below. Of course, to the extent
Salas Rushford makes any such due process claim, that theory would
fail because, as the CTPC makes clear, neither ABIM nor the ABIM
- 34 -
Under Puerto Rico law, a plaintiff like Salas Rushford,
seeking to establish liability under Article 1802 of the Puerto
Rico Civil Code, must establish "a duty requiring the defendant to
conform to a certain standard of care, a breach of that duty, proof
of damage, and a causal connection between the negligence and the
damage." Nieves-Romero v. United States, 715 F.3d 375, 378–79
(1st Cir. 2013) (citing Sociedad de Gananciales v. González Padín
Co., 17 P.R. Offic. Trans. 111, 125 (1986)).23 Like the district
court, we focus our analysis on whether Salas Rushford has
established a duty of care owed by the ABIM Individuals. Under
Puerto Rico law, a duty of care "refers to an 'obligation to
anticipate and take measures against a danger that is reasonably
foreseeable.'" Baum-Holland v. Hilton El Con Mgmt., LLC, 964 F.3d
77, 88 (1st Cir. 2020) (quoting Woods-Leber v. Hyatt Hotels of
P.R., Inc., 951 F. Supp. 1028, 1036 (D.P.R. 1996), aff'd, 124 F.3d
47 (1st Cir. 1997)). Such a duty "may arise (1) by statute or
regulation; (2) 'as the result of a special relationship between
the parties that has arisen through custom; or (3) as the result
Individuals are state actors, and the CTPC does not allege that
their actions could, nonetheless, be construed as state action.
See Jarvis v. Vill. Gun Shop, Inc., 805 F.3d 1, 8 (1st Cir. 2015).
23 Once again, we adopt the district court's conclusion that
Puerto Rico law applies to Salas Rushford's tort claim because the
parties do not dispute the applicability of that body of law on
appeal. See, e.g., Lluberes, 663 F.3d at 23; Perry, 629 F.3d at
8; New Ponce Shopping Ctr., 86 F.3d at 267.
- 35 -
of a traditionally recognized duty of care particular to the
situation.'" Id. (quoting De Jesús-Adorno v. Browning Ferris
Indus. of P.R., Inc., 160 F.3d 839, 842 (1st Cir. 1998)). The
"essential elements" of the duty are "foreseeability . . . and the
risk involved in each specific case." Montalbán v. Centro Com.
Plaza Carolina, 132 P.R. Dec. 785 (P.R. 1993) (official
translation).
Tellingly, rather than identify a duty that has been
breached, Salas Rushford argues, incorrectly, that "it is not
necessary to allege the existence of a duty in order to assert a
cause of action in tort." Despite this disclaimer, in identifying
two courses of conduct that form the basis of his tort claim -- the
defendants' failure to warn him about its investigation of ABR and
the unfair manner in which they conducted the appeals process -- he
essentially articulates the purported duties that the ABIM
Individuals have allegedly breached.
Salas Rushford first argues that the individual
defendants had a duty to warn him about their suspicions regarding
the ABR course, rather than allow him to participate in the course
and thereby expose himself to the risk of his certification being
later suspended.24 Salas Rushford fails to explain, however, how
24 It is not clear from the CTPC that the ABIM Individuals
participated in this stage of the investigation. Since Salas
Rushford's theory fails regardless, we need not also consider this
potential causation issue.
- 36 -
such a duty is compelled by any of the considerations described
above, such as legal authority, a special relationship, or a
situation-specific duty traditionally recognized. See
Baum-Holland, 964 F.3d at 88. For that reason, this tort theory
fails.
Salas Rushford next suggests that the ABIM Individuals
owed a duty of care in how they conducted his disciplinary review.
Specifically, echoing the central theory underpinning his breach
of the contractual duty of good faith claim, he asserts that the
ABIM Individuals acted negligently by refusing to share with him
the Policies & Procedures document guiding their decision-making,
as well as the evidence against him. Indeed, he claims that they
had a duty to refrain from participating in his hearing at all,
given their affiliation with ABIM.
Salas Rushford points us to no legal authority, special
relationship, or traditionally recognized duty in this situation
that would establish any such duty of care governing the ABIM
Individuals' conduct during the disciplinary proceedings, nor have
we discovered any. And, in our survey of Puerto Rico law, we have
not found any authority supporting the existence of such a duty.
Accord Doe v. Trs. of Bos. Coll., 892 F.3d 67, 94 (1st Cir. 2018)
(similarly holding, under Massachusetts law, that individual
defendants conducting "disciplinary proceedings ar[ising] from [a]
contractual relationship[,]" had no tort duty of care because
- 37 -
"[w]hen an 'alleged obligation to do or not to do something that
was breached could not have existed but for a manifested intent,
then contract law should be the only theory upon which liability
would be imposed'" (quoting Treadwell v. John Hancock Mut. Life
Ins. Co., 666 F. Supp. 278, 289 (D. Mass. 1987))). We thus reject
Salas Rushford's second theory of liability and affirm the
dismissal of his tort claims.
C. Lanham Act Claim
Salas Rushford asserts a claim of "commercial
disparagement" against most of the ABIM Individuals, invoking 15
U.S.C. § 1125(a). The Lanham Act makes liable:
(1) Any person who, on or in connection
with any goods or services, or any container
for goods, uses in commerce any word, term,
name, symbol, or device, or any combination
thereof, or any false designation of origin,
false or misleading description of fact, or
false or misleading representation of fact,
which--
(A) is likely to cause confusion, or to
cause mistake, or to deceive as to the
affiliation, connection, or association of
such person with another person, or as to the
origin, sponsorship, or approval of his or her
goods, services, or commercial activities by
another person, or
(B) in commercial advertising or
promotion, misrepresents the nature,
characteristics, qualities, or geographic
origin of his or her or another person's
goods, services, or commercial activities.
- 38 -
Salas Rushford's Lanham Act claim appears to target two
statements about his certification status published on ABIM's
website: (1) the label of "Revocation Recommended" after ABIM
initiated disciplinary action and (2) the labels of "Not
Certified" and "INITIAL CERTIFICATION Internal Medicine: 2009"
once ABIM suspended his certification. He argues that these
statements make the ABIM Individuals liable under both subsection
(A), for false association, and under subsection (B), for false
advertising. We address each theory of liability in turn.
1. False Association
To state a claim under section 1125(a)(1)(A), the
plaintiff must plausibly allege facts showing a likelihood of
consumer confusion "as to the affiliation, connection, or
association of such person with another person, or as to the
origin, sponsorship, or approval of his or her goods, services, or
commercial activities by another person." Claims under this
subsection typically involve "attempts to appropriate the goodwill
associated with a competitor[,]" for example, by misappropriating
a trademark or falsely implying an endorsement. Flynn v. AK
Peters, Ltd., 377 F.3d 13, 19 (1st Cir. 2004) (quoting Purolator,
Inc. v. EFRA Distribs., Inc., 687 F.2d 554, 561 (1st Cir. 1982));
see also, e.g., Int'l Ass'n of Machinists & Aerospace Workers,
AFL-CIO v. Winship Green Nursing Ctr., 103 F.3d 196, 208 (1st Cir.
1996) (Saris, J., concurring) ("Typical claims under prong (A)
- 39 -
would involve a new trademark that was confusingly similar to an
already established one, or an attempt by a defendant to 'palm-off'
its goods as those of a competitor by use of the competitor's
mark."). In evaluating such claims, the factors we usually
consider to gauge the likelihood of consumer confusion under this
subsection mostly relate to the possibility of consumers mistaking
one party's good, service, or trademark with that of another.25
Salas Rushford's theory, however, does not remotely
relate to any risk of consumers of his medical services being
misled into misunderstanding the origin of those services, or those
of any competitors, or misapprehending his affiliation with the
ABIM Individuals. Rather, Salas Rushford's theory is, as he puts
it, one of "commercial disparagement," that is, that consumers
will be misled into believing that his medical services are
substandard because of statements about him on ABIM's website.
The district court noted this deficiency, remarking that
"the CTPC . . . is barren of any mention [or] factual allegation
of a plausible likelihood of confusion in connection with the
25See I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 43
(1st Cir. 1998) ("This court has identified eight factors to be
weighed in determining likelihood of confusion: '(1) the
similarity of the marks; (2) the similarity of the goods; (3) the
relationship between the parties' channels of trade; (4) the
relationship between the parties' advertising; (5) the classes of
prospective purchasers; (6) evidence of actual confusion; (7) the
defendant's intent in adopting its mark; and (8) the strength of
the plaintiff's mark.'" (quoting Bos. Athletic Ass'n v. Sullivan,
867 F.2d 22, 29 (1st Cir. 1989))).
- 40 -
reporting of his certification status on ABIM's website." Salas
Rushford I, 2021 WL 214268, at *5. On appeal, Salas Rushford once
again argues only that "patients were likely to believe that the
quality of Dr. Salas Rushford's services was in question," without
any effort to connect that concern to the type of consumer
confusion contemplated in subsection (A).26 We thus agree with the
district court that Salas Rushford has failed to state a claim
under this theory of liability.
2. False Advertising
Salas Rushford next invokes 15 U.S.C. § 1125(a)(1)(B),
which prohibits "commercial advertising or promotion" that
"misrepresents the nature, characteristics, qualities, or
geographic origin of his or her or another person's goods,
services, or commercial activities." As relevant to Salas
Rushford's challenge to statements appearing on ABIM's website,
"[t]he Lanham Act prohibits only 'false or misleading
description[s] [or representations] of fact,'" and thus the
"plaintiff bears the burden of proving that the statement at issue
Salas Rushford does cite Doe v. Friendfinder Network, Inc.,
26
for the proposition that the Act prohibits "a defendant from using
the plaintiff's name in commerce in connection with services in a
way likely to cause confusion as to 'the affiliation, connection,
or association' of the parties." 540 F. Supp. 2d 288, 306 (D.N.H.
2008) (quoting 15 U.S.C. § 1125(a)(1)(A)). That case concerned
the "defendants' unauthorized use of a plaintiff's identity for
marketing purposes," id., and thus lends Salas Rushford no support
for his invocation of subsection (A) in the very different
circumstance of this case.
- 41 -
is false and/or misleading." Azurity Pharms., Inc. v. Edge Pharma,
LLC, 45 F.4th 479, 486 (1st Cir. 2022) (second alteration in
original) (quoting 15 U.S.C. § 1125(a)(1)). While "[t]hat
question is typically for the factfinder to determine," id. at
487, the plaintiff must still, of course, plausibly allege such a
statement, see id. at 495, 499 (dismissing Lanham Act claims for
failure to allege misleading representations of fact).
The CTPC makes clear that the challenged statements on
ABIM's website are literally true. Salas Rushford must therefore
shoulder the "additional burden" of showing that the statements,
"though 'literally true or ambiguous,' nonetheless [are] 'likely
to mislead and confuse consumers' into believing a 'false
representation of fact.'" Id. at 487 (omission removed) (first
quoting Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284
F.3d 302, 311 (1st Cir. 2002), and then quoting Clorox Co. P.R. v.
Proctor & Gamble Com. Co., 228 F.3d 24, 33 & 33 n.6 (1st Cir.
2000)).27 Moreover, with respect to liability under subsection
(B), Salas Rushford "must show how consumers have actually reacted
to the challenged advertisement rather than merely demonstrating
27We have recognized that a plaintiff alleging that a
statement is misleading is nonetheless "relieved of the burden of
demonstrating consumer deception when there is evidence that
defendants intentionally deceived the consuming public." Cashmere
& Camel Hair Mfrs. Inst., 284 F.3d at 311 n.8. Salas Rushford,
however, has made no appellate argument about intentional
deception, nor does the CTPC contain any such allegations.
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how they could have reacted." Clorox, 228 F.3d at 33 (emphasis
added).28
The district court found Salas Rushford's claim of
liability under subsection (B) lacking in several respects.29 We
find it sufficient to focus on the CTPC's most glaring deficiency:
it contains no allegations whatsoever indicating that any
consumers have actually been misled by the challenged statements.
We have repeatedly emphasized that plaintiffs seeking damages must
make this additional showing when they premise a false advertising
28 In Cashmere & Camel Hair Manufacturers Institute, we
clarified that this requirement is incurred in cases, like this
one, seeking monetary damages rather than injunctive relief. 284
F.3d at 311 n.9.
29 Because subsection (B) applies only to "commercial
advertising or promotion," 15 U.S.C. § 1125(a)(1)(B), the district
court found Salas Rushford's claim insufficient on the ground that
the statements on ABIM's website about Salas Rushford's
certification status are not "commercial speech." See also
Podiatrist Ass'n, Inc. v. La Cruz Azul de P.R., Inc., 332 F.3d 6,
19 (1st Cir. 2003) (explaining that to constitute "commercial
advertising or promotion" a statement "must (a) constitute
commercial speech (b) made with the intent of influencing
potential customers to purchase the speaker's goods or services
(c) by a speaker who is a competitor of the plaintiff in some line
of trade or commerce and (d) disseminated to the consuming public
in such a way as to constitute 'advertising' or 'promotion'"); but
see id. at 19-20 (noting that "the Lanham Act's commercial
disparagement provision covers more than classic advertising
campaigns" and "to pass the pleading threshold in a Lanham Act
§ 43(a)(1)(B) case, a plaintiff at the very least must identify
some medium or means through which the defendant disseminated
information to a particular class of consumers"). We need not
reach the question of whether ABIM's website simply reporting the
certification status of doctors falls within the "commercial
advertising or promotion" contemplated by the act.
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claim upon the purported misleading nature of a statement, rather
than the statement's literal falsity, unless they allege that the
defendant acted with an intention to deceive. See Azurity Pharms.,
45 F.4th at 487 & n.3; Cashmere & Camel Hair Mfrs. Inst. 284 F.3d
at 311 n.9; Clorox, 228 F.3d at 33.30
Most often, a plaintiff in a Lanham Act case makes such
a showing through consumer survey data indicating "that a
substantial portion of the audience . . . was actually misled,"
Clorox, 228 F.3d at 36, though surveys are not the only permissible
form of evidence to make this showing, see, e.g., Herman Miller,
Inc. v. Palazzetti Imps. & Exps., Inc., 270 F.3d 298, 323 (6th
Cir. 2001). While we clarified in Clorox that a plaintiff need
not "identify the particular consumer survey that will be used to
support its allegations to survive a motion to dismiss," 228 F.3d
at 37 n.11, we have nonetheless made clear that plaintiffs must
make some allegations of actual consumer deception or intentional
deception to state a legally sufficient claim for relief, see id.
at 36-37; Azurity Pharms., 45 F.4th at 487 n.3. Accordingly, the
30 As the Third Circuit has explained, see Fisons
Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 472 n.8
(3d Cir. 1994), this requirement of demonstrating actual falsity
applies to misleading statements underpinning false advertising
claims under 15 U.S.C. § 1125(a)(1)(B), but not false association
claims under 15 U.S.C. § 1125(a)(1)(A), which, by the plain text
of the act, may be proven simply by showing that the challenged
expression is "likely to cause confusion, or to cause mistake, or
to deceive," id. (emphasis added).
- 44 -
absence of any such allegations alone compels the dismissal of
Salas Rushford's false advertising claim.
D. Leave to Amend
Salas Rushford also challenges the district court's
denial of leave to amend the CTPC. We review the denial of leave
to amend for abuse of discretion, and, as such, "we will affirm
'so long as the record evinces an arguably adequate basis for the
court's decision.'" U.S. ex rel. D'Agostino v. EV3, Inc., 802
F.3d 188, 192 (1st Cir. 2015) (quoting Hatch v. Dep't for Child.,
Youth & Their Fams., 274 F.3d 12, 19 (1st Cir. 2001)). Leave to
amend should be "freely give[n] . . . when justice so requires."
Fed. R. Civ. P. 15(a)(2). That rule notwithstanding, "[a] court
may deny leave to amend for a variety of reasons, including
'futility, bad faith, undue delay, or a dilatory motive on the
movant's part.'" Privitera v. Curran (In re Curran), 855 F.3d 19,
27-28 (1st Cir. 2017) (quoting Hatch, 274 F.3d at 19).
In denying leave to amend the CTPC, the district court
focused largely on the timing of Salas Rushford's request. See
Salas Rushford II, 2021 WL 2892837, at *10-11. It noted that he
requested leave to amend more than five years after filing the
CTPC. Moreover, it observed that, previously, Salas Rushford had
"vehemently" disavowed any need to amend the CTPC in a bid to
expedite the proceedings. Id. at *11. Further, Salas Rushford
had made no concrete arguments explaining why justice required
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leave to amend, simply asserting that he should have the chance to
"address any defect" in the CTPC. Id. at *10.
On appeal, Salas Rushford argues only that an amendment
would not be futile. As our description of the district court's
ruling reveals, however, Salas Rushford fails to address the
district court's primary rationale -- that his request was unduly
delayed -- and he therefore offers no basis for finding that the
court abused its discretion. See Winslow v. Aroostook Cnty., 736
F.3d 23, 31 n.7 (1st Cir. 2013) ("We will not disturb the district
court's determination" where the appellant "merely disagrees with
the district court's holding at length and presents no reasoned
argument that the district court abused its discretion in this
instance.").
Moreover, insofar as the district court's reasoning
could be construed as a comment on the futility of Salas Rushford's
requested leave to amend,31 Salas Rushford's rebuttal to that
finding lacks substance. Neither in his request to the district
court nor on appeal has he explained why his proposed amended CTPC
would survive dismissal beyond the vague assertion that
"perceive[d] deficiencies in the pleading would be easily
31In denying leave to amend, the district court remarked that
"[o]ther than including a generic assertion that leave to amend is
requested in order to 'address any defect,' Dr. Salas Rushford
does not articulate why a request to amend the CTPC is being
advanced at this juncture." Salas Rushford II, 2021 WL 2892837,
at *10 (citation to record and alteration omitted).
- 46 -
remedied." That unsupported contention is inadequate to
demonstrate an abuse of discretion in the district court's
judgment. Accordingly, we affirm the district court's denial of
leave to amend.
III.
In light of the foregoing analysis, we affirm the
district court's grant of judgment on the pleadings to appellees.
So ordered.
- Concurring and Dissenting Opinion Follows -
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BARRON, Chief Judge, concurring in part and dissenting
in part. I agree with the majority's well-reasoned resolution of
this appeal, save for the way that the majority resolves Jaime A.
Salas Rushford's challenge to the dismissal of his counterclaim
for breach of contract. I write separately to explain why I would
vacate rather than affirm the judgment as to the dismissal of that
claim.
The District Court rested the contract claim's dismissal
solely on Salas Rushford's failure to have alleged facts that
contested the basis for the decision by the American Board of
Internal Medicine ("ABIM") to suspend his certification. ABIM had
relied for the suspension on Salas Rushford's asserted misconduct
and a provision in the operative contract (the "Revocation
Provision") that states, in relevant part, that ABIM could "revoke
the certificate if the diplomate fails to maintain moral, ethical,
or professional behavior satisfactory to ABIM . . . ."
As the majority notes, however, Salas Rushford expressly
alleges in paragraph 49 of his counterclaim and third-party
complaint (the "CTPC") that he did not engage in the claimed
misconduct. Moreover, Salas Rushford refers expressly to that
portion of the complaint in his briefing on appeal to us. Thus,
in my view, this ground for the contract claim's dismissal does
not hold up.
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The majority does not suggest otherwise. The majority
nonetheless affirms the District Court's dismissal of the claim on
the ground that the Revocation Provision gives ABIM unilateral
discretion to determine for itself whether Salas Rushford failed
to "maintain moral, ethical, or professional behavior." This
ground for affirmance was first surfaced on appeal, however, and
then only based on a contention by ABIM that rests entirely on a
text-based assertion about the Revocation Provision's meaning that
Salas Rushford characterizes, not implausibly, as "one-sided."
In such a circumstance, it strikes me as problematic to
affirm the contract claim's dismissal based on our own unaided
attempt to parse New Jersey's law of satisfaction contracts. Salas
Rushford would first have had reason to address this issue only in
his reply brief, and even then, he had no developed argument from
the appellees to address. And while the majority offers its own
view about how the law of a state outside our Circuit would be
best construed by the highest court of a state outside our Circuit,
it does so without identifying any case that addresses a
satisfaction contract between an accreditation organization and a
professional seeking accreditation. Whether that context is more
like the employment context -- in which "highly personal and
idiosyncratic" judgment is to be anticipated -- or a standard
consumer context -- in which subjective standards of satisfaction
are disfavored -- is not evident to me. See Silvestri v. Optus
- 49 -
Software, Inc., 814 A.2d 602, 607 (N.J. 2003); see also Restatement
(Second) of Contracts § 228 cmt. b (1981) ("[I]t will not usually
be supposed that the obligee has assumed the risk of the obligor's
unreasonable, even if honest, dissatisfaction."); 13 Williston on
Contracts § 38:22 (4th ed.) ("[A]s is true generally, the law here
prefers the more objective reasonable person standard to that of
the more subjective good faith standard, and the former standard
will apply absent a specific expression in the instrument or a
clear indication from the nature of the subject matter that the
good faith standard was intended.").
I thus see no reason to venture on our own -- without
the benefit of a single citation to any New Jersey precedent by
either party to this litigation -- to predict how the highest court
of a state outside our Circuit would resolve that question.
Rather, it seems to me more appropriate to follow the procedure
that we often use when confronted with an alternative ground for
affirmance that the appellee advances but that was neither asserted
below nor addressed by the district court: vacate and remand for
further proceedings. See, e.g., Lachance v. Town of Charlton, 990
F.3d 14, 31 (1st Cir. 2021) (vacating grant of judgment as a matter
of law, "declin[ing] to exercise our discretion to affirm on any
of th[e alternative] bases [for affirmance proffered by the
appellees, and] finding it 'appropriate to leave such a matter for
the district court to address in the first instance on remand,
- 50 -
especially when the grounds are not fully developed or fairly
contested on appeal,' as is the case here." (quoting Yan v. ReWalk
Robotics Ltd., 973 F.3d 22, 39 (1st Cir. 2020))). That way, the
newly raised issue may be given the full consideration that our
multi-tiered adjudicative system contemplates.
I therefore respectfully dissent from the decision to
affirm the dismissal of the contract claim but otherwise join the
decision in full.32
32Even though I do not construe the Revocation Provision to
give ABIM the discretion that the majority opinion does, I agree
that, for the reasons well stated in the majority's "good faith
and fair dealing" analysis, ABIM did not breach the implied
covenant of good faith and fair dealing.
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