Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc.

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
12-30-1998
Conte Bros Auto Inc v. Quaker State Slick
Precedential or Non-Precedential:
Docket 98-5136
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Recommended Citation
"Conte Bros Auto Inc v. Quaker State Slick" (1998). 1998 Decisions. Paper 288.
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Filed December 30, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-5136
CONTE BROS. AUTOMOTIVE, INC. and HI/TOR
AUTOMOTIVE, Individually and on Behalf of all Others
Similarly Situated,
Appellants,
v.
QUAKER STATE-SLICK 50, INC., SLICK 50
MANAGEMENT, INC., SLICK 50 PRODUCTS CORP., SLICK
50 CORP., BLUE CORAL-SLICK 50, INC., BLUE CORAL,
INC., BLUE CORAL-SLICK 50, LTD.
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(Civ. No. 97-3796)
District Judge: The Honorable Jerome B. Simandle
Argued: November 4, 1998
Before: SCIRICA and ALITO, Circuit Judges,
and GREEN, District Judge*
(Opinion Filed: December 30, 1998)
_________________________________________________________________
*The Honorable Clifford Scott Green, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
JAY W. EISENHOFER (ARGUED)
MEGAN D. McINTYRE
Grant & Eisenhofer, P.A.
1220 N. Market Street, Suite 500
Wilmington, DE 19801
PETER L. MASNIK
KALIKMAN & MASNIK
2 Kings Highway West
Haddonfield, NJ 08033
LEE SQUITIERI
ABBEY, GARDY & SQUITIERI, LLP
212 East 39th Street
New York, NY 10016
Counsel for Appellants
IRVING SCHER
BRUCE A. COLBATH (ARGUED)
GARRY A. BERGER
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
EDWARD T. KOLE
Willentz, Goldman & Spitzer
90 Woodbridge Center Drive
P.O. Box 10
Woodbridge, NJ 07095-0985
Counsel for Appellees
OPINION OF THE COURT
ALITO, Circuit Judge:
The issue in this appeal is whether retailers have
standing under S 43(a) of the Lanham Act, 15 U.S.C.
S 1125(a) (1994), to bring false advertising claims against
manufacturers of products that compete with those the
retailers sell. The District Court answered this question in
the negative and dismissed the Complaint. Conte Bros.
Automotive, Inc. v. Quaker State-Slick 50, Inc., 992 F. Supp.
2
709, 711 (D.N.J. 1998). Based on the facts alleged in the
Complaint, we conclude that the retailer plaintiffs do not
satisfy the prudential standing requirements implicit in
S 43(a) of the Lanham Act. We therefore affirm.
I.
Appellants are a putative nationwide class of retail sellers
of motor oil and other engine lubricants that purportedly
compete with Slick 50, a Teflon-based engine lubricant
manufactured by Appellees. According to the Complaint,
Slick 50 features a formula of Teflon suspended in particle
form in motor oil. Compl. P 17; App. 16. Appellees'
marketing materials state that one quart of Slick 50
substitutes for one quart of regular motor oil at the time of
an oil change. Compl. P 18; App. 16. The Complaint alleges
that the Appellees falsely advertised that the addition of
Slick 50 would reduce the friction of moving parts, decrease
engine wear, and improve engine performance and
efficiency. See, e.g., Compl.PP 24-29.
In 1996, the Federal Trade Commission ("FTC") brought
an action under 15 U.S.C. S 45(a) challenging the veracity
of and substantiation for the claimed benefits of Slick 50.
Compl. P 31; App. 20. The parties settled. Compl. P 33;
App. 21. Under the terms of the settlement, the Appellees
were enjoined from disseminating false or unsubstantiated
claims regarding Slick 50 and agreed to provide $10 million
in discounts, cash rebates and free products to affected
consumers by January 1998. 5 Trade Reg. Rep. P 24,301.
Subsequent to the settlement of the FTC suit, Appellants
raised the same allegations in this action for damages
under S 43(a) of the Lanham Act, 15 U.S.C.S 1125(a)
(1994), and certain state consumer protection statutes that
are not at issue in this appeal. The Appellants propose to
represent:
[a]ll persons in the United States who, at any time
between the time Slick 50 was first marketed to the
public and the present, have offered for sale, either as
retailers or wholesalers, motor oil products that
compete directly with Slick 50.
3
Compl. P 15; App. 13. "Motor oil products," as Appellants
use the term in the Complaint, include "engine additive,
engine treatment products, motor oil or motor oil additives
(sometimes referred to as engine treatments) that compete
with" Slick 50. Compl. P 1; App. 9. In addition to the
allegations regarding Appellees' asserted
misrepresentations, which largely mirror the allegations in
the FTC suit, the Complaint alleges that Appellees' false
advertisements increased Slick 50's sales and
concomitantly decreased sales of the competing products
sold by the class members. The harm the Appellants allege
they suffered is loss of sales of products they sell, such as
regular motor oil, that compete with Slick 50.
Appellees moved to dismiss the Complaint for lack of
standing or, in the alternative, to strike the Appellants'
class allegations. The District Court dismissed the
Complaint on the ground that retailers like Appellants
lacked standing under the Lanham Act to pursue false
advertising claims against manufacturers of competing
products. Conte Bros. Automotive, Inc. v. Quaker State-Slick
50, Inc., 992 F. Supp. 709, 712-14 (D.N.J. 1998). More
specifically, the District Court held that only"direct
commercial competitors" or "surrogates" for direct
commercial competitors have standing to pursue claims
under S 43(a). The District Court also held that the
Complaint failed to allege facts sufficient to infer that the
requisite direct competitive relationship existed. This appeal
followed.
II.
Our review of matters of standing and statutory
construction is plenary. Davis v. Philadelphia Hous. Auth.,
121 F.3d 92, 94 n.4 (3d Cir. 1997); UPS Worldwide
Forwarding, Inc. v. United States Postal Serv., 66 F.3d 621,
624 (3d Cir. 1995), cert. denied, 561 U.S. 1171, 116 S. Ct.
1261, 134 L. Ed. 2d 210 (1996). When reviewing an order of
dismissal for lack of standing, we accept as true all
material allegations of the complaint and construe them in
favor of the plaintiff. Steel Co. v. Citizens for a Better Env't,
118 S. Ct. 1003, 1017 (1998); Trump Hotels & Casino
4
Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 482 (3d
Cir. 1998).
A.
Section 43(a) of the Lanham Act, pursuant to which this
suit was brought, provides:
(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 a 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,
shall be liable in a civil action by any person who
believes that he or she is or is likely to be
damaged by such act.
15 U.S.C. S 1125(a) (emphasis added). The question in this
suit is whether, in enacting the Lanham Act, which
includes the quoted language, Congress intended to confer
standing on plaintiffs in Appellants' position. For the
reasons set forth below, we hold that Congress did not so
intend, and we therefore affirm.
Standing is comprised of both constitutional and
prudential components. Bennett v. Spear, 117 S. Ct. 1154,
1161 (1997) (citing Warth v. Seldin, 422 U.S. 490, 498, 95
S. Ct. 2197, 2205, 45 L. Ed. 2d 343 (1975)). The
constitutional component, derived from the Art. III "case" or
"controversy" requirement, requires a plaintiff to
demonstrate that he or she suffered "injury in fact," that
the injury is "fairly traceable" to the actions of the
5
defendant, and that the injury will likely be redressed by a
favorable decision. Bennett, 117 S. Ct. at 1161; Steel Co. v.
Citizens for a Better Env't, 118 S. Ct. 1003, 1016-17 (1998).
The parties do not dispute that the allegations in the
Complaint satisfy these constitutional standing
requirements. Because this issue is jurisdictional, however,
we address it here. See Steel Co., 118 S. Ct. at 1011
(question of Art. III standing is threshold issue that should
be addressed before issues of prudential and statutory
standing). The Complaint alleges that the plaintiff class has
lost sales of motor oil products as a result of Appellees'
false advertising. Compl. P 43; App. 22. These allegations
satisfy the first two components of Art. III standing, injury
in fact and causation. Appellants seek, among other things,
"monetary damages sufficient to compensate Plaintiffs and
the Class members for their lost profits as a result of the
Defendants' conduct." Compl. P 51(C); App. 25. The
requested relief, if granted, would redress Appellants'
alleged injuries and therefore satisfies the redressability
requirement. Based on the allegations in the Complaint, we
perceive no constitutional obstacle to our consideration of
this case.
Under certain circumstances, prudential, as opposed to
constitutional, standing considerations limit a plaintiff's
ability to bring suit. These prudential considerations are a
set of judge-made rules forming an integral part of "judicial
self-government." Lujan v. Defenders of Wildlife, 504 U.S.
555, 560, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992).
The aim of this form of judicial self-governance 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." Bender v. Williamsport Area Sch.
Dist., 475 U.S. 534, 546 n.8, 106 S. Ct. 1326, 1334 n.8, 89
L. Ed. 2d 501 (1986); see also Phillips Petroleum Co. v.
Shutts, 472 U.S. 797, 804, 105 S. Ct. 2965, 2970, 86
L. Ed. 2d 628 (1985) (federal courts adopt prudential limits
on standing "to avoid deciding questions of broad social
import where no individual rights would be vindicated and
to limit access to the federal courts to those litigants best
suited to assert a particular claim") (quoting Gladstone,
Realtors v. Village of Bellwood, 441 U.S. 91, 99-100, 99 S.
Ct. 1601, 1607-08, 60 L. Ed. 2d 66 (1979)).
6
No single formula is capable of answering every
prudential standing question. Clarke v. Securities Indus.
Ass'n, 479 U.S. 388, 400 n.16, 107 S. Ct. 750, 757 n.16,
93 L. Ed. 2d 757 (1987) ("Generalizations about standing to
sue are largely worthless as such.") (quoting Data
Processing Serv. v. Camp, 397 U.S. 150, 151, 90 S. Ct. 827,
829, 25 L. Ed. 2d 184 (1970)); see also Associated Gen.
Contractors v. California State Council of Carpenters, 459
U.S. 519, 537 n.33, 103 S. Ct. 897, 74 L. Ed. 2d 723 (1983)
("[I]t is simply not possible to fashion an across-the-board
and easily applied standing rule which can serve as a tool
of decision for every case."). Several considerations falling
within the general rubric of prudential standing, however,
are typically invoked. Thus, it is generally required (1) that
a litigant "assert his [or her] own legal interests rather than
those of third parties," (2) that courts "refrain from
adjudicating abstract questions of wide public significance
which amount to generalized grievances," and (3) that a
litigant demonstrate that the asserted interests are
arguably within the "zone of interests" intended to be
protected by the statute, rule or constitutional provision on
which the claim is based. Wheeler v. Travelers Ins. Co., 22
F.3d 534, 538 (3d Cir. 1994) (citations omitted); see also
UPS Worldwide Forwarding, Inc. v. United States Postal
Serv., 66 F.3d 621 (3d Cir. 1995); Trump Hotels & Casino
Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 485 (3d
Cir. 1998); Davis v. Philadelphia Hous. Auth., 121 F.3d 92,
96 (3d Cir. 1997).
In this case, the Appellants assert their own interests,
and their dispute is concrete in nature. Further, neither of
the parties has framed the issue by reference to the "zone
of interests" test. The issue in this appeal, rather, is the
Appellants' statutory standing -- that is, whether Congress
intended parties in Appellants' position to have standing to
sue under S 43(a).
Though sometimes analogized to the "zone of interests"
test identified above, the question of a party's standing to
sue under a given statute is not governed exclusively by the
"zone of interests" test. The "zone of interests" test
developed in the administrative law context where the issue
is whether a person aggrieved by an administrative decision
7
has standing to challenge it under S 10 of the
Administrative Procedures Act, 5 U.S.C. S 702 (1994) (the
"APA"). See Davis, 121 F.3d at 96-98 (recounting
development of "zone of interests" test). Certain attributes
of the "zone of interests" test, most notably its liberal tilt
toward recognizing standing to challenge agency action, see
id. at 98 ("zone of interests" test "not meant to be especially
demanding") (quoting Clarke, 479 U.S. at 399, 107 S. Ct. at
757), were developed in the administrative context, and are
most applicable there. Clarke, 479 U.S. at 400 n.16 ("The
principal cases in which the ``zone of interest' test has been
applied are those involving claims under the APA, and the
test is most usefully understood as a gloss on the meaning
of S 702."); cf. Bennett, 117 S. Ct. at 1161 ("[T]he breadth of
the zone of interests varies according to the provisions of
law at issue, so that what comes within the zone of
interests of a statute for purposes of obtaining judicial
review of administrative action under the ``generous review
provisions' of the [APA] may not do so for other purposes.")
(citations omitted); see also William A. Fletcher, The
Structure of Standing, 98 Yale L. J. 221, 255-263 (1988)
(criticizing use of "zone of interest" test outside of
administrative context).
The "zone of interests" test, therefore, is not exclusive for
determining statutory standing outside of the
administrative context in which it was formulated, Clarke,
479 U.S. at 400 n.16, 107 S. Ct. at 757 n.16, 93 L. Ed. 2d
757 ("[w]hile inquiries into reviewability or prudential
standing in other contexts may bear some resemblance to
a ``zone of interests' inquiry under the [APA], it is not a test
of universal application"); see also Davis, 121 F.3d at 97
n.7 (recognizing that variations of the zone of interests test
apply outside of the administrative review context), and it is
clear that we are free to consider other barometers of
congressional intent in determining whether a party has
standing to sue under a particular statute. See Associated
Gen. Contractors v. California State Council of Carpenters,
459 U.S. 519, 537 n.33 (1983) (focusing exclusively on
directness of injury or whether injury is "within zone of
interests protected by antitrust laws" leads to contradictory
and inconsistent results).
8
We believe it is more appropriate to inquire as to the
class's statutory standing free from the formalistic
constraints of the "zone of interests" test and its links to
administrative review. For purposes of determining a party's
standing under S 43(a), we equate our task with the inquiry
into congressional intent conducted by the Supreme Court
in Associated General in determining standing to sue under
the Clayton Act. See Clarke, 479 U.S. at 399 (inquiry "at
bottom . . . turns on congressional intent"). We turn to this
question in Section II(C) infra.
B.
Before reaching this central issue, however, we mustfirst
address a related question of statutory interpretation.
Because prudential standing doctrine is judge-made and
not the product of constitutional restraints on the power of
the federal courts to hear claims, Congress can eliminate
prudential restrictions on standing if it so desires. Bennett,
117 S. Ct. at 1161; United Food & Commercial Workers
Union v. Brown Group, Inc., 517 U.S. 544, 557, 116 S. Ct.
1529, 1536, 134 L. Ed. 2d 758 (1996); Warth v. Seldin, 422
U.S. 490, 501, 95 S. Ct. 2197, 2206 (1975); Gladstone,
Realtors v. Village of Bellwood, 441 U.S. 91, 103 n.9, 99 S.
Ct. 1601, 1609 n.9, 60 L. Ed. 2d 66 (1979); Trafficante v.
Metropolitan Life Ins. Co., 409 U.S. 205, 209, 93 S. Ct. 364,
366, 34 L. Ed. 2d 415 (1972). As a matter of statutory
interpretation, however, Congress is presumed to
incorporate background prudential standing principles,
unless the statute expressly negates them. Bennett, 117 S.
Ct. at 1162; Brown Group, 517 U.S. at 557, 116 S. Ct. at
1536.
The first inquiry, then, is whether Congress expressly
negated prudential standing doctrine in passing the
Lanham Act. In determining whether Congress intended to
abrogate the background presumption that prudential
standing doctrine applies, we consider the statutory text,
its structure, and its legislative history. See Bennett, 117 S.
Ct. at 1162-63 (considering purpose of Endangered Species
Act of 1973, Pub. L. No. 93-205, 87 Stat. 884 (codified as
amended in scattered sections of 16 U.S.C.)), in
determining whether Congress abrogated prudential
9
standing doctrine); Gladstone, 441 U.S. at 107-109, 99 S.
Ct. at 1612-13, 60 L. Ed. 2d 66 (considering legislative
history in determining whether Congress abrogated
prudential standing doctrine); cf. Block v. Community
Nutrition Inst., 467 U.S. 340, 344, 104 S. Ct. 2450, 2453-
54, 81 L. Ed. 2d 270 (1984) (whether party has standing to
challenge administrative ruling interpreting Agricultural
Marketing Agreement Act of 1937 properly determined"not
only from its express language, but also from the structure
of the statutory scheme, its objectives, [and] its legislative
history"). We hold, based on the text of S 43(a), the explicit
language of the Lanham Act declaring its purpose, as well
as the Lanham Act's legislative history, that Congress did
not expressly negate prudential standing doctrine in
passing the Lanham Act.
We note first of all that background presumptions of
prudential standing apply unless expressly negated by
Congress. Bennett, 117 S. Ct. at 1162. The Supreme Court
has twice held that Congress has not expressly negated
background prudential standing doctrine merely by passing
a statute the text of which admits of a broad interpretation.
Thus, in Bennett, while the Supreme Court ultimately
concluded that Congress intended standing to be limited
only by constitutional constraints on the federal judicial
power, it did so only after considering the broader purposes
of the statute. Id. at 1162-63 ("Our readiness to take the
term ``any person'1 at face value is greatly augmented by two
_________________________________________________________________
1. The statute at issue in Bennet, the Endangered Species Act of 1973,
Pub. L. No. 93-205, 87 Stat. 884 (codified as amended in scattered
sections of 16 U.S.C.), provides:
(1) Except as provided in paragraph (2) of this subsection any
person may commence a civil suit on his own behalf--
(A) to enjoin any person, including the United States and any
other governmental instrumentality or agency (to the extent
permitted by the eleventh amendment to the Constitution), who is
alleged to be in violation of any provision of this chapter or
regulation issued under the authority thereof; or
. . . . . . . .
(C) against the Secretary where there is alleged a failure of the
Secretary to perform any act or duty under section 1533 of this
10
interrelated considerations: that the overall subject matter
of this legislation is the environment (a matter in which it
is common to think all persons have an interest) and that
the obvious purpose of the particular provision in question
is to encourage enforcement by so-called ``private attorneys
general.' "). And in Associated General, the case most
directly on point, the Supreme Court held that Congress
incorporated prudential standing principles when it
promulgated the Clayton Act. Associated General, 459 U.S.
at 535 & n.31 (considering prudential limits on standing
despite statutory language giving "[a]ny person who shall be
injured in his business or property" standing to sue under
the Clayton Act).2
Based on the foregoing analysis, we must reject
Appellants' contention that they are entitled to bring suit
based on a literal reading of S 43(a). Initially, we note that
our precedent goes beyond the text of the Lanham Act in
determining whether a party has standing. See, e.g., Thorn
v. Reliance Van Co., 736 F.2d 929, 931-32 (3d Cir. 1984)
(applying plain meaning rule to S 43(a) and then applying
prudential standing doctrine before concluding that plaintiff
had standing to bring action). The Appellants' plain
language argument, moreover, misses the mark for a more
fundamental reason. Limiting standing according to well-
established prudential standing doctrine does no violence to
the plain meaning of the statute, because, as explained
above, Congress intends to incorporate prudential standing
_________________________________________________________________
title which is not discretionary with the Secretary. The district
courts shall have jurisdiction, without regard to the amount in
controversy or the citizenship of the parties, to enforce any such
provision or regulation, or to order the Secretary to perform such
act or duty, as the case may be . . . .
16 U.S.C. S 1540(g) (1994).
2. Although the Court in Associated General did not make explicit
findings regarding whether Congress expressly negated background
prudential standing doctrine, the Court has subsequently cited
Associated General for precisely that proposition. See Bennett, 117 S. Ct.
at 1162 (citing Associated General for the proposition that Congress
legislates against the background of prudential standing doctrine unless
it is expressly negated). We discuss Associated General at greater length
in Section II(C) of this opinion.
11
principles unless it expresses its desire to negate them.
Controlling precedent compels us to consider the statutory
text in the larger context of both the statute's purpose and
its background before we can conclude that Congress
intended to confer standing as broadly as the statute's
language suggests.
First, we consider the text of the statute in discerning
Congressional intent. In Bennett, the Supreme Court
considered whether Congress intended to expand standing
under the Endangered Species Act of 1973 ("ESA") to the
extent permitted by Art. III. The statutory language at issue
in the ESA, which said that "any person" could commence
suit, is, as noted by the Court, "an authorization of
remarkable breadth when compared with the language
Congress ordinarily uses." Id. at 1162. It is, indeed, broader
than the relevant language in S 43(a), which says that "any
person who believes that he or she is or is likely to be
damaged" by conduct proscribed by the Lanham Act can
bring suit. We find it significant that the Lanham Act limits
the class of persons entitled to sue to those who can trace
their injury to the anti-competitive conduct proscribed by
the Act, and find in the text support for our conclusion that
Congress did not abrogate principles of prudential
standing. Furthermore, we note that the Supreme Court
recently recognized that prudential standing principles were
incorporated into the Federal Election Campaign Act of
1971, 86 Stat. 11, as amended, 2 U.S.C. S 431 et seq., an
act with operative language at least as expansive as that
found in the Lanham Act. Federal Election Comm'n. v.
Akins, 118 S. Ct. 1777, 1783 (1998); 2 U.S.C.
S 437g(a)(8)(A) (1994) ("[a]ny party aggrieved" may file a
petition in district court seeking review).
The structure of the Lanham Act provides further support
for our conclusion that Congress did not intend to abrogate
prudential limitations on standing. Congress specified its
intent in enacting the Lanham Act in S 45 of the statute,
which reads in pertinent part:
The intent of this chapter is to regulate commerce
within the control of Congress by making actionable
the deceptive and misleading use of marks in such
commerce; to protect registered marks used in such
12
commerce from interference by State, or territorial
legislation; to protect persons engaged in such
commerce against unfair competition; to prevent
fraud and deception in such commerce by the use of
reproductions, copies, counterfeits, or colorable
imitations of registered marks, and to provide rights
and remedies stipulated by treaties and conventions
respecting trade-marks, trade names, and unfair
competition entered into between the United States and
foreign nations.
15 U.S.C. S 1127 (1994) (emphasis added).3 This section
makes clear that the focus of statute is on anti-competitive
conduct in a commercial context. Conferring standing to
the full extent implied by the text of S 43(a) would give
standing to parties, such as consumers, having no
competitive or commercial interests affected by the conduct
at issue. This would not only ignore the purpose of the
Lanham Act as expressed by S 45, but would run contrary
to our precedent, see Serbin v. Ziebart Int'l Corp., 11 F.3d
1163, 1174 (3d Cir. 1993) (consumers lack standing to
bring Lanham Act false advertising claim), and that of other
federal appellate courts. See Colligan v. Activities Club of
New York, Ltd., 442 F.2d 686 (2d Cir.) (same), cert. denied,
404 U.S. 1004, 92 S. Ct. 559, 30 L. Ed. 2d 557 (1971);
Barrus v. Sylvania, 55 F.3d 468 (9th Cir. 1995) (same);
Dovenmuehle v. Gilldorn Mortgage Midwest Corp., 871 F.2d
697 (7th Cir. 1989) (same). The congressionally-stated
purpose of the Lanham Act, far from indicating an express
intent to abrogate prudential standing doctrine, evidences
an intent to limit standing to a narrow class of potential
plaintiffs possessing interests the protection of which
furthers the purposes of the Lanham Act. The Lanham Act's
commercial subject matter and express statement of
purpose thus distinguish it from the statute considered by
the Supreme Court in Bennett. The Supreme Court noted
that the subject matter of the ESA -- the environment --
readily admitted of a finding that Congress intended to
expand standing to the limit permitted by Art. III. Bennett,
_________________________________________________________________
3. The quoted portion of S 45 has not been altered since the Lanham Act
was enacted in 1946. See Pub. L. No. 489, reprinted in 1946
U.S.C.C.A.N. 412, 429.
13
117 S. Ct. at 1163 (noting that "the subject of the
legislation makes the intent to permit enforcement by
everyman even more plausible"). The same cannot be said
of the expressly commercial purpose of the Lanham Act.
Our conclusion regarding congressional intent is
reinforced by the legislative history of the Lanham Act. The
Senate Report regarding the Lanham Act repeatedly
references the Act's focus on anti-competitive conduct in
the commercial arena. See S. Rep. No. 1333, 79th Cong., 2d
Sess. (1946), reprinted in 1946 U.S.C.C.A.N. 1274, 1275
("There is no essential difference between trade-mark
infringement and what is loosely called unfair
competition."); id. (goal of Lanham Act is "to foster fair
competition, and to secure to the business community the
advantages of reputation and good will by preventing their
diversion from those who have created them to those who
have not"). The legislative history accompanying the 1988
revisions to the Lanham Act further emphasizes the Act's
focus on commercial, anti-competitive conduct. See S. Rep.
No. 100-515, 100th Cong., 2d Sess., reprinted in 1988
U.S.C.C.A.N. 5577, 5604 (May 12, 1988) (characterizing
"competition between the parties" as a "traditional
trademark infringement question[ ]"); id. at 5603 (identifying
deterrence of acts of "unfair competition" as goal of Lanham
Act). Our case law also recognizes the essentially
commercial nature of the Lanham Act. Granite State Ins.
Co. v. AAMCO Transmissions, Inc., 57 F.3d 316, 321 (3d
Cir. 1995) (focus of the statute is on "commercial interests
[that] have been harmed by a competitor's false
advertising.") (emphasis in original).
In enacting the Lanham Act in 1946, Congress sought to
bring together various statutes regarding trademark
protection that previously had been scattered throughout
the United States Code. See id. at 1275-76 ("There are
many reasons why there should be a new trade-mark
statute. . . . [Trademark statutes have] been amended from
time to time and supplemented by the act of March 19,
1920, which has also been amended in several particulars.
The result is a confused situation. . . . It seems desirable to
collect these various statutes and have them in a single
enactment."). Nothing in the Lanham Act's legislative
14
history evidences an intent to work a major change in the
class of plaintiffs entitled to sue for damages. See id. at
1275 ("The present act is substantially the act of February
20, 1905."); S. Rep. No. 100-515, 100th Cong., 2d Sess.,
reprinted in 1988 U.S.C.C.A.N. 5577, 5604 (May 12, 1988)
(language regarding standing to bring action under S 43(a)
unchanged by 1988 amendments).
Earlier trademark statutes defined the class of eligible
plaintiffs narrowly and in keeping with the goal of federal
trademark law to protect good will. See S 7 of 1881 Act, 21
Stat. 502, 504, 46th Cong., 3d Sess. (Mar. 3, 1881)
(limiting right to sue to "owners" of trademark); S 16 of
1905 Act, 33 Stat. 724, 728, 58th Cong., 3d Sess. (Feb. 20,
1905) (same); S 4 of 1920 Act, 41 Stat. 533, 534, 66th
Cong., 2d Sess. (Mar. 19, 1920) (same). In addition, these
earlier acts were drafted against the backdrop of common
law doctrine similar to today's prudential standing doctrine
that limited the eligible plaintiff class. See Inwood Lab., Inc.
v. Ives Lab., Inc., 456 U.S. 844, 102 S. Ct. 2182, 72
L. Ed. 2d 606 (1982) ("purpose of the Lanham Act was to
codify and unify the common law of unfair competition and
trademark protection"); see also Bonito Boats, Inc. v.
Thunder Craft Boats, Inc., 489 U.S. 141, 109 S. Ct. 971,
103 L. Ed. 2d 118 (1989) ("law of unfair competition has its
roots in the common-law tort of deceit"); see generally 1
J.T. McCarthy, McCarthy on Trademarks and Unfair
Competition S 5:2 (4th ed. 1996) (discussing common-law
origins of Lanham Act). There is no indication that
Congress intended in any of the Lanham Act's statutory
precursors, or in the Lanham Act itself for that matter, to
abrogate the common law limitations on standing to sue.
Cf. Associated General, 459 U.S. at 531-34 (describing
congressional intent to incorporate common-law principles
constraining class of plaintiffs entitled to sue under Clayton
Act).
In light of the text of S 43(a), other textual provisions
defining the purpose of the Lanham Act, the Lanham Act's
legislative history and its common-law origins, we hold that
Congress did not intend to abrogate prudential limitations
on the standing of plaintiffs to bring suit under S 43(a).
15
C.
Our previous opinions analyzing standing under S 43(a)
have assumed, without undergoing the analysis prescribed
by Supreme Court cases such as Bennett, that prudential
standing doctrine limits the class of plaintiffs entitled to
bring suit. In Thorn v. Reliance Van Co., 736 F.2d 929 (3d
Cir. 1984), we first addressed S 43(a)'s standing
requirements.4 The issue there was whether an individual
investor in a bankrupt company had standing to sue for
allegedly false advertisements by a competitor of the
bankrupt company. Thorn, 736 F.2d at 931. We looked to
S 43(a)'s plain language and concluded that "it is this
court's function to grant standing to Thorn if he is a person
who believes that he has been damaged by [the defendant's]
use of false representations." Id. at 932. Because the
investor alleged with specificity both "a section 43(a)
violation and a resulting injury," we concluded that "the
mere fact that Thorn [was] not a competitor of [the
defendant] d[id] not, in and of itself, preclude him from
bringing suit under section 43(a)." Id. at 933. Though we
thus concluded that the plaintiff had satisfied
constitutional standing prerequisites, we went on to
consider whether "there [we]re any prudential reasons
which support a judicial determination that Thorn[was]
without standing . . . ." Id. We defined the "dispositive
question" of a party's prudential standing as "whether the
party has a reasonable interest to be protected against false
advertising." Id. (quoting Smith v. Montoro, 648 F.2d 602,
608 (9th Cir. 1981) (quoting 1 R. Callmann, Unfair
Competition, Trademarks and Monopolies, S 18.2(b) at 625
(3d ed. 1967))). While we never precisely defined the critical
term "reasonable interest," we noted that Thorn's
_________________________________________________________________
4. Though S 43(a) was modified after the Thorn decision, the operative
language defining the class of persons entitled to bring a private
damages action has not undergone substantive change. See Thorn, 736
F.2d at 931 (quoting the then-existing S 43(a): "Section 43(a) provides
that an action may be brought ``by any person doing business in the
locality falsely indicated as that of origin or in the region in which
said
locality is situated, or by any person who believes that he is or is
likely
to be damaged by the use of any such false description or
representation.' ").
16
allegations of injury -- notably the loss of his investment
due to the defendant's false advertising campaign-- were
"sufficient[ly] direct" to satisfy any prudential standing
considerations. Id.
Our subsequent decisions have carried forward this
prudential "reasonable interest" requirement and have
grappled with defining the term with greater precision. We
revisited the issue of standing under S 43(a) in Serbin v.
Ziebart Int'l Corp., 11 F.3d 1163 (3d Cir. 1993). In that
case, the issue was whether a consumer whose purchase
was allegedly influenced by false advertising had standing
under the Lanham Act to bring a suit for damages. We held
that consumers lack standing to bring false advertising
claims under the Lanham Act, and we reaffirmed the
principle announced in Thorn that, the plain language of
S 43(a) notwithstanding, prudential concerns dictate that a
sufficiently direct injury be alleged before standing to sue is
recognized:
The "sufficient direct injury" alleged by Thorn was that
his investment in Florida-Eastern was destroyed by the
misconduct of one of Florida-Eastern's chief
competitors. Thus, this Court's determination that the
plaintiff in Thorn had a "reasonable interest to be
protected under section 43(a)" permitted a false
advertising suit by one who, while not in his own
person a competitor of the alleged rogue enterprise,
was, nonetheless, so situated that he could quite
reasonably be regarded as a surrogate for such
competitor.
Serbin, 11 F.3d at 1175 (emphasis added). We fleshed out
the concept of "reasonable interest" by quoting extensively
from the Callmann treatise relied upon in Thorn in
formulating our "reasonable interest" requirement:
The language of the Lanham Act . . . states that the
wrongdoer in cases of false advertising is "liable to a
civil action . . . by any person who believes that he is
or is likely to be damaged by the use of any such false
description or representation." Indeed the statute goes
further in recognizing that the plaintiff need not even
be "in the same line of business and in competition
17
with defendant"; it will be sufficient, in the case of a
false designation of origin, that the plaintiff is "doing
business in the locality falsely indicated"5 and in the
case of a false description of goods or services, that he
believes he is or is likely to be damaged, because, for
instance, the parties are doing business on
different economic levels. The dispositive question
should be whether plaintiff has a reasonable interest to
be protected against false advertising.
Serbin, 11 F.3d at 1176-77 (emphasis added).
The emphasized language, quoted favorably in Serbin,
implies that parties who are not in direct competition
(because they are "doing business on different economic
levels") nevertheless may have standing to sue if they have
a "reasonable interest to be protected against false
advertising." This language, implicitly adopted in Serbin,
exists in some tension with the District Court's holding that
only direct competitors or their surrogates have standing.
Moreover, the District Court's holding conflicts with cases
from other courts of appeals that confer standing upon
parties who are not direct competitors or "surrogates" for
the same. See generally 4 Thomas J. McCarthy, McCarthy
on Trademarks and Unfair Competition S 27:32 at 27-51
(4th ed. 1996) ("With the possible exception of the Ninth
Circuit, the courts have held that the plaintiff and
defendant need not be in direct competition with each other
for plaintiff to have standing to sue . . . under S 43(a)."); see
also PPX Enters., Inc. v. Audiofidelity, Inc., 746 F.2d 120 (2d
_________________________________________________________________
5. This analysis rests upon an earlier version ofS 43(a), which, unlike
the
present statute enacted in 1992, appeared to create two classes of
parties with standing to sue. The earlier version of the statute provided
that an action could be brought
by any person doing business in the locality falsely indicated as
that
of origin or in the region in which said locality is situated, or
by any
person who believes that he is or is likely to be damaged by the
use
of any such false description or representation.
15 U.S.C. S 1125(a) (1988) (emphasis added). The text of the present
statute, which is quoted earlier in our opinion, does not differentiate
textually between the standing of "false designation" plaintiffs and
others
to bring suit.
18
Cir. 1984) (recognizing standing of owner of royalty streams
from music recording to bring action against distributor of
falsely labeled record albums); Camel Hair & Cashmere
Inst., Inc. v. Associated Dry Goods Corp., 799 F.2d 6 (1st
Cir. 1986) (trade association of makers of cashmere fibers
and fabrics, but not of finished coats, held to have standing
to sue for a preliminary injunction against retailers of coats
falsely labeled as containing more cashmere than they had).6
For this reason, we do not adopt the standard employed by
the District Court in this case as our test for standing
under S 43(a).
As discussed earlier, there exists no single overarching
test for determining the standing to sue under a given
statute. With respect to S 43(a) of the Lanham Act, the
Ninth Circuit jurisprudence in this area suggests one
alternative. Under Ninth Circuit law, the class of persons
entitled to bring suit under S 43(a) depends on what type of
Lanham Act violation is being alleged. For violations of the
"false association" prong of S 43(a), 7 any party with a
"commercial interest in the product wrongfully identified,"
whether in competition with the defendant or not, has
standing to bring a S 43(a) action. Waits v. Frito-Lay, Inc.,
978 F.2d 1093, 1009 (9th Cir. 1992). For violations of the
"false advertising" prong of S 43(a), 8 only parties who allege
a "discernibly competitive injury" have standing. Id. at
1109.
Applying this dichotomous approach, the Ninth Circuit
has held that a plaintiff who alleged his name was replaced
_________________________________________________________________
6. But see L.S. Heath & Son, Inc. v. AT & T Info. Sys., Inc., 9 F.3d 561,
575 (7th Cir. 1993) ("Because Heath is not in the computer business and
thus is not a competitor of AT&T, Heath does not have standing to raise
the false advertising claim."); Stanfield v. Osborne Indus., Inc., 52 F.3d
867, 872 (10th Cir.) ("[T]o have standing for a false advertising claim,
the
plaintiff must be a competitor of the defendant and allege a competitive
injury."), cert. denied, 516 U.S. 920 (1995).
7. A "false association" claim refers to false representations concerning
the origin, association, or endorsement of goods or services through the
wrongful use of another's distinctive mark, name, trade dress, or other
device. Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1108 (9th Cir. 1992).
8. A "false advertising" claim refers to false representations in
advertising
concerning the qualities of goods or services. Waits, 978 F.2d at 1108.
19
with that of another actor had standing to sue the movie's
producer under the "false association" prong even though
he was not in competition with the producer. Smith v.
Montoro, 648 F.2d 602 (9th Cir. 1981). Similarly, a singer
whose distinctive voice was imitated in a commercial was
deemed to have standing under the "false association"
prong of S 43(a) even though he could not allege a
competitive injury vis-a-vis the company that aired the
commercial. Waits, 978 F.2d at 1093. On the other hand,
a movie producer lacked standing under the "false
advertising" prong to bring a S 43(a) suit against various
movie theaters who falsely described the movie as bearing
an "R" rating as opposed to a "PG" rating because the
parties were not competitors. Halicki v. United Artists
Communications, Inc., 812 F.2d 1213 (9th Cir. 1987). The
Seventh Circuit followed the Ninth Circuit in L.S. Heath &
Son, Inc. v. AT & T Info. Sys., Inc., 9 F.3d 561, 575 (7th Cir.
1993) ("Because Heath is not in the computer business and
thus is not a competitor of AT&T, Heath does not have
standing to raise the false advertising claim.").
We reject the Ninth Circuit's approach. Section 43(a)
provides no support for drawing a distinction in standing
depending on the type of S 43(a) violation alleged. The
operative language that provides for standing --"any
person who believes that he or she is or is likely to be
damaged" -- does not purport to distinguish between the
two types of actions available under S 43(a). We also note
that the Ninth Circuit's approach has been the subject of
criticism in subsequent cases and in scholarly commentary.
See, e.g., Guarino v. Sun Co., Inc., 819 F. Supp. 405, 409
(D.N.J. 1993) (declining to follow Ninth Circuit and noting
that the distinction has been rejected by McCarthy); 4 J.
Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition S 27:33, at 27-52 to 27-53 (1998) ("The passe
semantic argument [in Halicki] that there cannot be ``unfair
competition' without ``competition' between the parties has
often been rejected."); James S. Wrona, False Advertising
and Consumer Standing Under Section 43(a) of the Lanham
Act: Broad Consumer Protection Legislation or a Narrow Pro-
Competitive Measure?, 47 Rutgers L. Rev. 1085, 1136-38
(1995) ("The Ninth Circuit should apply the same criteria
20
when reviewing standing under both section 43(a)
subparts.").
In short, the Ninth Circuit's approach enjoys no textual
support and fragments standing jurisprudence under
S 43(a); accordingly, we decline to adopt the Ninth Circuit's
reasoning.
The test for antitrust standing set forth by the Supreme
Court in Associated Gen. Contractors of California, Inc. v.
California State Council of Carpenters, 459 U.S. 519 (1983),
provides an appropriate method for adding content to our
"reasonable interest" test, and we therefore adopt it as the
test for determining a party's statutory standing under
S 43(a) of the Lanham Act. While we are thefirst court of
appeals to utilize this standing analysis in the context of a
Lanham Act claim, we note that its use has the imprimatur
of two prominent commentators in the area. See 4
McCarthy, McCarthy on Trademarks and Unfair Competition
S 27:32 n.1 (1998) ("In the author's opinion, some limit on
the S 43(a) standing of persons remote from the directly
impacted party should be applied by analogy to antitrust
law, such as use of the criteria listed in Associated General
Contractors, Inc. v. California State Council of Carpenters,
459 U.S. 519 (1983)."); Restatement (Third) Unfair
Competition, S 3, cmt. f (1995) ("In determining whether an
asserted injury is sufficiently direct to justify the imposition
of liability, the Supreme Court's analysis of similar issues
under federal antitrust law may offer a useful analogy.").
In Associated General, the Supreme Court addressed the
standing of plaintiffs to bring a private action for damages
under S 4 of the Clayton Act, which contains language
equally expansive as the standing provisions of the Lanham
Act. 15 U.S.C. S 15 provides, in pertinent part:
Any person who shall be injured in his business or
property by reason of anything forbidden in the
antitrust laws may sue therefor in any district court of
the United States . . . .
The Supreme Court rejected a "literal reading of the
statute," noting that such an interpretation would be
"broad enough to encompass every harm that can be
attributed directly or indirectly to the consequences of an
21
antitrust violation." Associated General, 459 U.S. at 529.
Instead, the Court applied principles of "antitrust standing"
developed by the lower courts and commentators in
determining standing to sue under the Clayton Act. Id. at
535 & n.31 ("Harm to the antitrust plaintiff is sufficient to
satisfy the constitutional standing requirement of injury in
fact, but the court must make a further determination
whether the plaintiff is a proper party to bring a private
antitrust action."). The Court then identified a number of
factors courts should consider in answering this question:
(1) The nature of the plaintiff's alleged injury: Is the
injury "of a type that Congress sought to redress
in providing a private remedy for violations of the
antitrust laws"? Id. at 538.
(2) The directness or indirectness of the asserted
injury. Id. at 540.
(3) The proximity or remoteness of the party to the
alleged injurious conduct. Id. at 542.
(4) The speculativeness of the damages claim. Id.
(5) The risk of duplicative damages or complexity in
apportioning damages. Id. at 543-44.
Weighing these factors, the Supreme Court determined
that a union, which claimed injury due to the anti-
competitive conduct of a multi-employer association with
which the union had negotiated a collective bargaining
agreement, lacked standing to pursue a private action
under the Clayton Act. The union's theory was that the
multi-employer association coerced third parties and
certain of its members to contract with nonunion entities,
thereby restraining the union's business activities. First,
the Court noted that the union was neither a consumer nor
a competitor in the market in which trade was restrained
and that its interests would not necessarily be served or
disserved by enhanced competition in the market. Since the
primary aim of the Clayton Act is to protect economic
freedom in the relevant market, the Court found that the
nature of the plaintiff 's injury was outside the"area of
congressional concern" and therefore weighed against
recognizing standing. Id. at 538-39.
22
Next, the Supreme Court noted that the union's injuries
were only an indirect result of whatever harm may have
been suffered by the parties who were coerced. "The
existence of an identifiable class of persons whose self-
interest would normally motivate them to vindicate the
public interest in antitrust enforcement diminishes the
justification for allowing a more remote party such as the
Union to perform the office of a private attorney general."
Id. at 542.
Finally, the Supreme Court pointed to the indirect nature
of the union's injury as implicating practical concerns of
judicial administration. If remote plaintiffs like the union
were to be permitted to sue for damages, "potential
plaintiffs at each level in the distribution chain would be in
a position to assert conflicting claims to a common fund
. . . thereby creating the danger of multiple liability" on the
one hand or a "massive and complex" damages litigation on
the other. Id. at 544-55. The Supreme Court concluded:
[T]he nature of the Union's injury, the tenuous and
speculative character of the relationship between the
alleged antitrust violation and the Union's alleged
injury, the potential for duplicative recovery or complex
apportionment of damages, and the existence of more
direct victims of the alleged conspiracy [ ] weigh heavily
against judicial enforcement of the Union's antitrust
claim.
Id. at 545.
Applying these same factors to Appellants' Lanham Act
claim similarly weighs against judicial enforcement of this
claim. First, while there may be circumstances in which a
non-competitor may have standing to sue as we noted
earlier, the focus of the Lanham Act is on "commercial
interests [that] have been harmed by a competitor's false
advertising," Granite State Ins. Co. v. AAMCO
Transmissions, Inc., 57 F.3d 316, 321 (3d Cir. 1995)
(emphasis in original), and in "secur[ing] to the business
community the advantages of reputation and good will by
preventing their diversion from those who have created
them to those who have not." S. Rep. No. 1333, 79th Cong.,
2d Sess. (1946), reprinted in 1946 U.S.C.C.A.N. 1274, 1275.
23
While the Appellants have alleged a commercial interest,
they have not alleged competitive harm. Nor is there any
indication that Appellants' good will or reputation have
been harmed directly or indirectly. This is in contrast to
cases like Waits and Camel Hair, in which the plaintiffs'
good will and reputation were impacted by the defendants'
conduct -- in Waits by falsely assuming the plaintiff 's
voice, and in Camel Hair by falsely representing the
characteristics of products marketed by the plaintiffs. As
the District Court stated, "plaintiffs do not allege that
defendants ran advertisements that said ``don't buy engine
additive at Conte Brothers or Hi/Tor -- instead, buy Slick
50 directly from the manufacturer.' " Conte Bros., 992 F.
Supp. at 715. The type of injury suffered by Appellants --
loss of sales at the retail level because of alleged false
advertising -- does not impact the Appellants' ability to
compete; nor does it detract from the Appellants' reputation
or good will. Therefore, the alleged harm is not of the "type
that Congress sought to redress" by enacting the Lanham
Act. Associated General, 459 U.S. at 538.
Appellants' remoteness from the allegedly harmful
conduct also weighs against recognizing a right to sue on
these facts. Here, as in Associated General, the "existence
of an identifiable class of persons" -- manufacturers of
competing products -- "whose self-interest would normally
motivate them to vindicate the public interest . . .
diminishes the justification for allowing a more remote
party . . . to perform the office of a private attorney
general." Associated General, 516 U.S. at 542. Indeed, our
decision in Serbin, in which we held that consumers whose
purchases were influenced by false advertising lacked
standing under S 43(a), involved more directly harmed
plaintiffs than the retailer class in this case.
Furthermore, any damages suffered by Appellants were,
if not speculative, then certainly avoidable. There is no
allegation that Appellants, as retailers, were unable to stock
Slick 50 for resale. If the retailers responded to the
artificially-increased popularity of Slick 50 that allegedly
resulted from the false advertising campaign by stocking
Slick 50, they would not have suffered any damages. As the
District Court recognized, the "interest that plaintiffs had in
24
preserving the reputation of motor oil and other competitors
of Slick 50 appears to be a theoretical, rather than actual
economic interest." Conte Bros., 992 F. Supp. at 715-16.
This is in contrast to the concrete and unavoidable nature
of the injury suffered by Quaker State's competitors who
cannot reasonably be expected to retool their factory
operations to meet the artificially-buoyed demand for Slick
50.
Finally, recognizing the right of every potentially injured
party in the distribution chain to bring a private damages
action would subject defendant firms to multiple liability for
the same conduct and would result in administratively
complex damages proceedings. Additionally, such a holding
could result in an enormous number of relatively
insignificant cases being litigated in the federal courts. If
every retailer had a cause of action for false advertising
regardless of the amount in controversy, regardless of any
impact on the retailer's ability to compete, regardless of any
impact on the retailer's good will or reputation, and
regardless of the remote nature of the injury suffered, the
impact on the federal courts could be significant. For
example, under Appellants' theory, every corner grocer in
America alleging that his sales of one brand of chocolate
bars have fallen could bring a federal action against the
manufacturer of another brand for falsely representing the
chocolate content of its product. Such an action hardly
seems befitting of a statute that was designed primarily to
resurrect the federal tort of unfair competition after it was
consigned to the post-Erie ashheap. See 4 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition
S 27:7 at 27-12 (Lanham Act drafted in part as "a reaction
to the 1938 Erie Railroad Supreme Court decision, which it
was widely felt, had eliminated the existing body of federal
unfair competition common law.").
D.
In the alternative, the Appellants argue that they have
sufficiently alleged a directly competitive relationship to
withstand a motion to dismiss. They point to the following
allegation in their Complaint:
25
Slick 50 products are sold to major national retailers
directly and through independent distributors. Direct
sales are made to national and regional chain stores, to
fast lube centers and to resellers and end users in
large metropolitan areas.
Compl. P 19; A16. The District Court concluded that this
allegation, while not entirely without ambiguity, generally
described Slick 50's distribution pattern and could not
reasonably be construed as alleging that Quaker State
directly distributed products to end users. Conte Bros., 992
F. Supp. at 714. The District Court also noted that any
ambiguity as to the meaning of the scope of this allegation
was resolved by admissions in the plaintiffs' brief that the
parties are not direct competitors. Id.; see also Glick v.
White Motor Co., 458 F.2d 1287, 1291 (3d Cir. 1972)
("Judicial admissions are binding for the purpose of the
case in which the admissions are made including appeals,
and . . . an admission of counsel during the course of trial
is binding on his client.").
Our conclusion would not be altered even if we were to
assume some percentage of Slick 50's sales were made
directly to end users and that the parties, therefore, were
"competitors" in some limited sense. Under the reasoning
we adopt today, standing under the Lanham Act does not
turn on the label placed on the relationship between the
parties. Given the existence of more directly injured parties,
the tenuousness of Appellants' damages claims, and the
possibility of multiple recoveries, we would not be inclined
to revisit our conclusion that the Appellants lack standing
even if we assumed a nominally competitive relationship.
In any event, Appellants clearly admitted in their District
Court brief that the parties are not in direct competition,
see Supp. App. 96 (Pls.' Br. in Opp. to Defs.' Mot. to
Dismiss at 5 n.1) ("Plaintiffs are not in direct competition
with Defendants"), and their alternative argument is
therefore foreclosed on the grounds stated by the District
Court.
III.
Expanding standing to parties such as Appellants would
result in a great increase in marginal litigation in the
26
federal courts and would not serve the underlying purposes
of the Lanham Act -- to ferret out unfair competitive
methods and protect businesses from the unjust erosion of
their good will and reputation. The test we adopt today,
which was originally announced in Associated General in
the context of standing under the Clayton Act, provides
appropriate flexibility in application to address factually
disparate scenarios that may arise in the future, while at
the same time supplying a principled means for addressing
standing under both prongs of S 43(a).
Applying those principles, we reach the same conclusion
as did the District Court: the Appellants lack standing
under S 43(a) of the Lanham Act. Accordingly, we affirm the
judgment of the District Court dismissing this case and tax
costs against the Appellants.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
27