LT Int’l Ltd. v. Shuffle Master, Inc., 2014 WL 1248270, No. 2:12–cv–1216 (D. Nev. March 26, 2014)
Here, the court disapproved a five-page complaint, finding that the false advertising and related claims sounded in fraud but didn’t satisfy Rule 9(b), and dismissed with leave to amend. LT sells gaming products, including an electronic interface that allows gamblers at a casino table to simultaneously place bets at other tables. LT’s direct competitor Shuffle Master allegedly disparaged LT’s products and services.
The court found that LT was bringing a Lanham Act false advertising claim. While neither fraud nor mistake is an element of a Lanham Act false advertising claim, and thus it doesn’t inherently trigger Rule 9(b), in the 9th Circuit Rule 9(b) is triggered when the complaint uses the language of fraudulent conduct. (Why? This has never been adequately explained to me.) So once a complaint uses the word “misrepresentation,” that’s a species of fraud. Only the fraudulent conduct allegations have to satisfy Rule 9(b), and if they’re inadequate they should be stripped. Comment: See, this is what’s really weird to me about how this principle is applied (well, this and why trademark plaintiffs never run into this problem). The difference between “intentionally false” and “unintentionally false” is intent, right? And intent and knowledge may be averred generally even under Rule 9(b), correct? So why does alleging intent convert a claim based purely on falsity—where intent isn’t required to prevail under the statute—to a claim sounding in fraud? What am I missing?
Anyway, the fraud-based allegations were conclusory, referring to “an international campaign of disparagement,” claiming “misrepresentations regarding Plaintiff’s business and products, including Plaintiff’s LT Game Live Multi–Table System, at international trade shows, including at the G2E gaming trade show in May, 2012 in Macau, and directly and indirectly to Plaintiff’s current and prospective customers in the gaming and casino industry.” LT identified two customers as among those to whom the misrepresentations had been made. Even if this constituted the who, where, and when, it didn’t explain how the statements were made, and LT didn’t allege the factual content of any statement, even though LT was required to allege with particularity “what is false or misleading about the purportedly fraudulent statement, and why it is false.” This also disposed of the Nevada and Macao unfair competition claims, though LT did plead a plausible claim for tortious interference with prospective business and contractual relations.