When are lost sales consequential damages?

BPI Sports, LLC v. Labdoor, Inc., 2016 WL 739652, No.
15-62212 (S.D. Fla. Feb. 25, 2016)
BPI makes supplements, including “Best BCAA,” which contains
branched chain amino acids (BCAAs) in multi-chain peptide form, rather than
isolated, free-form BCAAs. LabDoor’s website purports to rank and grade
supplements after detailed chemical analysis by an “FDA-registered” lab,
including Best BCAA.  The lab apparently
is Avomeen Analytical Services, co-founded by LabDoor’s CEO in 2010. BPI
alleged that research, clinical trials, or human studies “are more appropriate
methods of testing the safety and efficacy of the supplements being tested and
compared.” Nonetheless, LabDoor created a list of the best BCAA supplements,
and Best BCAA got a grade of “D.” BPI alleged that LabDoor’s analysis failed to
account for the nutritional value of the multi-chain peptides, compared to the
individual BCAAs in other supplements.  “In
an interesting twist, LabDoor sells the product it ranks and grades as number
BPI sued for false advertising under the Lanham Act,
violation of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA), and
tortious interference.  In a
demonstration of the value of Lanham Act claims in overcoming traditional
barriers, the court grants LabDoor’s motion to dismiss the FDUTPA and tortious
interference, with leave to amend.
Claims of tortious interference with BPI’s relations with
its “targeted consumer base” were speculative and insufficient.  Existing customers would be readily
identifiable, but any reference to them in the complaint was vague and really
about “hypothetical consumers generally.”
FDUTPA: Florida amended its law in 2001, changing references
to “consumer[s]” to “persons” who suffered losses as a result of a violation of
the law.  Federal courts are split on
whether non-consumers can now sue; the court agreed with the majority (and one
state court that considered the issue). 
Given the statutory requirement that FDUTPA be construed liberally, the
shift in language allowed non-consumer plaintiffs.  BPI also sufficiently alleged causation,
since the Eleventh Circuit has held that FDUTPA doesn’t require proof of actual
reliance but only likely consumer deception.
However, BPI failed to plead actual damages
sufficiently.  Generally, actual damages
are the difference in market value between what was promised and what was delivered.  Of course that doesn’t make sense here.  BPI alleged diverted sales and lost goodwill,
which the court deemed to be consequential damages, which don’t count as actual
damages.  That … really doesn’t make much
sense.  If you’re going to expand FDUTPA
to cover competitors, then actual damage to them must by definition be measured
differently than the damage suffered by a deceived consumer.  Otherwise, there’s no point.  They’re both harmed by false advertising, but
their harms are different, as Lexmark
made clear in the Lanham Act context.  “Consequential”
is a way of expressing a limit on tracing harm, so that if I was defrauded when
I bought a car, the lost profits from my inability to make work appointments in
my unreliable car would not ordinarily be recoverable damages. By contrast, the
honest dealer’s direct damage is the sale she would have made to me but for the
fraud. That lost sale should not be
excluded as “consequential” even if my own lost sales should be. But, because
BPI didn’t plead that LabDoor’s conduct “affected the market value of BPI’s
product,” (which would, given the causal mechanism, still be “consequential” by
the court’s reasoning) the court dismissed the FDUTPA claim.

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