Court won’t hear false advertising and contributory liability claims based on tinnitus credentialing

Academy of Doctors of Audiology v. International Hearing
Society, 2017 WL 679354, No. 16-13839 (E.D. Mich. Feb. 21, 2017)
IHS held a training program on tinnitus care in Orlando,
Florida, stating that it would provide a “Tinnitus Care Provider Certificate”
to people who completed the program and passed an examination. Before the
program was held, plaintiff ADA sued for false advertising. The court dismissed
the complaint on standing and other grounds.
According to ADA, hearing health care is provided mainly by
doctors; audiologists; and hearing aid dealers/specialists.  Doctors can treat tinnitus, which is the
phenomenon of hearing sound when no sound is present—the classic “ringing in
the ears.”  According to the CDC, nearly
15% of the general public experience some form of tinnitus. Twenty million
people have chronic tinnitus, while 2 million have extreme and debilitating
cases. More than 99% of tinnitus is subjective, audible only to the patient,
while under 1% is objective—sounds usually produced by the body’s circulatory
and somatic systems. There’s no scientifically validated cure, but tinnitus can
be treated, including by sound generation systems and hearing aids.  The treatment can be complex, and tinnitus
can also be a sign of other problems.
Audiologists provide clinical services related to
identifying and preventing hearing loss and related impairments, and can also
provide treatment for tinnitus.  Since
2007, audiologists entering the profession have been required to have the
degree of Doctor of Audiology, usually requiring four years of postgraduate
education, including a clinical externship; past practice generally required a
two-year Masters degree or a Ph.D. in Hearing Sciences.  
In Michigan, as in many other states, dealers can be
licensed if they’re graduates of an accredited high school or secondary school,
have served as a salesperson under a licensed dealer for two years, and pass a
written examination.  Outside of North
Carolina, dealers aren’t licensed to treat tinnitus.  Sound masking devices incorporated into
hearing aids are regulated by the FDA, and can only be sold on the prescription
or order of a licensed practitioner—and outside of North Carolina, only doctors
and audiologists can order such use.
IHS is a Michigan nonprofit with about 3000 members, a large
number of whom are dealers. ADA is a nonprofit dedicated to audiology, though
the complaint didn’t allege facts about the professions or educational backgrounds
of ADA’s own members, or what services ADA’s members provide to their patients. 
ADA challenged IHS’s intended “Tinnitus Care Provider
Certificate.”  Although the program
description advised participants to check what are permitted practices as to
tinnitus care under their state licensure, IHS intended to issue the
Certificate to to qualifying dealers regardless of whether they were licensed
to provide tinnitus care.  ADA alleged
that, outside of North Carolina, the Certificate would falsely or misleadingly
convey to the public that the dealer holding it was legally permitted to
provide tinnitus care.  Further, ADA
alleged that the program wouldn’t provide dealers with sufficient knowledge and
skill to provide appropriate tinnitus care, so the Certificate would falsely or
misleadingly indicate competence to provide tinnitus care.
ADA also brought claims for contributory false advertising
under the Lanham Act, alleging that IHS would be responsible for dealers’
misleading display/advertisement of Certificates, as well as a claim under Michigan’s
Consumer Protection Act and the common law of unfair competition.
IHS challenged ADA’s constitutional standing.  ADA argued that, on its own behalf, it would
suffer harm “in the form of costs to respond to the audiology profession and
the public about Dealers beginning to offer tinnitus care with the Certificate
to Dealers,” but this resource-diversion theory wasn’t alleged in the
complaint.  ADA also argued that it had
representative standing, which required it to show that 1) its members would
otherwise have standing to sue in their own right; 2) the interests it seeks to
protect were germane to its purpose; and 3) neither the claim asserted not the
relief requested required the participation of the individuals in the lawsuit.
ADA’s claim failed at the first part: it didn’t properly
allege that individual members would have standing.  The complaint alleged that the public would be
harmed by poor care, and that ADA’s members would be harmed by the diversion of
tinnitus care patients to dealers holding the Certificate.  However, the complaint didn’t allege that ADA’s
members directly compete with dealers in the hearing healthcare industry; 2) didn’t
allege that ADA members would suffer competitive injury; and 3) didn’t allege
that ADA’s members would suffer a loss of business customers or a loss of
financial revenue.  Lost sales would only
result if the number of licensed members available exceeded the amount of
services sought/if there was actual competition for tinnitus patients, which
wasn’t alleged. The court wouldn’t assume facts not alleged, and IHS argued the
contrary, given that “the need for devices and other non-medical management for
the approximately 30 million American tinnitus sufferers outweighs the number
of licensed audiologist and hearing instrument specialists available to provide
such care and relief.”
ADA also failed redressibility, because enjoining the
issuance of the Certificates would do nothing to prevent any dealers who attended
the Dec. 2016 program from advertising their completion thereof.  They could advertise “the very substance of
what the Certificates would presumably say” even if the requested injunction issued.
Separately, the Michigan Consumer Protection Act claim had
to be dismissed because that law covered only consumer purchases, not business
seminars.
The common-law unfair competition claim was treated like the
Lanham Act claim, which also failed. 
First, ADA failed the Lexmark
zone-of-interests/proximate cause test. 
Even if ADA could bring suit in a representational capacity under Lexmark, a theory of which the court
seemed skeptical, it couldn’t succeed here for failure to actually allege that
its members would suffer a competitive injury. 
There was also a “solid argument” that ADA didn’t allege proximate
cause: its injury didn’t “flow directly” from IHS advertising.
Moreover, ADA didn’t identify sufficient falsehoods.  The two things consumers would allegedly be
misled about were (1) non-North Carolina dealers being legally permitted to
provide tinnitus care, and (2) the same being competent to do so based on advertising
acquisition of the Certificates.  Because
the certificates at issue hadn’t yet been drafted, “ADA has not alleged any
specific statement that is likely to lead anyone to conclude that there is
‘legal permission’ or ‘competence’ to provide” tinnitus care. Moreover, false
advertising claims based on allegations of implied government approval aren’t
allowed, because they interfere with regulatory enforcement: the Lanham Act can’t
be used to indirectly enforce other government regulations.  The true harm, in ADA’s view, was provision of
tinnitus treatment by dealers, but that’s not the concern of the Lanham Act;
moreover, the complaint didn’t even allege that it was illegal for dealers
outside North Carolina to provide treatment—“the real issue here is that most
state statutes are silent as to whether or not Dealers can provide tinnitus
care.”
As for the allegedly false implication of competence, that’s
a nonfactual opinion.

Sealing the deal—and here’s the only part of the ruling I
find really shaky—the court held that ADA couldn’t sue for contributory false
advertising after Lexmark;
contributory trademark infringement is ok but not contributory false
advertising.  The court didn’t explain
why; Lexmark’s statutory analysis is
directed at language that applies to §43(a)(1)(A) and even to §32.  But the court here declined to join Duty Free
America, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (11th Cir. 2015),
recognizing such a claim.

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