Last summer, Maine Springs LLC filed a false advertising suit over the use of “Poland Springs” on bottled water sold and distributed by Nestle Waters North America Inc. (a unit of Nestle SA). Yesterday, however, a Maine district court dismissed the lawsuit, holding that Maine Springs’s plans to eventually sell bottled water that would compete against Nestle’s Poland Spring® brand product was too speculative to constitute injury-in-fact.
Maine Springs LLC, based in Poland Springs, Maine, sells bulk water and aspires to produce and sell its own bottled water. In its Complaint against Nestle, it alleged two sets of related, but distinct, facts.
First, Maine Springs alleged that Nestle had previously asserted that Maine Springs could not identify the source of its water, Poland Spring, Maine, without creating confusion with Nestle’s “Poland Spring” products. Accordingly, Nestle demanded that Maine Springs not use any label that would identify Poland Spring, Maine as the source of its water. Maine Springs responded by noting that, as a matter of federal and state law, bottled water must identify its source on the label. When an amicable resolution could not be reached, Maine Springs alleged that it lost proposals to supply bulk water to several companies based on fears that Nestle might file suit. As a result, Maine Springs alleged that it was “prevented from selling any of its water and the bottling and distribution facilities have sat idle.”
Second, Main Springs’s alleged that Nestle was engaged in false advertising because the water contained in the Poland Spring products was not “extracted from the [actual] Poland Spring,… does not even come from the same aquifer as the original source,” “does not necessarily come from carefully selected mountain springs that are continually replenished, as advertised, but from other sources including ground water and well water,” and was “sold as 100% natural spring water when it is not.”
In light of the second set of allegations, Main Springs alleged a claim under Section 43(a) the Lanham Act for false advertising which included the following allegation on damages: “As a direct and proximate result of Nestle Water’s misrepresentations about Poland Spring® Brand water, competitors, such as Plaintiff Maine Springs, have and continue to suffer damage.” And Main Springs alleged a second claim for tortious interference regarding the first set of facts which included the following damages allegation: “As a result of Defendant’s interference, Plaintiff has suffered actual damages in that it is being prevented from entering the market and selling its product.”
The Court granted Nestle’s motion to dismiss both claims. With respect to the Lanham Act claim, the Court labeled Maine Springs’s damages allegation as a “bald and conclusory assertion [that] alone is insufficient to state an injury.” Construing all facts in the Complaint in the most favorable light for the plaintiff, the Court further found that the “allegedly false advertising or false designation of origin cannot have harmed Maine Springs by channeling customers toward Poland Spring® Brand water when Maine Springs has not even begun to offer bottled water.” Moreover, although the rejection of supply proposals was viewed as concrete and particularized, and is a sufficient injury at the pleading stage of litigation, the Court held that Maine Springs did not establish that this injury was fairly traceable to Nestle’s alleged false advertising. Thus, Maine Springs did not establish causation and there was not Article III standing.
In light of its dismissal of the Lanham Act claim, the Court refused to exercise supplemental over the state law claim and it was dismissed without prejudice.