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Mimedx Group, Inc. v. DBW Partners LLC

United States District Court, District of Columbia

September 28, 2018

MIMEDX GROUP, INC., Plaintiff,
v.
DBW PARTNERS LLC, D/B/A THE CAPITOL FORUM, et al., Defendants.

          MEMORANDUM OPINION

          JOHN D. BATES UNITED STATES DISTRICT JUDGE

         Before the Court is [18] defendants' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff MiMedx Group, Inc. (“MiMedx”) brought claims for libel, slander, defamation, false light invasion of privacy, tortious interference with business relations, and false advertising under the Lanham Act after defendants published articles that questioned MiMedx's sales practices. Defendants move the Court to dismiss each claim for failure to state a claim upon which relief can be granted. For the reasons that follow, defendants' motion will be granted in part and denied in part.

         BACKGROUND [1]

         MiMedx is a publicly traded medical-products corporation organized under Florida law and headquartered in Georgia. Compl. for Damages & Injunctive Relief (“Compl.”) [ECF No. 1] ¶ 6. Id. Defendant DBW Partners LLC d/b/a The Capitol Forum (“The Capitol Forum”) is a firm based in the District of Columbia that offers business and regulatory analysis to paid subscribers. Id. ¶ 7. This lawsuit arises from articles that The Capitol Forum published about MiMedx and communications related to those articles.

         On August 21, 2017, The Capitol Forum “published an article entitled ‘MiMedx: Channel Stuffing Accusations Resurface in Recent Counterclaim; Former Employees Corroborate Allegations; A Close Look at Potential Risk'” [hereinafter “the August 21 article”]. Id. ¶ 23. The August 21 article outlined allegations MiMedx's former employees made in court filings against MiMedx claiming that the company had engaged in “channel stuffing”-a practice by which a company artificially inflates its sales and revenue figures by distributing more products to retailers than the retailers can sell. Id. ¶¶ 19-25.

         The same day, The Capitol Forum distributed this article to at least some MiMedx shareholders via email [hereinafter “the August 21 email”]. Id. ¶ 24. The email included a description of the August 21 article, which stated: “In the article, we detail channel stuffing allegations and recent counterclaims which may pose as a regulatory risk for the company. The article examines the allegations made by customers & former employees, the company's response to these claims, and the potential legal risks for MiMedx.” Id. ¶ 25 (emphasis added). The August 21 email concluded with an invitation to “schedule a call” with The Capitol Forum for more information. Id. The Capitol Forum now acknowledges that the “reference to ‘customers' in the August 21 email was a mistake: as the underlying report . . . indicated, the allegations of channel stuffing were contained in claims and counterclaims filed by former MiMedx employees, ” not by customers. Mem. P. & A. Supp. Defs.' Mot. to Dismiss (“Defs.' Mot.”) [ECF No. 18-1] at 3.

         As part of its “ongoing examination of allegations of channel stuffing made by former MiMedx employees, ” The Capitol Forum also submitted a Freedom of Information Act (“FOIA”) request to the Department of Veterans Affairs, Office of the Inspector General (“OIG”). Compl. ¶ 28. The Capitol Forum determined from the OIG's denial of its FOIA request that an OIG investigation “involve[d] documents related to MiMedx.” Id. Meanwhile, MiMedx informed The Capitol Forum “off-the-record that MiMedx had initiated contact with the OIG, that MiMedx was voluntarily working with the OIG, and that MiMedx was specifically not a target of the investigation.” Id. ¶ 30. On September 7, 2017, The Capitol Forum published another article titled “VA Office of Inspector General Confirms Investigation Involving MiMedx Documents” [hereinafter “the September 7 article”]. Id. ¶ 27. The article “omitted positive information” that MiMedx had provided The Capitol Forum and instead relayed only “that the OIG's inquiry involved ‘documents related to MiMedx.'” Id. ¶¶ 29-30. As it had done with the August 21 article, the Capitol Forum promoted the September 7 article in an email, invited readers to schedule a call for more information, and directed the email to at least some MiMedx shareholders. Id. ¶¶ 27-28.

         MiMedx alleges that The Capitol Forum's publications served as part of a “conspir[acy] to adversely manipulate the stock price of MiMedx via false and/or misleading statements to MiMedx's shareholders, which were intended to cause those shareholders to sell their stock.” Id. ¶ 33. The Capitol Forum allegedly served “as a ‘shill' for bearish traders in MiMedx stock” based upon “a nefarious motive to benefit the interests of bearish traders in MiMedx stock at the expense of the company, because those bearish traders included . . . friends, family, affiliates, and/or even . . . themselves.” Id. ¶¶ 33-34. MiMedx states that its “stock price dropped” on both September 7 and September 8, 2017, and that its stock price declined by more than 20% overall between August 21 and September 21, 2017. Id. ¶ 32.

         On September 21, 2017, MiMedx filed this action against The Capitol Forum and individuals who are principals or employees of The Capitol Forum: Trevor Baine, Teddy Downey, Jake Williams, Miles Pulsford, Matt Treacy, and fictitiously named defendants Does 1-100. Id. ¶¶ 7-10. MiMedx alleges that The Capitol Forum's description in its August 21 email of allegations by “customers” constitutes libel (Count 1) and defamation (Count 3). Id. ¶¶ 36-41, 47-51. MiMedx further alleges that The Capitol Forum's invitation to shareholders to “schedule a call” for more information about these customer allegations is evidence that The Capitol Forum “repeated the false and malicious statement(s), ” constituting slander (Count 2). Id. ¶¶ 42-46. MiMedx also asserts that the false and misleading content in The Capitol Forum's articles and emails violated MiMedx's right to privacy by placing it in a false light in the public eye (Count 4), id. ¶¶ 52-56; tortiously interfered with its business relations (Count 5), id. ¶¶ 57-61; and violated the Lanham Act's false advertising provision (Count 6), id. ¶¶ 62-68.

         Defendants now move to dismiss each claim for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).

         LEGAL STANDARD

         Rule 12(b)(6) provides for dismissal of a claim where the proponent has failed to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations . . . a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citation omitted). In short, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id.

         DISCUSSION

         I. Choice of Law

         In a diversity case, this Court generally employs the choice-of-law analysis of the District of Columbia. See Mastro v. Potomac Elec. Power Co., 447 F.3d 843, 857 (D.C. Cir. 2006); Mar-Jac Poultry, Inc. v. Katz, 773 F.Supp.2d 103, 111 (D.D.C. 2011). “Under District of Columbia law, the court must first determine if there is a conflict between the laws of the relevant jurisdictions” and “[o]nly if such a conflict exists must the court then determine, pursuant to District of Columbia choice of law rules, which jurisdiction has the ‘more substantial interest' in the resolution of the issues.” Young Women's Christian Ass'n of the Nat'l Capital Area, Inc. v. Allstate Ins. Co. of Canada, 275 F.3d 1145, 1150 (D.C. Cir. 2002). Factors relevant to this substantial-interest determination include: “(a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (d) the place where the relationship is centered.” District of Columbia v. Coleman, 667 A.2d 811, 816 (D.C. 1995).

         MiMedx asserts that Georgia law applies to all claims except for its federal Lanham Act claim because “MiMedx is headquartered in Georgia and stands to suffer injury there.” Compl. ¶ 35; Pl.'s Mem. P. & A. Opp'n Defs.' Mot. to Dismiss (“Pl.'s Opp'n”) [ECF No. 20] at 9 n.3. Defendants note that District of Columbia law could also apply because it is where “[T]he Capitol Forum is incorporated and domiciled, where it publishes its newsletter, where most of the individual defendants live and work, and where the bulk of the reporting concerning MiMedx was performed.” Defs.' Mot. at 6 n.3. However, defendants maintain that “there is no need to resolve any choice of law issue” because the laws of Georgia and the District of Columbia are virtually ...


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