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Academy of Doctors of Audiology v. International Hearing Society

United States District Court, E.D. Michigan, Southern Division

February 21, 2017

Academy of Doctors of Audiology, Plaintiff,
v.
International Hearing Society, Defendant.

          OPINION & ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION AS MOOT

          Sean F. Cox United States District Judge.

         In December of 2016, Defendant International Hearing Society held a training program on tinnitus care in Orlando, Florida. Defendant's program description states that Defendant will provide a “Tinnitus Care Provider Certificate” to certain persons who complete the program and pass an examination.

         Before the program was actually held, Plaintiff Academy of Doctors of Audiology brought this action against Defendant, asserting false advertising claims under the Lanham Act and Michigan common law, and a claim under the Michigan Consumer Protection Act. The sole relief sought by Plaintiff is a preliminary and permanent injunction barring Defendant from issuing a certificate to some of the persons who attended that program, specifically, hearing aid dealers.

         Currently pending before the Court are: 1) Plaintiff's Motion for Preliminary Injunction; and 2) a Motion to Dismiss filed by Defendant. Defendant's Motion to Dismiss challenges Plaintiff's standing to bring this action and also asserts that Plaintiff's Complaint fails to state a claim under Fed.R.Civ.P. 12(b)(6). The motions have been fully briefed by the parties. The Court finds that oral argument would not aid the decisional process. See Local Rule 7.1(f)(2), U.S. District Court, Eastern District of Michigan. The Court therefore orders that the motions will be decided upon the briefs.

         As explained below, the Court shall GRANT Defendant's Motion to Dismiss. Defendant's motion raises a facial attack to standing - which challenges the sufficiency of the allegations in the complaint. Plaintiff, as the party invoking federal jurisdiction, bears the burden to demonstrate standing and it must plead its components with specificity. Plaintiff has failed to do so. First, Plaintiff contends in its response brief that it has standing on its own to bring this case, based upon a “diversion of resources” theory. But there are no allegations in the complaint to support that theory. Second, Plaintiff contends that it has organizational or representative standing to bring this action on behalf of its members. In order to have such standing, Plaintiff's members must have standing themselves. As explained below, ADA has failed to do so because it has failed to sufficiently allege the injury-in-fact component, and because it is not likely that Plaintiff's members' claimed injury will be redressed by the injunction sought here.

         In addition, although the Court need not reach of any Defendant's 12(b)(6) challenges, the Court concludes that Plaintiff's claims would also be properly dismissed as to those challenges. For example, Plaintiff fails to state a claim under Michigan's Consumer Protection Act because the conduct at issue here does not involve consumer purchases (purchases made primarily for personal, family, or household purposes); instead it involves the issuance of a certificate in connection with a business seminar. Plaintiff's “contributory false advertising” claim under the Lanham Act is subject to dismissal because the Sixth Circuit has not recognized such a claim. Finally, Plaintiff's false advertising claim under the Lanham Act fails for multiple reasons.

         BACKGROUND

         On October 28, 2016, Plaintiff Academy of Doctors of Audiology (“Plaintiff” or “ADA”) filed this action against Defendant International Hearing Society (“Defendant” or “IHS”) in federal court, based upon federal-question jurisdiction and diversity jurisdiction. Plaintiff's Complaint asserts the following claims: 1) “FIRST CLAIM (False Advertising - Lanham Act);” 2) “SECOND CLAIM (Contributory False Advertising - Lanham Act);” 3) “THIRD CLAIM (Deceptive Trade Practices under M.C.L. § 445.903(1)(a)-(c));” and 4) “FOURTH CLAIM (Unfair Competition under Michigan Common Law).” Plaintiff's Complaint requests the following relief:

         REQUESTS FOR RELIEF

         Wherefore ADA requests the following relief against IHS:

A. Judgment granting preliminary and permanent injunctions against IHS and all persons affiliated with it as set forth in Fed. R. Civ. Proc. 65(d)(2)(A), (B) and (C), prohibiting the issuance by IHS of a “Tinnitus Care Provider Certificate” to Hearing Aid Dealers (persons licensed under M.C. L. §§ 339.1301 et seq. or the comparable statutes of other States);
B. ADA's costs, reasonable attorney fees and expenses of litigation; and
C. Such other and further relief to which ADA may be found to be entitled upon the evidence and law.

(D.E. No. 1 at Pg ID 16).

         On November 16, 2017, Plaintiff filed a Motion for Preliminary Injunction. Thereafter, the Court brought the parties in for a Status Conference on November 18, 2016. The parties believed that they had reached an agreement that would resolve the Motion for Preliminary Injunction and Plaintiff then withdrew the motion on the record that day.

         On November 22, 2016, the Court issued a Scheduling Order in this action that provides that discovery closes on May 18, 2017, and the deadline for filing motions is June 19, 2017.

         On December 15, 2016, Plaintiff's filed a Renewed Motion for Preliminary Injunction. (D.E. No. 12). Defendant filed a response to that motion (D.E. No. 14), and Plaintiff filed a reply. (D.E. No. 16). Thus, the motion has been fully briefed.

         On December 20, 2016, Defendant filed a Motion to Dismiss. (D.E. No. 13). Plaintiff filed a response to that motion (D.E. No. 15), and Defendant filed a Reply. (D.E. Nl. 17). Thus, this motion has also been fully briefed.

         ANALYSIS

         Defendant's Motion to Dismiss asks this Court to dismiss all of Plaintiff's claims in this action. If the Court were to grant that motion, then Plaintiff's Motion for Preliminary Injunction would be moot. In addition, the motion raises a standing challenge and if this Court determines that Plaintiff lacks standing to bring this action, the Court should not proceed any further and should dismiss the case. As such, the Court considers this motion first.

         I. Standard Applicable To Defendant's Motion To Dismiss

         Defendant's motion challenges Plaintiff's standing to bring this action and also asserts that Plaintiff fails to state a claim upon which relief may be granted. Thus, Defendant brings the instant Motion to Dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6).

         “Standing is, of course, a threshold requirement for federal jurisdiction. If a party does not have standing to bring an action, then the court has no authority to hear the matter and must dismiss the case.” Binno v. American Bar Assoc., 826 F.3d 338, 344 (6th Cir. 2016). Thus, this Court should “consider the 12(b)(1) motion first, since the Rule 12(b)(6) challenge becomes moot if this court lacks subject matter jurisdiction.” Wayside Church v. Van Burden Cty., ___ F.3d ___, WL ___ at * ___ (6th Cir. Feb. 10, 2017).

         As explained by the Sixth Circuit, subject-matter-jurisdiction challenges under Fed.R.Civ.P. 12(b)(1) come in two varieties: a facial attack and a factual attack. Id. (citations omitted). A facial attack - like the one IHS makes in its motion - “questions merely the sufficiency of the pleading.” Id. (emphasis added). When reviewing such a facial attack, a district court takes the factual allegations in the complaint as true, just as in a Rule 12(b)(6)[1] motion. Id.

         Thus, in reviewing IHS's challenge to standing, this Court considers only ADA's complaint and its exhibits. Id.; Binno, 826 F.3d at 344. ADA, as the party invoking federal jurisdiction, bears the burden to demonstrate standing and it must “plead its components with specificity.” Id.

         II. Plaintiff's Complaint

         Plaintiff ADA filed its Complaint on October 28, 2016. Plaintiff has not sought leave to file an amended complaint, even after Defendant's filed their Motion to Dismiss which challenges the sufficiency of Plaintiff's Complaint.

         General Factual Allegations

         “Hearing health care is provided in the United States mainly by three categories of persons, with different levels of training and state-licensed scopes of practice: 1) Medical Doctors, especially otolaryngologists, who specialize in diseases of the ear; 2) Audiologists and 3) Hearing Aid Dealers, as they are called in Michigan (in other states variously called Hearing Instrument Specialists, Hearing Instrument Dispensers, Hearing Instrument Dealers, Hearing Aid Dispensers, or Hearing Aid Specialists, all here referred to as “Dealers” regardless of state-specific title).” (Compl. at ¶ 9).

         “Medical Doctors are generally required to receive undergraduate and medical school degrees and to complete internship and residency. They have unlimited scopes of practice, including the treatment of tinnitus.” (Id. at ¶ 10).

         “Audiologists provide professional clinical services related to the prevention of hearing loss and the audiologic identification, assessment, diagnosis, and treatment of persons with impairment of auditory and vestibular (balance) function, and to the prevention of impairments associated with them. Their licensed scopes of practice encompass those activities. Audiologists assess and provide audiologic treatment for persons with tinnitus using techniques that include, but are not limited to, biofeedback, masking, hearing aids, education, and counseling. (Source: American Academy of Audiology.).” (Id. at ¶ 11).

         “Audiologists entering the profession since 2007 have generally been required for licensure in Michigan and the other States to hold an undergraduate degree and the degree of Doctor of Audiology (Au.D.), usually requiring four years of postgraduate education, including a clinical externship. Prior to the universal Au.D. entry-level requirement, audiologists generally held an undergraduate degree and a two-year Masters degree or a Ph.D. in Hearing Sciences. Some audiologists continue to practice under pre-Au.D. licenses and their associated academic degrees.” (Id. at ¶ 12).

         “Dealers in Michigan (like Dealers in the other States through similar statutes) are licensed pursuant to M.C.L. §§ 339.1301 et seq., to engage in the sale or offering for sale at retail of hearing aids. ‘Hearing aid' means an instrument or device designed for regular and constant use in or proximate to the human ear and represented as aiding or improving defective human hearing. The ‘Practice of selling or fitting a hearing aid' means the selection, adaptation, and sale of a hearing aid and includes the testing of hearing by means of an audiometer and other means for the sale of a hearing aid. The practice also includes the making of an impression for an ear mold.” (Id. at ¶ 13).

         “In Michigan, as is typical of other States, a Dealer may be licensed if the Dealer is a graduate of an accredited high school or secondary school, has served as a salesperson under a licensed Dealer for two years and passes a written examination. M.C.L. § 339.1305. (In a few States, a two-year post-secondary degree is required, in other States the requirements are even lower than in Michigan.)” (Id. at ¶ 14).

         Defendant “IHS is a Michigan non-profit corporation with its principal place of business at 16880 Middlebelt Road Livonia, Michigan 48154. There are approximately 3, 000 members of IHS, in Michigan and throughout the United States. A very large proportion of IHS members are Hearing Aid Dealers (as designated in Michigan) and IHS seeks to further their interests. IHS members provide services for the testing, selection and fitting of hearing aids, as well as ongoing follow-up care and counseling. Individuals who have met the standards and requirements established by the current IHS bylaws and Code of Ethics are designated by IHS as Hearing Instrument Specialists®.” (Compl. at ¶ 2) (emphasis added).

         Plaintiff “ADA is a Pennsylvania non-profit corporation with its principal place of business at 446 E. High St., Suite 10, Lexington, Kentucky 40507. ADA is dedicated to the advancement of audiology practitioner excellence, high ethical standards, professional autonomy and sound business practices in the provision of quality audiology care. ADA has approximately 1, 500 members in Michigan and throughout the United States. It brings this action in its organizational capacity to further its objectives and those of its members in connection with the treatment of tinnitus, including those concerning high ethical standards and the protection of the public.” (Compl. at ¶ 1) (emphasis added).

         Notably, the Complaint does not include allegations as to the professions or educational backgrounds of ADA's own members (ie., it does not allege whether its members are medical doctors, audiologists, Dealers, other audiology practitioners, or all of the above). The Complaint alleges that ADA's members have “objectives” “in connection with the treatment of tinnitus.” Unlike the allegations about IHS's members, the Complaint lacks allegations as to what services ADA's members provide to their patients (assuming they treat patients in a practice setting) or whether they provide tinnitus care to patients.

         “As described on the website of the American Tinnitus Association (“ATA”):

‘Tinnitus is the perception of sound when no actual external noise is present. While it is commonly referred to as “ringing in the ears, ” tinnitus can manifest many different perceptions of sound, including buzzing, hissing, whistling, swooshing, and clicking. In some rare cases, tinnitus patients report hearing music. Tinnitus can be both an acute (temporary) condition or a chronic (ongoing) health malady.
Millions of Americans experience tinnitus, often to a debilitating degree, making it one of the most common health conditions in the country. The U.S. Centers for Disease Control estimates that nearly 15% of the general public - over 50 million Americans - experience some form of tinnitus. Roughly 20 million people struggle with burdensome chronic tinnitus, while 2 million have extreme and debilitating cases.
In general, there are two types of tinnitus:
Subjective Tinnitus: Head or ear noises that are perceivable only to the specific patient. Subjective tinnitus is usually traceable to auditory and neurological reactions to hearing loss, but can also be caused by an array of other catalysts. More than 99% of all tinnitus reported tinnitus cases are of the subjective variety.
Objective Tinnitus: Head or ear noises that are audible to other people, as well as the patient. These sounds are usually produced by internal functions in the body's circulatory (blood flow) and somatic (musculo-skeletal movement) systems. Objective tinnitus is very rare, representing less than 1% of total tinnitus cases.
There is currently no scientifically-validated cure for most types of tinnitus. There are, however, treatment options that can ease the perceived burden of tinnitus, allowing patients to live more comfortable, productive lives.'

(Id. at ¶ 15).

         “Treatment of tinnitus is within the licensed scope of practice of Medical Doctors and Audiologists in Michigan and every other State. Treatment of tinnitus is not within the licensed scope of practice of Dealers in Michigan and the other States, except for North Carolina. N.C. G.S.A. § 93D-1.1.” (Id. at ¶ 16).

         “Treatment of tinnitus is complex, currently lacks some areas of research-backed effectiveness data and is evolving. Tinnitus, in some cases, can be a symptom of a more serious medical or surgical condition. There are significant risks to patients in tinnitus treatment. See, Clinical Practice Guideline: Tinnitus (American Academy of Otolaryngology, 2014), attached as Exhibit 1. While the Guideline notes that case management and evaluation may be provided by non-physicians such as Audiologists, Guideline at S3, it makes reference to Dealers limited only to potentially custom fitting hearing aids, at S20.” (Id. at ¶ 17).

         “‘Sound Masking Devices' are potentially useful in the treatment of tinnitus. As described by the ATA, “These are devices or applications that provide generic background noise - often white noise, pink noise, nature sounds or other ambient, subtle sounds. The noise generated by sound machines can partially or fully mask a patient's perception of tinnitus, providing relaxation and temporary respite from the condition.” Id. at ¶ 18).

         “Hearing aids may also potentially alleviate symptoms of tinnitus. Further, as described by the ATA, “Many hearing aids now come with integrated sound generation technology that delivers white noise or customized sounds to the patient on an ongoing basis. These devices combine the benefits of a hearing aid with those of other sound therapies, and are particularly well suited for tinnitus patients with measurable hearing loss. Also, because of the portable nature of these devices they can provide semi-continuous use and more consistent benefit throughout the day.'” (Id. at ¶ 19).

         “Hearing aids are regulated by the United States Food and Drug Administration, 21 CFR Part 874. Sound masking devices incorporated into hearing aids, or ‘Tinnitus Maskers, ' are likewise regulated by the FDA as a Class II Prosthetic Device, 21 CFR § 874.3400. Tinnitus Maskers may only be sold with patient labeling regarding ‘Hearing health care professional diagnosis, fitting of the device and followup care, ' id., (1). A Tinnitus Masker may only be sold on the prescription or order of a practitioner licensed by the applicable State to order such use. 21 CFR § 801.809. Thus, only Medical Doctors and Audiologists may order such use, other than in North Carolina, where Dealers may do so.” (Id. at ¶ 20).

         “IHS intends to offer a ‘Tinnitus Care Provider Certificate' (‘the Certificate'), in conjunction with a training program to be offered December 2-3, 2016, in Orlando, Florida (‘the Program'). The Program is open to Dealers from every State. See, Program description attached as Exhibit 2. While the description advises participants to check what are permitted practices as to tinnitus care under their state licensure, IHS intends to issue the Certificate to Dealers who meet the experience requirements and successfully complete the training, as shown by passing an examination, regardless of whether they are licensed to provide tinnitus care.” (Id. at ¶ 21).

         “As to Dealers licensed by Michigan and every other State except North Carolina, the Certificate will falsely or misleadingly convey to the public that the Dealer holding it is legally permitted to provide tinnitus care. There is a substantial risk that such Dealers will display and advertise the Certificate to the public, resulting in members of the public seeking tinnitus care from them and being provided such care illegally.” (Id. at ¶ 22) (emphasis added).

         “The Program will not provide Dealers with sufficient knowledge and skill to provide appropriate tinnitus care, given their limited education, training and experience. For that reason, the Certificate will falsely or misleadingly convey to the public that the Dealer holding it is competent to provide tinnitus care. There is a substantial risk that such Dealers will display and advertise the Certificate to the public, resulting in members of the public seeking tinnitus care from them and receiving inadequate such care.” (Id. at ¶ 23).

         “The public will thus be harmed by the issuance of the Certificate to Dealers. The members of ADA will be harmed by the diversion of tinnitus care patients to Dealers holding the Certificate. The organizational purpose of ADA to ensure the provision of ethical and high quality hearing health care to the public will be defeated.” (Id. at ¶ 24) (emphasis added).

         False Advertising Claim Under Lanham Act (Count I)

         ADA's first claim is a false advertising claim under Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). ADA alleges that the Certificate will falsely or misleadingly communicate that a Dealer (other than one in North Carolina) holding it: 1) is legally permitted to provide tinnitus care; and 2) is competent to provide tinnitus care. (Compl. at ¶¶ 26-27).

         Contributory False Advertising Under Lanham Act (Count II)

         ADA's second claim is a contributory false advertising claim under the Lanham Act. ADA claims that the issuance of the Certificate by IHS will induce Dealers (other than those in North Carolina) who receive it to advertise falsely that: 1) they are legally permitted to provide tinnitus care; and 2) they are competent to provide tinnitus care. ADA claims that, unless enjoined, IHS will issue the Certificate to Dealers who are not legally or competently able to provide tinnitus care, but who nevertheless are likely to display and advertise the Certificate to the public to attract business. ADA alleges that IHS will thereby “in connection with goods or services, induce the use interstate commerce of words, terms, names, symbols, devices, and combinations thereof, false or misleading descriptions of fact, and false or misleading representations of fact, which in commercial advertising or ...


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