United States District Court, E.D. Michigan, Southern Division
Steven Whalen Magistrate Judge.
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANTS' MOTIONS TO DISMISS [24, 33]
J. MICHELSON U.S. DISTRICT JUDGE.
Prime Group sells beauty products on Amazon. This included
LOMA hair-care essentials. But once LOMA and its founder,
David Hanen, discovered LOMA's products on ABG's
virtual shelves, ABG says LOMA and Hanen worked to force ABG
off Amazon.com's marketplace.
to ABG, LOMA and Hanen wished to maintain control over
Amazon.com's beauty-product market. So they reached out
to one of ABG's online competitors, All Alliance. LOMA
and Hanen gave All Alliance the opportunity to be the
exclusive LOMA retailer on Amazon. ABG says, in exchange,
LOMA and Hanen required All Alliance to target ABG's
store. To get Amazon to suspend ABG's store, All Alliance
(along with LOMA and Hanen) fraudulently complained to Amazon
that ABG was stealing LOMA's intellectual property. And,
as intended, All Alliance's complaints, when coupled with
LOMA's, led the retail giant to temporarily close
turn, ABG sued LOMA, seeking a declaratory judgment that ABG
did not infringe upon LOMA's trademark rights. LOMA
counter-sued, alleging trademark infringement. ABG then
amended its complaint to add All Alliance and claims of
antitrust conspiracy, business tort, and fraud.
LOMA and Hanen move to dismiss ABG's antitrust conspiracy
and fraud claims. For the reasons set forth below, the Court
will grant, in part, and deny, in part, the motions to
and Hanen move to dismiss parts of ABG's amended
complaint. So the following well-pled factual allegations
from that complaint are accepted as true. See Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
and Adam Greenberg along with Bryan Acrich incorporated ABG
Prime to sell products on Amazon. (R. 13, PageID.148.)
Amazon's platform permits third parties-like ABG Prime-to
open the digital equivalent of a brick-and-mortar shop.
(Id. at PageID.149.) ABG's store, hosted on
Amazon.com, relies on Amazon's market share and
fulfilment capabilities to generate an average of $10, 000 in
daily revenue. (Id. at PageID.149-150.) Among the
products on its virtual shelves, ABG stocks LOMA hair-care
essentials. (Id. at PageID.153.) ABG purchases LOMA
shampoos, conditioners, and other hair-care products from a
distributor only to turn around and resell the identical,
unopened, and authentic product through its Amazon store.
(Id. at Page.ID.153.)
March 2017, LOMA complained to Amazon about ABG's store.
According to LOMA's complaint, ABG's sale of LOMA
products infringed on LOMA's trademark rights.
(Id. at PageID.153.) Upon receiving the complaint,
Amazon temporarily closed ABG's store, just as LOMA
intended. (Id. at PageID.153, 156.) But Amazon's
policy requires a complainant to complete a “test
buy”-a controlled purchase of the allegedly infringing
product to determine its authenticity-prior to claiming
trademark infringement. (Id. at PageID.154.) LOMA
had not completed a test buy prior to complaining, so LOMA
withdrew the complaint and Amazon permitted ABG to reopen.
(Id. at PageID.154.)
reopened, ABG continued to sell LOMA hair-care products. And
in the months after LOMA withdrew its first complaint, LOMA
completed two test buys. (Id. at PageID.154-155.)
And doing so, LOMA confirmed the products' authenticity
to ABG's lawyer. Id. Yet LOMA again complained
to Amazon, but instead of asserting trademark infringement
specifically, it more generally asserted that ABG was
stealing its intellectual property. (Id. at
PageID.155.) Amazon again temporarily closed ABG's store,
but, this time, permanently barred ABG from selling LOMA
after its second suspension, ABG came to believe that a
Florida entity, All Alliance Products, was the only
third-party storefront selling authentic LOMA goods on
Amazon.(Id. at PageID.151.) Because All
Alliance was the only retailer, ABG suspected that All
Alliance and LOMA entered into an exclusive arrangement, (R.
13, PID 152, 157), designed to remove competitors from Amazon
(R. 13, PageID.157). Specifically, ABG thinks the arrangement
was intended to target and remove ABG. (Id. at
Page.ID.165.) According to ABG, All Alliance polices the
digital marketplace for third-party retailers of LOMA
products. (Id. at PageID.164.) Upon discovering a
third-party retailer, either LOMA or All Alliance file
complaints with Amazon. (Id. at PageID.165.)
Complaining to Amazon results in the third-party retailer
temporarily losing its selling privileges. (Id. at
unearthed this conspiracy after Amazon forwarded LOMA's
first complaint to ABG. The complaint appeared to be written
by Cimos Angelis, LOMA's lawyer. (Id. at
PageID.153.) But somehow ABG discovered that Demosthenes
Prodromitis actually wrote it. (R. 13, PageID.153.) ABG
learned that Prodromitis has some connection to All Alliance,
(R. 13, PageID.146), and Angelis and Demosthenes Prodromitis
have been friends since high school. (R. 13, PageID.152.) So
ABG insists that only a conspiracy accounts for the
relationship between All Alliance, Prodromitis, Angelis,
LOMA, and Hanen. (R. 13, PageID.164.)
ABG alleges LOMA's complaints to Amazon were fraudulent.
(R. 13, PageID.165.) The first complaint said ABG's sales
infringed on LOMA's trademark rights, but LOMA had yet to
complete a test buy, so LOMA had no basis to make such a
complaint. (R. 13, PageID.166.) And as LOMA's test buys
confirmed ABG sold authentic LOMA products, the second
complaint, claiming theft of LOMA's intellectual
property, was equally fraudulent. (R. 123, PageID.156.) In
ABG's view, LOMA had no factual basis to complain, knew
Amazon would forward the complaints to ABG, intended ABG to
stop selling LOMA ...