Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-03750/USCOURTS-cand-3_06-cv-03750-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1391 Personal Injury

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CMG MORTGAGE SERVICES, INC.,

Plaintiff,

 v.

WYMAC CAPITAL, INC.,

Defendant /

No. C-06-3750 MMC

ORDER DENYING DEFENDANT’S

MOTION TO DISMISS OR, IN THE

ALTERNATIVE, TO STAY; VACATING

HEARING

Before the Court is defendant Wymac Capital, Inc.’s motion to dismiss, filed July 3,

2006, to dismiss plaintiff CMG Mortgage Services, Inc.’s complaint, pursuant to Rules

12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, or, in the alternative, to stay

the instant action in light of an earlier-filed action pending in state court. Plaintiff has filed

opposition, to which defendant has replied. Having reviewed the papers filed in support of

and in opposition to the motion, the Court deems the matter suitable for decision on the

papers, VACATES the hearing scheduled for August 11, 2006, and rules as follows.

1. Contrary to defendant’s argument, plaintiff has adequately alleged standing to

assert its claim for unfair competition in violation of the Lanham Act, as well as its derivative

claim for declaratory relief. Specifically, plaintiff’s allegations that it is a competitor of

defendant, (see Compl. ¶ 5), that defendant has made false and misleading statements

about defendant’s products in its advertising, (see, e.g., Compl. ¶¶ 23, 31, 33, 34), and that

Case 3:06-cv-03750-MMC Document 22 Filed 08/03/06 Page 1 of 3
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plaintiff has lost customers as a result thereof, (see Compl. ¶ 37), are sufficient. See Waits

v. Frito-Lay, Inc., 978 F. 2d 1093, 1109 (9th Cir. 1982) (holding plaintiff who alleges injury

by reason of competitor’s false representations in advertisements has standing to bring

claim for unfair competition under Lanham Act).

2. Although defendant argues plaintiff lacks standing to bring a claim under the Real

Estate Settlement Procedures Act (“RESPA”) and, alternatively, has failed to state a claim

under RESPA, such arguments are unavailing because plaintiff has neither alleged nor

attempted to allege a claim under RESPA. Although the complaint alleges defendant has

“falsely advertis[ed]” that it offers services in compliance with RESPA, (see Compl.

¶ 23), a false advertising claim based on a defendant’s having falsely stated it is in

compliance with a federal law is not transformed into a claim for relief under the federal law

referenced in the defendant’s advertisements. See, e.g., Alpharma, Inc. v. Pennfield Oil

Co., 411 F. 3d 934, 939-41 (8th Cir. 2005) (holding plaintiff stated claim for false advertising

based on allegation defendant falsely represented its product was approved by FDA;

rejecting defendant’s argument plaintiff’s claim was “impermissible private attempt” to state

claim under FDA regulations).

3. Defendant is not entitled, under the Colorado River doctrine, to a stay of the

instant action in light of the state court action between the parties herein. Although

defendant asserts some of the issues presented herein, perhaps even the majority of such

issues, will be resolved in the state court proceeding, defendant has not shown that “the

pending state court proceeding [will] resolve all issues in the federal suit.” See Holder v.

Holder, 305 F. 3d 854, 868-69 (9th Cir. 2002) (holding defendant not entitled under

Colorado River doctrine to stay of federal proceeding in favor of state proceeding, where

defendant showed some but not all issues presented in federal action would be resolved in

state action). One issue presented herein that defendant has not argued, let alone shown,

will be resolved in the state court proceeding is whether defendant, in its advertising, has

used the symbol TM in connection with words and phrases for which it has not obtained

trademark protection. (See Compl. ¶ 33.)

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CONCLUSION

For the reasons stated, defendant’s motion to dismiss or, in the alternative, to stay is

hereby DENIED.

IT IS SO ORDERED.

Dated: August 3, 2006 

MAXINE M. CHESNEY

United States District Judge

Case 3:06-cv-03750-MMC Document 22 Filed 08/03/06 Page 3 of 3