FILED U.S. COURT OF AP P EALS E LEV EN T HC IRC U IT JUNE 22, 2007 THOMAS K. KAH

N CLERK [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 06- 14726

________________________ D . C . D ocketN o. 06 -003 94 -C V -C A P -1 P H O E N I X O F B R O W A R D , I N C ., o n b eh al f o f It sel f an d S i m i l arl y S itu a te d B u r g e rK in g F r a n c h is e e s , 1 1 0 1 S . R o g e r s C ir c le , S u ite 1 0 , B o c aR a to n , F lo r id a3 3 4 8 7 , P la in tif f - A p p e lla n t, v ersu s M C D O N A L D ’S C O R P O R A T I O N , O n e M c D o n a ld P la z a , O a k B r o o k , I llin o is 6 0 5 2 3 , D e f e n d a n t- A p p e lle e .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e N o r th e rn D is tr ic t o f G e o r g ia

_________________________ ( Ju n e 22, 2007)Honora ble Arthur L . Alarc on, United States Circuit Judg e for the Ninth Circuit, sitt ing * by designation. 2 B efo re P R Y O R , K R A V IT C H an d A L A R C O N , C i rcu i tJu d g es. * K R A V IT C H , C i rc ui tJudg e: T he pri m ary i ss ue i n thi s app ea l i s the prop ert es tfor det erm i ni ng w hether a pa r ty ha s prude nt i a l s t a ndi ng t o br i ng af a l s e a dve r t i s i ng c l a i m unde r§ 43( a ) of the L a n h a m A c t, 1 5 U .S .C . § 1 1 2 5 ( a ) . P h o e n ix o f B r o w a r d , I n c . ( “P h o e n ix ” ) ap p e a ls th e d istrict co u rt’s d ism issa l o f its fa lse a d v er ti sin g claim ag ain st M cD o n ald ’s C orpo ra t i on (“ M cD on al d’ s” ) f or l ac k o f prudent i al st andi ng . F or the re as on s that fo l l o w , w e ad o p tth e t estfo r p ru d en t i al st an d i n g setfo rth i n C o n t e B ro s. A ut om ot i ve, Inc. v. Q uaker S t at e- S l i ck 50 , Inc. , 16 5 F . 3d 22 1, 22 5 (3d C i r. 19 98 ), a n d a f f irm th e d is tr ic t c o u r t’s d is m is s a l. I . B AC KG RO UN D B urger K i ng C orpo ra t i on (“ B urger K i ng ”) ow ns, op er at es , and fra nchi se s f a s tf ood r e s t a ur a nt s thr oughoutthe w or l d. T oda y , the r e a r e appr oxi m a t e l y 11, 000 B ur ge rK i ng r e s t a ur a nt s w or l dw i de . A ppe l l a ntP hoe ni x i s al i c e ns e d B ur ge rK i ng fr anchi se e thatow ns and o pera t es a B urger K i ng fr anchi se i n F ortL auderdal e, F l or i da . M c D ona l d’ s , l i ke B ur ge rK i ng, ow ns , ope r a t e s , a nd f r a nc hi s e s f

a s tf ood re stau ra n ts th ro u g h o u t th e w o rld , an d th er e a re ap p ro x im ately 3 0 ,0 0 0 M cD o n ald ’s re stau ra n ts w o rld w id e. A s c o m p etit o rs in th e f as t fo o d in d u stry , b o th M cD o n ald ’s3

and B urger K i ng have em pl oyed a vari ety of m arket i ng and p rom ot i on al stra t egi es t o attractcu st o m ers, g en erat e sal es, an d en su re cu st o m er l o yal ty. F r o m 1 9 9 5 to A u g u s t 2 0 0 1 , M c D o n a ld ’s o f f e r e d c u s to m e r s th e o p p o r tu n ity t o p art i ci pat e i n v ar i ou s prom ot i on al gam es such as “ M on op ol y G am es at M c D o n a ld ’s ,” “T h e D e lu x e M o n o p o ly G a m e ,” “W h o W a n ts to b e aM illio n a ir e ,” and “ H at ch, M at ch and W i n. ” E ac h o f the prom ot i on al gam es fe atured l ow -val ue, m i d -v al u e, an d h i g h -v al u e p ri zes. T h e l o w -v al u e p ri zes i n cl u d ed l o w -d o l l ar cash aw ar ds and foo d and beverage i t em s, w hi l e the hi gh -val ue pri ze s i ncl ud ed aut om ob i l es and cas h aw ar ds of up t o $ 1 m i l l i on do l l ar s. In general , cust om er s c oul d w i n the $1 m i l l i on gr a nd pr i z e i n one of tw o w a y s — by obt a i ni ng one of the rare $ 1 m i l l i o n , i n st an t -w i n n er g am e p i eces o r by c ol l e c t i ng a nd m a t c hi ng a c o m b in a tio n o f

c e r ta in o th e rg a m e p ie c e s . M c D ona l d’ s c onduc t e d a n e xt e ns i ve a dve r t i s i ng a nd m a rke t i ng c a m pa i gn f or ea ch of the gam es i toffe re d. In these advert i se m ent s, M cD on al d’ s r epre se nt ed that a ll c u s to m e r s w h o p a r tic ip a te d in th e g a m e s h a d af a ira n d e q u a l o p p o r tu n ity to w in the of f e r e d pr i z e s . T he a dve r t i s e m e nt s a l s o r e pr e s e nt e d the s pe c i f i c odds of w in n in g c e r ta in p r iz e s , in c lu d in g th e h ig h - v a lu e p r iz e s . In approx i m at el y A pri l 20 00 , the F eder al B ureau o f I nv es t i gat i on (“ F B I” ) b eg an i n v est i g at i n g th e p ro m o t i o n al g am es. W h i l e th e g am es w ere st i l l u n d erw ay,4

the F B I i nf

orm e d M c D ona l d’ s tha tthe r e w e r e pr obl e m s w i th the r a ndom d istrib u ti o n o f its g am e p iece s. In sp it e o f th is alleg ed k n o w led g e, M cD o n ald ’s c ont i nue d t o a dve r t i s e tha tc us t om e r s ha d af a i ra nd e qua l oppor tuni ty t o w i n the o f f e r e d p r iz e s , in c lu d in g th e h ig h - v a lu e p r iz e s . O n A ugus t21, 2001, the U ni t e d S t a t e s D e pa r tm e ntof J us t i c e ( “ D O J ” ) a nd th e F B I a n n o u n ce d th at b etw ee n 1 9 9 5 an d A u g u st 2 0 0 1 , cer tain o f M cD o n ald ’s prom ot i on al gam es had b ee n com prom i se d b y acr i m i nal ri ng l ed by an em pl oyee o f S im o n M a rk e tin g , I n c . ( “S im o n ” ) , th e c o m p a n y M c D o n a ld ’s e n g a g e d to o p e r a te th e p ro m o ti o n al g am es . F ro m ap p ro x im ately 1 9 9 5 to A u g u st 2 0 0 1 , S im o n ’s D i r e c t orof

S e c ur i ty , J e r om e J a c obs on, di ve r t e d a tl e a s t$20 m i l l i on i n hi gh- va l ue pr i z e s by e m be z z l i ng w i nni ng, hi gh- va l ue ga m e pi e c e s a nd di s tr i but i ng the m t o a ne tw ork of

“ w i nne r s ” w ho c l a i m e d ( orr e c rui t e d othe r s t o c l a i m ) the pr i z e s f r om M c D ona l d’ s . T he D O J a nd F B I a nnounc e d tha te i ghti ndi vi dua l s , i nc l udi ng J a c obs on, ha d be e n a rr e s t e d i n c onne c t i on w i th the s c he m e . I n a nnounc i ng the arre st s, the U . S . A tt orney G ener al st at ed thatthe “ fr aud schem e deni ed M cD o n al d ’ s cu st o m ers a fair and eq u al ch an ce o f w i n n i n g . ” In a co rp o rat e p ress re l ea se i ss ued aft erthe arre st s, M cD on al d’ s C hai rm an and C hi ef E xecut i ve O ff

i ce r de s c r i be d the s c he m e a s “ ahi ghl y s ophi s t i c a t e d i ns i de ga m e of f r a ud a nd d e c e p tio n .”5

O n o r abo utA pri l 5, 20 02 , Ja cobson pl ea ded g ui l ty t o charges of conspi ra cy and m ai l fr aud. A pp roxi m at el y 50 o ther per sons ei ther pl ea ded g ui l ty or w er e c o n v ic te d in c o n n e c tio n w ith th e c o n s p ir a c y . F ol l ow i ng the di s c l os ur e of the s c he m e , M c D ona l d’ s c r e a t e d a n i nde pe nde nt t as k force t o revi ew al l of i t s prom ot i on al prac t i ce s, and i ti ntrodu ce d add i t i on al s e c u r ity p r o c e d u r e s to e n s u r e th e in te g r ity o f f u tu r e p r o m o tio n a l g a m e s . N o n eth el ess, co n su m ers th ro u g h o u tth e U . S . fi l ed sev eral cl ass act i o n s ag ai n st Mc Do n a l d ’ s , a l l e g i n g c o n s u m e rf r a u d , n e g l i g e n c e , a n d u n j u s te n r i c h m e n t . On A p r il 1 9 , 2 0 0 2 , M c D o n a ld ’s s e ttle d th e s e c la s s a c tio n s b y , in te ra lia , a g r e e in g to i m pl e m e nta$15 m i l l i on “ I ns t a ntG i ve a w a y , ” pr ovi di ng c l a s s m e m be r s a nd the g e n e r a l p u b lic a n o p p o r tu n ity to w in f if te e n $ 1 m illio n p r iz e s . O n F eb ru ar y 2 2 , 2 0 0 6 , P h o en ix filed th e in stan t actio n ag ain st M cD o n ald ’s on behal f of i t se l f a nd al l si m i l ar l y s i tuat ed B urger K i ng fr anchi se es (aprop osed c l a s s of appr oxi m a t e l y 1, 100 f

r a nc hi s e e s ) , a l l e gi ng f

a l s e a dve r t i s i ng i n vi ol a t i on of § 4 3 (a ) o f th e L an h am A ct. S p ec ifically, P h o en ix alleg ed th at M cD o n ald ’s m i sr epre se nt ed thatea ch pl ay eri n i t s prom ot i on al gam es had a fai r a nd equal c ha nc e of

w i nni ng hi gh- va l ue pr i z e s a nd m i s r e pr e s e nt e d the s pe c i f i c odds of w i nn i ng hi gh -val ue pri ze s. A cc ordi ng t o P ho eni x, M cD on al d’ s prom ot i on al gam es w er e “ ri gg ed fr om approx i m at el y 199 5-20 01 , ” tho se gam es l ured cust om er s a w ay6

f r om B ur ge rK i ng a nd y i e l de d a n “ unna tur a l ” s pi ke i n pr of i t s f orM c D ona l d’ s , the h ig h -v alu e p rize s ( in clu d in g th e $ 1 m il li o n p rize s) w er e d iv er ted fr o m M cD o n ald ’s cust om er s, and the “ advert i si ng ca m pai gn s thatt ou t ed m i l l i on do l l arpri ze s w er e l i t er al l y f al se . ” P ho eni x al so al l eged thataf t erl ea rni ng thatthe gam es had b ee n c om pr om i s e d, M c D ona l d’ s know i ngl y a nd de l i be r a t e l y c ont i nue d t o a dve r t i s e the ga m e s a s though c us t om e r s ha d af a i ra nd e qua l c ha nc e of

w i nni ng. M cD on al d’ s m ov ed t o d i sm i ss P ho eni x’ s c om pl ai nton the grou nd s that P ho eni x l ac ked p rudent i al st andi ng un der the L anham A ctand, i n the al t ernat i ve, th a tJ a c o b s o n ’ s th e f

twa s a n i n t e rv e n i n g c a u s e o f P h o e n i x ’ s a l l e g e d i n

j u ry . On A u g u st 1 , 2 0 0 6 , th e d istrict co u rt issu ed a w ritt en o rd erg ra n ti n g M cD o n ald ’s m o tio n a n d d is m is s in g th e a c tio n w ith p r e ju d ic e . N o tin g th a t th e E le v e n th C ir c u it had n otaddres se d the approp ri at e s t andard for det erm i ni ng w hether apl ai nt i ff has prud ent i al st andi ng t o b ri ng a f al se advert i si ng cl ai m un der § 43 (a ) of the L anham A ct , the di stri ctcourtsurvey ed the ca se l aw of other c i rc ui t s a nd adop t ed the fi vef a c t ort e s ts e tf

or th by the T hi r d C i r c ui ti n C ont e B r os . , 165 F . 3d a t225, f i ndi ng tha tt e s tt o be m or e “ pe r s ua s i ve ” tha n the “ c a t e gor i c a l appr oa c h” a dopt e d by se vera l other c i rc ui t s. A pp l yi ng the C on t e B ros. t es t , the di stri ctcourtconcl ud ed th a t P h o e n ix d id n o t h a v e p ru d e n tia l s ta n d in g to b r in g af a ls e a d v e r tis e m e n t c la im u n d er th e L an h am A ctag ai n stM cD o n al d ’ s. P h o en i x n o w ap p eal s.7 I I . DI S CUS S I ON O n ap p e a l, P h o e n ix a r g u e s th a t th e d is tr ic t c o u r t e rr e d in d is m is s in g its com pl ai ntagai nstM cD on al d’ s f or l ac k o f prudent i al st andi ng . “ W e r evi ew s t a ndi ng de t e rm i na t i ons de novo. ” B oc he s e v. T ow n of P onc e I nl e t , 405 F . 3d 964, 975 ( 11th C i r . 2005) . “ W e r e vi e w adi s tr i c tc ourt ’ s gr a ntof am ot i on t o di s m i s s de novo, t a ki ng a s true the f a c t s a s the y a r e a l l e ge d i n the c om pl a i nt . ” O w e ns v. S am kl e A ut o. Inc. , 42 5 F . 3d 13 18 , 13 20 (11th C i r. 20 05 ). “I n e v e ry f

e d e r a l c a s e , th e p a r ty b r in g in g th e s u it m u s t e s tab lis h s ta n d in g to pr os e c ut e the a c t i on. ” E l k G r ove U ni f i e d S c h. D i s t . v. N e w dow , 542 U . S . 1, 11, 12 4 S . C t . 23 01 , 23 08 , 15 9 L . E d. 2d 98 (200 4). A s the S up re m e C ou rthas expl ai ned, st andi ng j uri sprudence i s c om pri se d o f “ tw o stra nd s: A rt i cl e I II s t a ndi ng, w hi c h e nf

or c e s the C ons t i tut i on’ s c a s e - or - c ontr ove r s y r e qui r e m e nt , a nd p ru d en t i al st an d i n g , w h i ch em b o d i es j u d i ci al l y sel f-i m p o sed l i m i t s o n th e ex erci se of f e de r a l j ur i s di c t i on. ” I d. a t11- 12, 124 S . C t . a t2308 ( i nt e rna l quot a t i on m a rks and ci t at i on om i tt ed). T o d em on stra t e A rt i cl e I II st andi ng , a pl ai nt i ff m ustal l ege that(1) he has s uf f e r e d a n a c tua l orthr e a t e ne d i nj ury , ( 2) the i nj ury i s f a i r l y tr a c e abl e t o the c ha l l e nge d c onduc tof

the de f e nda nt , a nd ( 3) the i nj ury i s l i ke l y t o be r e dr e s s e d by af a vor abl e rul i ng. P r i m e r aI gl e s i aB a ut i s t aH i s pa naof B oc aR a t on, I nc . v.8

B r o w a r d C o u n ty , 4 5 0 F .3 d 1 2 9 5 , 1 3 0 4 ( 1 1 th C ir . 2 0 0 6 ) . M c D ona l d’ s doe s notdi s put e tha tthe a l l e ga t i ons i n P hoe ni x’ s c om pl a i nt s a t i s f y the s e c ons t i tut i ona l s t a ndi ng r e qui r e m e nt s . B e c a us e the i s s ue of c ons t i tut i ona l s t a ndi ng i s j ur i s di c t i ona l , how e ve r , w e a ddr e s s i the r e . S e e S t e e l C o. v. C i t i z e ns f

oraB e tt e rE nv’ t , 523 U . S . 83, 91- 93, 118 S . C t . 1003, 1011, 140 L .E d .2 d 2 1 0 ( 1 9 9 8 ) ( s ta tin g th a t th e q u e s tio n o f A r tic le I I I s ta n d in g is j uri sdi ct i on al and sho ul d b e a dd re ss ed before i ss ues of prudent i al and st atut ory s ta n d in g ) ; C o n te B r o s ., 1 6 5 F .3 d a t 2 2 5 . I n i t s c om pl a i nt , P hoe ni x a l l e ge s tha t“ [ a ] s adi r e c ta nd pr oxi m a t e r e s ul tof M cD on al d’ s f

al se . . . advert i si ng and u nfai r c om pet i t i on , cust om er s w er e di vert ed f r o m P h o e n ix a n d its A f f ilia te d F r a n c h is e e s , w h o a c c o r d in g ly n o t o n ly lo s t p r o f its due , i nt e ra l i a , t o r e duc e d s a l e s , buta l s o i nc urr e d c os t s i n c onne c t i on w i th c om m on c ount e r a c t i ve e f

f or t s t o r e t a i n thos e c us t om e r s . ” A l though P hoe ni x doe s nota l l e ge tha tM c D ona l d’ s ora ny of i t s e m pl oy e e s pa r t i c i pa t e d i n the the f ttha tl e d t o the co m p ro m isin g o f th e h ig h -v alu e g am es (a ll eg ed ly re n d er in g M cD o n ald ’s a dve r t i s e m e nt s f

a l s e ) , P hoe ni x doe s a l l e ge tha ta f t e rM c D ona l d’ s l e a rne d tha tthe hi gh -val ue gam es had b ee n com prom i se d, i tkn ow i ng l y a nd del i bera t el y a dv ert i se d th atcu st o m ers h ad a fai r an d eq u al o p p o rtu n i ty t o w i n h i g h -v al u e p ri zes. T h ese a l l e ga t i ons s a t i s f

y the f i r s ttw o pr ongs of

the c ons t i tut i ona l s t a ndi ng9

in q u iry— P h o e n ix a lle g e s th a t it h a s s u f f e r e d a n a c tu a l in

ju ry th a t is f

a ir ly tr a c e ab le t o M cD on al d’ s a l l eged m i sc on du ct . S ee P ri m er a I gl es i a, 45 0 F . 3d at13 04 . In r e l i e f , P hoe ni x r e que s t s , a m ong othe rthi ngs , “ a c tua l da m a ge s , i n a m ount s t o be d em o n stra ted at trial fo r th e h ar m s d irec tl y a n d p ro x im ately c au se d b y M cD o n ald ’s f a ls e . . . a d v e r tis in g ” a n d “o th e rd a m a g e s in c u rr e d ,” in c lu d in g “a d v e r tis in g c o s ts in c u rr e d to r e s p o n d to th e f ix e d p r o m o tio n a l g a m e s .” I f g r a n te d , th is r e lie f

w o u ld r e dr e s s the i nj ur i e s a l l e ge d a nd thus s a t i s f i e s the thi r d pr ong of

the s t a ndi ng i nq ui ry . S ee i d. B as ed on the al l egat i on s i n the com pl ai nt , w e c on cl ud e that P h o e n ix h a s s a tis f

ie d th e r e q u ir e m e n ts o f

c o n s titu tio n a l s ta n d in g . E ven w here const i tut i on al st andi ng exi st s, ho w ever , prud ent i al c ons i de r a t i ons m a y pr e c l ude s t a ndi ng. W oode n v. B d. of R e ge nt s of

U ni v. S y s . of G a . , 247 F . 3d 1262, 1273 n. 12 ( 11th C i r . 2001) . W e the r e f or e turn t o the i s s ue of prude nt i a l s t a ndi ng. A . W h et h er P ru d en ti al S tan d i n g D octr i n e A p p l i es to th e L an h am A ct W e m ustfi rs tdet erm i ne w hether C on gres s i nt ended t o abrog at e prudent i al st an d i n g d o ctri n e i n p assi n g § 4 3 (a) o f th e L an h am A ct . S ect i o n 4 3 (a) p ro v i d es: (1 ) A n y p erso n w h o , o n o r i n co n n ect i o n w i th an y g o o d s o r serv i ces, or any c on t ai ner f

or go od s, uses i n com m er ce any w ord, t erm , nam e, sym b o l , o r d ev i ce, o r an y co m b i n at i o n th ereo f, o r an y fal se d esi g n at i o n o f o ri g i n , fal se o r m i sl ead i n g d escri p t i o n o f fact , o r fal se orm i s l e a di ng r e pr e s e nt a t i on of f a c t , w hi c h— ( A ) i s l i ke l y t o c a us e c onf us i on, ort o c a us e m i s t a ke , ort o de c e i ve10

a s to th e a f

f ilia tio n , c o n n e c tio n , o ra s s o c ia tio n o f s u c h p e r s o n w ith a n o th e rp e r s o n , o ra s to th e o r ig in , s p o n s o r s h ip , o rap p r o v a l o f h is orhe rgoods , s e rvi c e s , orc om m e r c i a l a c t i vi t i e s by a nothe rpe r s on, or ( B ) i n c om m e r c i a l a dve r t i s i ng orpr om ot i on, m i s r e pr e s e nt s the nature, char ac t er i st i cs , qu al i t i es , or geog raph i c ori gi n o f hi s or her o r an o th er p erso n ’ s g o o d s, serv i ces, o r co m m erci al act i v i t i es, s ha l l be l i abl e i n ac i vi l a c t i on by any pe rs on w ho be l i e v e s that he or she is or is l i ke l

y to b e dam ag ed

b y s u c h a c t. 15 U . S . C . § 1 12 5(a) (e m ph as i s a dd ed). T he i s s ue of

w he the rprude nt i a l s t a ndi ng doc tr i ne appl i e s t o § 43( a ) of the L a n h a m A c t is o n e o f

f ir s t im p r e s s io n in th is c ir c u it. T h e T h ir d a n d F if th C ir c u its h a v e a d d r e s s e d th is q u e s tio n , a n d b o th h a v e h e ld th a t C o n g r e s s d id n o t ab r o g a te prud ent i al l i m i t at i on s on the st andi ng of pl ai nt i ff s t o b ri ng sui tun der § 43 (a ). S ee C ont e B r os . , 165 F . 3d a t227- 230; P r oc t e r& G a m bl e C o. v. A m w a y C orp. , 242 F . 3d 53 9, 56 1-62 (5th C i r. 20 01 ). W e a gree . C ongr e s s i s pr e s um e d t o i nc orpor a t e ba c kgr ound prude nt i a l s t a ndi ng lim ita tio n s u n le s s th e s ta tu te e x p r e s s ly negat es such pri nci pl es . B ennettv. S pear , 520 U . S . 154, 163, 117 S . C t . 1154, 1162, 137 L . E d. 2d 281 ( 1997) . A l though § 4 3 (a)’ s u se o f th e t erm “ an y p erso n ” m i g h tl ead t o th e co n cl u si o n th atC o n g ress i nt e nde d t o ne ga t e the ba c kgr ound of prude nt i a l s t a ndi ng by a l l ow i ng “ a ny pe r s on” w ho coul d achi eve A rt i cl e I II st andi ng t o b ri ng sui t , “ the S up re m e C ou rthas tw i ce h e ld th a t C o n g r e s s h a s n o t e x p r e s s ly ab r o g a te d p ru d e n tia l s ta n d in g d o c tr in e m e r e lySe c tio n 4 5 p ro vide s in pertinent p art : 1 Th eintent o f t

hisc ha pter i s tore gulatec omm erc ewithin th ec ontrol o f C ongre ss by makingactionablethe dec eptive and misleading useof marks in such commerc e; to protec t reg istered mar ks used in such commerce f rom interferenc e by State , o r territo ri al le g isl atio n; to protect persons engaged in such comm erce against unfai r compe tition ; to prevent fraud and de ception in such c ommerceby the use of reproduc tions, copies, counterfeits, or c olorable imitations of registered marks; and to providerights and reme dies stipulated by treaties and conventions respe ctingtrademarks, trade name s, and unfair competition entere d into between theUnite d St ate s and

fo re ign n atio ns . 15 U.S.C. § 1127 (emphasis added) . 11 b y p a s s in g as ta tu te th e te x t o f w h ic h a d m its ab r o a d in te rp r e ta tio n .” C o n te B r o s ., 16 5 F . 3d at22 7. F or exam pl e, i n A ss oci at ed G ener al C on tra ct ors of C al i forni a, Inc. v. C al i forni a S t at e C ou nci l of C arpent er s, the S up re m e C ou rthel d that C ongr e s s di d notabr oga t e prude nt i a l s t a ndi ng pr i nc i pl e s w he n i te na c t e d the C l a y t on A c t , de s pi t e s t a tut ory l a ngua ge a l l ow i ng “ [ a ] ny pe r s on w ho s ha l l be i nj ur e d i n hi s bus i ne s s orpr ope r ty ” t o br i ng s ui tunde rtha ta c t . 459 U . S . 519, 535 & n. 31, 103 S . C t . 897, 907 & n. 31, 74 L . E d. 2d 723 ( 1983) . A nd a s not e d by the c our t s i n C ont e B r os . a nd P r oc t e r& G a m bl e , l a ngua ge c ont a i ne d i n § 45 of the L a nha m A c t“ m a ke s c l e a rtha tthe f oc us of the [ L a nha m A c t ] i s on a nt i - c om pe t i t i ve c onduc ti n ac om m e r c i a l c ont e xt , ” s o tha tc onf e rr i ng s t a ndi ng t o the f

ul l e xt e nt 1 i m pl i e d by the pl a i n l a ngua ge of § 43( a ) w oul d gi ve s t a ndi ng t o pa r t i e s tha tha ve not h ad th eir c o m p etit iv e o r c o m m er cial in tere sts a ff ec ted b y th e d ef

en d an t’ s c o n d u c t. C o n te B r o s ., 1 6 5 F .3 d a t 2 2 9 ; P r o c te r& G a m b le , 2 4 2 F .3 d a t 5 6 1 .12

R ath er, “ [t ] h e co n g ressi o n al l y-st at ed p u rp o se o f th e L an h am A ct ” ev i n ces a cong re ss i on al “ i nt entt o l i m i tst andi ng t o a narr ow cl as s of pot ent i al pl ai nt i ff s po ss es si ng i nt er es t s the prot ec t i on of w hi ch furthers ” thatcong re ss i on al l y s t at ed p u rp o s e . C o n te B r o s ., 1 6 5 F .3 d a t 2 2 9 . A cc ordi ng l y, i n l i gh tof the t extof § 4 3(a) and the pu rpose of the L anham A ctas expres se d i n § 45 , w e j oi n the T hi rd and the F i fth C i rc ui t s a nd ho l d that C on gres s di d n oti nt end t o abrog at e prudent i al st andi ng l i m i t at i on s w hen i tenac t ed th e L a n h a m A c t. B . T h e A p p r op r i at e T e s t f or P r u d e n t i alS t an d i n g U n d e r § 43( a) P hoe ni x a r gue s tha tthe di s tr i c tc our tappl i e d the w r ong t e s tt o de t e rm i ne w h eth er P h o en i x h ad p ru d en t i al st an d i n g t o b ri n g i t s fal se ad v ert i si n g cl ai m ag ai n st M cD on al d’ s. A cc ordi ng t o P ho eni x, the di stri ctcourterre d i n app l yi ng the fi vefa ct or t es tart i cul at ed by the T hi rd C i rc ui ti n C on t e B ros. , and i nst ea d, the court s houl d ha ve appl i e d the “ c a t e gor i c a l appr oa c h” tha t , a c c or di ng t o P hoe ni x,

“ co n tro l s i n m o st ” o f th e ci rcu i tco u rt s o f ap p eal s. T hi s c ou rthas notaddres se d the approp ri at e t es tfor det erm i ni ng w hether a pl a i nt i f f ha s prude nt i a l s t a ndi ng t o br i ng af a l s e a dve r t i s i ng c l a i m unde r§ 43( a ) of the L a nha m A c t . A f

t e rs urve y i ng the c a s e l a w f r om othe rc i r c ui t s a nd e xa m i ni ng the pa r t i e s ’ a r gum e nt s , w e j oi n the T hi r d a nd F i f th C i r c ui t s a nd a doptthe t e s tf orTo date, theThird and F ifth Circuits are theonly circuits to have adopted thetest set 2 forth in Conte Bros. Automotive, Inc. v. Quaker State- Slick 50, Inc., 165 F .3d 221, 233 (3d Cir. 1998), as the sta

ndard f or determining whether

a plaintiff ha s prudential standingunder § 43( a) of the L anham Ac t. See Am. Ass’n of O rthodontists v. Yellow Book USA, Inc., 434 F .3d 1100, 1104 (8th Cir. 2006). In announcingthis standard, the Third Circuit adopted the test for standingunder the 3 Sherman Ac t articulate d by the Supreme Court in Associated General Contrac tors of California, Inc. v. California

State Council of Carpenters, 459 U.S. 519, 103 S.Ct . 897, 74 L .Ed.2d 723 (1983). Conte B ros., 165 F.3d a t 233. 13 prude nt i a l s t a ndi ng a r t i c ul a t e d i n C ont e B r os . W e the r e f or e hol d tha tt o de t e rm i ne 2 w hether aparty has prud ent i al st andi ng t o b ri ng a f al se advert i si ng cl ai m un der § 43( a ) of

the L a nha m A c t , ac our ts houl d c ons i de ra nd w e i gh the f ol l ow i ng fact o rs: ( 1) T he na tur e of

the pl a i nt i f

f’ s a l l e ge d i nj ury : I s the i nj ury of aty pe tha tC ongr e s s s oughtt o r e dr e s s i n pr ovi di ng apr i va t e r e m e dy f or v io lati o n s o f th e [ L an h am A ct]? (2 ) T h e d i rectn ess o r i n d i rectn ess o f th e assert ed i n j u ry. ( 3) T he pr oxi m i ty orr e m ot e ne s s of the pa r ty t o the a l l e ge d i nj ur i ous c o n d u c t. ( 4 ) Th e s p e c u l a t i v e n e s s o f th e d a ma g e s c l a i m. ( 5) T he r i s k of

dupl i c a t i ve da m a ge s orc om pl e xi ty i n appor t i oni ng d am ag es. C on t e B ros. , 16 5 F . 3d at23 3 (i nt ernal qu ot at i on m arks and ci t at i on s om i tt ed); 3 P r oc t e r& G a m bl e , 242 F . 3d a t562 ( a dopt i ng the C ont e B r os . t e s tf orde t e rm i ni ng prud ent i al st andi ng un der the L anham A ct ). W e bel i eve thatthi s t es t“ prov i des approp ri at e f

l exi bi l i ty i n app l i ca t i on t o add re ss fa ctual l y di spar at e s ce nari os that m a y a r i s e i n the f

utur e , w hi l e a tthe s a m e t i m e s uppl y i ng apr i nc i pl e d m e a ns f or14

a ddr e s s i ng s t a ndi ng unde r. . . § 43( a ) . ” C ont e B r os . , 165 F . 3d a t236. I nde e d,

“ tw o p rom i nentcom m ent ar i es ” have endorsed thi s s t andard. P roct er& G am bl e, 2 4 2 F .3 d a t 5 6 2 n .5 1 ( c itin g 4 M c C a r th y , M c C a r th y o n T r a d e m a rk s a n d U n f a ir C om pe t i t i on § 27: 32 n. 1 ( 4th e d. 1996) ( “ I n the a uthor ’ s opi ni on, s om e l i m i ton the § 43( a ) s t a ndi ng of

pe r s ons r e m ot e f

r om the di r e c t l y i m pa c t e d pa rty s houl d be appl i ed by anal og y t o ant i trustl aw , such as use of the cr i t er i a l i st ed i n A ss oci at ed G e n e r a l C o n tr a c to r s . . . .” ) ; R e s ta te m e n t ( T h ir d ) o f U n f a irC o m p e titio n § 3 c m t.f (199 5) (“ In det erm i ni ng w hether a n ass ert ed i nj ury i s s uffi ci ent l y di re ctt o j ust i fy the i m po si t i on of l i abi l i ty, the S up re m e C ou rt ’ s a nal ys i s of s i m i l ari ss ues und er f e de r a l a nt i trus tl a w m a y of f e raus e f ul a na l ogy . ” ) ) . A nd unde rthi s s t a nda r d,

“ s t a ndi ng unde rthe L a nha m A c tdoe s notturn on the l abe l pl a c e d on the r e la tio n s h ip b e tw e e n th e p a r tie s .” C o n te B r o s ., 1 6 5 F .3 d a t 2 3 5 . P ho eni x argues thatthi s c ou rtshou l d ado ptthe so-c al l ed “ ca t egori ca l appr oa c h” tha ti s appl i e d i n the m a j or i ty of the c i r c ui t s , a s unde rtha tappr oa c h,

“ a c tua l ” or“ di r e c t ” c om pe t i t i on i s the “ e xc l us i ve r e qui r e m e nt ” f orde t e rm i ni ng prud ent i al st andi ng . T o thatend, P ho eni x argues thatthe C on t e B ros. t es tw as form ul at ed i n o rdert o ext end p rudent i al st andi ng un der the L anham A ctt o p art i es w ho ar e n o t i n “ a c tua l ” or“ di r e c t ” c om pe t i t i on. T hus , a c c or di ng t o P hoe ni x, the C on t e B ros. fa ct ors “ i nevi t abl y c ol l apse ” i nt o the ca t egori ca l approach w henContrary to Phoenix ’s contention, it appea rs that the F ourth Circuit has not adopted the 4 so -c alle d c ate g oric al a

pp ro a c h f oll ow e d in

theSe venth , N int

h, and Tenth Circuit s. In M a dein theUSAF oundatio n v . Phill ipsF oo ds , Inc ., theF ourt h Circuit state d th at “ in a

n e arl ier c a se involving commercial par ties, we noted in pa ssing that the Lanham Ac t is ‘a privatereme dy [for a] commercial plaintiff who meets the burden of proving that its commercial intere sts have been harme d by

a competitor’s false advertising .’” 365 F .3d 278, 281 (4th Cir. 2004) (quotingMylan L abs., Inc. v. Matka

ri, 7 F.3d 1130, 1139 (4th Cir. 1993)) (emphasis added) . And af ter e xaminingop ini on s f

ro m th eF ir st, Se c on d, Third, Se venth , a nd Tenth Circuit s, theF ourt

h Circuit acknowle dg ed that “there might be some marginal difference s in the circuits about what qu alif ie s a s a c omm erc ial or

c omp e titiveintere st f

or sta ndingpurp os e s under t

heL anh am A c t” and determine d th at “ theba sica pp ro a c h o f o ther c ircuit s . . . re quire s th eL anh am A c t pl aintif f to be eng ag ed in commercial ac tivity .” Id. at 280-81 (ex amining Conte B ros., 165 F.3d at 229; Stanfield v. OsborneIndus., Inc., 52 F .3d 867, 873 (10th Cir. 1995); Dovenmuehlev. Gilldorn Mortg ag e Midwest Corp., 871 F .2d 697, 700 (7th Cir. 1989); Berni v. Int’l Gourmet Rests. of Am., Inc., 838 F .2d 642, 648 (2d Cir. 1988); Camel Hair &CashmereInst. of Am., Inc. v. As so c iate d D ry

Go od s Co rp ., 79 9 F .2 d 6 , 1 1- 12 (1 st C ir . 1 98 6) ). Th ec ourt endor se d this “ba sic a pp ro a c h, ”and

a s a re sult, it c on c lude d th at a c on sumer doe s n ot h avesta ndingto suefo r f

alse adver tising under

the L anham Ac t. I d. at 281. Thus, rather than adopt the cate g orical approach fo llo we d b y

theSe venth , N int

h, and Tenth Circuit s, theF ourt

h Circuit endor se d th e“ba sic approach” of

requiringthat the plaintiff be eng ag ed in commercial ac tivity —an approach followed by

all circuits that have addressed the issue. Id. 15 appl i ed t o a “ di re ctcom pet i t or” a l l egi ng a “ com pet i t i ve i nj ury, ” a nd there fore , d i rectco m p et i t o rs “ i n v ari ab l y sat i sfy” th e C o n t e B ro s. req u i rem en t s. W e ad d ress e a c h a r gum e nti n turn. O f the c i r c ui t s tha tha ve nota dopt e d the C ont e B r os . t e s t , the S e ve nth, N i nth, a nd T e nth C i r c ui t s ha ve c om e the c l os e s tt o “ c a t e gor i c a l l y ” hol di ng tha tthe p la in tif f m u s t b e in “a c tu a l” o r“d ir e c t” c o m p e titio n w ith th e d e f e n d a n t a n d a s s e r t a

“ com pet i t i ve i nj ury t o est abl i sh prud ent i al st andi ng un der § 43 (a ). ” S ee , e. g. , Ja ck 4 R us s e l l T e rr i e rN e tw ork of N . C a . v. A m . K e nne l C l ub, I nc . , 407 F . 3d 1027, 1037 (9 th C i r. 2 0 0 5 ) (h o l d i n g th att o est ab l i sh “ st an d i n g p u rsu an tt o th e ‘ fal se advert i si ng ’ pron g o f § 43 (a ) of the L anham A ct , a pl ai nt i ff m ustshow : (1) a16

c om m e r c i a l i nj ury ba s e d upon am i s r e pr e s e nt a t i on aboutapr oduc t ; a nd ( 2) tha tthe i nj ury i s ‘ c om pe t i t i ve , ’ orha rm f ul t o the pl a i nt i f

f’ s abi l i ty t o c om pe t e w i th the defe nd ant ” ( ci t at i on om i tt ed)) ; H ut chi nson v. P fe i l , 21 1 F . 3d 51 5, 52 0 (10 th C i r. 2 0 0 0 ) ( h o ld in g th a t th e p la in tif f la c k e d s ta n d in g b e c a u s e h is h o p e s o f e v e n tu a lly o b ta in in g ap r o d u c t to c o m p e te w ith th e d e f e n d a n t’s w e r e to o r e m o te , a n d h is in ab il ity to co m p ete w ith th e d ef en d an t w as n o t a fu n ctio n o f th e d ef en d an t’ s a l l e ge d m i s c onduc t ) ; J ohnny B l a s t of f , I nc . v. L . A . R a m s F ootba l l C o. , 188 F . 3d 4 2 7 , 4 3 8 (7 th C i r. 1 9 9 9 ) (h o l d i n g th at“ a p arty m u std em o n strat e th ati th as a r e a s onabl e i nt e r e s tt o be pr ot e c t e d a ga i ns tc onduc tvi ol a t i ng the A c t [ , ] ” by a s s e r t i ng “ adi s c e rnabl e c om pe t i t i ve i nj ury ” ( i nt e rna l quot a t i ons om i tt e d) ) ; S t a nf

i e l d v. O s borne I ndus . , I nc . , 52 F . 3d 867, 873 ( 10th C i r . 1995) (hol di ng thatthe pl ai nt i ff “ m ustbe a c om pet i t or of the defendantand al l ege a c om pe t i t i ve i nj ury ” ) ; L . S . H e a th & S on, I nc . v. A T & T I nf o. S y s . , I nc . , 9 F . 3d 561, 5 7 5 ( 7 th C ir . 1 9 9 3 ) ( h o ld in g th a t “th e p la in tif f m u s t a s s e r t ad is c e rn ib le c om pe t i t i ve i nj ury ” ) ; W a i t s v. F r i t o- L a y , I nc . , 978 F . 2d 1093, 1109 ( 9th C i r . 1992) (s am e) . I n c ontr a s tt o the S e ve nth, N i nth, a nd T e nth C i r c ui t s , the F i r s ta nd S e c ond C ir c u its h a v e ap p lie d ale s s c a te g o r ic a l ap p r o a c h to d e te rm in e s ta n d in g , w h e r e in the di sposi t i ve i ss ue i s notthe degree of “ com pet i t i on , ” butw hether the pl ai nt i ff17

ha s a“ r e a s onabl e i nt e r e s t ” t o be pr ot e c t e d a ga i ns tthe ty pe of ha rm tha tthe L a nha m A c ti s i nt e nde d t o pr e ve nt . S e e , e . g. , O rtho P harm . C orp. v. C osprop har, I nc . , 32 F . 3d 690, 694 ( 2d C i r . 1994) ; C a m e l H a i r& C a s hm e r e I ns t . , I nc . v. A s s o c ia te d D ryG o o d s C o rp ., 7 9 9 F .2 d 6 , 1 1 ( 1 s t C ir . 1 9 8 6 ) . I n C a m e l H a ir , a tr a d e g r o u p o f

c a s h m e r e g a rm e n t p r o d u c e r s f ile d aL a n h a m A c t s u it a lle g in g th a t a c o a t m a n u f

a c tu r e rh a d m is r e p r e s e n te d th e c a s h m e r e c o n te n t o f o n e o f its p r o d u c ts . 799 F . 2d a t6- 8. I n di s c us s i ng the i s s ue of s t a ndi ng, the F i r s tC i r c ui ts a i d: “ the pl ai nt i ff [m usthave] a rea so n a b le i n terest i n b ei n g p ro t ect ed [ag ai n stfal se a dve r t i s i ng] . . . . [ I ] ti s [ note nough] f orthe pl a i nt i f

f m e r e l y t o e s t abl i s h a f a l s e hood i n the de f

e nda nt ’ s a dve r t i s i ng orm a rke t i ng; the pl a i nt i f f m us ta l s o s how alin k o r‘n e x u s ’ b e tw e e n its e lf a n d th e a lle g e df

a ls e h o o d .” I d . a t 1 1 - 1 2 ( e m p h a s is added). C on cl ud i ng thatthe tra de grou p h ad st andi ng , the F i rs tC i rc ui tst at ed that “[alth o u g h ] none o f th e [g ro u p ’ s] m em b ers c o m p e te w ith th e de

fe n da n t . . . th e ir po si t i on as m anufacturer s a nd vend ors of f abri c a nd cl othi ng cont ai ni ng ca shm er e g iv e s th e m a s tr o n gin te r e s t in p r e s e rv in g c a s h m e r e ’s r e p u ta tio n a s ah ig h q u a lity f ib r e .” I d . a t 1 2 ( e m p h a s is a d d e d ) . I n the S e c ond C i r c ui t , apl a i nt i f f br i ngi ng af

a l s e a dve r t i s i ng c l a i m unde rthe L anham A ct“ m ustdem on stra t e both (1) a r ea sonabl e i nt er es tt o b e prot ec t ed a ga i ns tthe a dve r t i s e r ’ s f a l s e orm i s l e a di ng c l a i m s , a nd ( 2) ar e a s onabl e ba s i s f or18

be l i e vi ng tha tthi s i nt e r e s ti s l i ke l y t o be da m a ge d by the f a l s e orm i s l e a di ng a dve r t i s i ng. ” I T C L t d. v. P unc hgi ni , I nc . , 482 F . 3d 135, 169 ( 2d C i r . 2007) ( in te rn a l q u o ta tio n m a rk s o m itte d ) ; a c c o r d S o c ie te D e s H o te ls M e r id ie n v . L a S a lle H ot e l O pe r a t i ng P ’ s hi p, L . P . , 380 F . 3d 126, 130 ( 2d C i r . 2004) ; H a va naC l ub H ol di ng , S . A . v. G al l eon S . A . , 20 3 F . 3d 11 6, 13 0 (2d C i r. 20 00 ); P D K L abs, Inc. v. F r i e dl a nde r , 103 F . 3d 1105, 1111 ( 2d C i r . 1997) . “ T he r e a s onabl e i nt e r e s tpr ong of thi s t e s ti nc l ude s c om m e r c i a l i nt e r e s t s , di r e c tpe c uni a ryi nt e r e s t s , a nd e ve n a f u tu r e p o te n tia l f

o rac o m m e r c ia l o rc o m p e titiv e in ju ry [ ,]” w h ile “th e r e a s o n ab le b a s i s p r o n g r e q u i r e s th e p l a i n t i f f t o s h o w b o th l i k el y i n

j u ry and a c aus al nex us to the f a l s e a dve r t i s i ng. ” I T C , 482 F . 3d a t169- 70 ( i nt e rna l quot a t i on m a rks om i tt e d) ( e m pha s i s a dde d) . A nd unde rthe S e c ond C i r c ui t ’ s appr oa c h, apl a i nt i f f a s s e r t i ng a f a l s e a dve r t i s i ng c l a i m unde r§ 43( a ) ne e d not b e a “ co m p et i t o r. ” S ee P D K L ab s, 1 0 3 F .3 d a t 1 1 1 1 ; O r th o , 3 2 F .3 d a t 6 9 4 ; B e rn i v . I n t’l G o u rm e t R e s ts . o f A m ., Inc. , 83 8 F . 2d 64 2, 64 8 (2d C i r. 19 88 ). Inst ea d, “ w here the pl ai nt i ff’ s produ ct s a re n o to b v i o u sl y i n co m p et i t i o n w i th [th e] d efen d an t ’ s p ro d u ct s, ” th e “ p l ai n t i ff m u st m ake am ore s ub st ant i al show i ng of i nj ury a nd causat i on . ” P D K L abs, 10 3 F . 3d at 11 11 (quo t at i on m arks om i tt ed). T hus , c ontr a ry t o P hoe ni x’ s a s s e r t i ons , the m a j or i ty of the c i r c ui t s do not hol d “ c a t e gor i c a l l y ” tha ta c tua l ordi r e c tc om pe t i t i on i s the e xc l us i ve r e qui r e m e ntPho enix f ur ther c ontend s th at th edis tric t c ou rt erron e ou sly

frame d th eConteB ro s. te st 5 and the “ cate g orical approach” a s “opposite sides of a circuit spli t coin.” Although we agreethat the Conte Bros. test and the ca teg orical approach are not nec essarily on opposite sides of a c ircuit sp lit , w eno nethe le ss c on c ludetha t th ereis t ens ion

betw e en th etw o a

pp ro a c he s w ith reg ards to the de greeof ac tual competition require d between the plaintiff and thedefendant. See, e.g ., Am. Ass’n of Or thodontist s, 434 F.3d at 1103-04 (re cognizi ngdifference s between circuits that “have he ld, categ orically , that false advertisingclaims not involving misuse of a tra demark

area c tio na

bleonly wh en b rought b y

c omp e titor s o f t

hewrong do er[, ]” a

nd tho se circuits that “have adopted a less c ateg orical multi -factor test . . . that focuses judicial enforcement of the L anham Ac t on the protec tion of commerc ial interests and theprevention of competitive har

m” (internal quotation marks omitted)). 19 f o rs ta n d in g to b r in g af

a ls e a d v e r tis in g c la im u n d e rth e L a n h a m A c t. 5 W e a l s o di s a gr e e w i th P hoe ni x’ s a s s e r t i on tha tthe T hi r d C i r c ui ta dopt e d the C o n te B r o s . te s t to “e x te n d p ru d e n tia l s ta n d in g ” to p a r tie s w h o a r e n o t in “d ir e c t” or“ a c tua l ” c om pe t i t i on. I n de t e rm i ni ng the appr opr i a t e t e s tf orprude nt i a l s t a ndi ng unde r§ 43( a ) , the C ont e B r os . c our tf i r s tnot e d tha tthe T hi r d C i r c ui t ’ s pr e vi ous c a s e s a ddr e s s i ng § 43( a ) ’ s s t a ndi ng r e qui r e m e nt s “ de f i ne d the di s pos i t i ve que s t i on o f a p arty’ s p ru d en t i al st an d i n g as w h eth er th e p arty h as a r e a s o n a b le in te r e s t t o be prot ec t ed agai nstfa l se advert i si ng . ” C on t e B ros. , 16 5 F . 3d at23 0 (i nt ernal qu ot at i on m arks om i tt ed) ( em ph as i s a dd ed). A l tho ug h the courthad “ never prec i se l y def

i ned the cr i t i ca l t erm ‘ re as on abl e i nt er es t , ’ ” i thad “ ca rr i ed forw ar d thi s prude nt i a l ‘ r e a s onabl e i nt e r e s t ’ r e qui r e m e nta nd ha [ d] gr appl e d w i th de f i ni ng th e t erm w i th g reat er p reci si o n . ” Id . at2 3 0 -3 1 . In ad o p t i n g th e fi v e-factor test di s c us s e d above , the c our te xpr e s s l y de c l i ne d t o a dopts t a nda r ds c onf e rr i ng st andi ng on l y on “ di re ctcom pet i t ors or thei r s urrogat es , ” a s s uch st andards w er e20

“ i n t ensi on ” w i th l angu age f rom a pre vi ou s T hi rd C i rc ui top i ni on w hi ch i m pl i ed th a t p a r tie s “n o t in d ir e c t c o m p e titio n ” m a y n o n e th e le s s “h a v e s ta n d in g to s u e if the y ha ve ar e a s onabl e i nt e r e s tt o be pr ot e c t e d a ga i ns tf a l s e a dve r t i s i ng. ” I d. a t232 (c i t i ng S erbi n v . Z i ebartInt ’ l C orp. , 11 F . 3d 11 63 , 11 76 -77 (3d C i r. 19 93 )) (i n t ern al q u o t at i o n m ark s o m i tt ed ). T h e co u rtal so ci t ed earl i er cases fro m th e F i rst and S ec on d C i rc ui t s thatre cogn i ze d st andi ng for L anham A ctpl ai nt i ff s w ho w er e not in d ir e c t c o m p e titio n w ith th e d e f e n d a n t. I d . a t 2 3 1 - 3 2 ( c itin g P P X E n te r s ., I nc . v. A udi of

i de l i ty , I nc . , 746 F . 2d 120 ( 2d C i r . 1984) ( hol di ng tha tthe ow ne rof r o y a lty s tr e a m s f

r o m am u s ic r e c o r d in g h a d s ta n d in g to s u e ad is tr ib u to ro f f a ls e ly l abe l e d m us i c r e c or di ngs ) ; C a m e l H a i r , 799 F . 2d a t11 ( hol di ng tha tatr a de as soci at i on of m anufacturer s of c as hm er e f i bers and fabri cs , bu tno tof fi ni shed coat s, had st andi ng t o sue re t ai l er s of c oat s f al se l y l abel ed as cont ai ni ng m ore ca shm er e than they had)). T hu s, even before the C on t e B ros. deci si on , the T hi rd C i rc ui thad i m pl i ed, and the F i rs tand S ec on d C i rc ui t s had hel d exp re ss l y, that part i es w ho ar e not

i n “ di r e c t ” or“ a c tua l ” c om pe t i t i on m a y none the l e s s ha ve p ru d e n tia l s ta n d in g to b r in g f a ls e a d v e r tis in g c la im s u n d e rth e L a n h a m A c t. F i n al l y, w e d i sag ree w i th P h o en i x ’ s co n t en t i o n th at“ d i rectco m p et i t o rs” a lle g in g a“c o m p e titiv e ” in ju ry “in v a r iab ly s a tis f

y ” th e C o n te B r o s . r e q u ir e m e n ts . R ather than b l i nd l y a cc epta pl ai nt i ff’ s a l l egat i on thati ti s a“ com pet i t or” thathas21

s uf f e r e d a“ c om pe t i t i ve i nj ury , ” the C ont e B r os . t e s ti s de s i gne d t o de t e rm i ne w hether the i nj ury a l l eged i s the type of i nj ury thatthe L anham A ctw as desi gn ed t o r e dr e s s — ha rm t o the pl a i nt i f f’ s “ abi l i ty t o c om pe t e ” i n the m a rke tpl a c e a nd e r os i on of

the pl a i nt i f

f’ s “ good w i l l a nd r e put a t i on” tha tha s be e n di r e c t l y a nd prox i m at el y c ause d b y the defendant ’ s f al se advert i si ng . Id. at23 4-36 . M oreover, a tl e a s tone f

e de r a l c our t( i n a ddi t i on t o the di s tr i c tc our tbe l ow ) ha s appl i e d the C ont e B r os . t e s tw he r e the pl a i nt i f f a nd de f e nda ntw e r e “ di r e c tc om pe t i t or s ” a nd h e ld th a t th e p la in tif

f la c k e d p ru d e n tia l s ta n d in g . S e e , e .g ., K I S , S .A . v . F o to F a nt a s y , I nc . , 240 F . S upp. 2d 608, 610- 11, 616 ( N . D . T e x. 2002) ( appl y i ng the C ont e B r os . t e s ta nd hol di ng tha tthe pl a i nt i f f , am a nuf a c tur e ra nd ope r a t orof p h o t o b o o th s, l ack ed p ru d en t i al st an d i n g t o b ri n g a fal se ad v ert i si n g cl ai m ag ai n st the de f e nda nt , a l s o am a nuf

a c tur e ra nd ope r a t orof

phot o booths , e ve n though the pl a i nt i f f a nd de f e nda ntw e r e di r e c tc om pe t i t or s i n the phot o booth i ndus try ) . A nd e v e n a c c e p tin g P h o e n ix ’s a r g u m e n t, a s s ta te d ab o v e , w e c o n c lu d e th a t th e C o n te B r o s . te s t “p r o v id e s ap p r o p r ia te f le x ib ility in ap p lic a tio n to a d d r e s s f a c tu a lly di s pa r a t e s c e na r i os tha tm a y a r i s e i n the f utur e , w hi l e a tthe s a m e t i m e s uppl y i ng a p r in c ip le d m e a n s f

o ra d d r e s s in g s ta n d in g u n d e r ” § 4 3 ( a ) o f th e L a n h a m A c t. C o n te B r o s ., 1 6 5 F .3 d a t 2 3 6 . In sum m ary, w e hol d thatt o d et erm i ne w hether apl ai nt i ff has prudent i al22

st andi ng t o b ri ng a f

al se advert i si ng cl ai m un der § 43 (a ) of the L anham A ct , a c ou rt m u s t c o n s id e ra n d w e ig h th e f iv e f a c to r s a r tic u la te d in th e C o n te B r o s . o p in io n . C . A ppl yi ng t he C o nt e Br o s . Te s t f o r Pr ude nt i a lSt a ndi ng P ho eni x argues thati tsa t i sf i ed the re qu i re m ent s of prudent i al st andi ng un der th e C o n t e B r o s . t e s t . Af t e re x a m i n i n g a n d we i g h i n g th e C o n t e B r o s . f a c t o r s , we concl ud e otherw i se . 1. T ype of I n j u ryA l leged T he fi rs tfa ct or di re ct s us t o d et erm i ne “ w hether the al l eged i nj ury i s of a ty pe C ongr e s s s oughtt o r e dr e s s i n pr ovi di ng apr i va t e r e m e dy f orvi ol a t i ons of

the L anham A ct . ” P roct er& G am bl e, 24 2 F . 3d at56 3. A s the C on t e B ros. court no t ed, the focus of § 43 (a ) i s on p rot ec t i ng “ com m er ci al i nt er es t s [ that ] have been h arm ed b y a co m p et i t o r’ s fal se ad v ert i si n g , an d i n secu r[i n g ] t o th e b u si n ess c o m m u n ity th e a d v a n ta g e s o f r e p u ta tio n a n d g o o d w ill b y p r e v e n tin g th e ir d iv e r s io n f

r o m th o s e w h o h a v e c r e a te d th e m to th o s e w h o h a v e n o t.” C o n te B r o s ., 1 6 5 F .3 d a t 2 3 4 ( a lte r a tio n s in o r ig in a l) ( c ita tio n o m itte d ) . In i t s c om pl ai nt , P ho eni x al l eges that(1) M cD on al d’ s f al se l y a dv ert i se d that c us t om e r s w ho pur c ha s e d i t s pr oduc t s ha d af a i ra nd e qua l c ha nc e t o w i n a ny of the p ri zes o ffered , i n cl u d i n g th e h i g h -v al u e p ri zes; (2 ) d u ri n g th e ru n o f th e g am es, M c D ona l d’ s e xpe r i e nc e d a n “ unna tur a l s pi ke ” i n i t s s a l e s w hi l e B ur ge rK i ngAlthough th eConteB ro s. c ourt he ld t hat th e“ los s o f s ale s”su ff ere d b y theplaintif

fsin 6 that casedid not detrac t from their “ ability to compete”and thus was not the ty pe of injury

the L anham Ac t was designed to re dress, the c ourt reached this conc lusion after determiningthat the plaintif f- retailerswereno t at a ll

in competition with the defenda nt-manufacturers. Conte Bros., 165 F.3d at 234. Here , by contra st, Burg er King is oneof McDonald’s direc t competitors in the f a s tf o o d i n d u s tr y. 23 experi ence d a decre as e i n i t s s al es ; and (3) B urger K i ng fr anchi se es i ncurred coun t er -prom ot i on cost s i n an eff ortt o “ l ure back cust om er s w ho fr equent ed M cD o n al d ’ s w h i l e th e frau d u l en tg am es w ere ru n n i n g . ” In o u r v i ew , th ese al l egat i on s a m ou ntt o an ass ert i on by P ho eni x thati t s “ com m er ci al i nt er es t s” w er e

“ ha rm e d by ac om pe t i t or ’ s f a l s e a dve r t i s i ng, ” a nd thi s i s the ty pe of ha rm the L a n h a m A c t w a s in te n d e d to r e d r e s s . S e e id . a t 2 3 4 . 6 M cD on al d’ s a rgues thati t s “ cond uctw as i n n o w ayant i -c om pet i t i ve” b e c a u s e it “w a s th e v ic tim o f ac r im in a l f

r a u d s c h e m e ” p e rp e tr a te d b y ath ir d p a r ty . A cc ordi ng t o M cD on al d’ s, “ t o the ext entany of i t s a dv ert i si ng w as ‘ fa l se , ’ i tw as f a ls e s o le ly b e c a u s e o f

th e in te rv e n in g c r im in a l c o n d u c t o f J a c o b s o n a n d h is c o c o n s p ir a to r s .” W e f

in d th is a r g u m e n t u n a v a ilin g , h o w e v e r , b e c a u s e P h o e n ix al l eges thatM cD on al d’ s “ kn ow i ng l y a nd del i bera t el y c on t i nu ed t o adv ert i se ” that i t s c ust om er s had a “ fa i r a nd equal chance” t o w i n h i gh -val ue pri ze s e ven af t er le a rn in g th a t th e in te g r ity o f its p r o m o tio n a l g a m e s h a d b e e n c o m p r o m is e d . M or e ove r , “ [ s ] e c t i on 43( a ) pr ovi de s as tr i c tl i abi l i ty t or tc a us e of a c t i on. ” V e c t or P ro d s. , In c. v . H art fo rd F i re In s. C o . , 3 9 7 F . 3 d 1 3 1 6 , 1 3 1 9 (1 1 th C i r. 2 0 0 5 ) (“ Iti s24

w e l l - s e tt l e d tha tno pr oof of i nt e ntorw i l l f

ul ne s s i s r e qui r e d t o e s t abl i s h avi ol a t i on o f L a n h a m A c t § 4 3 ( a ) f

o rf a ls e a d v e r tis in g .” ) . M c D ona l d’ s a l s o c ont e nds tha tP hoe ni x’ s a l l e ge d i nj ur i e s a r e not c om pe t i t i ve i n na tur e be c a us e the c ha l l e nge d a dve r t i s e m e nt s “ di d nott outthe pr oduc t s a nd s e rvi c e s of M c D ona l d’ s ordi s pa r a ge the pr oduc t s a nd s e rvi c e s of B ur ge rK i ng. ” W e c a nnota gr e e . A l though the a dve r t i s e m e nt s di d notdi s pa r a ge B ur ge rK i ng ort outs om e i ntr i ns i c qua l i ty of M c D ona l d’ s goods a nd s e rvi c e s , the ad v er ti se m en ts n o n eth eles s a ss er ted th at cu sto m er s w h o p atro n ized M cD o n ald ’s re st aura nt s had an op po rtun i ty t o w i n p ri ze s, i ncl ud i ng the hi gh -val ue pri ze s that had b ee n st ol en. M oreover, P ho eni x al l eges thatthe prom ot i on al gam es w er e s o m e tim e s “p h y s ic a lly a tta c h e d to M c D o n a ld ’s p r o d u c ts .” M c D ona l d’ s f

ur the rc ont e nds tha tbe c aus e P hoe ni x “ ha s ne i the ra l l e ge d nor s u g g e s te d th a t its r e p u ta tio n w a s a d v e r s e ly a f f e c te d b y M c D o n a ld ’s a d v e r tis in g ,” thi s l a c k of

“ r e put a t i ona l i nj ury ” c ouns e l s a ga i ns tprude nt i a l s t a ndi ng. A l though M c D ona l d’ s i s c orr e c ti n a s s e r t i ng tha tP hoe ni x doe s nota l l e ge tha ti t s r e put a t i on w as harm ed by M cD on al d’ s c on du ct , w e c anno tsa y thatthe l ac k o f a l l eged

“ re pu t at i on al i nj ury, ” i n and of i t se l f, di re ct s us t o con cl ud e thatP ho eni x h as fa i l ed t o a l l e ge the ty pe of

i nj urytha tthe L a nha m A c tw a s i nt e nde d t o r e dr e s s . A ga i n, the L anham A cti s noton l y des i gn ed t o p rot ec tagai nstun fa i r e rosi on of a25

co m p et i t o r’ s rep u t at i o n , i ti s al s o d e s ig n e d to p r o te c t “c o m m e r c ia l in te r e s ts [ th a t] have been harm ed by a c om pet i t or’ s f al se advert i si ng , ” C on t e B ros. , 16 5 F . 3d at 2 3 4 ( a lte r a tio n in o r ig in a l) , a n d , a s s ta te d ab o v e , P h o e n ix a lle g e s s u c h h a rm . W e th e r e f o r e c o n c lu d e th a t th e f

ir s t f a c to rw e ig h s in f

a v o ro f p ru d e n tia l s ta n d in g . 2 . D irect n ess o f t h e A sserted

In j u ry T he s e c ond f

a c t orr e qui r e s us t o e xa m i ne the “ di r e c tne s s ” w i th w hi c h the d e f e n d a n t’s c o n d u c t a f

f e c te d th e p la in tif

f . P h o e n ix a lle g e s th a t b y f a ls e ly a dve r t i s i ng tha tc us t om e r s ha d af a i ra nd e qua l oppor tuni ty t o w i n hi gh- va l ue pr i z e s , M c D ona l d’ s l ur e d c us t om e r s t o i t s r e s t a ur a nt s a nd a w a y f r om B ur ge rK i ng rest au ran t s. A cco rd i n g t o P h o en i x , as a d i rectresu l to f th ese fal se ad v ert i sem en t s, i tl ostsa l es and i ncurred addi t i on al prom ot i on al expenses i n i t s a tt em pt s t o l ure b a c k th e c u s to m e r s it lo s t to M c D o n a ld ’s d u r in g th e f r a u d u le n t p r o m o tio n . O n o ne hand , the causal chai n P ho eni x al l eges i s s i m i l art o thatof the typi ca l fa l se advert i si ng cl ai m i n w hi ch a pl ai nt i ff al l eges thati tl ostsa l es and/ or m arket s h a r e a s ar e s u l to f

th e d e f e n d a n t ’ s f

a l s e o rmi s l e a d i n g r e p r e s e n t a t i o n s ab o u ts o me c ha r a c t e r i s t i c of

the de f e nda nt ’ s pr oduc tors e rvi c e s . F ore xa m pl e , i n L oga n v. B ur ge r s O z a rk C ountry C ur e d H a m s I nc . , the F i f th C i r c ui tc onc l ude d tha tthe se cond C on t e B ros. fa ct or coun se l ed i n favor of st andi ng w here the pl ai nt i ff a l l e ge d tha tthe de f

e nda nt ’ s “ l i t e r a l l y f

a l s e a dve r t i s i ng abouti t s ow n goods26

i nfl uenced i t s c ust om er s t o b uy i t s produ cti nst ea d o f [ the pl ai nt i ff’ s] prod uct . ” 26 3 F . 3d 44 7, 46 1 (5th C i r. 20 01 ). In so concl ud i ng , the L og an courtst at ed that th e p l ai n t i ff’ s ab i l i ty t o l i cen se i t s p ro d u ct s “ m ay hav e be e n di r e c t l y af f e c te d by [ th e d e f e n d a n t’s ] f

a ls e a d v e r tis in g ” ab o u t th e d e f e n d a n t’s p r o d u c ts . I d . ( e m p h a s is a dde d) . A nd i n P r oc t e r& G a m bl e , the F i f th C i r c ui ts t a t e d tha tthe s e c ond f a c t or w ei g h s i n fav o r o f st an d i n g i n cases w h ere “on e co m p et i t o r d i rect l y i n j u r[es] an o th er b y m ak i n g fal se st at em en t s ab o u ti t s o w n g o o d s an d th u s i n fl u en c[es] cust om er s t o buy i t s pr oduc ti ns t e a d of the c om pe t i t or ’ s pr oduc t . ” L oga n, 263 F . 3d at46 0 (ci t i ng P roct er& G am bl e, 24 2 F . 3d at56 3). O n the other hand, the causal chai n P ho eni x al l eges i s m ore a tt enuat ed than th at alleg ed in ca se s lik e L o g an . P h o en ix es se n ti ally alleg es th at (1 ) M cD o n ald ’s a d v e r tis e m e n ts f

a ls e ly r e p r e s e n te d th a t c u s to m e r s h a d af a ira n d e q u a l c h a n c e to w in o n e o f

th e “r a r e ” h ig h - v a lu e p r iz e s if th o se cu sto m er s p atro n ized M cD o n ald ’s r e s t a ur a nt s a nd pl a y e d i t s ga m e s ; ( 2) a s adi r e c tr e s ul tof the m i s r e pr e s e nt a t i on r e ga r di ng the hi gh- va l ue pr i z e s , M c D ona l d’ s l ur e d c us t om e r s w ho w oul d ha ve e a te n a t B ur

ge rKi ng(a s opp osed t o o ne of nu m er ou s other f as tfood com pet i t ors) , cau si n g B u rg er K i n g t o l o se sal es; an d (3 ) b u tfo r th i s m i srep resen t at i o n , th ese c u s to m e r s w o u ld h a v e e a te n a t B ur ge rKi ng , e ve n though the c ha nc e s of w i nni ng one of the “ r a r e ” hi gh- va l ue pr i z e s w oul d ha ve be e n m i nut e ha d the r e be e n no27

the f t , e ve n though onl y “ c e r t a i n” hi gh- va l ue pr i z e s w e r e s t ol e n, a nd e ve n though th e s e c u s to m e r s s till h a d af a ira n d e q u a l o p p o r tu n ity to w in a ll o f th e o th e rp r iz e s . A cc ep ti n g P h o en ix ’s alleg atio n s a s tru e, th e c au sa l ch ain li n k in g M cD o n ald ’s al l eg ed m i srep resen t at i o n s ab o u to n e asp ecto f i t s p ro m o t i o n al g am es t o a d ecrease i n B urger Ki ng ’s s a le s is te n u o u s , to s a y th e le a s t. T a ki ng c a r e nott o c onf l a t e the prude nt i a l s t a ndi ng i nqui ry w i th the

“ ma t e r i a l i ty ” e l e me n tPh o e n i x mu s te s t ab l i s h t o s u c c e e d o n th e me r i t s o f i t s c l a i m, s e e J ohns on & J ohns on V i s i on C a r e , I nc . v. 1- 800 C ont a c t s , I nc . , 299 F . 3d 1242, 12 50 (11th C i r. 20 02 ) ( “ T o succe ed on a c l ai m of fa l se advert i si ng , the pl ai nt i ff m us te s t abl i s h tha tthe de f e nda nt ’ s de c e pt i on i s l i ke l y t o i nf l ue nc e the pur c ha s i ng de c i s i on. ” ( i nt e rna l quot a t i on m a rks om i tt e d) ) , w e c onc l ude tha tthe s e c ond f a c t or c o u n s e ls a g a in s t p ru d e n tia l s ta n d in g .

3. Proxim it

y to th e A l

legedl y H arm fu l Con du ct T he thi r d f

a c t orr e qui r e s us t o e xa m i ne the pr oxi m i ty of the pl a i nt i f

f t o the al l egedl y harm ful cond uct . In exam i ni ng thi s f ac t or, w e m ustdet erm i ne w hether th e r e is a n “id e n tif

iab le c la s s ” o f

p e r s o n s “w h o s e s e lf

- in te r e s t w o u ld n o rm a lly m ot i va t e the m t o vi ndi c a t e the publ i c i nt e r e s t ” by br i ngi ng as ui t . C ont e B r os . , 165 F . 3d a t234. “ T he e xi s t e nc e of s uc h ac l a s s di m i ni s he s the j us t i f i c a t i on f or al l ow i ng a m ore r em ot e party . . . t o p er form the offi ce of a pri vat e a tt orney28

general . ” J oi ntS t ock S oc’ y v. U D V N . A m . , Inc. , 26 6 F . 3d 16 4, 18 2 (3d C i r. 20 01 ) ( i nt ernal qu ot at i on m arks om i tt ed). H e r e , the di s tr i c tc our the l d, a nd M c D ona l d’ s a s s e r t s on appe a l , tha tthe c ons um e r s w ho w e r e de ni e d af a i ra nd e qua l oppor tuni ty t o w i n the hi gh- va l ue p ri zes as ad v ert i sed co n st i tu t e an “ i d en t i fi ab l e cl ass” o f p erso n s w h o se sel f-i n t erest w o u ld n o rm a lly m o tiv a te th e m to s u e M c D o n a ld ’s r e g a r d in g its f a ls e a d v e r tis in g . B utthi s c a n be s a i d abouta ny fa l se advert i si ng cl ai m , as the consum er s w ho w er e di ve r t e d f

r om the pl a i nt i f

f’ s pr oduc tt o the de f

e nda nt ’ s pr oduc ti n r e l i a nc e on the defe nd ant ’ s a l l egedl y f

al se advert i se m ent s w ou l d al w ay s have anatural se l fi nt e r e s ti n s ui ng f

orf r a ud. A s s uc h, i f

w e a c c e ptthe di s tr i c tc our t ’ s a nd M cD on al d’ s r ea soni ng , thi s f ac t or w ou l d n evercoun se l i n favor of prud ent i al st an d i n g . M o reo v er, co n su m ers w o u l d n o tb e ab l e t o v i n d i cat e th e p u b l i c i n t erest vi a the L anham A ct , as “ the se vera l ci rc ui t s thathave deal tw i th the qu es t i on ar e uni f orm i n the i rc a t e gor i c a l de ni a l of L a nha m A c ts t a ndi ng t o c ons um e r s . ” M a de i n the U S A F ou nd . v. P hi l l i ps F oo ds, Inc. , 36 5 F . 3d 27 8, 28 1 (4th C i r. 20 04 ); se e al so C on t e B ros. , 16 5 F . 3d at22 9 (re i t er at i ng prec edentho l di ng thatconsum er s la c k s ta n d in g u n d e rth e L a n h a m A c t a n d s ta tin g th a t ac o n tr a ry c o n c lu s io n w o u ld

“ i gn ore the pu rpose of” the A ct ); B arrus v. S yl vani a, 55 F . 3d 46 8, 47 0 (9th C i r. 19 95 ) ( ho l di ng thatconsum er s l ac k st andi ng t o b ri ng fa l se advert i si ng cl ai m s und er29

the L a nha m A c tbe c a us e the y c a nnota l l e ge e i the rac om m e r c i a l orc om pe t i t i ve in ju ry ) . F urtherm ore, court s app l yi ng the C on t e B ros. t es thave general l y c on si dere d w hether other com m er ci alent i t i es w e r e th e m o r e ap p r o p r ia te p a r tie s to v in d ic a te th e c o m p e titiv e h a rm w r o u g h t b y th e d e f e n d a n t’s a lle g e d m is c o n d u c t. S e e , e .g ., Joi ntS t ock S oc’ y, 26 6 F . 3d at18 2 (st at i ng thatR ussi an vo dk a m anufacturer s that e x p o r te d v o d k ato th e U .S . w e r e b e tte rs u ite d to b r in g af a ls e a d v e r tis in g c la im a ga i ns tthe de f

e nda nta nd “ w e r e m or e pr oxi m a t e t o the c l a i m e d i nj ury ” tha n the pl a i nt i f f - m a nuf a c tur e rtha tdi d note xpor ti t s vodkat o the U . S . ) ; C ont e B r os . , 165 F . 3 d at2 3 5 (co n cl u d i n g th atm o t o r-o i l m an u factu rers h ad a m o re co n cret e i n t erest i n pr e s e rvi ng the r e put a t i on of m ot oroi l tha n the pl a i nt i f f s a s r e t a i l e r s of

e ngi ne a ddi t i ve s ) ; buts e e P r oc t e r& G a m bl e , 242 F . 3d a t563- 64 ( s t a t i ng tha ta l though d i stri b u t o rs “ p ro b ab l y d o n o th av e st an d i n g t o su e u n d er th e L an h am A ct ” b ecau se the A ct“ do es no tgi ve consum er s s t andi ng t o sue[, ] ” di stri bu t ors “ ar e m ore i m m e di a t e t o the i nj ury tha n i s [ pl a i nt i f f - m a nuf a c tur e r ] ” a nd “ c oul d vi ndi c a t e the publ i c i nt e r e s t. . . by s ui ng f orf r a ud” ) . A s s uc h, c ons um e r s “ s houl d be i rr e l e va nt t o thi s a na l y s i s . ” F or d v. N Y L C a r e H e a l th P l a ns of G ul f C oa s t , I nc . , 301 F . 3d 329, 33 8 (5th C i r. 20 02 ) ( B enavi des, J. , concurri ng ). A ga i n, P hoe ni x a l l e ge s tha ta s adi r e c tr e s ul tof M c D ona l d’ s f

a l s e a nd30

m i sl ea di ng re pres ent at i on s r egar di ng the hi gh -val ue pri ze s, M cD on al d’ s l ured cu st o m ers aw ay fro m P h o en i x an d i t s affi l i at ed fran ch i sees, w h i ch , i n tu rn , l o st s a l e s a nd m a rke ts ha r e . A c c e pt i ng the s e a l l e ga t i ons a s true , w e c a n thi nk of no

“ i d en t i fi ab l e cl ass” o f p erso n s th ati s m o re prox i m at e t o the cl ai m ed i nj ury than f a s t f o o d f r a n c h is e e s s u c h a s P h o e n ix a n d th e p u ta tiv e c la s s it s e e k s to r e p r e s e n t. A s s uc h, the thi r d f

a c t orw e i ghs i n f

a vorof prude nt i a l s t a ndi ng. 4. S pecu lativeN

atu reof t

h e A l leged D am ag es U nde rthe f

our th f a c t orof the C ont e B r os . t e s t , w e e xa m i ne the s pe c ul a t i ve nature of the pl ai nt i ff’ s a l l eged dam ages . A cc ordi ng t o P ho eni x, i t s dam ages ar e n o t “s p e c u la tiv e ” b e c a u s e it w o u ld b e “r e la tiv e ly s tr a ig h tf o rw a r d ” to c a lc u la te its da m a ge s a s “ a n appr opr i a t e s ha r e of a l l pr of i t s a s s oc i a t e d w i th s a l e s ge ne r a t e d by the fi xed p rom ot i on al gam es ” bas ed on m arketshar e. W e di sa gree . A s the di s tr i c tc our tnot e d, onl y “ c e r t a i n” hi gh- va l ue pr i z e s w e r e s t ol e n, a nd c u s to m e r s s till h a d af

a ira n d e q u a l o p p o r tu n ity to w in o n e o f th e r e la tiv e ly nu m er ou s l ow - and m i d-val ue pri ze s M cD on al d’ s off er ed, because tho se pri ze s w er e unaffe ct ed by the theft . M oreover, the fa stfood m arketconsi st s of m any c o m p e tito r s , o n ly tw o o f w h ic h a r e M c D o n a ld ’s a n d B u r g e rK in g . I n o u rv ie w , it r e q u ir e s to o m u c h s p e c u la tio n to c o n c lu d e th a t a n a s c e r ta in ab le p e r c e n ta g e o f b o th the i nc r e a s e i n M c D ona l d’ s s a l e s a nd the c onc om i t a ntde c r e a s e i n B urger Ki ng ’s31

s a le s d u r in g th e s e v e r a l- y e a rru n o f th e g a m e s is d ir e c tly a ttr ib u tab le to M c D ona l d’ s a l l e ge d m i s r e pr e s e nt a t i ons aboutthe c ha nc e s of w i nni ng hi gh- va l ue p ri zes. P ho eni x al so ar gu es thatatthe pl ea di ng st age, the focus s ho ul d b e on w hat the c om pl a i nta l l e ge s , not on w hether P ho eni x m aybe abl e t o p rove the exact nu m ber of c ust om er s l ured t o M cD on al d’ s, because thi s i s am att erfor di sc ov ery a nd e xpe r tt e s t i m ony . A l though “ ge ne r a l f a c tua l a l l e ga t i ons of

i nj ury r e s ul t i ng f r o m th e d e f

e n d a n t’s c o n d u c t m ay s uf f i c e ” t o s uppor ts t a ndi ng “ [ a ] tthe pl e a di ng s t a ge , ” L uj a n v. D e f

e nde r s of W i l dl i f e , 504 U . S . 555, 561, 112 S . C t . 2130, 2137, 119 L . E d. 2d 351 ( 1992) ( e m pha s i s a dde d) , t o “ pr e s um e ” tha tP hoe ni x’ s a l l e ga t i ons

“ em brac e tho se spec i fi c f ac t s thatar e nec es sa ryt o sup po rt ” i t s c l ai m t o an appr opr i a t e s ha r e of

M c D ona l d’ s pr of

i t s f r om the c om pr om i s e d ga m e s r e qui r e s t oo m uc h c onj e c tur e . S e e i d. E ve n a c c e pt i ng P hoe ni x’ s a l l e ga t i ons a s true , the sp ec u lati v e n atu re o f th e d am ag es italleg ed ly in cu rr ed as a r es u lto f M cD o n ald ’s r e p r e s e n ta tio n s r e g a r d in g th e h ig h - v a lu e p r iz e s is in e s c ap ab le . P hoe ni x a l s o c ont e nds tha tdi s gor ge m e ntof the pr of i t s M c D ona l d’ s m a de du ri ng the “ fi xed” prom ot i on w ou l d b e a n app ropri at e r em edy “ i f the di stri ct co u rt ’ s p rem atu re fears [reg ard i n g th e i n cal cu l ab l e n atu re o f P h o en i x ’ s d am ag es] w ere su b st an t i at ed . ” D i sg o rg em en to f “ w ro n g fu l ” p ro fi t s “ i n i t i al l y d ev el o p ed as a32

r e m e d y to p r o v id e ap la in tif f r e lie f in e q u ity , to s e rv e a s ap r o x y f o rd a m a g e s , o rto d e te rth e w r o n g d o e rf

r o m c o n tin u in g h is v io la tio n s ” a n d “is m o s t ap p r o p r ia te if da m a ge s a r e othe rw i s e nom i na l . ” B A S F C orp. v. O l d W or l d T r a di ng C o. , 41 F . 3d 10 81 , 10 95 -96 (7th C i r. 19 94 ). B utas the T hi rd C i rc ui tst at ed i n Joi ntS t ock S oc ’ y , “ [ i ] f

ar e que s tf

orr e l i e f tha tm a y be s oughtby a ny pa r ty s uf f i c e d unde rthe fo u rth fact o r o f th e C o n t e B ro s. t est , th atfact o r w o u l d b e essen t i al l y m ean i n g l ess, a nd w e r e f

us e t o unde rm i ne the f

our th f a c t ori n thi s w a y . ” J oi ntS t oc k S oc ’ y , 266 F . 3d at18 5. “ T he ai m of [prudent i al st andi ng ] i s t o d et erm i ne w hether the pl ai nt i ff i s ‘ apr ope rpa r ty t o i nvoke j udi c i a l r e s ol ut i on of the di s put e a nd the e xe r c i s e of the c our t ’ s r e m e di a l pow e r s . ’ ” C ont e B r os . , 165 F . 3d a t225 ( quot i ng B e nde rv. W i l l i a m s por tA r e aS c h. D i s t . , 475 U . S . 534, 546 n. 8, 106 S . C t . 1326, 1334 n. 8, 89 L . E d. 2d 501 ( 1986) ) . A c c or di ngl y , P hoe ni x m a y notbol s t e ri t s “ c a s e f or prude nt i a l s t a ndi ng by r e l y i ng on f orm s of m one t a ry r e l i e f

tha t[ i t ] w oul d r e c e i ve as a v i cari o u s av en g er o f th e g en eral p u b l i c’ s ri g h tt o b e p ro t ect ed ag ai n st. . . fal se a dve r t i s e m e nt s . ” J oi ntS t oc k S oc ’ y , 266 F . 3d a t185 ( i nt e rna l quot a t i on m a rks om i tt ed). W e th u s c o n c lu d e th a t th e f o u r th f a c to rw e ig h s a g a in s t p ru d e n tia l s ta n d in g . 5. R isk of D u

plicativeD am ag es T he f i f th a nd f i na l f a c t orunde rthe C ont e B r os . t e s tr e qui r e s us t o a s s e s s the33

ri sk o f d u p l i cat i v e d am ag es orthe c om pl e xi ty of appor t i oni ng da m a ge s . T he di stri ctcourtconcl ud ed thatthi s f ac t or w ei gh s a gai nstst andi ng . W e a gree . I f w e w e r e t o hol d tha tP hoe ni x ha s prude nt i a l s t a ndi ng t o br i ng the i ns t a nt cl ai m , then every f

as tfood com pet i t or of M cD on al d’ s a ss ert i ng thati t s s al es had f a l l e n by a ny a m ountdur i ng the r e l e va ntt i m e pe r i od w oul d a l so have prud ent i al s ta n d in g to b r in g s u c h ac la im . A n d if e v e ry f a s t f o o d c o m p e tito rh a d s ta n d in g to br i ng s uc h ac l a i m , r e ga r dl e s s of the a m ounti n c ontr ove r s y , r e ga r dl e s s of the a m ountof

l os ts a l e s orm a rke ts ha r e di r e c t l ya ttr i but abl e t o the f a l s i ty of the a dve r t i s e m e nt , a nd r e ga r dl e s s of the i m pa c ton the c om pe t i t or ’ s goodw i l l or re pu t at i on (a s the advert i se m ent s m ade no m ent i on of any c om pet i t or), the i m pact on the fe dera l court s w ou l d b e s ub st ant i al . F urtherm ore, appo rt i on i ng dam ages a m o n g th e s e c o m p e tito r s w o u ld b e ah ig h ly c o m p le x e n d e a v o r . P hoe ni x a r gue s tha tc our t s appl y i ng the C ont e B r os . t e s tha ve a s s e s s e d the r i s k of dupl i c a t i ve da m a ge s e i the rby e xa m i ni ng “ the pl a i nt i f f’ s pos i t i on i n the d is tr ib u tio n c h a in r e la tiv e to th e d e f e n d a n t” o rb y e x a m in in g “w h e th e rth e in ju ry is di r e c t l y r e l a t e d t o the m a rke t ” i n w hi c h the y c om pe t e . B utc our t s appl y i ng the C o n te B r o s . te s t al

s o ha ve a s s e s s e d the r i s k of dupl i c a t i ve da m a ge s by e xa m i ni ng the nu m ber of pot ent i al cl ai m ant s i n the sa m e posi t i on i n the di stri bu t i on chai n as the pl ai nt i ff

and/ or i n the sa m e m arketas the pl ai nt i ff . F or exam pl e, the T hi rd34

C i rc ui ti n Joi ntS t ock S oc’ y a ss es se d the fi fth fac t or by no t i ng thati f the pl ai nt i ff s w ere g ran t ed p ru d en t i al st an d i n g , fal se ad v ert i si n g cl ai m s co u l d b e b ro u g h tag ai n st th e d e f e n d a n t b y , in te ra lia , a ll v o d k am a n u f a c tu r e r s in th e U .S . m a rk e t and a ll vodkam a nuf

a c tur e r s w ho, l i ke the pl a i nt i f f s , ha d note nt e r e d the U . S . m a rke tbut ha d t a ke n m i ni m a l pr e pa r a t ory s t e ps f ore ntry . 266 F . 3d a t184- 85. T hus , the J oi nt S to c k S o c ’y c o u r t c o n s id e r e d b o th the num be rof pot e nt i a l c l a i m a nt s oc c upy i ng the s a m e pos i t i on i n the di s tr i but i on c ha i n a s the pl a i nt i f f s ( m a nuf a c tur e r s ) a nd the nu m ber of pot ent i al cl ai m ant s i n the sa m e m arketas the pl ai nt i ff s ( m anufacturer s w ho had n otent er ed the U . S . m arket ) t o con cl ud e thatthe fi fth fac t or w ei gh ed a g a in s t p ru d e n tia l s ta n d in g . I n L o g a n , th e F if th C ir c u it d e te rm in e d th a t th e f if th f a c t orw e i ghe d i n f

a vorof prude nt i a l s t a ndi ng be c a us e “ L oga n appe a r [ e d] t o be the onl y pl a i nt i f

f w ho c oul d br i ng aL a nha m A c tf a l s e a dve r t i s i ng c l a i m a ga i ns t[ the d e f e n d a n t] b a s e d o n ” th e c h a lle n g e d a d v e r tis e m e n ts . 2 6 3 F .3 d a t 4 6 1 . A n d in P roct er& G am bl e, the F i fth C i rc ui tconcl ud ed thatthe fi fth fac t or coun se l ed agai nstst andi ng for P roct er& G am bl e i n p artbecause “ e v e r y c om pe t i tori n the m arke t c oul d s ue ” the de f

e nda nti f P r oc t e r& G a m bl e w e r e a l l ow e d s t a ndi ng. 242 F .3 d a t 5 6 4 ( e m p h a s is a d d e d ) . A c c or di ngl y , w e c onc l ude tha tthe f i f th f a c t orw e i ghs a ga i ns ts t a ndi ng.35 6. W ei g h in gT h e T o ta lit y o f t h e Fa cto rs T o s um m a r i z e , the f

i r s ta nd thi r d C ont e B r os . f a c t or s w e i gh i n f

a vorof p ru d en t i al st an d i n g , w h i l e th e seco n d , fo u rth , an d fi fth fact o rs w ei g h ag ai n st prude nt i a l s t a ndi ng. A dm i tt e dl y i ti s ac l os e que s t i on, butw e c onc l ude tha ton b al an ce, P h o en i x d o es n o th av e p ru d en t i al st an d i n g t o b ri n g i t s cl ai m ag ai n st M cD o n ald ’s. A lth o u g h P h o en ix an d th e c lass itse ek s to re p re se n t are M cD o n ald ’s

“ di re ctcom pet i t ors, ” P ho eni x h as al l eged a com pet i t i ve harm t o thei r c om m er ci al i nt e r e s t s , a nd the r e i s no i de nt i f i abl e c l a s s of

pe r s ons tha ti s m or e pr oxi m a t e t o the c l a i m e d i nj ury , be c a us e of the a tt e nua t e d l i nk be tw e e n the a l l e ge d i nj ury a nd M cD on al d’ s a l l eged m i sr epre se nt at i on s, the spec ul at i ve nature of the cl ai m ed da m a ge s , the pot e nt i a l c om pl e xi ty i n appor t i oni ng da m a ge s , a nd the s i gni f i c a nt ri sk of du pl i ca t i ve dam ages , w e hol d thatP ho eni x d oes nothave prud ent i al st an d i n g t o b ri n g a fal se ad v ert i si n g cl ai m u n d er th e L an h am A ctag ai n st M c D o n a ld ’s . I n s o hol di ng, w e s a y nothi ng aboutthe out c om e of thi s a na l y s i s i f

, f or e xa m pl e , the f

a c t s w e r e s uc h tha tM c D ona l d’ s ha d f a l s e l y a dve r t i s e d the odds of w in n in g a ll o f

its p r iz e s ( lo w - , m id - , a n d h ig h - v a lu e ) , orif M c D o n a ld ’s w e r e o n ly g i v i n g aw ay a si n g l e p ri ze an d fal sel y rep resen t ed th e o d d s o f w i n n i n g , as th ese h y p o th e tic a ls p r e s e n t f

a c tu a l s c e n a r io s m a te r ia lly d if f e r e n t f r o m th e f a c ts o f th is36

c a s e . I n d e e d , a s s ta te d ab o v e , as a lie n t v ir tu e o f th e C o n te B r o s . te s t is th a t it prov i des afl exi bl e y etpri nci pl ed m ea ns of det erm i ni ng the exi st ence of prud ent i al st an d i n g fo r d i sp arat e factu al scen ari o s, th ereb y al l o w i n g co u rt s t o fo recl o se s t a ndi ng on one s e tof

f a c t s w hi l e r e c ogni z i ng s t a ndi ng w he n pr e s e nt e d w i th a sl i g h t l y (b u tm at eri al l y) d i fferen tseto f fact s. I I I . CONCL US I ON F or the foregoi ng re as on s, w e AF F I RM .