Opinion ID: 199109
Heading Depth: 2
Heading Rank: 1

Heading: The Sua Sponte Dismissal

Text: 21 We review de novo the district court's dismissal of Clorox's Lanham Act claim pursuant to Fed. R. Civ. P. 12(b)(6). See Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16 (1st Cir. 1998). We will affirm the dismissal of the complaint if, and only if, accepting all well-pleaded facts as true and drawing all reasonable inferences in favor of the plaintiff, the complaint fail[s] to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). That is, the complaint is properly dismissed only when the allegations are such that the plaintiff can prove no set of facts to support [the] claim for relief. Rockwell v. Cape Cod Hosp., 26 F.3d 254, 260 (1st Cir. 1994). 22 Courts must move cautiously when dismissing a complaint sua sponte. See, e.g., Baker v. Cuomo, 58 F.3d 814, 818 (2d Cir. 1995). Although it is occasionally appropriate for a district court to note the inadequacy of the complaint and, on its own initiative, dismiss the complaint[,] a court may not do so without at least giving plaintiffs notice of the proposed action and affording them an opportunity to address the issue. Wyatt v. City of Boston, 35 F.3d 13, 14-15 (1st Cir. 1994) (quoting Literature, Inc. v. Quinn, 482 F.2d 372, 374 (1st Cir. 1973)). See also Perez v. Ortiz, 849 F.2d 793, 797 (2d Cir. 1988) (noting that the general rule is that a 'district court has no authority to dismiss a complaint for failure to state a claim upon which relief can be granted without giving the plaintiff an opportunity to be heard'). Clorox was given no opportunity to argue the validity of its claim to the district court. Moreover, the court's dismissal was done in the face of Proctor & Gamble's acknowledgment that the complaint states a claim under the federal false advertising statute[--]Section 43(a) of the Lanham Act. Clorox had no reason to suspect, therefore, that its Lanham Act claim was in danger of dismissal. 23 There are limited exceptions to the general rule barring dismissal without notice, applicable to frivolous claims or to claims whose defects could not be cured by amendment. See Wyatt, 35 F.3d at 15 n.1 (noting that reversal of a sua sponte dismissal without notice may not be mandated if amendment [of the complaint] would be futile or if it is patently obvious that the plaintiff could not prevail); Street v. Fair, 918 F.2d 269, 272 (1st Cir. 1990) (per curiam) (noting that procedural protections may be unnecessary when the court dismisses in forma pauperis actions as frivolous). As our discussion infra indicates, Clorox's Lanham Act claim does not fall within any of these exceptions. 24 Recognizing the procedural vulnerability of the court's dismissal, Proctor & Gamble points out that Clorox submitted substantial evidence in conjunction with its complaint and its preliminary injunction motion--evidence that the district court presumably could have used to convert, sua sponte, a motion to dismiss into a motion for summary judgment. See 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1366, at 470 (West Supp. 2000) (explaining that it may be appropriate for a court to convert a motion to dismiss into one for summary judgment sua sponte when parties offer material outside of the pleadings in conjunction with a motion to dismiss). Proctor & Gamble now urges us to treat the district court's ruling as a summary judgment, inviting us to affirm on any alternative ground supported by a full examination of the record. See Frillz, Inc. v. Lader, 104 F.3d 515, 516 (1st Cir. 1997) (stating that we may affirm an entry of summary judgment on any alternative ground made manifest by the record). 25 There are several problems with this approach. Even if we were to agree that it would have been appropriate for the district court to consider material outside the pleadings in connection with its sua sponte dismissal of the Lanham Act claim, this is not what the district court did. The court's opinion and order sets forth its analysis in a section entitled Motion to Dismiss, which it prefaces with a discussion of the 12(b)(6) motion to dismiss standards. The court expressly grants Defendant's motion to dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b). More significantly, the district court did not conduct the searching review of the record necessary to rule on summary judgment. See Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 18-19 (1st Cir. 1992) (stating that the test for deciding whether a district court's ruling is a 12(b)(6) dismissal or an entry of summary judgment is whether the court actually took cognizance of supplementary materials). The district court looked only to the face of the complaint. It did not purport to dismiss Clorox's Lanham Act claim based on an evaluation of the record as a whole. 26 Moreover, Proctor & Gamble's suggestion fails to address the fundamental problem with the district court's sua sponte actions: the failure to give Clorox notice and an opportunity to be heard. Even if the district court had converted the motion to dismiss into a motion for summary judgment--which it did not--such conversion usually requires that all parties shall be given reasonable opportunity to present all material made pertinent to such a motion. Fed. R. Civ. P. 12(b). Although we do not mechanically enforce the requirement of express notice of a district court's intention to convert a Rule 12(b)(6) motion into a motion for summary judgment, we do guard against allowing such a conversion where it would come as a surprise or be unfair to the party against whom judgment is rendered. Chaparro-Febus v. International Longshoremen Ass'n, Local 1575, 983 F.2d 325, 332 (1st Cir. 1992). In light of Proctor & Gamble's acknowledgment that the complaint stated a claim under § 43(a) of the Lanham Act, the district court's conversion without notice would have been both surprising and unfair. 27 It would only compound the unfairness to Clorox if we accepted the invitation of Proctor & Gamble to indulge the fiction that the district court's ruling was a summary judgment determination and then affirm on any basis that seems appropriate. Clorox has now tailored its appellate advocacy to address the legal standards that it reasonably expected would govern this appeal--i.e., the standards governing review of a 12(b)(6) dismissal. Clorox has never had an adequate opportunity to argue the relationship between the record evidence and its Lanham Act claim. Also, it would be imprudent to evaluate the voluminous filings in this case in light of the summary judgment standard without advocacy from both parties on the relationship between this evidence and the legal standards governing liability under the Lanham Act. 28 Our refusal to review the entire record based upon summary judgment standards does not mean, however, that we will not examine any of the filings in this case. The record includes hundreds of pages of exhibits appended to the various complaints and submitted in support of motions to dismiss and motions for and against a preliminary injunction. These exhibits include the full text of the advertising copy, internal company memoranda, letters exchanged between the parties, market research and consumer survey data, and declarations and deposition testimony of experts and other witnesses. Although much of the evidence contained in the record is out-of-bounds in reviewing a 12(b)(6) dismissal, it is well-established that in reviewing the complaint, we may properly consider the relevant entirety of a document integral to or explicitly relied upon in the complaint, even though not attached to the complaint, without converting the motion into one for summary judgment. Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996) (citing Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir. 1993) (explaining that the main problem of looking to documents outside the complaint--lack of notice to plaintiff--is dissipated [w]here plaintiff has actual notice . . . and has relied upon these documents in framing the complaint)). Were the rule otherwise, a plaintiff could maintain a claim . . . by excising an isolated statement from a document and importing it into the complaint . . . . Id.; see also Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 454 (7th Cir. 1998) (It is a well-settled rule that when a written instrument contradicts allegations in the complaint to which it is attached, the exhibit trumps the allegations.). Accordingly, in determining whether Clorox has stated a claim for relief for false advertising, we read the allegations in the complaint in light of the full text of the advertising copy contained in the record. We limit our evaluation of material outside the complaint to the advertisement copy because that is the only material we deem integral to assessing the sufficiency of the allegations in the complaint. 29 In closing our discussion of the sua sponte dismissal, we must reiterate that basic fairness and sound prudential reasons underlie our insistence on the involvement of the parties in any dismissal. [A]dequate notice helps the court secure a just determination, by giving parties moved against the opportunity to present their best arguments in opposition. Perez, 849 F.2d at 797 (internal citations and quotations omitted). This case aptly illustrates the wisdom of that insistence. The relationship between the allegations in the complaint and the Lanham Act false advertising claim is complex and contested. By dismissing Clorox's Lanham Act claim without the benefit of the parties' advocacy in addressing these complex issues, the district court misunderstood the relationship between the allegations in Clorox's complaint and the relevant legal standards. We turn now to those standards.