Gotlin v. Lederman
367 F.Supp.2d 349, 2005 WL 1023306, 2005 U.S. Dist. LEXIS 7712 (2005)
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Rule of Law:
Under the Lanham Act, consumers lack standing to sue for false advertising, as such claims are reserved for commercial parties. Similarly, under the Racketeer Influenced and Corrupt Organizations Act (RICO), personal injuries and financial losses incidental to them do not constitute an "injury to business or property" required for standing.
Facts:
- In late 2001 or early 2002, physicians and hospitals, including Dr. Gilbert S. Lederman and Staten Island University Hospital (SIUH), created an 'International Patient Program'.
- Through this program, they marketed a cancer treatment called Fractionated Stereotactic Radiosurgery (FSR) to Italian nationals using booklets, videos, and in-person seminars in Italy.
- Marketing materials made allegedly false claims, including a '90 percent' success rate, that the physicians had the 'greatest experience worldwide,' and that the treatment had minimal side effects.
- An agent for the defendants, Salvatore Conte, held conferences in Italy where he falsely represented himself as a medical doctor and oncologist.
- Dr. Lederman also attended these conferences, examined patients' medical films, and told them and their families that the defendants could cure them.
- Relying on these representations, numerous Italian cancer patients, the plaintiffs, were induced to travel to the United States and pay for the FSR treatment.
- The plaintiffs underwent the FSR treatment, which they alleged worsened their medical conditions, caused them pain, and deprived them of the opportunity to seek other necessary care.
- Most of the plaintiffs died within weeks or months of receiving the treatment.
Procedural Posture:
- The estates of deceased Italian nationals and one living national (Plaintiffs) filed a complaint in the U.S. District Court for the Eastern District of New York against various physicians, hospitals, and their agents (Defendants).
- The complaint alleged multiple federal and state law violations, including claims under the Lanham Act and the Racketeer Influenced and Corrupt Organizations Act (RICO).
- Defendants filed a motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6).
- Defendants also filed a motion to strike certain allegations in the complaint pursuant to Fed.R.Civ.P. 12(f).
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Issue:
Do consumers who suffer personal injuries and financial loss from a deceptively advertised medical treatment have standing to sue under the Lanham Act for false advertising and under the Racketeer Influenced and Corrupt Organizations Act (RICO)?
Opinions:
Majority - Glasser, District Judge
No. Consumers lack standing to sue under either the Lanham Act or RICO for personal injuries resulting from deceptive practices. For the Lanham Act claim, the court is bound by Second Circuit precedent in Colligan v. Activities Club of N.Y., Ltd., which held that the Act's purpose is 'exclusively to protect the interests of a purely commercial class against unscrupulous commercial conduct.' The court explicitly rejected the plaintiffs' request to create an exception for egregious cases involving life-threatening harm, holding that consumers, as a non-commercial class, do not have standing. For the RICO claim, standing under § 1964(c) requires an 'injury to business or property.' The court reasoned that the plaintiffs’ core injuries—physical harm, pain, suffering, and wrongful death—are personal injuries, not the proprietary-type damage required by the statute. The financial loss of $17,500 paid for the treatment was deemed a 'financial loss incidental to a personal injury' and therefore insufficient to confer RICO standing. The court also dismissed several state law claims, including fraud and negligent misrepresentation, because they were not distinct from the medical malpractice claim and failed to allege a separate injury.
Analysis:
This decision reinforces the strict prudential standing requirements for consumer claims under the Lanham Act and RICO within the Second Circuit. It demonstrates the high barrier consumers face when attempting to bring federal claims for false advertising or fraudulent schemes that result in personal injury, effectively channeling these disputes into state tort law, such as medical malpractice or consumer fraud actions. The court's rigid adherence to the commercial-party limitation for the Lanham Act and the narrow 'business or property' interpretation for RICO highlights the judiciary's reluctance to expand the scope of these federal statutes into areas traditionally governed by state law, even in the presence of sympathetic plaintiffs and egregious facts.
