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Helicopter Helmet, LLC v. Gentex Corp.

United States District Court, D. Delaware

May 1, 2018

HELICOPTER HELMET, LLC, and GOVERNMENT SURPLUS SALES, INC. d/b/a GOVERNMENT SALES, INC., Plaintiffs
v.
GENTEX CORPORATION, FLIGHT SUITS d/b/a GIBSON & BARNES, and JAMES T. WEGGE, Defendants.

          MEMORANDUM OPINION

          MATTHEW W. BRANN UNITED STATES DISTRICT JUDGE.

         Gentex Corporation, Gibson & Barnes, and James T. Wegge filed a motion to dismiss the amended complaint filed by Helicopter Helmet, LLC, and Government Surplus Sales, Inc. For the reasons that follow, those motions are granted.

         I. BACKGROUND [1]

         A. The Parties

         Defendant Gentex Corporation, Plaintiff Helicopter Helmet, LLC (“HHC”), and Plaintiff Government Surplus Sales, Inc. (“GSS”), all manufacture helmets for use by helicopter passengers.[2] Defendant Flight Suits d/b/a Gibson & Barnes (“G&B”) is the exclusive distributor of Gentex's helicopter helmets.[3] Defendant James Wegge is G&B's director.[4]

         B. G&B's 2013 Advertising Campaign and the White Papers

         In 2013, G&B ran an advertisement titled “Is Your Helmet a Dangerous Counterfeit?”[5] The ad stated that “[t]housands of helicopter pilots and crews wear dangerous counterfeit helmets, ” which “look like real [Gentex] helmets . . . [b]ut are assembled from obsolete, defective, and 20-year-old military-surplus parts.”[6]Such helmets, the ad stated, “aren't even tested, ” and contain parts that “can hurt you in a side impact.”[7]

         Also in 2013, G&B issued a number of publications on “[t]he [u]se of [o]bsolete and [n]onconforming” parts in helicopter helmets.[8] These documents- styled “White Papers”-noted that certain unidentified “[c]ompanies” were developing their own replacement parts for certain types of helicopter helmets; these replacement parts, however, “did not conform to . . . military specifications.”[9]As a result, the White Papers charged, helmets containing these parts were dangerously unsafe.[10] The White Paper on “obsolete” or “nonconforming” earcups, for example, contained a graph showing the results of drop tests performed on a “mil-spec” helmet and on an unidentified “[n]onconforming [h]elmet” (“Drop Test Graph”).[11] That White Paper also contained an image showing damage to an unidentified helmet with “[n]onconforming” parts after a drop test (“Damaged Helmet Graphic”).[12] None of the White Papers mentioned any helicopter helmet manufacturer by name.[13]

         C. The Accident Prevention Bulletin and the Aviation Life Support Equipment Handbook

         One of these White Papers made its way to the United States Department of the Interior (“DOI”).[14] As a result, the DOI's Office of Aviation Services (“OAS”), with the assistance Defendants, issued an Accident Prevention Bulletin (“AP Bulletin”).[15] Similar to the White Papers, the AP Bulletin warned of the dangers of helicopter helmets with “outdated components” that fail to meet military specifications, and contained copies of the Drop Test Graph and the Damaged Helmet Graphic.[16] Unlike the White Papers, however, the AP Bulletin mentioned a helicopter helmet manufacturer by name; specifically, it noted that the earcups in some of Gentex's helmets- “original version[s]” of the SPH-4B model-“do not meet current agency standards, ” and that owners of that helmet should purchase a “conversion kit.” The AP Bulletin, though, did not mention any other manufacturer. As a result of the safety issues highlighted in the AP Bulletin, the DOI's Bureau of Land Management (“BLM”) awarded G&B a sole source contract for Gentex helmets.[17]

         Defendants' relationship with the OAS continued after the issuance of the AP Bulletin. The OAS publishes an Aviation Life Support Equipment Handbook (“2008 ALSE Handbook”), which “regulates all helmets that are purchased for [federal] government agencies.”[18] Among other things, the ALSE Handbook notes which helicopter helmets have been approved[19] for use by DOI personnel, specifically identifying several of Gentex's helmets as well as several helmets by other manufacturers.[20] After the publication of the AP Bulletin, Defendants “caused DOI personnel” to draft[21] an updated ALSE Handbook (“2013 ALSE Handbook”) that listed only Gentex helmets as “approved, ” removing all references to non-Gentex helmets.[22]

         D. Investigation by the Department of the Interior's Office of the Inspector General

         Although the 2013 ALSE Handbook never made it out of draft form, it was relied upon by the DOI for some helmet contracts.[23] As a result, HHC complained to the DOI's Office of the Inspector General (“OIG”).

         The OIG's summary report on this incident noted that it investigated “allegations that a helicopter helmet company misled the [BLM] to believe that only one type of helicopter helmet, available only through a single vendor, was acceptable for DOI use, ” as well as “alleg[ations] that the company and other vendors colluded with BLM personnel to draft an update of the [2008 ALSE Handbook] to benefit only two companies . . . .”[24] The summary report, however, found only that the DOI “improperly applied helmet standards from the draft [2013 H]andbook, which was pending approval, rather than the standards listed in the currently[-]approved handbook.”[25] It did not contain any finding on the alleged collusion.

         As a result of the investigation, BLM cancelled the sole-source contract with G&B and the OAS removed the AP Bulletin from its website.[26] In a letter to the OIG, OAS noted that, in the future, it would “ensure that all data solicited from, or provided by, the aviation industry is vetted for accuracy and free of any advertising rhetoric prior to incorporating the language into publications.”[27] The letter also indicated OAS's intention to “publish a list of the helmet models that have met the ALSE [H]andbook standards in a manner that affords frequent updates.”[28]

         E. Procedural History

         Plaintiffs initiated this action on May 1, 2017. Their operative complaint narrates the above allegations and argues that Defendants' actions, which were intended to drive Plaintiffs out of business, violated federal antitrust laws, state defamation and civil conspiracy law, the Delaware Consumer Fraud Act, the Federal Trade Commission Act, and the Lanham Act, and unjustly enriched Defendants at Plaintiffs' expense.[29] Defendants have moved to dismiss this complaint for lack of personal jurisdiction, improper venue, and failure to state a claim.[30]

         II. DISCUSSION

         A. Standard of Review

         When considering a motion to dismiss for failure to state a claim upon which relief may be granted, [31] a court assumes the truth of all factual allegations in the plaintiff's complaint and draws all inferences in favor of that party;[32] the court does not, however, assume the truth of any of the complaint's legal conclusions.[33]If a complaint's factual allegations, so treated, state a claim that is plausible - i.e., if they allow the court to infer the defendant's liability - the motion is denied; if they fail to do so, the motion is granted.[34]

         B. Whether This Court Has Personal Jurisdiction Over G&B and Mr. Wegge

         G&B and Mr. Wegge argue that this Court lacks personal jurisdiction over them, and that Plaintiffs' suit should be dismissed on that basis.

         Personal jurisdiction takes two forms: general jurisdiction and specific jurisdiction.[35] Plaintiffs do not argue that this Court has general jurisdiction over G&B and Mr. Wegge; consequently, Plaintiffs must show the existence of specific jurisdiction. To do so, Plaintiffs must point to competent evidence in the record.[36]

         This Court's exercise of personal jurisdiction is limited only by the Due Process Clause.[37] Therefore, Plaintiffs need merely show some “affiliation between [Delaware] and the underlying controversy”-i.e., show that the suit arises out of or relates to G&B and Mr. Wegge's contacts with Delaware.[38]

         Plaintiffs have sustained their burden. Their complaint alleges several causes of action based on, inter alia, Defendants' alleged creation and dissemination of the White Papers.[39] And they have produced uncontroverted evidence that G&B and Mr. Wegge distributed these White Papers into Delaware.[40] This Court, therefore, has specific personal jurisdiction over G&B and Mr. Wegge.

         C. Whether Venue Is Proper in This Court as to Mr. Wegge

         Mr. Wegge argues that venue is improper in this Court as to the antitrust claims against him. He observes that the Clayton Act allows a plaintiff to sue a defendant “in the district in which the defendant resides or is found, ”[41] and notes that he neither resides in, nor can be found in, Delaware.

         In federal antitrust cases, however, venue may be established under the Clayton Act or under the general venue statute.[42] The general venue statute, in turn, states that an action may be brought in any judicial district “in which a substantial part of the events or omissions giving rise to the claim occurred.”[43] And as noted above, Plaintiffs' claim is partly based on Defendants' dissemination of White Papers into Delaware.[44] Therefore, venue is proper in this Court.

         D. Whether There Is a Private Right of Action Under the Federal Trade Commission Act

         Gentex, G&B, and Mr. Wegge argue that there is no private right of action under the Federal Trade Commission. In response, Plaintiffs abandon that claim.[45]

         E. Whether Plaintiffs Have Stated a Claim for Unjust Enrichment

         Gentex, G&B, and Mr. Wegge argue that Plaintiffs have not stated a claim for unjust enrichment because they have not alleged a nexus between their loss and Defendants' gain.

         Under Delaware law, unjust enrichment is “the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience.”[46] To plausibly allege their claim for unjust enrichment, then, Plaintiffs must allege some relationship between their impoverishment and Defendants' enrichment.[47]

         In their complaint, Plaintiffs allege that unjust enrichment occurred when the BLM awarded a sole-source contract to Defendants, since HHC had previously provided helmets to that agency's Alaska State Office.[48] Plaintiffs do not allege, however, that they had any vested right or interest in providing helmets to the BLM-they do not, for example, allege that the BLM breached any contract with them in order to deal with Defendants. This circumstance, therefore, cannot be classified as “the unjust retention of a benefit to the loss of another, or the retention of money or property of another.” And Plaintiffs do not identify any other direct “relationship between [Defendants'] enrichment and [Plaintiffs'] impoverishment.” Therefore, their unjust enrichment claim will be dismissed.

         F. Whether Plaintiffs Have Stated a Claim for Defamation

         Gentex, G&B, and Mr. Wegge argue that Plaintiffs have not stated a claim for defamation because none of the allegedly defamatory statements mention any of the Plaintiffs directly.

         Under Delaware law, a plaintiff bringing a claim for defamation must allege that the statement at issue “refers to the plaintiff.”[49] Here, Plaintiffs point to several of G&B's advertisements that warn of unsafe “counterfeit” helicopter helmets, and to the White Papers which discuss the safety of various “obsolete” and “nonconforming” helicopter helmet parts.[50] None of these publications, however, mention any Plaintiff either directly or obliquely. Plaintiffs argue that, in light of small number of helicopter helmet manufacturers that supply the national market, [51] G&B's statements must be understood as referring to HHC or GSS. Plaintiffs, however, point to no Delaware legal authority supporting such a “group libel” theory, nor can this Court find any.[52] ...


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