RICARDO S. MARTINEZ, District Judge.
This matter is before the Court for consideration of cross-motions for summary judgment. Plaintiff Cascade Yarns, Inc., ("Cascade") has filed a motion for summary judgment against all defendants on Counts I through IV of the Fourth Amended Complaint ("FAC") and has requested oral argument. Dkt. # 724. Defendants Knitting Fever, Inc. and KFI, Inc., (together, "KFI"), Sion Elalouf, and Designer Yarns, Ltd., move for summary judgment on all four counts. Dkt. # 715. By separate motion, defendants Debbie Bliss and Jay Opperman have also moved for summary judgment on all four counts. Dkt. # 717. The Court deems it unnecessary to hold oral argument on these motions. For the reasons which are set forth below, plaintiff's motion shall be denied, and the defendants' motions shall both be granted.
The background of this dispute is well known to the parties, and need only be summarized here. Plaintiff Cascade Yarns, Inc., ("Cascade") sells luxury yarns, some of them a blend of wool with other natural fibers, including kid mohair, silk, and cashmere. The yarns, bearing the Cascade brand label, are sold through retail yarn shops and boutiques around the United States. Defendant Knitting Fever, Inc., ("KFI") is one of Cascade's chief competitors. KFI is a distributor of a number of brands of luxury yarn, including the popular Debbie Bliss line.
Cascade alleges in the Fourth Amended Complaint that sometime between July 2000 and June 2001, Mr. Sion Elalouf, the controlling shareholder and chief executive of KFI, "discovered two versions of a yarn called Cashmerino — one of which contained cashmere and the one which did not contain any cashmere." Fourth Amended Complaint ("FAC"), Dkt. # 322, ¶ 28. Mr. Elalouf, with all his experience in the yarn trade, was "unable to distinguish between the cashmere and non-cashmere versions of the yarn." Id., ¶ 29. Indeed, apart from "expert fiber analysis — something to which the majority of KFI's and Cascade's customers do not have access — it is virtually impossible to confirm the presence of cashmere is [sic] a spun yarn." Id. According to the complaint, following this discovery of the two versions of Cashmerino, Mr. Elalouf entered into an agreement with defendant Designer Yarns, Ltd., a British company, to "substitute the 0% cashmere version of the product for the Cashmerino spun of 12% cashmere." Id., ¶ 31. The "0% cashmere" version was then marketed in a new line of Debbie Bliss yarns to be launched by Designer Yarns and distributed in the United States by KFI. Id., ¶¶ 33-34. The "non-cashmere" Cashmerino, with a label indicating the fiber content of 55% merino wool, 33% microfiber, and 12% cashmere, was introduced to the market at U.S. trade show in June 2001. Id., ¶¶ 35-39.
In September 2006, "amidst the growing controversy in the hand knitting yarn community," Debbie Bliss sent a letter to retailers who sold Cashmerino throughout the United States, "represent[ing] that the Debbie Bliss branded yarns contain cashmere." Id., ¶ 53.
In April and May 2010, shortly before initiating this lawsuit, Cascade sent additional yarn samples to Langley for fiber analysis. The samples included both Cashmerino yarns and other luxury yarns distributed by KFI, such as Louisa Harding Kashmir Aran, Noro Silk Garden, and others. Langley found no cashmere at all in the Debbie Bliss Cashmerino Astrakan and Louisa Harding Kashmir Aran yarns, despite labels stating that each contained 10% cashmere. Id., ¶¶ 70-71. Other yarns, according to Langley's analysis, contained cashmere, but in substantially lesser amounts than stated on KFI's labels. Id., ¶¶ 72, 74-76, 78, 79-81. In subsequent tests, Langley found no cashmere
In 2011, Cascade began sending samples of milk fiber yarns, such as Ella Rae Milky Soft, Knitting Fever Baby Milk, Ella Rae Latte, and others distributed by KFI, to Langley for fiber analysis. Langley found no milk protein any of the yarns. Id., ¶¶ 97, 99-101, 104. These tests on milk fiber yarn led to the filing of Cascade's Third and Fourth Amended Complaints, which incorporated allegations of mislabeling with respect to these yarns.
The Fourth Amended Complaint sets forth six separate causes of action, all arising from the allegations of mislabeled yarn: Count I, unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); Count II, false advertising under the Lanham Act, 15 U.S.C. § 1125(a); Count III, unfair competition in violation of the Washington Consumer Protection Act, RCW 19.86; Count IV, unfair competition at common law; Count V, injury to business and property in violation of the Racketeer Influenced and Corrupt Organization Act ("RICO"); and Count VI, conspiracy to cause injury to business and property under RICO. Both RICO claims have been dismissed. Order, Dkt. # 701. The parties have filed cross-motions for summary judgment on the four remaining claims, as set forth above. This Order will address all three summary judgment motions.
Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). An issue is "genuine" if "a reasonable jury could return a verdict for the nonmoving party" and a fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The evidence is viewed in the light most favorable to the nonmoving party. Id. However, "summary judgment should be granted where the nonmoving party fails to offer evidence from which a reasonable jury could return a verdict in its favor." Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.1995). It should also be granted where there is a "complete failure of proof concerning an essential element of the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "The mere existence of a scintilla of evidence in support of the nonmoving party's position is not sufficient" to prevent summary judgment. Triton Energy Corp., 68 F.3d at 1221.
As set forth in the FAC, this case originated with Cascade's suspicions regarding the proper labeling of Debbie Bliss Cashmerino yarns as to cashmere content. Cascade asserts that "the labels profess that the yarns are made of either (1) 12% cashmere, 55% merino wool, and 33% acrylic fibers or, alternatively, (2) 10% cashmere, 60% merino wool, and 30% acrylic fibers." Cascade Motion for Partial
Cascade Motion, Dkt. # 724, p. 3-4.
The Court has reviewed Cascade's citations to the record for support of the contention that KFI's yarns are in fact mislabeled, as this is an essential element of Cascade's claims. As noted above, the reports and testimony of Cascade's designated expert Kenneth D. Langley have been excluded as inadmissible for lack of reliability, pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ("Daubert"). Dkt. # 865. In order to prevail on any of its four remaining claims, Cascade must point to evidence in the record, independent of Professor Langley's test results, which would demonstrate that KFI's "accused yarns" are in fact mislabeled, and that KFI knew that to be so.
None of the evidence cited by Cascade fulfills that requirement. Dkt. Nos. 4-2, 4-3, 4-4, and 152 are test reports and a declaration by Professor Langely, and have been excluded, as have Exhibits DD and GG to the Declaration of Robert Guite. Turning to the exhibits attached to the Declaration of Robert Guite, Dkt. ## 726-27,
Exhibit Q is described by counsel as "a true and correct copy of a chart prepared at my direction compiling the reports of fiber analysis conducted by Kenneth D. Langley, Adam Varley and Maureen Reitman. All of the information summarized in Exhibit Q may be found in the reports to Kenneth D. Langely, Adam Varley and
Cascade also cites to Exhibit R, without any specific page citation, as support for its claim regarding mislabeling. Exhibit R comprises over 300 pages of test reports from SGS, which apparently is a testing laboratory in the United Kingdom, although counsel's declaration does not explain the role this laboratory plays in this case. In these SGS test reports, most yarns are not identified other than by the client's description, which in most cases states that it is "55% merino wool/33% microfibre/12% cashmere." See, e.g., Dkt. # 726, Exhibit R, p. 21. This yarn content applies to Cascade's Cash Vero as well as to some of the Debbie Bliss Cashmerino yarns, so these tests could refer to either one. A few yarns are identified specifically as "Cashmerino Aran." Notably, these particular yarns tested at values of 14.4%, 13.5%, 14.7%, and 13.1%. Id., pp. 82, 85, 87, 89. These SGS test results appear to refute, rather than support, Cascade's claims of mislabeling, at least with respect to Cashmerino Aran. With respect to the other tests, in light of Cascade's failure to identify and connect the results with any particular yarns, the Court cannot find in these test reports any evidence of mislabeling of any KFI yarn.
Moreover, in the absence of specific page citations within Exhibit R, the Court cannot sort through the 300 pages to attempt to find what evidence Cascade actually seeks to offer with this exhibit. Fed. R.Civ.P. 56(c)(1)(A). The same is true of Exhibit S, which appears to be a series of results from tests performed on various yarns in 2006 by TFT, apparently another testing laboratory in the UK. Although this exhibit is only eleven pages, Cascade has pointed to no particular page as presenting evidence in support of its claim. While some tests report values for cashmere in Cashmerino Aran at 1.3% to 4.8%, there is one test of an unidentified yarn which reports 11.0% cashmere. The Court cannot speculate as to what Cascade seeks to demonstrate by this exhibit. Further, no foundation has been laid for this exhibit or for its authenticity, or for the reliability of this testing laboratory. The Court finds in it no evidence to support for Cascade's claims of mislabeling.
Declaration of Robert Guite, Dkt. # 726, Exhibit F, p. 3. In response, KFI responded,
Id. The other two requests and responses are nearly identical. None of these constitutes evidence as to what KFI knew or did not know regarding the actual content of Cashmerino yarns in November 2007. All the defendants admitted is that they knew of the test reports; they denied any belief that these tests revealed that the yarns actually contained only 5% cashmere.
Exhibit G, also cited by Cascade, is defendant KFI, Inc.'s responses to plaintiff's Second Requests for Admission. Cascade has not cited to any particular response or page number as evidence supporting its contention regarding KFI's knowledge, and the Court declines to speculate as to what was intended by this citation to Exhibit G in its entirety. Fed.R.Civ.P. 56(c)(1)(A).
The cited lines within Exhibit P, the deposition of Jay Opperman, present a colloquy regarding actions taken by a yarn shop owner:
Dkt. # 856, Exhibit P, pp. 309-310. Again, this cited evidence fails to support Cascade's contention that KFI "knew" in late 2007 that its yarns "lacked cashmere." Indeed, the continuation of the discussion rebuts that inference:
Id. See Fed.R.Civ.P. 56(c)(3).
The additional evidence cited by Cascade for its assertion that KFI knew its yarns lacked cashmere is Exhibits Q, R,
Turning to the evidence cited with respect to the "Strategy Notes," the Court can find no evidence that "confirms" as a fact that KFI's yarns contained an average of 5% cashmere, as Cascade asserts. The cited page at Exhibit D represents Requests for Admission posed to Designer Yarns. This defendant was asked to admit that
Declaration of Robert Guite, Dkt. # 726, Exhibit D, p. 4. Defendant responded,
Id. That is, Designer Yarns admitted to making the statement in the Strategy Notes and admitted it was accurately quoted, but did not admit that the statement itself was true as to the labeling. Similarly, in Exhibit F, KFI was asked to admit to the authenticity of a copy of the Strategy Notes and did so. Id. at Exhibit F, p. 7. There are no admitted facts regarding labeling or re-labeling in this cited section. In Exhibit L, defendant KFI simply admitted that it had not formed any intention regarding disclosure of some unidentified document to its customers. Id. at Exhibit L, p. 9.
Exhibit V, also cited by Cascade, is the deposition of Sion Elalouf. In the first group of cited pages, he does discuss re-labeling, but the topic was designating the synthetic component of the yarn as microfiber versus acrylic, not the percentage of cashmere. Dkt. # 857-2, Exhibit V, pp. 51-52. In the second section cited, Mr. Elalouf addressed questions regarding fiber tests performed by Julie Smith. He was asked if he had "any understanding as to why Julie Smith consistently got higher amounts of cashmere than others?" Id., p. 156. The response was simply that she "had been very highly recommended" by the UK's biggest cashmere wholesaler, suggesting that her results may be more reliable than others. This section contains no evidence regarding labeling, mis-labeling, or re-labeling of KFI's yarns. The attached exhibit, Exhibit 6 to the deposition, is a memo from a Designer Yarn representative to Mr. Elalouf which poses a series of questions and proposals based on test results from SGS showing "a fibre content of 55% wool, 40% acrylic, 5% cashmere." Dkt. # 857, Exhibit V, SE Exhibit 6. This memo does not constitute evidence that in fact the yarn under discussion actually contained 5% cashmere; it simply reflects discussion of a perceived problem, based on test results which the participants at that time believed to be accurate. In light of the general lack of reliability of fiber tests noted in the Court's Order disqualifying Cascade's fiber test expert, these references to SGS test results cannot be deemed evidence of mislabeling. See, Order on Motion to Exclude Expert Kenneth Langley, Dkt. # 865, p. 10.
In this respect, SE Exhibit 15, also cited by Cascade, is very interesting. This exhibit is a copy of a memo/discussion between Mr. Elalouf and Designer Yarn representatives. Mr. Elalouf, writing in capital letters, noted that Julie Smith identified cashmere not only by fiber diameter
Dkt. # 857, SE Exhibit 15. This statement simply underscores the uncertainty underlying all the testing that was going on at this time. While the statements in this memo were based on the assumption that the SGS tests were more accurate than others, the reliability of SGS tests has not been put before the Court, and defendants' statements based on their assumptions do not constitute evidence that the yarn actually contained 5% cashmere instead of the labeled 12%. The same reasoning applies to Mr. Elalouf's Strategy Notes, which simply put forward a variety of options based on the assumption that the SGS test results showing 5% cashmere were correct, while noting that some tests by other labs "came back with as much as 13.1 %." Declaration of Robert Guite, Dkt. # 726, Exhibit HH, p. 2.
In further support of its claims based on mislabeling, Cascade cites to documents filed early in this case in support of Cascade's motion for a preliminary injunction. The documents were obtained during discovery in a different case in the United States District Court for the Eastern District of Pennsylvania, The Knit With v. Knitting Fever, Inc., et al., Cause No 2:08-CV-04221, and filed in that case in support of summary judgment.
Cascade's Motion, Dkt. # 724, p. 5. Cascade has misquoted the letter as to what was considered "very dangerous." It was not "the absence of cashmere" as asserted, but rather the rumors circulating about that absence (which originated with Cascade). Regarding the initial test report from Langley that was circulated at the 2006 trade show, showing no cashmere in Cashmerino yarn, the letter from V.V.G. stated,
Declaration of Robert Guite, Dkt. # 12, Exhibit 11 to Exhibit A (emphasis added). The letter also explained the results in the attached test reports of unidentified Cashmerino yarns by an Italian laboratory. The laboratory explained that it is not easy to "separate exactly very similar animal fibres." Id. Therefore the tests reported only what was identified as cashmere with certainty; there was an additional component that was mixed cashmere and wool but which was reported as wool. Id. Thus according to V.V.G., the laboratory tests validated that the total cashmere was 10%,
Cascade also points to a July 20, 2006 letter from KFI to its customers, asserting that "KFI continued to assert that the Accused Yarns contained cashmere," and arguing that the purpose of the letter was "to counter the allegations that the Debbie Bliss Cashmerino yarns were mislabeled." Cascade's Motion, Dkt. # 724, p. 5. Cascade neglects to mention that the KFI letter also contained a very plausible explanation for the variable test results, including those tests that find no cashmere in the Cashmerino yarns:
Declaration of Robert Guite, Dkt. # 12, Exhibit 2 to Exhibit A. As with the other evidence cited by Cascade, this letter does not in any way constitute evidence that KFI's yarns were mislabeled as to cashmere content.
The Court has reviewed plaintiff's cited evidence at length in order to demonstrate the basis for its finding that Cascade has produced no evidence to support the contention that KFI's yarns were in fact mislabeled as to cashmere content or milk fiber content. As false labeling of the product is an essential element of each of the four claims asserted by Cascade, all necessarily fail, as set forth in more detail below.
Cascade's federal claims of unfair competition and false advertising arise under section 43(a) of the Lanham Act, which states in relevant part:
15 U.S.C. § 1125(a). The elements of this claim are: (1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the good will associated with its products. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.1997).
An advertising claim may be either literally false on its face, or may be literally true but confusing or misleading to consumers. Id. As set forth above, plaintiff has produced no evidence that the labels on KFI's cashmere blend and milk fiber yarns were literally false. Cascade's claims of falsity and mislabeling are based on the assumption that the test reports produced by the Langley laboratory were accurate and valid, but the Court has excluded these reports as unreliable under Daubert. In so ruling, the Court also noted that "accuracy and reliability of the test results are not an isolated problem with K.D. Langley fiber Services" and that the problem "appears to be industry-wide."
In moving for summary judgment, Cascade attempts to shift the burden of proof to defendants, asserting that "[t]here is no evidence that many accused yarns are properly labeled." Cascade Motion, Dkt. # 724, p. 10. However, on summary judgment the burden is on plaintiff to show that there is no genuine dispute as to this material fact (falsity of labels), and that Cascade is therefore entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In order to support the assertion that the fact of falsity cannot be genuinely disputed, Cascade must cite to particular parts of the materials in the record which demonstrate that fact. Fed.R.Civ.P. 56(c)(1)(A). Had Cascade cited to such facts in the record, then defendants would have to produce evidence to raise a genuine issue of material fact as to falsity. However, plaintiff has pointed to no facts which would constitute evidence of falsity of the labels, because the fiber tests on which plaintiff's claims are based have been found inadmissible. No inference can arise from defendants' initial acceptance of the Langley fiber tests as genuine. In the absence of evidence of falsity produced by plaintiff, defendants need produce no controverting evidence to defeat plaintiff's summary judgment motion.
Instead of producing controverting evidence demonstrating that the labels are correct, defendants have argued that Cascade has not demonstrated literal falsity. KFI Opposition, Dkt. # 744. KFI argued that the Langley tests were unreliable, based on the tests performed by its own experts, Reitman and Varley. Now that the Court has found the Langley test results inadmissible, it need not address KFI's additional arguments or find at this time that the Reitman and Varley test results are themselves admissible.
Plaintiff's theory of Lanham Act liability relies entirely on literal falsity, based on the fiber tests performed by Langley, which have now been excluded. Nowhere has plaintiff argued that the labels were literally true but confusing or misleading to consumers, in order to demonstrate falsity under the alternative formula set forth in Southland Sod Farms. Although Cascade argues that the labels are deceptive, that argument is addressed to the second element of a Lanham Act claim, and is based on the premise that the labels are false and misleading. As Cascade has failed to demonstrate literal falsity, and failed to argue that the labels are literally true but misleading, the Lanham Act claims fail at the first step.
eMove Inc. v. SMD Software Inc., 2012 WL 1379063 at *7 (D.Ariz.2012) (citing Southland Sod Farms, 108 F.3d at 1139 (citations omitted)). As Cascade has failed
The KFI defendants (Knitting Fever, Inc. and KFI, Inc., Sion Elalouf, and Designer Yarns, Ltd.) have moved for summary judgment on several bases. Defendant's Motion for Summary Judgment, Dkt. # 715, pp. 4-6. The KFI defendants assert that Cascade has failed to demonstrate either commercial or competitive injury as required for standing, that the claims of false labeling are pre-empted by the Wool Products Labeling Act, and also that Cascade's claims are barred by the statute of limitations or laches. Cascade has argued in opposition to these contentions. Cascade's Opposition, Dkt. # 757. The Court need not reach the questions of standing, preemption or time bar, as KFI has also asserted that Cascade has not established the essential elements of a Lanham Act claim, starting with the first element, falsity. Defendants assert that "Cascade has produced no evidence of a literally false statement." Defendants' Motion, Dkt. # 715, p. 7.
Cascade's response, which was written before its expert was disqualified and the fiber test results held inadmissible, was simply to assert that "Cascade has already established that KFI's yarn labels are literally and unambiguously false, and neither KFI's clever word games nor its reliance on inapposite law change[s] that fact." Cascade's Opposition, Dkt. # 757, p. 8; citing to Cascade's Motion for Summary Judgment, Dkt. # 724. The bulk of the Cascade's arguments on falsity have been rendered moot by the Court's ruling on the inadmissibility of the Langley test results. Cascade also asserts that it has evidence of falsity of at least the Cashmerino yarns apart from the fiber tests, in the form of communications between KFI and the manufacturer. Cascade states that "correspondence between KFI and its manufacturer confirms that KFI labeled its Cashmerino products as containing 12% cashmere when it knew that the manufacturer was only even purporting to put in (at most) 10% "cashmere" into the product." Cascade's Opposition, Dkt. # 757, p. 9 n. 7. Cascade then cites to several pages of deposition of Sion Elalouf, together with two exhibits about which he was asked to testify. Declaration of Robert Guite, Dkt. # 706, Exhibit A, Exhibits 22, 23. The exhibits are two copies of emails from the Italian manufacturer, V.V.G. Filatura, to Mr. Elalouf. They differ slightly, and that difference was the subject of the deposition questioning, with Cascade's attorney suggesting that Mr. Elalouf altered some of the fiber percentage figures before forwarding the email. Id., Exhibit A, pp. 239-252. The Court cannot make any determination as to that accusation, as it would involve expert testimony regarding the authenticity and transmission of the messages. Neither has the Court been asked to do so. What is significant about the emails, for the purposes of this motion, is that the unaltered portion states that to make the Cashmerino blend, V.V.G. puts in three components as follows: "Tops 100% acrylic microfibre," put in at 35%; "Tops 100% Merino wool extrafine," put in at 45%, and "Tops pre-mixed 55% cashmere 45% wool," put in at 20%. Dkt. # 761, Exhibit A part 2, Exhibit SE 22. The result, according to V.V.G.'s representative, is "teoretically [sic] 11% to 12% on the final blend." Id. That is not the "(at most) 10% cashmere" asserted by Cascade above, and the document does not constitute evidence that KFI knew that the manufacturer was putting in less cashmere than stated on the Cashmerino label.
A party is entitled to summary judgment if it shows that the adverse party
Individual defendants Debbie Bliss and Jay Opperman have moved for summary judgment on all claims asserted against them. Dkt. # 717. As to the Lanham Act claims, they both contend that Cascade has no standing to assert such claims against them, as they are not competitors of Cascade. In the motion, Ms. Bliss, a resident of the UK, asserts that she is a designer of knitting patterns whose name appears on the Cashmerino line of yarns, but while she promotes the yarns she does not actually sell them. She licences her name to Designer Yarns, Inc., who pays her royalties based on sales. KFI distributes her brand of yarns in the United States, but she receives neither salary nor commission from KFI. Motion for Summary Judgment, Dkt. # 717, pp. 3-4.
Mr. Opperman, for his part, is an independent sales representative for KFI. He is not an employee of KFI but receives commissions based on his sales of Knitting Fever, Inc. yarns to yarn shops. He attends trade shows and calls on yarn shops, but does not participate in any aspect of labeling the yarn. Id., p. 4-5.
In order to have standing to assert a Lanham Act false advertising claim against a defendant, a plaintiff must demonstrate (1) a commercial injury due to a misrepresentation about a product; and (2) that the injury is competitive, meaning that it is harmful to the plaintiff's ability to compete with the defendant. Jack Russell Terrier Network of Northern California v. American Kennel Club, Inc., 407 F.3d 1027, 1037 (9th Cir.2005). Ms. Bliss and Mr. Opperman both assert that Cascade cannot show either element, as they have not misrepresented any product (element one), and they do not compete in any way with Cascade.
In opposition to the motion, Cascade argues that
Cascade's Opposition, Dkt. # 748, p. 2.
The Court need not review the evidence cited by Cascade in support of this argument, as it is all premised on the assumption that the Debbie Bliss yarn was in fact mislabeled. However, as set forth above, Cascade has offered no admissible evidence that this in fact is the case. The fiber tests have been excluded, and Cascade may not point to correspondence between defendants regarding those unreliable test results as confirming that the yarn "contained at most 5% cashmere." Thus there is no basis for Cascade's claim that in its own summary judgment motion (which has now been denied) it has "set forth uncontroverted evidence establishing each element of its Lanham Act claim...." Cascade's Opposition, Dkt. # 748, p. 7. Moreover, Cascade may not assert that Ms. Bliss and Mr. Opperman have contributory liability for false labeling when there is no admissible proof that any labels were false.
As Cascade has failed to point to a genuine issue of fact as to a false statement by either Ms. Bliss or Mr. Opperman, or their status as competitors subject to Lanham Act liability, their motion for summary judgment shall be granted, and the Lanham Act claims against them dismissed.
The Court notes that defendants' reply on this motion contains a motion to strike portions of the Declaration of James Casale, filed by Cascade at Dkt. # 750. Defendants contend that the declaration constitutes a sham affidavit, as it contradicts earlier deposition testimony. The Court has reviewed the contested portion of the declaration in ¶ 2, together with the cited portions of Mr. Casale's deposition, and finds that the declaration does not constitute a sham affidavit. In the declaration, Mr. Casale states,
Dkt. # 750, ¶ 2. In his earlier deposition, which was taken in the Pennsylvania The Knit With v. Knitting Fever case, he testified,
Declaration of Joshua Slavitt, Dkt. # 765, Exhibit 7, p. 329. The Court sees no contradiction between these two statement; both assert that Mr. Opperman has an ownership interest in Designer Yarns (he was "given a piece of" it by Mr. Elalouf), and that he is responsible for marketing, while Mr. Elalouf is responsible for choosing the yarns and fiber content. While this may all be hearsay, it is not a sham and the Court shall deny the motion to strike as to ¶ 2 of Mr. Casale's declaration. The motion to strike is granted as to ¶¶ 3 and 4, which, according to defendants, misrepresent the actual language of the pleadings filed in the Pennsylvania case.
Plaintiff has also moved for summary judgment on the two state law claims of
It is well-established under Washington law that a CPA violation must include the following elements: (1) an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) affecting the public interest; (4) that injures the plaintiff in his or her business or property; and (5) a causal link between the unfair or deceptive act and the injury suffered. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 719 P.2d 531 (1986). The "unfair or deceptive act or practice" must have the capacity to deceive a substantial portion of the public. Henery v. Robinson, 67 Wn.App. 277, 289-91, 834 P.2d 1091 (1992).
Under the analysis set forth above, the Court finds that Cascade has provided no evidence of a deceptive act or practice by the KFI defendants with respect to the labeling of yarn. Nor has Cascade demonstrated that it has met the requirements for an action for a state law claim of unfair competition at common law. Camel Hair Manufacturers Institute v. Saks Fifth Avenue, 284 F.3d at 320 (finding that the same conduct supports a Lanham Act claim and a state law claim of unfair competition). Accordingly, Cascade's motion for summary judgment on the state law claims shall be denied.
Defendants have moved for summary judgment on the state law claims on the basis that they are based on the same conduct as the Lanham Act claims and substantially congruous with those claims. Defendants have also moved on the basis these claims are time-barred. As noted above, Cascade has opposed the motion by arguing that
Cascade's Opposition, Dkt. #757, p. 7 n. 5 (emphasis in original). Cascade cites no legal authority for this statement.
Cascade argued in its own motion for summary judgment that it simultaneously satisfied the elements of its Lanham Act claim its CPA claim. Cascade's Motion, Dkt. #724, p. 22. It also asserted that because it had already established each element of its Lanham Act claim, it is entitled to summary judgment "as to liability for its common law unfair competition claim." Id., p. 23. In ruling on Cascade's motion, the Court has found that Cascade has not satisfied the first element of a Lanham Act claim, namely a literally false statement, and therefore has not satisfied the first element of a CPA claim, namely a deceptive act or practice. Cascade's unsupported "bafflement" argument fails to demonstrate why this ruling is not dispositive of the CPA and unfair competition claims. As to each claim asserted, Cascade's proof fails at the first step,
There is an additional basis for dismissal of Cascade's state law unfair competition claim, in that it was filed outside the three-year statute of limitations applicable to claims of fraud. RCW 4.16.080(4). Defendants asserted a time-bar argument in its motion with respect to all claims, arguing that while the Lanham Act itself contains no statute of limitations, courts "borrow" the analogous state law statutory period. KFI Defendants' Motion for Summary Judgment, Dkt. #715, p. 20. Defendants contend that the most analogous state law for Lanham Act claims is common law fraud, citing Ranch Realty, Inc. v. DC Ranch Realty, LLC, 614 F.Supp.2d 983, 989 (D.Ariz.2007). Cascade counters with the assertion that the state law cause of action most similar to the Lanham Act is the Washington CPA, which has a four-year statute of limitations. Cascade also argues that any delay in filing should be analyzed under laches principles, not statute of limitations. Cascade's Opposition, Dkt. #757, pp. 10-20.
The Court declines to resolve the question of the applicable statute of limitations for Lanham Act claims, as those claims were resolved on substantive grounds, for Cascade's lack of evidence of fraud. However, Cascade offers no convincing argument that its state law claim of unfair competition is not barred by the three-year statute of limitations applicable to fraud claims. According to the allegations of the complaint, Cascade knew of the alleged mislabeling, at the latest,
Individual defendants Debbie Bliss and Jay Opperman have moved for summary judgment on the state law claims on the same basis asserted by the KFI defendants; namely, that they are based on the same alleged conduct as the Lanham Act claims, and that congruity should lead to the same result. The Court agrees and shall grant the motion for summary judgment for the reasons set forth in section B(2) above.
As set forth herein, Cascades's motion for summary judgment against all defendants on Counts I through IV of the Fourth Amended Complaint (Dkt.#724) is DENIED in all respects. The KFI defendants' motion for summary judgment on Counts I through IV (Dkt.#715) is GRANTED, and these claims against the KFI defendants, Sion Elalouf, and Designer Yarns, Inc., are DISMISSED. The summary judgment motion filed by Debbie Bliss and Jay Opperman as to all claims against them (Dkt.#717) is also GRANTED and these claims are DISMISSED.
The Court has declined to rule on several of the motions to strike presented by the parties in their memoranda, as such ruling was not necessary to the issues presented in the motions. Any remaining motions to strike are hereby STRICKEN as moot.
Plaintiff's claims against defendant Emmepieffe S.R.L. remain pending, as do all counterclaims between the KFI defendants, Cascade, and the third-party (Dunbabin) defendants. The Court will address the pending motions for summary judgment on the counterclaims in a separate Order. As between Cascade and Emmepieffe, no summary judgment motion has been timely filed. The pretrial conference has been re-scheduled to November 2, 2012 at 9:00 am. Counsel for all parties shall attend.
