SAM SPARKS, District Judge.
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Defendants Plasti-Pure, Inc. and CertiChem, Inc.'s Motion for Judgment as a Matter of Law [# 185], and Plaintiff Eastman Chemical Company's Response [# 189]; Eastman's Motion for Entry of Final Judgment [# 204], Defendants' Response [# 209], and Eastman's Reply [#214]; Defendants' Motion for Judgment [# 205], Eastman's Response [#211], and Defendants' Reply [#215]. Having reviewed the documents, the governing law, and the file as a whole, the Court now enters the following opinion and orders.
In this Lanham Act false advertising case, Eastman alleged Defendants made false and misleading statements about an Eastman product, a plastic resin known as Tritan. Specifically, Eastman claimed Defendants incorrectly stated Tritan, or products made from Tritan, leached chemicals capable of causing estrogenic activity when subjected to various stressors, and those estrogenic chemicals could cause harm to humans. A jury trial was held from July 15, 2013 to July 24, 2013. After approximately three to four hours of deliberation, the jury returned a verdict and found in favor of Eastman on every question.
At the close of Eastman's case-in-chief, Defendants filed their motion for judgment as a matter of law, which the Court carried. After the jury returned its verdict, the Court instructed the parties to file proposed final judgments. The parties' respective motions, proposed judgments, and assorted briefs are now submitted, and the issues are ripe for adjudication.
"Under the standard articulated in Fed. R.Civ.P. 50(a), a district court properly grants a motion for judgment as a matter of law only when `a party has been fully
To succeed on a false advertising claim under section 43(a) of the Lanham Act, a plaintiff must establish the following five elements:
Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir.2000). Defendants offered a plethora of arguments in support of their motion,
First, Defendants argued there was no evidence they were "in commercial competition" with Eastman, a requirement drawn from section 43(a)'s "commercial advertising or promotion" language. Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1382-84 (5th Cir. 1996). This argument is both conclusory and patently false. Defendants' common founder and "Chief Scientist," Dr. George Bittner, testified Defendants were developing a plastic resin to compete with Tritan, and that such a product may or may not be ready to market. Although Dr. Bittner expressed a surprising amount of confusion about what actually goes on at the companies he owns, his testimony alone provided sufficient evidence from which a jury could conclude Defendants were in commercial competition with Eastman. Defendants also published a brochure in which they compared test results from products made with Tritan to their own in-house brand of plastic, further suggesting direct competition between the parties. Finally, Defendants' general business practice of certifying plastic products as "EA-free" directly impacts Eastman's business. See Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 463 (5th Cir.2001) (jury "could have inferred that the parties were competitors" based on plaintiff's "direct business interest" in relevant market and defendants' advertisements in the same market).
Second, Defendants contended they made no statements of fact about Tritan. "[A] statement of fact is one that (1) admits of being adjudged true or false in a way that (2) admits of empirical verification." Pizza Hut, 227 F.3d at 496 (internal quotation marks omitted). Defendants contend their statements about Tritan are matters of scientific debate protected by the First Amendment and are therefore
ONY does not control this case.
Third, Defendants argued there was no evidence from which the jury could reasonably conclude the statements "Tritan has EA"
Fourth, Defendants argued there was no evidence Eastman's customers were actually deceived, an element Eastman must prove if a statement is deemed misleading. But the jury heard from numerous Eastman customers who expressed concern about the statements Defendants were making, even if their concerns were ultimately assuaged by Eastman. Additionally, Eastman presented testimony from a marketing expert who conducted a survey of plastic — product purchasers and concluded a statistically significant amount of those surveyed believed various (allegedly false or misleading) statements made by Defendants. While the jury had numerous reasons to discount or disregard entirely the expert's survey results — such as her acknowledgment she did not survey Eastman's actual customers, and her inability to explain her statistical analysis — the jury was presented with some evidence which could have supported a finding of actual deception.
Fifth, Defendants argued there was no evidence Eastman's customers' purchasing decisions were likely to be influenced by any misleading statements, and thus the "materiality" element is not satisfied. Once again, the jury heard some evidence, in the form of the marketing expert's survey as well as testimony about Eastman's customers' behavior in response to Defendants' advertisements. While a jury was certainly not required to find materiality, there was some evidence to support such a finding.
Sixth, Defendants argued there was no evidence of injury to Eastman. Defendants' one-sentence argument ignores the evidence of deception and materiality described above, as well as evidence
Seventh, Defendants argued their press releases and website statements do not constitute commercial advertisements or promotions under the Lanham Act, and therefore offer no basis for liability. "Courts have applied the Lanham Act to just about every imaginable print and media form, including press releases, print ads, posters, and websites." Bracco Diagnostics, Inc. v. Amersham Health, Inc., 627 F.Supp.2d 384, 462 (D.N.J.2009) (citing Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 585-86 (3d Cir.2002)). Defendants' press releases and website statements were clearly designed to bolster Defendants' image and reaffirm Defendants' primary business strategy; in other words, to "influenc[e] consumers to buy defendant's goods or services," namely Defendants'"safer" plastic alternatives as well as their testing and certification services. Seven-Up, 86 F.3d at 1384.
Defendants' Rule 50 motion failed to show there was "no legally sufficient evidentiary basis" for the jury to find in favor of Eastman on the various issues raised. See FED. R. CIV. P. 50(a). Accordingly, judgment as a matter of law was not warranted and the factual issues were properly submitted to the jury for a final determination.
Though styled simply as a "Motion for Judgment," Defendants' motion in part challenges the sufficiency of the evidence to sustain the jury's verdict. Accordingly, the Court will construe those portions of the motion as a Rule 50(b) renewed motion for judgment as a matter of law. Applying Rule 50(b), the Court is "obligated to accept the findings of the jury unless the facts point so overwhelmingly in favor of one party that no reasonable person could arrive at a different conclusion." Pizza Hut, 227 F.3d at 500. The Court construes all evidence "the way that is most favorable to upholding the verdict." Id.
Defendants' burden is an important one in this case, as the jury heard days of contradictory testimony from world-class scientists as well as lay witnesses. At various times, each side presented compelling arguments on small sub-issues throughout the case. At other times, each side's witnesses fell flat. The jury watched attentively and took notes, and no doubt made numerous judgments about the credibility of the witnesses and the importance to assign to each piece of evidence. Faced with so much contradictory evidence, virtually any verdict the jury reached would have been sustainable, as reasonable jurors could disagree about countless facts, inferences, and conclusions. Bearing in mind Defendants' obligation to show "no reasonable person" could arrive at the conclusions this jury did, the Court turns to Defendants' arguments. See id.
First, Defendants re-urge their First Amendment argument based on ONY. For the reasons already discussed, this argument is rejected. Defendants refuse to acknowledge the critical factual distinction between suing someone for publishing an
Defendants seek to immunize themselves from all liability simply because scientists disagree about (1) the definition of estrogenic activity; (2) whether estrogenic activity can be conclusively detected using an MCF-7 in vitro assay; and (3) whether EA detected using an MCF-7 assay is dangerous to human health. Even if it were binding on this Court, ONY would not require such a result. ONY merely recognizes scientists must be free to have such debates within the scientific community without fear of being sued for making "false" statements. See Underwager v. Salter, 22 F.3d 730, 736 (7th Cir. 1994) (affirming summary judgment in favor of scientists accused of defaming the plaintiff — scientist by reporting results of their study debunking the plaintiff — scientist's work); ONY, 720 F.3d at 497 (citing approvingly to Underwager). Dr. Bittner was not sued for publishing his paper. Instead, his companies were sued when they transformed snippets of his paper — a paper which never mentions Tritan or Eastman by name — into commercial advertisements claiming Tritan is harmful whereas Defendants' certified EA-free products are safe.
Defendants' reading of ONY, taken to its logical conclusion, would eviscerate the Lanham Act. For the right price, an expert can be found to offer virtually any opinion on any given subject. See, e.g., Underwager, 22 F.3d at 731 (plaintiff-scientist frequently testified as an expert that "most accusations of child sexual abuse stem from memories implanted by faulty clinical techniques rather than from sexual contact between children and adults"). Defendants would immunize from liability all statements made concerning subjects over which two scientists disagreed, thus making the issue one of "scientific debate." The courts are full of cases in which experts on each side disagree about a particular topic. The role of the jury is to consider the evidence, evaluate the credibility of the witnesses, and render a decision. Our system does not prevent juries from deciding issues simply because highly qualified experts disagree. In this case, the jury necessarily made numerous credibility determinations in evaluating the scientific testimony offered by both parties. It concluded Defendants falsely claimed Tritan and its products exhibit estrogenic activity and are harmful. The jury's conclusion
The jury found Defendants made three false statements: (1) Tritan has EA; (2) Tritan is dangerous; and (3) Tritan exhibits EA when subjected to "common use" stressors. The jury's verdict rests on adequate evidentiary grounds with respect to all three statements. It was the jury's task to evaluate the credibility of the witnesses and weigh the competing claims. For example, the jury was likely unimpressed with Dr. Bittner's combative demeanor and testimony. After analyzing all of the evidence, a reasonable jury could have found Defendants' tests for EA were not adequate to conclusively prove the Tritan resin Eastman ships from its plants exhibits estrogenic activity. Similarly, a reasonable jury could have concluded there was no evidence Tritan was actually harmful, especially because this point was essentially undisputed: nobody was willing to testify Tritan was actually dangerous to humans. A reasonable jury could also have found Defendants' chosen stressors were not "common use," despite being described as such, because they did not simulate realistic exposure conditions for Tritan products. A different jury on a different day may have reached a different conclusion, but that does not diminish the validity of the jury's verdict in this case.
Second, Defendants re-urge their argument they are not in commercial competition with Eastman. As noted above, this argument simply ignores the evidence presented at trial, including testimony from Dr. Bittner about Defendants' efforts to create an alternative to Tritan.
Third, Defendants for the first time argue Eastman lacks prudential standing to sue under the Lanham Act. The Fifth Circuit has held "only persons who have suffered a commercial injury as a result of anti-competitive conduct have prudential standing to sue under the Lanham Act." Harold H Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir.2011). The Fifth Circuit analyzes the prudential standing inquiry using the following five factors:
Id. at 796-97 (quoting Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 563 (5th Cir.2001)). "Although technically distinct, these five factors can be distilled into an essential inquiry, i.e., whether, in light of the competitive relationship between the parties, there is a sufficiently direct link between the asserted injury and the alleged false advertising."Ford v. NYLCare Health Plans of Gulf Coast, Inc., 301 F.3d 329, 337 (5th Cir.2002).
The Court first concludes Defendants waived this argument by failing to raise it before a post-verdict Rule 50(b) motion. See Bd. of Miss. Levee Comm'rs v. EPA, 674 F.3d 409, 417 (5th Cir.2012) ("Unlike constitutional standing, prudential standing arguments may be waived."); Ensley v. Cody Res., Inc., 171 F.3d 315, 320 (5th Cir.1999) (finding prudential standing argument waived when not raised "until after Ensley's case-in-chief" because argument could have been raised before trial). Defendants counter they could not raise this argument until after the evidence at trial revealed Eastman had suffered no injury. This argument is sophistic, because it ignores the most obvious avenue for challenging standing on this basis: a timely summary judgment motion
Alternatively, the Court will briefly address the prudential standing argument because such an argument may be raised sua sponte at any time. See id. at 418 ("Although the EPA correctly points out that we have previously considered the issue [of prudential standing] sua sponte,... we decline to do so here." (citation omitted)). Considering the relevant factors, the Court finds Eastman has plainly presented sufficient evidence of injury to satisfy the prudential standing inquiry. The jury heard testimony about specific Eastman customers who were upset by Defendants' statements and came to Eastman demanding answers. Although an Eastman witness testified he had a 100% success rate in assuaging client concerns by showing them Eastman's testing data, Defendants' messaging nevertheless required Eastman to take ameliorative actions it would not otherwise have taken. Moreover, a reasonable juror could infer other customers had similar reactions but did not reach out to Eastman to receive the corrective messaging. Additionally, the jury heard evidence from Eastman's marketing expert about consumer confusion, and also heard evidence of the significant amount of money Eastman expended in corrective advertising fees in response to Defendants' statements. This evidence establishes a "sufficiently direct link" between Eastman's alleged injury and Defendants' statements. Ford, 301 F.3d at 337.
Fourth, Defendants re-urge their challenges to the jury's "misleading" findings, arguing there was no evidence of either deception or materiality.
Fifth, Defendants raise a new challenge to the jury's finding of willfulness. A violation of the Lanham Act is willful if the defendant knows or is indifferent to whether its actions are unlawful. Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 506 (7th Cir.1992). Defendants argue there is no evidence of willfulness because Defendants based their statements upon Dr. Bittner's published scientific paper. Defendants cite no authority suggesting reliance on a published paper categorically precludes a "willful" level of culpability. Moreover, Defendants did not simply quote or excerpt Dr. Bittner's paper; instead, they redesigned a bar chart to compare Tritan with PlastiPure products (as in the brochure) and read in wholly unsupported conclusions (e.g., Tritan is harmful).
Additionally, the jury heard evidence which supported their willfulness finding. For example, the jury saw an email from Dr. Bittner prior to any testing on Tritan in which he claimed Tritan would be estrogenically active. The jury also heard testimony indicating the data underlying the brochure's bar chart told a different story, and the chart omitted data unfavorable to PlastiPure products. One of Defendants' employees even testified he did not believe the tests they used simulated "common use" stressors. From this evidence, a reasonable jury could conclude Defendants
Sixth, Defendants challenge the sufficiency of the evidence to support the jury's verdict on all the related questions submitted to the jury (unfair competition, conspiracy, aiding and abetting). The unfair competition claim was based solely on the conduct constituting false advertising. Defendants offer no unique argument against the jury's finding on this claim, and the Court therefore denies Defendants' motion for judgment on this claim for the same reasons as the Lanham Act claim. Defendants offer no substantive attack on the jury's conspiracy and aiding-and-abetting findings, and those findings are supported by substantial amounts of evidence, including evidence of common ownership and management of the two defendant companies.
Viewing the evidence in the light most favorable to upholding the jury's verdict, the Court sees no basis for overturning the jury's findings in this case. To the extent Defendants' motion seeks judgment notwithstanding the jury's verdict, it is DENIED. The Court thus turns to the parties' arguments over the necessity and scope of injunctive relief.
The Lanham Act specifically contemplates injunctive relief as a remedy for victorious plaintiffs. 15 U.S.C. § 1116(a).
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). Defendants primarily argue Eastman has not shown it will suffer any irreparable injury, but also contest the remaining three prongs of the injunction inquiry.
The first question is whether Eastman has shown it will suffer irreparable injury in the absence of a permanent injunction. Eastman argues irreparable injury may be presumed, citing a trademark infringement case. Abraham v. Alpha Chi Omega, 708 F.3d 614, 627 (5th Cir.2013) (citing 5 McCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 30:2 (4th ed.2001)). This position strikes the Court as plainly inconsistent with the Fifth Circuit's false advertising precedent, which explicitly requires a plaintiff to prove irreparable injury "[i]n addition" to proving
While a presumption is inappropriate, it would still be somewhat unusual not to enjoin an infringer from infringing in the future. See McCarthy § 27:37 ("In most cases, after a full trial finding false advertising, a final injunction is appropriate."). The classic example of when an injunction is not appropriate is Seven-Up, where the defendant had not used the challenged presentations in five years and the presentations were outdated and essentially useless at the time the injunction was requested. Id. n. 7 (citing Seven-Up, 86 F.3d at 1390). In this case, although Defendants represent they have removed the press release and brochure from their website and do not plan to redistribute them, there is a undoubtedly a possibility Defendants will make similar statements in the future. See William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 532, 44 S.Ct. 615, 68 L.Ed. 1161 (1924) ("But respondent being entitled to relief, is entitled to effective relief; and any doubt in respect of the extent thereof must be resolved in its favor as the innocent producer and against the petitioner, which has shown by its conduct that it is not to be trusted.").
The jury found Eastman was injured by Defendants' statements, and the verdict was supported by the evidence. For example, the jury heard about Eastman's strained relationship with its customer Lock & Lock, a Korean company who fell from Eastman's list of "top ten customers" after it encountered Defendants' statements. The jury saw evidence indicating Defendants had communicated with numerous other Eastman customers, and Defendants' brochure was widely distributed at an industry convention. Eastman also expended roughly half a million dollars to pay for corrective advertising. Although it is difficult to measure the precise damage Eastman has or will suffer as a result of Defendants' statements, there is certainly evidence in the record to support the jury's finding of injury and suggest an injunction is appropriate. See PBM Prods., LLC v. Mead Johnson & Co., 639 F.3d 111, 126-27 (4th Cir.2011) (noting the difficulty of proving irreparable harm in false advertising cases, but affirming district court's grant of permanent injunction where jury concluded defendant's statements had misled consumers and evidence showed harm to plaintiff's reputation); id. at 127 ("As the district court aptly noted, the injunction prevents Mead Johnson from `infecting the marketplace with the same or similar claims in different advertisements in the future.").
While some of Eastman's injuries would be easily compensable (e.g., its corrective advertising costs), others are not easily reduced to a damages figure. This is especially true of the ongoing potential harm if Defendants continue making similar statements through difficult-to-monitor channels, such as direct advertising via emails to customers. See ICEE Distribs., Inc. v. J&J Snack Foods Corp., 325 F.3d 586, 596-97 (5th Cir.2003) (injunction warranted to prevent future sale of product because damages would be difficult to prove); Fresh Del Monte Produce v. Del Monte Foods Co., 933 F.Supp.2d 655, 664-65 (S.D.N.Y.2013) (injunction warranted in false advertising case where jury found no lost sales, because the extent of injury was difficult to measure). Because the jury found Defendants' statements were literally false, the ability of those statements to impact consumers' purchasing decisions is presumed. It is likely impossible to quantify the extent of the harm Eastman has
An injunction is also supported by the balance of the hardships. Defendants have already taken down the brochure and press releases, and indicate they have no intention to redistribute them. An injunction putting legal force behind their commitment is a minimal burden. While Defendants claim their First Amendment rights will be burdened by an injunction, they will not be prohibited from participating in scientific discussions, continuing their research, or publishing scientific articles. An injunction will only prevent Defendants from repeating statements a jury found to be false and misleading in commercial advertisements or promotions. Finally, the public has a strong interest in the enforcement of the Lanham Act's prohibition on false advertisements, and will suffer no harm because Defendants' scientific pursuits will be unaffected by the terms of the injunction.
Moving beyond the four eBay factors, Defendants argue Eastman is not entitled to an injunction because it has unclean hands. In essence, Defendants seek to have this Court do what the jury did not, which is consider the merits of Defendants' improperly pleaded
The Court therefore finds an injunction is warranted in this case. The parties disagree about the scope of any injunction, however, and thus the Court must determine the precise contours of the injunction.
Eastman requests an injunction prohibiting Defendants from making any of the following four statements in a commercial advertisement or promotion:
Def.'s Mot. Judg. [# 204-1], Ex. A (Proposed Final Judgment), ¶ 3. Eastman also seeks to force
Defendants to engage in "corrective advertising" of their own by placing a formal retraction on their website for the next year. Id. ¶ 6.
Defendants argue attaching disclaimers to the press releases, brochure, and website would be a more appropriate remedy than in injunction. If an injunction does issue, Defendants request the
Def.'s Mot. Judg. [# 205], at 23. Further, Defendants want the injunction to specify it:
Id. at 24.
Disclaimers are a recognized alternative to a prohibitive injunction. Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 672 (5th Cir.2000); Better Bus. Bureau of Metro. Hons., Inc. v. Med. Dirs., Inc., 681 F.2d 397, 405 (5th Cir.1982). In general, the purpose of a disclaimer is to accommodate some First Amendment interest the defendant retains despite its infringing activity. E.g., Westchester Media, 214 F.3d at 673 (magazine had First Amendment interest "in both the use of the title and content of its ongoing publication"). Disclaimers are appropriate when a disclaimer can effectively make the presentation of particular information no longer deceptive or misleading. See Better Bus. Bureau, 681 F.2d at 405.
As the Fifth Circuit noted in Westchester Media, "speech that misleads or creates confusion is not protected under the First Amendment." 214 F.3d at 672.
Although an injunction is warranted here, the injunction must be narrowly tailored. See Better Bus. Bureau, 681 F.2d at 405 (citing In re R.M.J., 455 U.S. 191, 203, 102 S.Ct. 929, 71 L.Ed.2d 64 (1982)). Eastman's first three prohibitions map directly to the statements the jury considered and found to be false. Eastman's fourth prohibition — "Defendants' use of the MCF-7 in vitro assay is a definitive final test for estrogenic activity in chemicals or substances, including Tritan" — does not. While this was an important issue in this case, and the jury may well have considered it in reaching its verdict, it was not a direct question the jury was asked to answer. Further, whether the MCF-7 test is definitive or not is not a statement about Tritan; it is a statement about the MCF-7 test. Including this statement in the injunction would therefore expand the scope of the injunction beyond what is reasonably necessary to enforce the jury's findings.
Defendants' requested additions to the injunction are simply not necessary. Nothing in the injunction prohibits Defendants from engaging in additional scientific research or publishing scientific papers. The jury in this case determined, based on the evidence adduced at trial, three statements Defendants made about Tritan were false and misleading. The injunction simply prohibits Defendants from continuing to make those statements in commercial advertisements or promotions. If Defendants conduct new research and believe their results show Tritan exhibits estrogenic activity, they are free to publish a scientific paper on the topic. If Defendants further believe their research proves the statements the jury found to be false and misleading are no longer false and misleading, Defendants may seek relief from the injunction in this Court.
Finally, the Court turns to whether or not Eastman's proposed corrective advertising is appropriate. While courts have on occasion included forced corrective advertising as a part of the remedy in false advertising cases, there is no suggestion such relief is mandatory, or even presumed appropriate. See, e.g., Rhone-Poulenc Rorer Pharms., Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 516 (8th Cir. 1996) (district court has discretion to decide whether corrective advertising is a necessary and appropriate remedy). In this case, Eastman itself has already engaged in significant amounts of corrective advertising, and it is unclear what additional effect a digital billboard written by Eastman and posted on Defendants' website will have. Based on the record in this case, the Court is convinced requiring Defendants to stop making the statements the jury found to be false is sufficient to protect Eastman's interests and honor the spirit of the Lanham Act's protective provisions.
Accordingly,
IT IS ORDERED that Defendants PlastiPure, Inc. and CertiChem, Inc.'s Motion for Judgment as a Matter of Law [# 185] is DENIED;
IT IS FURTHER ORDERED that Defendants' Motion for Judgment [# 205] is DENIED;
IT IS FINALLY ORDERED that Eastman's Motion for Entry of Final Judgment [# 204] is GRANTED as modified above. A final judgment incorporating the Court's