Antitrust Law Daily Wrap Up, ADVERTISING—4th Cir.: Verdict of $4.6M over false advertising of pool chlorination products affirmed, (Mar 25, 2026)

By Brian Craig, J.D.

The district court properly admitted evidence that the manufacturers products falsely advertised their salt cells as “Made in the USA” and concluded that the companies are alter egos.

In a dispute between competitors in the pool industry, the U.S. Court of Appeals in Richmond, Virginia has affirmed a jury verdict of $4.6 million that four related companies with ties to China that sell saltwater pool chlorination products falsely advertised their products as “Made in the USA.” In affirming the judgment of the federal district court in Charlotte, North Carolina, the U.S. Court of Appeals for the Fourth Circuit held that that the district court properly admitted evidence that the manufacturers falsely advertised their salt cells as “Made in the USA” when the salt cells come from China. The appeals court also affirmed the directed verdict issued by the district court that the four companies are alter egos lacking separate corporate identity (Hayward Industries, Inc. v. BlueWorks Corp., No. 25-1396 (4th Cir. Mar. 24, 2026)).

A manufacturer of pool sanitization products, Hayward Industries, Inc. (hereinafter “Hayward”), filed suit in the federal district court in North Carolina alleging false advertising against four companies that sell saltwater pool chlorination products. The defendant manufacturers are BlueWorks Corp., also known as Blue Works and Blueworks Pools; Blue Works Innovation Corporation; Ningo C.F. Electronic Tech Co., Ltd.; and Ningo Yishang Import and Export Co., Ltd. Hayward accused the four companies of Lanham Act violations and other claims, alleging that the defendants’ advertisements tend to confuse customers into thinking that defendants’ products are Hayward products.

In January 2024, the district court refused to exclude an expert witness report of Hayward to support Hayward’s damages claims and lost profits. During discovery, the four manufacturers revealed that the products are made in China. The district court denied a pretrial motion in limine to exclude evidence that the four companies falsely advertised their salt cells as “Made in the USA.” After a seven-day trial, a jury found the four companies liable under state and federal law for falsely advertising their saltwater pool chlorination products and awarded $4.6 million in damages. The district court also issued a sua sponte directed verdict that the four companies are alter egos lacking a separate corporate identity. The four companies appealed to the Fourth Circuit arguing that the district court improperly admitted “Made in the USA” evidence at trial and for the direct verdict.

The Fourth Circuit first held that the district court did not err by admitting evidence that the four companies falsely advertised their products as “Made in the USA.” The defendant manufacturers insisted that until trial, Hayward presented an entirely different false advertising theory. While the complaint and responses to interrogatories lack “Made in the USA” allegations, evidence obtained late during discovery revealed that the salt cells were made in China. The Fourth Circuit found that it is not fair to blame a party for raising these facts too late when the companies waited until the last possible moment to reveal them. The supposedly prejudicial evidence was within the companies’ control and the companies had no trouble defending against the theory at summary judgment. The panel found that the “cry of sandbagging rings hollow.”

The appeals court also affirmed the district court’s decision to issue a directed verdict that the four companies are alter egos lacking separate corporate identity. An alter ego finding allows a court to pierce the corporate veil and find one corporate entity liable for actions by another. The Fourth Circuit agreed with the district court that no reasonable jury could determine that the companies are not alter egos of one another. The district court relied primarily on trial testimony from the companies’ shared representative for depositions. The four companies also shared common legal representation and advertised the same address and contact information. Furthermore, the panel found that any hypothetical error would be harmless because without any alter ego finding, the four companies all share responsibility for the damages award.

The Case is No. 25-1396.

Judge: Diaz, A.

Attorneys: Erik Paul Belt (McCarter & English, LLP) for Hayward Industries, Inc. Samuel Alexander Long (Shumaker Loop & Kendrick, LLP) for BlueWorks Corp.

Companies: Hayward Industries, Inc.; BlueWorks Corp.

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