Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Blender maker’s false advertising, trade libel claims against competitor dismissed, (Nov 7, 2014)

By Edward L. Puzzo, J.D.

Claims of false advertising by a home blender company, against a competitor that had been enjoined from making certain product comparisons, failed because the pleadings did not distinguish statements of opinion from statement of fact, or cite the audience affected and the injury suffered, the federal district court in Los Angeles has ruled. Claims of trade libel also failed because the allegations in support of the required element of special damages were too conclusory (Homeland Housewares, LLC v. Euro-Pro Operating LLC, November 5, 2014, Pregerson, D.).

Plaintiffs Homeland and Nutribullet and defendant Euro-Pro sold competing home blender products, the “Nutribullet” and “Nutri Ninja” lines of blenders, respectively. Homeland and Nutribullet brought an action against Euro-Pro, alleging false advertising violations under Section 43(a) of the Lanham Act, based on a comparison chart Euro-Pro placed on the packaging of its “Nutri Ninja” blenders. In the comparison chart, entitled “Nutri Ninja vs. Nutribullet,” Euro-Pro stated that its “Nutri Ninja Pro” operated at 900 Watts; produced 21,000 RPMs; had ice crushing capability, pulse technology, sip & seal lids; and fit in cup holders. The competing “Nutribullet” had none of those features, according to the chart.

Preliminary injunction. Homeland sought a preliminary injunction against Euro-Pro. On August 22, 2014, the court granted the preliminary injunction. Euro-Pro was given 120 days to remove the 900 watts, 21,000 RPMs, and “sip & seal” statements from its “Nutri Ninja Pro” packaging, advertisements, and commercials.

Post-injunction. After the preliminary injunction was granted, plaintiffs sent a number of letters to retailers carrying defendant’s products, notifying the retailers that they were expected to comply with the injunction and that plaintiffs intended to bring contempt proceedings against violators. Subsequently, defendant Euro-Pro sought a court order that would require plaintiffs to stop publicizing the August 22, 2014 preliminary injunction they had been granted, and further sought a court-approved notice correcting erroneous characterizations of the preliminary injunction allegedly made by plaintiffs. On September 10, 2014, the court ruled against Euro-Pro’s ex parte application for the requested order. Euro-Pro then moved to dismiss Homeland’s complaint.

False advertising. Homeland had alleged that Euro-Pro had made false advertising claims in the form of a campaign to plant “false claims of defects” on the Internet that were made to appear as reviews by consumers.

Merely alleging that the defendant said negative things about one’s product is not stating a claim for false advertising, the court stated. This claim by Homeland was too ambiguous, the court continued. It did not distinguish between statements, such as “poorly made,” which would be statements of opinion, versus material false statements of fact. Also, stating that “false reviews can be found on the internet” was impermissibly vague and failed to set forth the audience likely to be deceived, that the message was placed in interstate commerce, or that Homeland was likely to be injured by the statements. Consequently, the court granted Euro-Pro’s motion to dismiss this count.

In addition, claims of unfair competition brought under California law are “substantially congruent” with claims made under the Lanham Act, the court explained. Because Homeland’s Lanham Act claims fell, the unfair competition claims must also fall, the court found.

Trade libel. Homeland alleged that Euro-Pro had committed trade libel by making statements about the quality and performance of Homeland’s Nutribullet to achieve economic advantage.

Under California law, the court explained, “trade libel is an intentional disparagement of the quality of property, which results in pecuniary damage.” It required a showing of (1) a statement that (2) was false, (3) disparaging, (4) published to others in writing, (5) induced others not to deal with it, and (6) caused special damages. To support the element of special damages, Homeland pleaded that it suffered “lost sales, disruption of business relationships, loss of market share and customer goodwill.” These conclusory statements of economic loss did not sufficiently identify special damages, the court stated. Instead, they should have alleged facts showing an established business, the amount of sales for a substantial period preceding the publication, the amount of sales subsequent to the publication, and facts showing that such loss in sales were the natural and probable result of such publication. Thus, Homeland failed to satisfy the special damages requirement for a trade libel claim under state law, and this claim must also be dismissed, the court ruled.

The case is Civil Action No. CV 14-03954 DDP (MANx).

Attorneys: Dylan C. Dang (Trojan Law Offices) for Homeland Housewares LLC, and NutriBullet, LLC. Kenneth L. Wilton (Seyfarth Shaw LLP) for Euro-Pro Operating LLC.

Companies: Homeland Housewares, LLC; Nutribullet, LLC; Euro-Pro Operating LLC

Cases: Advertising CaliforniaNews