Antitrust Law Daily Wrap Up, ADVERTISING—D. Mass.: Preliminary injunction request to recall competitors’ mislabeled product denied, (Nov 20, 2015)

By Michael Menzhuber, J.D., LL.M.

A request for preliminary injunctive relief to require a competing wire mesh manufacturer and distributor to recall and issue corrective advertising with respect to its mislabeled product was denied by the federal district court in Worcester, Massachusetts (Riverdale Mills Corporation v. Cavatorta North America, Inc., November 18, 2015, Hillman, T.).

Background. Riverdale Mills Corporation manufactures and distributes Aquamesh, a welded wire mesh product for use in making marine traps sold to fisherman. Aquamesh is manufactured using a galvanized after welding (GAW) process. The process extends durability and longevity beyond that of wire mesh products using a galvanized before welding (GBW) process. Cavatorta North America, Inc. sells SEAPLAX, a welded wire mesh product which directly competes with Aquamesh. SEAPLAX is manufactured by Metallurgica Abruzzese SPA using a GAW process.

Between April 2014 and May 2015, a significant manufacturing error by Metallurgica resulted in the production of a large quantity of SEAPLAX that was GBW, not GAW. Metallurgica was unaware of the error and sent the GBW SEAPLAX to Cavatorta who, in turn, sold it to its customers. Upon learning of the issue with the SEAPLAX product, Cavatorta initiated a process of notification, recall, and compensation.

Riverdale brought a lawsuit against Cavatorta and Metallurgica that alleged, in part, false advertising in violation of the Lanham Act and unfair competition. Riverdale also motioned for the preliminary injunctive relief that would require the defendants to: (1) cease all sales, including importing of their falsely labeled SEAPLAX product; (2) not make any false or misleading statements in their advertisements regarding any SEAPLAX product; (3) recall all SEAPLAX product falsely labeled as GAW; (4) label all SEAPLAX product that is not GAW as GBW; and (5) issue a corrective communication to the market stating that the previously sold SEAPLAX product was GAW. The defendants contested the requests for a recall and corrective advertising.

Preliminary injunction. The court noted that the test governing an award of a preliminary injunction requires a consideration of: (1) a likelihood of success on the merits; (2) the potential for irreparable harm; (3) a balancing of relevant equities; and (4) the effect on public interest.

The court determined that Riverdale did not have a likelihood of success on the merits on it false advertising claim under the Lanham Act because it did not demonstrate all of the five elements necessary to prove a false advertising claim under the Act. It was undisputed that the defendants made a false or misleading description about the SEAPLAX product, placed these false or misleading statements in interstate commerce, and the misrepresentation was material.

However, the court found that, although initial purchasers of the SEAPLAX product were deceived for a short period of time, the defendants took sufficient corrective action to prevent the likelihood of ongoing confusion. The anticipated reputational harm that Riverdale claimed was merely conjecture, particularly in light of the fact that the statements occurred during an isolated period of time and Riverdale’s sales had increased when the industry became aware of the defendants’ mistake.

After further concluding that the requirements for irreparable harm were not met, the balance of equities favored the defendants, and the public interest was not served by doing something that had already been done; the court denied Riverdale’s motion for a preliminary injunction with respect to the recall and corrective advertising.

The case is No. 4:15-CV-40132.

Attorneys: William E. Hilton (Gesmer Updegrove, LLP) for Riverdale Mills Corp. Paul S. Rainville (Hassett & Donnelly, PC) for Cavatorta North America Inc., Metallurgica Abruzzese SPA and Trafileria E Zincheria Cavatorta SPA.

Companies: Riverdale Mills Corp.; Cavatorta North America Inc.; Metallurgica Abruzzese SPA; Trafileria E Zincheria Cavatorta SPA

Cases: Advertising MassachusettsNews