Antitrust Law Daily Wrap Up, ADVERTISING—D. Mass.: Radon mitigation company enjoined from making false ‘Energy Star Rated’ representations, (Apr 22, 2016)

By Greg Hammond, J.D.

A company that manufactures and sells radon mitigation devices has been enjoined from making false statements concerning its products’ Energy Star Ratings. The federal district court in Boston granted a competitor’s motion for preliminary injunction, finding that the relief sought would merely prevent the manufacturer from making false statements with regard to Energy Star Ratings in the future, a hardship that was outweighed by the competitor’s potential loss of customers and goodwill if the manufacturer continued to falsely advertise (Spruce Environmental Technologies, Inc. v. Festa Radon Technologies, Co., April 21, 2016, Gorton, N.).

Spruce Environmental Technologies, Inc. and Festa Radon Technologies, Co. are competing manufacturers of radon mitigation devices. Spruce filed a false advertising suit against Festa, and Festa counterclaimed, alleging violations of the Lanham Act and various Massachusetts laws. Fest moved for preliminary injunction, seeking to enjoin Spruce from advertising that: (1) all RadonAway fans were certified for outdoor use under the safety standards set forth in "UL 507—Standard for Electric Fans"; and (2) the RP260 and RP380 models of RadonAway fans were "Energy Star Rated."

Likelihood of success. The court first reviewed a number of affidavits provided by the parties and concluded that Festa was unlikely to show that the advertising statements that Spruce made concerning outdoor use were literally false. Injunctive relief was therefore denied with regard to the outdoor use false advertising claims.

Spruce, however, conceded that its RP260 and RP380 models did not comply with the most recent set of Energy Star standards. Because the parties did not dispute that Spruce made literally false statements in its ads that the RP260 and RP 280 models of RadonAway fans were Energy Star Rated, Fest demonstrated a likelihood of success on its claim of false advertising as they relate to Energy Star Ratings, the court determined.

Remaining factors. The court next determined that although Festa could be compensated by money damages for lost sales if it prevailed on the merits of its false advertising claims, Festa had sufficiently demonstrated irreparable harm to its goodwill. The requested injunction, according to the court, would merely prevent Spruce from making false statements with regard to Energy Star Ratings in the future, a hardship that was outweighed by Festa’s potential loss of customers and goodwill if Spruce continued to falsely advertise. Consequently, the court concluded that the factors for injunctive relief tip in Festa’s favored only with regard to statements concerning Energy Star Ratings.

The case is No. 15-11521-NMG.

Attorneys: Christopher P. Litterio (Ruberto, Israel & Weiner, PC) for Spruce Environmental Technologies, Inc. Stephen W. Rider (Stephen W. Rider, PC) for Festa Radon Technologies, Co.

Companies: Spruce Environmental Technologies, Inc.; Festa Radon Technologies, Co.

Cases: Advertising MassachusettsNews