Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., 193 F. Supp. 3d 556

Background

Handsome Brook Farm (plaintiff) sells eggs labeled USDA Certified Organic and American Humane (AHA) pasture-raised; it does not use HFAC’s Certified Humane® mark. Three farms supply eggs packaged at Phil’s Fresh Eggs for Handsome Brook.
Humane Farm Animal Care (HFAC, defendant) is a non-profit that certifies producers to use the Certified Humane® logo in exchange for application, inspection, and per-product licensing fees (a material revenue source).
HFAC audited Phil’s Fresh Eggs after a third‑party complaint and its auditor reported allegedly stale USDA paperwork and an inability to verify AHA pasture‑raised status for Handsome Brook’s supplier farms.
HFAC’s Executive Director sent a May 20, 2016 email to 69 retail purchasing contacts at major grocers claiming Handsome Brook’s “pasture raised” and organic claims could not be verified and urging retailers to reconsider suppliers.
Handsome Brook alleged actual marketplace harm (retailers temporarily or indefinitely pulling product and lost sales/opportunities) and sued under the Lanham Act and state law; the court previously issued a TRO and now considered a preliminary injunction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the May 20 email is "commercial advertising or promotion" under the Lanham Act	Email was commercial: targeted to purchasers, promotes HFAC‑licensed eggs, HFAC receives licensing revenue tied to sales	Email was noncommercial/public‑interest advocacy; HFAC’s fees are insubstantial and it is akin to a consumer‑advocacy org	Held commercial: HFAC’s certification/licensing is a commercial product, fees are a major revenue source, and the email targeted retailers to influence purchases
Whether HFAC and Handsome Brook are in competition for Lanham Act purposes	HFAC’s licensing promotes HFAC licensees’ eggs which compete with Handsome Brook; indirect competition suffices	HFAC argued no direct producer‑level competition because it does not sell eggs	Held competition exists despite different distribution levels; indirect competition is adequate post‑Lexmark
Whether the email contained false or misleading factual statements	Email made false statements (e.g., “none were pasture raised”; inspection followed whistleblower) and implied mislabeling of organic status; Handsome Brook offered certificates and AHA confirmation	HFAC relied on auditor report and asserted due diligence; disputed materiality and falsity	Held false/misleading: record showed suppliers were AHA‑certified and USDA certificates had been provided; some specific assertions were demonstrably false or misleading by implication
Whether injunctive relief (prohibit further dissemination; corrective communications; website posting) is warranted	Irreparable harm from lost customers/goodwill; corrective statement from HFAC necessary; website posting unnecessary	HFAC opposed mandatory corrective measures and argued reputational harm and overbreadth	Held: preliminary injunction granted to bar further dissemination and to require HFAC to send a corrective email to original recipients; website corrective posting denied as unnecessary and overbroad

Key Cases Cited

Pashby v. Delia, 709 F.3d 307 (4th Cir. 2013) (Winter preliminary injunction standard applied)
Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (four‑factor preliminary injunction test)
Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60 (1983) (factors for commercial speech/mixed messages)
Gordon & Breach Sci. Publ’rs v. Am. Inst. of Physics, 859 F. Supp. 1521 (S.D.N.Y. 1994) (four‑part test for “commercial advertising or promotion”)
Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (standing and scope of Lanham Act; indirect competition relevance)
In re GNC Corp., 789 F.3d 505 (4th Cir. 2015) (literal falsehoods and deception under Lanham Act)
Scotts Co. v. United Indus. Corp., 315 F.3d 264 (4th Cir. 2002) (elements of Lanham Act false advertising claim)