519 F.Supp.3d 839
D. Or.2021Background:
- Suzie’s Brewery (small, family-owned) obtained USDA National Organic Program certification for Suzie’s Organic Hard Seltzer on June 1, 2020 and began selling in July 2020 in six states.
- Anheuser-Busch’s Michelob ULTRA Organic Seltzer was USDA-certified August 19, 2020 and launched nationally (available in 49 states) in January 2021.
- Anheuser-Busch ran national ads, press releases, and influencer posts calling Michelob ULTRA the “first” or “only national USDA certified organic hard seltzer.”
- Suzie’s sued under the Lanham Act § 43(a)(1)(B) for false advertising, seeking a TRO to enjoin the challenged statements as deceptive and damaging to Suzie’s reputation and sales.
- The court found the challenged phrasing (“national USDA certified organic hard seltzer”) reasonably reads as modifying USDA’s National Organic Program (not merely national distribution), making the “only”/“first” claims literally false given Suzie’s earlier certification, and enjoined the false phrasing while allowing truthful statements that the product is the only/first USDA-certified organic hard seltzer distributed nationally.
- Court ordered a $5,000 bond, authorized limited expedited discovery, and set the TRO to expire in 28 days unless extended or converted to a preliminary injunction.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Falsity of “only/first national USDA certified organic hard seltzer” | Phrase is literally false because Suzie’s was certified earlier; “national” describes the USDA program, so claim excludes Suzie’s | “National” meant only to describe national distribution (i.e., nationally distributed product), so statement is not false | Court held statements are literally false; “national” reasonably modifies the USDA National Organic Program, not merely distribution |
| Consumer deception / tendency to deceive | Ads and influencer posts have already caused consumers and distributors to question Suzie’s certification; literal falsity presumes deception | Ambiguity or innocent marketing intent; no survey evidence offered | Court found likelihood of consumer deception (presumption from literal falsity plus submitted consumer/distributor/journalist evidence) |
| Materiality and injury to plaintiff | USDA-certified organic status affects purchase decisions and Suzie’s invested to obtain certification; false claim lessens Suzie’s goodwill and sales | Defendants did not contest interstate commerce entry; argued limited harm or alternative meanings | Court found materiality and likely injury satisfied (loss of goodwill and diversion risk) |
| Irreparable harm, equities, and public interest for TRO | False advertising causes irreparable reputational harm; public interest favors accuracy; §1116(a) presumption applies | Defendant cited advertising development costs and launch needs; asked for no or higher bond | Court applied statutory presumption of irreparable harm, found equities/public interest favor Suzie’s, required $5,000 bond, and narrowed injunction to allow truthful distribution-based claims |
Key Cases Cited
- Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997) (enumerates Lanham Act false-ad elements and falsity standards)
- Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir. 2007) (literal falsity and presumption of consumer deception discussion)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014) (standing and zone-of-interests for Lanham Act false-ad claims)
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (standard for preliminary injunction/TRO factors)
- All. for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) (serious-questions alternative test for injunctions)
- eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) (discussion on presumptions of irreparable harm in injunctive relief)
- POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014) (Lanham Act protects competitors from misleading advertising)
- Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) (procedural note that TRO and preliminary injunction standards are substantially similar)