Lead Opinion
Thеre is a substantial market for products that will prevent game animals, with their keen sense of smell, from detecting the presence of hunters. Activated carbon, when embedded in clothing, adsorbs
After the district court denied Plaintiffs’ motion for class certification because reliance and damages issues lack the commonality required by Federal Rule of Civil Procedure 23(b)(3), Plaintiffs filed a motion for partial summary judgment, seeking to permanently enjoin Defendants’ advertisements because they are literally false.
Defendants appeal the grant of a permanent injunction, arguing the district court erred in its literal falsity determinations and in granting an injunction based solely on those determinations. Although other claims remain pending, we have jurisdiction to review an interlocutory order granting an injunction. See 28 U.S.C. § 1292(a)(1). Agreeing with Defendants that the permanent injunction was based upon those errors of law, we vacate the injunction and remand.
I. The Governing Law Error
A. The Error. Plaintiffs led the district court into error by arguing, as they do on appeal, (i) that the Minnesota statutes in question are coextensive with the federal false advertising standards under the Lanham Act, and (ii) that Lanham Act cases establish the proposition that, “When an advertisement is literally false, the Court need not consider the remaining Lanham Act elements in order to grant Plaintiffs injunctive relief.” Buetow,
The first legal error is that the proposition is a misstatement of federal law. To establish a Lanham Act false advertising claim, a plaintiff must prove “(1) a false statement of fact by the defendаnt in a commercial advertisement about its own or another’s product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a loss of goodwill associated with its products.”
Though the proposition has been repeated in numerous District of Minnesota opinions, it is not correct. Rather, it is a careless expansion of a sound principle adopted many years ago by the Second Circuit — when a competitor’s advertisement, particularly a comparative ad, is provеd to be literally false, the court may presume that consumers were misled and grant an irreparably injured competitor injunctive relief without requiring consumer surveys or other evidence of the ad’s impact on the buying public. See Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc.,
The second error was in equating the standards for relief under the Lanham Act and the Minnesota consumer protection statutes at issue. Plaintiffs are retail purchasers seeking relief under those statutes. Lanham Act false advertising cases invariably involve claims asserted by “competitors of the wrongdoer” or by plaintiffs protecting other commercial interests. See Am. Ass’n of Orthodontists v. Yellow Book USA Inc.,
Plaintiffs seek a permanent injunction for alleged violations of two Minnesota statutes. Accordingly, the proper starting point is to determine the statutory standards for obtaining that relief. In general, under Minnesota law, “where injunctive relief is expliсitly au
B. The MCFA Claims. The MCFA expressly authorizes injunctive relief in certain circumstances:
The ... use ... of any fraud, ... misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoin-able as provided in section 325F.70.
Minn.Stat. § 325F.69, subd. 1. Relying on dicta in LeSage v. Nw. Bank CalhouivIsles, N.A.,
The attorney general ... may institute a civil action in the name of the state ... for an injunction prohibiting any violation of [the MCFA], The court, upon proper proof that defendant has engaged in a practice made enjoinable by section 325F.69, may enjoin the future commission of such practice. It shall be no defense to such an action that the state may have adequate remedies at law.
Minn.Stat. § 325F.70, subd. 1; see Ensminger v. Timberland Mortg. Servs., Inc.,
Private plaintiffs seeking remedies for violation of Minnesota consumer protection statutes do have a remedy, an action under MinmStat. § 8.31, subd. 3a:
[A]ny person injured by a violation of [the laws against false or fraudulent advertising, or the unlawful trade practices act] may bring a civil action and recover damages, together with costs and disbursemеnts, including ... reasonable attorney’s fees, and receive other equitable relief as determined by the court.
The “substantive statutes define the prohibited conduct,” but “it is MinmStat. § 8.31, subd. 3a, that authorizes private actions for violation of these ... statutes.” Group Health,
C. The MUTPA Claims. The MUTPA prohibits sеllers from “knowingly misrepresenting] ... the true quality ... of ... merchandise.” Minn.Stat. § 325D.13. Unlike the MCFA, this statute grants a private right of action to enjoin violations:
Any person damaged or who is threatened with loss, damage, or injury by reason of a violation of sections 325D.09 to 325D.16 shall be entitled to sue for and have injunctive relief ... against any damage or threatened loss or injury by reason of a violation.... [I]t shall not be necessary to allege or prove that an аdequate remedy at law does not exist.
Minn.Stat. § 325D.15. But this statute requires private plaintiffs to prove they have been “damaged or ... threatened with loss, damage, or injury by reason of a violation” to be entitled to injunctive relief. Plaintiffs failed to prove the threat of future injury; we doubt that § 325D.15 authorizes an injunction to “remedy” only past violations. See Wilson v. Polaris Indus., Inc.,
As Plaintiffs failed to prove, indeed, claimed that they need not prove the irreparable injury that is еssential to a claim for a preliminary or permanent injunction under these Minnesota statutes, we vacate the district court’s injunction.
II. A Judicial Fact-Finding Error
Under the Lanham Act, a plaintiff can prove that advertising is false by showing either that it contains a statement that is “literally false,” or a statement that, while literally true, implicitly conveys a false message, is misleading, or is likely to deceive consumers. United Indus.,
In this case, the summary judgment record is crowded with various ads published by Defendants between 1994 and late 2006 containing a variety of claims that the carbon activated garments “eliminate” odor and can be “reactivated” in an ordinary household dryer. Both sides retained experts who conducted tests of the clothing’s odor-adsorbing capabilities. Defendants’ expert, Dr. Hartman, conducted quantitative permeation testing and estimated that Defendants’ products “blocked” ninety-six to ninety-nine percent of odor compounds, whereas noncarbon garments blocked only five to fifty-five percent. But Dr. Hartman admitted that Defendants’ garments did not eliminate all odor. Plaintiffs’ expert, Dr. Miller, described how his tests showed that odor passed through Defendants’ garments in as little as thirty seconds but admitted his tests did not measure the extent or concentration of odor permeation. Defendants introduced evidence of substantial customer satisfaction with ALS’s Scent-Lok® products, as well as evidence that, when those products first came on the market in the early 1990’s, numerous soaps, powders, and cover sprays were being marketed to deer hunters as “odor eliminating” products.
The district court took a simple approach in determining that all ads claiming that Defendants’ garments “eliminate odor” or use “odor eliminating technology” were literally false. Citing two dictionary definitions of the word “eliminate,” the court concluded that “[t]he word ‘eliminate’ is subject to only one reasonable interpretation — complete elimination.” The court rejected Defendants’ reliance on dictionary definitions equating “eliminate” with “remove” because “use of the word ‘remove’ would also be literally false if used in Defendants’ advertisements.” The court disregarded the fact that other hunting products used the word “eliminate” because “such advertisements may also be literally false.”
We disagree with the district court’s decision to base its determination of literal falsity on the most absolute of competing dictionary definitions of the word “eliminate.” The Lanham Act doctrine of literal falsity is reserved fоr an ad that is unambiguously false and misleading — “the patently false statement that means what it says to any linguistically competent person.” Schering-Plough,
III. What Next?
In response to Plaintiffs’ motion for partial summary judgment for a permanent injunction based upon literal falsity without proof of injury, Defendants objected to Plaintiffs seeking summary judgment on only the falsity element of their overall claims. Plaintiffs replied that they “have moved for a complete summary adjudication of their claims seeking injunctive relief.” We will hold them to that representation. Plaintiffs failed to prove both the requisite irreparable injury and their core allegations that Defendants’ use of the terms “odor eliminating” and “reactivation” were literally false. As in Avis,
On the other hand, Plaintiffs’ individual claims for damages cannot be resolved on this summary judgment record. Accordingly, we remand for a determination of those claims applying the standards prescribed by the Supreme Court of Minnesota in Wiegand v. Walser Auto. Groups, Inc.,
The district court’s Memorandum Opinion and Order dated May 13, 2010 is reversed, the Injunction dated June 17, 2010 is vacated, and the case is remandеd for further proceedings not inconsistent with this opinion.
Notes
. Adsorption is a process in which gas particles physically adhere to the surface of the adsorbent (the “bulk material”). It differs from absorption, in which particles permeate the bulk material and are incorporated into its volume.
. Federal jurisdiction in this case is based upon the Class Action Fairness Act, 28 U.S.C. § 1332(d). That jurisdiction continued despite the district court’s denial of Plaintiffs' motion for class certification. Cunningham Charter Corp. v. Learjet, Inc.,
. Some courts have been willing to presume that a literally false comparative ad irreparably injured the compared competitor because ''[a] misleading comparison to a specific competing product necessarily diminishes that product's value in the minds of the consumer." McNeilab, Inc. v. Am. Home Prods. Corp.,
. See Minn. Laws. 2004, ch. 228, art. 1, §§ 56, 57.
. There is some disagreement whether literal falsity is a question of fact or a question of law for the court. Compare N. Am. Med. Corp.,
Concurrence Opinion
concurring in part and dissenting in part.
I am pleased to concur in section I of the majority opinion. However, I respectfully dissent from sections II and III.
I do not believe that the trial judge, who wrote a very thorough opinion in this case, committed any judicial fact finding errors when he concluded that the terms “odor eliminating” and “reactivation” are literally false.
I agree with the majority that the message conveyed must be analyzed within its full context and that the Lanham Act proscribes only messages that are both false and misleading. However, in finding that the “odor eliminating” and “reactivation” claims are not literally false because not many hunters would be “so scientifically unsophisticated as to believe that any product can ‘eliminate’ every molecule of human odor,” the majority’s opinion substitutes this court’s judgment for the evidence in the record (i.e., the statements in the Plaintiffs’ affidavits) that the Plaintiffs themselves were misled. It is true that only a very credulous consumer would believe such a claim, but the claim itself is, in fact, false. It is unwise to decide that just because the judges on the panel would not be deceived, it is therefore impossible that any reasonable consumer would be deceived. This is especially the case because the claims are scientific. I fear that the majority opinion sets up a slippery slope for future false advertising claims brought by consumers, especially as consumer products become ever more hi-tech and complex.
The majority essentially finds that “odor eliminating” and “reactivation” are nonac
The majority’s conclusion that the “odor eliminating” and “reactivation” claims are merely “puffery” does not square with this court’s definition of puffery:
Puffery exists in two general forms: (1) exaggerated statements of bluster оr boast upon which no reasonable consumer would rely; and (2) vague or highly subjective claims of product superiority, including bald assertions of superiority. Juxtaposed to puffery is a factual claim. A factual claim is a statement that (1) admits of being adjudged true or false in a way that (2) admits of empirical verification. To be actionable, the statement must be a specific and measurable claim, capable of being рroved false or of being reasonably interpreted as a statement of objective fact.... Puffery and statements of fact are mutually exclusive. If a statement is a specific, measurable claim or can be reasonably interpreted as being a factual claim, ie., one capable of verification, the statement is one of fact. Conversely, if the statement is not specific and measurable, and cannot be reasonably interpreted as providing a benchmark by which the veracity of the statement can be ascertained, the statement constitutes puffery. Defining puffery broadly provides advertisers and manufacturers considerable leeway to craft their statements, allowing the free market to hold advertisers and manufacturers accountable for their statements, ensuring vigorous competition, and protecting legitimаte commercial speech.
Am. Italian Pasta Co. v. New World Pasta Co.,
Finally, I question the need to reach the issues addressed in section II and referenced in section III. Having found in section I that the entry of an injunction in this case was error, I believe we should do no more than remand for further proceedings.