HEARTLAND OF URBANA OH, LLC, Plaintiff-Appellant v. MCHUGH FULLER LAW GROUP, PLLC, Defendant-Appellee
Appellate Case No. 2016-CA-3
IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT CHAMPAIGN COUNTY
September 23, 2016
2016-Ohio-6959
Trial Court Case No. 2014-CV-210 (Civil Appeal from Common Pleas Court)
OPINION
Rendered on the 23rd day of September, 2016.
ROBERT M. ANSPACH, Atty. Reg. No. 0017263, J. RANDALL ENGWERT, Atty. Reg. No. 0070746, JOSEPH S. CENTER, Atty. Reg. No. 0092570, 300 Madison Avenue, Suite 1600, Toledo, Ohio 43604
Attorneys for Plaintiff-Appellant
THOMAS P. MANNION, Atty. Reg. No. 0062551, JUDD R. UHL, Atty. Reg. No. 0071370, MICHELLE L. GORMAN, Atty. Reg. No. 0066493, 1375 East Ninth Street, Suite 1600, Cleveland, Ohio 44114
Attorneys for Defendant-Appellee
{¶ 1} In this case, Plaintiff-Appellant, Heartland of Urbana, LLC (“Heartland“), appeals from a summary judgment rendered in favor of Defendant-Appellee, McHugh Fuller Law Group PLLC (“McHugh“). In support of its appeal, Heartland contends that the trial court erred in holding that its claims for injunctive relief were moot. Heartland further contends that the trial court erred in finding that its claims arising under Ohio‘s Deceptive Trade Practices Act (“DTPA“) failed under the Lanham Act,
{¶ 2} We conclude that the case was not moot. Even if McHugh conceded that it could no longer run the same advertisement due to statutory amendments, Heartland was entitled to have the trial court consider whether McHugh willfully engaged in a deceptive trade practice, and if so, whether Heartland was entitled to attorney fees. Furthermore, the trial court erred in rendering summary judgment in favor of McHugh. The advertisement was literally false under the false by necessary implication doctrine, and in such situations involving comparative advertisements, likely injury is presumed. A rebuttable presumption of causation and injury in fact also arose — which was not rebutted by McHugh in a manner sufficient to warrant summary judgment in its favor.
{¶ 3} Finally, the request for a retraction was sufficiently pled, and the trial court erred in concluding that it was precluded from granting such a remedy. Accordingly, the judgment of the trial court will be reversed, and this cause will be remanded for further
I. Facts and Course of Proceedings
{¶ 4} McHugh is a Mississippi law firm. Michael J. Fuller is an attorney licensed in several jurisdictions, including Mississippi, Georgia, New York, Washington D.C., Kentucky, Ohio, Missouri, Wisconsin, West Virginia, Florida, Pennsylvania, and Tennessee. Fuller is a member/manager of McHugh.
{¶ 5} On December 13, 2014, McHugh published a full-page advertisement in the Urbana Daily Citizen newspaper that discussed Heartland, a skilled nursing care facility located in Urbana, Ohio. In addition, the advertisement was published online, on the newspaper‘s website. The advertisement contained a picture of Heartland‘s facility in Urbana, and stated:
ATTENTION!
The government has cited
HEARTLAND OF URBANA NURSING
AND REHABILITATION CENTER
for failing to provide necessary care and
services to maintain the highest well-being
of each resident.
If you suspect that a loved one was
NEGLECTED or ABUSED
at Heartland of Urbana,
call McHugh Fuller today! Has your loved one suffered?
Bedsores
Broken Bones
Unexplained Injuries
Death
{¶ 6} The words “Attention,” “Neglected or Abused,” and “Death,” were in bold type and were colored red. “Cited” was also underlined in red. In addition, the advertisement contained contact information, including a phone number for McHugh, and a statement that the advertisement was “advertising material.” Michael Fuller‘s name was also listed on the advertisement.
{¶ 7} After becoming aware of the advertisement, Heartland filed a complaint for injunctive and other relief, along with a request for a temporary restraining order (“TRO“), with the common pleas court on December 24, 2014. The complaint contained claims for violation of the DTPA, as well as violations of Ohio common law, including claims for defamation and false light invasion of privacy. Heartland alleged in the complaint that McHugh advertised its services across the country, and that its systematic efforts to entice clients to bring suit against Heartland and other skilled care facilities included a pattern of ongoing newspaper and online advertisements that were false, fraudulent, deceptive, and misleading.
{¶ 8} The complaint further alleged that the language in the advertisement falsely led readers to believe that Heartland had been cited recently. However, Heartland had not had a citation of any kind for over two years, and had not had a citation remotely
{¶ 9} On December 24, 2014, Heartland also filed a motion for a temporary restraining order (“TRO“). The motion was supported by the affidavit of Heartland‘s Licensed Nursing Home Administrator, Dan Arnold, who stated that Heartland was an 85-bed, skilled nursing home facility that was ranked overall by the federal government as a “Five Star” nursing home, which is the highest ranking available to nursing homes. Arnold further stated that Heartland had most recently been subject to regular annual surveys on February 20, 2014, and November 23, 2012, during which the Ohio Department of Health had found no deficiencies, and had issued no citations. Consistent with the allegations in the complaint, Arnold additionally stated that the only citation remotely similar to the one referenced in the complaint had occurred more than four years earlier, on the June 24, 2010 survey, and had not resulted in harm to any nursing home patient. The deficiency was also corrected shortly after the June 2010 survey.
{¶ 10} The trial court held an ex parte TRO hearing on December 24, 2014, at which only counsel for Heartland appeared. After hearing Heartland‘s arguments, the trial court entered a TRO and set a preliminary injunction hearing for January 7, 2015. The restraining order precluded McHugh from using the advertisements in question, and required the ads to be removed from the public domain, including the websites of both
{¶ 11} On January 7, 2015, the parties agreed to extend the TRO until the application was heard by a court of competent jurisdiction. On the same day, McHugh filed a notice of removal to federal court. Subsequently, the matter was removed to federal court, but was remanded by the federal court to common pleas court in April 2015, because the amount in controversy required for diversity actions had not been satisfied. Ultimately, in May 2015, the trial court ordered McHugh to file an answer to the complaint.
{¶ 12} In May 2015, McHugh filed a motion asking the trial court to dissolve the TRO. McHugh claimed in the motion that the TRO deprived it of income, because McHugh relied on advertising for its income.1 However, in June 2015, McHugh withdrew its motion and the parties agreed to continue the TRO until the matter could be set for hearing by a court of competent jurisdiction. Shortly thereafter, the court set the matter for trial in October 2015, and ordered a discovery cut-off of September 30, 2015.
{¶ 14} Heartland then attempted to schedule Michael Fuller‘s deposition. The record clearly indicates that McHugh obstructed access to Fuller by refusing to supply him for a deposition on September 15, 2015, even though the parties had agreed upon the date and location well in advance of the scheduled time for the deposition.
{¶ 15} Moreover, McHugh‘s explanation to the court for the failure to supply Fuller for the September 15, 2015 deposition was contradicted by the record. Specifically, McHugh filed a motion for a protective order on September 14, 2015, asking the court to stay Fuller‘s deposition until after McHugh‘s motion for summary judgment had been resolved.2 In the motion for protective order, McHugh noted that Fuller‘s deposition was set for September 15, 2015, and then stated that Fuller had a schedule conflict, based on a mediation set for September 15, 2015, in Mississippi. In this regard, McHugh told the court that: “The date for this mediation has been set since August 10, 2015, well before Defendant‘s attorneys received notice that Plaintiffs wished to take Mr. Fuller‘s deposition * * *.” Defendant‘s Motion for a Protective Order, Doc. #51, p. 2.
{¶ 16} Contrary to these representations, the time, date, and location of Fuller‘s
{¶ 17} Further contrary to its representations to the court, McHugh did not tell Heartland that it needed to cancel the deposition because of the conflict; instead, McHugh indicated on September 9, 2010, that McHugh was filing a motion for summary judgment and believed the resolution of the motion would make the deposition unnecessary.
{¶ 18} In view of the allegations of malice and willfulness in the complaint, Heartland was entitled to question the only fact witness identified by McHugh. McHugh had agreed to produce this witness, and did not have the right to arbitrarily restrict access, particularly after agreeing to produce the witness.
{¶ 19} Instead of ruling on the motion to compel and motion for sanctions for the failure to produce Fuller, the trial court did nothing other than to vacate the discovery deadline.
{¶ 20} As was noted, McHugh‘s motion for summary judgment was filed on September 14, 2015. On September 24, 2015, Heartland filed a motion under
{¶ 21} Heartland noted in the motion that Fuller‘s deposition was critical to its ability
{¶ 22} After the court denied the
{¶ 23} Nonetheless, the court ruled on the summary judgment motions on December 31, 2015, without allowing a reasonable time for Fuller‘s deposition to be transcribed and filed with the court. (The deposition was filed on January 6, 2016, six days after the court‘s ruling on summary judgment. The notary‘s certification on Fuller‘s deposition indicates the notary did not even finish preparing the deposition until January
{¶ 24} As an additional matter, McHugh, itself, submitted Fuller‘s affidavit to buttress its arguments in support of summary judgment. See Doc. #82, Defendant‘s Reply in Support of Its Motion for Summary Judgment; Affidavit of Michael J. Fuller Attached and Motion to Strike Non-Conforming Evidence, filed on November 13, 2015. Thus, McHugh used Fuller to support its motion, but Heartland was not permitted a
{¶ 25} Finally, on December 23, 2015, McHugh filed a motion for leave to supplement its motion for summary judgment. On December 31, 2015, prior to the expiration of time for Heartland to respond to that motion, the trial court issued its summary judgment decision, granting McHugh‘s motion for summary judgment, denying Heartland‘s motion for summary judgment, and dissolving the TRO. Heartland now appeals from the judgment of the trial court.
II. Did the Court Err in Holding that Heartland‘s Claims Were Mooted by a Statutory Amendment?
{¶ 26} Heartland‘s First Assignment of Error states that:
The Trial Court Erred in Holding Heartland of Urbana‘s Claims for Injunctive Relief Were Mooted by
R.C. 5165.67 .
{¶ 27} The gist of Heartland‘s DTPA claim was that the advertisement was misleading because the only citation remotely similar to the one referenced in the
{¶ 28} Heartland also argued in the trial court that the advertisement was deceptive because it omitted a description of the citation (referred to as an F-309 tag), and led readers to believe that the violation was far more serious than it actually was. For example, under Federal standards applicable to nursing facilities, violations are assessed by letters ranging from “A” to “L,” with “L” being the most severe. “J,” “K,” or “L” violations mean that a nursing facility is in immediate jeopardy, and is in risk of being cut-off from Medicare reimbursement. In contrast, the particular violations on June 24, 2010 were only “E” and Level 2 violations, which, at worst, contemplate only minimal physical discomfort and the potential to undermine a given resident‘s ability to maintain or reach his or her highest practicable well-being, in light of definitions of that resident‘s plan of care.
{¶ 29} According to Heartland, the harm and injury mentioned in McHugh‘s advertisement, “negligence, abuse, bedsores, broken bones, unexplained injuries, and death” would fall under a Level 4 severity. The three matters that were involved in the June 24, 2010 citation, however, involved three relatively minor matters: a failure to document and administer laxatives prescribed for constipation; a failure to timely
{¶ 30} The trial court concluded that Heartland‘s DTPA claims were mooted by amendments to
{¶ 31} On appeal, Heartland indicates that
{¶ 32} Prior to the H.B. 290 amendments,
(F)(1) Except as otherwise provided in this section, the results of an inspection or investigation of a home that is conducted under this section, including any statement of deficiencies and all findings and deficiencies cited in the statement on the basis of the inspection or investigation, shall
be used solely to determine the home‘s compliance with this chapter or another chapter of the Revised Code in any action or proceeding other than an action commenced under division (I) of section 3721.17 of the Revised Code. Those results of an inspection or investigation, that statement of deficiencies, and the findings and deficiencies cited in that statement shall not be used in any court or in any action or proceeding that is pending in any court and are not admissible in evidence in any action or proceeding unless that action or proceeding is an appeal of an action by the department of health under this chapter or is an action by any department or agency of the state to enforce this chapter or another chapter of the Revised Code. (2) Nothing in division (F)(1) of this section prohibits the results of an inspection or investigation conducted under this section from being used in a criminal investigation or prosecution.
{¶ 33} Thus, nothing in the prior statute prohibited the use of investigation results in advertising or other matters, or governed their use; the statute simply restricted the use of investigation results in court proceedings.
{¶ 34} After the amendments,
(F)(1) Except as otherwise provided in this section, the results of an inspection or investigation of a home that is conducted under this section, including any statement of deficiencies and all findings and deficiencies cited in the statement on the basis of the inspection or investigation, shall be used solely to determine the home‘s compliance with this chapter or another chapter of the Revised Code in any action or proceeding other than
an action commenced under division (I) of section 3721.17 of the Revised Code. Those results of an inspection or investigation, that statement of deficiencies, and the findings and deficiencies cited in that statement shall not be used in either of the following: (a) Any court or in any action or proceeding that is pending in any court and are not admissible in evidence in any action or proceeding unless that action or proceeding is an appeal of an action by the department of health under this chapter or is an action by any department or agency of the state to enforce this chapter or another chapter of the Revised Code;
(b) An advertisement, unless the advertisement includes all of the following:
(i) The date the inspection or investigation was conducted;
(ii) A statement that the director of health inspects all homes at least once every fifteen months;
(iii) If a finding or deficiency cited in the statement of deficiencies has been substantially corrected, a statement that the finding or deficiency has been substantially corrected and the date that the finding or deficiency was substantially corrected;
(iv) The number of findings and deficiencies cited in the statement of deficiencies on the basis of the inspection or investigation;
(v) The average number of findings and deficiencies cited in a statement of deficiencies on the basis of an inspection or investigation conducted under this section during the same calendar year as the
inspection or investigation used in the advertisement; (vi) A statement that the advertisement is neither authorized nor endorsed by the department of health or any other government agency.
(2) Nothing in division (F)(1) of this section prohibits the results of an inspection or investigation conducted under this section from being used in a criminal investigation or prosecution.
{¶ 35} The trial court concluded that these amendments would eliminate any false impression about a recent violation, since the date of the citation was now required to be included in advertisements. Furthermore, the amended statute required the number of citations to be included, as well as whether those citations had been substantially remedied. The trial court, therefore, held that the changes in the law had mooted the matter, and rejected Heartland‘s argument that the court should issue an injunction to prevent future violations. In this regard, the court found that an injunction requiring a defendant to simply follow the law was too broad and vague to be enforceable.
{¶ 36} Under the mootness doctrine, ” ‘American courts will not decide * * * cases in which there is no longer any actual controversy.’ ” In re A.G., 139 Ohio St.3d 572, 2014-Ohio-2597, 13 N.E.3d 1146, ¶ 37, quoting Black‘s Law Dictionary 1100 (9th Ed.2009). This is based on the fact that courts have no duty “to decide purely academic or abstract questions.” (Citation omitted.) James A. Keller, Inc. v. Flaherty, 74 Ohio App.3d 788, 791, 600 N.E.2d 736 (10th Dist.1991). Dismissals on the basis of mootness present questions of law and are reviewed de novo. (Citation omitted.) Brown v. Dayton, 2d Dist. Montgomery No. 24900, 2012-Ohio-3493, ¶ 9.
{¶ 37} In its brief, Heartland argues that in order for mootness to apply in lawsuits
{¶ 38} Although the case law Heartland cites is federal, Ohio courts have held that “[a]n action for declaratory and/or injunctive relief, may, however, become moot if the defendant demonstrates that ‘* * * “there is no reasonable expectation that the wrong will be repeated.” * * * ’ ” Ohio Academy of Nursing Homes, Inc. v. Barry, 10th Dist. Franklin No. 92AP-1266, 1993 WL 186656, *3 (May 25, 1993), quoting United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953). In Barry, the court concluded that issues pertaining to the legality of a reduction in the Medicaid reimbursement rate by a state agency were not rendered moot by the voluntary reinstatement of the original reimbursement rate, because the agency failed to provide evidence of this alleged fact, and additionally, had not provided evidence that the wrongful reductions would not be repeated. Id. In W.T. Grant, the court stressed that the defendant‘s burden of showing no reasonable expectation that the wrong would be repeated is a “heavy one.” W.T. Grant at 633.
{¶ 39} This is consistent with the exception to the mootness doctrine that “arises when the claims raised are capable of repetition, yet evading review. This exception applies when the challenged action is too short in duration to be fully litigated before its cessation or expiration, and there is a reasonable expectation that the same complaining party will be subject to the same action again.” (Citation omitted.) State ex rel. Dispatch Printing Co. v. Louden, 91 Ohio St.3d 61, 64, 741 N.E.2d 517 (2001). “An injury is not deemed capable of repetition merely because someone, at sometime, [sic] might suffer
{¶ 40} According to the information in the case before us, McHugh voluntarily agreed to stop publishing the advertisement during the litigation. In addition, McHugh submitted an affidavit in connection with its summary judgment motion, conceding that under the law as amended, McHugh would not and could not publish the same advertisement in Ohio, now or in the future. Affidavit of Michael J. Fuller, attached as Ex. A to McHugh‘s Reply in Support of its Motion for Summary Judgment. Heartland contends that this is insufficient for several reasons. First, Fuller did not sign the affidavit in a representative capacity. Second, an assurance to comply with the law is of no effect.
{¶ 41} We disagree with Heartland‘s initial proposition. Under
{¶ 42} “Judicial admissions are formal statements, made by a party or a party‘s
{¶ 43} Thus, when McHugh submitted Fuller‘s affidavit, it was a judicial admission of the statements contained in the affidavit, and McHugh could not, thereafter, challenge the fact that McHugh was prohibited from publishing the advertisement it had previously submitted to the Urbana newspaper. As an additional matter, Fuller specifically identified himself in his affidavit as a member/manager of McHugh. Clearly, he was speaking in a representative capacity.
{¶ 44} The matters at issue were the publication of the advertisement as well as preventing it from continuing to be published. Heartland indicated from the very beginning of the case that it was not seeking damages, as they would be very difficult to quantify. See Transcript of December 24, 2014 TRO Hearing, p. 19.4 Since relief from publication was obtained, the issue is whether there was any further relief the court could
{¶ 45}
(A) A person engages in a deceptive trade practice when, in the course of the person‘s business, vocation, or occupation, the person does any of the following:
* * *
(2) Causes likelihood of confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
(3) Causes likelihood of confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another;
* * *
(7) Represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;
* * *
(9) Represents that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;
(10) Disparages the goods, services, or business of another by false representation of fact * * *.
{¶ 46}
(A)(1) A person who is likely to be damaged by a person who commits a deceptive trade practice that is listed in division (A) of section 4165.02 of the Revised Code may commence a civil action for injunctive relief against the other person, and the court of common pleas involved in that action may grant injunctive relief based on the principles of equity and on the terms that the court considers reasonable. Proof of monetary damage or loss of profits is not required in a civil action commenced under division (A)(1) of this section.
(Emphasis added.)
{¶ 47}
The court may award in accordance with this division reasonable attorney‘s fees to the prevailing party in either type of civil action authorized by division (A) of this section. An award of attorney‘s fees may be assessed against a plaintiff if the court finds that the plaintiff knew the action to be groundless. An award of attorney‘s fees may be assessed against a defendant if the court finds that the defendant has willfully engaged in a trade practice listed in division (A) of section 4165.02 of the Revised Code knowing it to be deceptive.
{¶ 48} Heartland sought injunctive relief and attorney fees in the complaint, and with respect to these issues, the case was not moot. Instead of deciding the issues in
{¶ 49} The statute clearly states that attorney fees may be granted under either type of action brought under
{¶ 50} Ohio does not have a significant amount of case law relating to the DTPA. As a result, “where claims are made under Ohio common law and the deceptive trade practices statutes, courts are to apply essentially the same analysis as that applied in assessing unfair competition under the federal statutes.” (Citation omitted.) Cesare v. Work, 36 Ohio App.3d 26, 28, 520 N.E.2d 586 (9th Dist.1987). Accord Leventhal & Assoc., Inc. v. Thomson Cent. Ohio, 128 Ohio App.3d 188, 196, 714 N.E.2d 418 (10th Dist.1998).
{¶ 51} In Cesare, the court concluded that the plaintiff was entitled to a permanent injunction because he successfully demonstrated a “likelihood of confusion” over whether customers purchased tickets to one band‘s performance, thinking they were going to see another band. However, because the plaintiff had not demonstrated that he had been injured, he was not entitled to actual damages. Cesare at 28.
{¶ 52} Notably, in Cesare, the trial court awarded the plaintiff attorney fees as the “prevailing party,” and the court of appeals agreed that there was sufficient evidence for the trial court to make an award of reasonable attorney fees. Id. at 29. This occurred even though the plaintiff obtained only injunctive relief.
{¶ 53} Based on the preceding discussion, the trial court erred in concluding that the case was moot. Even if McHugh conceded that it would no longer run the same advertisement, Heartland was entitled to have the court consider whether McHugh willfully committed a deceptive trade practice, and, if so, whether Heartland was entitled to attorney fees. Accordingly, the First Assignment of Error is sustained. However, whether this error is prejudicial depends on our resolution of the Second Assignment of Error. Specifically, the trial court alternatively rendered summary judgment on Heartland‘s claim under the DTPA. If the trial court was correct in granting summary judgment, any error in finding the case moot would be harmless.
III. Did Heartland‘s Claim under the DTPA Fail?
The Trial Court Erred by Holding Heartland of Urbana‘s Claim Arising Under the Deceptive Trade Practices Act Fails Pursuant to Diamond Co. v. Gentry Acquisition Corp. and the Lanham Act.
{¶ 55} In its brief, Heartland combines its discussion of the First and Second Assignment of Error. However, the basic arguments being made under the Second Assignment of Error are, first, that the trial court‘s comments about Diamond Co. v. Gentry Acquisition Corp., 48 Ohio Misc.2d 1, 531 N.E.2d 777 (C.P.1988), are dicta, and second, that the trial court failed to recognize that Heartland‘s claim under the DTPA involves several branches, rather than just a “false advertising” claim as discussed in Diamond Co. In this context, Heartland relies on the enumerated deceptive trade practices in
{¶ 56} Finally, Heartland contends that the test outlined in Diamond Co. conflicts with the DTPA. Specifically, according to Heartland, Diamond Co. requires demonstration of some adverse impact other than a plaintiff‘s subjective belief that he or she is injured or likely to be injured. Heartland contends this standard imposes too heavy a burden.
{¶ 57} After finding the claims moot, the trial court went on to note that even if the case were not moot, McHugh would be entitled to summary judgment on the DTPA claim. In this regard, the court reasoned that Heartland failed, under the test set out in Diamond Co., to demonstrate any causal connection between the allegedly false statements and any harm resulting to Heartland. If the case, indeed, were moot, the trial court‘s comments about summary judgment would have been dicta. However, since the trial
{¶ 58} Concerning summary judgment, “[a] trial court may grant a moving party summary judgment pursuant to
{¶ 59} As was noted earlier, Ohio courts look to case law interpreting the Lanham Act for guidance when considering the DTPA. See, e.g., Dawson v. Blockbuster, Inc., 8th Dist. Cuyahoga No. 86451, 2006-Ohio-1240, ¶ 23 (noting that “[t]he Ohio Deceptive Trade Practices Act is substantially similar to the federal Lanham Act * * * .“)
{¶ 60} Section 43(a) of the Lanham Act,
{¶ 61}
{¶ 62} “Two different theories of recovery are available to a plaintiff who brings a false advertising action under § 43(a) of the Lanham Act. First, the plaintiff can demonstrate that the challenged advertisement is literally false, i.e., false on its face.” (Citation omitted.) Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 153 (2d Cir.2007). “When an advertisement is shown to be literally or facially false, consumer deception is presumed, and ‘the court may grant relief without reference to the advertisement‘s [actual] impact on the buying public.‘” Id., quoting Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir.1982), abrogated on other grounds by
{¶ 63} In Time Warner, the plaintiff proceeded strictly on a literal falsity claim. One commercial was found to contain a literally false statement, and the court of appeals affirmed a preliminary injunction that had been granted based on a presumption of irreparable harm. Time Warner at 152 and 154. In discussing a second commercial, in which the statements were not “literally false,” the court concluded that it would formally adopt a doctrine “known in other circuits as the ‘false by necessary implication’ doctrine.” Id. at 158, citing cases from the First, Third, Fourth, and Ninth Circuits.5 The court noted that:
Under this doctrine, a district court evaluating whether an advertisement is literally false “must analyze the message conveyed in full context,” [Castrol v.] Pennzoil Co., 987 F.2d [939] at 946 [(3d Cir.1993)], i.e., it “must consider the advertisement in its entirety and not ... engage in disputatious dissection,” Avis Rent A Car [System, Inc. v. Hertz Corp.], 782 F.2d [381] at 385 [(2d Cir.1986)] (internal quotation marks omitted). If the words or images, considered in context, necessarily imply a false message,
the advertisement is literally false and no extrinsic evidence of consumer confusion is required.
{¶ 64} The court stressed that if the language or graphic in the advertisement “is susceptible to more than one reasonable interpretation, the advertisement cannot be literally false.” (Citation omitted.) Id. In such situations, factfinders ” ‘might conclude that the message conveyed by a particular advertisement remains so balanced between several plausible meanings that the claim made by the advertisement is too uncertain to serve as the basis of a literal falsity claim * * *.’ ” Id., quoting Clorox Co. Puerto Rico v. Proctor & Gamble Commercial Co., 228 F.3d 24, 35 (1st Cir.2000). Accord Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 63 (2d Cir.2016).
{¶ 65} The rationale for the presumption of harm is that the injury in misleading, non-comparative commercials “accrues equally to all competitors; none is more likely to suffer from the offending broadcasts than any other.” McNeilab, Inc. v. Am. Home Products Corp., 848 F.2d 34, 38 (2d Cir.1988). As a result, in such situations, “some indication of actual injury and causation” is required to ensure that a plaintiff‘s injury is not speculative. Id. In contrast, “[a] misleading comparison to a specific product necessarily diminishes that product‘s value in the minds of the consumer.” Id. “This is analogous to a Lanham Act trademark dispute. An infringing mark, by its nature, detracts from the value of the mark with which it is confused * * * [and] irreparable harm will be presumed.” Id. Accord Time Warner at 162. The same observations are equally applicable to disparagement of services of a specific provider, like Heartland.
{¶ 66} After reviewing the second advertisement under these standards, the court
{¶ 67} In Diamond Co., the Common Pleas Court of Cuyahoga County referred to federal law, and stated that:
The generally required proofs on a claim of false or deceptive advertising are:
(a) a false statement, or a statement which is misleading;
(b) which statement has actually deceived or has the tendency to deceive a substantial segment of the target audience;
(c) the deception is material in that it is likely to influence a purchasing decision; and
(d) The plaintiff has been or is likely to be injured as a result.
Diamond Co., 48 Ohio Misc.2d at 5, 531 N.E.2d 777, citing Am. Rockwool, Inc. v. Owens-Corning Fiberglas Corp., 640 F.Supp. 1411, 1419 (E.D.N.C.1986). (Other citation omitted.)
{¶ 68} Consistent with Time Warner, the court noted in Diamond Co. that “[i]f a statement in an advertisement is facially false or is susceptible to an objective determination of its falsity, the only issues under the Lanham Act are questions of materiality, causation and damages. * * * If the challenged statement is not objectively or facially false, the plaintiff then has the burden of introducing some evidence that the statement in question would deceive a substantial number of the group at which the statement is aimed.” (Citations omitted.) Id. at 5-6.
{¶ 70} In Johnson (the case cited by Diamond Co.), the court of appeals reversed the dismissal of the plaintiff‘s claims after a bench trial. The dismissal had been based on the plaintiff‘s failure to carry its burden to show damage or likelihood of damage. Johnson at 189.
{¶ 71} The case involved Johnson‘s claims that the defendant, Carter-Wallace, made false claims for its product (NAIR with baby oil), and that Carter was “packaging and advertising NAIR so as to give consumers the false impression that NAIR is a Johnson & Johnson product.” Id. at 188. Johnson promoted its own product, baby oil, “as a substitute for shaving cream and is used for removal of hair by shaving.” Id. at 190. The court of appeals noted that “Johnson‘s false representation claim alleges that Carter‘s ‘NAIR with baby oil’ campaign falsely represents to consumers that the baby oil in NAIR has moisturizing and softening effect on the skin of the user.” Id. at 188. After reviewing the evidence, the court of appeals found that Johnson had provided sufficient evidence to support its claim, and reversed the dismissal of the case.
{¶ 72} In Johnson, the court of appeals rejected the district court‘s conclusion that
{¶ 73} Unlike Time Warner and McNeilab, however, Johnson involved a non-comparative advertisement, rather than a specific comparison of the parties. See McNeilab, 848 F.2d at 38. Likewise, Diamond Co. involved a non-comparative commercial, in which the competitor‘s name was not mentioned. See Diamond Co., 48 Ohio Misc.2d at 4, 531 N.E.2d 777 (the defendant‘s ads referred to “regular-priced stores and departments,” and not to any competitor by name).
{¶ 74} In McNeilab, the court stressed that:
Both Coca-Cola [v. Tropicana Prods., Inc., 690 F.2d 312 (2d Cir.1982)] and Johnson & Johnson [v. Carter-Wallace, Inc., 631 F.2d 186, (2d Cir.1980)] involved misleading, non-comparative commercials which touted the benefits of the product advertised but made no direct reference to any competitor‘s product. The injury in such cases accrues equally to
all competitors; none is more likely to suffer from the offending broadcasts than any other. The Lanham Act, however, only authorizes actions by one “who believes that he is or is likely to be damaged.” 15 U.S.C. § 1125(a) . Thus, we required some indication of actual injury and causation to satisfy Lanham Act standing requirements and to ensure a plaintiff‘s injury was not speculative. See Johnson & Johnson, 631 F.2d at 189. This case, by contrast, presents a false comparative advertising claim. Thus, the concerns voiced in Coca-Cola and Johnson & Johnson regarding speculative injury do not arise. A misleading comparison to a specific competing product necessarily diminishes that product‘s value in the minds of the consumer.
McNeilab at 38. See also Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247, 259 (2d Cir.2014). Accordingly, neither Diamond Co. nor Johnson is pertinent or controlling in the case before us, where the advertisement in question refers directly to the plaintiff. The appropriate standard is taken from decisions like McNeilab, Time Warner, and Merck, which discuss misleading advertisements identifying a specific party.
{¶ 75} Furthermore, “[a] predicate finding of intentional deception, as a major part of the defendant‘s marketing efforts, contained in comparative advertising, encompasses sufficient harm to justify a rebuttable presumption of causation and injury in fact.” (Emphasis sic.) Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1336 (8th Cir.1997). Accord Merck at 260.
{¶ 76} After applying the above standards to the case before us, which involves comparative advertising (identifying the specific party), we conclude that McHugh‘s ad is
{¶ 77} When the advertisement was published, McHugh, a law firm, would have known that any claims based on the June 24, 2010 citations were barred due to the statute of limitations — one year for medical claims pursuant to
{¶ 78} Furthermore, the only reasonable conclusion is that the advertisement falsely implied Heartland was a facility where patients were being exposed to very dangerous conditions, including death, and that McHugh made impliedly false statements intended to deceive customers. As a result, Heartland‘s services were necessarily diminished in the minds of consumers, since Heartland was directly identified. McNeilab, 848 F.2d at 38. Furthermore, in view of the intentional deception, a rebuttable
{¶ 79} In Internatl. Diamond Exchange Jewelers, Inc. v. U.S. Diamond & Gold Jewelers, Inc., 70 Ohio App.3d 667, 591 N.E.2d 881 (2d Dist.1991), we found the opinion in Diamond Co. “well-reasoned,” and adopted it. Id. at 676. However, although our own case involved specific reference to a competitor, we did not consider the distinctions between non-comparative advertising and advertising identifying specific competitors. This may be because the parties did not bring the distinction to our attention. In addition, the doctrine was not as well-known at the time. For example, the Second Circuit only formally adopted it in 2007. Time Warner, 497 F.3d at 158. As a result, our decision is not a full consideration of the matter.
{¶ 80} Nonetheless, Internatl. Diamond is not controlling because it dealt only with the issue of whether a grant of a preliminary injunction should be stayed pending the outcome of a permanent injunction hearing, and not with a judgment on the merits of the case. Id. at 669. Also, in contrast to the case before us, we concluded in Internatl. Diamond that the comments in the advertisement were not misleading, but were fair comment, and that the plaintiff was unlikely to prevail on the merits. Id. at 677.
{¶ 81} Heartland‘s final point is that the trial court failed to consider its five separate claims under the DTPA. At pages 10-11 of its brief, Heartland discusses how the content of the advertisement qualifies as a deceptive trade practice under each prong. For
{¶ 82} Based on the preceding discussion, the Second Assignment of Error is sustained.
IV. Failure to Grant a Mandatory Injunction
{¶ 83} Heartland‘s Third Assignment of Error states that:
The Trial Court Erred by Finding Heartland of Urbana‘s Failure to Amend Its Complaint to “Add a Request for a Mandatory Injunction, in the Form of a Retraction” Precluded the Court From Granting Such Relief.
{¶ 84} Under this assignment of error, Heartland contends that the trial court erred in concluding that it could not grant a “mandatory injunction” because Heartland failed to add a request for this form of relief in its complaint. Heartland argues that it generally asked for injunctive relief in the complaint, and that the allegations in the complaint were sufficient to be construed as a request for retrospective relief in the form of a retraction of the advertisement.
{¶ 85}
{¶ 86} In the complaint, Heartland asked the trial court for an injunction and such further equitable relief as the court deemed appropriate. Additionally, Heartland filed a motion for a preliminary and permanent injunction, and asked the trial court in its memorandum to require McHugh to publish a full-page retraction of its prior advertisement.
{¶ 87} “A prohibitory injunction preserves the status quo by enjoining a defendant from performing the challenged acts in the future. * * * A mandatory injunction, however, is an extraordinary remedy that compels the defendant to restore a party‘s rights through an affirmative action. * * * The distinction between these two categories of injunctive relief can best be summed up as follows: a prohibitory injunction is used to prevent a future injury, but a mandatory injunction is used to remedy past injuries.” (Citations omitted.) State ex rel. Gen. Motors Corp. v. Indus. Comm., 117 Ohio St.3d 480, 2008-Ohio-1593, 884 N.E.2d 1075, ¶ 12. For example, in Gratz v. Lake Erie & W. RR. Co., 76 Ohio St. 230, 233, 81 N.E. 239 (1907), a railroad attempted to obtain a mandatory injunction for a property owner to remove a crossing he had constructed over the railroad.
{¶ 88} Similarly, we noted that “a mandatory injunction is a proper remedy for an adjoining landowner to seek for the purpose of compelling the removal of an encroachment.” Miller v. W. Carrollton, 91 Ohio App.3d 291, 296, 632 N.E.2d 582 (2d Dist.1993). In Miller, we observed that mandatory injunctions have a “drastic character” and courts should “consider and weigh the relative conveniences and comparative injuries to the parties which would result * * * .” Id. In light of this standard, we concluded that the trial court had erred in issuing a mandatory injunction requiring parts of a car
{¶ 89} Publishing a retraction of an advertisement in a newspaper does not appear to qualify as the type of remedy that has the “drastic character” of a mandatory injunction. Instead, it appears to be the type of equitable relief that a court could easily order where money damages are not being sought.
{¶ 90} “The function of equitable relief is to supplement the law where the law is insufficient to remedy a wrong.” Barone v. Barone, 11th Dist. Geauga No. 2004-G-2575, 2005-Ohio-4479, ¶ 17, citing Mosesson v. Rach, 7th Dist. Mahoning No. 99 CA 321, 2001 WL 315236, *2, fn.1 (Mar. 28, 2001). “In short, a court‘s equitable powers may be invoked to provide the flexibility necessary to moderate unjust results.” Id. “Under the prayer for general equitable relief, the Court may grant any relief that is consistent with the pleadings and the evidence.” (Citations omitted.) Suburban Home Mortg. Co. v. Hopwood, 83 Ohio App. 115, 123-24, 81 N.E.2d 387 (2d Dist.1948).
{¶ 91} Under the circumstances, we conclude that a request for retraction of the advertisement was sufficiently pled, and that the trial court erred in concluding otherwise. Accordingly, the Third Assignment of Error is sustained.
V. Conclusion
{¶ 92} All of Heartland‘s assignments of error having been sustained, the judgment of the trial court is reversed, and this cause is remanded for further proceedings.
HALL, J., concurring:
{¶ 93} I agree with the well-reasoned lead opinion and join wholeheartedly. I write separately only to note that appellant‘s argument that there are five possible violations of the DTPA being
Robert M. Anspach
J. Randall Engwert
Joseph S. Center
Thomas P. Mannion
Judd R. Uhl
Michelle L. Gorman
Hon. Nick A. Selvaggio