Monday, May 22, 2017

Suing for false advertising as abuse of process

Bobrick Washroom Equipment, Inc. v. Scranton Products, Inc., 2017 WL 2126320, No. 14-CV-00853 (M.D. Pa. May 16, 2017)

In May 2014 SP sued Bobrick, alleging that it “carefully orchestrated a campaign to scare architects, product specifiers, procurement representatives, building owners, and others in the construction industry into believing that Scranton Products’ toilet partitions are fire hazards, are unsafe and pose health and safety risks if used in building projects across the country.” After SP voluntarily dismissed the claim, Bobrick filed a complaint asserting false advertising and wrongful use of civil proceedings under Pennsylvania’s Dragonetti Act, as well as common law unfair cornpetition and abuse of process claims.

Bobrick’s Lanham Act and unfair competition claims arose from SP’s alleged misrepresentations of “thousands of its high density polyethylene (‘HDPE’) toilet partitions sold for installation in schools and other public and private buildings as being compliant with applicable fire, life safety, and building code requirements.” SP allegedly falsely represented that its HDPE toilet partitions comply with the requirements of the NFPA 286 room-corner test, a fire performance test promulgated by the National Fire Protection Association, even though SP allegedly improperly modified and manipulated the test methodology to produce a favorable result, thereby invalidating the test, and sold toilet partitions with a different chemical composition and physical structure than those it claimed to have successfully tested under NFPA 286.

As for the abuse of process-type claims, Bobrick alleged that SP knew or should have known that its central claims—similar to those challenged in the false advertising claims here—were false, but sued anyway, for “the improper purpose of stifling legitimate competition by Bobrick, silencing Bobrick’s efforts to educate market participants about code requirements in the interest of public safety, and inflicting financial harm on Bobrick for unfair competitive advantage by increasing Bobrick’s costs and otherwise.” The result was “[n]early three years of costly and time-consuming litigation.”  SP also allegedly destroyed numerous relevant documents while contemplating litigation and made discovery more costly in various ways, including by miseading Bobrick and the court.

The court first found that false advertising was cognizable as unfair competition under Pennsylvania common law, which was not limited to passing off.  Then it refused to dismiss the abuse of process claim. “Generally speaking, to recover under a theory of abuse of process, a plaintiff must show that the defendant used legal process against the plaintiff in a way that constituted a perversion of that process and caused harm to the plaintiff.”  Though un-of-the-mill discovery disputes cannot constitute an abuse of process under Pennsylvania law, Bobrick alleged “facts far more detailed and nefarious: that SP knew that some or all of its HDPE toilet partitions did not actually comply with NFPA 286 (i.e., its claims were baseless) yet SP nevertheless continued to prosecute this lawsuit for nearly three years, all while stifling Bobrick’s legitimate discovery efforts for the specific purpose of financially harming Bobrick and gaining a competitive advantage in the marketplace.” 

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