Friday, August 04, 2017

#1 is puffery, but 2-to-1 preference claims aren't

Trex Co. v. CPG Int’l LLC, No. 17-cv-00005, 2017 WL 3272013 (W.D. Va. Aug. 1, 2017)

Trex sued defendant AZEK, its major competitor in the wood-alternative decking industry, for false advertising.  Trex has the largest market share and largest amount of gross sales in this industry, ahead of AZEK by a substantial margin. With another two or three companiees, they comprise at least 85% of the market, but there are also a number of smaller competitors. The wood-alternative decking industry is apparently also known as the “premium decking” industry.

The court found that most of the challenged claims were puffery, but that one was potentially misleading; a preliminary injunction was denied for want of evidence of consumer deception.

AZEK claimed to be “the #1 in Premium Decking” and “Number One in Premium Decking.” The paragraphs below the statements referenced “the best high-performance building materials available,” AZEK’s “commitment to technology and materials science innovation,” and “our dedication to inspiring design and style.” AZEK advertised that “TimberTech Is the #1 Provider in Design Preference,” following the question, “Looking to build your dream deck?” in a Facebook ad.  AZEK’s CEO also stated at a trade show and in a press release that AZEK is “the preferred premium leader in the categories where we offer products.” AZEK likewise claimed to be “the leader in performance, aesthetics, and innovation” and referenced “the best warranties in the industry.” AZEK also advertised that TimberTech “is a preferred choice 2-to-1 over the competition,” without specific reference to sales volume or market share.   

The court first rejected Trex’s argument that the court should consider all the statements together, as part of one ad campaign.  Instead, it evaluated each separately.  The #1 statements were puffery, even though they identified the relevant industry; the use of “design preference” was just an additional vague term and didn’t convert the puffery into a factual statement.  The statements didn’t refer to sales or come in a context referring to sales or any other specific measure, and they didn’t provide an identifiable person or group who determined that AZEK was #1.  Even the nearby presence of AZEK’s claim that it is “#1 in performance trim,” where AZEK was apparently the market sales leader, didn’t matter—the #1 statements were all “simply too vague to be meaningful at all.”  So too with the “leader” statements, which didn’t identify a measure in which the company leads, such as warranty offerings, variety of products offered, or sales volume.

The “2-to-1” statements, however, were more specific.  Giving a ratio “implies that there is some data to back up the claim,” making them “less vague and more empirical.” And the ratio wasn’t so high that a consumer couldn’t reasonably rely on it. Although sales wasn’t explicitly mentioned in the claim, “the use of the word ‘preferred choice,’ especially when combined with the reasonable ratio given, states a sufficient factual statement that can be false, or at least misleading.”

Still, the court found the statement to be ambiguous.  Trex argued that “the competition” necessarily means all of AZEK’s competitors in the alternative wood decking industry, which would make the claim false. But if “the competition” referred to only some of the minor players in the market, then it would be true. “While this is a strained reading of the statement, and perhaps even an unlikely interpretation, it is also technically true.”  But ambiguity shouldn’t be found just because some “strained” readings can be found—they should be at least equally plausible, according to the cases that discuss similar strained readings.  Anyway, no PI.

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