Friday, November 03, 2017

"look like new forever" might not be puffery in context of technological innovation claims

EP Henry Corp. v. Cambridge Pavers, Inc., 2017 WL 4948064, No. 17-1538  (D.N.J. Oct. 31, 2017)

Disclosure: I consulted on this case. 

EP Henry and Cambridge compete in the market for concrete pavingstones. Cambridge made superiority such as “only Cambridge pavingstones have ArmorTec - a unique process that guarantees the color will never fade, backed by our fully transferable, lifetime guarantee.” Cambridge also claimed that ArmorTec pavers would “always look like new,” they’d would “look like new forever,” and that their color “will never fade.” EP Henry alleged that consumers had told EP Henry distributors that they were misled, and that after purchase they discovered that the pavingstones didn’t continue to look like new and weren’t fade-proof.

The court ruled that, in context of additional claims about advanced technology, phrases like “they’ll look like new forever” and “the color will never fade” weren’t puffery as a matter of law, even though they would be without additional context. “[C]ourts around the country regularly find that, standing alone, language suggesting perpetuity or an indefinite period of time constitutes non-actionable puffery,” but Cambridge’s ad campaign allegedly touts its breakthrough technology, telling potential customers that ArmorTec is a “unique process.”  It was “plausible that a potential customer could reasonably come to the conclusion that Cambridge is not puffing, but has actually found the ‘secret sauce’ to enable pavingstones to ‘look like new forever’ or ensure that ‘the color will never fade.’”

With that out of the way, the New Jersey Consumer Fraud Act claim (if any) failed because the NJCFA only grants standing to consumers and commercial competitors “who are acting as consumers” or who are involved in a “consumer transaction,” but not to commercial competitors generally. Negligent misrepresentation and common law fraud claims failed because EP Henry couldn’t allege reasonable or justifiable reliance on the alleged misstatements. Though EP Henry argued that it reformulated its advertising campaign in response to Cambridge’s alleged misrepresentations, it didn’t allege that it relied upon or believed Cambridge’s alleged misstatements in doing so. The common law unfair practices claim wasn’t recognized by New Jersey, which limits common law unfair competition to (1) the “passing off” of goods or services; (2) unprivileged imitation; and (3) tortious interference.

The Lanham Act false advertising claim, however, survived.  EP Henry didn’t allege “a specific instance of a consumer choosing to purchase pavers from Cambridge over EP Henry because of Cambridge’s false advertising statements,” but that wasn’t required before discovery.  It sufficiently pled that, as a direct competitor, it suffered harm to its reputation and sales by losing customers as a result of Cambridge’s alleged misstatements. Without evidence from third parties and discovery, however, Cambridge could still be entitled to summary judgment.

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