Friday, November 09, 2018

Wipe on, wipe off: after survey excluded, plaintiff wins jury verdict on false advertising windshield protector claim

Illinois Tool Works Inc. v. Rust-Oleum Corporation, 2018 WL 5810327, No. H-17-2084 (S.D. Tex. Jun. 21, 2018)

 ITW’s Rain-X and Rust-Oleum’s RainBrella water repellant product compete in the market for use on vehicle windshields. Rust-Oleum advertised that RainBrella lasted twice as long as Rain-X, as proved by use that lasted over 100 car washes.

The parties sought to exclude each other’s experts’ testimony.  ITW’s expert Berger offered a survey to show consumer perception of Rust-Oleum’s “Last Over 100 Car Washes” statement.  Respondents were qualified if they: (1) were eighteen years of age or older; (2) owned or leased a personal motor vehicle; and (3) had purchased in the past twelve months an automotive product to maintain or enhance the exterior of their vehicle. The test group was shown a static image of a modified RainBrella package from which the phrase “Lasts 2X Longer” had been digitally removed and in a perspective in which only certain portions of the package were viewable.

The test group was asked: “One of the claims on the package is that it ‘lasts over 100 car washes.’ Do you see this in the ad?” If they said yes, they were asked: “In terms of time (weeks, months, years), how long do you believe that the RainBrella product will last?” The test group respondents were given four answer choices: (1) between zero and fifty years; (2) between one and eleven months; (3) between zero and four weeks; and (4) “Don’t Know.” The average answer was 110.6 weeks. The respondents in the control group were shown the same image used in the test group, but also without “Lasts Over 100 Car Washes.” The average duration answer in that group was 19.8 weeks.

A survey validator fully screened seventy-seven of the 359 respondents with working numbers and found that thirty-seven of the seventy-seven screened respondents didn’t recall taking the survey.

Rust-Oleum hired Akron Rubber Development Laboratory, a third party independent laboratory facility, to test how long the RainBrella and Rain-X products lasted on an automotive windshield. ARDL applied the products to a clean windshield. ARDL mounted the windshield onto a test frame, turned on a water spray, and ran the wiper blades. It continued, checking every 10,000 cycles, until water droplets no longer beaded on approximately 50% of the wiper area. ARDL concluded that “RainBrella and its repellent properties last on average, at least two times longer versus the leading competitor ....”

An in-house ITW test also sought to measure the hydrophobicity (water repellency) of each product and concluded that RainBrella did not last twice as long as Rain-X. Rust-Oleum retained a mechanical engineer to review the parties’ test.

Rust-Oleum succeeded in excluding the survey.  First, the survey didn’t adequately replicate market conditions because it omitted the statement “Lasts 2X Longer” from the image of the RainBrella package, which was important to consumer’s perception.  [Interesting question why the control group didn’t control for this difference—I can see arguments either way.] Second, the universe was overinclusive, because it selected for people interested in protecting their car’s exterior, not the windshield in particular.  Third, the 48% validation failure rate strongly indicated the survey was unreliable.

The question form—suggestive of temporal terms, but not leading—was relevant to the issue in the case and thus didn’t “greatly” affect the survey’s reliability, nor did drawing respondents’ attention to specific language on the package. Still, the other flaws rendered the survey “fundamentally flawed and unreliable.”

ITW’s motion to exclude Rust-Oleum’s expert didn’t fare so well.  Although Dr. Brani was not a chemist and lacked experience testing hydrophobicity, he used lab coursework in his teaching and worked at an independent law where he “routinely draft[ed] scientifically based testing protocols and execute[d] this testing to provide greater insight for various clients including insurance adjusters, attorneys, manufacturers of products, and designers of products.”  Thus, his knowledge of and experience with laboratory testing enabled him to assist the trier of fact here.

However, that was limited to his first set of opinions: conclusions regarding generally accepted methods of scientific testing, including qualitative and quantitative testing.  He also offered conclusions regarding the reliability of the ARDL Test and the ITW Test, and the ultimate conclusion that the ARDL Test substantiated Rust-Oleum’s claim that RainBrella “Lasts 2X Longer.”  At the Daubert hearing, he indicated that he couldn’t testify as to whether the ARDL Test procedures were superior to other test procedure, nullifying his written opinion that the ARDL Test was implemented in a reliable way and the ITW Test was not. His final conclusion that the ARDL test substantiated Rust-Oleum’s claim also conflicted with his testimony that he could not opine as to the actual implementation or execution of the ARDL Test, and Rust-Oleum’s counsel represented to the Court that he wouldn’t be testifying as to whether the ARDL Test results are proper. This discrepancy showed that his report’s conclusions on this point were unreliable.

Illinois Tool Works Inc. v. Rust-Oleum Corporation, --- F.Supp.3d ----, 2018 WL 5810326, No. H-17-2084 (S.D. Tex. Oct. 30, 2018)

The jury found in Rain-X’s favor even without the survey.

Here, the court granted a permanent injunction. “The potential for ongoing harm if a defendant continues to make similar false or misleading statements and the likely impossibility of quantifying the extent of harm suffered as a result of false or misleading statements weigh in favor of finding irreparable injury.” There was testimony that ITW’s reputation and brand were harmed as a result of the challenged claims, which supported a finding of irreparable injury.  The balance of hardships weighed in favor of an injunction, but not a recall; the public interest in truthful advertising also supported an injunction.

The jury was instructed that “can award ITW the profits Rust-Oleum earned as a result of its false advertising if [it] finds ITW has shown by a preponderance of the evidence that Rust-Oleum benefited from its false advertising” and that it “may award Rust-Oleum’s profits even if Rust-Oleum’s costs exceed its profits.” The jury awarded profits in the amount of $392,406, and also found Rust-Oleum “acted maliciously, fraudulently, deliberately, or willfully.”

There was no direct evidence of sales diversion, which weighed against a profit award, but there was a strong public interest in making false advertising unprofitable and there was no unreasonable delay in ITW asserting its rights. The court wouldn’t touch the jury award of profits.

The jury also awarded a bit over $925,000 for corrective advertising. Rust-Oleum argued that ITW didn’t engage in pretrial corrective advertising and there was no evidence ITW it would do so in the future. But there was no evidence that it wouldn’t, and the evidence showed Rust-Oleum spent $1,318,023 on advertising. Though the jury could award money for corrective advertising, the size here was punitive, and instead awarded 25% of Rust-Oleum’s ad expenditures, according to the principles of equity: a shade under $330,000.

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