Cascade initially sued defendant KFI alleging that certain
yarns it sold were mislabeled as to fiber content in violation of the Lanham
Act and Washington state law. KFI
counterclaimed for defamation and false advertising of certain Cascade yarns as
to fiber content or country of origin.
The fiber content claims were dismissed on motions for summary judgment,
leaving KFI’s counterclaims for defamation and false labeling as to country of
origin. Cascade then separately sued KFI
for state and federal false advertising, alleging country of origin
mislabeling; these were the claims presently before the court.
The complaint alleged that KFI distributed yarns branded as
Mondial and Katia. Mondial is an Italian company and Katia is based in Spain. Before 2010, Mondial yarns supplied to KFI
were labeled “Made in Italy.” Katia
yarns were labeled as made in Spain, but KFI allegedly knew that at least one
was actually made in Italy. Sometime
after late 2010, Mondial began sourcing from Turkey and China and ceased
listing a country of origin on many labels, while other Mondial yarns were
labeled “Made in China.” Katia also
began importing yarn from Turkey and China and ceased to list a country of
origin on many of the labels. Identifying a premium-priced yarn as “Made in
China” would allegedly be unattractive to consumers. The court found these allegations sufficient:
“While Cascade will have to identify the specific yarns and provide proof in
order to prove this allegation and prevail on the merits of its claims, it need
not provide such specificity at the pleading stage.”
KFI argued that failing to identify a country of origin
wasn’t false labeling. It contended that
the Wool Products Labeling Act requires that products be labeled “with the name
of the country where such products were processed or manufactured.” The FTC
explained that the phrase “made in” or “product of” isn’t required with the
country of origin unless “needed to avoid confusion or deception.” Thus, KFI
concluded, Katia labels displaying Katia’s address in Barcelona, Spain,
properly indicated the country of origin. But that would only be so if the yarn
were actually produced or manufactured in Spain. And the complaint alleged that
some Katia yarns originated in China or Turkey, making a label listing only
Spain potentially false.
KFI also argued that six of the seven accused Mondial yarns
were properly labeled. It attached
copies of the labels to its motion, including three “Made in China” labels
(apparently done via sticker). Cascade
offered its own copies of the labels of the same three yarns stating “Made in
Italy.” This extrinsic evidence was
irrelevant to a motion to dismiss in the absence of authentication about chain
of custody and time of sale or purchase.
Thus, the allegations survived a motion to dismiss.
KFI argued that the complaint violated rules against
claim-splitting. But the allegations of
false advertising about yarn content in the earlier case were not based on the
same set of facts as the allegations here, even though they were both Lanham
Act false advertising claims. “The facts to be offered in proof are entirely
different; there is no overlap whatsoever between a claim that a label
misstates the fiber content of a yarn and a claim that the label misstates the
country of origin.”
Posts
No comments:
Post a Comment