Willful false advertising insufficient to justify fee award

Eastman Chemical Co. v. Plastipure, Inc., No. A–12–CA–057, 2013 WL 5555373 (W.D. Tex. Oct. 4, 2013)

Previous discussion here.  Based on its successful Lanham Act false advertising trial result, Eastman sought attorneys’ fees and costs (the latter of which it got as a matter of course).  The court found the case unexceptional, at least in the relevant way, and declined to award fees.  Exceptional cases require underlying violations that are “malicious, fraudulent, deliberate, or willful,” and the required level of culpability is high and must be shown by clear and convincing evidence.

This case was really nothing more than a battle of experts, with testimony on both sides. Though the jury found willfulness, that didn’t bind the court on exceptionality.  The case required jurors to “sift through complex scientific testimony,” and the court would’ve upheld a verdict for defendants as well.  “From the evidence presented at trial, reasonable jurors could have found either side’s scientific testing to be flawed.”  Defendants’ belief in the validity of the testing and data underlying their statements was central to their defense theory, and a good faith belief should generally preclude a finding of exceptionality.  “Defendants presented considerable evidence demonstrating their good faith basis for believing the statements they made were true,” except possibly for the claim that plaintiff’s product Tritan itself was harmful to humans (um, seems like a pretty big “except”!).  Though no witness was willing to testify that Tritan was harmful because the relevant testing hasn’t been performed, that exception didn’t make the case exceptional in light of all the facts and circumstances.

Along with the “speculative nature” of liability, Eastman’s failure to prove money damages was also suggestive of nonexceptionality.  Eastman’s expert didn’t survey plastic manufacturers—Eastman’s direct customers—but instead surveyed end consumers, and her methodology was seriously called into question.  (The court also criticized her fee, “more than $65,000.00 for a basic Internet survey.”)

Eastman also asked the court to consider defendants’ litigation conduct, but the Fifth Circuit hadn’t endorsed that as a consideration: “the Court believes the safer course is to rely on the actual evidence rather than the squabblings of the attorneys who represented these parties.”  Even if it did consider litigation conduct, the court wouldn’t find the case exceptional.  There’s nothing exceptional about “petty discovery disputes and run-of-the-mill litigation tactics, particularly where both sides have willingly run up their fees to the tune of several million dollars.”  The case was aggressively litigated, but “neither side was sure what this case actually was until the trial was over. Pleaded causes of action, defenses, and other issues melted away as the actual evidence failed to provide any support for the parties’ asserted positions.”  Though Eastman failed even to seek money damages from the jury, before the trial its settlement offer was over $5 million plus other relief.  “Defendants had at least five million good reasons to proceed to trial, as even a total loss at the hands of the jury left Defendants in a better position than settling this case would have.”

In a footnote, the court snarked that this was an “exceptional” case in the lay rather than legal sense, since the lawyers spent more than $7 million on a one-issue case with no damages; the jury resolved the issue in under four hours of deliberation but the parties filed over 185 pages of post-trial motions; and there were multiple discovery disputes that contributed to the “needlessly contentious” litigation. “And who could forget the parties’ generous decision to extend the dispositive motions deadline by five weeks without seeking leave or even giving the Court notice, in violation of this Court’s rules? Truth be told, this case has been, and continues to be, an exceptional example of precisely how not to try a lawsuit.”  (Eek.  I have to say, I’m a bit more sympathetic to plaintiff here, given that defendant’s ads accused it of being harmful to people—that’s pretty disparaging, if untrue, and I can see why they would’ve considered it bet-the-company litigation.  That doesn’t mean the case was pleasant to try, or that every part of the burden can be placed on defendants’ shoulders, though.)