Skedco, Inc. v. ARC Products, LLC, 2014 WL 2465577, No.
3:13–CV–00696 (D. Or. Jun. 2, 2014)
The parties compete in the market for emergency medical
rescue equipment, and are suing over false advertising. Plaintiff’s Sked is “an
evacuation sled system designed to quickly evacuate wounded people from
confined spaces, from high angles, in technical rescues, and in traditional
land-based rescues.” Defendant’s Vertical Lift Rescue Sled (VLR Sled) “is an
evacuation device that provides quick transport of a nonambulatory individual
in a difficult rescue situation or a confined space.” Here, the court analyzes
three of defendant’s false advertising counterclaims.
First, ARC alleged that Skedco claimed that the Sked sled was
composed of “Low density E-Z glide polyethylene plastic[,]” commonly referred
to as LDPE, that would begin to melt at 450 degrees F to 500 degrees F. In
fact, ARC alleged, “publically available technical specification materials
demonstrate that LDPE plastic generally starts to melt at the substantially
lower temperature of approximately 248 degrees.” ARC attached an example ad
flyer, and alleged that Skedco distributed it to third parties, precise
identities and dates of distribution to be determined by discovery.
Skedco argued that this pleading flunked Rule 9(b). But ARC
gave Skedco enough to prepare an adequate defense: it identified the allegedly
false statement, its theory of falsity, and an example ad. Though it didn’t
identify a time period or a recipient, or how/if a customer was deceived, the
Rule 9(b) standards “may be relaxed where the circumstances of the alleged
fraud are peculiarly within the [plaintiff’s] knowledge or are readily
obtainable by him.” Skedco can figure out when it distributed its ad, and
discovery is required for ARC to know to whom Skedco distributed it. As for
deception, ARC sufficiently pled falsity syllogistically, which was enough to
put Skedco on notice of the nature of the claim.
Next claim: “Skedco claims its cross-strap Cobra buckles are
rated at 3,000 pounds, but this claim is materially misleading because the Sked
sled cross-straps are likely to fail where said straps attach to the Sked sled,
and that such failure is likely to occur at a significantly lower weight than
3,000 pounds.” ARC challenged similar representations about Skedco’s lift rope
strength, claimed to be over 5,000 pounds when, according to ARC, the rope
would pull the attachment grommets free from the Sked sled at a lesser weight. These
were allegedly misleading claims, not literally false ones. Skedco argued that
these claims were inadequately pled because ARC didn’t include any details
about actual consumers being misled. But ARC identified the allegedly false
statements and the reasons why they were allegedly misleading, and attached a
relevant ad. “[T]he court finds it near impossible for defendant to allege
which of plaintiff’s customers were actually misled by the advertisement
without the benefit of discovery.” There was adequate notice of the claim. ARC
also argued falsity by necessary implication (which seems like a valid argument
to me, especially given the safety-related nature of the claims), but didn’t plead that; it could seek to amend. (I
didn’t realize you needed to plead your precise subtheory of falsity! If you
do, I don’t quite understand why the court allowed the misleadingness theory to
proceed without allegations about survey evidence or other consumer reaction
evidence.)
Finally, ARC challenged representations about Skedco’s
loading speed. According to ARC, “Skedco’s Carston ‘Bud’ Calkin made assertions
in his capacity as an executive and agent of Skedco in a published
interview titled ‘Cleared for Takeoff,’ which appeared in the publication ‘Military
Medical & Veterans Affairs Forum’ … that an individual person can have an
injured person ready for transport in a Sked sled in a mere 20 seconds and that
Calkin [who told the interviewer he was 75] could perform this ‘routinely,’
when in reality it takes significantly longer for an injured person to be
loaded into and ready for transport into a Sked sled.” The interview appeared
in close proximity to a paid Skedco ad. ARC alleged that in reality it takes
substantially longer to load an injured person.
Skedco argued that statements a journalist attributed to a
Skedco officer weren’t commercial speech. The journalist might not have been
engaging in commercial speech, but “defendant did not bring a claim against the
author.” Calkin’s statements highlighted new features of the Sked sled and
explained their added benefits to customers. The magazine that published the
article claimed to reach a “targeted mailing list” of “the military’s top
leadership,” which is to say Skedco’s primary customer. “The court cannot find
a purpose behind Calkin’s statements other than to promote his company’s
product to potential customers.” Thus, the statements were commercial speech.
They also satisfied the rest of the test for “commercial
advertising and promotion”: the parties competed; the statements were about the
product; they were meant to influence readers of the article to purchase the
Sked sled. Given the targeted audience, Calkin’s statements were disseminated
sufficiently to the relevant purchasing public to constitute promotion. Thus,
they were actionable under the Lanham Act.
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