Lumps in materiality survey fail to justify its exclusion

Select Comfort Corp. v. Tempur Sealy Int’l, Inc., No. 13-2451, 2016 WL 5496340 (D. Minn. Sept. 28, 2016)

The court resolves various motions surrounding expert testimony in this false advertising case about the effects of certain comparative claims on Select Comfort Sleep Number mattress sales.  The claims were made mostly through the flyer below, though also allegedly through statements from salespeople, the latter including that Sleep Number beds develop mold and that defendant Mattress Firm chose to stop selling Sleep Number due to quality issues.

flyer

In 2013, the Court granted a TRO enjoining Mattress Firm from making various representations to consumers regarding Select Comfort and its products, but lots of issues remain.

For one thing, the court allowed testimony about calculation of profits to stay in, because disgorgement may be an available remedy even though the court previously granted summary judgment against Select Comfort on the issue of willfulness.  Whether disgorgement is available without willfulness is an issue of law reserved for later.  However, the court excluded testimony about Tempur-Pedic’s total profits from sales of products other than Tempur-Choice, the subject of the comparative ads at issue:

Tempur-Choice is the only Tempur-Pedic product with the same feature as the Sleep Number bed—the ability to separately adjust mattress firmness on either side of the bed. Tempur-Pedic’s other mattress lines (not air-adjustable) vary greatly to the extent that they offer different features and sell at different prices. An accounting of profits under the Lanham Act is intended to award profits on sales that are attributable to infringing conduct. While under a disgorgement model Plaintiff must only prove Tempur-Pedic’s sales, those sales must be of the allegedly falsely advertised products.

The court also excluded a lost profits calculation based on comparing Select Comfort’s sales at stores near defendant Mattress Firm stores versus sales at stores not near Mattress Firm stores.  Because the expert didn’t distinguish between Mattress Firm stores where the salespeople made the statements at issue as part of an organized campaign of disparagement from Mattress Firm stores where there was no evidence of such statements, the damages model was inappropriate bootstrapping: it assumed liability to prove liability.  Nor did the model appropriately account for other differences between stores, such as the amount of local advertising Select Comfort invested in.

Hal Poret conducted a survey for Select Comfort.  One group was used to test the materiality of three statements Mattress Firm sales representatives made with regard to Sleep Number beds; another group was questioned about the flyer or a control version of the flyer that didn’t use “hammocking” imagery or claim that Select Comfort used “commodity foam.”  The flyer groups were asked what they understood the flyer to communicate, such as a comparison between Tempur-Choice and Sleep Number beds. The survey used open-ended questions about what the flyer communicated, then questions about specific sections of the flyers such as as “commodity memory foam” and the “hammocking” imagery. Respondents were then shown the flyer and asked about specific parts, with the specific parts marked with a red box, e.g., “What, if anything, does this phrase (with a red box around it) communicate to you about SLEEP NUMBER beds?” and followups about why the statement was negative or positive (depending on the respondent’s answer) and whether it would affect their purchase intentions.

 

survey flyer with check marks

Poret concluded, based on the closed-ended question, 44% of the test group respondents understood the phrase “commodity foam” to communicate something negative, and 31% of the test group respondents answered that the phrase “commodity” memory foam would make them less likely to purchase a Sleep Number bed. In the closed-ended question, 27.5% of the Test Group respondents answered that that Sleep Number beds allow hammocking, and 55% answered that this section of the ad would negatively impact their likelihood of purchasing a Sleep Number bed.  

Poret also tested statements allegedly made by Mattress Firm sales associates that: (1) the store stopped selling Sleep Number beds because too many customers returned them; (2) the store stopped selling Sleep Number beds because too many customers had problems with them; and (3) Sleep Number beds develop mold.  Poret also asked about additional statements aimed at being “control statements.”  Poret concluded that the test statements were “highly material” because high percentages said that the test statements would influence their decisions.  Respondents also said that the control statements would influence their decisions to various degrees, averaging 14%, which he counted as the relevant noise.  Even after subtracting 14% from the test question results, he concluded that the results still “strongly indicate[d]” that the statements or substantially similar statements were material.

Defendants challenged the survey for having an overinclusive sample population: any individual who purchased any memory foam or adjustable air/memory foam mattress in the past two years, or who planned to purchase any memory foam or adjustable air/memory foam mattress in the next two years. Poret did not limit his sample population to those who purchased or planned to purchase mattresses within the relevant price range, and didn’t control for current owners of the parties’ products.  Further, defendants argued the survey didn’t approximate actual market conditions because of the other information consumers would have encountered in the marketplace and because it forced them to pay attention to and understand the challenged claims, which might not have otherwise happened, especially since Poret circled the challenged claims with red boxes (which has a negative connotation).  The court found that none of these criticisms merited excluding the survey, especially given the presence of a control group.

Mattress Firm also challenged Poret’s use of specific statements to test materiality, arguing that its salespeople didn’t say those exact things.  “Mattress Firm can question Poret about his choice of test statements and a jury can decide how much, if any, weight to afford the survey based on that, and other factors.”  Defendants’ own experts could also criticize Poret for not including other factors that might influence mattress purchases.

A defendant expert witness on polyurethanes, however, didn’t have relevant expertise to testify on the meaning of “commodity foam” to consumers:

Here, there is no evidence that Defendants consulted any expert to determine the meaning of “commodity” before creating their advertisement, and it appears that Fogg’s testimony on this point is being offered as an after-the-fact explanation for a marketing decision. Fogg is a polyurethane expert, not a marketing expert, and he has no particular qualification that would allow him to opine on how a consumer would perceive the meaning of the advertisement.