Monday, November 21, 2016

Truthful report about injunction not misleading, even if injunction shouldn't have been issued

Peek v. Whittaker, 2016 WL 6806265,  No. 13-cv-1188 (W.D. Pa. Nov. 17, 2016)

The parties, floor care businesses, are in a litigation deathmatch; this case is a follow-on to a state court lawsuit.  Whittaker sold carpet cleaning machines and fluids to other businesses that needed to clean their carpets. Whittaker’s Director of Sales was Paul Offutt, who worked under a contract that included a non-compete provision.  When Whittaker told Offutt that Offutt’s contract would not be renewed upon its expiration in June 2008, Stephen Peek told Offutt “The hell with them. Why don’t you look into doing something with me? Let’s do something together.” The two created Clear Floor Care, LLC and took on another Whittaker employee, who took documents with him.

“Whittaker got wind of this, and sued in state court to nip this new venture in the bud.”  He obtained a preliminary injunction barring the defendants from directly or indirectly engaging in any business that competed with Whittaker, soliciting current, former, or prospective customers of Whittaker, soliciting employees of Whittaker, or using any of Whittaker’s trade secrets. Several years later, in April 2013, “after extended discovery, and after the non-compete provision in Offutt’s contract had timed out, the state court went in the other direction and granted summary judgment to Peek et al., concluding that Whittaker was unable to prove its claims that the state court defendants had actually taken or used any trade secrets.”

Peek then sued, arguing that the state court lawsuit was baseless, and that Whittaker knew as much from Day One.  The court rejected Lanham Act claims based on Whittaker’s statements about the lawsuit.  Whittaker sent the preliminary injunction order to three people who worked for two companies (Tandus and Shaw Carpet). These companies were “carpet mills” who weren’t customers of Whittaker nor potential customers of Clear Floor Care, LLC, but they make carpet cleaning and maintenance recommendations to their customers.

By contrast, the parties’ clients or potential clients are organizations in need of carpet cleaning equipment, such as convention centers and personal care facilities. There was no evidence that any such entity received a copy of the preliminary injunction order. Thus, the dissemination wasn’t “commercial advertising or promotion.”  Even if the carpet mills had constituted a relevant purchasing public, dissemination to three people wouldn’t be enough.

Moreover, Peek couldn’t show deceptiveness.  The preliminary injunction existed, and Peek couldn’t show misleadingness.  Even if the injunction had been procured with false testimony, that wouldn’t deceive relevant purchasers because it was a real injunction.  “It was not as if Whittaker disseminated an injunction that it did not have, or stated that the injunction prohibited the Plaintiffs from doing more than what they were actually prohibited from doing. Whittaker disseminated an actual injunction that had the full force of law.”

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