Monday, April 10, 2017

Court finds materiality of color questionable

Spruce Environmental Technologies, Inc. v. Festa Radon Technologies, Co., No. 15-11521, --- F. Supp. 3d ----, 2017 WL 1246327 (D. Mass. Apr. 3, 2017)

The parties compete in the radon extraction business. Spruce claimed that Festa falsely advertised its radon extraction fans in violation of the Lanham Act; the Massachusetts Consumer Protection Act, M.G.L. ch. 93A; M.G.L. c. 266, § 91 prohibiting false/unfair ads; and the common law of commercial disparagement. Festa counterclaimed similarly. Spruce filed a motion for partial summary judgment, which was denied.

Previously, the court enjoined Festa from using inaccurate photos of Spruce’s fans and representing that Festa fans have Energy Star and Home Ventilating Institute (HVI) certifications, and enjoined Spruce from claiming that its fans were Energy Star certified. 

Spruce argued that it was entitled to summary judgment on its claim that Festa’s promotions violated the Lanham Act and Chapter 93A because they include a photo of a bright yellow Spruce fan when the fans are actually a different shade of yellow or greyish-brown, which is material because color is an inherent quality and because one of its potential customers suggested in an email that color would affect his purchase decision.  But there were genuine issues of material fact about whether the photo properly represented the fans; there was evidence that the photo wasn’t manipulated and thus might not be literally false, and the fans did become more yellow over time.  Also, the email was hearsay and there was no other evidence of materiality.  “[I]t is unclear whether consumers would find that the difference between the bright yellow in the advertisement and the yellow tint that admittedly develops is an inherent quality.” Also, since the fan was supposed to remove radon, not to be decorative, color might never be an inherent quality.  Injury was also a matter for factfinding.

Likewise for Festa’s Energy Star rating, which Festa conceded was expired at the time of the ads. Spruce didn’t show that it was injured, and there was an unclean hands problem as well; Spruce also made literally false statements that two models were Energy Star rated.  Similarly, Festa allegedly falsely advertised using photos that included HVI certification labels even though that certification had expired. Festa responded that the small labels in the stock photos were indecipherable and there was no evidence that consumers were materially misled; the court agreed that there were genuine factual issues.

Similar factual issues precluded summary judgment on Festa’s counterclaim.

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