Vault Cargo Management, LLC v. Rhino U.S.A., Inc., No. 18-cv-01517-H-LL,
2018 WL 5809516 (S.D. Cal. Nov. 6, 2018)
The parties compete to sell products, including a variety of
vehicle straps. Rhino allegedly created the false impression that its products
are made in the United States, even though import records show that the
products are shipped from China. In response to a customer question on Amazon
Marketplace, Rhino said that its products are manufactured overseas, but Vault
also pled examples of Rhino explaining that its products are American made, “hundreds”
of examples of Rhino republishing, approving, or endorsing customer reviews
that state that its products are made in the United States; and one example of Rhino
answering a consumer question on Amazon.com explaining that its products are
made in Naperville, Illinois.
That looks pretty bad, but Vault didn’t show irreparable
harm for preliminary injunction purposes.
Vault showed that its sales varied depending on Rhino’s market activity,
e.g., when Rhino began selling ratchet straps, Vault’s sales declined by 50
percent and when Rhino’s ratchet strap listing is not active, Vault’s ratchet
strap sales double. But those are “simply economic harms that may be recovered
in the ordinary course of litigation.”
As to loss of goodwill and damage to reputation, Vault didn’t provide
enough evidence that Rhino would enjoy brand loyalty built on the false
statements even if Vault wins. A declaration from Vault’s CEO to this effect
was insufficient without further evidence/explanation. In addition, Vault
itself pled that there were “many different sellers of cargo and vehicle
recovery accessories, offering varying levels of product quality across a wide
array of price points[.]” There wasn’t enough evidence that customers concerned
with the manufacturing origins of a product wouldn’t instead choose to purchase
the product from one of the other “many different sellers” of similar products.
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