Thursday, March 14, 2019

"local" is falsifiable but relative, meaning damages for false advertising must be limited

Bimbo Bakeries USA, Inc. v. Sycamore, 2019 WL 1058234, No. 13-cv-00749 (D. Utah Mar. 5, 2019)

Previously, Bimbo won a false advertising claim in front of a jury against U.S. Bakery for trade secret misappropriation and for falsely advertising its bread as “local.” Bimbo Bakeries’ false advertising damages were limited to Utah and southern Idaho.  At trial, Bimbo’s expert testified about consumer surveys performed on U.S. Bakery’s fresh/local tagline, and another expert offered damages testimony; U.S. Bakery offered conflicting expert testimony.  After the verdict judgment was entered against U.S. Bakery for $8,027,720 in false advertising damages and $1,578,942 in trade secret damages, plus exemplary damages of $789,471 for the trade secret claim.

U.S. Bakery argued that the verdict should be set aside because (1) the word “local” in U.S. Bakery’s tagline is not a specific geographic place, and therefore not false or misleading; (2) Bimbo Bakeries’ expert testimony couldn’t support the verdict; and (3) Bimbo Bakeries failed to present evidence that “localness” was material. These arguments had been made before and didn’t work now either.  “Local” has a relative meaning, but it’s still a factual meaning in its context, and Bimbo showed misleadingness through extrinsic evidence.  U.S. Bakery cited Forschner Group, Inc. v. Arrow Trading Co., a Second Circuit case, to argue that “local” is not a specific geographic location that can be verified objectively as either true or false. Even if it had been binding, it wasn’t relevant: the court there held that “Swiss Army knife” doesn’t falsely suggest Swiss origin, but “a term does not need to designate a specific geographic origin to be actionable.”  “Local” is geographically descriptive, and Bimbo presented evidence that U.S Bakery used the term deceptively, “to suggest that its bread products were particularly fresh and of high quality because they were baked within the geographic vicinity of where they were sold.”

At trial, Bimbo’s expert presented admissible results of consumer surveys performed demonstrating 28% consumer confusion. The jury properly found materiality through direct testimony as well as survey evidence.

However, remittitur was appropriate on the false advertising claim. Remittitur is appropriate if the jury award is “so excessive as to shock the judicial conscience and to raise an irresistible inference that passion, prejudice, corruption or other improper cause invaded the trial.” The expert’s damage calculation was based on U.S. Bakery’s profits from all eight states in which the misleading tagline was used, but only Utah consumers were surveyed.  (What makes Utah consumers different in their likely response to the use of “local”?  In the abstract, I don’t see why this isn’t legitimately extrapolable to the other areas using only common sense. The expert admitted that consumers in different states might have different perceptions of what constitutes being “local”; “for example, a consumer in Vancouver, Washington, may consider Portland, Oregon, to be ‘local.’” This would be meaningful to the case here if the products were baked in places that may have been “local” to some consumers within the slogan’s footprint.)  Bimbo’s evidence was sufficient, but only with respect to consumer confusion in Utah and damages from false advertising in Utah. Since the jury chose to adopt Bimbo’s expert’s method of calculation, and since he calculated $83,398 in profits from U.S. Bakery’s use of the disputed tagline in Utah, no new trial was necessary and the damages were remitted to that amount.

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