Wednesday, November 06, 2019

multimillion-dollar verdict in false advertising case, but no fee shift

Boltex Manufacturing Co. v. Ulma Piping USA Corp., No. 17-CV-1400, 2019 WL 5684201 (S.D. Tex. Nov. 1, 2019)

Previous coverage. A jury found in favor of plaintiffs Boltex and Weldbend on their flange-related false advertising claims.  The court noted that the Lanham Act has no statute of limitations and so borrows state law.  The majority of cases in Texas borrow the four-year period for common law fraud, but, because “a very credible argument could be made that the closest parallel in Texas law to a Lanham Act unfair advertising claim is Texas’ common law cause of action for unfair competition,” which has a two-year period, the jury verdict form asked the jury to separate out the relevant periods for damages purposes.

The jury awarded damages for federal false advertising and state unfair competition; the court required plaintiffs to elect (and based on the numbers they’re going to choose federal).  In addition, the jury findings supported disgorgement.  Ulma’s profits were found to be $26 million, but the court wasn’t going to award that entire amount, since plaintiffs had less than 25% of the flange market even after Ulma was hypothetically removed from the market. Using plaintiffs’ own experts, their share of the flange market in which they all competed was 11.6% for Boltex and 10.4% for Weldbend. Thus, the court determined to award a bit over $3 million to Boltex and a bit over $2.7 million to Weldbend in addition to the Lanham Act damages if they opted for Lanham Act damages.  The total was nearly $3.7 million/a bit over $3 million for the Lanham Act respectively, or $1.2 million/$600,000 under Texas common law.

The court also found that the case wasn’t exceptional, even though the falsity part of the case may have been easy, because the existence damages was reasonably litigatable:

Defendants quite legitimately argued and produced a fair amount of evidence that the Plaintiffs and Defendants did not compete and consequently Plaintiffs were not damaged by any actions of the Defendants and if damaged at a substantially lesser amount than claimed. While the jury did not totally agree with Defendants’ position, it did not completely agree with the amount of damages claimed by the Plaintiffs. Defendants have the right to litigate liability and damages and it is not an unreasonable litigation position—even in the face of what some might consider overwhelming evidence of liability—to vehemently contest whether a plaintiff has actually suffered any damages due to its alleged misconduct.

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