Friday, February 04, 2022

ANSI standards aren't well known enough to be material

Little Giant Ladder Sys. v. Tricam Indus., Inc., 2022 WL 325969, No. 17-cv-1769 (ECT/ECW) (D. Minn. Feb. 3, 2022)

This case previously traveled under a different name/lead plaintiff. The parties compete in the market for articulated ladders, also known as multi-position ladders. Little Giant argued that Tricam violated the Lanham Act and the Minnesota Deceptive Trade Practices Act by falsely representing that its ladders comply with ANSI ASC A14.2, a voluntary industry standard for portable metal ladders (one mandated by Home Depot, the big customer, for all its suppliers). The case was tried to the Court, and Little Giant lost.

ANSI “does not develop standards and will in no circumstance give an interpretation of any [ANSI standard].” And “no persons shall have the right or authority to issue an interpretation of an [ANSI standard] in the name of [ANSI].” The court determined that the interpretation of the standard was a fact question, since it wasn’t a legal rule having the force of law; even if that sometimes happens, it wasn’t at issue here as part of a regulatory regime. And on that question, it sided with Tricam, though the details of interpretation are not worth going into. Tricam did have external testing done for compliance with the standard, and passed that testing using its interpretation thereof. There were also dueling materiality surveys, Little Giant’s focusing on whether compliance with safety standards was important to purchasers and Tricam’s focusing on whether respondents actually knew what ANSI does.

Tricam argued that it didn’t “use” any statements on Home Depot’s website, because Home Depot “developed the ANSI compliance language in its IDM system, specified the compliance language to be used in a drop-down menu, and otherwise exercised substantial control over the website.” The question, the court thought, was whether a business “has ceded so much control that it is no longer ‘using’ the ad.” Here,

the better understanding of the trial record is that Tricam retained control over the statements on Home Depot’s website. Tricam entered the information, not Home Depot. Though Home Depot reviews the submitted information, it relies on vendors to ensure that content is accurate. There is no evidence suggesting Home Depot second-guessed, double-checked, or somehow verified the information vendors submitted through this system. If Home Depot could change the Tricam-related content on its webpage without Tricam’s input, there is no evidence that happened. And no evidence warrants concluding that Tricam was prevented from accessing or editing this content if that became necessary.

Tricam’s argument was that Home Depot required ANSI-compliance statements. But that didn’t remove responsibility from Tricam for making the statements if they weren’t true.

Fortunately for Tricam, Little Giant didn’t succeed in showing falsity. Initially, “statements of ANSI compliance are statements of fact, not of opinion.” The better view of the relevant standard meant that this statement was true. For belt-and-suspenders purposes, if the court was wrong about what ANSI requires, it would have found literal falsity.

“In the Eighth Circuit, materiality is not presumed even when a statement is found to be literally false.” And the statements, even if false, were not material. Defendant’s ANSI-specific survey was more persuasive because it was more specific to which safety standards mattered. The court also liked the survey size (1000 v. 200 for Little Giant) and open-ended questions (compared to a closed list of 10 possibly relevant factors that omitted others that consumers might care about like price, availability, and customer reviews).  Also, Tricam’s expert “spent considerable time in Home Depot stores observing customers shop for and purchase ladders”; Little Giant’s did not. In Tricam’s expert’s survey, in response to an open-ended question about reasons for purchase, none of the respondents mentioned ANSI, OSHA, or industry safety standards. Only 2% of purchasers who bought at Home Depot recalled seeing an ANSI-compliance statement on the label.

As Little Giant’s expert pointed out, Tricam’s survey also featured 87% of respondents answering, in response to a closed-ended question, that information on a ladder’s side label was either “very important” or “somewhat important” to their purchasing decision. “But the tremendous volume of information on the side labels of Tricam’s MPX ladders makes it impossible to know whether—and unwise to conclude that—the ANSI-compliance statement specifically prompted or affected these responses.” Only 42 percent of respondents had heard of ANSI, and that didn’t say whether it was important to purchase decisions.

Nor did non-survey evidence support materiality; fact witnesses had never heard of consumers relying on ANSI to buy a ladder.

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