Wednesday, September 06, 2023

"major flaw"/"tendency to shear" false advertising claims fail

Shepard & Assoc., Inc. v. Lokring Tech., LLC, 2023 WL 5229803, No. 1:20-cv-02488 (N.D. Ohio Aug. 15, 2023)

Lokring sells fittings for pipes and other transfer systems for fluids and gases, as well as tools used to install them. Its distributors have exclusive territories. Shepard was an exclusive distributor, but the relationship broke down. This opinion addresses third-party trade secret and unfair competition claims against Tube-Mac; I won’t cover the trade secret claim (which is what linked Tube-Mac to Shepard).

The emails at issue all had the same basic outlines: They said the sender previously worked for Shepard and touted Tube-Mac products. It also criticized Lokring products and toolings and stated that “The major flaw in the Lokring design is the thin cross section in the middle of the fitting where the two pipes meet…. Over time there is a tendency for the Lokring fittings to shear at that thin cross section as shown in the attached picture.”

The “major flaw” statement was false, Lokring argued, because the basis that the writer gave in deposition was merely testimony that there had been customer feedback that they didn’t like the thin cross section. Its head of product development testified that the thin cross section had, as designed, worked acceptably for over 25 years. But this testimony showed that the Lokring products did in fact have a thin cross section in some cases. Characterizing this as a “major flaw” was not actionable. Something can be designed, and still be flawed. “It is not inherently false to say that a thinner pipe connector may be more susceptible to corrosion or breakage than it otherwise would be if it were made thicker.” At least, this wasn’t literally false.

Tendency to shear: This was more susceptible to empirical testing and truth. Lokring argued that there was no data to support the claim, and that the fitting in the photo sheared because of installation error. But the burden was on Lokring to show falsity, and it didn’t submit expert or other technical evidence to show literal falsity. And its witness’s testimony was inconsistent about whether the picture showed shearing in a pipe that had been installed correctly. Thus, it didn’t show literal falsity. Lokring also didn’t submit evidence of how many consumers were deceived. It offered an email from Dow Chemical as evidence of confusion:

I am going to respectfully ask that you please stop contacting my peers in Deer Park I Houston Hub and misrepresenting the Pyplok fitting as a “LOKRING equivalent”. The Pyplok fitting has not been evaluated by our Dow piping discipline team and is not approved for use at Dow.

As you can see, this email didn’t indicate any deception about quality/design flaws in Lokring products.

Tube-Mac thus prevailed on summary judgment.

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