Nantucket Wine & Food Festival, LLC v. Gordon Companies, Inc., --- F.Supp.3d ----, No. 24-11640-LTS, 2024 WL 5442374 (D. Mass. Dec. 12, 2024)
Wild facts here.
Plaintiff NWF runs an annual, multi-day event on Nantucket
called the Nantucket Wine & Food Festival “The Festival has been held
annually—with the exception of a hiatus during the COVID-19 pandemic—since its
founding as the Nantucket Wine Festival in 1997.” Recently, it’s been held over
the course of five days encompassing the weekend in May between Mother’s Day
and Memorial Day. NWF solicits “Luminaries”—experts and high-level presenters—and
“Invitees”—other exhibitors, wineries, distributors, importers, and sponsors.
The remaining attendees are “Guests,” who either purchase tickets to the
various events or are invited by, for example, a sponsor. NWF works on the
Festival year-round, with ticket sales typically commencing in November. Nancy
Bean, with a partner, owns the rights to the Festival and is one of two
permanent staffers; she’s the majority owner.
David Gordon is the president and chief executive officer of
the Gordon Companies, a regional liquor-and-wine retail-and-distribution
business based in Waltham, Massachusetts. He approached Bean about potentially
investing in NWF in 2021. Discussions continued over two years, and Gordon
provided logistical, financial, and other assistance to Bean. “Principally,
Gordon furnished Bean with an attorney, defendant Todd Goldberg, who had
previously done work for the Gordon Companies, to help Bean buy out her
original partner,” a transaction completed in 2022, though a small percentage is
still owned by a third party. The Gordon Companies also extended to NWF a loan
of approximately $55,000, and Gordon gained access to financial and other
sensitive information relating to NWF.
NWF and the White Elephant resort agreed that White Elephant
would be the exclusive “Host Hotel” of the 2024 Festival, reserving to NWF the
exclusive rights to its name and logo. But, as the 2024 Festival approached,
Bean broke off negotiations for a Gordon Companies investment in NWF. Gordon
and Bean executed a release agreeing that NWF’s $55,000 debt to the Gordon
Companies would be paid off via sponsorship rights at the 2024 Festival. The Festival
occurred as planned, and Bean posted on NWF’s website a save-the-date for the
2025 Festival, marking the same weekend, May 14 to May 18, 2025, as well as a
similar Instagram post.
Then, mid-June, 2024, the Gordon Companies issued statements
announcing the Gordon Companies’ plans for the 2025 Nantucket Food and Wine
Experience. An email announcement sent to “a cultivated list of industry
professionals, including wine vendors, chefs and restaurant owners” stated, in
relevant part: “The Gordon Companies is thrilled to announce that we have
partnered with White Elephant Resorts to present the newly branded Nantucket
Food And Wine Experience. Under new guidance, this rebranded event will take
place on Nantucket from Wednesday, May 14th through Sunday, May 18, 2025. This
extraordinary celebration will offer a revitalized experience featuring the
world’s top vineyards, distilleries, and culinary minds.”
Another email went to the Gordon Companies’ customer list:
“The Gordon Companies Purchases Nantucket Food and Wine Experience.” It read in
relevant part: “The Gordon Companies have partnered with the iconic White
Elephant Resorts to present the newly branded Nantucket Food And Wine
Experience. Under this new partnership, one of the nation’s longest-running
food and wine events will take place on Nantucket from Wednesday, May 14th
through Sunday, May 18, 2025.”
The Gordon Companies also sent a press release to at least
fifteen media outlets, including the Boston Globe, Boston Common Magazine, Wine
Spectator, and Forbes: “The Gordon Companies Partner with The White Elephant to
Present a Newly Branded Nantucket Food & Wine Experience.” A subhead read:
“One of the nation’s longest running food and wine events returns to Nantucket
on May 14–18, 2025.” Relevant bits included:
The Gordon Companies ... and White
Elephant Resorts are thrilled to announce their partnership for a newly branded
Nantucket Food & Wine Experience in 2025.... David Gordon, CEO of The
Gordon Companies, notes, “We are excited to introduce the newly rebranded
Nantucket Food & Wine Experience to the loyal guests who have enjoyed this
celebratory time on the island for many years.” … Khaled Hashem, President of
White Elephant Resorts, adds, “We are honored that our harborside hotel will
continue to serve as the official host for this dynamic partnership with The
Gordon Companies. We look forward to carrying on the tradition of providing
food and wine excellence for locals and visitors alike on beautiful Nantucket.”
A similar press release went to industry media outlets such
as BevNet/Nosh, Wine Industry Advisor, Kane’s Beverage News Daily, Beverage
Dynamics, and Wine Business: “Prominent New England Wine and Spirits Retailer
Purchases Nantucket Food & Wine Experience.” Its subhead was: “Gordon’s
Fine Wine Acquires Ownership Stake in One of the Nation’s Longest-Running Food
and Wine Events.” In relevant part, it said:
The Gordon Companies … have
acquired the ownership rights to the Nantucket Food & Wine Experience
(previously known as the Nantucket Wine & Food Festival), one of the
longest running food and wine events in the U.S. The rebranded event … will
take place on the island from Wednesday, May 14 through Sunday, May 18, 2025 ….
“This longstanding event is an important part of Nantucket’s rich history, not
to mention a significant annual driver of tourism and local pride,” says David
Gordon, CEO of The Gordon Companies. “We’re excited to introduce the newly
rebranded Nantucket Food & Wine Experience, and we’re especially honored to
be one of the only fine wine and spirits retailers in the country to own and
present a festival of this size and prominence.”
Both Gordon and White Elephant had issues with Bean—the former
believing that Bean would never bring him on as a co-owner as he’d hoped, the
latter because of Bean’s “organization and planning and time management.” Thus,
they’d planned a new event for a couple of months, including
nantucketfoodandwine.com. The person who sold them that domain name offered
Gordon a list of domains including the word “festival” or “fest,” but Gordon
replied, “[w]e need to use experience not festival (for now).”
After the four statements went out, Gordon quickly realized
that there was a bit of a problem, and emailed “[t]he subject of our email that
went out said Purchases Nantucket Food and Wine, if we can I’d like to stick
with ‘The Gordon Companies Partner with The White Elephant to Present a Newly
Branded Nantucket Food & Wine Experience.” Meanwhile, Bean’s contemporaneous
reaction was: “I am inundated with texts and calls—everyone thinks I sold NWF
to him for $$$$$$$.” NWF also received “frantic inquiries from Boston Common
Magazine regarding the sale and their astonishment of it given they had just
been with us on-site and were in the midst of writing all of our post-festival
acclaims and reviews and pieces.”
The next day, the Gordon Companies sent out a clarification
to its industry email (“Gordons has not purchased any festival. We have
partnered with the White Elephant in a multiyear deal to produce a new event.
In no way are we affiliated with any other event or festival on Nantucket.
Sorry for any confusion this may have caused.”) and contacted industry
publications to remove from the Industry Release the statement that the
Experience had been “previously known as the Nantucket Wine & Food
Festival.” But they didn’t send out corrective emails to the other recipients
of the statements. Even after Gordon’s instruction not to use the word “purchase,”
he responded to “[c]ongratulations to your purchase of the Nantucket Food and
Wine Festival” without a correction.
Amy Baxter, Licensing Administrator at the Nantucket Police
Department, met with Gordon and subsequently emailed a third party about “a
change in ownership and management of the Wine Fest.” She then emailed Gordon:
“[j]ust to confirm I should not be expecting Nancy to come at us to try and
secure that weekend since you have a contract with White Elephant correct? I
know that to be the case and I will be general in my answer but just
reconfirming.” She then told a reporter from a local newspaper, “I do not
anticipate competing festivals.”
Three days after the initial announcement, and two days
after first contact from NWF’s lawyer, the Gordon Companies sent a correction
to its customer list: “Gordon’s has not purchased, acquired, or rebranded the
previously existing Nantucket Food & Wine Festival which has been operated
by a still operating entity which is not affiliated with The Gordon Companies
in any way. The Nantucket Food and Wine Experience is also not affiliated with
the Nantucket Food & Wine Festival.” The Gordon parties succeeded in
getting several industry publications to remove the parenthetical stating that
the Experience was “previously known as the Nantucket Wine & Food Festival,”
but didn’t send corrections to the general media release.
“In response to questions from several chefs regarding
whether a sale had happened, Bean emailed all chefs who had participated in the
2024 Festival clarifying the situation and asking for their support.” She also
contacted sommeliers, wine importers, and other constituents. The Boston Globe,
the Newport Buzz, and the Nantucket Current all ran articles about the Festival
and the Experience with quotes by Bean. Nonetheless, Bean testified, “many
people remain under the impression that I either tried to sell the genuine
festival or will sell the genuine festival” because they “find it hard to
believe someone would lie so blatantly about purchasing a company unless there
had been some agreement that I reneged or that belatedly fell apart.”
The Nantucket Select Board received applications from both
sides for events during the same time and announced that tickets for these
events should not be sold until the applications had been evaluated; the
applications were pending as of the court’s decision.
Right before the PI hearing, plaintiffs dismissed White
Elephant from the case, and White Elephant agreed that it wouldn’t host an
event with the Gordon parties on the relevant weekend for the next two years. The
Gordon Parties represented that they were in the process of withdrawing the
permit applications they had filed to the Nantucket Select Board. So the Experience
wasn’t going to happen in 2025, at least not on Nantucket. Thus, plaintiffs
narrowed their request for preliminary relief, but still wanted defendants to be
enjoined from disparagement and to be required to make corrective disclosures
including a statement that their earlier statements were “false.” They also
wanted prominent links on defendants’ websites to NWF’s own site. The court
granted the corrective disclosure and website remedies, but not a general
prohibition against disparagement.
The court relied on Massachusetts General Laws Chapter 93A and
did not analyze the claims as Lanham Act false advertising. Chapter 93A grants
a private right of action to any business harmed by another business’s “unfair
methods of competition and unfair or deceptive acts or practices in the conduct
of any trade or commerce.”
The court found that defendants’ statements constituted
commercial disparagement, which requires proof that a defendant: (1) published
a false statement to a person other than the plaintiff; (2) “of and concerning”
the plaintiff’s products or services; (3) with knowledge of the statement’s
falsity or with reckless disregard of its truth or falsity; (4) where pecuniary
harm to the plaintiff’s interests was intended or foreseeable; and (5) such
publication resulted in special damages in the form of pecuniary loss.
The court found that at least three of the widely
disseminated messages were false, implying that that the Gordon Companies had
purchased and the long-running Festival and was “rebranding” it as the
Experience. (Although this probably counts as falsity by necessary implication,
relying on 93A avoids any need to nitpick about explicitly false v. implicitly
false claims under the Lanham Act, since state laws generally don’t have the
same doctrinal distinctions.) The statements were plainly of and concerning
plaintiffs, and they were made with knowledge/recklessness as to their falsity.
Harm intended or foreseeable: “Stating that a competitor no
longer operates independently could foreseeably cause that competitor to lose
business.” “[W]here a false statement has been ‘widely disseminated,’ and it
would be impossible to identify particular customers who chose not to purchase
a plaintiff’s goods or services,” a plaintiff can show special damages “by
circumstantial evidence showing that the loss [of the market] has in fact
occurred, and eliminating other causes.” That was also sufficiently shown with
evidence of confusion, including among the Nantucket town government, preventing
plaintiffs from selling tickets to the 2025 Festival starting in November, as
they normally would.
Plaintiffs also showed irreparable harm to their goodwill
and reputation. “By its very nature injury to goodwill and reputation is not
easily measured or fully compensable in damages. Accordingly, this kind of harm
is often held to be irreparable.”
The existing corrective efforts were inadequate: they “did
not admit or explain the falsity of the original statement.” Indeed, the court
found their language obfuscatory, with the potential to leave readers believing
that the NWF no longer existed: “Gordon’s has not purchased, acquired, or
rebranded the previously existing Nantucket Food & Wine Festival which has
been operated by a still operating entity which is not affiliated with The
Gordon Companies in any way.” Plus, “while the original Customer Email went out
as its own message, the corrections went out in small print above ads for the
Gordon Companies.”
Defendants argued that confusion had already dissipated due
to plaintiffs’ efforts. “However, just
because some locals and insiders now know that the Gordon Parties did not
purchase the Festival, that does not mean that all confusion has dissipated.
Many Festival devotees may still find it difficult to trust Bean, as she has
avowed. Other, more casual participants may not be so plugged in and so may,
having seen one of the Gordon Parties’ statements, still believe the Festival
is no more.”
Still, plaintiffs couldn’t identify any actionable, false
statements made by the Gordon Parties after July 1. Thus, the court denied
their requires for an injunction against “false disparaging statements about
either of the Plaintiffs, the ownership of the Nantucket Wine & Food
Festival, or its operations.”
However, additional corrective disclosures, including prominent
placement on defendant’s nantucketfoodandwine.com website with links to
plaintiffs’ site, were justified. The disclosure is not the kind of thing you
want to have to send out:
Pursuant to an Order of the U.S.
District Court …, the Gordon Companies hereby discloses that, in June of this
year, the Gordon Companies sent out false press releases and emails stating
that Gordon Companies had acquired and rebranded the Nantucket Wine & Food
Festival under new management. There was never any acquisition, rebranding, or
new management of the Nantucket Wine & Food Festival. The Gordon Companies
is not planning any festival for May 2025. The long-running Nantucket Wine
& Food Festival continues to operate. As previously announced by the Nantucket
Wine & Food Festival, the annual tradition will continue May 14 – 18, 2025,
under the leadership of its longtime Executive Director Nancy Bean. For more
information, please visit www.nantucketwinefestival.com.
Defendants had to post the disclosure in large bold font on
the home page of the website at nantucketfoodandwine.com and
foodandwinenantucket.com, with no other text or links on the page, but with the
reference to www.nantucketwinefestival.com at the end of the disclosure
hyperlinked.
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