false claims of buying and "rebranding" a festival lead to disclosure/correction remedies

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.

"natural" products can be produced in factories

Karabas v. TC Heartland LLC, 2025 WL 777001, No. 24-CV-2722 (AMD) (VMS) (E.D.N.Y. Mar. 11, 2025)

Karabas alleged that Heartland deceptively marketed its stevia-based sweetener as “100% Natural” when the sweetener’s two ingredients — stevia leaf extract and erythritol — are synthetic because of the process through which the defendant produced the ingredients, which were allegedly not natural. The court granted the motion to dismiss.

There were no allegations that the chemicals used in production were added to the product:

No reasonable consumer would conclude that a product contains artificial ingredients merely because it is produced “in industrial factories” using “synthetic processes.” Indeed, that is the way most consumer goods are produced. “A reasonable consumer would not think that a compound found in nature is artificial even if it is produced in a different way than nature produces it, if the way it is produced is that it is derived from a natural product and does not contain anything synthetic.”

Moreover, the package included a description of the process by which the stevia was extracted — that the stevia leaves are steeped in water, the “sweet parts of the leaf” are extracted, the extract is separated, filtered, and purified, and the erythritol is fermented. That was sufficient to clear up any ambiguities, given that the product was a “niche, specialty product” whose purchasers “are undoubtedly more likely to exhibit a higher standard of care.”

court once again reduces false advertising statutory damages award to 10% of request on constitutional grounds

Montera v. Premier Nutrition Corp., 2025 WL 751542, No. 16-cv-06980-RS (N.D. Cal. Mar. 10, 2025)

I just taught this case!—The court once again, after remand, reduces a statutory damages award based on NY consumer protection law from $83 million to $8.3 million on substantive due process grounds (funny how that never works in copyright). (At least plaintiffs got their fees for the appeal.)

A jury found Premier liable to a class of New York purchasers for deceptive advertisement of Joint Juice under GBL Sections 349 and 350, which impose statutory damages of $50 and $500, respectively, or actual damages, whichever is greater. Wakefield v. ViSalus, Inc., 51 F.4th 1109 (9th Cir. 2022), subsequently held that statutory damages awards could be unconstutionally excessive as a matter of substantive due process (gone for women! Here for corporations!). The 9^th Circuit told the district court to apply Wakefield on remand.

Montera asked this time for $83,124,500, or $500 per violation under GBL § 350, based on sales of 166,249 units of Joint Juice in New York during the class period; the court determined instead that the award should be reduced to $50 per unit sold—the amount available under GBL § 349 only.

Possibly a key factor here is that New York law provides that statutory damages are not an available remedy in class actions under §§349-350, but that rule doesn’t apply in federal court because the Supreme Court said that the New York rule was procedural, not substantive. Actual damages for the class—all that would be available in state court—would be $1.4 million.

Wakefield instructed courts to consider whether “aggregation [of statutory damages] has resulted in extraordinarily large awards wholly disproportionate to the goals of the statute” and whether the award “greatly outmatch[es] any statutory compensation and deterrence goals.” The case also pointed to the factors articulated in Six (6) Mexican Workers v Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), for “further guidance” in determining whether statutory damages are disproportionately punitive in the aggregate: “1) the amount of award to each plaintiff, 2) the total award, 3) the nature and persistence of the violations, 4) the extent of the defendant’s culpability, 5) damage awards in similar cases, 6) the substantive or technical nature of the violations, and 7) the circumstances of each case.”  The “public importance and deterrence goals” to be considered are: “(i) the public interest; (ii) the opportunities for committing the offense; and (iii) the need for securing uniform adherence to the statute.” But, the court noted, “there is a dearth of appellate authority on how to reduce aggregated statutory damages awards once a constitutional issue is identified.”

Premier sought to get the court to reject any award of statutory damages at all.

Wakefield began with the proposition that “[o]nly very rarely will an aggregated statutory damages award … exceed constitutional limitations where the per-violation amount does not.”

Although the statute’s language was clear, this was the uncommon case where the constitution must limit damages “so severe and oppressive’ as to no longer bear any reasonable or proportioned relationship to the ‘offense.’ ”

Montera argued that the NY state provision that didn’t allow statutory damages in class actions was irrelevant because it was merely procedural and thus inapplicable in federal cases.  But the Ninth Circuit, in remanding, said that “the relevant statutory goals for the district court to consider on remand include the Legislature’s compensation and deterrence goals in enacting GBL §§ 349 and 350—the statutes that authorized the statutory damages at issue.” “Therefore, the New York legislature’s explicit concern about the punitive nature of aggregated statutory damages does some work to differentiate this case” from others. On the other hand, rejecting statutory damages entirely because of the NY state rules would be an “end run” around the Supreme Court determination that the rule was procedural.

So what are the relevant goals? The private right of action was added when the legislature recognized “the limited ability of the New York State Attorney General adequately to police false advertising and deceptive trade practices.” The legislature authorized statutory damages to “encourage private enforcement” and to “add a strong deterrent against deceptive business practices,” and increased those amounts in 2007, because “[c]urrent limits [were] too low to be effective.”

Thus, the statute’s legislative history and text indicated that the goals were “to compensate injured consumers and deter future wrongdoing.” The legislature also didn’t reject punitiveness, because there was no damages range.  “Even a predominantly punitive award is not necessarily constitutionally unsound.”

Nonetheless, “Premier persuasively argues Montera’s requested award is disproportionate to the goals of the statute, particularly in light of the conduct at issue. The $83 million requested by Montera is so large as to become entirely untethered from the statutory goals.” It was far in excess of compensation; what about deterrence and punitiveness? Premier argued that actual damages and attorneys’ fees (nearly $7 million, plus $1 million in costs) sufficed for deterrence.

And, on deterrence grounds, “while there are important public interest concerns in protecting New York consumers, the opportunities for committing this offense are not unlimited. In this matter, Premier has ceased to sell Joint Juice.” Thus, “an $83 million award would be largely punitive”—so punitive as to raise constitutional concerns.

In terms of the Six Mexican Workers factors, it was hard to evaluate whether the award to each individual class member (over $1100) was really out of bounds because there aren’t many comparable cases. Premier’s culpability was “mixed”: it made the choice to continue marketing its product as containing joint health benefits. “Despite the arrival of numerous studies pointing to a lack of benefits from glucosamine and chondroitin in the dosage at issue, Premier Nutrition continued to market its product not just to people seeking joint health benefits, but more specifically to people seeking joint pain and arthritis relief.” And Montera offered evidence that Premier “was aware of the changing tide in the science yet continued its marketing.” The violations here were “substantive, not merely technical.”

On the other hand, the harm to consumers was economic and not physical. On the other other hand: “Class members based reasonable hopes on Joint Juice’s promises. And while Premier may not have targeted people with financial vulnerability, it did target people suffering from joint issues seeking relief. Taken with Premier’s culpability, these economic and intangible harms again lead to a mixed result on Premier’s overall reprehensibility.”

As noted above, there weren’t really comparable cases. So, on balance, the Six Mexican Workers factors “support the conclusion there is a due process issue with Montera’s $83 million requested award.” (Which factors favored Premier?)

So, how to go about reducing the award? Measuring by actual damages had no real justification:

Wakefield’s warning against overstepping the role of the judiciary looms large at this stage. When a legislature codifies minimum damages in statutory text, courts “are constrained by a statute’s language and interpret statutes with awareness that [the legislature] could have enacted limits as to damages, including in large class action litigation, provided discretion to courts to award damages within a given range, or limited liability in any number of ways.”

So, the court chose the clear minimum set by § 349 alone, or $50 per violation. That “more closely hews to the compensatory, deterrence, and punitive goals of the statutes.” It was compensatory, and enough to deter.  

 

comparative advertising isn't confusing

Windmar PV Energy, Inc. v. Solar Now Puerto Rico, LLC, 2025 WL 725078, NO. 24-1570 (RAM) (D.P.R. Mar. 6, 2025)

A frivolous lawsuit against comparative advertising; the court gets the right result at least. Windmar and Solar now compete in the Puerto Rico market for the sale and installation of solar energy equipment. Windmar has registrations with various elements including: the silhouette of the sun’s corona; the words “WINDMAR” or “WINDMAR HOME”; a combination of the colors orange, blue, black, and grey; and a stylized image of a windmill replacing the “I” in “WINDMAR.” The typical logo shows the words “WINDMAR HOME” written in blue and grey, with the “I” replaced by a blue windmill logo; the words are placed under and within an orange outline of a sunburst or corona. Windmar alleged that it was the “number one” company in the “solar energy industry in Puerto Rico.”

Solar Now’s marketing campaign featured ads and billboards that showed a salesman pointing to a form listing three different options for solar companies: a colored logo of Solar Now and two greyscale logos that feature the profile of a sun and its corona, one titled “PAQUITO SOLAR” and the other “MOLINITO.” Windmar alleged that “MOLINITO” (which translates to “little windmill”), when used in conjunction with the sun-related imagery, alludes to Windmar’s logo. Solar Now’s logo is next to a “X” mark of approval while the two greyscale logos are placed further down the form, allegedly implying that they are inferior options to Solar Now.

billboard

social media post

This just didn’t plausibly allege likely confusion, although the court relied way too heavily on the dissimilarity of the Windmar marks from what Solar Now actually used, as opposed to the obvious comparative advertising context. At least the court noted that most of the Pignons factors favoring Windmar (similarity of goods, channels of trade, advertising, and prospective consumers) “could be true for any two companies competing in the same market and geographic area, and do not weigh as heavily in the Court’s analysis.” The court declined to rely on nominative use because the First Circuit hasn’t adopted a specific test.

Nor did Windmar successfully plead fame for dilution. Even if the marks were famous, the comparative advertising and parody exclusions applied. “[W]hen viewed in the light most favorable to Plaintiff, the purpose of billboards and social media posts at issue is clear to a reasonable consumer: humorous comparative advertising showing Solar Now should be chosen over its (fictional or real) competitors.” Separately, the parody exclusion also applied, because “MOLINITO” “is not a particularly flattering phrase, mocking Plaintiff’s logo and reputation by referencing it as a tiny windmill.” It did not plausibly serve as a source-indicator for Solar Now. “It is abundantly clear that Plaintiff is the subject of Solar Now’s joke.”

Although the court misunderstood descriptive fair use to be limited to personal names, that didn’t matter.

"natural" claims proceed because reasonable consumers can know little about pet food

Goetz v. Ainsworth Pet Nutrition, LLC, 2025 WL 692426, No. 24-CV-04799 (JPO) (S.D.N.Y. Mar. 3, 2025)

Plaintiffs alleged violations of Sections 349 and 350 of the New York General Business Law and breach of warranty based on defendants’ allegedly false claims that their products were “natural” rather than synthetic. The court denied a motion to dismiss.

Defendants’ products use the label “natural food” in varying formats and sizes, alongside the phrase “with added vitamins, minerals & taurine.” Plaintiffs identified forty-seven products so labeled yet containing ingredients classified as synthetic by the FDA. The labels disclose “added vitamins, minerals & taurine,” but plaintiffs alleged that “an ordinary person would understand [this] claim to mean that the added vitamins, minerals and/or taurine are natural as well.”

The court applied the reasonable consumer standard, noting that determining reasonableness as a matter of law is appropriate only where a plaintiff’s claims are “patently implausible or unrealistic.” The requirement used by the Second Circuit that a “significant portion” of consumers be likely to be deceived “does not impose a particularly onerous burden on Plaintiffs.” The court quoted the Second Circuit’s 2008 affirmation that New York’s consumer protection laws are “meant to take into account the impact of allegedly deceptive statements on the ‘vast multitude which the statutes were enacted to safeguard—including the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions.’ ” City of New York v. Smokes-Spirits.com, Inc., 541 F.3d 425 (2d Cir. 2008), rev’d on other grounds sub nom. Hemi Grp., LLC v. City of New York, 559 U.S. 1 (2010) (quoting Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 273 (1977). Reasonable consumers can be “less astute than average.”

“It is not unreasonable as a matter of law for a consumer to expect that a product labeled ‘natural’ to contain only natural, and not synthetic ingredients.” That was true even though product labels said only “natural” and not “100%,” “solely,” “exclusively,” or “only” “natural.”

Defendants also argued that plaintiffs failed to plead that the ingredients were actually synthetic.

But the complaint identified at least some “synthetic ingredients,” including glycerin, xanthan gum, and menadione sodium bisulfate complex. Although FDA definitions of “synthetic” are not binding, they were “persuasive evidence” of what a reasonable consumer might consider to be “synthetic” as opposed to “natural.” Cases involving ingredients with both natural and synthetic forms were inapposite. “[A]t least some of the ingredients in Defendants’ products are named in their synthetic forms—for example, ‘menadione sodium bisulfate complex’ rather than the more generic ‘vitamin K.’” True, some of the other ingredients can occur naturally, and it was not enough to allege that “citric acid” must be synthetic simply because “[m]ore than 90 percent of commercially produced citric acid … is manufactured through a processed derivative of black mold.” However, given the allegations of unequivocally synthetic ingredients, “it is not too far a leap to infer that, because Defendants are willing to use synthetic forms of some vitamins and minerals, they are more likely to use the synthetic forms of others, particularly in light of widespread commercial practice.”

Nor did the many possible meanings of “natural” defeat the claim. “[T]he mere fact that ‘the term’s use is confusing to consumers’ does not prevent it from being used deceptively.” Also, defendants didn’t offer a single definition of “natural” that their products did satisfy. “The one definition they provide— ‘occurring in conformity with the ordinary course of nature’—is at least plausibly violated by the inclusion of synthetic, lab-created vitamin and mineral analogues.” The court commented that “it is unclear what purpose including ‘natural’ on their packaging would serve if not to indicate a lack of unnatural ingredients or components.”

Nor was it unreasonable for any consumer to believe that pet food could truly be “natural,” despite defendants’ argument that packaged pet food has to be processed. “[I]t is not clear why pet food—like some shelf-stable human food—cannot be made without the addition of synthetic (as opposed to naturally occurring) vitamins. It is also far from clear that the ordinary reasonable consumer is intimately familiar with the nature of the pet food industry and its processing norms.”

Likewise, the court rejected defendants’ argument that any ambiguity could be cleared up by the ingredient panel. “The Court is unpersuaded that all reasonable consumers should know what ‘menadione sodium bisulfate complex’ (synthetic vitamin K) is, for example. This is especially true given that the naturally occurring forms of the same vitamins and minerals have similarly difficult-to-pronounce names, like ‘phylloquinone’ (one of two forms of naturally occurring vitamin K).” Moreover, even if the list of ingredients were intelligible to an ordinary shopper, “a reasonable consumer should not be expected to consult the Nutrition Facts panel on the side of the box to correct misleading information set forth in large bold type on the front of the box.”

The express warranty claim also survived, for the same reason. And the court declined to dismiss claims as to unpurchased goods, since the products that plaintiffs did buy were sufficiently similar to those SKUs. “All are types of wet and dry pet food that are labeled ‘natural,’ and each contains a mix of synthetic ingredients. That is enough.” Variations in the prominence of “natural” and its corresponding potential to mislead created fact issues for discovery.

 

job postings aren't "commercial advertising or promotion" for hiring party's goods/services

Sun Nong Dan Foods, Inc. v. Kangnam1957, Inc., 2024 WL 5440252, No. 2:23-cv-09779-WLH-RAO (C.D. Cal. Nov. 19, 2024)

Not a surprise, but fills a gap in the caselaw: employment ads aren’t “commercial advertising and promotion” for the business trying to hire.

SND alleged that defendants stole SND’s recipe for its “flagship” dish “galbi jjim” and opened a “counterfeit” restaurant offering the same dish.

SND alleged that “two job posts and the employee training in 2019 which involves the dissemination of false statements, constitute false commercial adverting.” A customer allegedly posted the following in a review on Yelp: “We asked a few questions [of employees] since this a new spot, and we learned the head Chef of [defendant] Daeho was from KTown in LA.” Daeho also allegedly published job posts to SF Korean and go20.com:

We are looking for servers and kitchen staff to join our upcoming Korean food restaurant opening in early February in San Francisco’s Japantown neighborhood.

Former head chef of Sun Nong Dan in Los Angeles is preparing to open a new restaurant in San Francisco’s Japantown.

The main menu will be tang (hot pot), and we’ll be serving up some of the best hot pot and other dishes you’ve never had in San Francisco, like BBQ, galbi jjim, and galbi tang.

Open 7 days a week, starting at 7am, part-time and full-time positions available.

If you’re interested in food, want to make money, or want to learn the restaurant business, we want to hear from you….

SF Korean was allegedly the “most well-known media platform within the Korean community in the San Francisco Bay Area.” Allegedly, “[f]or the Korean restaurants, recognition within the Korean Community is crucial for success.” And the representation about having the former head chef was allegedly false.

Instead, defendant C. Park allegedly sought employment at SND with the intent of stealing trade secrets which he then misappropriated, specifically recipes, such that defendants’ “galbi jjim and three side dishes have identical or nearly identical tastes and flavors to those of Sun Nong Dan, as noted by numerous Yelp reviewers.” Daeho allegedly “misappropriated Sun Nong Dan’s confidential galbi preparation method, which has the benefit of the meat easily falling off the bone.” And it allegedly misappropriated SND’s “confidential culinary processes and business operations designed to efficiently handle a large volume of orders for galbi jjim, including order-taking, cooking, the use of specialized cooking equipment, and serving methods tailored for quick handling of large-scale orders which preserving the deep flavors of galbi jjim.”

The court granted defendants’ motion to dismiss the state and federal false advertising claims, though other claims remain.  

SND alleged that the employee training in 2019, where one defendant allegedly instructed Daeho employees to make false statements about Daheo Kalbijjim’s relationship with SND, constituted false commercial advertising. But the Yelp review didn’t reflect that any employee made a false statement as part of a “commercial advertisement about [defendant’s] own or another’s product.” “Instead, the allegation indicates that an employee answered a customer’s questions with an undisputed fact—that the chef had worked in Koreatown in Los Angeles.”

As for the job postings, which can be commercial speech, they still weren’t plausibly published with “the purpose of influencing consumers to buy defendant’s goods or services.” It didn’t even include the restaurant’s name. (Note that California law doesn't have the same "commercial advertising or promotion" language--but when competitor-plaintiffs sue, courts usually interpret the relevant state false advertising laws as covering the same conduct.)

However, the complaint sufficiently alleged misappropriation of SND’s galbi jjim recipe and cooking method. But SND’s order-taking method, “which involves accepting pre-orders before seating customers,” was not plausibly a trade secret. By virtue of visiting the restaurant, any patron could see the method.

 

Rogers v. Grimaldi lives on, at least for work content

Of note because the lawsuit was brought at all, suggesting that trademark owners are willing to try to roll back any First Amendment protections for noncommercial speech.

Pepperdine University v. Netflix, Inc., No. 2:25-cv-01429-CV (ADSx), 2025 WL 632983 (C.D. Cal. Feb. 26, 2025)

Pepperdine sued Netflix for Lanham Act trademark infringement, contributory infringement, dilution, false advertising, and coordinate state claims based on Netflix’s Running Point series, which depicts a team known as the Waves. The court denies a TRO because Rogers is still good law, at least for things that aren’t titles.

Pepperdine’s athletic teams have been known as the “Waves” since the University’s founding in 1937, and it has registrations for WAVES marks. 

examples from complaint

Running Point was scheduled for release yesterday. It’s an “original comedic television series” created by Mindy Kaling and Warner Bros. about a “very dysfunctional family” who owns and manages a “high-profile, multi-billion-dollar basketball franchise and arguably the most famous professional team in all of sports, the Los Angeles Waves.” Pepperdine alleged that the fictional Los Angeles Waves team uses the word “WAVES” with a “strikingly similar font” and similar colors. An image in the Running Point trailer allegedly includes a framed jersey with the number “37,” similar to that worn by Pepperdine’s mascot and denoting Pepperdine’s founding year. Pepperdine also alleged that the story depicted in Running Point does not align with Pepperdine’s values.

comparisons from complaint

Jack Daniels cited Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (2002) (Barbie Girl) and University of Ala. Bd. of Trustees v. New Life Art, Inc., 683 F.3d 1266 (2012) (sports art), and Louis Vuitton Malletier S. A. v. Warner Bros. Entertainment Inc., 868 F. Supp. 2d 172 (S.D.N.Y. 2012) (use of “Louis Vuitton” to describe luggage in movie) with approval as non-trademark uses.  

Post-Jack Daniels cases have also applied Rogers to non-title uses. Haas Automation, Inc. v. Steiner, No. 24-CV-03682-AB-JC, 2024 WL 4440914 (C.D. Cal. Sept. 25, 2024) (use of mark on book’s front cover, back cover, and on several pages, but mark was “not used to tell the consumer who published the book or the source of the book”; mark told the consumer what the book was about and who the author worked for); JTH Tax LLC d/b/a Liberty Tax v. AMC Networks Inc., 694 F. Supp. 3d 315 (S.D.N.Y. 2023) (use of fictional tax preparation business name in Better Call Saul).

Photos, including on back cover, from Guenther Steiner's book 

Surviving to Drive: A Year Inside Formula 1, recounting his experiences as Team Principal of the Haas F1 Team 

This is distinct from cases like Punchbowl, which involved use in a business name, or Mar Vista Entertainment, LLC v. THQ Nordic AB, No. 2:23-cv-06924-MEMF (SSC), 2024 WL 3468933 (C.D. Cal. July 8, 2024) (rejecting application of Rogers in a dispute between the owner of the rights to the Alone in the Dark videogame franchise, and entities who released a horror film titled Alone in the Dark).

The court found no use of “Waves” or related indicia as source indicator. The “product” at issue was Running Point, the series, and defendants didn’t suggest Pepperdine was the source. The title cards confirmed that Netflix, Warner Bros., and Mindy Kaling are responsible for the series. They didn’t use Waves in the title (sigh), and, there was an express statement that the series is a fictional work, and “[a]ny similarity to any actual persons ... events, firms and institutions or other entities, is coincidental and unintentional.” “Ultimately, on this record, there is no evidence that any viewer would be misled regarding the source of the series.” (That is not a precondition for Rogers applying, though the court treats it as such; any such precondition makes Rogers irrelevant, at least to source confusion.)

complaint's social media "evidence"

The use of Waves was artistically relevant: it “was chosen as a nod to the real-life Lakers, whose team name also alludes to a body of water.” It also evokes the Los Angeles area and the “Southern California ‘vibe,’ associated with beaches, sun, surfing, and waves.” Nor was there any explicit misleadingness about source. “Neither Pepperdine nor the Waves Marks appear in the title cards for the series. There is therefore no implicit, let alone explicit statement that misleads the consumer as to the source of the series.”

Of note, not all is lost for Rogers for titles: Down to Earth Organics, LLC v. Efron, No. 22-CV-06218 (NSR), 2024 WL 1376532 (S.D.N.Y. Mar. 31, 2024), applied Rogers to the use Netflix and Zac Efron of the phrase “Down to Earth” for the documentary series entitled Down to Earth with Zac Efron. That court found that the defendants were “undoubtedly using ‘Down to Earth’ simply to identify the subject matter and tone of the Series.”

5th Circuit discounts confusion caused by overlap in commonly used arbitrary word

Rampart Resources, Inc. v. Rampart/Wurth Holding, Inc., No. 24-30111, 2025 WL 586820 (5^th Cir. Feb. 24, 2025)

District court’s denial of preliminary injunction discussed here. Rampart Resources provides real estate and property management services in Louisiana, Texas, Arkansas, Mississippi, Alabama, West Virginia, and Ohio. Its services relate to right-of-way acquisition, servitudes, real estate brokerage, permitting, and property management—across several industries, including utilities, oil and gas, renewable energy, and public works. It has a 2018 registration for those services for “the stylized wording ‘RAMPART RESOURCES’ to the right of a graphic image of a road going into the horizon, with a road curving off to the right and left of the main road.” “To be clear, Rampart Resources does not have a trademark for the word ‘Rampart’ or ‘Rampart Resources.’”

Rampart/Wurth offers commercial and residential property management services throughout Louisiana, Texas, Mississippi, and Alabama. Its services cover multifamily, single-family, office, retail, and receiver/keeper properties; it uses different logos to refer to Rampart Multifamily Management and Rampart Commercial Management.

Rampart Resources found out about Rampart/Wurth’s recent adoption of that name change in September 2023 when a FedEx driver told its president that “another Rampart” had just opened in Baton Rouge and that she had confused the two businesses.

Rampart Resources received at least seven telephone calls in September and October 2023 from individuals inquiring about rent collection, leasing units, Section 8 housing vouchers, lease payments, and refunding deposits. After being told they must have the wrong number, customers responded, “this is the home office of Rampart, correct?” and “this is the number I got for Rampart.”

On appeal, the standard was abuse of discretion. “As to each element of the district court’s preliminary-injunction analysis ... the district court’s findings of fact are subject to a clearly-erroneous standard of review, while conclusions of law are subject to broad review and will be reversed if incorrect.” Here, the appeal failed on likely success on the merits.

The district court found that the type of mark/mark strength, similarity of products/services, and evidence of actual confusion weighed in favor of likely confusion; similarity of marks, consumer overlap, and degree of care of potential purchasers weighed against; and advertising media/defendant’s intent were neutral.

Rampart Resources argued that mark strength should weigh heavily in its favor, not just slightly as the district court held. Although the mark was arbitrary, and although Rampart Resources had used it for 34 years, Rampart/Wurth provided evidence of widespread use of the key portion (Rampart). This was not clear error.

Mark similarity: “It is visually apparent that all aspects of the marks (font, color, design, etc.) are different except the use of the singular word ‘Rampart.’ The common use of the word ‘Rampart’ does not make the marks similar when considering ‘the total effect of designation.’”

Similarity of services: the district court found only a minor overlap and didn’t weigh it heavily in Rampart Resources’ favor. “The district court correctly concluded that while both parties operate broadly in the real estate industry, there is not substantial overlap between the services offered.”

But, when there isn’t direct competition, “the confusion at issue is one of sponsorship, affiliation, or connection.” The critical question, the court of appeals said, is “whether the consuming public would believe that the natural tendency of [Rampart Resources]” would be “to expand into the [property management industry].” “Here, the district court found that it would be reasonable for a customer of Rampart Resources to believe it was making a foray into property management, since they have offered property management services in the past and represent that they are still capable of doing so.” Weighing this factor in favor of a likelihood of confusion, but only somewhat, not heavily, was plausible based on the record.

Advertising media: “Both parties stated that word of mouth advertising is perhaps their strongest form of advertising…. Although both parties represented they use face-to-face communications and website advertising, the district court is correct that the evidence presented for this digit is scant.” Finding the factor neutral was not an abuse of discretion.

Actual confusion: While swayed purchases are not necessary, “more is required when the confusion did not or cannot sway purchases.”  “[N]ot all confusion counts: evidence of actual confusion must show ‘more than a fleeting mix-up of names’; rather it must show that ‘[t]he confusion was caused by the trademarks employed and it swayed consumer purchases.’ ” Here, seven misdirected phone calls and the FedEx driver’s confusion was not weighty when evaluated in light of “the high volume of business conducted by the parties and the fact that there was no evidence that any of Rampart Resources’ customers had erroneously contacted Rampart/Wurth.” The court of appeals agreed.

Interestingly, the court found it “[m]ost important[]” that

there is no evidence that any of the eight incidents of actual confusion were related to Rampart/Wurth’s logo or conduct. None of Rampart Resources’ anecdotal evidence shows that parties were confused by the trademarks at issue in this case. Rampart Resources does not have a trademark on the word “Rampart.” Our court has rejected strictly anecdotal evidence where “the proponent did not show that ‘a misleading representation by [the defendant], as opposed to some other source, caused a likelihood of confusion.’ ”

[This is a covert way of saying that, if the confusion was caused by the overlap in “Rampart,” too bad for plaintiff—a purely empirical vision of trademark would say that if the confusion was caused by the overlap, then plaintiff’s rights would extend past its registration to other uses. But there is never a purely empirical account of trademark, much as courts often pretend otherwise. Also: How insulted do you think the Fifth Circuit would be to hear that this is a very European way of looking at it?]

Still, it wasn’t abuse of discretion to weigh actual confusion slightly in the plaintiff’s favor, even though the only evidence showed a “fleeting mix-up of names,” and not that any party was “actual[ly] confus[ed] about the origin of the parties’ products.”

There was no clear error in weighing the factors.  The district court found that the dissimilarity of the marks, as well as the sophistication of the clients weighed most heavily against a finding of likelihood of confusion. Given that each digit “may weigh differently from case to case,” that wasn’t clear error.

 

 

 

pandemic education shutdowns allow unjust enrichment, not contract or false advertising claims

Yodice v. Touro College & Univ. Sys., 2025 WL 579957, No. 21cv2026 (DLC) (S.D.N.Y. Feb. 21, 2025)

Yodice sued Touro for reimbursement of tuition and fees he paid during the Spring 2020 semester, when Touro’s campuses were closed due to the COVID-19 pandemic. On remand, the court dismisses some of the claims. Touro has nearly 20,000 students across the United States and three other countries. The Touro system includes an online institution named Touro University Worldwide (TUW), which offers undergraduate and graduate degree programs.

Yodice alleged that TCDM markets various aspects of the on-campus student experience to the public. For example, its dental website says that students begin in the “dental simulation laboratory” and then “treat patients in our modern clinic.” The website also emphasizes the setting of TCDM’s Hudson Valley campus, which “attracts talented students who prefer a suburban lifestyle with easy access to the New York metropolitan area.” The campus’s location, the website explains, “provides students with numerous career, residency, clinical, and internship opportunities.” And various opportunities to work with local institutions “offer a chance for students to put their learning into practice, conduct research, or interact with patients and professionals in preparation for their future careers.”

Obviously, that didn’t happen through 2020. “Yodice left campus sometime in March. He did not have access to any of Touro’s facilities for the rest of the semester, and he was unable to experience the in-person academic, social, and professional interactions he would have had if not for the pandemic. Touro did not refund the tuition or fees paid by Yodice and other students who were unable to participate in in-person instruction or campus life for much of the Spring 2020 semester.”

Yodice alleged breach of contract, unjust enrichment, and consumer protection false advertising claims. The Second Circuit affirmed dismissal of his contract/unjust enrichment claims based on fees he paid, but reversed on tuition, concluding that the plaintiff “plausibly stated a claim for breach of an implied contract to recover tuition.” It likewise remanded for further consideration of the GBL false advertising claims.

The court here dismissed the contract and GBL claims, but allowed unjust enrichment to proceed as to those who paid tuition for the Spring 2020 semester at Yodice’s dental college.

Limiting the claim to that group: Yodice didn’t sufficiently allege that the other Touro schools were similar: “The FAC itself emphasizes the representations by specific Touro schools as to the quality of the on-campus experiences they offered. The only characteristic that the dozens of Touro schools around the world share is affiliation with the same corporate entity. And Yodice provides no reason to think he has anything in common with most of the class he seeks to represent except that they were, like him, students during the pandemic.”

Yodice argued that Touro’s class standing arguments would be properly handled in assessing the adequacy and commonality of the class representative and class pursuant to Rule 23(a), but “the independent requirement of class standing requires a connection between his claims and those of the class he seeks to represent even at the motion to dismiss stage.”

Breach of contract: dismissed because performance was impossible. “There is no dispute that holding in-person classes and other functions, as Yodice alleges was promised, would have been illegal.”

But that did mean that Yodice could proceed with his unjust enrichment claim seeking a prorated refund of the tuition he paid at the beginning of the semester. “To recover under a theory of unjust enrichment under New York law, a litigant must show that (1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered.” He stated a claim by alleging Touro

retained his tuition even after providing a less valuable and less costly service than was expected when the parties entered their relationship. The FAC alleges essentially that the tuition was conferred under a mistake of fact -- that is, that in-person instruction would be possible. It plausibly alleges that Touro spent less money operating TCDM remotely than it would have on a normal, open physical campus. Whether equity and good conscience require a partial refund cannot be decided at this stage, but Yodice has sufficiently alleged that they do.

Unjust enrichment may be available where one party’s duty to perform is unenforceable due to impossibility. In Goldberg v. Pace Univ., 88 F.4th 204 (2d Cir. 2023), a similar unjust enrichment claim failed because an enforceable force majeure provision in the contract limited the defendant’s duties to provide in-person instruction. There, the plaintiff was attempting to circumvent the terms of the parties’ contract by alleging unjust enrichment. But here, the plaintiff has pled that Touro had a contractual duty to provide in-person instruction, but its performance was excused by the doctrine of impossibility. Fault is not necessary for “circumstances [to] create an equitable obligation running from the defendant to the plaintiff.”

GBL: Usually, the GBL is broader than contract law. But there was no false advertising here because no reasonable person would think that Touro had promised to provide in-person instruction regardless of what happened. “Yodice has not plausibly alleged that Touro’s representation of an on-campus experience was deceptive, or that a reasonable consumer would have understood it to mean that in-person instruction would continue even in a pandemic.” In summary, “Sections 34 9 and 350 are far-reaching, but they do not require businesses to append ‘unless impossible’ to the end of every advertisement.” Nor could this be characterized as a materially deceptive omission; there was no allegation that “Touro possessed some piece of material information at the beginning of the Spring 2020 semester unknown to its students that would have affected prospective students’ decision to attend the university.”

disgorging a CEO's salary, then trebling the amount?

Multiple Energy Technologies, LLC v. Casden, 2025 WL 579641, № 2:21-cv-01149-ODW (RAOx) (C.D. Cal. Feb. 21, 2025)

I just posted about courts’ increasing openness to disgorgement. Here, the court trebles an award in a way that seems definitionally disconnected to the amount of defendant’s profits from false advertising—three times his total salary—in ways that seem to me inconsistent with Dewberry. I wonder if a motion for reconsideration is justified.

Plaintiff MET sued an individual, Casden, for false advertising and tortious interference with contractual relations. MET developed a patented bioceramic infrared material; Casden is the co-founder and CEO of Hologenix, which made a competing product. MET sued Hologenix for false advertising, and they settled in 2020. Casden negotiated and signed the Settlement Agreement on behalf of Hologenix. The settlement involved agreed payments and a permanent injunction against Hologenix barring it from “stat[ing] or suggest[ing]” that the Food and Drug Administration (“FDA”) “approved” Celliant or “made a ‘determination’ ” that Celliant promoted any benefits.

Afterwards, Casden made or approved statements about Celliant that violated the stipulated permanent injunction. And, the day before Hologenix was scheduled to pay $1,400,000 to MET pursuant to the Settlement Agreement, Hologenix filed for Chapter 11 bankruptcy. As a result of the bankruptcy proceedings, MET returned $100,000 it had received from Hologenix. MET then sued Casden for Lanham Act and state law false advertising violations, as well as tortious interference contractual relations. The court found that Casden acted to advance his personal interests when he tortiously interfered with the settlement agreement, thus foreclosing any agency immunity defense. The jury returned an advisory verdict in MET’s favor on its tortious interference cause of action with an award of $1 in nominal damages and a verdict in MET’s favor on its Lanham Act false advertising cause of action, similarly awarding $1 in nominal damages.

The court then awarded MET $2.5 million in damages on the tortious interference claim, and found that, on the Lanham Act claim, MET was entitled to disgorgement of Casden’s profits, treble damages, and attorneys’ fees. “[T]he jury viewed exhibits that reflect the statements Casden authorized or made himself, and they heard testimony from Casden acknowledging his discovery admissions that those statements were not true. This evidence is sufficient such that a reasonable jury could find the statements literally false.”

The court found that Casden’s salary could be disgorged as profits, and that this award could be trebled, because it had the discretion to award up to three times the “financial benefit [Casden] received because of the [false] advertising.” I don’t think that’s true if there’s no uncertainty about the amount of financial benefit received, because trebling the damages just because the deception was willful is a penalty, which disgorgement under the Lanham Act is not supposed to be.

The court determined that Casden’s annual salary of $300,000 since 2019 should be disgorged, because it was undisputed that the only product Hologenix sold was Celliant. And “the deliberate and willful nature of Casden’s conduct warranted trebling the award of Casden’s financial benefit.” The court found that it was not awarding a “penalty” or “windfall.” “Rather, the trebled amount is the amount the Court found to be ‘just, according to the circumstances of the case.’” But if it’s only just because Casden is bad, how is that not a penalty?

MET was also awarded nearly $600,000 in attorneys’ fees.

FDA preclusion doesn't work as often after Pom Wonderful (or Loper Bright?)

Pacira BioSciences, Inc. v. Ventis Pharma, Inc., 2025 WL 576549, No. 2:24-cv-07554-MRA-RAO, (C.D. Cal. Jan. 17, 2025)

Pacira alleged that its competitor (here Ventis) violated the Lanham Act by making claims about its drugs relating to (1) exemption from FDA approval, (2) FDA approval, and (3) comparative superiority, safety, and efficacy.

The FDA doesn’t require preapproval of drugs compounded by registered “outsourcing facilities, aka the “503B exemption.” The exemption requires that the “bulk drug substances” in the compounded drug must be on the FDA’s Drug Shortage List or Clinical Need List.

Pacira makes EXPAREL, an FDA-approved injectable drug product used to manage and reduce post-surgical pain whose active ingredient is bupivacaine. Pacira allegedly uses a a proprietary multivesicular liposome (pMVL) technology and created a new category of drugs known as the “Post-Surgical Non-Opioid Regional Analgesia,” in which EXPAREL is the leading product.

Ventis makes, inter alia, Enduracaine and Endura-KT, which consist of three bulk drug substances: (1) epinephrine, (2) tetracaine, and (3) lidocaine. Enduracaine and Endura-KT have not been approved by the FDA. Below the header “FDA Disclaimer,” Ventis’ website states that under the FDCA, human drug products compounded by an outsourcing facility “are exempt from the following three sections of the [FDCA] section 505 (21 U.S.C. 355).” In an advertisement in Anesthesiology News, Ventis claimed that Endura-KT is “produced following cGMP manufacturing guidelines under 503B outsourcing standards overseen by the FDA.” However, none of the three component bulk drug substances are on the CNL. Lidocaine and epinephrine are on the DSL, but not tetracaine, and it is not approved for use as an injection.

Ventis also allegedly implied FDA approval, as in a white paper on its website describing Endura-KT as an “off-label use version of Enduracaine.” “Off-label use” is allegedly generally recognized as the use of an FDA-approved product for an unapproved use. Ventis advertised in Anesthesiology News that Endura-KT is “made from a combination of currently FDA approved USP products.” But the FDA allegedly does not oversee production of Endura-KT, and it has not approved the use of bulk drug substances as combined in Endura-KT.

Ventis also advertised Enduracaine and Endura-KT as comparable to, and replacements for, EXPAREL. It marketed Endura-KT as “safe and acceptable for use,” advertised that Endura-KT provides an “EXTENDED DURATION” of pain relief and that it is “Quick Onset – Long Lasting,” “Safe,” for “Pediatric Use,” and “Cost Effective.” It advertised that Endura-KT is “clinically significant over other commercially available products.” But Endura-KT has allegedly not been reviewed, been approved, or undergone any clinical trials to confirm its capabilities, efficacy, or safety.

Exemption-based statements: The court rejected defendant’s preclusion argument under Pom Wonderful. Although the Ninth Circuit previously did not allow Lanham Act claims that required significant interpretation of the FDCA, the court here relied more heavily on the general statements in Pom Wonderful (and it’s hard not to imagine that the recent rejection of agency interpretive authority in Loper Bright is having an effect here too). Pom Wonderful characterized the FDCA as “designed primarily to protect the health and safety of the public at large” rather than to prevent false advertising.  The mere fact that “an agency enacted regulations that touch on similar subject matter but do not purport to displace [a] remedy [under the Lanham Act] or even implement the statute that is its source” cannot displace such a “well-established federal remedy.” That is because “[a]n agency may not reorder federal statutory rights without congressional authorization.” (Note that the issue here is not just regulations “touching on” similar subject matter, but actually defining that which is legal to produce and market.)

Anyway, as a result, “courts have adopted a general presumption that Lanham Act claims pertaining to FDCA-regulated products are permissible and, often, desirable.” The Ninth Circuit’s decision in PhotoMedex, Inc. v. Irwin, 601 F.3d 919 (9th Cir. 2010), the court reasoned, did not clearly survive, so it wasn’t necessarily enough for preclusion that “the claim would require litigation of the alleged underlying FDCA violation in a circumstance where the FDA has not itself concluded that there was such a violation.” Regardless, even PhotoMedex said that it didn’t mean that “the Lanham Act can never support private party claims involving FDA approval or clearance of drugs or medical devices.” The Ninth Circuit said that, where an affirmative statement of FDA approval was required to market a product, “a Lanham Act claim could be pursued for injuries suffered by a competitor as a result of a false assertion that approval had been granted.”

Defendant argued that FDA policy allows for the compounding of tetracaine, and thus that allowing this claim to proceed would “clearly interfere” with the FDA’s policy judgment in that regard. It pointed to the FDA’s 2017 “Interim Policy on Compounding Using Bulk Drug Substances Under Section 503(b) of the [FDCA].” As to categories of drugs nominated for inclusion on the CNL, the FDA stated that “at this time [the] FDA does not intend to take action against an outsourcing facility for compounding a drug using a bulk drug substance that does not appear on the [CNL] and that is not used to compound a drug that appears on the [DSL] at the time of compounding, distribution, and dispensing,” provided certain conditions are met.

But that wasn’t enough. An FDA policy of non-enforcement was not equivalent to a finding that the compounding was “exempt.” “Under the plain terms of section 503B, the compounded bulk drug substance must appear on the CNL or DSL to qualify for exemption.” Indeed, the interim guidance “would seem to tacitly acknowledge that the compounding of a Category 1 substance does not yet satisfy the requirements for 503B exemption, only that the agency does not presently consider such conduct an enforcement priority.” And nonenforcement of the FDCA wasn’t relevant, given that the plaintiff “seeks to enforce the Lanham Act, not the FDCA or its regulations.” “If anything, the FDA’s non-enforcement cautions against preclusion of Plaintiff’s Lanham Act claim,” given the FDA’s limited resources. The court pointed to Pom Wonderful’s similar discussion of FDA nonenforcement:

Because the FDA acknowledges that it does not necessarily pursue enforcement measures regarding all objectionable labels, if Lanham Act claims were to be precluded then commercial interests—and indirectly the public at large—could be left with less effective protection in the food and beverage labeling realm than in many other, less regulated industries. It is unlikely that Congress intended the FDCA’s protection of health and safety to result in less policing of misleading food and beverage labels than in competitive markets for other products.

“This reasoning applies with added importance in the context of drug marketing.”

Plus, an FDA interim policy may “touch on similar subject matter” as a Lanham Act claim, but it “do[es] not purport to displace that remedy[.]” Nor is it even an “agency regulation[ ] with the force of law that purport[s] to bar other legal remedies.” The Interim Policy clearly states, “FDA’s guidance documents do not establish legally enforceable responsibilities. Instead, guidances describe the Agency’s current thinking on a topic and should be viewed only as recommendations.” Thus, this is not “a case where a lawsuit is undermining an agency judgment.”

As the First Circuit said in Azurity Pharmaceuticals, Inc. v. Edge Pharma, LLC, 45 F.4th 479 (1st Cir. 2022), involving similar statements, “the parties have identified no FDA regulation that governs the statements that outsourcing facilities may make in advertising—let alone a regulation that would risk subjecting [the defendant] to inconsistent obligations ....” Here, “[i]n claiming 503B exemption specifically, Ventis is representing that it complies with the statutory requirements. Even under PhotoMedex, determining the falsity of such statements does not ‘require litigation of the alleged underlying FDCA violation.’”

Was the statement non-actionable opinion?  The general rule is that, “[a]bsent a clear and unambiguous ruling from a court or agency of competent jurisdiction, statements by laypersons that purport to interpret the meaning of a statute or regulation are opinion statements, and not statements of fact. Statements of opinion are not generally actionable under the Lanham Act.” But that didn’t make “exempt” a statement of opinion:

In advertising that its product is exempt from FDA approval under section 503B, Defendant is not interpreting the FDCA and related regulations. Given the unambiguous text of section 503B, “there is no interpretation necessary to determine” the conditions for establishing exemption under section 503B. Section 503B “plainly” provides that the bulk drug substances in the compounded drug must appear on either the CNL or DSL. By purportedly invoking 503B exemption, Defendant represents that it has satisfied these criteria. Yet, as Azurity observed, “one of these lists does not yet even exist, while there is no dispute that [Plaintiff] has plausibly alleged that the other list does not include the bulk drug substance in question.”

The FDA’s interim policy doesn’t purport to mean that section 503B “does not impose the condition that it plainly imposes with respect to the use of ‘bulk drug substances.’ ” Anyway, the opinion versus fact distinction was for a factfinder. (Both of these things can’t be true.)

Turning to allegedly approval-based statements, like “produced following cGMP manufacturing guidelines under 503B outsourcing standards overseen by the FDA,” “made from a combination of currently FDA approved USP products,” and “off-label use version of Enduracaine,” defendant argued that there was no false statement or implication of FDA approval.

Mylan Laboratories, Inc. v. Matkari, 7 F3d 1130 (4th Cir. 1993), rejected a theory that “the very act of placing a drug on the market, with standard package inserts often used for FDA-approved drugs, somehow implies (falsely) that the drug had been ‘properly approved by the FDA.’ ” Several district courts have relied on Mylan to hold more broadly that “[f]alse advertising claims based on allegations of implied governmental approval have not been allowed, for ‘the law does not impute representations of government approval ... in the absence of explicit claims.’ ” Here, though, the court found that plaintiff plausibly alleged that defendant’s description of Endura-KT as an “off-label” use of Enduracaine falsely implied that Enduracaine is FDA approved. It didn’t evaluate the other statements one way or another.

Comparison-based statements: Ventis allegedly falsely advertised its products as “superior to liposomal bupivacaine products like EXPAREL” and that its products are “equivalent or are otherwise substitutable.” An infographic on the site purported to summarize the findings of two studies, and stated in a footer that “[t]he preponderance of evidence fails to support the routine use of liposomal over plain bupivacaine.”

Defendant argued that this was nonactionable scientific opinion, under Pacira BioSciences, Inc. v. Am. Soc’y of Anesthesiologists, Inc., 63 F.4th 240 (3d Cir. 2023), which held that the studies summarized in the infographic were nonactionable opinion. But that conclusion didn’t insulate the infographic. First, unconvincingly, the court said that the Third Circuit was only dealing with trade libel, not Lanham Act claims. Second, the Third Circuit relied the context in which the statements were made: “a peer-reviewed journal for anesthesiology specialists.” But the infographic wasn’t an academic article, and the footer statement wasn’t attributed to either study. In publishing the infographic on its website, the defendant “los[t] the benefits that scholarly articles and scientific debate typically enjoy.”

What about “EXTENDED DURATION,” “Quick Onset,” “Long Lasting,” “Safe,” and “Cost Effective,” and “safe and acceptable for use”? Are they fact or puffery? Finally, the defendant won an argument: these were “generic adjectives without any specific, objectively verifiable measure.”

As to alleged comparative superiority/ “generic or substitutable” statements, plaintiff didn’t specifically identify where and when Ventis made those statements in advertising or promotion. A general statement that “Medications can only be ordered by healthcare providers when it is determined the product is clinically significant over other commercially available product” wasn’t specific to either EXPAREL or Endura-KT, and thus couldn’t form the basis of a claim.

Remedy creep: SCt seems to endorse more disgorgement

Dewberry Group, Inc. v. Dewberry Engineers Inc., No. 23–900 (Feb. 26, 2025)

We’ve gone very fast from most lower courts saying that willfulness was required for Lanham Act disgorgement/profits awards, to the Court saying that it wasn’t required but was still a factor, to “maybe disgorgement is standard.” I’d be happier with the common-law evolution if the Court admitted it was engaged in common-law rule development. Also, it’s true that the Court is writing in the context of willful infringement, but I doubt plaintiffs’ lawyers will limit themselves to quoting it in that situation.

The first line of Justice Kagan’s opinion for the Court: “A prevailing plaintiff in a trademark infringement suit is often entitled to an award of the ‘defendant’s profits’” (emphasis added). In concurrence, Justice Sotomayor similarly says: “Congress enacted the Lanham Act … to ensure ‘trademarks [w]ould receive nationally the greatest protection that can be given them.’ Disgorgement awards play a leading role in that regime, and the text of the Act forecloses any claim that Congress looked favorably on easy evasion” (emphasis added).

Also of note—the Court declines to decide whether/when the award of profits from one entity can be increased by profits from related entities based on the Lanham Act language: “If the court shall find that the amount of the recovery based on profits is either inadequate or excessive[,] the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances.” I agree with the idea that this adjustment can reflect the “defendant’s true financial gain.” That’s the only interpretation that can also implement the statutory command that the award is not supposed to be a penalty. Nonetheless you often see courts adjusting upwards for what are essentially penal reasons—punishing bad behavior.

distinguishing false establishment claims from lack of substantiation claims

Kurin, Inc. v. ICU Medical, Inc., 2024 WL 5416672, No. 8:24-cv-00564-FWS-ADS (C.D. Cal. Nov. 8, 2024)

The parties compete in the market for medical devices aimed at addressing blood culture contamination (BCC) in hospitals. BCC is both medically and financially costly. Kurin makes the Kurin Lock, while defendants make a series of syringes, collectively VI Syringes. Both allegedly operate similarly, by passively sidelining the initial 0.15mL of blood, which can contain contaminants from the patient’s own skin. However, defendants allegedly overclaimed their advantages in violation of the Lanham Act and coordinate state law.

First, the court found that early summary judgment was not appropriate given the need for some discovery. Defendants cited their own studies in support of their motion, and discovery was appropriate about those studies, as well as other factual claims made by defendants.

The court found that many of the challenged statements were insufficiently pled to be false advertising, though it granted leave to amend.

First, defendants claimed the VI Syringe “[i]mprov[es] sample quality by removing over 99.9% of contaminates.” They allegedly refer to a “Toxikon Clinical Lab Invitro Testing Diversion study” in support. It was not enough to allege, “[o]n information and belief,” that the Toxikon Study does not support the 99.9% Statement, because that was merely a lack of substantiation claim that private parties are not allowed to make. Kurin alleged that defendants’ “in-house study claims diversion of 94%, 97.2% and 98.6% of contaminants,” making the 99.9% claim literally false, but the court found that insufficient. Kurin needed to allege something like its own testing disproving the claim.

FDA Clearance: Kurin alleged that defendants falsely and misleadingly claimed that the FDA cleared their 99.9% Statement when its VI Syringe brochure referred to “Vascular Integrity FDA 510(k) documentation on file.” Kurin alleged that defendants falsely and misleadingly marketed the VI Syringe as if it were another, pre-existing medical device, the Brannon PortSyringe, so as to impute the latter’s Class II device FDA clearance to the former, even though the Brannon PortSyringe was for a two-step approach to collecting blood through a catheter for lab tests, not for blood cultures in hospitals.

The court found that this claim was precluded by the FDCA. It applied the 9^th Circuit’s PhotoMedex rule, which is pre-Pom Wonderful but probably consistent with it. A “central issue” in PhotoMedex was whether the defendant could impute a 510(k) clearance from one device to another and whether the 510K documentation was enough for the defendant to claim the device was “FDA Approved.” “Under the 510(k) process, if the Class II device is deemed “substantially equivalent” to a pre-existing device with prior clearance, ‘it can be marketed without further regulatory analysis.’ ” Thus, whether there was falsity here depended in part on what the FDA thinks, making it inappropriate for a Lanham Act claim.

False claims that the VI Syringe was patented: Ok to be brought under the Lanham Act since 35 U.S.C § 292’s prohibition on false marking isn’t exclusive, but not sufficiently alleged for purposes of Rule 9(b).

Claims about the VI “Microbial Diversion study,” allegedly performed in conditions that are inconsistent with routine blood culture collection which violate industry protocols for conducting performance studies. Thus, Kurin alleged, the study failed to account for four key points of contamination, in violation of industry standards. This was a classic establishment claim challenge, and sufficiently pled. (Note that, because competitors can bring California state law claims and have the Lanham Act standards applied to those claims in pari materia, a competitor-v-competitor case is the one place where you routinely get Lanham Act concepts like explicit/implicit falsity and establishment claims treated as features of state consumer protection law.) Defendants argued that their study was fine, but the court expressed “concern about evaluating the ‘persuasiveness’ of studies at the motion to dismiss stage.” And a Lanham Act plaintiff can plead literal falsity of product testing by “demonstrate[ing] that such tests ‘are not sufficiently reliable to permit one to conclude with reasonable certainty that they established’ the claim made.” Allegations that defendants’ study was not peer reviewed, did not account for the industry-standard four points of contamination, and that the sample size was too small to support their claims, sufficed to plead that the VI Study was scientifically unreliable.

Likewise, advertising that the VI Syringes “Help Reduce Risk of False Positives” by helping to reduce central line-associated bloodstream Infection (CLABSI) via the VI Syringe’s design to “avoid breaks in the aseptic technique required in multi-step line procedures that may contribute to CLABSI rates” was sufficiently pled to be a false establishment claim, for similar reasons. In the context of an establishment claim, falsity can be alleged by alleging that the claim is “unsupported by clinical data, peer-reviewed data or FDA clearance.” The establishment claim—tests prove—is itself falsifiable, distinguishing this from a bare lack of substantiation claim.

Kurin also alleged that “Defendants mislead clinicians payors, and others in the medical community” by claiming “that the VI Syringe includes a field that is free from bacteria or otherwise free from contamination.” The allegations here weren’t precise enough under Rule 9(b).

Finally, Kurin alleged that defendants’ claim that the VI Syringes “Help Reduce Hemolysis” was deceptive. Defendants’ “hemolysis study” concluded that the VI Syringe is “non-Hemolytic” based on ASTM F756 guidelines while using a sample size of three samples. It was not enough to allege that this sample size “is simply insufficient” to reach such a conclusion. “To prove that an advertisement claim based on product testing is literally false, a plaintiff must do more than show that the tests supporting the challenged claim are unpersuasive.” That’s just lack of substantiation. (I think this should be fixable—surely it’s possible to plead that scientists would not consider three samples to constitute a reliable study, and this is exactly the kind of claim that reasonable consumers would expect to be backed up with scientific evidence.) But the court thought that Kurin “has not alleged potentially fundamental flaws in the methodology, as it did for the VI Study.” (Why isn’t a sample size of three a fundamental methodological flaw? Wouldn’t a sample size of one be a fundamental methodological flaw? Now we’re in factual argument territory.)

reminder: Harvard/Yale/Stanford Junior Faculty Forum, June 2-3, 2025 submissions due soon

 Request for Submissions

Harvard/Stanford/Yale Junior Faculty Forum

June 2-3, 2025, Harvard Law School

Harvard, Stanford, and Yale Law Schools are soliciting submissions for the 2025 Harvard/Stanford/Yale Junior Faculty Forum, to be held at Harvard Law School on June 2-3, 2025. Twelve to twenty junior scholars (with one to seven years in teaching) will be chosen, through a double-blind selection process, to present their work at the Forum. A senior scholar will comment on each paper. The audience will include the participating junior faculty, senior faculty from the host institutions, and invited guests. The goal of the Forum is to promote in-depth discussion about particular papers and more general reflections on broader methodological issues, as well as to foster a stronger sense of community among American legal scholars, particularly by strengthening ties between new and veteran professors.

TOPICS: Each year the Forum invites submissions on selected topics in public and private law, legal theory, and law and humanities topics, alternating loosely between public law and humanities subjects in one year, and private law and dispute resolution in the next. For the upcoming 2025 meeting, the topics will cover these areas of the law:

Administrative Law

Antidiscrimination Law and Theory

Constitutional Law—theoretical foundations

Constitutional Law—historical foundations

Criminal Law

Critical Legal Studies

Environmental Law

Family Law

Jurisprudence and Philosophy

Law and Humanities

Legislation and Statutory Interpretation

Public International Law

Workplace Law and Social Welfare Policy

A jury of accomplished scholars will choose the papers to be presented. There is no publication commitment. Harvard Law School will pay presenters’ travel expenses, though international flights may be only partially reimbursed.

QUALIFICATIONS: Authors who teach law in the U.S. in a tenured or tenure-track position as of the submission deadline (February 28, 2025) and have not been teaching at either of those ranks for a total of more than seven years are eligible to submit their work. American citizens or permanent residents teaching abroad are also eligible provided that they have held a faculty position or the equivalent, including positions comparable to junior faculty positions in research institutions, for less than seven years and that they earned their last degree after 2015. We accept jointly authored submissions, but each of the coauthors must be individually eligible to participate in the Forum. Papers that will be published prior to the Forum are not eligible. There is no limit on the number of submissions by any individual author. Faculty from Harvard, Stanford, and Yale Law Schools are not eligible.

PAPER SUBMISSION PROCEDURE: Electronic submissions should be sent to Rebecca Tushnet at rtushnet@law.harvard.edu with the subject line “Junior Faculty Forum.” The deadline for submissions is February 28, 2025. Remove all references to the author(s) in the paper. Please include in the text of the email your name, the title of your paper, your contact email and address through June 2025, and under which topic your paper falls. Each paper may only be considered under one topic. Any questions about the submission procedure should be directed to Rebecca Tushnet.

FURTHER INFORMATION: Inquiries concerning the Forum should be sent to Christine Jolls (christine.jolls@yale.edu) or Yair Listokin (yair.listokin@yale.edu) at Yale Law School, Rebecca Tushnet (rtushnet@law.harvard.edu) at Harvard Law School, or Norman Spaulding (nspaulding@stanford.law.edu) at Stanford Law School.

Christine Jolls

Yair Listokin

Rebecca Tushnet

Norman Spaulding