Brand Mktg. Grp. LLC v. Intertek Testing Servs., N.A.

• Citation: 801 F.3d 347
• Decision Date: 10 September 2015
• Docket Number: No. 14–3010.,14–3010.
• Parties: BRAND MARKETING GROUP LLC, d/b/a Thermablaster v. INTERTEK TESTING SERVICES, N.A., INC., d/b/a Intertek Testing Servicing; Continental Appliances, Inc., d/b/a ProCom Intertek Testing Services, N.A., Inc., Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

801 F.3d 347

BRAND MARKETING GROUP LLC, d/b/a Thermablaster
v.
INTERTEK TESTING SERVICES, N.A., INC., d/b/a Intertek Testing Servicing; Continental Appliances, Inc., d/b/a ProCom
Intertek Testing Services, N.A., Inc., Appellant.

No. 14–3010.

United States Court of Appeals, Third Circuit.

Argued on April 28, 2015.
Filed: Sept. 10, 2015.

801 F.3d 350

Brendan B. Lupetin, Esq. (Argued), Meyers, Evans & Associates, Pittsburgh, PA, Counsel for Appellee.

William T. Hangley, Esq. (Argued), Matthew A. Hamermesh, Esq., Dina L. Hardy Grove, Esq., Hangley, Aronchick, Segal, Pudlin & Schiller, Philadelphia, PA, Counsel for Appellant.

Before: FISHER, HARDIMAN and ROTH, Circuit Judges.

801 F.3d 351

OPINION

HARDIMAN, Circuit Judge.

This case comes to us following a jury verdict in favor of Brand Marketing Group, LLC. The jury found Defendant Intertek Testing Services, N.A., Inc. liable to Brand for negligent misrepresentation and awarded Brand more than $6 million in total damages—$1,045,000 in compensatory and $5 million in punitive damages. After an adverse ruling on its post-trial motions, Intertek filed this appeal from the District Court's final order. We will affirm.

I

A

Brand is a small company founded in 2004 by David Brand.¹ Until about 2008, Brand sold vent-free heaters—products that provide gas heat without having to vent outdoors—made by a company called ProCom. At that point, Brand began developing the Thermablaster, a vent-free heater that purportedly improved on ProCom's design.

Through some industry contacts, Brand was introduced to a Chinese company called Reecon M & E Co., Ltd. that would manufacture the Thermablasters. Reecon, in turn, suggested that Brand use Intertek to test the heaters to ensure they met U.S. safety standards. Intertek, an international product-testing company with more than 35,000 employees, had an ongoing relationship with Reecon, and Reecon wanted to extend that relationship to include the Thermablasters.

Before accepting Reecon's testing suggestion, David Brand did some research. He attended a trade show where he spoke with two Intertek representatives who indicated that their company could test the Thermablasters. He also received and examined a promotional leaflet and visited the company's website, which indicated that Intertek could test to any standard promulgated by the American National Standards Institute (ANSI). Later, he exchanged emails with the trade show representatives, who suggested that the Thermablasters be tested at Intertek's facility in China.

Satisfied that Intertek and its China facility had the expertise to do the testing, Brand allowed Reecon to use Intertek to test the heaters. Reecon then applied to have the Thermablasters tested by Intertek, stating on its application that the heaters should be tested against the most recent applicable ANSI standard (Z.21.11.2b), and that “BMG”—Brand Marketing Group—was the ultimate buyer of the heaters. Although Reecon contracted with and paid Intertek about $22,000, the cost of testing was passed through to Brand as part of the per-unit price Reecon charged Brand for the heaters.

Having established manufacturing and testing programs for its product, Brand struck a deal in April 2011 with Ace Hardware Corp., which agreed to pay Brand some $467,000 for 3,980 Thermablasters. Three months later, Intertek tested the heaters and found that they met the ANSI standard. Shortly after testing was completed, David Brand visited China to monitor production. While he was there, Reecon gave Brand a Test Data Sheet—an Intertek document signed by several of its engineers—showing that the heaters had passed all relevant tests. Satisfied that the heaters complied with the applicable standard, Brand bought 5,500 heaters from

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Reecon, and delivered the Thermablasters to Ace within a couple of months.

Ace began selling the heaters in late 2011 but halted sales permanently after ProCom—the company whose products Brand had formerly sold—notified Ace that the Thermablasters did not meet ANSI standard Z.21.11.2b. Brand initially defended its product, pointing to Intertek's Test Data Sheet as evidence that the heaters met the ANSI standard. Because the heaters were actually noncompliant, however, Ace refused to sell them and demanded that Brand repossess the heaters and refund its payment. Brand could do neither, as the company lacked the means to retrieve the heaters and had already spent the funds it received from Ace. As a result, Ace sued Brand and obtained a default judgment for about $611,060 (Ace's purchase price plus interest and costs), thus wiping out Brand's anticipated profit of about $147,000.

Brand then sued Intertek alleging, inter alia, fraudulent and negligent misrepresentation. Intertek countersued, alleging trademark infringement (among other claims) because Brand had placed Intertek's testing certification mark—which indicates to consumers that Intertek has certified that a product meets applicable safety standards—on Thermablaster boxes prior to receiving Intertek's permission to do so. During pretrial proceedings, Intertek bought Ace's $611,060 judgment against Brand for $250,000. Intertek aggressively tried to collect its judgment in the weeks leading up to trial, attempting, among other tactics, to transfer the judgment from the company to David Brand personally.

Before trial, Brand withdrew its fraudulent misrepresentation claim. As relevant to this appeal, the parties proceeded to trial on the negligent misrepresentation and trademark infringement claims.

B

During the three-day trial held in March 2014, the jury heard testimony from several witnesses, including Intertek's chief engineer for heating products, Frederick Curkeet. Curkeet testified that vent-free heaters posed “a big risk in terms of overheating and carbon monoxide poisoning” in consumers' homes if they did not meet safety standards and that he knew Intertek's customers relied on their testing results. App. 772. Despite that understanding, Curkeet admitted that Intertek lacked a “complete process” to ensure that Intertek's facilities around the world tested consistently to ANSI standards. Nor did Intertek share “best practice[s]” among facilities, even though Curkeet acknowledged that such knowledge-sharing would be ideal. App. 802. Moreover, Curkeet stated that in the past “quite a number [of Intertek] engineers” had been caught “slacking off on the job and saying things complied without running the test,” though he maintained that Intertek always fired those employees promptly. App. 842.

Curkeet also testified that, although ANSI standard Z.21.11.2b was written in English, Intertek did not translate it for the Chinese engineers who tested the Thermablaster. Intertek didn't do so, he said, because the standard's engineering jargon didn't translate well from English to Chinese. The company decided not to translate even though the Chinese engineers' English was imperfect: as Curkeet noted, “it's obvious it's not their first language,” and “sometimes the language issues do creep into the documentation.” App. 800–01. In regard to the Thermablaster testing, he agreed that “something got lost in translation.” App. 802. Furthermore, Curkeet stated that Intertek had never before tested to Z.21.11.2b and

801 F.3d 353

that training and experience in the China facility were lacking. He said that although he was on the ANSI committee that wrote the applicable standard, he did not directly supervise the Chinese engineers who tested the heaters. Had he done so, Curkeet stated, Intertek would not have erroneously certified the Thermablasters.

At the close of trial, the District Court instructed the jury that it could award punitive damages to Brand if it found that Intertek's conduct was outrageous, even though Brand's claim was for negligent, not fraudulent, misrepresentation. The jury did just that, returning a verdict for Brand in the amount of $6,045,000. That figure included $725,000 in past compensatory damages, $320,000 in future compensatory damages, and $5 million in punitive damages. The jury also found for Intertek on the trademark infringement claim but awarded no damages because the infringement was not willful.

C

After the jury verdict was announced, Intertek moved for post-trial relief under Federal Rules of Civil Procedure 50 and 59. It requested (1) judgment as a matter of law or a new trial on the punitive damages claim because Brand had not shown that Intertek had acted recklessly; (2) a reduction in punitive damages because the award violated the Due Process Clause of the Fourteenth Amendment; (3) a reduction in compensatory damages because Brand had shown only about $320,000 in actual loss; (4) a new trial because the jury verdicts on Brand's claim and Intertek's counterclaim were inconsistent; (5) a set-off to the judgment equal to the judgment against Brand that Intertek had purchased from Ace; and (6) a new trial because of allegedly erroneous evidentiary rulings by the District Court. The District Court granted the requested set-off but denied the remainder of Intertek's motion. Intertek filed this timely appeal.

II

Brand...