Oxycal Laboratories, Inc. v. Jeffers, Civil No. 95-1200-R.

• Decision Date: 04 December 1995
• Docket Number: Civil No. 95-1200-R.
• Citation: 909 F. Supp. 719
• Parties: OXYCAL LABORATORIES, INC., an Arizona Corporation, and Inter-Cal Corporation, an Arizona Corporation, Plaintiffs, v. Jim JEFFERS and Lou B. Jeffers, dba Quest for the Best; John A. Perkins, dba Promotion Publishing; and Hulda C. Clark, Defendants.
• Court: U.S. District Court — Southern District of California

909 F. Supp. 719

OXYCAL LABORATORIES, INC., an Arizona Corporation and Inter-Cal Corporation, an Arizona Corporation, Plaintiffs, v. Jim JEFFERS and Lou B. Jeffers, dba Quest for the Best; John A. Perkins, dba Promotion Publishing; and Hulda C. Clark, Defendants.

Civil No. 95-1200-R.

United States District Court, S.D. California.

December 4, 1995.

William H. Drummond, David G. Duckworth, Drummond and Duckworth, Newport Beach, CA, for plaintiffs.

Charles Scott, Victoria A. Stewart, Barwick, Rutherford & Scott, Lemon Grove, CA, for defendants.

ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION

RHOADES, District Judge.

This matter is before the Court on Plaintiffs' Motion for Preliminary Injunction. For the reasons stated below, Plaintiffs' Motion is DENIED.

I. Background

Plaintiffs Oxycal Laboratories, Inc. and Inter-Cal Corporation, (collectively "Oxycal") are manufacturers and suppliers of vitamin C products. Oxycal's patented products are sold under the federally registered trademark ESTER-C. Plaintiffs claim that the tradename ESTER-C is a leading product in the vitamin C market, and that Oxycal has built up valuable "significant commercial goodwill" in the good name of the ESTER-C product line.

Hulda A. Clark ("Clark") is the author of a book entitled The Cure for All Cancers ("Clark's Book"). John A. Perkins, doing business as "ProMotion Publishing," is the publisher of the Book, and is engaged in promoting its sale. Jim Jeffers and Lou Jeffers (collectively, "the Jeffers") are principals of, and doing business as, Quest for the Best. Plaintiffs allege that the Jeffers actively promote the sale of the Book as a vehicle for increasing sales of some of their products which are recommended in the Book. In July of 1994, Oxycal began receiving reports that consumers were, after reading Clark's Book, becoming concerned that ESTER-C products caused cancer. Oxycal claims that they received a substantial number of calls from "existing customers, potential customers, large clients, existing distributors and even a governmental consumer protection agency" worried about the potential carcinogenic characteristics of ESTER-C. See Declaration of David R. Stenmoe at ¶ 15-20.

The reason for the concern about the carcinogenic effects of ESTER-C is that Clark's Book alleges that the mineral Thulium contributes to the occurrence of cancer. Furthermore, the Book also alleges that ESTER-C products contain Thulium. See Motion Exhibit A at 18 ("All the ESTER-C varieties of vitamin C that I have tested are polluted with Thulium!"). Clark's Book claims that all cancers can be rid from the human body by eliminating harmful toxins, such as Thulium. The Book provides for activities that can be done to eliminate harmful materials from the body, including avoiding certain foods, avoiding exposure to certain household items, etc. The Book also identifies methods for testing for the presence of certain toxins that should be avoided. In short, the Book provides a comprehensive plan for identifying and removing all causes of cancer.

After becoming aware that Clark's Book alleged that ESTER-C contains Thulium and that Thulium causes cancer, Oxycal hired a Dr. Jack Hegenauer, PhD., to conduct a study of ESTER-C and Thulium to test the allegations contained in Clark's Book. Dr. Hegenauer concluded that ESTER-C contains no Thulium, and that to date there is no scientific evidence of a causal link between Thulium and cancer. See Dr. Hegenauer Declaration at ¶ 22, 30, 31.

Concerned that the continued dissemination of false information concerning ESTER-C would irreparably harm the reputation of ESTER-C, result in "millions of dollars of lost sales" and thus cause inestimable damage to the financial health of Oxycal, see Stenmoe Declaration at ¶ 20, Oxycal moved for a preliminary injunction. Oxycal's complaint is based on a violation of the Lanham Act, specifically 15 U.S.C. § 1125(a), and the request for a preliminary injunction is made pursuant to a provision of the Lanham Act at 15 U.S.C. § 1116(a).

II. Discussion

A. Authority For a Preliminary Injunction

The Lanham Act gives district courts explicit authority to grant injunctive relief to prevent violation of 15 U.S.C. § 1125(a). Section 1116 of Title 15 provides that "the several courts vested with jurisdiction of civil actions arising under this chapter shall have power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, ... to prevent a violation under section 1125(a) of this title." The Ninth Circuit has applied the same standard to a request for preliminary injunction under § 1125(a) as that applied to requests for preliminary injunctions in general. See Sega Enterprises, Ltd. v. Accolade, Inc., 977 F.2d 1510, 1517 (9th Cir.1992).

B. Standard for Granting Preliminary Injunction

To prevail on a request for preliminary injunctive relief, the moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable injury, or (2) that serious questions are raised and the balance of hardships tips sharply in its favor. United States v. Odessa Union Warehouse Co-op, 833 F.2d 172, 174 (9th Cir.1987); Sports Form, Inc. v. United Press International, Inc., 686 F.2d 750, 753 (9th Cir.1982). These formulations are not different tests; they represent two points on a sliding scale in which the showing of irreparable harm must increase as the probability of success on the merits decreases. Odessa Union, 833 F.2d at 174. The Ninth Circuit has indicated that "serious questions" are issues "to which the moving party" has a "fair chance of success on the merits." Sierra On-Line v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984).

C. Chance of Success on the Merits

Under either formulation of the test for a preliminary injunction, the district court must first evaluate the moving parties chance of success on the merits of the claim. Here, the Court finds that Oxycal has little chance of success on the merits of its claim based on violation of § 1125(a). Since Oxycal has little chance of success on the merits, Oxycal cannot meet the requirements for a grant of a preliminary injunction under either formulation of the test, and the motion must be denied.

1. 15 U.S.C. § 1125(a)

Oxycal has brought its suit under 15 U.S.C. § 1125(a)(1)(A) and § 1125(a)(1)(B). See Reply at 3. The Court finds that Oxycal has little chance of success on the merits under either (a)(1)(A) or (a)(1)(B). § 1125(a)(1) reads:

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

Although Oxycal claims to have brought its action under both (a)(1)(A) and (a)(1)(B), Oxycal has made no argument that the statements contained in Clark's Book are actionable under (a)(1)(A). Oxycal has not alleged that there is any confusion as to the "affiliation, connection or association" of defendants with any other person, nor has Oxycal identified any confusion as to the "origin, sponsorship or approval" of defendants' goods, services or commercial activities. Indeed, aside from the assertion that "Oxycal has brought this suit under 15 U.S.C. § 1125(a)(1)(A) or (B)," Reply at 3, Oxycal makes no argument that it has established a prima facie case for a violation of § 1125(a)(1)(A).

The crux of Oxycal's complaint is that statements made in Clark's Book misrepresent the characteristics of Oxycal's ESTERC product line. Oxycal's allegations are covered, if at all, by § 1125(a)(1)(B) which is concerned with false or misleading representations of fact which "misrepresent the nature, characteristics, qualities ... of another person's goods, services or commercial activities." The Court must evaluate the likelihood of success on this (a)(1)(B) cause of action.

A threshold requirement of stating a cause of action under § 1125(a)(1)(B) is that the false or misleading representations of fact be made "in commercial advertising or promotion." After carefully considering the legislative history of the Lanham Act, and the treatment of this issue by other courts, this Court concludes that the statements made in the contents of Clark's Book are not statements made "in commercial advertising or promotion."

a. Commercial Advertising or Promotion

15 U.S.C. § 1125(a)(1)(B) on its face is clearly only applicable to misrepresentations made in commercial advertising or promotion. The Lanham Act is necessarily limited in scope by the First Amendment. See Gordon & Breach Science Publishers v. AIP, 859 F.Supp. 1521, 1533 (S.D.N.Y.1994). In adopting § 1125(a)(1)(B), Congress explicitly limited the reach of the Lanham Act to statements made in commercial advertising or promotion in order to preserve its constitutionality. The legislative history supports the idea that the language chosen was selected to ensure that the Lanham Act did not impermissibly restrict protected speech. See 135 Cong.Rec. H1216-17 (daily ed. April 13, 1989) (statement of Rep. Kastenmeier) ("The proposed change in section 1125(a) should not be read in any way to limit political speech, consumer or editorial comment, parodies, satires, or...