Clorox Co. Puerto Rico v. Proctor & Gamble Commerical Co.

Decision Date11 May 2000
Docket NumberNo. 99-1608,99-1608
Parties(1st Cir. 2000) THE CLOROX COMPANY PUERTO RICO, PLAINTIFF, APPELLANT, V. THE PROCTOR & GAMBLE COMMERCIAL COMPANY, DEFENDANT, APPELLEE. . Heard
CourtU.S. Court of Appeals — First Circuit

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Jose Antonio Fuste, U.S. District Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Armando Llorens, with whom Dora M. Penagariciano and McConnell Valdes were on brief, for appellant.

Harold P. Weinberger, with whom Jonathon M. Wagner, Gabrielle L. Gould, Kramer Levin Naftalis & Frankel, Llp, Pedro J. Santa-Sanchez, and O'Neill & Borges were on brief, for appellee.

Before Lynch, Circuit Judge, Cyr, Senior Circuit Judge, and Lipez, Circuit Judge.

Lipez, Circuit Judge.

"Mas blanco no se puede" (Whiter is not possible) was the advertising tag line used by the defendant, the Proctor and Gamble Commercial Company, to sell its detergent, Ace con Blanqueador (Ace with whitener), in Puerto Rico. The Clorox Company Puerto Rico cried foul, complaining that no detergent brings out the white like its chlorine bleach when used with a detergent. Proctor & Gamble modified its pitch, inviting consumers to "Compare con su detergente . . . Mas blanco no se puede" (Compare with your detergent . . . Whiter is not possible). Unimpressed by this change, Clorox sued, alleging, inter alia, that the advertisements were false and misleading in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). After Clorox moved for a preliminary injunction, the district court dismissed the false advertising claim sua sponte. Concluding that Clorox has stated a claim under § 43(a) of the Lanham Act, we vacate the dismissal and remand to the district court for further proceedings.

I.

We present the facts in the light most favorable to Clorox, the party opposing the dismissal of the complaint. See Langadinos v. American Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000). In 1989, Proctor & Gamble introduced in Puerto Rico Ace con Blanqueador, a powdered laundry detergent that contains a non-chlorine whitening agent described as a "color-safe oxygen bleach" with a patented "activator," the same formula used in powdered Tide with Bleach marketed in the continental United States. In 1997, Proctor & Gamble introduced a liquid version of Ace containing a "compound of high levels of sulfactants and enzymes which function as a whitener and a color enhancer," the same formula used in liquid Tide with Bleach Alternative.

The Original Doorstep Challenge Campaign

Proctor & Gamble conducted some consumer studies in 1997 and determined that an obstacle to obtaining an enhanced market share for Ace con Blanqueador was the public's perception that chlorine bleach was necessary to get clothes white. Using this new information, Proctor & Gamble implemented an advertising campaign to counter the perception of consumers that chlorine bleach was necessary, and to convince them that Ace was a superior option to using a lower-priced detergent in conjunction with chlorine bleach. This "Doorstep Challenge" included a series of television advertisements in which Francisco Zamora, a television celebrity in Puerto Rico, visited women in their homes to ask them about their laundry practices and to elicit their praise for Ace. In the commercials depicting powdered Ace, the overriding theme was that chlorine bleach was not necessary to get clothes white if washed with Ace. The commercials pitching liquid Ace also emphasized its enhanced whitening capacity, but did not specifically mention chlorine bleach. Each commercial closed with the tag line, "Whiter is not possible," a slogan Proctor & Gamble had been using since powdered Ace arrived on the market in 1989.

For instance, the "Evelyn" commercial for powdered Ace went as follows:

Francisco: Do you use Ace?

She: No . . .

Fco: What is your laundry routine?

She: I put in the three detergents I use, I throw in a bit of chlorine and I let it soak until the next day. I waste a lot of time . . . but to accomplish what I want I have to do it that way.

Fco: I dare you to wash your white garments with Ace and nothing else!

She: Without chlorine?

Fco: Without chlorine . . . we're going to wash all these.

She: I don't think so . . .

She: The truth is . . . that's whiteness, that's whiteness! So now I'm going to save money, time . . .

[VISUAL: Whiter is not possible.]

Certified Translation.

The Promotional Mailing

As part of its campaign to sell Ace, Proctor & Gamble sent a promotional brochure and product sample to consumers in Puerto Rico. The first page of the brochure depicted a bowling ball imprinted with the word "Ace" standing in front of several bowling pins that resembled Clorox bottles. The caption read: "Da en el blanco con una sola tirada," (hit the [white] spot with just one shot). The second and third pages of the brochure contained additional pictures surrounded by punchy statements in Spanish like, "Dare to pass the test. Wash with Ace and nothing else," "Say goodbye to the complications of chlorine and other cleaners," and "Resist the 'bombs.' 1 Put your ACE con Blanqueador to the test." Like the television commercials, the brochure ended with the tag line, "Whiter is not possible!"

The Modified Campaign

In January 1998, the Clorox Company, which markets in Puerto Rico a brand of chlorine-based liquid bleach called Clorox, sent a letter to Proctor & Gamble complaining that the Doorstep Challenge campaign was false and misleading, and demanding that Proctor & Gamble stop running the television advertisements. Although Proctor & Gamble would not alter the theme of its advertising, it agreed to soften the tag line by adding the qualification, "compare with your detergent," before the phrase "whiter is not possible." 2

The qualification did not satisfy Clorox. In March 1998, Clorox filed this lawsuit, alleging in its complaint violations of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), the Federal Trademark Dilution Act, 15 U.S.C. § 1125(c), the Federal Trade Commission Act and regulations, 15 U.S.C. § 45(a), Article 1802 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31 § 5141, and regulations issued by the Puerto Rico Department of Consumer Affairs ("DACO"). Clorox later amended the complaint by dropping the claims pled under the FTC Act and the FTC and DACO regulations, and adding a claim under Article 1802 predicated solely on Proctor & Gamble's alleged violations of those laws and regulations. 3 Proctor & Gamble moved to dismiss all of the claims except the Lanham Act claim. Clorox then sought leave to amend the complaint again to add Proctor & Gamble's alleged violation of the Lanham Act as another predicate for its Article 1802 claim. 4

Clorox sought to permanently enjoin Proctor & Gamble from "making any claims that Ace gets clothes 'the whitest possible,' without the use of Clorox." (Emphasis in original). Additionally, Clorox sought damages and attorneys' fees under § 43(a) of the Lanham Act. 5 Finally, Clorox moved for a preliminary injunction on its Lanham Act claim. In connection with the motion for a preliminary injunction, the parties conducted document production and depositions and submitted to the court relevant evidentiary materials, including consumer surveys, statements of experts, and the testimony of various witnesses. The district court did not hear oral argument.

In March 1999, while Clorox's motion to amend its amended complaint and its motion for preliminary injunction were pending, the district court granted Proctor & Gamble's motion to dismiss both the Dilution Act and Article 1802 claims. Additionally, the district court dismissed the Lanham Act claim sua sponte. This appeal followed, limited to the dismissal of the Lanham Act and Article 1802 claims.

II.
A. The Sua Sponte Dismissal

We review de novo the district court's dismissal of Clorox's Lanham Act claim pursuant to Fed. R. Civ. P. 12(b)(6). See Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16 (1st Cir. 1998). We will affirm the dismissal of the complaint if, and only if, accepting all well-pleaded facts as true and drawing all reasonable inferences in favor of the plaintiff, the complaint "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). That is, the complaint is properly dismissed only when the allegations are such that "the plaintiff can prove no set of facts to support [the] claim for relief." Rockwell v. Cape Cod Hosp., 26 F.3d 254, 260 (1st Cir. 1994).

Courts must move cautiously when dismissing a complaint sua sponte. See, e.g., Baker v. Cuomo, 58 F.3d 814, 818 (2d Cir. 1995). Although it is occasionally appropriate for a district court to "note the inadequacy of the complaint and, on its own initiative, dismiss the complaint[,] a court may not do so without at least giving plaintiffs notice of the proposed action and affording them an opportunity to address the issue." Wyatt v. City of Boston, 35 F.3d 13, 14-15 (1st Cir. 1994) (quoting Literature, Inc. v. Quinn, 482 F.2d 372, 374 (1st Cir. 1973)). See also Perez v. Ortiz, 849 F.2d 793, 797 (2d Cir. 1988) (noting that "the general rule is that a 'district court has no authority to dismiss a complaint for failure to state a claim upon which relief can be granted without giving the plaintiff an opportunity to be heard'"). Clorox was given no opportunity to argue the validity of its claim to the district court. Moreover, the court's dismissal was done in the face of Proctor & Gamble's acknowledgment that "the complaint states a claim under the federal false advertising statute[--]Section 43(a) of the Lanham Act." Clorox had no reason to suspect, therefore, that its Lanham Act claim was in danger of dismissal.

There are limited exceptions to the general rule barring dismissal without notice,...

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