Coca-Cola Co. v. Tropicana Products, Inc.

Citation690 F.2d 312
Decision Date29 September 1982
Docket NumberD,No. 1524,COCA-COLA,1524
PartiesTheCOMPANY, Plaintiff-Appellant, v. TROPICANA PRODUCTS, INC., Defendant-Appellee. ocket 82-7422.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Thomas C. Morrison, New York City (Christine H. Miller, Patterson, Belknap, Webb & Tyler, New York City, of counsel), for plaintiff-appellant.

Frank L. Butler, Chicago, Ill. (Logan T. Johnston, Neil E. Holmen, Winston & Strawn, Chicago, Ill., of counsel), for defendant-appellee.

Before CARDAMONE and WINTER, Circuit Judges, and MALETZ, Judge, Court of International Trade. *

CARDAMONE, Circuit Judge:

A proverb current even in the days of ancient Rome was "seeing is believing." Today, a great deal of what people see flashes before them on their TV sets. This case involves a 30-second television commercial with simultaneous audio and video components. We have no doubt that the byword of Rome is as valid now as it was then. And, if seeing something on TV has a tendency to persuade a viewer to believe, how much greater is the impact on a viewer's credulity when he both sees and hears a message at the same time?

In mid-February of 1982 defendant Tropicana Products, Inc. (Tropicana) began airing a new television commercial for its Premium Pack orange juice. The commercial shows the renowned American Olympic athlete Bruce Jenner squeezing an orange while saying "It's pure, pasteurized juice as it comes from the orange," and then shows Jenner pouring the fresh-squeezed juice into a Tropicana carton while the audio states "It's the only leading brand not made with concentrate and water."

Soon after the advertisement began running, plaintiff Coca-Cola Company (Coke, Coca-Cola), maker of Minute Maid orange juice, brought suit in the United States District Court for the Southern District of New York, 538 F.Supp. 1091, against Tropicana for false advertising in violation of section 43(a) of the Lanham Act. The statute provides that anyone who uses a false description or representation in connection with goods placed in commerce "shall be liable to a civil action by (anyone) ... who believes that he is or is likely to be damaged by the use of ... such false description or representation." 15 U.S.C. § 1125(a) (1976). Coke claimed the commercial is false because it incorrectly represents that Premium Pack contains unprocessed, fresh-squeezed juice when in fact the juice is pasteurized (heated to about 200o Fahrenheit) and sometimes frozen prior to packaging. The court below denied plaintiff's motion for a preliminary injunction to enjoin further broadcast of the advertisement pending the outcome of this litigation. In our view preliminary injunctive relief is appropriate.

I Scope of Review

A party seeking issuance of a preliminary injunction in this Circuit must always show that it is likely to suffer possible irreparable harm if the requested relief is not granted. In addition, it must demonstrate either (1) a likelihood of success on the merits of its case or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor. Sperry International Trade, Inc. v. Government of Israel, 670 F.2d 8, 11 (2d Cir. 1982); Jackson Dairy, Inc. v. H. P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979) (per curiam); Caulfield v. Board of Education, 583 F.2d 605, 610 (2d Cir. 1978); see Mulligan, Preliminary Injunction in the Second Circuit, 43 Brooklyn L.Rev. 831 (1977).

The grant or refusal to grant interlocutory injunctive relief rests in the sound discretion of the district court judge. Upon appeal, the order granting or denying a preliminary injunction will not be disturbed unless it results from an abuse of judicial discretion, see Doran v. Salem Inn, Inc., 422 U.S. 922, 931-32, 95 S.Ct. 2561, 2567-68, 45 L.Ed.2d 648 (1975), or is contrary to some rule of equity, Meccano, Ltd. v. John Wanamaker, New York, 253 U.S. 136, 141, 40 S.Ct. 463, 465, 64 L.Ed. 822 (1920).

As so often is the case, the rule is easily stated; its precise meaning is more elusive. In reviewing the action of a trial court, an appellate court is not limited to reversing only when the lower court's action exceeds any reasonable bounds and to rubber-stamping with the imprimatur of an affirmance when it does not. Omega Importing Corp. v. Petri-Kine Camera Co., 451 F.2d 1190, 1197 (2d Cir. 1971) (Friendly, C. J.). Congress, in enacting 28 U.S.C. § 1292(a)(1) to give appellate courts jurisdiction over interlocutory injunctions, surely did not envision that appellate review should be limited to a choice between the monster Scylla and the abyss of Charybdis. See Omega Importing, 451 F.2d at 1197; Carroll v. American Federation, 295 F.2d 484, 488 (2d Cir. 1961). The scope of review over the exercise of a trial court's discretion is broader, lying between-not relegated to-these two extremes. Thus, as Learned Hand defined it, abuse of discretion "means no more than that we will not intervene, so long as we think that the (discretion exercised) is within permissible limits," Barnett v. Equitable Trust Co. of New York, 34 F.2d 916, 920 (2d Cir. 1929), modified and aff'd sub nom. United States v. Equitable Trust Co. of New York, 283 U.S. 738, 51 S.Ct. 639, 75 L.Ed. 1379 (1930). 1

An abuse of discretion may consist of an error of law, an error of fact, or an error in the substance or form of the trial court's order. For example, the trial judge may have an erroneous view of the law which controls the pending suit-a statute, standard or line of cases may be misapprehended-or the judge may have misapplied the rules governing the issuance of injunctive relief. The Supreme Court has viewed an error of law as an abuse of a trial court's discretion. See United States v. Corrick, 298 U.S. 435, 438, 56 S.Ct. 829, 830, 80 L.Ed. 1263 (1936). Our Court has reasoned that where a trial court's denial of an injunction is based "in substantial measure upon conclusions of law which can and should be reviewed because of their basic nature" in the pending litigation, the order may be reversed and the case remanded in light of the appropriate legal principles. Ring v. Spina, 148 F.2d 647, 650 (2d Cir. 1945), cert. denied, 335 U.S. 813, 69 S.Ct. 30, 93 L.Ed. 368 (1948).

Beginning decades ago, we have not hesitated to reverse an order denying a preliminary injunction where the district court reached an erroneous conclusion on the facts before it, see Schey v. Turi, 294 F. 679, 680 (2d Cir. 1923); Palmer v. Superior Manufacturing Co., 210 F. 452, 453 (2d Cir. 1913); or, as stated now under Rule 52(a) of the Federal Rules of Civil Procedure, where the findings of fact are clearly erroneous, see Unicon Management Corp. v. Koppers Co., Inc., 366 F.2d 199, 203 (2d Cir. 1966). Further, an abuse of discretion may be found in the form that the order itself takes, e.g., an injunction may be too broad or too long in duration, or several injunctions may issue where one will do, see Donovan v. Bierwirth, 680 F.2d 263, 276-77 (2d Cir. 1982).

These various errors of law, fact, substance and form, singly or in combination, may affect the relief granted at the trial level. Upon review, if an error is found which did not actually form the basis for the determination whether the injunction issued or not, no abuse of discretion will have occurred because such an error will be deemed harmless. However, when the error, whatever its nature, is the predicate for the trial court's order, an appellate court must reverse because in such case the order would plainly result from an improvident exercise of the trial court's discretion.

An appellate court discharges its statutory obligation to review when it independently examines the relevant factors considered by the trial court in reaching its conclusion. See In re Josephson, 218 F.2d 174, 182 (1st Cir. 1954). The appellate court presupposes that the trial judge understood and applied the applicable law and took into account all the circumstances of the case. Reversal is warranted only upon a firm conviction that such presupposition was, in a given case, misplaced. A trial court's discretion should not be disturbed where a question as to its validity is perched precariously, as though on a swaying aerial catwalk, subject to doubt and uncertainty.

We believe that the outlined scope of review and the authorities cited suffice for us to reverse in the instant case where the trial court, by a misapplication of the irreparable injury standard (discussed at II, infra), concluded that Coca-Cola had failed to show an essential requirement for injunctive relief. This error of law constitutes an abuse of discretion which mandates reversal. In addition, we conclude that the trial court's finding of no facial falseness in defendant's TV commercial (discussed at III, infra) was an error of fact.

II Irreparable Injury

Perhaps the most difficult element to demonstrate when seeking an injunction against false advertising is the likelihood that one will suffer irreparable harm if the injunction does not issue. It is virtually impossible to prove that so much of one's sales will be lost or that one's goodwill will be damaged as a direct result of a competitor's advertisement. Too many market variables enter into the advertising-sales equation. Because of these impediments, a Lanham Act plaintiff who can prove actual lost sales may obtain an injunction even if most of his sales decline is attributable to factors other than a competitor's false advertising. Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186, 191 (2d Cir. 1980). In fact, he need not even point to an actual loss or diversion of sales. Id. at 190-91.

The Lanham Act plaintiff must, however, offer something more than a mere subjective belief that he is likely to be injured as a result of the false advertising, id. at 189; he must submit proof which provides a...

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