Eastman Chem. Co. v. Plastipure, Inc.

• Decision Date: 30 August 2013
• Docket Number: No. A–12–CA–057–SS.,A–12–CA–057–SS.
• Citation: 969 F.Supp.2d 756
• Parties: EASTMAN CHEMICAL COMPANY, Plaintiff, v. PLASTIPURE, INC. and Certichem, Inc., Defendants.
• Court: U.S. District Court — Western District of Texas

969 F.Supp.2d 756

EASTMAN CHEMICAL COMPANY, Plaintiff,

v.PLASTIPURE, INC. and Certichem, Inc., Defendants.

No. A–12–CA–057–SS.

United States District Court,

W.D. Texas,

Austin Division.

Aug. 30, 2013.

Eleanor Ruffner, Kevin W. Brown, Shannon Dawn King, Rick Harrison, Fritz Byrne Head and Harrison, PLLC, Austin, TX, for Plaintiff.

Robert G. Hargrove, Hays & Owens, Austin, TX, Sarah Ann Nicolas, Atlas Hall & Rodriguez, Brownsville, TX, George Barton Butts, George Butts Law, Bryan D. Lauer, Ray N. Donley, Stephen E. McConnico, Steven J. Wingard, Scott Douglass and McConnico LLP, Sean P. Flammer, Office of the Attorney General, Austin, TX, for Defendants.

ORDER

SAM SPARKS, District Judge.

BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Defendants PlastiPure, Inc. and CertiChem, Inc.'s Motion for Judgment as a Matter of Law [# 185], and Plaintiff Eastman Chemical Company's Response [# 189]; Eastman's Motion for Entry of Final Judgment [# 204], Defendants' Response [# 209], and Eastman's Reply [# 214]; Defendants' Motion for Judgment [# 205], Eastman's Response [# 211], and Defendants' Reply [# 215]. Having reviewed the documents, the governing law, and the file as a whole, the Court now enters the following opinion and orders.

Background

In this Lanham Act false advertising case, Eastman alleged Defendants made false and misleading statements about an Eastman product, a plastic resin known as Tritan. Specifically, Eastman claimed Defendants incorrectly stated Tritan, or products made from Tritan, leached chemicals capable of causing estrogenic activity when subjected to various stressors, and those estrogenic chemicals could cause harm to humans. A jury trial was held from July 15, 2013 to July 24, 2013. After approximately three to four hours of deliberation, the jury returned a verdict and found in favor of Eastman on every question.

At the close of Eastman's case-in-chief, Defendants filed their motion for judgment as a matter of law, which the Court carried. After the jury returned its verdict, the Court instructed the parties to file proposed final judgments. The parties' respective motions, proposed judgments, and assorted briefs are now submitted, and the issues are ripe for adjudication.

Analysis

I. Defendants' Motion for Judgment as a Matter of Law

A. Legal Standard

“Under the standard articulated in Fed.R.Civ.P. 50(a), a district court properly grants a motion for judgment as a matter of law only when ‘a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for the party on that issue.’ ” Anthony v. Chevron USA, Inc., 284 F.3d 578, 582–83 (5th Cir.2002) (quoting Fed.R.Civ.P. 50(a)). In order to submit an issue to the jury, “the evidence must be sufficient so that [the] jury will not ultimately rest its verdict on mere speculation and conjecture.” Id. The court considers “all the evidence presented at trial in the light most favorable to the non-moving party.” Id.

B. Application

To succeed on a false advertising claim under section 43(a) of the Lanham Act, a plaintiff must establish the following five elements:

(1) A false or misleading statement of fact about a product;

(2) Such statement either deceived, or had the capacity to deceive a substantial segment of potential consumers;

(3) The deception is material, in that it is likely to influence the consumer's purchasing decision;

(4) The product is in interstate commerce; and

(5) The plaintiff has been or is likely to be injured as a result of the statement at issue.

Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir.2000). Defendants offered a plethora of arguments in support of their motion,¹ but none justified taking the ultimate questions away from the jury.

First, Defendants argued there was no evidence they were “in commercial competition” with Eastman, a requirement drawn from section 43(a)'s “commercial advertising or promotion” language. Seven–Up Co. v. Coca–Cola Co., 86 F.3d 1379, 1382–84 (5th Cir.1996). This argument is both conclusory and patently false. Defendants' common founder and “Chief Scientist,” Dr. George Bittner, testified Defendants were developing a plastic resin to compete with Tritan, and that such a product may or may not be ready to market. Although Dr. Bittner expressed a surprising amount of confusion about what actually goes on at the companies he owns, his testimony alone provided sufficient evidence from which a jury could conclude Defendants were in commercial competition with Eastman. Defendants also published a brochure in which they compared test results from products made with Tritan to their own in-house brand of plastic, further suggesting direct competition between the parties. Finally, Defendants' general business practice of certifying plastic products as “EA-free” directly impacts Eastman's business. See Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 463 (5th Cir.2001) (jury “could have inferred that the parties were competitors” based on plaintiff's “direct business interest” in relevant market and defendants' advertisements in the same market).

Second, Defendants contended they made no statements of fact about Tritan. “[A] statement of fact is one that (1) admits of being adjudged true or false in a way that (2) admits of empirical verification.” Pizza Hut, 227 F.3d at 496 (internal quotation marks omitted). Defendants contend their statements about Tritan are matters of scientific debate protected by the First Amendment and are therefore per se not actionable, citing ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir.2013).

ONY does not control this case.² Most obviously, ONY is factually distinguishable because the plaintiff there sued over conclusions drawn in a published article in a peer-reviewed scientific journal. Id. at 496–98. In essence, the plaintiff believed the defendants had reached an incorrect result based on the data collected and reported in the paper. The Second Circuit concluded “the article's contents [were] not actionable” because the paper disclosed the data, weaknesses of the experiments, and potential conflicts of interest, thereby giving the scientific audience adequate information to analyze and accept or reject the authors' conclusions. Id. at 498.³ By contrast, Eastman did not sue Defendants over Dr. Bittner's scientific paper, which was also published in a peer-reviewed scientific journal. Instead, Eastman's false advertising claims are based on non-scientific materials, such as an advertising brochure, press releases, and Defendants' website,⁴ none of which included the full context of the scientific paper, and some of which pre-dated the publication of Dr. Bittner's paper. The “scientific debate” in this case moved from the pages of academic journals to commercial advertisements targeted at consumers. Although the jury heard from a dizzying number of experts and was subjected to hours upon hours of complex scientific testimony, often with little to no interpretive assistance from counsel, this case was ultimately nothing more than a battle of the experts in which the jury was properly tasked with crowning a victor. See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 596, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) (recognizing the traditional tools of the adversary system are adequate to allow juries to assess even complex scientific evidence); see also Davis v. Duran, 277 F.R.D. 362, 366 (N.D.Ill.2011)( Daubert “reaffirmed ... the capability of juries to understand scientific evidence and weigh the credibility of the competing experts, notwithstanding their contradictory conclusions and dogmatic assertions” (internal quotation marks omitted)).⁵

Third, Defendants argued there was no evidence from which the jury could reasonably conclude the statements “Tritan has EA” ⁶ or “Tritan has EA and is thus harmful to human health” ⁷ were false. To the contrary, the jury heard extensive evidence, including expert testimony, indicating Tritan did not exhibit estrogenic activity or leach chemicals capable of causing estrogenic activity after being subjected to common-use stressors. This evidence included discussions of Eastman's own testing of Tritan's components, as well as criticisms of the testing done by Defendants. With respect to the “Tritan is harmful” claim, it was essentially undisputed there was no evidence to support the claim that Tritan is actually harmful to humans: the expert witnesses on both sides universally refused to make such a claim, and even PlastiPure's CEO admitted he could not definitively say Tritan (as opposed to EA in the abstract) is dangerous.

Fourth, Defendants argued there was no evidence Eastman's customers were actually deceived, an element Eastman must prove if a statement is deemed misleading. But the jury heard from numerous Eastman customers who expressed concern about the statements Defendants were making, even if their concerns were ultimately assuaged by Eastman. Additionally, Eastman presented testimony from a marketing expert who conducted a survey of plastic—product purchasers and concluded a statistically significant amount of those surveyed believed various (allegedly false or misleading) statements made by Defendants. While the jury had numerous reasons to discount or disregard entirely the expert's survey results—such as her acknowledgment she did not survey Eastman's actual customers, and her inability to explain her statistical analysis—the jury was presented with some evidence which could have supported a finding of actual deception.⁸

Fifth, Defendants argued there was no evidence Eastman's customers' purchasing decisions were likely to be influenced by any misleading statements, and thus the “materiality” element is not satisfied. Once again, the jury heard some evidence, in the form of the marketing expert's survey as well as testimony about Eastman's...