Hickson Corp. v. Northern Crossarm Co., Inc., 02-15899.

CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)
Citation357 F.3d 1256
Docket NumberNo. 02-15899.,02-15899.
PartiesHICKSON CORPORATION, Plaintiff-Counter-Defendant-Appellee Cross-Appellant, v. NORTHERN CROSSARM CO., INC., Patrick Bischel, in his individual capacity, Defendants-Counter-Claimants-Appellants Cross-Appellees.
Decision Date26 January 2004

David S. McCrea, Bloomington, IN, for Defendants.

Andrew McFee Thompson, William W. Maycock, Smith, Gambrell & Russell, Atlanta, GA, for Plaintiff.

Appeal from the United States District Court for the Northern District of Georgia.

Before TJOFLAT, BIRCH and GOODWIN*, Circuit Judges.

GOODWIN, Circuit Judge:

A controversy over promotional language employed by competitors in the wood-preservation products industry resulted in litigation in which parties on both sides obtained a summary judgment. Both sides have appealed. Because material evidence was overlooked in the district court, one of the summary judgments must be vacated and remanded. We affirm the other summary judgment.

BACKGROUND

Plaintiff-Appellee Hickson Corporation ("Hickson")1 formulates, produces, and markets chromated copper arsenate ("CCA") to wood treatment companies. Hickson owns the "Wolmanized®" trademark, and wood products companies that use Hickson's CCA product are licensed to sell wood as "Wolmanized®" lumber to retailers. Defendant-Appellant Northern Crossarm Company ("Northern") purchases a different wood preservative, alkaline copper quaternary ("ACQ"), from a Hickson competitor, pressure treats wood with it, and markets the resulting product to retailers under the name "ACQ-Preserve." Defendant Patrick Bischel is the President of Northern and is responsible for marketing ACQ-Preserve. ACQ-Preserve competes directly with Wolmanized lumber in the relevant market. These facts are not in substantial dispute.

On May 21, 2000, Bischel sent a facsimile advertisement for Northern's ACQ-Preserve to 480 retailers and distributors of CCA pressure-treated wood. Some of these 480 retailers and distributors were purchasers and sellers of Wolmanized® lumber. The advertisement (hereinafter "OUCH! advertisement") read as follows:

OUCH!

During the last 5 weeks, 5 major metropolitan news programs have done news segments warning the public about the dangers of CCA treated wood.

In court depositions in 1998, Hickson representatives admitted to knowing of at least a dozen instances of purported personal injuries caused by exposure to Wolmanized Pressure Treated Wood.

Is it time for you to switch to a treated wood without arsenic? Call us for more information on ACQ Preserve.

Hickson demanded that Northern provide Hickson with factual support for the OUCH! advertisement and that it retract the advertisement. Northern refused to do either, and Hickson filed suit on June 16, 2000.

Hickson alleged five claims: (1) false and misleading representations in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B); (2) violations of the Georgia Deceptive Trade Practices Act (GDTPA), O.C.G.A. § 10-1-372(a)(5), (a)(7), (a)(8), and (a)(12); (3) libel in violation of O.C.G.A. § 51-5-1; (4) common law product disparagement and unfair competition; and (5) tortious interference with contractual and business relations.

The district court entered a consent preliminary injunction on July 7, 2000, enjoining Northern from making false, misleading, and/or disparaging comments about Hickson, Wolmanized wood, or CCA-treated products or about Hickson's knowledge of injuries caused by exposure to Wolmanized products or CCA-treated wood.

On July 20, 2000, Hickson sent the following letter to its customers:

You may have heard that someone has been saying untrue things about Wolmanized wood. Hickson has regarded those accusations as the serious attacks that they were intended to be. As a consequence, Hickson filed a lawsuit against Northern Crossarm Co., Inc., and Patrick Bischel.

The nature of the lawsuit is described in the attached preliminary injunction, which has been entered by the federal court against the Defendants.

As you will see from reading pages 3 and 4 of the enclosure, Northern Crossarm and Mr. Bischel are enjoined from making false, misleading and/or disparaging statements regarding Hickson, Wolmanized goods and services, or CCA-treated wood; and from engaging in any communication that misleads or misinforms consumers or constitutes any deceptive misrepresentation.

In the event that you witness or hear of any act by Northern Crossarm or Mr. Bischel that may constitute a violation of the Preliminary Injunction, please contact Bill Baldwin at the Hickson office shown on this letterhead.

In response to the Hickson letter, Northern filed a counterclaim against Hickson, alleging libel and tortious interference with contractual and business relations. Both Hickson and Northern filed motions for summary judgment on the respective claims, and, as noted, the district court granted both.

DISCUSSION
A. Standard of Review

"We review a district court's grant of summary judgment de novo, applying the same legal standards applied by the district court." Valley Drug Co. v. Geneva Pharms., 344 F.3d 1294, 1303 (11th Cir. 2003) (citing Bailey v. Allgas, Inc., 284 F.3d 1237, 1242 (11th Cir.2002)).

B. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."

An issue of fact is "material" if, under the applicable substantive law, it might affect the outcome of the case. Allen v. Tyson Foods, 121 F.3d 642, 646 (11th Cir.1997) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998 (11th Cir.1992)). An issue of fact is "genuine" if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party. Id. A court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251, 252, 106 S.Ct. 2505.

The moving party bears "the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the nonmoving party bears the burden of proof at trial, the moving party may discharge this "initial responsibility" by showing that there is an absence of evidence to support the nonmoving party's case or by showing that the nonmoving party will be unable to prove its case at trial. United States v. Four Parcels of Real Property, 941 F.2d 1428, 1437-38 (11th Cir.1991). To survive summary judgment, the nonmoving party bearing the ultimate burden of proof at trial must come forward with evidence sufficient to withstand a directed verdict motion. Fitzpatrick v. Atlanta, 2 F.3d 1112, 1116 (11th Cir.1993).

On summary judgment, "the evidence of the non-movant is to be believed." Anderson, 477 U.S. at 255, 106 S.Ct. 2505. "The district court should resolve all reasonable doubts about the facts in favor of the non-movant, and draw all justifiable inferences ... in his favor." Four Parcels, 941 F.2d at 1428 (internal quotations and citations omitted).

C. Northern's Motion for Summary Judgment

We consider each of Hickson's claims in turn.

1. Lanham Act claim

Section 43(a) of the Lanham Act provides:

(1) 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 ... (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.

15 U.S.C. § 1125(a).

To succeed on a false advertising claim under § 43(a)(1)(B) of the Lanham Act, a plaintiff must establish that (1) the advertisements of the opposing party were false or misleading; (2) the advertisements deceived, or had the capacity to deceive, consumers; (3) the deception had a material effect on purchasing decisions; (4) the misrepresented product or service affects interstate commerce; and (5) the movant has been — or is likely to be — injured as a result of the false advertising. Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1247 (11th Cir. 2002) (citing ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 964 (D.C.Cir.1990)); United Industries Corp v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir.1998).

The first element of the Lanham Act test requires that the plaintiff show that the statements at issue were either "(1) commercial claims that are literally false as a factual matter" or "(2) claims that may be literally true or ambiguous but which implicitly convey a false impression, are misleading in context, or likely to deceive consumers." Clorox, 140 F.3d at 1180. We agree with the district court's analysis and conclusion that the OUCH! advertisement was not literally false and Hickson elected not to challenge this finding on appeal. Hickson argues that the OUCH! advertisement was literally true but misleading.

A plaintiff attempting to establish the second kind of falsehood, that an...

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