Nutreance LLC v. Primark, LLC
| Decision Date | 10 July 2020 |
| Docket Number | Case No. 4:18-cv-00098-SRC |
| Parties | NUTREANCE LLC, et al., Plaintiffs, v. PRIMARK, LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This is a trademark infringement/false advertising case involving competitors in the nutritional-supplements market. Plaintiffs allege that Defendants orchestrate a scheme to publish sham reviews of Plaintiffs' products online, on websites purporting to be independent and unbiased, but actually controlled by Defendants. These review sites include "rankings" of products that invariably rank Plaintiffs' products as inferior, and rank Defendants' competing products as the top choice. Plaintiffs further allege that Defendants use Plaintiffs' trademarks as paid search engine terms to steer potential customers to the fake review sites, and ultimately to Defendants' own products.
This matter comes before the Court on several pending motions. Defendants move for summary judgment on all claims in Plaintiffs' complaint. Doc. 140. Defendants also move to strike certain exhibits submitted by Plaintiffs in opposition to Defendants' motion for summary judgment. Doc. 170. Defendants separately move to exclude the testimony of Plaintiffs' damages expert, Sanford Krachmalnick. Doc. 146. Finally, Plaintiffs move to strike portions of a declaration of Defendants' lead counsel, and related supporting materials. Doc. 157.
A. The parties
Plaintiff Nutreance LLC markets and sells nutritional supplement products under trade names including RediCalm, RediMove, RediMind, and RediNite. Plaintiff Idingo, LLC markets and sells nutritional supplement products under trade names including Proaxil, Menoprin, Jointprin, and Brainol. Plaintiff Koech Corp. markets and sells nutritional supplement products under trade names including Macafem. Koech Corp. federally registered the MACAFEM trademark in 2013. In 2018, after the filing of this lawsuit, Nutreance LLC federally registered the trademarks REDICALM, REDIMOVE, REDIMIND, and REDINITE. All Plaintiffs market and sell their nutritional products on the internet.
Defendant Admark, LLC also markets and sells nutritional supplements on the internet. Defendants Danny and Brendan O'Shea are the sole members of Admark, LLC. Defendants Primark, LLC, iHealth Fulfillments Services Limited Liability Company, and Wastena Holdings, LLC are additional entities, either active or dissolved, of which Danny and Brendan O'Shea are or were the sole members. Defendant Olympia O'Shea is Danny O'Shea's wife.
B. The non-party review hosts
21 Century Web is an India-based entity that publishes online reviews of nutritional supplements. 21 Century Web hosts these reviews at websites including consumerhealthdigest.com, dailyhealthanswers.com, and thebeautyinsiders.com (the "Review Websites"). The founder and CEO of 21 Century Web is Mohammed Khanbahadur. In 2019, Khanbahadur formed a new entity, Kyzooma Pvt. Ltd., using the same business address as 21 Century Web, and transferred ownership of the Review Websites to Kyzooma. Doc. 105-6. The Court refers to non-parties 21 Century Web and Kyzooma collectively as the Review Hosts.
In 2015, Admark contracted with the Review Hosts to conduct "affiliate marketing" for Admark. Under the affiliate marketing agreement, Admark agreed to pay the Review Hosts a 20% commission on all sales of Admark products referred by the Review Websites. The Review Hosts agreed to place banner advertisements for Admark products on the Review Websites. In turn, Admark agreed to allow the Review Hosts to use its intellectual property (including trade names) in product reviews published on the Review Websites.
The Review Hosts disclose on the Review Websites that they may receive a commission for sales of products referred by the Review Websites. However, an "Advertising Disclosure" on all Review Websites states:
C. Teresa Dowdell
Teresa Dowdell is a former business partner of Brendan and Danny O'Shea. According to Dowdell, the editorial independence proclaimed by the Review Hosts is a lie. Dowdell worked with Brendan and Danny O'Shea from 2002 to 2014; first for an entity named Nutrazone LLC and later for an entity named Syntegy LLC. Dowdell avers that Danny and Brendan O'Shea first began working with the Review Hosts to market and sell nutritional supplements for Nutrazone in 2002. According to Dowdell, Khanbahadur and another man, Khalid Rizwan, operated the Review Hosts, but Brendan and Danny O'Shea actually controlled them.
Dowdell avers that Brendan and Danny O'Shea partnered with Khanbahadur and Rizwan of the Review Hosts in a scheme as follows: the Review Hosts hosted websites that purported to give unbiased "reviews" of competitor's products using a sham and manipulated ranking system. The Review Hosts paid third-party copywriters to prepare the reviews with an appearance ofobjectivity, but always concluding that the competitors' products were inferior. Potential customers who entered the name of competitors' products into search engines would see results near the top of the list using phrases like "shocking facts," "exposed," "scam," or "warning," and urging customers to first review the Review Hosts' purportedly-unbiased reviews before purchasing the competitor's product. Prospective customers who clicked on these links would see the Review Hosts' sham review, including false and disparaging information about the competitor's product. The review pages would invariably rank Brendan and Danny O'Shea's products as "#1" or "top choice." Though the Review Websites purported to be independent and unbiased, Brendan and Danny O'Shea actually controlled what content was posted or taken down, and the Review Hosts did not independently control the content of the Review Websites without oversight from the O'Sheas.
Dowdell avers that Danny and Brendan O'Shea, through their partnership with the Review Hosts, would also use the names of competitors' products as paid search engine terms, so that customers searching for competitors' products would instead be directed to the Review Websites. According to Dowdell, Brendan and Danny O'Shea's nutritional supplement businesses derived the majority of their revenue from these marketing tactics.
D. Present suit
Each of the Plaintiffs market and sell nutritional supplements that are the subject of "reviews" hosted on the Review Websites. Each Plaintiff claims quantifiable losses as a result of Defendants' marketing tactics. Plaintiffs bring claims for trademark infringement and false advertising under the Lanham Act, 15 U.S.C. §§1114, 1125(a), as well as Missouri common law claims for unfair competition, commercial disparagement, defamation, and tortious interference.
Federal Rule of Evidence 702, which governs the admission of expert testimony in federal court, provides in relevant part:
Fed. R. Evid. 702. Under Rule 702, district courts act as gatekeepers, ensuring that expert testimony is "not only relevant, but reliable." Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S. Ct. 2786, 2795, 125 L. Ed. 2d 469 (1993); see also Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999) (quoting Daubert, 509 U.S. at 597). The reliability requirement means "the party offering the expert testimony must show by a preponderance of the evidence both that the expert is qualified to render the opinion and that the methodology underlying his conclusions is scientifically valid," while the relevance requirement demands "the proponent must show that the expert's reasoning or methodology was applied properly to the facts at issue." Barrett v. Rhodia, Inc., 606 F.3d 975, 980 (8th Cir. 2010) (quoting Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 757 (8th Cir. 2006)).
The Eighth Circuit Court of Appeals has stated that proposed expert testimony must meet three criteria to be admissible under Rule 702. "First, evidence based on scientific, technical, or other specialized knowledge must be useful to the finder of fact in deciding the ultimate issue offact." Lauzon v. Senco Prods., Inc., 270 F.3d 681, 686 (8th Cir. 2001). "Second, the proposed witness must be qualified to assist the finder of fact." Id. "Third, the proposed evidence must be reliable or trustworthy in an evidentiary sense, so that, if the finder of fact accepts it as true, it provides the assistance the finder of fact requires." Id. (internal quotation marks omitted). To meet the third requirement, the testimony must be "based on sufficient facts or data" and be "the product of reliable principles and methods," and the expert must have "reliably applied the principles and methods to the facts of the case." Id.; Fed. R. Evid. 702(b)-(d).
The Eighth Circuit has admonished district courts "not to weigh or assess the correctness of competing expert opinions." Johnson v. Mead Johnson & Co., LLC, 754 F.3d 557, 562 (8th Cir. 2014). "As long as the expert's scientific testimony rests upon 'good grounds, based on what is known' it should be tested by the adversary process with competing expert testimony and cross-examination, rather than excluded by the court at the outset." Id. (quoting Daubert, 509 U.S. at 590, 596). "Only if the expert's...
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