Sanborn Mfg. Co., Inc. v. Campbell Hausfeld/Scott Fetzer Co.

• Decision Date: 08 July 1993
• Docket Number: No. 92-2559,92-2559
• Citation: 997 F.2d 484
• Parties: 1993-2 Trade Cases P 70,470, 27 U.S.P.Q.2d 1533 SANBORN MANUFACTURING COMPANY, INC., Appellant, v. CAMPBELL HAUSFELD/SCOTT FETZER COMPANY, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 484

997 F.2d 484

1993-2 Trade Cases P 70,470, 27 U.S.P.Q.2d 1533

SANBORN MANUFACTURING COMPANY, INC., Appellant, v. CAMPBELL HAUSFELD/SCOTT FETZER COMPANY, Appellee.

No. 92-2559.

United States Court of Appeals Eighth Circuit.

Submitted March 15, 1993.

Decided July 8, 1993.

Daniel J. Maertens, Minneapolis, MN, argued (Jerome B. Pederson, on the brief), for appellant.

Mark G. Schroeder, St. Paul, MN, argued (Alan H. Maclin, on the brief), for appellee.

Before MAGILL, Circuit Judge, HEANEY, Senior Circuit Judge, and HANSEN, Circuit Judge.

HANSEN, Circuit Judge.

Sanborn Manufacturing Company (Sanborn) sued Campbell Hausfeld/Scott Fetzer Company (Campbell) for deceptive advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a), and in violation of the Minnesota Deceptive Trade Practices Act, Minn.Stat. § 325D.43 et seq., and for unfair competition. Sanborn moved for a preliminary injunction alleging that Campbell had improperly affixed tags to two air compressor models erroneously indicating that the units had been inspected and approved by Underwriters Laboratories (UL). The district court ¹ denied Sanborn's motion for preliminary injunction and Sanborn appeals. We affirm the district court.

I. Background

Sanborn and Campbell are two of the major manufacturers competing in the air compressor manufacturing market. Campbell sells two models of air compressors: the "HL7023 model," labeled as "5 Air Compressor HP rating," and the "WL6007 model," labeled as "3.5 Air Compressor Horsepower Rating." Campbell affixed a tag to both models indicating that they had been inspected and approved by Underwriters Laboratories (UL).

Under an amendment to UL standard 1450, air compressors labeled as having more than three horsepower and manufactured after August 30, 1991, must use an air tank certified by the American Society of Mechanical Engineers (ASME). Sanborn alleges that the two Campbell models do not meet the UL standard. Campbell admits that the models manufactured after August 30, 1991, do not have ASME certified air tanks, but asserts that UL approved of the use of its mark on the two models. Sanborn and Campbell hotly contest whether UL gave its approval to the models in question. Sanborn maintains that it is at a competitive disadvantage because its models bearing the UL mark and labeled as having more than three horsepower do have ASME certified air tanks and are, therefore, more expensive. Beginning April 28, 1992, Campbell voluntarily removed the UL mark from the models and is removing the words "horsepower" and/or "h.p." from the labels on the models. On June 3, 1992, the district court denied Sanborn's request for preliminary injunction.

Sanborn asserts that the district court abused its discretion in denying the motion for preliminary injunction based on the weight of the evidence. Sanborn also argues that in determining one of the factors used in deciding a motion for preliminary injunction, the threat of irreparable harm to the movant, that the district court applied an erroneous legal standard.

II. Discussion

In deciding a motion for a preliminary injunction, the court should consider (1) the probability of success on the merits; (2) the threat of irreparable harm to the movant; (3) the balance between this harm and the injury that granting the injunction will inflict on other interested parties; and (4) whether the issuance of an injunction is in the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981) (en banc). "As is always true when weighing these factors to determine whether the extraordinary relief of a preliminary injunction should be granted, no single factor is in itself dispositive." Calvin Klein Cosmetics v. Parfums de Coeur, Ltd., 824 F.2d 665, 667 (8th Cir.1987) (citation omitted). Rather, "all of the factors must be considered to determine whether the balance weighs towards granting the injunction." Dakota Indus., Inc. v. Dakota Sportswear, Inc., 988 F.2d 61, 64 (8th Cir.1993) (citation omitted). The burden on the movant "is a heavy one where, as here, granting the preliminary injunction will give [the movant] substantially the relief it would obtain after a trial on the merits." Dakota Indus., Inc. v. Ever Best Ltd., 944 F.2d 438, 440 (8th Cir.1991) (citations omitted). We will not "disturb the district court's balancing of the equities absent a clearly erroneous factual determination, an error of law, or an abuse of discretion." Calvin Klein Cosmetics v. Lenox Labs., Inc., 815 F.2d 500, 503 (8th Cir.1987) (citations omitted).

A. Likelihood of Success

With respect to the first Dataphase factor, the district court found that "the likelihood of success on the merits is not clear, with conflicting predictions presented by the parties." Sanborn Mfg. Co. v. Campbell-Hausfeld/Scott Fetzer Co., 828 F.Supp. 652, 657 (D.Minn.1993) (memorandum and order).

The Lanham Act provides that a company that uses any "false or misleading representation of fact" that is "likely to cause confusion, or to cause mistake or to deceive" as to the "approval" of its goods which enter interstate commerce shall be liable in a civil action by a party "who believes that [it] is or is likely to be damaged by such act." ² 15 U.S.C. § 1125(a)(1). Sanborn argues that Campbell's use of the UL mark on the HL7023 model and the WL6007 model was a false representation of fact because UL did not in fact approve the models in question. Campbell argues that the UL gave its approval of the use of the mark. Although discovery was incomplete, both parties submitted substantial evidence to support their respective positions.

Campbell asserts that a meeting between Mike Yacobi, Campbell's Director of Engineering; Mike Keilholz, an engineer for Campbell; and Mike Tetzlaff, UL Staff Engineer, took place on December 11, 1990, at which the amendment to UL standard 1450 was discussed. Campbell submitted contemporaneous handwritten notes and an affidavit that indicate that while an air compressor without an ASME certified air tank labeled as "3.5 horsepower air compressor" would not receive UL approval, one labeled "3.5 air compressor horsepower" would receive approval because the order indicated that the wording referred to the air compressor, not the motor. See Campbell's appendix, at 17 (Yacobi affidavit), 24 (Yacobi handwritten notes). Tetzlaff does not recall the details of this meeting and stated that he does not believe that he would have given final approval for that language. See id. at 96-97 (Tetzlaff deposition); Sanborn's app. at 81-82 (Tetzlaff deposition). A memorandum from Keilholz sent two days later to Ed Kloss, an engineer for UL, states "According to Mike T., a manufacturer cannot state '3 1/2HP', but '3 1/2 compressor HP' is acceptable." See Campbell's app. at 245 (memo).

Soon thereafter, Keilholz faxed correspondence seeking approval of a tank decal stating "3.5 AIR COMPRESSOR HORSEPOWER RATING" to Laurie Florence, the UL engineer assigned to Campbell air compressor projects. Id. at 248 (memo). Keilholz stated that Florence telephoned him and gave him oral approval. Id. at 306 (Keilholz supplemental affidavit). Florence could not recall this conversation. Id. at 56 (Florence deposition).

On February 8, 1991, Keilholz sent Tetzlaff a handwritten note seeking approval for a label that read "3.5 RATED AIR COMPRESSOR H.P." See Sanborn's app. at 87-88 (note). A notation on the document indicated that on February 11, 1991, Tetzlaff communicated by telephone that the label was "ok till effective date of new requirements [August 30, 1991]." Id. at 70-74 (Tetzlaff deposition), 87-88 (note).

On March 4, 1991, Tetzlaff wrote Keilholz and stated that the Model HL7023 air compressors manufactured after August 30, 1991, would not comply with the amended standard 1450. Id. 89-90 (letter). The letter further stated that the right to use the UL mark "will cease on that date unless prior to that time the products are found by UL to comply." Id. A letter dated March 9, 1991, from Tetzlaff thanked Keilholz for his response to the March 4, 1991, letter, and stated that "the phrase, '3.5 air compressor,' would be acceptable whereas the phrase, '3.5 air compressor horsepower,' would not be acceptable." Id. at 45 (letter).

On May 24, 1991, Keilholz faxed a memorandum to Anthony Bell of UL. Id. at 44 (letter). After acknowledging that Campbell must alter the labels on its air compressors to comply with the amendment to UL standard 1450, effective August 30, 1991, Keilholz stated:

Through talking with Mike Tetzlaff ..., Campbell Hausfeld has taken the position to comply by not wording 3 + horsepower models using non-ASME tanks with the word "horsepower" in any way, shape or form on the actual model or its packaging, manual or sales literature. Campbell Hausfeld has successfully listed compressors in the past as "3.5 Air Compressor" marked on the models, and we plan to use this mark on all 3 + horsepower models using non-ASME tanks (even after the August 30, 1991 rule effective date).

Id. Keilholz now states that he meant that the word "horsepower" would not be used immediately after a number such as 3.5 where it would refer to motor rating rather than air compressor pump ratings. See Campbell's app. at 320-21 (Keilholz third affidavit). Bell ambiguously responded that Campbell's "fax states that the units in question are 3 + horsepower models" and that "3 + horsepower units submitted will be subjected to 3 + horsepower requirements." Id. at 251 (memo). Bell states that the discussion centered on the term "3.5 air compressor" and that he did not authorize the use of the phrase "3.5 air compressor horsepower rating" for units manufactured after August 30, 1991. See Sanborn's app. at 117 (Bell deposition).

On August 27, 1991, an inspector from UL issued a variation notice on Model WL6007, identified as item one on the notice. See Campbell's app. at 252 (variation notice). The...