U-Haul Intern., Inc. v. Jartran, Inc.
| Decision Date | 17 February 1981 |
| Docket Number | No. Civ. 80-454 PHX-EHC.,Civ. 80-454 PHX-EHC. |
| Parties | U-HAUL INTERNATIONAL, INC., an Oregon Corporation, Plaintiff, v. JARTRAN, INC., a Florida Corporation; Jar Corporation, a Florida Corporation; James A. Ryder, an individual; and Sandra C. Tinsley, Inc., Defendants. |
| Court | U.S. District Court — District of Arizona |
COPYRIGHT MATERIAL OMITTED
Dan M. Durrant, Ronald J. Cohen, Deana S. Peck, Frank M. Placenti, of Streich, Lang, Weeks & Cardon, P. A., Phoenix, Ariz., for plaintiff.
Daniel J. McAuliffe, Charles Johnson, Snell & Wilmer, Phoenix, Ariz., John McAvoy, David Branson, White & Case, Washington, D. C., John Behrendt, Gibson Dunn & Crutcher, Los Angeles, Cal., Robert H. Anderson, White & Case, New York City, for defendants.
I am called on to decide whether a stipulated preliminary injunction preventing certain cost-comparison advertising should be extended to cover allegedly false and deceptive advertising involving equipment qualities of the advertiser or claimed comparisons with a competitor.
For reasons set forth in this Opinion, an Amended Preliminary Injunction will issue, although not to the extent sought by Plaintiff.
Plaintiff U-Haul International, Inc., (U-Haul) brought this action against Jartran, Inc., (Jartran), JAR Corporation (JAR), James A. Ryder (Ryder) and Sandra C. Tinsley, Inc., (Tinsley) to enjoin continued publication of advertisements alleged to make false and misleading statements and comparisons of equipment leased by U-Haul and Jartran, and to recover damages alleged to result from such publications.
U-Haul, an Oregon corporation, has its principal place of business in Phoenix, Arizona. U-Haul provides accounting and coordination activities for over 90 rental companies which are incorporated in various states as wholly owned subsidiaries of U-Haul. Each of these local companies contracts with independent entities to act as local agents in renting U-Haul equipment to the public. These operations in totality are referred to as the U-Haul System. U-Haul's business activities are directed towards renting equipment to persons interested in moving household goods and personal effects. Equipment includes trucks and trailers of various sizes, and related items such as trailer hook-up accessories and items to facilitate transportation of household goods. In the 1979-80 period, U-Haul's annual gross revenues were approaching $400,000,000, based on more than 5,000,000 annual rental transactions. The U-Haul System included approximately 100,000 trailers and 60,000 trucks. On a national basis, prior to the advent of Jartran, U-Haul handled virtually 100% of the one-way trailer rentals and about 80% of the one-way and local truck rentals of comparably sized units.
James A. Ryder founded Ryder System in the 1930s, and by 1978 that company (or related companies) was involved in rental and leasing of large trucks and trailers of the type used by freight carriers and was also engaged in specialized contract carrier services. In 1978, Ryder terminated all relationships with Ryder System, and he then formed Jartran to lease large truck and trailer units to franchisees, with Jartran to service the units. This plan and related business did not develop rapidly and in 1979, Jartran (with Ryder as Chairman and Chief Executive Officer) decided to go into the business of renting trucks and trailers in the consumer rental market — the same market in which U-Haul operated. Jartran's initial advertisements starting in August, 1979, involved rental of trucks. Jartran acquired its first trailers in early 1980, and ads mentioning trailers appeared in March, 1980. By late 1980, Jartran had approximately 2,100 dealers with 10,000 trucks and 19,000 trailers in its consumer rental division. In 1979, Jartran had gross revenues of approximately $5,000,000, and it was projecting $100,000,000 in 1980, with the majority of revenues coming from the consumer rental division. Jartran's advertising budget in 1980 was $6,000,000.
JAR owns 97% of Jartran's stock and Ryder owns approximately 87% of JAR's stock.
Sandra C. Tinsley, Inc., is the advertising agency that worked with Jartran in its consumer rental market advertising program — which is at issue in this proceeding.
U-Haul's First Amended Complaint alleges five claims:
(1) violation of the Lanham Act, Section 43(a) (15 U.S.C. § 1125(a));
(2) violation of the Lanham Act, Section 44 (15 U.S.C. § 1126);
(3) a common law claim for injurious falsehood;
(4) a common law claim for interference with prospective advantage; and
(5) a claim against Ryder that he is personally liable for damages sustained by Plaintiff due to the claimed false and misleading advertisements.
Jurisdiction is conferred on this Court by 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a). The Court has jurisdiction over the pendent claims by reason of 28 U.S.C. § 1338(b), as well as diversity jurisdiction under 28 U.S.C. § 1332.
U-Haul moved for a Preliminary Injunction, pending final disposition of the action, to enjoin defendants from:
Prior to hearing, the parties stipulated to entry of a Preliminary Injunction, with respect to price advertising, as follows:
ORDERED that Jartran, Inc., its officers, agents, servants, employees and all those persons in active concert or participation with it, be and are hereby enjoined until the entry of a final order in this action from publishing any advertisement that (1) purports to state both the prices charged by U-Haul and those charged by Jartran and/or (2) states that Jartran saves consumers money by reason of the prices charged by Jartran while mentioning, displaying, or otherwise directly referring to U-Haul or any of its equipment.
U-Haul withdrew its request for a preliminary injunction related to dealer-contractual relationships, reserving its right to pursue this claim at trial on the merits, and accordingly, so-called dealer ads are not an issue at this time.
The preliminary injunction hearing commenced on December 16, 1980, and extended over all or parts of thirteen days, ending January 20, 1981, with more than 2,600 transcript pages of evidence and argument, and in excess of 300 exhibits. Twenty-four witnesses testified, either personally, or by way of deposition (and in several instances both ways). Each party in the proceeding was afforded an equal opportunity to fully present its evidence and arguments, and the record reflects that such opportunities were extensively pursued.
In the Ninth Circuit, the criteria for granting preliminary injunctive relief, as most recently stated by the Court in Los Angeles Coliseum Com'n v. National Football League, 9th Cir., 634 F.2d 1197 (1980), require that plaintiff establish:
The difference between these two tests is insignificant and a finding with respect to either establishes the basis for injunctive relief.
Consideration of the legal elements of plaintiff's claims and evidence relating to those elements is a necessary step in reaching a decision.
I do not agree with Defendant's rather fulsomely stated position that "The `Public Interest' is not part of the Calculus for Equitable relief in a case of this nature".
The Lanham Act is itself a public interest statute intended to protect the consuming public and competitors from false and deceiving statements which a company chooses to utilize in advertising its goods or services. The fact that a claim is asserted under the provisions of that Act against the violator, albeit by a competitor of the false advertiser, does not serve to transmogrify resolution of such Lanham Act claims into a purely private proceeding. Ames Publishing Co. v. Walker-Davis Publications, Inc., 372 F.Supp. 1, 14 (E.D.Pa.1974).
To suggest, as Defendants do, that a Court must find, prior to issuing an injunction to stop false advertising under the Lanham Act, that such injunction "will not disservice the public interest" is a non-sequitur, and is wholly without legal precedent.
Federal Statutory Lanham Act Claims:
Plaintiff's first two claims are based on Sections 43(a) and 44 of the Lanham Trademark Act, 15 U.S.C. § 1125(a) and § 1126.
The parties have agreed1 for purpose of this motion, that the elements of Plaintiff's Lanham Act claim are as stated in Skil Corp. v. Rockwell International Corp., 375 F.Supp. 777 (N.D.Ill.1974). These elements are whether:
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