Buetow v. A.L.S. Enterprises, Inc.

650 F.3d 1178, 2011 U.S. App. LEXIS 17126, 2011 WL 3611488
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 18, 2011
Docket10-2415
StatusPublished
Cited by63 cases

This text of 650 F.3d 1178 (Buetow v. A.L.S. Enterprises, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Buetow v. A.L.S. Enterprises, Inc., 650 F.3d 1178, 2011 U.S. App. LEXIS 17126, 2011 WL 3611488 (8th Cir. 2011).

Opinions

LOKEN, Circuit Judge.

There is a substantial market for products that will prevent game animals, with their keen sense of smell, from detecting the presence of hunters. Activated carbon, when embedded in clothing, adsorbs1 and retains human scent. In 1992, A.L.S. Enterprises began manufacturing and selling hunting garments incorporating activated carbon by a patented process that A.L.S. advertised under the brand name “Scent-Lok®” as “odor eliminating technology.” Fifteen years later, five hunters commenced this purported class action against A.L.S. and three of its licensees who sell odor adsorbing clothing under various brand names in Cabela’s and Gander Mountain retail stores and mail order catalogs. Plaintiffs’ Second Amended Class Action Complaint alleged that A.L.S. “has uniformly misrepresented to consumers that its odor eliminating clothing would not only eliminate 100% of human odors, but could also be reactivated or regenerated in a household dryer after the clothing has become saturated with odors,” thereby violating three Minnesota consumer protection statutes, the Minnesota Consumer Fraud Act (MCFA), Minn.Stat. § 325F.69, subd. 1; the Minnesota Unlawful Trade Practices Act (MUTPA), Minn.Stat. § 325D.13; and the Minnesota Uniform [1182]*1182Deceptive Trade Practices Act (MDTPA), Minn.Stat. § 325D.44, subd. 1.

After the district court denied Plaintiffs’ motion for class certification because reliance and damages issues lack the commonality required by Federal Rule of Civil Procedure 23(b)(3), Plaintiffs filed a motion for partial summary judgment, seeking to permanently enjoin Defendants’ advertisements because they are literally false.2 Defendants filed cross motions for summary judgment dismissing all claims. In the core ruling at issue on appeal, the court held that all advertisements claiming that Defendants’ garments are “odor eliminating,” without a qualification that the clothing can only reduce odor, are literally false as a matter of law and that proof of literal falsity entitles Plaintiffs to a permanent injunction under the MCFA and the MUTPA without proof of the other elements of a federal false advertising claim under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). The court further ruled that ads claiming that clothing that contains activated carbon can be “reactivated” are not literally false, but it permanently enjoined as literally false ads claiming that reactivation will make the clothing “like new” or “pristine.” Finally, the court ruled that the sole remedy under the MDTPA is prospective injunctive relief and granted Defendants summary judgment dismissing those claims because Plaintiffs presented no evidence they are exposed to a risk of future harm. (Plaintiffs do not cross appeal that ruling.) Buetow v. A.L.S. Enters., Inc., 713 F.Supp.2d 832 (D.Minn.2010).

Defendants appeal the grant of a permanent injunction, arguing the district court erred in its literal falsity determinations and in granting an injunction based solely on those determinations. Although other claims remain pending, we have jurisdiction to review an interlocutory order granting an injunction. See 28 U.S.C. § 1292(a)(1). Agreeing with Defendants that the permanent injunction was based upon those errors of law, we vacate the injunction and remand.

I. The Governing Law Error

A. The Error. Plaintiffs led the district court into error by arguing, as they do on appeal, (i) that the Minnesota statutes in question are coextensive with the federal false advertising standards under the Lanham Act, and (ii) that Lanham Act cases establish the proposition that, “When an advertisement is literally false, the Court need not consider the remaining Lanham Act elements in order to grant Plaintiffs injunctive relief.” Buetow, 713 F.Supp.2d at 838 (quotation omitted).

The first legal error is that the proposition is a misstatement of federal law. To establish a Lanham Act false advertising claim, a plaintiff must prove “(1) a false statement of fact by the defendant in a commercial advertisement about its own or another’s product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a loss of goodwill associated with its products.” [1183]*1183United Indus. Corp. v. Clorox Co., 140 F.3d 1175,1180 (8th Cir.1998).

Though the proposition has been repeated in numerous District of Minnesota opinions, it is not correct. Rather, it is a careless expansion of a sound principle adopted many years ago by the Second Circuit — when a competitor’s advertisement, particularly a comparative ad, is proved to be literally false, the court may presume that consumers were misled and grant an irreparably injured competitor injunctive relief without requiring consumer surveys or other evidence of the ad’s impact on the buying public. See Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125,129 (3d Cir.1994); Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir.1982), and cases cited. We endorsed this principle in United Industries, 140 F.3d at 1180. But even when the principle applies in a Lanham Act dispute between competitors, the plaintiff “must show that it will suffer irreparable harm absent the injunction.” McNeil-P.C.C., Inc. v. Bristoh-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir.1991); accord Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1334-35 (8th Cir.1997). Plaintiffs and the district court, like prior District of Minnesota opinions, ignored this qualifier, winch is an essential and universal predicate to the grant of equitable relief. The result was what Judge Posner has characterized as “an unfortunately common example of a litigant misled by general language in judicial opinions.” Schering-Plough Healthcare Prods., Inc. v. Schwarz Pharma, Inc., 586 F.3d 500, 512 (7th Cir.2009).3 The district court erred in granting Plaintiffs a permanent injunction without proof of irreparable injury.

The second error was in equating the standards for relief under the Lanham Act and the Minnesota consumer protection statutes at issue. Plaintiffs are retail purchasers seeking relief under those statutes. Lanham Act false advertising cases invariably involve claims asserted by “competitors of the wrongdoer” or by plaintiffs protecting other commercial interests. See Am. Ass’n of Orthodontists v. Yellow Book USA Inc.,

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650 F.3d 1178, 2011 U.S. App. LEXIS 17126, 2011 WL 3611488, Counsel Stack Legal Research, https://law.counselstack.com/opinion/buetow-v-als-enterprises-inc-ca8-2011.