Homeland Housewares LLC et al v. Euro-Pro Operating LLC

Filing 39

ORDER DENYING EX PARTE APPLICATION FOR ORDER REQUIRING PLAINTIFF TO CEASE PUBLICIZING PRELIMINARY INJUNCTION AND ORDER AUTHORIZING CORRECTIVE NOTICE 35 . Plaintiff shall notify the Court by 4:30 p.m. of the day after this order is issued whether it intends to continue making reference to the unrelated Pennsylvania case in future letters by Judge Dean D. Pregerson. (lc). Modified on 9/10/2014 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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HOMELAND HOUSEWARES, LLC, a
California LLC; NUTRIBULLET,
LLC,L a California LLC,

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Plaintiff,
v.
EURO-PRO OPERATING LLC, a
Massachusetts LLC,

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Case No. CV 14-03954 DDP (MANx)
ORDER DENYING EX PARTE
APPLICATION FOR ORDER REQUIRING
PLAINTIFF TO CEASE PUBLICIZING
PRELIMINARY INJUNCTION AND ORDER
AUTHORIZING “CORRECTIVE NOTICE”
[Dkt. No. 35]

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Defendants.
___________________________

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Before the Court is an ex parte application by Defendant for
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an order requiring Plaintiff to cease “publicizing” this Court’s
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preliminary injunction in this case, dated August 22, 2014.
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Defendant also seeks to be allowed to issue a “Court-approved
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notice” correcting alleged erroneous characterizations of the
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injunction by Plaintiff.
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For the reasons discussed below, the Court denies the
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application in its entirety.
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I. BACKGROUND.
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Plaintiff and Defendant are competitors in the home blender
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market.

On May 22, 2014, Plaintiff filed a complaint with this

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Court alleging, inter alia, that the packaging of Defendant’s NUTRI

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NINJA PRO blender made a number of false representations about

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Plaintiff’s NUTRIBULLET line of blenders.

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Plaintiff moved for a preliminary injunction against Defendant

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to prevent, inter alia, sales of the allegedly falsely-labeled

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product pending the outcome of this litigation.

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2014, this Court issued a preliminary injunction with regard to

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three claims made on the NUTRI NINJA PRO packaging: “(1) that

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‘NUTRIBULLET’ products do not operate at 900 watts; (2) that

On August 22,

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‘NUTRIBULLET’ products do not produce 21,000 RPMs; and (3) that

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‘NUTRIBULLET’ products do not have “sip & seal” (or drink through)

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lids.”

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to remove all three statements from “all NUTRI NINJA PRO products

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on sale to consumers and from any other Euro-Pro advertisements.”

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Id.

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(Order Granting Prelim. Inj., § IV.)

Defendant was ordered

Shortly thereafter, Plaintiff sent letters to a number of

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retailers who carry Defendant’s products.

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retailers of the injunction, stated that “retailers . . . who have

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notice of the injunction must also comply,” and declared

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Plaintiff’s intention to “bring[] contempt proceedings against

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violators.”

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stated that the injunction was based on a “finding” that the

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statements on the packaging were “literally false.”

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also noted that the litigation is ongoing, and that “[Plaintiff]

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will likely be entitled to monetary damages for every sale” and

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that “[i]f Euro Pro is unable to pay the damages, then any company

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in the sales chain can be held liable for the damages.”

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Finally, the letters made retailers aware of another recent case in

The letters notified

(Decl. Jennifer McCabe, Exhibit A.)

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The letters

The letters

Id.

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which a federal court in Pennsylvania also issued a preliminary

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injunction against Euro-Pro for false advertising.

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Id.

Defendant seeks an order from this Court barring Plaintiff

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from “publicizing” the injunction or the Pennsylvania case “in any

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manner whatsoever . . . without limitation,” requiring Plaintiff to

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“immediately provide Euro-Pro and the Court with copies of every

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letter and other communication it sent to a non-party,” and

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“[a]llowing Euro-Pro to issue a Court-approved notice,” correcting

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what Defendant alleges are “erroneous” representations in

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Plaintiff’s letters.

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II. LEGAL STANDARD.

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(Ex Parte Appl., § VI.)

Defendant does not point the Court to a specific legal theory

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under which this relief should be granted.

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assume for purposes of this order that the Defendant invokes the

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Court’s broad inherent equitable power to protect its own orders

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from evasion, abuse and misuse.

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Holding Co., which noted that when a district court’s power to

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enjoin is invoked,

However the Court will

See, e.g., Porter v. Warner

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all the inherent equitable powers of the District Court are

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available for the proper and complete exercise of that

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jurisdiction . . . .

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matters immediately underlying its equitable jurisdiction and

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decide whatever other issues and give whatever other relief

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may be necessary under the circumstances.

In addition, the court may go beyond the

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328 U.S. 395, 398 (1946).

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powers will be invoked against the party enjoined, in a contempt

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hearing.

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either party in order to ensure the order is effectively carried

This Court notes that typically these

But it is not outside the power of the court to bind

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out.

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Admin., 98 F. Supp. 2d 25, 26 (D.D.C. 2000) (holding that the court

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“retained jurisdiction to permit any one of the parties to seek

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such further orders or directions as may be necessary or

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appropriate for the construction or carrying out of this Decree”)

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(internal quotation marks omitted) (emphasis added).

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See Nat'l Law Ctr. on Homelessness & Poverty v. U.S. Veterans

Thus, this Court will be guided by general equitable

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principles in deciding whether and how to fashion relief necessary

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to properly enforce and ensure the effectiveness of the preliminary

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injunction, including, as needed, orders against either party

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necessary to prevent the abuse of the injunction.

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include attempting to follow “equity’s lodestar that ‘justice be

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done,’” as well as a consideration of the public interest and,

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where applicable, Congress’s policy intent in granting the courts

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injunctive power in the first place.

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Inc., 939 F.2d 746, 753-54 (9th Cir. 1991).

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III. DISCUSSION.

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These principles

E.E.O.C. v. Recruit U.S.A.,

In this case, justice, the public interest, and the policy

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undergirding the court’s statutory injunctive power do not favor

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issuing Defendant’s proposed orders.

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First, justice and the public interest might mandate issuing

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some sort of order if Plaintiff’s letters misrepresented the

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content of the injunctive order, asserting unlikely or spurious

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claims in terrorem in order to chill market demand for Defendant’s

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products.

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This is, indeed, more-or-less what Defendant alleges.

The letter to Amazon.com, submitted by Defendant as a

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representative sample, asserts that the “injunction is based upon

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the Judge’s finding that the advertising on the box for the NUTRI
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NINJA PRO contains false statements that are likely to deceive

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consumers.”

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states that “The Court found that some of the claims on the box

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were literally false.”

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(McCabe Decl., Exhibit A.)

The same paragraph also

Id.

This language accords, in at least a narrow sense, with the

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language of the injunctive order: “[I]t follows from this

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conclusion that three of the statements made in the [packaging] are

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false.” (Order Granting Prelim. Inj., § III.A.1.)

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assertion . . . that the model [manufactured by Plaintiff] lacks

And: “Euro-Pro’s

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these features is literally false.”

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language taken in isolation, it could create the impression that

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the Court has made a final judgment on the merits in the case,

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rather than making a limited factual finding for the sole purpose

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of determining whether to grant a preliminary injunction pending

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the outcome of litigation.

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Id.

However, were that

Plaintiff’s letters do not fall into this trap.

Immediately

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prior to the statements about the Court’s “findings,” the letter

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states that it is from attorneys representing Plaintiff “in a false

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advertising case” and states, correctly, that the injunction is a

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“preliminary injunction.”

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is not a model of absolute clarity on this point—it might more

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advisably have included words like “ongoing” or “pending” in

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describing the “false advertising case,” for example.

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conveys, if infelicitously, the procedural posture of the case.

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While there is still some danger that the unsophisticated will fail

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to understand the nuanced difference between a preliminary

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injunction and a final judgment on the merits, the facts presented

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seem to show that many of the retailers who have expressed concern

(McCabe Decl., Exhibit A.)

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The language

But it

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following the letters are represented by competent, cautious

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counsel.

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discussions with in-house counsel and stating that “[i]t looks like

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there have [sic] already been a preliminary finding made”).)

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(McCabe Decl., Exhibit B (letter from Costco mentioning

Thus, Plaintiff does not actually misrepresent the language of
the injunction itself.
Defendant nevertheless alleges that Plaintiff misrepresents

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the scope of the injunction by advising recipients of the letters

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that “retailers such as Amazon.com who have notice of the

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injunction must also comply with the Court’s order.”

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Decl., Exhibit A.)

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within the scope of the injunction, because they are neither

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parties nor nonparties who have notice of the injunction and “are

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in active concert or participation with” the enjoined party.

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R. Civ. P. 65(d)(2).

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(McCabe

Defendant argues that the retailers are not

Fed.

Who is in “active concert or participation with” a party is

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not a fully settled area of law.

The Ninth Circuit has not

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specifically addressed the question of whether retailers who sell a

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party’s enjoined product are in “active concert” with the party.

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Other courts appear split on the question.

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AE Tech Co., 727 F.3d 1375, 1384 (Fed. Cir. 2013) (“We find that

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the S & F Defendants fell within the purview of the original

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injunction because they were ‘acting in concert’ with AE Tech in

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connection with the resale of the redesigned products.”), with

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Paramount Pictures Corp. v. Carol Pub. Grp., Inc., 25 F. Supp. 2d

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372, 376 (S.D.N.Y. 1998) (“Paramount has not demonstrated that the

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nonparty retailers and distributors are ‘acting in concert’ with

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Carol Publishing.”).

Compare Aevoe Corp. v.

It should be noted, however, that both Aevoe
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and Paramount are heavily dependent on their facts: in Aevoe, the

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retailer had an exclusive distribution agreement with the enjoined

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party, making it a “privy” of the party, while in Paramount the

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retailers had completed their purchases of the enjoined products

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prior to the injunction.

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And in general the inquiry is likely to always be fact-

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intensive. Rockwell Graphic Sys., Inc. v. DEV Indus., Inc., for

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example, noted a line of cases establishing that those who “aid or

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abet the named parties in a concerted attempt to subvert” the

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injunction fall within the injunction’s power.

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(7th Cir. 1996).

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who are “aiding and abetting” the enjoined party from those who are

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merely in business with the party at arm’s length but in a way that

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incidentally subverts the intent of the injunction.

91 F.3d 914, 919

But the court found no bright line dividing those

Rather,

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A court must consider the extent of the alleged “active

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concert or participation” of third parties with those named in

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the injunction in determining whether the injunction's

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prohibitions shall apply to those third parties . . . .

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The resolution of Rockwell's allegations made in support of a

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finding of contempt necessitated a complete factual inquiry.

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Id. at 920.
Because the inquiry is so fact-specific, and the law still

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relatively unsettled, this Court cannot say for certain that

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Plaintiff misrepresents the scope of the injunction.

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Plaintiff puts forward a particular theory of the injunction’s

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reach to nonparties that might not be sustained in an actual

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contempt hearing.

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warning of potential legal action; often the law is not quite so

To be sure,

But that is true of a great number of letters

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certain as a potential plaintiff would wish.

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that courts should enjoin or constrain such letters, where the

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party’s legal theory is at least plausible and the potential action

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is not purely frivolous or harassing.

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This does not mean

Finally, the intent of Congress in providing the courts the

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power to grant injunctive relief in Lanham Act cases also does not

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favor granting Defendant’s application.

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Act is to “protect[] persons engaged in [commerce within the

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control of Congress] against unfair competition” POM Wonderful LLC

The purpose of the Lanham

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v. Coca-Cola Co., 134 S. Ct. 2228, 2234 (2014).

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Plaintiff’s Lanham Act claim is likely meritorious, and therefore

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justifies the extraordinary measure of preliminary injunctive

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relief in the first place, it is clear that Plaintiff may

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aggressively assert the injunction’s protection in the marketplace

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in order not to be subject to unfair competition.

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To the extent that

This is not to say Defendant’s contention that it has been

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poorly treated is entirely without merit.

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Plaintiff’s reference in its letters to an unrelated case in the

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Western District of Pennsylvania, involving a different plaintiff

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and different facts,1 served no purpose in asserting its theory of

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nonparty liability for contempt in this case.

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letter strayed far beyond what was necessary to put retailers on

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notice of the injunction in this case.

In particular,

That portion of the

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The case apparently referenced is Groupe SEB USA, Inc. v.
Euro-Pro Operating LLC, No. CIV.A. 14-137, 2014 WL 2504741 (W.D.
Pa. June 3, 2014).

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The court refrains from ordering Plaintiff to cease making

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reference to the unrelated case in such letters out of deference to

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potential speech concerns.

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immediately delete the reference, the court will set a hearing on

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whether the preliminary injunction should be vacated.

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shall, by 4:30 p.m. tomorrow, advise the Court through the filing

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of a notice which course it elects to take.

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However, should Plaintiff elect not to

Plaintiff

Apart from that issue, however, the Defendant’s most powerful
response to the Plaintiff’s letter is likely to be the “preferred

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First Amendment remedy of ‘more speech, not enforced silence,’”

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United States v. Alvarez, 617 F.3d 1198, 1216 (9th Cir. 2010)

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aff'd, 132 S. Ct. 2537, 183 L. Ed. 2d 574 (U.S. 2012).

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asks that this court “approve” a specific “notice” to retailers

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calling Homeland’s characterization of the injunction “erroneous”

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and stating that “retailers are not subject to the injunction.”

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(Ex Parte Appl., § VI.)

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determination would be fact-intensive and more appropriately made

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in the course of a contempt hearing, the Court declines to approve

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any such statement.

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lawsuit, the scope of the injunction, the injunction’s timetable,

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and Defendant’s own theory of “active concert or participation” to

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those retailers who express concern.

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IV. CONCLUSION.

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Defendant

Because, as discussed above, such a

Defendant, however, is free to explain the

Because the Court does not find that it is necessary to issue

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any of the requested orders in order to protect or enforce its

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injunctive order, Defendant’s ex parte application is denied.

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However, Plaintiff shall notify the Court by 4:30 p.m. of the day

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after this order is issued whether it intends to continue making
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reference to the unrelated Pennsylvania case in future letters.

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IT IS SO ORDERED.

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Dated:September 10, 2014
DEAN D. PREGERSON
United States District Judge

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