Spruce Environmental Technologies, Inc. v. Festa Radon Technologies, Co.

Filing 163

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER"In accordance with the foregoing, Spruces partial motion for summary judgment (Docket No. 139) is DENIED."(Caruso, Stephanie)

United States District Court
District of Massachusetts
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Plaintiff-Counterclaim )
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Defendant,
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v.
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FESTA RADON TECHNOLOGIES, CO.,
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Defendant-Counterclaim )
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Plaintiff.
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SPRUCE ENVIRONMENTAL
TECHNOLOGIES, INC.,

Civil Action No.
15-11521-NMG

MEMORANDUM & ORDER
GORTON, J.
This case involves a dispute between two competitors in the
radon extraction business.

Plaintiff/counterclaim-defendant

Spruce Environmental Technologies, Inc. (“Spruce”) claims that
defendant/counterclaim-plaintiff Festa Radon Technologies, Co.
(“Festa”) engaged in false advertising of its fans in violation
of 1) the Lanham Act, 15 U.S.C. § 1125(a), 2) the Massachusetts
Consumer Protection Act, M.G.L. ch. 93A, §§ 2, 11, (“Chapter
93A”), 3) a Massachusetts statute that prohibits unfair and
misleading advertisements, M.G.L. c. 266, § 91 and that Festa
committed commercial disparagement.

Festa counterclaims that

Spruce has, itself, violated the Lanham Act and Chapter 93A and
engaged in commercial disparagement.

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Spruce has filed a motion

for partial summary judgment and, for the reasons that follow,
that motion will be denied.
I.

Factual and Procedural Background
Spruce, a Massachusetts corporation with a principal place

of business in Haverhill, Massachusetts, manufactures and
advertises radon mitigation devices, including a line of radon
extraction fans.

Festa, a Pennsylvania corporation with a

principal place of business in Cranberry, Pennsylvania,
similarly manufactures and advertises radon extraction fans.
In April, 2015, Spruce filed a complaint against Festa
which, in turn, answered and counterclaimed.
for a preliminary injunction.

Each party moved

In July, 2015, the Court enjoined

Festa from 1) using inaccurate photos of Spruce’s fans and 2)
representing that Festa fans have Energy Star and Home
Ventilating Institute (“HVI”) certifications.

In April, 2016,

the Court enjoined Spruce from claiming that its fans were
Energy Star certified.
In November, 2016, Spruce filed a motion for partial
summary judgment on its claims that Festa violated the Lanham
Act and Chapter 93A with false advertisements concerning 1) the
color of Spruce’s fans, 2) Festa’s Energy Star partnership and
certification and 3) Festa’s HVI membership and certification.
Spruce requests that the Court permanently enjoin Festa from
publishing those purportedly false advertisements.
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Spruce also

moves for the summary dismissal of Festa’s counterclaim that
Spruce violated the Lanham Act and Chapter 93A by asserting that
its fans comply with standards for outdoor use.

Festa has

timely opposed Spruce’s motion for summary judgment which is the
subject of this memorandum and order.
II. Motion for Partial Summary Judgment
A. Legal Standard for Summary Judgment
The role of summary judgment is “to pierce the pleadings
and to assess the proof in order to see whether there is a
genuine need for trial.” Mesnick v. Gen. Elec. Co., 950 F.2d
816, 822 (1st Cir. 1991).

The burden is on the moving party to

show, through the pleadings, discovery and affidavits, “that
there is no genuine dispute as to any material fact and that the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a).

A fact is material if it “might affect the outcome of

the suit under the governing law.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).

A genuine issue of material

fact exists where the evidence with respect to the material fact
in dispute “is such that a reasonable jury could return a
verdict for the nonmoving party.” Id.
If the moving party has satisfied its burden, the burden
shifts to the non-moving party to set forth specific facts
showing that there is a genuine, triable issue. Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986).
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The Court must view the

entire record in the light most favorable to the non-moving
party and indulge all reasonable inferences in that party’s
favor. O’Connor v. Steeves, 994 F.2d 905, 907 (1st Cir. 1993).
Summary judgment is appropriate if, after viewing the record in
the non-moving party’s favor, the Court determines that no
genuine issue of material fact exists and that the moving party
is entitled to judgment as a matter of law.
B. Application
1. Lanham Act and Chapter 93A
The Lanham Act prohibits “commercial advertising or
promotion” that “misrepresents the nature, characteristics, [or]
qualities” of a product. 15 U.S.C. § 1125(a)(1)(B).

To prevail

on a claim brought under that statute, a plaintiff must prove:
(1) the defendant made a false or misleading description of
fact or representation of fact . . . in a commercial
advertisement about [its] own or another’s product; (2) the
misrepresentation is material . . . ; (3) the
misrepresentation actually deceives or has the tendency to
deceive a substantial segment of its audience; (4) the
defendant placed the false or misleading statement in
interstate commerce; and (5) the plaintiff has been or is
likely to be injured as a result of the misrepresentation,
either by direct diversion of sales or by a lessening of
goodwill associated with its products.
Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d
302, 310-11 (1st Cir. 2002), cert. denied, 537 U.S. 1001 (2002).
There are two paths to success on a Lanham Act claim.

A

plaintiff can show that an advertisement is “literally false” in
which case consumer deception is presumed. Clorox Co. Puerto
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Rico v. Proctor & Gamble Commercial Co., 228 F.3d 24, 33 (1st
Cir. 2000).

Consumer deception is also presumed if a plaintiff

demonstrates an intentional attempt to confuse consumers.
Cashmere, 284 F.3d. at 316.

Alternatively, a plaintiff may show

that an advertisement is “literally true or ambiguous” but
misleads consumers. Chlorox, 288 F.3d at 33.
An advertisement is considered material under the Lanham
Act if it is “likely to influence the purchasing decision.” Id.
at 33, n.6.

The materiality requirement is also met if the

statement concerns one of the product’s “inherent
characteristic[s].” Cashmere, 284 F.3d. at 311-12 (quoting Nat’l
Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir.
1997)).
When a plaintiff requests only injunctive relief, the
injury requirement is relaxed.

Instead of requiring that the

plaintiff prove “actual harm,” courts require that the plaintiff
demonstrate only “that the defendant’s activities are likely to
cause confusion or deceive customers.” Id. at 311.
False advertising claims under the Lanham Act and Chapter
93A rise and fall together. Empire Today, LLC v. Nat'l Floors
Direct, Inc., 788 F. Supp. 2d 7, 26 (D. Mass. 2011).

Thus, if

summary judgment is warranted with respect to a Lanham Act
claim, it will also be warranted under Chapter 93A.

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2. Spruce’s Motion for Summary Judgment on Its Own Claims
Spruce moves for summary judgment on its claims that Festa
violated the Lanham Act and Chapter 93A with false promotions
concerning 1) the color of Spruce’s fans, 2) Festa’s Energy Star
partnership and certification and 3) Festa’s HVI membership and
certification.
a. The Color of Spruce’s Fans
Spruce asserts that it is entitled to summary judgment on
its claim that Festa’s promotions violate the Lanham Act and
Chapter 93A because they include a photo of a bright yellow
Spruce fan when the fans are actually a different shade of
yellow or greyish-brown.

Spruce further contends that the

misrepresentation is material because color is an inherent
quality and one of its potential customers suggested in an email
that color would affect his purchase decision.
Festa responds that summary judgment is unwarranted because
Spruce admits that its fans become more yellow over time and the
subject photo is neither literally nor intentionally false.

It

asserts that, because the customer email on which Spruce relies
is hearsay, there is no admissible evidence that the shade of
yellow in its advertisements is material or that Spruce has been
injured.
Festa is correct that summary judgment is precluded because
genuine issues of material fact persist with respect to the
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supposed falsity of the photo, materiality and whether Spruce
was injured.

First, with respect the photo’s alleged falsity,

Daryl Festa, who took the photo and copied it into the
promotion, testified that he did not intentionally manipulate or
change the photo in any way.

That testimony is corroborated by

an expert who examined his camera and computer.

Accordingly,

viewing the facts in Festa’s favor, a genuine issue of material
fact remains as to whether the photos are literally and
intentionally false or merely inadvertently misleading.
Consequently, a genuine issue of material fact remains with
respect to whether customer deception is presumed. See Clorox,
228 F.3d at 33; Cashmere, 284 F.3d. at 316.
Second, to meet the materiality requirement, the proponent
of a claim must demonstrate that the false statement is “likely
to influence the purchasing decision” or involves an “inherent
quality or characteristic." Cashmere, 284 F.3d at 311 (quoting
Clorox, 228 F.3d at 33, n.6 and Nat’l Basketball Ass’n, 105 F.3d
at 855).

As Festa points out, and Spruce does not dispute, the

lone consumer email that supposedly shows that color would
influence the purchasing decision is hearsay.

Because hearsay

may not be considered on motions for summary judgment, the Court
will disregard that email. Davila v. Corporacion De Puerto Rico
Para La Difusion Publica, 498 F.3d 9, 17 (1st Cir. 2007).

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That leaves Spruce’s assertion that the bright yellow color
is an inherent quality of the fan. Viewing the facts in the
light most favorable to Festa, it is unclear whether consumers
would find that the difference between the bright yellow in the
advertisement and the yellow tint that admittedly develops is an
inherent quality. See Nat'l Basketball Ass'n, 105 F.3d at 855.
Furthermore, it is unclear whether color of the fan can ever
constitute an inherent quality because its purpose is to remove
toxic radon, not provide decoration.
Genuine issues of material fact also remain with respect to
whether Spruce has been injured.

Spruce makes the hollow

assertions that “the effect of an advertisement itself is
enormously difficult to prove” and harm to good will is
“virtually impossible to prove”.

Aside from the single

inadmissible email, however, it provides no evidence that it is
likely to be injured by customer confusion about the color of
the fan. See Cashmere, 284 F.3d. at 311.
Accordingly, given the several issues of material fact,
Spruce is not entitled to summary judgment on its Lanham Act and
Chapter 93A claims based on the color of the fans. Empire Today,
LLC, 788 F. Supp. 2d at 26.
b. Energy Star Partnership and Certifications
Spruce asserts that it is entitled to summary judgment with
respect to its Lanham Act and Chapter 93A claims that Festa
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promotions of its fans as Energy Star rated is literally false.
Festa concedes that its Energy Star certifications had expired
at the time of the advertisements but contends that summary
judgment is precluded because Spruce has failed to show that it
was injured and has unclean hands.
Festa’s contention that Spruce has not demonstrated it was
injured by showing that customers were confused or deceived is
well taken.

As Festa points out,

[p]laintiff has identified not one customer who even
mentioned the Energy Star references . . . much less a lost
sale due to these matters.
Thus, a genuine issue of material fact persists with respect to
whether Spruce was injured. See Cashmere, 284 F.3d at 310-11.
Moreover, Spruce is not entitled to judgment as a matter of
law on its Energy Star claim by virtue of the doctrine of
unclean hands.

“It is old hat” that when a party requests an

equitable remedy a court considers whether that “party has acted
in bad faith or with unclean hands.” Texaco Puerto Rico, Inc. v.
Dep't of Consumer Affairs, 60 F.3d 867, 880 (1st Cir. 1995).
The doctrine of unclean hands precludes equitable relief when
the plaintiff has engaged in “misconduct [that] is directly
related to the merits of the controversy between the parties.”
Markel Am. Ins. Co. v. Diaz-Santiago, 674 F.3d 21, n. 7 (1st
Cir. 2012) (quoting Dr. Jose ́. Belaval, Inc. v. Peŕez-Perdomo,
S
488 F.3d 11, 15 (1st Cir. 2007)).
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Here, Spruce requests a permanent injunction preventing
Festa from falsely advertising that it has Energy Star
certifications.

Yet, as this Court has already concluded,

the parties do not dispute that [Spruce] made literally
false statements in its advertisements that the RP260 and
RP280 models of RadonAway fans were Energy Star Rated.
Spruce Envtl. Techs., Inc. v. Festa Radon Techs., Co., No. 15cv-11521-NMG, 2016 WL 1611433, at *4 (D. Mass. Apr. 21, 2016).
Thus, because Spruce has engaged in misconduct directly related
to the equitable relations between the parties and the merits of
this case, the Energy Star claim is barred by the doctrine of
unclean hands and summary judgment is unwarranted.
c. HVI Membership and Certifications
Spruce also contends that it is entitled to summary
judgment on its Lanham Act and Chapter 93A claim that Festa
falsely advertised using photos that included HVI certification
labels even though that certification had expired.

Festa offers

as rejoinder that the small labels in the stock photos are
indecipherable and there is no evidence that consumers were
confused or misled by them.
The Court agrees that summary judgment is precluded.
Genuine issues of material fact persist with respect to three
prongs of the Lanham Act analysis. Cashmere, 284 F.3d at 310-11.
First, it is unclear whether Festa made a false or misleading
statement because there is no evidence that consumers were able
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to decipher the labels in the photos.
whether the labels were material.

Second, it is unclear

Finally, it is unclear

whether Spruce was injured because it has failed to demonstrate
that consumers were adversely affected by the labels.
Consequently, Spruce is not entitled to summary judgment.
3. Spruce’s Motion for Summary Judgment on Festa’s
Outdoor Use Counterclaim
Finally, Spruce moves for summary judgment of dismissal of
Festa’s counterclaim that Spruce falsely advertised that its
fans are Intertek certified and comply with UL 507 standards for
outdoor use.

According to Spruce, its promotion is true because

the fans were submitted to Intertek for testing.

Festa responds

that genuine issues of material fact remain with respect to
1) whether the fans comply with UL 507, 2) whether Spruce’s
representation as to outdoor use is implicitly false because the
design of the fans has changed and 3) whether the fans could
currently pass the water spray test required for outdoor use.
Viewing the record in Festa’s favor, genuine issues of
material fact remain with respect to whether Spruce is entitled
to summary judgment.

Kevin Miller, the Fed. R. Civ. P. 30(b)(6)

witness for Intertek, testified at his deposition that only one
Spruce fan model has been tested for outdoor certification and
that it is impossible to determine which product or model was

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tested.

Festa also asserts that there are no records showing

required inspections of the fans.
Furthermore, Festa’s expert witness, Adam Black, conducted
tests on the Spruce fans that purportedly demonstrate that they
do not comply with the UL 507 standards for outdoor use.
Although Spruce raises several objections to Mr. Black’s
expected testimony, the Court concludes that those objections go
to the weight not the admissibility of Mr. Black’s testimony.
See Cummings v. Standard Register Co., 265 F.3d 56, 65 (1st Cir.
2001).

Therefore genuine issues of material fact persist with

respect to whether the fans would pass the water test for
outdoor use.
Given that it is unclear which fans were certified, whether
they were regularly inspected and whether they actually complied
with the requirements for outdoor use, Spruce is not entitled to
summary judgment on Festa’s counterclaims as to outdoor use.

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ORDER
In accordance with the foregoing, Spruce’s partial motion
for summary judgment (Docket No. 139) is DENIED.

So ordered.
/s/ Nathaniel M. Gorton______
Nathaniel M. Gorton
United States District Judge
Dated April 3, 2017

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