Boltex Manufacturing Company, L.P. et al v. Galperti, Inc. et al

Filing 253

MEMORANDUM OPINION AND ORDER GRANTING 146 Sealed motion, 130 Sealed motion. (Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BOLTEX MANUFACTURING COMPANY, L.P.,
and WELDBEND CORPORATION,
Plaintiffs,
v.
GALPERTI, INC. and OFFICINE NICOLA
GALPERTI E FIGLIO S.P.A.
Defendants.

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CIVIL ACTION H-17-1439

MEMORANDUM OPINION AND ORDER
Pending before the court is defendants Officine Nicola Galperti e Figlio S.p.A. (“ONG”) and
Galperti, Inc.’s (“Galperti”) (collectively, “Defendants”) motion for summary judgment. Dkt. 146.
Plaintiffs Boltex Manufacturing Company, L.P. (“Boltex”) and Weldbend Corporation (“Weldbend”)
(collectively, “Plaintiffs”) responded. Dkt. 191. Defendants replied. Dkt. 224. Also pending before
the court is Plaintiffs’ motion for summary judgment. Dkt. 130. Galperti responded.1 Dkt. 178.
Plaintiffs replied. Dkt. 214. Having considered the motions, responses, replies, and applicable law,
the court is of the opinion that both motions should be GRANTED.

I. BACKGROUND
This is a false advertising and unfair competition case. Dkt. 1 at 1–3. This dispute centers
on the process of normalization. Id. at 1, 8. Normalization is a costly heat treatment process that
changes the physical composition of carbon steel to increase its toughness and ductility. Id. The
American Society of Testing and Materials sets out standards that require manufacturers to apply
heat treatment to certain types of flanges. Id. at 8–9. There are several different methods available

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Defendant ONG was not a party to this response. See Dkt. 178.

for heat treatment, including normalization. Id. at 9. Although it is not required by the standards,
many customers require that certain flanges be normalized. Id.
Both Plaintiffs and Defendants manufacture carbon steel flanges. Id. at 1–3. Plaintiffs sued
Defendants for false advertising and unfair competition in violation of the Lanham Act, 15 U.S.C. §
1125(a), as well as common law unfair competition. Id. at 23. Plaintiffs allege that Defendants
advertise their flanges as “normalized” when they are not. Specifically, Plaintiffs allege that
Defendants falsely advertise when they: (1) stamp their flanges as normalized; (2) indicate
normalization in a Mill Test Report; (3) advertise their flanges in catalogs, brochures, price lists, and
web sites of third party distributors of Defendants’ flanges; and (4) indicate that their flanges were
normalized in emails with potential customers. Id. at 11; Dkt. 77-1 at 9; Dkt. 77-2 at 7–8.
Galperti counterclaimed that: (1) Plaintiffs Boltex and Weldbend falsely advertised their
products as “Made in the USA” and/or “American Made”; (2) Weldbend made misrepresentations
regarding the “traceability” of its flanges and yield strength; and (3) Boltex made misrepresentations
in the Reference Manual published on its website.2 Dkt. 46. Both parties have moved for summary
judgment. Dkt. 146; Dkt. 130.
II. LEGAL STANDARD
A court shall grant summary judgment when a “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for
the nonmoving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). The
moving party bears the initial burden of demonstrating the absence of a genuine issue of material

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ONG filed its own answer which did not include a counterclaim. Dkt. 151.
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fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548 (1986). If the moving party meets
its burden, the burden shifts to the non-moving party to set forth specific facts showing a genuine
issue for trial. Fed. R. Civ. P. 56(e). The court must view the evidence in the light most favorable
to the non-movant and draw all justifiable inferences in favor of the non-movant.

Envtl.

Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir. 2008).
III. APPLICABLE LAW
To prove a false advertising claim under the Lanham Act, a plaintiff must establish: (1) a
false or misleading statement of fact about a product; (2) such a statement either deceived, or had
the capacity to deceive a substantial segment of potential customers; (3) the deception is material,
in that it is likely to influence the consumer’s purchasing decision; (4) the product is in interstate
commerce; and (5) the plaintiff has been or is likely to be injured as a result of the statement at issue.
Derrick Petrol. Servs. v. PLS, Inc., Civil Action No. H-14-1520, 2017 WL 3456920, at *5(S.D. Tex.
Aug. 11, 2017) (Rosenthal, J.) (internal alterations omitted) (quoting Pizza Hut, Inc. v. Papa John’s
Int’l, Inc., 227 F.3d 489, 495 (5th Cir. 2000)). “The failure to prove the existence of any element
of the prima facie case is fatal to the plaintiff’s claim.” Id.
IV. DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
A.

False Advertising in Violation of the Lanham Act
Defendants argue that Plaintiffs’ claim for false advertising in violation of the Lanham Act

cannot survive summary judgment because, inter alia, Plaintiffs cannot show injury. Dkt. 146 at
12–31.
Under the Lanham Act, a plaintiff must establish that he has been injured or is likely to be
injured. Derrick Petrol. Servs., 2017 WL 3456920, at *5. To prove injury, a plaintiff must provide
evidence that consumers would have bought the plaintiffs’ products instead of those of the defendant
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in the absence of the allegedly false and misleading statements. IQ Prod. Co. v. Pennzoil Prods. Co.,
305 F.3d 368, 376 (5th Cir. 2002); Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S.
118, 140, 134 S. Ct. 1377, 1395 (2014).
In Lanham Act cases involving comparative advertisement, courts may sometimes presume
causation and injury. Dkt. 191 at 19 (citing Greater Houston Transportation Co. v. Uber Techs.,
Inc., 155 F. Supp. 3d 670, 703–4 (S.D. Tex. 2015)). However, in those cases, the alleged
advertisement at issue engaged in direct comparison. See Uber Techs., Inc., 155 F. Supp. 3d at 686
(constituting comparative advertisement where the false advertisements compared Ubert’s safety and
that of the taxi industries with statements such as “[w]e’re confident that every ride on the Uber
platform is safer than a taxi); Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1334 (8th Cir. 1997)
(finding comparative advertisement where one of the advertisements at issue was titled “Competitive
Filter Evaluation for Optimizing Gas Operations: Pall versus Porous Media” and compared the
performance of a Pall filter with a Porous filter).
Here, Plaintiffs argue that this is a comparative advertising case because “Defendants’
advertising specifically references Boltex and Boltex’s inventory.” Dkt. 191 at 19. However,
Plaintiffs only point to deposition testimony that Galperti sells the same types of flanges as described
in the Boltex price sheet. Id.; see also Dkt. 191, Exh. H, Exh. 13 (Casner Dep. 139:24–140:5).
Plaintiffs also argue that Defendants use “Boltex’s own price list in describing [their] flanges.”
Dkt. 191 at 19. Plaintiffs point to an email between a Galperti employee and a potential client where
the Galperti employee uses the Boltex price list to quote prices for their own flanges. Dkt. 191, Exh.
H, Exh. 39; see also Dkt. 226-10 at 5 (Casner Depo. 134:2–15)(explaining the email). However,
this is simply evidence that Defendants were using the price sheet, this is not evidence of a

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comparison.3 The email does not compare the prices of Boltex’s carbon steel flanges to Galperti’s
steel flanges. Plaintiffs also argue that Galperti uses Boltex’s price list and then offers a variable
discount to undersell Boltex who does normalize their flanges while Defendants allegedly do not.
Dkt. 191 at 19. Again, Plaintiffs have not proffered any summary judgment evidence to support the
allegation that Defendants offer a discount to undersell Plaintiffs.4
Even if the court could somehow craft a comparison because Defendants used Boltex’s price
sheet to quote prices for their own flanges, it would not make sense when the court considers why
the presumption exists in comparative advertisement cases. The presumption exists because “[a]
misleading comparison to a specific competing products necessarily diminishes that product’s value
in the minds of the consumer.” Healthpoint, Ltd. v. Stratus Pharm., Inc., 273 F. Supp. 2d 871, 885
(W.D. Tex. 2001). Here, there is no reason to suggest that the value of Plaintiffs’ flanges is
diminished in the minds of the consumer when Defendants used the price sheet. Thus, this is a not
a comparative advertisement case and the court will not presume injury.
Furthermore, Plaintiffs’ only additional evidence of injury is inadmissible.5 Although
material offered in support of summary judgment evidence may be presented in a form that would
not, in itself, be admissible at trial, the substance of the evidence must be admissible at trial. Fed.
3

Further, there is evidence that Boltex is one of the few companies that offers a price sheet
and that many competitors may use Boltex’s price sheet as a guideline to set their prices. Dkts. 2268 (Adam Depo. 161:8–162:5), see also Dkt. 226-15 (Horton Depo. 42:12–25). There is also
evidence that the Boltex price list is just a list price and that Boltex applies a different multiplier to
the price sheet for different distributors to determine the final price for each distributor. Dkt. 226-8
(Adam Depo. 48:4–24).
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Plaintiffs’ summary judgment evidence consisted of deposition testimony that simply said
that the multiplier Galperti uses “fluctuates very often” and that sometimes it can be “relative
standard for six months.” Dkt. 191 at 19, id. Exh. H, Exh. 13 (Casner Depo. 278:11–17).
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Plaintiffs do not argue that their damages expert, Thomas Briven, establishes injury.
Dkt. 191 at 24.
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R. Civ. P. 56(c); see Lee v. Offshore Logistical & Transp., L.L.C., 859 F.3d 353, 355 (5th Cir. 2017).
To prevent the use of materials that lack authenticity or violate the rules of evidence, a “party may
object that the material cited to support or dispute a fact cannot be presented in a form that would
be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). The comments to the Rule indicate that “the
burden is on the proponent to show that the material is admissible as presented or to explain the
admissible form that is anticipated.” Fed. R. Civ. P. 56, Advisory Comm. Notes, 2010 Amendment.
Here, to prove that Plaintiffs lost sales to Defendants, Plaintiffs provided testimony from their
salesmen that reached out to customers when they lost a sale. Dkt. 191 at 20–21. The customers
confirmed to the salesmen that Plaintiffs lost the sales to Defendants. Id. Thus, the proffered
testimony that Plaintiffs lost a sale to Defendants only comes from the salesmen. Plaintiffs also
provided testimony that they “believe” they have lost sales to Defendants. Id. at 20. Defendants
object that this is hearsay and speculative.6 Dkt. 224 at 4–5. The court agrees. The testimony
consists of out court statements offered for the truth of the matter asserted. Fed. R. Evid. 801(c).
Additionally, Plaintiffs have not shown that it can present the substance of the evidence in a form
that would be admissible in court. Thus, the court does not have any summary judgment evidence
that creates a genuine issue of material fact that Plaintiffs were injured as a result of Defendants’
alleged misrepresentations. Fowler v. Smith, 68 F.3d 124, 126 (5th Cir. 1995) (evidence based on
hearsay should not be considered at summary judgment).
Accordingly, Defendants’ motion for summary judgment on Plaintiffs’ Lanham Act is
GRANTED. And, because Plaintiff’s unfair common law competitions are based on their Lanham

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Specifically, Defendants argued that “the alleged ‘evidence’ of lost sales constitutes
speculation, hearsay, or conclusory testimony, which are all inadmissible.” Dkt. 224 at 4–5. The
court is treating this as an objection to the summary judgment evidence.
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Act claims, summary judgment on both unfair competitions is also GRANTED. Tercel Oilfield
Prod. USA L.L.C. v. Alaskan Energy Res., Inc., No. CIV.A. H-13-3139, 2014 WL 645380, at *4
(S.D. Tex. Feb. 19, 2014) (“Courts in the Fifth Circuit generally analyze a Lanham Act deceptive
advertising claim and a Texas unfair competition claim together.)
V. PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
A.

Counts I and II
Plaintiffs seek summary judgment on Counts I and II of Galperti’s counterclaims for false

designation of origin and false advertising under the Lanham Act. Dkt. 130 at 4–23. In those counts,
Galperti claims that: (1) Plaintiffs advertise their carbon steel flanges and certain high yield carbon
steel flanges as, inter alia, “American made” and “Made in the USA” and (2) that Weldbend
“advertises its goods as ‘made in USA’ with ‘unquestionable traceability’ and ‘from melt to your
hands’”. Dkt. 46 at ¶ 39, ¶ 47, ¶ 58. Galperti is seeking both damages and injunctive relief. Id. at
¶ 56, ¶ 68, ¶ 75, ¶ 76.
As part of its prima facie case for false advertisement under the Lanham Act, a party must
prove that it has been injured or that it is likely to be injured as a result of the misrepresentation.
Derrick Petroleum Servs., 2017 WL 3456920, at *5. Even if a plaintiff fails to prove actual harm,
he may establish that he was in some way injured. Logan v. Burgers Ozark Country Cured Hams
Inc., 263 F.3d 447, 463 (5th Cir. 2001). A party seeking injunctive relief must at least prove the
likelihood of injury, even though it does not need to prove actual injury. Derrick Petroleum Servs.,
2017 WL 3456920, at *5; Schlotzsky's, Ltd. v. Sterling Purchasing & Nat'l Distrib. Co., 520 F.3d
393, 401 (5th Cir.2008) (“[A]t least the likelihood of injury must be proven in this case even if only
injunctive relief is to be ordered.”).

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Plaintiffs argue that Galperti does not have any evidence to show that it has been injured or
is likely to be injured because of Plaintiffs’ alleged false advertising. Dkt. 130 at 20–23.7 To prove
actual harm, a plaintiff must provide evidence that consumers would have bought plaintiffs’ products
instead of those of defendant in the absence of the allegedly false and misleading statements. IQ
Prod. Co., 305 F.3d 368, 376 (5th Cir. 2002). Here, Defendants have not presented any summary
judgment evidence that customers would have bought Defendants’ products instead of Plaintiffs’ in
the absence of the allegedly misleading statements. There is also no evidence that Plaintiffs’ profits
were the result of the allegedly false advertising. In fact, Galperti’s damages expert, Walter Bratic,
assumes that there will be evidence at trial establishing injury. Dkt. 144-5 at 11 (Bratic Depo.
42:2–10). Thus, Galperti has not created a genuine issue of material fact that it was actually injured.
Galperti has also not provided any evidence that creates a genuine issue of material fact that
it was likely injured. Galperti conclusorily states that “[b]ecause it is undisputed that [Plaintiffs] and
Galperti are in competition, there is evidence that [Plaintiffs’] advertising is likely to harm
Galperti,.” Dkt. 178 at 22.
In some cases, a party need not provide direct evidence of injury if the party provides
evidence that the parties were competitors and that the plaintiff was in some way injured. See, e.g.,
Logan, 263 F.3d at 463; see also Schlotzsky's, Ltd. v. Sterling Purchasing & Nat. Distribution Co.,
520 F.3d 393, 401 (5th Cir. 2008). However, in those cases, there was sufficient evidence that
allowed the jury to make that inference. Logan, 263 F.3d at 463 (finding there was sufficient
evidence because: the plaintiff had a direct business interest in the sales of the disputed product in
which he had a patented method, the plaintiff’s claims against defendant were based on a license

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Galperti does not distinguish between its claims against Plaintiffs for purposes of the injury
analysis and the court will do the same. Dkt. 178 at 21–23.
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agreement regarding plaintiffs’ patented method, and plaintiff’s ability to license his patented method
may have been directly affected by defendant’s false advertising); Schlotzsky's, 520 F.3d at 401
(finding sufficient evidence of likelihood of injury when the evidence created an “unavoidable
inference” that the “misrepresentation was done to maximize [the defendant’s] bargaining power and
therefore its income by substituting itself for other alternatives that might have been available.”).
Here, Galperti has not presented any evidence that would allow a fact finder to infer that the
parties are competitors in the market for U.S.-sourced flanges. Galperti’s strongest evidence of
competition is Boltex’s president affirmatively answering that he “generally considers flanges that
are made from U.S. material and flanges made from non-US material to be competing with each
other.” Dkt. 178, Exh. 2, Exh. 6 (F. Bernobich Depo 164:6-16). While this may raise a possibility
of injury, this evidence is so minimal that it does not create a genuine issue of material fact as to the
likelihood of injury.8 Thus, summary judgment as to Counts I and II is GRANTED.
B.

Count III
Plaintiffs also seek summary judgment on Galperti’s common law claim of unfair

competition in Count III. Dkt. 130 at 23–24. Unfair competition requires that the “plaintiff show
an illegal act by the defendant which interfered with the plaintiff’s ability to conduct business.”
Taylor Pub. Co. v. Jostens, Inc., 216 F.3d 465, 486 (5th Cir. 2000). “Although the illegal act need
not necessarily violate criminal law, it must be an independent tort.” Id.
Galperti alleged unfair competition in three ways. First, Galperti alleged unfair competition
based on its Lanham Act claims. Dkt. 46 ¶¶ 70–71. Because summary judgment has been granted

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A party seeking injunctive relief must also show “irreparable harm if the injunction is not
granted.” Logan, 263 F.3d at 465. Galperti has not shown the likelihood of injury, much less
irreparable harm. Galperti did not even address irreparable harm in their briefing.
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on the Lanham Act claims, the part of Galperti’s unfair competition claim that relies on the Lanham
Act claims also fails. Tercel Oilfield Prod. USA L.L.C., 2014 WL 645380, at *4.
Galperti also alleged unfair competition when Weldbend underreported the yield strengths
of its flanges, and when Boltex “misrepresented itself as having expertise in the field of carbon steel
flanges and misrepresenting to consumers what the technical standards are for ASTM A105 carbon
steel flanges.” Dkt. 46 ¶¶ 72–73. However, Galperti has not provided any summary judgment
evidence that these acts interfered with their ability to conduct business. Thus, summary judgment
is granted on all of Galperti’s unfair competition claims.
VI. CONCLUSION
For these reasons, both motions for summary judgment (Dkt. 146; Dkt. 130) are GRANTED.

Signed at Houston, Texas on June 21, 2019.

___________________________________
Gray H. Miller
Senior United States District Judge

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