Earthgrains Baking Companies v. Sycamore et al

Filing 257

REDACTED VERSION OF 250 MEMORANDUM DECISION AND ORDER (SEALED) granting in part and denying in part 119 Sealed Motion for Summary Judgment. Signed by Judge David Nuffer on 4/28/2017. (jds)

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Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 1 of 19 IN THE UNITED STATES DISTRICT COURT FOR TILE DISTRICT OF UTAH,CENTRAL DIVISION BIMBO BAKERIES USA, INC., Plaintiff, I ELAND SYCAMORE,TYLER SYCAMORE, WILD GRAINS BAKERY, EEC, and UNI FED STATES BAKERY, INC., SEALED NIEMOR1NDUM DECISION A ND ORDER GRANTING IN P,1.R.rF AND DENYING IN PART DEFENDAN [119] MOTION FOR SUMMARY JUDGMENT Case No. 2:13-cv-00749 DN District Judge David Nuffer Defendant. Plaintiff Bimbo Bakeries (Bimbo) tiled this case against multiple Defendants, principally alleging that the Defendants misappropriated Bimbo's trade secrets for making bread.] The trade secrets were originally developed by Defendant Leland Sycamore and acquired by Bimbo. One of the Defendants, United States Bakery (U.S. Bakery), moves for summary judgment on all of Bimbo's claims against it.? These claims include:(1)trade secret misappropriation,(2) trade dress infringement,(3) trade dress dilution, and (4) false designation of origin, advertising, and unfair competition.3 For the reasons stated in this order, Defendant's motion for summary _judgment is GRANTED as to Bimbo's trade dress infringement claims that pertain to whole grain bread, and . " possible infringement after slanuary 2014. The motion is DENTE )on all other claims. I Ain. C'ompl.; dockct no. 37. 2 Mot. for summ. 3.: docket no. 1 19. Cornpl. at p. 15-21: docket no. 37. Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Patie 2 of 19 BACKGROUND FACTS U NDISPUTLD FACTS 4 LEGAL STANDARD 6 DISCUSSION 7 ' Irate Secret Misappropriation 1. U.S. Bakery I las Not Shown Bimbo's Purported rfrade Secret is Generally Known S 2. The Use of Additional Ingredients Does Not Absolve U.S. Bakery From Trade 9 Secret Misappropriation Liability. 3. Fault Owed a Duty to Bimbo Not to Acquire -Information By Improper Means.. 10 4. Whether U.S. Bakery Used Bimbo's Purported Trade Secret Is Disputed 11 Trade Dress Infringement and Dilution 12 1. Bimbo Does Not Assert Trade Dress Claims As To Multigrain Bread. 12 2. Dr. Christensen's Surveys Are Admissible. 12 Summary Judgment Is Granted Only as to Possible Infringement After January 3. 2014 13 4. Damages Will Not Be Limited for Grandma Emilie's Failure to Make a Profit 14 False Designation of Origin, False Advertising, and Unfair Competition 15 1. The Fresh. Local. Quality. Tagline is Sufficiently Definite. 15 w hoth, 1 J C P -11. T ,e-rli 1kA/rono-lv 1 1,:01-1 ltc Chrl Disrutpil 1 3. The Admissibility of Damages Has Been Decided 17 ORDER 17 BACKGROUND FACTS4 Leland Sycamore ("Leland") invented the process and formula including the elements constituting the alleged trade secrets at issue — for making Grandma Sycamore's Home-Maid Bread ("Grandma Sycamore's") in 1979 at Aaron Bakery.5 Leland used packaging for Grandma Sycamore's that was substantially similar to packaging his successor, Bluth°, still uses to sell the bread today.6 Leland received federal trademark protection for part of the packaging's design in 1 999.7 helpful background arc taken from previous briefing and a prior order; Sealed Memorandum Decision and Order 1)enying Defendants' Mot. for Summ. J.., docket no. 2-13. 4 1. 11CSC Statement of Elements andUndisputed Material Facts(501) at 1,i, 1: docket no. 1 15 Mar 16, 2013 Declaration of Christopher D. Smith ("5/16/13 Smith Decd. at 11 .:c, docket no. 133. ') 7 Docket no. 157-7. Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 3 of 19 When Leland's son, Tyler, was 14 years old, he worked for his father's company.s It is, however, disputed whether Tyler was actually involved in making Grandma Sycamore's breach() Bimbo claims that, through years of working at the company, Tyler was well aware of the process for baking Grandma Sycamore's bread. Tyler, however, asserts that he was merely involved in simple tasks such as slicing bread and has no knowledge of the process for making the bread. 10 In 1995, Leland sold Grandma Sycamore's rights to one of!limbo's predecessors-ininterest for . i iThe purchase was a complete transfer of all assets of the business, including all intellectual property, trade secrets, machinery, and equipment relating to the production of Grandma Sycamore's products.12 As part of the transaction, Leland executed a nondisclosure agreement, which requires, among other things, him to keep confidential and refrain from using Grandma Sycamore's production formulations, manufacturing processes, and trade secrets.13 Bimbo asserts trade secret protection over the production process of Grandma Sycamore's white bread. 14 Bimbo claims that the production process is composed of the : compilation of G, Deposition oFfilar Sycamore. taken October 30. 2013 at p. 1 1 :14-16, 12:10-13; docket no. 190-11. ILL at p. 12:14-21. 14:15 15:1 . Ia. at p. 14:1-10. [ i SOF at 112; ON. 11, Aaron Bakery Asset Purchase ;\grecinent [Binlho 1495-15211,(Asset Pm-chase Agreement), at Bimbo p. 1499-500:(locket no. 199. 1 2 Id. 13 Asset Purchase Agreement I P. 1:)16: docket no. 199-13 r a Am. Cmill>1. at '11 13-14: docket no. 37. o Ex. A. Expert Report ofl)i. Russel l Carl 1 loseney (Hoscncy Report) at'1124; docket no 199-2. Case 2:13-cv-00749-DN-DBP Document 250 ASEALEDk Filed 04/28/17 Page 4 of 19 UNDISPUTED FACTS U.S. Bakery bought Grandma Emilie's bread brand from Hostess when Hostess went through bankruptcy. is 'Co re-introduce the Grandma Innilie's brand, U.S. Bakery used Tyler Sycamore's company, Wild (ii iins Bakery, (\\ Grains), as a contract baker until it could } A N. at in 25(,1). /c/. at 1125(h). o Mot. [or 522621 docket no. t IQ, -t Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 5 of 19 expand its Nampa, Idaho bakery to handle the production.2o For a period of three months starting in May 2013, Wild Grains baked and wholesaled Grandma Emilie's to U.S. Bakery.21 U.S. Bakery re-introduced Grandma Emilie's to the market on May 13, 2013.21! In June 2013, Bimbo's counsel wrote to U.S. Bakery complaining that Grandma Emilie's packaging infringed on Grandma Sycamore's trade dress.23 After June 2013 U.S. Bakery changed its labels and informed. Bimbo of the change. Bimbo did not respond to U.S. Bakery's letter informing Bimbo of the change in packaging.24 The last order of Grandma Emilie's made by Wild Grains was produced on August 10, 2013.25 U.S. Bakery's facility in Nampa, Idaho then took over production. U.S. Bakery had to develop a new recipe because Wild Grains did not disclose the recipe it was using. U.S. Bakery also changed its labels to avoid infringing on Grandma Sycamore's trade dress.26 In May 2013, Jeremy Faull went to work for U.S. Bakery.27 In November 2013, Faull transferred to the Nampa location and helped U.S. Bakery develop its bread recipe.2s Although Faull never worked Ibr a company that produced Grandma Sycamore's bread, Faull learned the basic recipe for producing the bread from Leland.29 Bimbo claims that Faull improperly 21 H. 21 10. at p. 29. 22 hi Declaration of Christopher I) Erickson in Support of Defendant U.S.Bakery's Mot. for Swum. J. 23 Id. at p. (Erickson Doe.), docket no. 121 . : M. 0 f, Deposition of Joseph Robinson, taken on Jan. 14, 2014 at p. 31 :22-32:6; docket no. 199-15. 10. 27 LS. 1)1), Deposition Jeremy Fault I, taken January 14, 2014 (Fault I Dep.) at p. 8:19-25 to 9:1-6; docket no. 199-9. 1 -; I. . .I, Deposition of Jeremy Fault II, taken December 1, 2015 (Faul l II Dep.) at p. 26:19-23: docket no. 199-17. 20 Id. at p. 42:16-24. Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Pace 6 of 19 misappropriated Grandma Sycamore's recipe for making white bread in transferring it to U.S. Bakery.30 Toward the end of 2015, the Grandma Emilie's brand was discontinued due to poor sales.31 In February 2015, U.S. Bakery relaunched its BreadLover's White product using the same formula and process that it had been using for Grandma Emilie's.32 U.S. Bakery currently has bakeries in Alaska, Idaho, Montana, Oregon, and Washington, and bakery outlets and depots in Northern California, Utah, and Wyoming.33 In July 2012, U.S. Bakery adopted a new tagline for its products, "Fresh. Local. Quality."34 In the spring of 2015, U.S. Bakery began phasing out the tagline from its product packaging. LEGAL STANDARD Summary emitment is annronriatc‘, if "there is no “entline, disout(' as to any material fact and the movant is entitled to judgment as a matter of law. 36 A factual dispute is genuine when " there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.-37 In determining whether there is a genuine dispute as to material fact, the court should "view the factual record and draw all reasonable inferences therefrom most favorably to the nonmovant."38 30 Am. Compi at 1124.; docket no. 37. o Mot. for Sminn. J at p. ix.; docket no. 1 10. 1 ),,,p,) it-101 -1 of A:u-on \Aih,11,‘11 1t 0AihHon , m ay p ",0•7_17: docket n og 1,00- 14. 33 Ox. Q. Deposition of' Mike Petit) (Petitt 11 Dep.) at p. 41:2-0: docket no. 65-17. , ;4 Ex 10. Ken Maltos Dep. at p. 60:16-61:5; docket no. 195-10. ( Pctnt 11 Dep. at p. 27:5-12; docket no. 65-17. ), Fed. R. Cic. P. 56(a). .1(11(7 ,Stones. Inc 144 1 .3d 664, 670 (10th Cir. 1099. 6 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 7 of 19 The moving party "bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law."-9 DISCUSSION Bimbo claims:(1) -U.S. Bakery misappropriated its trade secrets by hiring a competitor's employee and by use of confidential methods of making Grandma Sycamore's bread disclosed by that employee,(2) U.S. Bakery is liable for trade dress infringement because U.S. Bakery mimicked the Grandma Sycamore's trade dress in an effort to confuse consumers into buying Grandma Entilie's when the consumers meant to purchase Grandma Sycamore's, and (3) U.S. Bakery is liable for false advertising based on its "Fresh. Local. Quality" taglinc when the products were produced in out of state bakeries and were therefOre not local. judgment on each claim on the following bases: )The U.S. Bakery moves for summary, individual elements of Bimbo's purported trade secret are generally known;(2) U.S. Bakery uses additional ingredients in its bread recipe;(3) Faull did not owe a duty to Bimbo not to misappropriate trade secrets;(4) U.S. Bakery did not use the trade secret process Faull provided; (5) Bimbo has no evidence ofinfringement as to multigrain bread;(6) Secondary meaning cannot be established because surveys used by expert Dr. Christensen are inadmissible;(7) U.S. Bakery changed its design and therefore did not infringe on Bimbo's trade dress alter January 2014;(8) U.S. Bakery did not receive a profit from its alleged trade dress infringement because its product was not profitable;(9) the term "local" cannot constitute false advertising because it is indefinite and not measurable;(10) U.S. Bakery's "Freshly Baked in Utah" shelf-liners were only used in connection with products baked in Utah; and (1 1) Bimbo only has evidence of damages suffered in Utah. hl. at p. 670-71 . 7 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Patio 8 of 19 TRADE SECRET MISAPPROPRIATION 1. U.S. Bakery Has Not Shown Bimbo's Purported Trade Secret is Generally Known. 13imbo asserts trade secret protection over the compilation of in the production process of Grandma Sycamore's bread. These steps include:( . Utah has adopted the Uniform Trade Secrets Act. Under the act, a trade secret can be a -eoniodation' that 'derives independent value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use."40 "A compilation can be made up of known elements, if the combination itself is outside the general knowledge and not ascertainable by Koper means.".n The Tenth Circuit has been clear that when the plaintiff asserts trade secret protection under a compilation theory, an analysis of the individual trade secret components in isolation is improper.42 U.S. Bakery analyzes each individual element of Bimbo's purported trade secret and argues that the elements in isolation are generally known. While viewing each individual element may be helpful in determining whether the compilation of the elements is generally known, the fact that an individual element is generally known in isolation otherwise proves very little. Even if U.S. Bakery's piecemeal analysis was valid and it was found that each individual step in the process of producing Grandma Sycamore's bread was generally known,judgment still could not be entered in U.S. Bakery's favor. As the moving party, it is U.S. Bakery's burden to show that the compilation of individually generally known processes is also generally known. U tah Code Ann. f 13-24-2(4)(a). Briphani Younc (//or. r. Pri2c) h7c., 501 F. Supp. 24 1320. 1323 (D. Utah 2012). . RilVi/l/C77 FOrt:Nt Prods, 1,1d. r co , S'CV ( ia-Pacilic Cory.. 25 F.321042, 1045 flOth Cir. 1004). Case 2:13-cv-00749-DN-DBP Document 250 ''SEALED* Filed 04/28/17 Page 9 of 19 Because U.S. Bakery has not met this burden, summary judgment cannot be granted. Whether each individual element of the trade secret is generally known need not be discussed because U.S. Bakery does not argue that the compilation of elements is generally known. Furthermore, the facts in the record show that despite Grandma Sycamore's existence in the market for many years, competitors have tried to replicate the production process and have failed.43 At a minimum, that the fact that competitors have not been able to replicate the production process is evidence that the process for making Grandma Sycamore's bread is not generally known. . 2 The Use of Additional Ingredients Does Not Absolve U.S. Bakery From ' tirade Secret Misappropriation Liability. U.S. Bakery argues that even if Bimbo has a protectable trade secret, U.S. Bakery did not misappropriate it because it used different ingredients and processes. For example, U.S. Bakery argues that Grandma Emilie's/Breadl.over's White uses ingredients that Grandma Sycamore's does not. Such ingredients include:(1) unsalted butter,(2) soybean oil,(3) honey,(4) wheat gluten,(5) mono/di GlVIS 90,(6) SSI. l'.mplex,(7) calcium propionate,(8) ICS Sollase 699P, and ( vinegar.44 9) Additionally, U.S. Bakery argues that its bread uses a sponge and dough process, where approximately 60` ) of the ingredients are mixed together and allowed to ferment for approximately four hours before the remaining ingredients are added and mixed to full , development..F " The user of ,' mother's trade secret is liable even if he uses it with modifications or improvements upon it effected by his own eftOrts, so long as the substance of the process used by 1 1x. DD, Faul l I Dap. at p. 19:14-20:20: docket no. 199-9. r .X. D, Deposition or Larry 45 Fx. 1111, Whalen II Dcp. Suter dt 0500002867_65: docket no. 199-5. p. 47:5-45:21 , May 12. 2015:(locket no. 199-14. 1) Case 2:13-ev-00749-DN-DBP Document 250 -A-SEALED' Filed 04/28/17 Pane 10 of 19 the actor is derived horn the other's secret-4o "[I]rtrade secret law were not flexible enough to encompass modified or even new products that are substantially derived from the trade secret of another, the protections that law provides would be hollow."-17 Bimbo's purported trade secret is the combination of . Bimbo argues that even though U.S. Bakery may have used additional ingredients. U.S. Bakery still used Bimbo's trade secret. Summary judgment is denied because adding additional ingredients to an otherwise protectable trade secret does not necessarily absolve U.S. Bakery from liability. U.S. Bakery further argues that the recipe used by Wild Grains for the few months it was wholesaling Grandma Emilie's was also different from Bimbo's purported trade secret. U.S. states :Eat it wi-he to incorporate the ar4urnents made in Wild Grains motion for summary judgment. Summary judgment is denied because disputed facts remain concerning whether Wild Grains' recipe inhinged on Bimbo's purported trade secret.45 3 Fault Owed a Duty to Bimbo Not to Acquire Information By Improper Means. . U.S. Bakery argues that Faull did not owe Bimbo a duty of confidentiality as to die purported trade secret. U.S. Bakery says Leland had confidentiality obligations, but Faull did not because Fault never worked for Bimbo or any company it acquired. ' Faun signed a contract obligating him to maintain confidentiality concerning the production process of Leland's bread.49 It is, however, unclear whether Faull knew that !Leland was under an obligation not to use the trade secret Bimbo acquired. In rn linuirahvc 47 hi: Alaiwren R€1 Inc.. 749 F.24 575, 757 (7th C'ir. 197(1). /)nn. Corp. 17 ,\al 7 Chcni. Co., 57 1 .32 537. 544 (7th Ciu. 199(i). 1 Scaled Memorandum Decision and Under Dnnr ins Defendants' Mot. for Summ.,1 at p. 5-5; docket no. 245. to Ex. .1, 11'mt11 11 Dap. at p. 1 :2-22. 54:15-24, 90:24-67:5. docket no. 195-9. Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 11 of 19 Under Utah law, a third party has a duty not to knowingly acquire information by improper means.50 A party may be liable if the infOrmation was "acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use ... or derived from or through a person who owed a duty to maintain its secrecy or limit its USC."51 Utah defines misappropriation by improper means as "acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper 111CallS."52 Whether Faull, and U.S. Bakery, knew that they learned Bimbo's trade secret through improper means is disputed. Although it appears that Faull did not have an express agreement with Bimbo not to use Grandma Sycamore's trade secret, he could have acquired the trade secret through improper means because Leland was under an obligation not to share the recipe. Even though Faull never worked at Bimbo, Utah law prevents a person from knowingly acquiring .3 information through improper means.5 Summary judgment cannot be granted because even though Faull did not have an express agreement with Bimbo, he had a duty not to knowingly acquire information by improper means. Even in the absence of an express agreement, a duty not to acquire information by improper means nonetheless exists.54 Whether Faull knew that the information he acquired may have been a protected trade secret is disputed. . 4 Whether U.S. Bakery Used Bimbo's Purported Trade Secret Is Disputed. U.S. Bakery argues that whatever process or recipe Faull disclosed to U.S. Bakery, U.S. Bakery did not use it because Fatal's recipe did not yield bread that could be put on the market. Bimbo, however, argues that Faull disclosed the four elements of its trade secret and U.S. Bakery 5(1 Utah Code Ann. 13-24-2(2). CI)C Rcstoraiimi d C'onst., Utah Code Ann. 54 o. Tradcsinan Contractors, 1.1_,C, 369 P.3d 452, 459(Utah 2016). 13-24-2(2)(a). Id. 11 Case 2:13-cv-00749-DN-DBP Document 250 "SEALED* - Filed 04/28/17 Pane 12 of 1_9 ultimately made Grandma Emilie's bread using the tbur raCtOrS.55 Whether -U.S. Bakery used the purported trade secret is disputed and material so summary judgment must be denied on this issue. TRADE DRESS INFRINGEMENT ,AND DILUTION U.S. Bakery moves for summary judgment on Bimbo's trade dress infringement and dilution claims arguing that:( 1) Bimbo has no evidence of infringement as to multigrain bread; (2) Uirandma Sycamore's trade dress has not acquired secondary meaning; and (3) potential remedies, if any, should be limited. 1. Bimbo Does Not Assert Trade Dress Claims As To Multigrain Bread. U.S. Bakery argues that Bimbo has no evidence of trade dress infringement as it relates to multigrain bread, Bimbo claims that it never asserted trade dress infringement relating to U.S. Bakery's use of multigrain bread.5( While the Amended Complaint does refer to multigrain bread,57 because Bimbo agrees U.S. Bakery did not infringe on Bimbo's trade dress through its use of multigrain bread, summary judgment is granted on this issue. 2 Dr. Christensen's Surveys Are Admissible. . To merit protection under the Lanham Act a trade dress must(1) be inherently distinctive, or(2) have acquired distinctiveness through secondary meaning.5s Proof of secondary meaning requires "direct evidence, such as consumer surveys or testimony from consumers.-59 35 1.X. .•\., 110C11Cy - Report at 1130; docket no. 150-2. Opp. to Stunt-1-4.1. at p. 14-15; docket no. 200. Compl. at ill 15; docket no. 37. Two 12 oa, Inc. v. Trwo Cabana, Inc., 505 U.S. 753, 759 (1592). [ v. Collins, 809 1 to'. 1 133, 1 145 (10t0 E'ir. 2010). 12 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 13 of 19 U.S. Bakery argues that summary judgment should be granted on the issue of secondary meaning because Dr. Christensen's secondary meaning surveys that were conducted for Bimbo are inadmissible. U.S. Bakery's sole argument is that if Dr. Christensen's surveys are inadmissible then summary judgment must be granted. U.S. Bakery's motion to exclude expert Dr. Christensen's surveys was denied. Therefore, summary judgment because his testimony is inadmissible cannot be granted.w . 3 Summary Judgment Is Granted Only as to Possible Infringement After January 2014. U.S. Bakery argues that Bimbo only has a claim for trade dress infringement front May through June 2013. After June 2013 U.S. Bakery changed its labels and informed Bimbo of the change. Bimbo did not respond to U.S. Bakery's letter informing Bimbo of the change in U.S. Bakery argues that Bimbo's failure to respond precludes Bimbo from claiming infringement for the new design. U.S. Bakery's asserts the common-law defense of estoppel by acquiescence.62 Under the defense of estoppel by acquiescence,"a plaintiff loses his rights against a defendant if he committed some act amounting to an assurance he would not assert his rights."63 U.S. Bakery has not cited authority standing for the proposition that silence can create a successful defense of estoppel by acquiescence.54 The cases dealing with this defense typically involve an affirmative statement that the plaintiff will not assert its rights.0 u, Memorandum Decision and Order Denying Motion to 0o chide: docket no. 245. o Mot. for Summ. J. at p. docket no. 1 19; Sec also 11rickson Dec.; docket no 121 . Legal Det: 62 Sec Fund, Inc., 753 F.2d 131, 137(D.( Cir. 1055). ,Allic High luaus. v. Cohen, 222 l',3d 845, 558 (10th Cir. 2000)(quoting W I. 203646 at t 12 (Ohio Ct. App. 1007). 10 Mot. for Sumnt..0 at p. .S'cc API(' :Alennn Soc( t r (Lib, Inc 1007 docket no 1. 19. Indus., at 858. 13 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Pane 14 of 19 U.S. Bakery has not shown that it was entitled to rely on Bimbo's silence. Bimbo's failure to respond was not an assurance that it would not enforce its rights. U.S. Bakery's letterw., stated that although it did not believe that it infringed on Bimbo's trade dress, it will change its packaoing.67 Because Bimbo did not give its assurance that it would not assert its rights alter receiving the letter. U.S. Bakery is not entitled to summary judgment on its affirmative defense of estoppel by acquiescence. Summary _judgment is denied for U.S. Bakery's trade dress infringement atter June 2013. I n .January 2014, U.S. Bakery changed its product further to make it look more similar to its other products. Bimbo states that it does not claim U.S. Bakery infringed on Bimbo's trade dress after January 2014.6s Because the Amended Complaint does not have an ending date for !hi' I 1(1e, ,1 ,-n1ty..!i,, io,1,, , 1 , , al ep) that I T Q Bakory Bimbo's trade dress alter January 2014. 4 Damages Will Not Be Limited for Grandma Emilie's Failure to Make a Profit. . U.S. Bakery argues that Bimbo is not entitled to any disgorgement of profits because the Grandma Emilie's bread line was not profitable. Whether alternative damage calculations are appropriate was discussed in the order to exclude expert testimony.69 That order considered alternative valid calculations of damages other than disgorgement of profits.70 Summary judgment is therefore denied due to Grandma Emilie's lack of profit. Ht Letter, Christopher 0. Erickson to Randel S. Springer...June 18, 2013. A to Erickson Ike.; docket no. 121-1 . d)pp. to Mot. l'or Summ. J. at p. 15; docket no. 200. at p. 11. sa Memorandum Decision and Order Denying Motion to It\elude: docket no. 245. 7 (7. 14 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 15 of 19 FALSE DESIGNATION OF ORIGIN,FALSE ADVERTISING, A ND UNFAIR CONI PETITION Bimbo contends that the U.S. Bakery tagline "Fresh. Local. Quality. is false because U.S. Bakery neither maintains a baking facility in the state of Utah nor contracts with a Utah facility to manufacture its bread products. U.S. Bakery argues that it is entitled to summary judgment because the tagline is not sufficiently definite and is not attributable to the product, and because Bimbo lacks admissible evidence to support the claim. 1. The Fresh. Local. Quality. Tagline is Sufficiently Definite. " The Lanham Act prohibits the False or misleading description of fact, or false or misleading representation of fact, which ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities.'"7 I TO succeed on this claim the plaintiff must show:(1) a false or misleading description of fact or representation of fact in a commercial advertisement about its product;(2)the misrepresentation is material, in that it is likely to influence the purchasing decision;(3) the misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience;(4) the false advertisement was placed 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.72 The Lanham Act also bars statements involving the false designation of origin of a product.73 Words in advertisements that constitute a statement of opinion that are not subject to Zollcr Laboratories. LL('r ,vBII`htc.. 1 1 1 ltd. Appx. 978.082 (10th Cir. 2004)(quoting Scotty Co. a. 1 1flirca hiaas. Corp.. 315 F.35 204, 272 (4i.0 Cu -. 2002). Sc Id. 1 5 I.J.S.L. 1 125. 1 13 Case 2:13-cv-00749-DN-DBP Document ? C) *SFAI FD* Filed 04/22/17 Pano 10 of 10 an objectively ascertainable meaning arc, however, generally not actionable as literally false because truth or falsity cannot be measured.7• Bimbo only challenges the word "local" in the tagline. U.S. Bakery claims that -localfalls within the category of non-actionable words because the term is vague and not measurable and is therefore merely an opinion. A claim for false designation oforigin is often clear. For example, if a company marketed its potatoes as Idaho potatoes, when in fact the potatoes were grown in Utah, then a claim for false designation of origin would exist. Such a claim can easily be proven false. The United States Department of Agriculture has concluded [t]hough 'local' has a geographic connotation, there is no consensus on a definition in terms of the distance between to an:I consurnption.-7:, Bionho e was misleading and material to potential purchasers. Because the term local does not carry a set definition, whether the term is false or misleading is a question appropriate for the fact finder. Summary judgment is denied because whether "local" is misleading is a factual question. 2 Whether U.S. Bakery Wrongly Used Its Shelf Liners Is Disputed. . In its Amended Complaint, Bimbo claims that U.S. Bakery violated the Lanham Act by using shell -liners saying "Freshly Baked in Utah" on products that were not baked in Utah.76 U.S. Bakery claims that this only happened in one instance after one of the products got misshelved.77 U.S. Bakery claims that in all other circumstances those shelf liners were used with its bun products that were baked in Utah. U.S. Bakery therefore claims that it is entitled to summary Son Proc for << (Iambic Co. c. K6111)( In-Clarl; Corp., 569 L.Stipp.2d 796, ,;0.2 (F.D. Wis. 2001 ). ' ` U.S. Dep't of Agriculture. Steve Martinez, Michael _I land, et al., local Food Systems: Concepts, Impacts, and t Issues iii (May 2010), http:/, \ , mcdm 2.2;;6 err97 1 .pdr. Compl. at 11129-35. o Slot. For Summ. J. at p. 20: docket no. I 0). 16 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 17 of 19 judgment because Bimbo cannot prove that U.S. Bakery engaged in this behavior on a systematic basis. Chris Smith, the director of sales for Bimbo, testifies that he has seen the shell'liners used in Utah in 2014 during a time that he understood that U.S. Bakery did not have a bakery in the state. Smith's testimony creates a genuine dispute as to a material Oct and precludes summary judgment on this issue. 3 The Admissibility of Damages Has Been Decided. . U.S. Bakery moves for summary judgment seeking that the issue of damages be limited to the state of Utah. This issue has been addressed in detail in the Order on Motions to Exclude Expert Witnesses which found that Dr. Christensen's damage calculations are limited to Utah and southern Idaho.79 ORDER Defendant U.S. Bakery's motion for summary judgment is GRANTED as to the Trade Dress Infringement claims pertaining to U.S. Bakery's whole grain bread, and its packaging after J anuary 2014. The remainder of U.S. Bakery's motion for summary judgment is DENIH/80 Within fourteen days after filing of this order, the parties shall send a redacted version of this document to The redacted version shall obscure all protected i nformation and shall be a text-based PDF. If the redactions are acceptable to the court, the 5/1w16 Smith 1)ecl. St docket no. 133. Order on Motion to Lxcludc at p. 5t doAct no. 244. so Docket no. 119. 17 Case 2:13-cv-00749-DN-DBP Document 250 A:SFAI FD* Filed 1)4/22/17 Pane 12 of 19 redacted version will be placed on the docket. Signed April 28, 2017. BY THE COURT District Jude David Iker 18 Case 2:13-cv-00749-DN-DBP Document 250 *SEALED* Filed 04/28/17 Page 19 of 19 United States District Court for the District of Utah April 28, 2017 ****MAILING CERTIFICATE OF THE CLERK****** RE: Bimbo Bakeries USA v Leland Sycamore, et al. 2:13cv749 DN-DBP Charles A. Burke WOMBLE CARLYLE SANDRA-00F ONE W FOURTH ST WINSTON-SALEM, NC 27101 Raymond J. Etcheverry PARSONS BEI ILE Sz. LATIMER (UT) PO BOX 45898 SALT LAKE CITY, UT 84145-0898 Sean N. Loan PARKSIDE TOWER STE 950 215 S STATE ST SALT LAKE CITY, UT 84111-2374 Andrew 0. Deiss DEISS LAW PC 10 W 100 S STE 425 SALT LAKE CITY, UT 84101 Christopher S. Hill KIRTON MCCONKIE PO BOX 45120 SALT LAKE CITY, UT 84145-0120 Eric C. Beach TONKON TOR0 LLP 888 SW EIFTI I AVE STE 1600 PORTLAND, OR 97204 Aimee Trujillo, RICE (WINSTON-SAI FM)

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