Earthgrains Baking Companies v. Sycamore et al
Filing
434
MEMORANDUM DECISION AND ORDER Ruling on Comments and Objections to Court's Proposed Final Jury Instructions and Special Verdict Form, 406 Objections by United States Bakery, 408 Supplemental Objections by United States Bakery, and 410 Objections by Bimbo Bakeries USA. Signed by Judge David Nuffer on October 4, 2017. (Attachments: # 1 Exhibit Final Jury Instructions with Revisions, # 2 Exhibit Special Verdict Form with Revisions) (mjt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
BIMBO BAKERIES USA, INC.,
Plaintiff,
v.
LELAND SYCAMORE and UNITED
STATES BAKERY, INC.,
MEMORANDUM DECISION
AND ORDER RULING ON
COMMENTS AND OBJECTIONS TO
COURT’S PROPOSED FINAL JURY
INSTRUCTIONS AND
SPECIAL VERDICT FORM
Case No. 2:13-cv-00749-DN-DBP
Defendants.
District Judge David Nuffer
INTRODUCTION
The Court’s Proposed Jury Instructions and Special Verdict Form filed before trial
invited comments and objections from the parties. 1 Responses to the Preliminary Instructions
were addressed in a prior order. 2 Comments and objections to the Final Jury Instructions and
Special Verdict Form have been submitted by plaintiff, Bimbo Bakeries USA, Inc. (“Bimbo
Bakeries”), 3 and defendant United States Bakery, Inc. (“US Bakery”). 4 Brief argument regarding
the viability of false advertising claim based on literal falsity was heard on the morning of
1
Notice re Court’s Proposed Jury Instructions and Special Verdict Form, docket no. 378, filed September 18, 2017.
2
Memorandum Decision and Order Ruling on Standard of Evidence in Jury Instruction and Sustaining [396]
Objections to Preliminary Instructions by United States Bakery, and [399] Objections to Preliminary Instructions by
Wild Grains Bakery, Tyler Sycamore, docket no. 407, filed September 23, 2017.
3
Plaintiff Bimbo Bakeries USA, Inc.’s Comments and Objections to Proposed Jury Instructions and Special Verdict
Form (“Bimbo Response”), docket no. 410, filed September 24, 2017.
4
Defendant United States Bakery, Inc.’s Objections to Court’s Proposed Final Jury Instructions (“US Bakery
Response I”), docket no. 406, filed September 23, 2017; Defendant United States Bakery, Inc.’s Supplemental
Comments and Objections to Court’s Proposed Final Jury Instructions and Special Verdict Form (“US Bakery
Response II”), docket no. 408, filed September 24, 2017.
October 3, 2017, and the parties submitted case authorities 5. The parties’ comments and
objections are OVERRULED IN PART and SUSTAINED IN PART as set forth in this
Memorandum Decision and Order. They jury will receive the Final Jury Instructions and Special
Verdict Form as set forth in the forms attached hereto.
DISCUSSION
Global Changes
Bimbo Bakeries has requested certain global changes to the Final Jury Instructions and
Special Verdict Form. 6 Each of these global changes is granted.
First, references to the phrase “Freshly Baked in Utah” have been removed from
the Final Jury Instructions and Special Verdict Form because Bimbo Bakeries has
withdrawn the portion of its false advertising claim based on that phrase. 7
Second, references to Tyler Sycamore and Wild Grains as defendants in this
action have been removed because Tyler Sycamore and Wild Grains were dismissed. 8
Third, the jury instructions regarding false advertising will be presented before the
instructions on trade secret misappropriation. The instructions are reordered to follow the
order of the claims in the special verdict form and to reflect Bimbo Bakeries’ presentation
of evidence. 9 The change necessitates moving former Instruction No. 36 forward to
5
Email from US Bakery dated October 3, 2017 Re Literal Falsity Authorities, docket no. 431, filed October 4, 2017;
Email from Bimbo Bakeries dated October 3, 2017 Re Literal Falsity Authorities, docket no. 432, filed October 4,
2017; Email from US Bakery dated October 3, 2017 Re Literal Falsity Authorities, docket no. 433, filed October 4,
2017.
6
Bimbo Response at 2–3.
7
Id. at 3.
8
Order Granting Joint Motion to Dismiss Plaintiff’s Claims against Defendants Tyler Sycamore and Wild Grains
Bakery, LLC with Prejudice, docket no. 411, filed September 25, 2017.
9
Bimbo Response at 2.
2
Instruction No. 29 to instruct the jury on calculating profits in conjunction with the first
jury instruction raising the issue of profits.
Final Jury Instructions
Instruction on Stipulated Facts Replaced with Instruction on Demonstrative Exhibits: No. 17
The parties have not stipulated to facts. An instruction on stipulated facts is not necessary
and has been removed. The instruction has been replaced with an instruction explaining
demonstrative exhibits and their use.
False Advertising—Essential Elements: No. 25
The jury instruction explaining the elements of a false advertising claim refer to “material
false or misleading representations of fact in connection with the advertising or promotion of
[US Bakery’s] products.” Following the testimony of US Bakery’s witnesses, including Todd
Cornwell, the jury would benefit from an instruction on what constitutes “advertising or
promotion” for purposes of a false advertising claim. Instruction No. 25 has been revised to
include the test for “advertising or promotion” developed by the federal courts under the Lanham
Act and adopted in the Tenth Circuit. 10
Definition of Trade Secret: Former No. 26 (Now No. 34)
A pretrial order rejects the defendants’ proposed jury instruction that “[c]ertain
information loses protection as a trade secret if it has been merged into a person’s own faculties,
skill, and experience.” 11 US Bakery has objected to the exclusion of this statement from the jury
instructions. 12 US Bakery argues that the proposed instruction is consistent with the Utah
10
Proctor & Gamble Co. v. Haugen, 222 F.3d 1262 (10th Cir. 2000) (citing and adopting the test set out in Gordon
& Breach Sci. Publishers, S.A. v. Am. Inst. of Physics, 859 F. Supp. 1521, 1535–36 (S.D.N.Y.1994)); Grubbs v.
Sheakley Group, Inc., 807 F.3d 785, 799–801 (6th Cir. 2015).
11
Memorandum Decision and Order Ruling on Defendants’ Proposed Jury Instruction No. 26 (Loss of Trade Secret
Protection by Merger) (“Merger Order”), docket no. 390, filed September 20, 2017.
12
US Bakery Response I at 2–3.
3
Supreme Court’s ruling in Microbiological Research Corp. v. Muna. 13 As explained in the prior
order on this instruction, the Microbiological case quotes directly from a statement in a treatise
that has been withdrawn in the subsequent edition of the treatise. 14 The proposed instruction is
not a reliable statement of Utah law. US Bakery’s objection is overruled.
Bimbo Bakeries objects to the Definition of Trade Secret instruction because it instructs
the jury that “[i]f a defendant could reverse-engineer the components of a formula or process by
performing basic research, or if the information is available from public sources, the information
cannot constitute a trade secret.” This is an accurate statement of the law. 15 Bimbo Bakeries’
objection is overruled.
Definition of Misappropriation: Former No. 28 (Now No. 36)
Bimbo Bakeries favors the word “used” over “utilized” in the Definition of
Misappropriation instruction. The term “use” appears elsewhere in the instructions as a simpler
synonym of “utilize.” For consistency, the instruction has been revised as requested to read:
“derived from or through a person who had used improper means to acquire it.”
An Employee’s General Knowledge, Skill, or Experience: Former No. 30 (Now No. 38)
References to former defendants Tyler Sycamore and Wild Grains have been removed
from this instruction.
Innocently Acquired Trade Secrets: Former No. 33 (Now No. 41)
US Bakery objects to including a jury instruction on innocently acquired trade secrets. 16
US Bakery has not shown that the instruction is an inaccurate statement of the law. The objection
13
625 P.2d 690, 697 (Utah 1981).
14
Id. (citing 2 Callman Unfair Competition, Trademarks and Monopolies (3rd Ed.), § 54.2(a), pp. 418–419); Merger
Order at 2.
15
Utah Code Ann. § 13-24-2(4)(a) (requiring that information not be generally known or readily ascertainable by
proper means to qualify as a trade secret).
16
US Bakery Response I at 3.
4
is overruled. However, the decision to present the instruction to the jury is reserved and will be
included only if evidence is presented that the alleged trade secret was innocently acquired.
References to former defendants Tyler Sycamore and Wild Grains have been removed
from this instruction.
Trade Secret Misappropriation—Willfulness: Former No. 40 (Now No. 47)
Consistent with the prior order ruling on the standard of evidence, the jury will be
instructed on the “clear and convincing” standard in addition to the “preponderance of the
evidence” standard. 17 US Bakery’s objection in favor of the “clear and convincing” standard 18 is
moot because instruction on the “clear and convincing” standard has been accepted. Bimbo
Bakeries’ objection to instruction on the “clear and convincing” standard 19 is overruled.
False or Misleading Representations: Former No. 42 (Now No. 26)
Bimbo Bakeries does not intend to argue liability based on the phrase “Freshly Baked in
Utah” at trial, 20 which means that Bimbo Bakeries’ false advertising claim is based only on the
tagline “Fresh. Local. Quality.” US Bakery contends that Bimbo Bakeries has not argued that the
remaining “Fresh. Local. Quality.” is literally false. 21 Therefore, US Bakery objects to
instructing the jury that there are two ways to show false or misleading advertising—(1) literally
false or (2) literally true or ambiguous and likely to mislead or confuse consumers. Bimbo
Bakeries disputes US Bakery’s characterization of the false advertising argument and responds
that its position is indeed that the “Fresh. Local. Quality.” tagline is literally false. 22
17
Memorandum Decision and Order Ruling on Standard of Evidence Jury Instruction, docket no. 407, filed
September 23, 2017.
18
US Bakery Response I at 3.
19
Bimbo Response at 4.
20
Id. at 3.
21
US Bakery Response I at 4.
22
Email from Counsel for Bimbo Bakeries Dated September 29, 2017, lodged at docket no. 426 on October 2, 2017.
5
US Bakery’s objection is overruled. A plaintiff may show that a statement made in
commercial advertising or promotion is literally false “either on its face or by necessary
implication.” 23 If a plaintiff cannot show literal falsity, the plaintiff may still show false
advertising by proving that a literally true or ambiguous statement is likely to mislead or confuse
consumers. 24 Bimbo Bakeries continues to pursue the argument that the “Fresh. Local. Quality.”
tagline is (1) literally false, or (2) if not literally false, likely to mislead or confuse consumers. 25
“Whether an advertisement is literally false is an issue of fact.” 26 The jury must decide the
issue. 27 The instructions on literal falsity will be included.
Materiality: Former No. 43 (Now No. 27)
Based on Bimbo Bakeries’ decision not to argue liability based on the phrase “Freshly
Baked in Utah” at trial, 28 US Bakery has objected to the jury instructions about the presumption
of materiality that attends a literally false advertisement. However, Bimbo Bakeries continues to
pursue the argument that the “Fresh. Local. Quality.” tagline is literally false. 29 US Bakery’s
objection is overruled.
23
Zoller Labs., LLC v. NBTY, Inc., 111 Fed. Appx. 978, 983 (10th Cir. 2004) (unpublished) (quoting Southland Sod
Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997).
24
Intermountain Stroke Center, Inc. v. Intermountain Health Care, Inc., 638 Fed. Appx. 778, 785 (10th Cir. 2016).
25
Email from Counsel for Bimbo Bakeries Dated September 29, 2017, lodged at docket no. 426 on October 2, 2017.
26
Zoller Labs., 111 Fed. Appx. at 983 (quoting C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare, L.P.,
131 F.3d 430, 434 (4th Cir. 1997)).
27
This conclusion is reached notwithstanding the decision relied upon by US Bakery in Honeywell Internat’l Inc. v.
ICM Controls Corp., 45 F.Supp.3d 969 (D. Minn. 2014) (finding on summary judgment that “Made in the U.S.A.”
is not unambiguous enough to support a literal falsity theory under the Lanham Act.) Unlike “local,” that phrase was
subject to many applicable or analogous regulatory interpretations. Literal falsity is a question of fact for the jury,
and the instructions on that issue are followed by instructions on a literally true or ambiguous statement which is
misleading or likely to deceive.
28
Bimbo Response at 3.
29
Email from Counsel for Bimbo Bakeries dated September 29, 2017, lodged at docket no. 426 on October 2, 2017.
6
Damages for False Advertising: Former No. 44 (Now No. 28)
Based on Bimbo Bakeries’ representation that it is no longer seeking to recover actual
damages for false advertising, 30 the jury need not be instructed on that subject. References to the
amount of actual damages have been removed. Bimbo Bakeries’ requested this revision:
“[Damages proximately caused by US Bakery’s false advertising] may include profits Bimbo
Bakeries lost due to a loss of market share caused by the false advertising” (emphasis shows
revision). 31 This change reflects that Bimbo Bakeries does not intend to prove actual damages in
the form of its own lost profits; rather, Bimbo Bakeries intends to show a loss of market share.
Bimbo Bakeries’ proposed revisions did not go far enough to address Bimbo Bakeries’ position
on actual damages. The amended instructions attached to this order reflect additional necessary
changes.
Because Bimbo Bakeries’ has decided not to argue liability based on the phrase “Freshly
Baked in Utah” at trial, 32 the second paragraph of the instruction directing the jury to decide
damages for that phrase separately has been removed.
Damages for False Advertising—US Bakery’s Profits: Former No. 45 (Now No. 29)
Based on Bimbo Bakeries’ representation that it is no longer seeking to recover actual
damages for false advertising, 33 the jury need not be instructed how actual damages impact the
measure of damages. The statement in Instruction No. 29 (formerly Instruction No. 45) that the
jury “may not include in any award of US Bakery’s profits any amount of Bimbo Bakeries’ lost
30
Id. at 5 (“[Bimbo Bakeries] does not intend to seek an award of actual damages for lost profits due to [US
Bakery’s] false advertising, but rather only a jury finding that it did indeed suffer actual damages.”).
31
Id. at 4.
32
Id. at 3.
33
Id. at 5 (“[Bimbo Bakeries] does not intend to seek an award of actual damages for lost profits due to [US
Bakery’s] false advertising, but rather only a jury finding that it did indeed suffer actual damages.”).
7
profits that [were] included in determining actual damages” no longer applies. This change is
reflected in Instruction No. 29.
Special Verdict Form
US Bakery’s Comments and Objections
US Bakery argues that the Special Verdict Form must “ask whether the purported false
advertising caused, or was likely to cause, actual consumer confusion.” 34 US Bakery also argues
that the form must include a “question regarding materiality.” 35 Both issues—actual consumer
confusion and materiality—are covered in the jury instructions on false advertising. 36 The
objections are overruled. The jury will be expected to rely upon the instructions in responding to
Question No. 1: “Has US Bakery engaged in false advertising by using the words ‘Fresh. Local.
Quality’ in connection with the advertising or promotion of its products?”
US Bakery objects to Question No. 5 on Trade Secret Misappropriation. The objection is
overruled. After asking in Question No. 4 whether the jury finds willful and malicious trade
secret misappropriation by clear and convincing evidence, Question No. 5 asks whether the jury
finds willful and malicious trade secret misappropriation by the preponderance of the evidence.
Question No. 5 will not be posed unless the jury first finds trade secret misappropriation and then
finds no clear and convincing evidence of willful and malicious misappropriation. In that event,
the court would have no fact determination on which to base an award of attorneys’ fees, which
34
US Bakery Response I at 5.
35
Id.
36
Jury Instructions Nos. 25–27.
8
requires willful and malicious misappropriation. 37 Therefore, Trade Secret Question No. 5 is
necessary.
Bimbo Bakeries’ Comments and Objections
Bimbo Bakeries objects to including the clear and convincing standard of proof in the
Special Verdict Form. The objection is overruled for the reasons stated in the order accepting the
clear and convincing standard for finding willful and malicious trade secret misappropriation for
purposes of assessing exemplary damages. 38
Bimbo Bakeries also requests that False Advertising Question No. 2 be revised to ask
whether Bimbo Bakeries suffered actual damages rather than the amount of actual damages. The
request is granted. This revision is consistent with Bimbo Bakeries’ decision to no longer seek to
recover actual damages for false advertising. 39
ORDER
IT IS HEREBY ORDERED that the comments and objections of Bimbo Bakeries and US
Bakery are OVERRULED IN PART and SUSTAINED IN PART.
Subject to further objections filed before 10:00 p.m. today, the jury will receive the Final
Jury Instructions and Special Verdict Form as set forth in the forms attached hereto.
Dated October 4, 2017.
BY THE COURT:
____________________________
David Nuffer
United States District Judge
37
Utah Code Ann. § 13-24-5 (“If a claim of misappropriation is made in bad faith, a motion to terminate an
injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award
reasonable attorneys' fees to the prevailing party.”).
38
Memorandum Decision and Order Ruling on Standard of Evidence Jury Instruction, docket no. 407, filed
September 23, 2017.
39
Bimbo’s Response at 5 (“[Bimbo Bakeries] does not intend to seek an award of actual damages for lost profits due
to [US Bakery’s] false advertising, but rather only a jury finding that it did indeed suffer actual damages.”).
9
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