Opinion
Civil No. 03-5141 (JRT/FLN).
June 11, 2004
Peter D. Raymond, REED SMITH, New York, N.Y. and Rita Coyle DeMeules, ROBINS KAPLAN MILLER CIRESI, Minneapolis, MN, for plaintiff.
Thomas A. Smart, KAYE SCHOLER, New York, NY, and Christopher K. Larus, FULBRIGHT JAWORSKI, Minneapolis, MN, for defendant.
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S RENEWED MOTION FOR A PRELIMINARY INJUNCTION
Millennium Import Company ("Millennium" or plaintiff), maker of the luxury vodka Belvedere, brought this lawsuit against Sidney Frank Importing Company ("Sidney" or defendant), maker of the luxury vodka, Grey Goose. Millennium accuses Sidney of false and misleading advertisement practices relating to a print advertisement ("print ad") and a "hang tag" advertisement, both of which reference a 1998 taste test in which Grey Goose outscored Belvedere. Millennium brings these claims under the Lanham Act and several Minnesota statutes including the Deceptive Trade Practices Act, the Unlawful Trade Practices Act, and the Consumer Fraud Protection Act. Millennium also brings a claim for common-law product disparagement or "trade libel."
On March 19, 2004, the Court heard oral argument on Millennium's renewed motion for a preliminary injunction. For the reasons discussed below, the Court denies the motion for preliminary injunctive relief. Also on the calendar was Sidney's motion to dismiss Count IV (brought under the Minnesota Consumer Protection Statute) and Count V (common law claim for product disparagement). The parties rested on their briefing as to that motion, and the Court ruled on the motion from the bench. The Court granted the motion to dismiss Count IV, and granted the motion to dismiss Count V, but granted plaintiff leave to amend Count V to comply with the pleading requirement for claims of product disparagement.
BACKGROUND
I. THE VODKAS
Belvedere, introduced in 1996, and Grey Goose, introduced about a year later, are part of a new and fast-growing category of "luxury imported vodka." According to the parties' representations, Belvedere and Grey Goose hold the vast majority of the market share for luxury vodkas. Both types of vodka seem to have done well in the market, though sales of Grey Goose have outpaced those of Belvedere.
II. THE TASTE TEST
In 1998 the privately run Beverage Testing Institute of Chicago ("BTI") conducted a taste-test of over 40 vodkas. The BTI is an independent taste testing organization, which conducts periodic taste tests of wine, beer, and distilled spirits, including vodka. For the 1998 vodka taste-test, the BTI tested "luxury" vodkas, as well as the more run-of-the-mill variety. The vodkas were rated on a scale of 1 to 100, according to BTI's regular practices. Points were awarded based on smoothness, nose, and taste. Scores from 100-96 are "superlative;" from 95-90 are "exceptional;" 81-89 are either "recommended" or "highly recommended;" below 80 are "not recommended." Grey Goose came out on top, with a score of 96. Belvedere fared much worse, and scored 74. Although Millennium suggests the test was an anomaly, neither party complains that the 1998 BTI taste test at issue did not follow accepted procedure or was otherwise unreliable.
III. THE AD
Sidney took advantage of Grey Goose's top score, and began to run advertisements touting the 1998 BTI taste-test results. The at-issue print ad has appeared in multiple issues of numerous different magazines, and reads as follows:
Rated The #1 Vodka In The World [in large type]
"In 1998, the Beverage Testing Institute of Chicago conducted a blind taste test of more than 40 vodkas. They awarded points based on smoothness, nose, and most importantly, taste. Of all the vodkas, Grey Goose Vodka emerged victorious, receiving 96 points out of a possible 100.
"Founded in 1981, the Beverage Testing Institute conducts tests in a specially designed lab that minimizes external factors and maximizes panelists' concentration. The Institute selects judges based on their expertise, and its testing and scoring procedures are widely praised as the best in the industry." [two paragraphs are in a smaller type]
This print ad then lists 31 vodka brands, their countries of origin, and their scores from the 1998 test. In very small print, the ad states that the 31 vodkas are a "sampling" of the 40 vodkas tested. Millennium states that only three "luxury" vodkas are on the list.
Millennium also complains about a "hang tag" or "neck tag." The hang tag is designed to go around the neck of the Grey Goose bottle, and features a bar chart of nine vodka brands in ascending order (from lowest to highest) based on the 1998 BTI ranking. Belvedere is listed first (in the "worst" position) though Smirnoff is also listed with the same score of 74. In tiny print at the bottom of the tag is the following:
NOTE THIS REPRESENTS A SAMPLING OF THE 40 VODKAS TESTED 1998 SOURCE (BTI) BEVERAGE TESTING INSTITUTE INC.
Although Sidney claims that it is no longer placing the hang tag on new product, it is possible that a quantity of Grey Goose vodka still in the chain of distribution carries the hang tag. The record does not reflect how many hang tags remain in the chain of distribution, and counsel for Sidney was unable to provide the Court with more specific information. (Einsidler Decl. ¶ 14, claiming that Sidney has not been applying the neck tag to new bottles of Grey Goose since early June of 2003 and noting, "We anticipate that little, if any, product containing the hang tag will be in the market by year end.").
Millennium suggests that the 1998 taste test was an anomaly, and points out that in subsequent tests conducted by the BTI, Belvedere consistently has earned "Exceptional" ratings. Millennium reports that Belvedere has attained the following scores in BTI tests: 90 in 1999, 91 in 2001, and 92 in two separate tests in 2002.
Sidney objects that one of the 2002 tests is unauthenticated and lacks documentary support in this record. For the purposes of this motion, it is enough to note that Belvedere has been ranked as "Exceptional" by the BTI in at least three subsequent taste tests.
IV. MILLENNIUM'S CHALLENGE
Before filing this complaint, Millennium complained to the "NAD" (National Advertising Division of the Council of Better Business Bureaus). The NAD is a self-regulatory organization of advertisers. Parties can file complaints with the NAD, and the NAD endeavors to provide dispute resolution that is more efficient, economical, and confidential than traditional methods of dispute resolution. NAD reports having resolved over 3,700 advertising cases. See http://www.nadreview.org/AboutNAD. Though decisions of the NAD are not binding, the NAD reports an extremely high compliance rate. Id.
For a more thorough discussion of NAD's procedures, see the NAD's website at http://www.nadreview.org/AboutNAD.
Sidney presented its position to the NAD, as did Millennium. The NAD found in favor of Millennium, and determined that the Grey Goose ads were misleading. The NAD recommended that Sidney remove Belvedere's 1998 test results from the ad. Sidney disagreed with the NAD's determination.
When an advertiser disagrees with the NAD's findings, the decision can be appealed to the National Advertising Review Board ("NARB") for additional review. Sidney chose to appeal the NAD decision. The NARB adopted the findings of the NAD and determined that the message in the Grey Goose ads was inaccurate and misleading. The NARB panel concluded, "the challenged advertisement can reasonably be perceived by consumers as reflecting BTI's current assessment of Belvedere Vodka." (Gill Decl. at Exhibit E.)
Although Sidney had participated in the NARB process — in fact, Sidney instigated the appeal — Sidney declined to comply with the NARB's decision and refused to revise its advertising. Sidney claims that it could not revise its ads in the manner suggested by the NARB, because the BTI explicitly forbids "mixing and matching" test results from different years. Sidney claims that it could not, therefore, have an ad in which it reported Belvedere's scores from the later tests and Grey Goose's score from the 1998 test. Counsel for Sidney indicated at oral argument that it is unclear what the consequence of such "mixing" would be. Sidney does not indicate that it would be a violation of BTI policy to exclude Belvedere entirely from the advertisement.
In addition to the review by the NAD and the NARB, the Bureau of Alcohol, Tobacco and Firearms (now known as the Alcohol and Tobacco Tax and Trade Bureau) has also reviewed the at-issue ads. The BATF has approved BTI's methodology for the 1998 test and has reviewed the challenged ad and determined that it is neither disparaging nor misleading. Millennium suggests that the BATF reviewed the ads in 1998, and therefore the BATF's approval is no longer indicative of the current truth or falsity of the ads. Sidney points out, however, that the NAD/NARB decision was reported to the Bureau, and the Bureau took no action.
V. THE SURVEYS
After filing this complaint, Millennium commissioned Dr. Alex Simonson to conduct a consumer survey to determine whether, and to what extent, relevant consumers believed that the print ad for Grey Goose vodka makes a current claim about the taste test ranking for Grey Goose in relation to the rankings of other brands of vodka. In brief, vodka consumers, ages 21 and older, who were likely to read the magazines in which the Grey Goose ad runs were asked to read the ad, and then were asked to respond to a series of questions about it. Dr. Simonson interprets the results as proving that about half the respondents believe that the ad communicates something about the listed brands currently, not merely about some past time or period. Simonson also interprets the survey as indicating that a vodka's placement at the bottom of the list would affect the purchasing decisions of about one-third of the respondents. Sidney hired an expert to critique Millennium's consumer survey, which is discussed below.
Sidney also conducted its own consumer survey (the "Lieberman survey") in order to determine what impact, if any, the at-issue advertisement has on purchase interest in Belvedere. The Lieberman survey interviewed 601 consumers in twelve U.S. markets. The survey involved showing consumers one of three ads resembling the at-issue ad, and manipulating the placement of Belvedere on the list. In one ad, Belvedere was near the bottom, in one it was not in the ad at all, and in the third, Belvedere was near the top. Each ad was shown to about 200 respondents, who were adults, 21 and older, who bought vodka in a store or restaurant in the past 12 months, and expected to do so again in the next 12 months, and would be willing to spend more than $25 on a fifth of vodka or would specify what brand if they ordered in a bar or restaurant.
After screening questions, respondents were shown the ad, and then the ad was taken away. Respondents were then asked a series of questions beginning with "What brand was advertised in the ad?" Respondents were then asked additional questions about how particular brands scored in the test. The survey did not ask any questions about when the taste test occurred, or whether the listing reflected the most recent test results.
Lieberman interprets his results as showing that the Grey Goose ad did not have a harmful effect on Belvedere. Most of the respondents were able to identify Grey Goose as the brand being advertised, but only a very small proportion identified Belvedere, regardless of its placement. Even fewer respondents expressed that they would be less likely to choose Belvedere based on the ad.
ANALYSIS
I. PRELIMINARY INJUNCTION
To obtain a preliminary injunction, Millennium must establish that the balance of the following factors is in its favor: (1) the probability that Millennium will succeed on the merits; (2) the threat of irreparable harm to Millennium; (3) the balance between this harm and the injury that granting the injunction will inflict on other parties; and (4) whether the issuance of an injunction is in the public interest. Calvin Klein Cosmetic Corp. v. Lenox Lab., 815 F.2d 500, 503 (8th Cir. 1987) (citing Dataphase Sys. Inc. v. C.L. Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981)).
In cases brought pursuant to the Lanham Act, if the relief sought in the preliminary injunction is essentially the same relief sought in a trial on the merits, the movant's burden is heightened. Calvin Klein Cosmetic Corp., 815 F.2d at 503.
A. Probability of Success on the Merits
The Lanham Act prohibits advertising that is false, and also prohibits statements that tend to deceive or that create a false impression. 15 U.S.C. § 1125(a)(1)(B) (Section 43(a) of the Lanham Act). Courts use an analysis "substantially similar to that applicable to federal claims under the Lanham Act to analyze claims based on" the Minnesota statutes under which plaintiff brings causes of action. Alternative Pioneering Sys., Inc. v. Direct Innovative Products, Inc., 822 F. Supp. 1437, 1441 (D. Minn. 1993). Therefore, the Court will "analyze only the Lanham Act claim to determine whether [the plaintiff is] likely to succeed on the merits of its false advertising claims." Id.
Specifically, the Act prohibits the "false or misleading representation of fact, which. — . . . (B) 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." 15 U.S.C. § 1125(a)(1)(B).
To prevail on a false advertising claim under this section, Millennium must prove that (1) defendant made a false statement of fact in a commercial advertisement about its own or another's product; (2) the statement actually deceived or would tend to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to the defendant or by a loss of good will associated with its products. Surdyk's Liquor, Inc. v. MGM Liquor Stores, Inc., 83 F. Supp.2d 1016, 1022 (D. Minn. 2000) (citing United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998)); see also American Italian Pasta Co. v. New World Past Co., No. 03-2065, slip op. at 3-4 (8th Cir. June 7, 2004).
The first element, that the defendant made a false statement of fact, "generally falls into one of two categories: (1) commercial claims that are literally false as a factual matter; and (2) claims that may be literally true or ambiguous but which implicitly convey a false impression, are misleading in context, or likely to deceive consumers." United Indus., 140 F.3d at 1180. In cases in the latter category, proof that the advertising actually conveyed the implied message and thereby deceived a significant portion of the recipients becomes critical, and the ultimate success of the claim usually turns on the persuasiveness of a consumer survey. Id. (citations omitted).
1. False by necessary implication
Plaintiff first argues that the ads are "literally false by necessary implication." Plaintiff does not claim that the test was wrong in 1998, or that defendant changed the results. Instead, this "literally false by necessary implication" argument hinges on looking at the overall message of the advertisement, and determining whether "the audience would recognize the claim as readily as if it had been explicitly stated." Clorox Co. Puerto Rico v. Proctor Gamble Co., 228 F.3d 24, 34 (1st Cir. 2000); see also Novartis Consumer Health, Inc. v. Johnson Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3d Cir. 2002) (noting that a message is false by necessary implication "when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated"); Scotts Co. v. United Indus. Corp., 315 F.3d 264, 274 (4th Cir. 2002) (same).
For example, in Tambrands v. Warner-Lambert Co., 673 F. Supp. 1190 (S.D.N.Y. 1987), the district court determined that the claims of a home-pregnancy test maker were "literally false by necessary implication" because the ads claimed results "in as fast as 10 minutes." In fact, only 52% of pregnant women would obtain positive results in 10 minutes, while 48% of pregnant women, and all non-pregnant women required 30 minutes to confirm test. Id. at 1194. The Court rejected defendant's argument that the qualifying words — "in as fast as" — sufficiently modified the message to render to advertisement true. Id. See also Clorox Co. Puerto Rico v. Proctor Gamble Commercial Co., 228 F.3d 24 (1st Cir. 2000) (reversing dismissal of Lanham Act claim because fact-finder could have determined comparison claim of "Compare with your detergent . . . whiter is not possible" was literally false by necessary implication); Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 945-48 (3d Cir. 1993) (discussing difference between finding claim false by necessary implication, and finding claim true, but likely to deceive; noting that consumer evidence is required only for the latter, and that it is within judicial province to find the former; and concluding that claim that motor oil provided superior engine protection was literally false based on the commercial's necessary implication without reference to consumer confusion); Playskool, Inc. v. Product Dev. Group, Inc., 699 F. Supp. 1056, 1060 (E.D.N.Y. 1988) (finding claim that defendant's toys could attach to plaintiff's toys was literally true, but the "clear implication" was that defendant's toys could safely attach to plaintiff's toys, which was untrue and misleading without referring to consumer surveys).
Here, plaintiff's claim is that looking at the overall message of the advertisement, it is clear that Grey Goose is claiming that it is currently ranked the best tasting vodka in the world. Plaintiff also argues that the ad communicates the false message that Belvedere's rating of 74 is the current rating. Plaintiff suggests that even the qualifying words — noting that the tests were conducted in 1998, and the use of the past tense — do not render the ad true. Plaintiff argues that the later tests supersede and contradict the results of the 1998 test.
Defendant responds by arguing that the Grey Goose ad is not "false by necessary implication" because there simply is no implication in the ad. Defendant analogizes to a sporting event, and suggests that advertising a "win" in year one is not false, even if the ad fails to mention that the team "lost" in year two. Defendant also notes the past tense language, and points out that the year of the test is displayed prominently. As a slightly different argument, defendant emphasizes that consumers are accustomed to "taste tests" and understand that taste tests occur with some frequency, and that the results are somewhat subjective. Essentially, defendant argues that consumers know how to read this ad, and consumers are not reading it as putting forth current results of taste tests.
Plaintiff's likelihood of success on the false by necessary implication argument is bolstered somewhat by defendant's alleged violation of the Federal Trade Commission's (FTC) guidelines. Plaintiff argues that according to those guidelines, advertisers should not use outdated third-party endorsements. Some courts have granted FTC guidelines significant weight. Surdyk, 83 F. Supp.2d at 1021-22 (citing B. Sanfield, Inc. v. Finlay Fine Jewelry Corp., 168 F.3d 967, 973 (7th Cir. 1999) ("[A]s the administrative agency charged with preventing unfair trade practices, the [FTC's] assessment of what constitutes deceptive advertising commands deference from the judiciary.")). Both the Surdyk and B. Sanfield courts, however, also caution against "blur[ring] the distinctions between the FTC and a Lanham Act plaintiff" and note that the Lanham Act plaintiff must "show that the [advertisements] are literally false or misleading to the public," not merely that the advertisements violate FTC guidelines. Surdyk, 83 F. Supp.2d at 1022, n. 2 (quoting Sanfield, 168 F.3d at 972 n. 3, additional internal quotation omitted).
The print ad is not literally false, and despite the FTC guidelines, the Court is not persuaded by plaintiff's "false by necessary implication" argument. Given the sheer number of claims by adult beverage makers that theirs is "the best" or "the premier," it is unlikely that the plaintiff will be able to show (and plaintiff has not yet shown) that "the audience would recognize the claim" — that Grey Goose is currently rated the best vodka in the world — "as readily as if it had been explicitly stated." Novartis, 290 F.3d at 586.
Plaintiff has not yet persuaded the Court that consumers have no way of knowing that any taste test was ever conducted after 1998, or that it is reasonable to conclude that many consumers would think that the 1998 taste test is the last word on the tastiness of vodkas. The Court notes, however, that at some point, reliance on an outdated test could well render an ad "false by necessary implication" especially where the ad appears to report the most recent taste test results.
2. Consumer surveys
Because the Court finds that plaintiff has not presented a strong argument that the printed ad is false by necessary implication, the Court turns to the consumer surveys. Courts review consumer surveys because "[w]here a commercial claim is not literally false but is misleading in context, proof that the advertising actually conveyed the implied message and thereby deceived a significant portion of the recipients becomes critical." United Indus., 140 F.3d at 1142. Consumer surveys supply the reviewing court with a measure of public reaction, which "is the measure of a commercial's impact." Id. In cases of consumer confusion or deception, "`the success of the claim usually turns on the persuasiveness of a consumer survey.'" Id. (quoting Johnson Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129-30 (3rd Cir. 1994)).
Plaintiff alternately argues that even if the Grey Goose print ad is "literally true," consumer survey evidence demonstrates that it conveys a deceptive message to consumers. To bolster this argument, plaintiff points out that the AND/NARB determined that the ad was literally true, but that the ad deceived and misled consumers. The NAD/NARB, however, made this determination without the benefit of the consumer surveys. While "full-blown consumer surveys . . . are not an absolute prerequisite at the preliminary injunction stage, the movant . . . must present evidence of deception" or consumer confusion. Scotts Co. v. United Indus. Corp., 315 F.3d 264, 276 (4th Cir. 2002) (internal citations omitted) (emphasis added); see also United Indus., 140 F.3d at 1183.
The Court notes that neither survey addressed the hang tag.
After filing this lawsuit, but before filing the instant motion, plaintiff hired Dr. Alex Simonson to conduct a consumer survey. Simonson's team surveyed 254 people in the double-blind study. Simonson interprets the results as proving that almost half (48%) of the consumers responded that the ads communicated a current superiority message about the advertised vodka. Exactly half, again according to Simonson's analysis, indicated that the ad communicated something current about the list of vodka brands in the ad. Plaintiff argues that these results prove the ad is misleading, because the 1998 taste ratings do not support any claim concerning current ratings. Simonson also interprets the results as indicating that the ad is likely to influence the purchasing decisions of about one-third of the respondents.
Defendant argues that the Simonson survey is "fatally flawed" and that the survey does not meet the Daubert test for admissibility. Daubert v. Merrell Dow Pham., Inc., 509 U.S. 570 (1993). "The evidentiary value of a survey's results rests upon the underlying objectivity of the survey itself." Johnson Johnson * Merck Consumer Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 300 (2d Cir. 1992) (citation omitted). "The probative value of a consumer survey is a highly fact-specific determination and a court may place such weight on survey evidence as it deems appropriate." Rhone-Poulenc, 19 F.3d at 134. Courts measure objectivity by various factors, including "whether [the survey] is properly `filtered' to screen out those who got no message from the advertisement, whether the questions are directed to the real issues, and whether the questions are leading or suggestive." Johnson Johnson, 970 F.2d at 300 (citations omitted).
Defendant raises the following specific criticisms: (1) Simonson surveyed the wrong universe; (2) the survey asked leading and ambiguous questions; (3) it did not use controls; and (4) the survey's key questions were hypothetical and did not measure whether consumers actually took away any false messages about Belvedere. The Court addresses each of these criticisms in turn.
a. Proper universe
Defendant's first criticism is that although Simonson surveyed individuals likely to buy vodka, he should have interviewed individuals likely to purchase luxury vodka. Defendant cites Conopco, Inc. v. Cosmair, Inc., 49 F. Supp.2d 242, 253 (S.D.N.Y. 1999), in which the district court rejected a consumer survey in a trademark dispute regarding a "prestige" perfume bottle. The Conopco court cited the three following reasons for finding the universe to be flawed: "(1) it excluded all men and women over the age of forty-five who represent a substantial portion of the total universe of the products' potential consumers; (2) it included past purchasers who were not necessarily future potential purchasers; and (3) it failed to properly discriminate between purchasers of "prestige fragrance" brands as opposed to those who purchase just any fragrance. Id. (internal citations to transcript omitted). In addition to the flawed universe, the district court also based the rejection of the survey on the fact that the control bottle used in the survey "did not faintly resemble" the at-issue bottle. Id. at 250. Finally, the fairness of the survey was undermined because the survey "was purposefully limited to malls where [the perfume] ha[d] a high recognition rate." Id.
Defendant also points to Weight Watchers Int'l, Inc. v. Stouffer Corp., 744 F. Supp. 1259, 1272 (S.D.N.Y. 1990), in which the district court accorded only slight weight to the plaintiff's consumer survey because the court determined the survey contained numerous major flaws, and the court noted its "strong misgivings about [the survey's] improper universe and improper miscategorization of responses." Id.
Plaintiff answers this critique by arguing that Simonson included all vodka drinkers because that is who is targeted by the ads at issue. Plaintiff also points out that defendant's expert testified that he did not know what effect, if any, a different universe would have had on the survey results, and plaintiff argues the universe suggested by defendant would have been more beneficial to plaintiff.
The surveys in the cases cited by defendant are distinguishable because those surveys were discredited on multiple grounds. For example, in Conopco the universe excluded women over 45, for reasons that were inexplicable to the district court. The survey also omitted all men. There are no such criticisms in the instant case. Further, the difference between purchasers of "regular" fragrance and "prestige" fragrance could well be more extreme than the difference between purchases of "regular" vodka and "luxury" vodka. See Conopco, 49 F. Supp.2d at 245 (prices for the "prestige" fragrance up to $180 per ounce and prestige fragrances sold only in department and specialty stores). Another meaningful distinction is that in Conopco, the survey was conducted in carefully selected malls — malls which the surveyors believed would lead to favorable results. In this case, there is no indication that plaintiffs selected the malls based on improper criteria.
The Weight Watchers case is also distinguishable. The court noted its concern regarding the proper universe; in doing so, the court decided that past purchasers of frozen entrees were not necessarily future purchasers of diet frozen entrees. Weight Watchers, 744 F. Supp. at 1272. The court then focused its critique on "sloppy execution" which included allowing responders who did not fit the (improper) universe. Id. The court's confidence in the survey was further undermined by the fact that the market study "overstated actual confusion" and miscategorized answers. Id. at 1273. Despite these concerns, the court did not reject the survey entirely, but chose to give only slight weight to the survey. Id. at 1274. See also Anheuser-Busch, Inc. v. Balducci Publ'ns, 28 F.3d 769 (8th Cir. 1994) (accepting without comment survey of "beer drinkers" and not distinguishing between drinkers of mass produced beers and microbrews).
The concerns discussed by the Conopco and Weight Watchers courts are not nearly as pressing in this case. The universe reasonably included past purchasers of vodka who were likely to purchase vodka again. The universe was further limited to those respondents who indicated they were likely to read one of the magazines in which the print ad appears. The Court therefore does not disregard the survey on the basis of a flawed universe.
b. Leading and ambiguous questions
Defendant suggests that questions 4a and 5a are leading. Question 6a, defendant argues, is both ambiguous and leading.
Question 4a reads: "Based only on the advertisement, would the place of a particular brand on the list affect or not affect your likelihood to purchase that particular brand?" Respondents could answer "Affect/Not affect/Not Sure/No opinion." Question 5a reads: "Based only on the advertisement, how, if at all, would a brand's place near or at the bottom of the list affect your likelihood of purchase for that particular brand?" The respondents' answers were recorded verbatim.
Questions 4a and 5a were asked only if respondents answered in a certain manner to previous questions. Specifically, 4a was asked only if the respondent answered "Yes" to Question 3: "Did you happen to notice whether there was a list of brands in the advertisement?" Question 5a was asked only if the respondent was asked 4a, and the respondent's answer to 4a was "Affect" (meaning the placement of the brand would affect the purchasing decision). Given that respondents were asked questions 4a and 5a only if they responded in a certain way to "filter" questions, the questions are not unacceptably leading.
The Court agrees with defendant that Question 6a is ambiguous: "Do you believe that the list of brands communicates to you something currently or only something about some past time or period." The question could easily solicit an answer of "currently" that did not reflect consumer confusion about the ranking. For example, the ad "currently" communicates that in 1998 Grey Goose won a taste test. Not only is this question open to various interpretation, it is also a critical question in the survey. This criticism is tempered, however, by the fact that the next question (6b) is a request to explain "What causes you to say that?" By studying the responses to 6b, the Court can determine how many of the respondents believed that the ad conveyed a current ranking.
c. No controls
Plaintiff suggests that Simonson's survey was not the type of survey that needs or would benefit from a control group. Defendant's expert conceded that he did not know if a control group was necessary in this case. Further, the need for a control group is not evident to the Court. Given that admission, the "no control group" is not a reason to discount the Simonson survey.
d. Hypothetical questions
The allegedly hypothetical questions were 4a, "Based only on the advertisement, would the place of a particular brand on the list affect or not affect your likelihood to purchase that particular brand?" Respondents could answer "Affect/Not affect /Not Sure/No opinion." Defendant also criticizes #5a, "Based only on the advertisement, how, if at all, would a brand's place near or at the bottom of the list affect your likelihood of purchase for that particular brand?" The respondents' answers were recorded verbatim.
The use of the word "would" as opposed to, for example, the word "is" ("Based only on the advertisement, is the placement likely to affect . . .") is insufficient to reject the survey. Defendant also posits that the question should have identified the vodka brands at issue — "Is the placement likely to affect your decision to purchase Belvedere?" Defendant argues that the questions are irrelevant because they are unconnected to the recollection of any particular brand or ranking on the list. The Court finds this criticism specious. Plaintiff is required to show "that the deception is material, in that it is likely to influence the purchasing decision." Surdyk's Liquor, Inc. v. MGM Liquor Stores, Inc., 83 F. Supp.2d 1016, 1022 (D. Minn. 2000) (citation omitted). A response that placement on the list would be likely to impact a purchasing decision meets this element.
Nothing in the Lanham Act prevents Grey Goose from designing ads that influence consumers to buy Grey Goose, rather than Belvedere. Nonetheless, that seems to be what defendant's survey addresses. What is forbidden by the Lanham Act, and what plaintiff's survey is designed to address, is whether that influence results from misleading or deceiving consumers. The fact that a consumer is less likely to buy Belvedere after reading the ad is fine (in fact, that is the goal of advertising). What makes the ad objectionable (arguably, what makes the ad violate the Lanham Act) is that it influences consumers to buy Grey Goose (instead of any other vodka including Belvedere) by misleading or deceiving consumers. Plaintiff suggests defendant's own survey establishes materiality, because defendant's survey shows that placement at the top of this list influences consumers to purchase Grey Goose. A decision to buy Grey Goose is a decision not to buy another vodka, and therefore establishes the "materiality" element.
3. Conclusion
The Court does not accept defendant's invitation to reject plaintiff's consumer survey. However, the Court does not agree with plaintiff's conclusion that the survey proves that half the consumers are misled and perceive that the ad conveys a message that the taste test results are the most current. The Court reaches this result by studying the answers to 6a and 6b. Plaintiff's expert suggests that the responses to those questions prove that about half of the respondents were misled. The Court carefully reviewed the responses to 6a and 6b, and finds that only 27 of 256 responses to 6b clearly evidence that the respondent believed the rankings were current (about 11%). After reviewing 6a and 6b together, it is clear that an answer of "current" to 6a is not evidence that the particular consumer believed the list conveyed the current/most recent rankings because some of the individuals who answered "current" to 6a explicitly identified the year of the testing in 6b.
Included in this grouping were responses the Court believed fairly evidences that the respondent was misled. For example, the Court included the following answers: "because the taste test was apparently current" (respondent ("R") 109), "I'd like to think these things are kept up to date" (R 212), and "These studies are recent. Grey Goose is the highest rated." (R 232).
Under the Court's analysis, plaintiff has not demonstrated, at least on the current record as it is fairly analyzed, that a "substantial" number of consumers are misled by the print ad. The Court therefore concludes that plaintiff has yet to demonstrate a likelihood of success in its Lanham Act claim premised on the print ad.
B. Irreparable harm
"[T]he failure to demonstrate the threat of irreparable harm is, by itself, a sufficient ground upon which to deny a preliminary injunction." United Indus., 140 F.3d at 1183. In certain Lanham Act cases, however, irreparable harm is presumed. Specifically, courts have presumed irreparable harm when a comparative advertising claim actually names the competitor's product, and is false or deceptive. Ott A.G. v. Target Corp., 153 F. Supp.2d 1055, 1072 (D. Minn. 2001) (citing Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1336 (8th Cir. 1997)). The Court cannot assume irreparable harm in this instance, because plaintiff has not established that the print ad misleads a substantial number of consumers.
The Court therefore must consider whether plaintiff has established that it faces irreparable harm if the Court does not enjoin the print ad. Given Belvedere's impressive market performance, plaintiff has a difficult argument to make regarding irreparable harm. Nonetheless, plaintiff argues that even with remedial advertising, it will be impossible to reach all the consumers who have seen the Grey Goose ad, therefore the misperception about the anomalous score will remain. Further, plaintiff argues that the ad diminishes plaintiff's marketing position, and no amount of monetary consideration can fully compensate the company for what has been lost.
Defendant urges that plaintiff's delay in bringing this lawsuit undermines any argument that plaintiff faces irreparable harm. It is well-established that a movant's delay in seeking relief or objecting to the actions the movant seeks to enjoin "belies any claim of irreparable injury pending trial." Hubbard Feeds v. Animal Feed Supplement, 182 F.3d 598, 603 (8th Cir. 1999). In this case, however, the Court does not credit defendant's delay argument. As an initial matter, the 1998 survey results were current for a time, so any delay has to be something less than the five years defendant cites. Further, plaintiff pursued alternate, and arguably less drastic, ways to resolve the parties' dispute. The Court will not fault a party for attempting to resolve a dispute more amicably (especially where both parties participated in the alternative dispute resolution, and the opposing party simply refused to comply with the result).
Although plaintiff did not unreasonably delay in bringing this motion, the Court is not convinced that monetary damages, coupled perhaps with remedial advertising, would not suffice if plaintiff eventually prevails. The irreparable harm factor therefore does not favor the grant of preliminary injunctive relief.
C. Balance of harms
"The `balance of harms,' requires the court to consider `the balance between the harm [to the movant] and the injury that the injunction's issuance would inflict on other interested parties, and the public interest.'" Doctor John's, Inc. v. City of Sioux City, Iowa, 2004 WL 360985 *16 (N.D. Ia. Feb. 26, 2004) (quoting Pottgen v. Missouri State High Sch. Activities Ass'n, 40 F.3d 926, 929 (8th Cir. 1994)). In this case, the balance of harms is roughly the same, therefore this factor does not favor either granting or denying the injunction. Both parties face the potential loss of business goodwill, and the loss of sales.
D. Public interest
"The public interest favors enjoining false statements." Sanborn Mfg. Co. v. Campbell-Hausfeld/Scott Fetzer Co., 997 F.2d 484, 490 (8th Cir. 1993). Defendant argues granting the injunction would not benefit the public, because the ad is not misleading. Denial of the injunction, defendant continues, is in the public interest, because the public has an interest in the "free flow of commercial speech." Bates v. State Bar of Arizona, 433 U.S. 350, 364 (1977). Plaintiff argues the opposite — that consumers are being misled, therefore defendant's false statements should be enjoined.
Plaintiff has not shown that the ad is misleading to a substantial number of consumers. In addition, even assuming some consumers are confused, the public interest in avoiding that misperception is not as strong as it is, for example, where the misstatement implicates consumer health or safety. See, e.g., Playskool, 699 F. Supp. at 1060 (public interest favored entering injunction where false advertising created potential safety risk to young children); Tambrands, 673 F. Supp. 1190 (public interest in accurate results of over-the-counter pregnancy tests). This factor therefore weighs in favor of denying preliminary injunctive relief.
II. HANG TAG
Although the parties do not focus on the hang tag, the Court finds that plaintiff is more likely to prevail on the merits as to the hang tag, because the hang tag does not have the same emphasis on the "past" nature of the taste test. In fact, the year of the taste test, and the source, is printed in tiny font at the bottom of the hang tag and is virtually indiscernible. See Weight Watchers v. Stouffer Corp., 744 F. Supp. at 1276 (disclaimer appearing in miniscule print on the very bottom of ad insufficient to reduce or eliminate consumer confusion); Anheuser-Busch, Inc., 28 F.3d 769 (disclaimer in tiny print not sufficient to cure consumer confusion).
Defendant represents that the hang tag is nearly out of use, and therefore an injunction would be inappropriate and unnecessary. The Court, however, is concerned that defendant was unable to tell the Court how many of the hang tags remain in the chain of distribution. Before the Court determines whether an injunction would be appropriate, and before the Court further discusses the Dataphase factors in relation to the hang tag, the Court will order defendant to provide the Court with the number of hang tags that remain in the chain of distribution, and where the remaining hang tags are found. If more than an insignificant number of hang tags remain, the Court will revisit the issue.
Nothing in this Order prevents defendant from removing the remaining hang tags. If that is the course of action defendant pursues, defendant shall so inform this Court, and opposing counsel, within 30 days of the date of this Order.
Therefore, although the Court denies plaintiff's renewed motion for a preliminary injunction, it does so without prejudice. If hang tags remain in the chain of distribution in more than insignificant numbers, plaintiff may renew its motion, but the motion may be renewed only as to the necessity of granting preliminary injunctive relief as to the hang tags.
ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that plaintiff's renewed motion for a preliminary injunction [Docket No. 27] is DENIED without prejudice.
IT IS FURTHER ORDERED that within 30 days of the date of this Order, defendant shall provide the Court and opposing counsel with an affidavit indicating the number of hang-tags remaining in the chain of distribution and the location of such tags.