### Th e Honorable Ortrie D. Smith, United States District Judg e 1 

### for the Western District of Missouri, sitting by designation.



# United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________ No. 96-1552

___________ Porous Media Corporation, * * Plaintiff - Appellee, * * Appeal from the United States v. * District Court for the * District of Minnesota. Pall Corporation, * * Defendant - Appellant. *

___________ Submitted: December 9, 1996 Filed: April 8, 1997

___________ Before BOWMAN and LAY, Circuit Judges, and SMITH , District Judge. 1

___________ LAY, Circuit Judge.
Porou s Media Corporation (Porous) and Pall Corporation (Pall) ar e manufacturers of indu strial filters. They produce competing products for certain applications in various industries, including the oil and natural gas markets (oil/gas markets) and the paper and power generation markets (paper/power markets).

Porous cl aims that in 1985 and 1986 it began penetrating the market for filters in the paper/power markets and the oil/gas markets. Porou s contends that Pall then began a concerted effort to disparage Porous’ s produc ts and make false comparisons of Pall’s products and Porous’ s products. Among other things, Porous

### The jury, and the district court sitting as finder of fac t 2 

### for Porous’s claim for injunctive relief, found that Pall mad e nu merous false and misleading statements about Porous’s product s and about its own products. Those findings are not directl y challenged in this appeal. The Honorable Mi chael J. Davis, United States District Judge 3 

### for the District of Minnesota.
The district court also entered an injunction against Pal l 4 

### which was not appealed.
-2- suggests that Pall distributed false anecdotal statements that Porous’ s filters had collapsed in the field and caused major problems, that Pal l made false and disparaging statements about Porous’s filters which were no t supported by Pall’s own testing data, and that P all made false comparisons of its own filters for certain applications with Porous filters that Porou s had never recommended as interchangeable for those applications. 2

Porous brought this action against Pall for common-law produc t disparagement and for false misrepresentation un der Lanham Act § 43(a), 15 U.S.C. § 1125(a) (1982); Pall counterclaimed for trademark and trade dress infringement and unfa ir competition. Following a nearly two-month trial, the jury returned a v erdict in favor of Porous and against Pall on all of the claims and counterclaims. The jury found that Pall made fals e statements about Porous’s products, that Porous had proven special damages , and aw arded Porous $5.5 million on the common-law product disparagemen t claim

. On the Lanham Act claim, the jury found that Pall made false o r misleading statements about its own products in its comparativ e advertising, that Pall had acted willfully and in bad faith, and awarded $1.5 milli on in damages. In addition, the district court awarded Porous 3 its attorneys’ fees in the amount of $560,564 and costs in the amount of $261,712.39. 4

### The Lanham Act was substantially revised in 1988. Porous’s 5 

### claim for damages under the revised Lanham Act was dismissed by the district court before trial, and this ruling is not appealed. The district court held that the amendments were not retroactive. For a thorough discussion of the relevant amendments to § 43(a) of the Lanham Act and the question of their retroactivity, see ALPO Petfoods, Inc. v. Ralston Purina Co. , 913 F.2d 958, 963 n.6 (D.C. Cir. 1990).
-3- Pall file d post-trial motions for judgment as a matter of law or in the alternative for a new trial. The district court denied the motions, and Pall appeals. Pa ll challenges the judgment under both the Lanham Act and the common-law disparagement claim. We affirm.

I. LANHAM ACT

The di strict court allowed Porous to proceed with its claim unde r the p re-1988 version of the Lanham Act for relief based on false o r 5 misleading statements made by Pall about Pall’s own products alone and in comparison to Porous’s products. The claim enco mpassed statements made in both the oil/gas and paper/power markets.

Pall argue s that the judgment on the Lanham Act claim must b e reversed because the district court improperly instructed the jur y regardi ng causation and injury, and because Porous failed to prove a n element of the claim by failing to offer extrinsic evidence of custome r confusion to show tha t Pall’s statements were misleading. We reject both arguments.

A. Jury instruction

The tri al court instructed the jury as to the elements of Porous’ s Lanham Act claim:

### -4- To establish its claim that Pall violat ed the Lanham Act, Porous Media must prove by a preponderance of the evidence the following elements. Those elements are:
Pa ll made false or misleading statements of fact whic h misrepresented the nature, characteristics or qualities o f Pall’s own filter products, alone or in comparison with Porous’ products; Any such false or misleading statements actually deceived or had the tendency to deceive a substantial segment of their audience; Such statements were material because t hey were likely to influence buying decisions; and
Pall caused its advertised products to enter interstat e commerce; and
Porous has been injured as a result of those activitie s either by direct diversion of sales to Pall or by a lessening of its goodwill.
To pro ve its claim under the Lanham Act, any fals e state ments made by Pall must concern Pall’s, not Porou s Media’s, products. Pall need not produce any evidence to show that the statements made are true.
The court then read to the jury Instruction No. 19:
If you should find that Pall made any f alse or misleading sta tements in its representations concerning its filte r prod ucts alone or in comparison to Porous’ filter product s de liberately—that is with knowledge of their false o r misleading nature—and yo u find that Pall engaged in making any such deliberately false statements as an important part of its mark eting efforts, then you may presume that customers an d prospective customers we re deceived by any such statements and that Porous has suffered damages as a result of suc h deception.

The effect of this instruction is, o f course, to transfer the burden of proof to Pall regarding false deception of Porous’s

### In this regard, the court further instructed the jury that 6 

### it could only award Porous damages in the form of lost profits where they were shown to be the natural and probable consequence of Pall’s unlawful conduct.
-5- customers and the fact of harm Porous incurred by reason of the deception. The court further instructed:

You are instructed that Pall may overco me the presumption byproof that customers and/or prospective customers were not deceived by any such sta tements and/or by evidence that Porous has no t suffered any damages as a result of any suc h statements.
In Instruction 20, the district court directed the jury:

Porous Media has the burden of proving damages by a preponderance of the evidence. Damages, for purposes of this cla im, means the amount of money which will reasonably an d fai rlycompensate Porous Media for any injury you find wa s caused by Pall’s misrepresentations of fact concerning Pall’s filt er products or concerning Pall’s filter products a s compared to Porous’ filter products.
Porous Media may recover any damages which it proves i t sustai ned as a result of Pall’s false and misleadin g representations of fact which misrepresented the nature , characteristics and qual ities of filters manufactured by Pall. Porous Media may recover past and future profits lo st by Porous Media as a result of lost sales attributable to Pal l’s wrongful acts. 6

This instruction also told the jury that “[i]n determining Porous’ damages , you should not includ e any amounts for the purpose of punishing Pall, but you are to fully compensate Porous for the damages, if any , that it ha s sustained .” (our emphasis). Thus, the jury was instructed that upon a finding that Pall had engaged in deliberate deception in its comparative advertising, as a maj or part of its marketing effort, Porous was entitled to a presumption

### -6-

that Pall’s statements had caused injury. However, in order to recover any damages, Porous had the burden of proving both t he loss sustained and that it was caused by Pall’s statements. In other words, Porous still had to prove an evidentiary basis, showing actual harm caused by Pall, for an y damages award.

Ins truction No. 19 contains two separate rebuttable presumptions

. The first , which we refer to as a presumption of deception, allowed th e jury to assume actual deception, the second element of the cause of action , upon a fin ding that the defendant acted deliberately to deceive. Th e second, w hich we refer to as a presumption of causation and injury , ins tructed the jury that upon a finding that the defendant deliberatel y deceived the public it could assume that the def endant’s statements caused harm to the plaintiff, satisfying the fifth element of the cause of action

. The presumption of deception, which was not objected to and not appealed herein, has been approved by several courts. See U-Haul Int’l., Inc. v

. Jartran, I nc. , 793 F.2d 1034, 1041 (9th Cir. 1986) (Jartran II) (“Th e expenditure by a competitor of substantial funds in an effort to deceive consumers and influence their purchasing decisio ns justifies the existence of a presumption that consumers are, in fact, being deceived.”); Harpe r Hou se, Inc. v. Thomas Nelson, Inc. , 889 F.2d 197, 209 (9th Cir. 1989 ) (approv ing the presumption of deception from Jartran II upon a jury’ s finding that the defendants engaged in intentional deception); Resourc e Developers, Inc. v. S tatue of Liberty-Ellis Island , 926 F.2d 134, 140 (2d Cir. 199 1) (approving the use of the presumption of deception onc e plaintiff establishes that defendant acted with intent to deceive). At the charging conference, Pall objected to the presumption o f causat ion and injury arguing that it improperly collapses two separat e presumptions and that Porous must be required to prove

### -7-

that any deceptive advertising caused damage to Porous. Here, Pall argues that the presumption of causation and injury imp roperly relieved Porous of its burden to prove causation and injury, an essential element of it s Lanham Act claim.

Pall reli es primarily on the Ninth Circuit opinion in Harper House
. The re a producer of personal organizers sued a competitor for copyrigh t infringement and violation of the Lanham Act. The jury found for Harper House on all claims and awarded substantial dama ges on both claims. Harper House , 889 F.2d at 201. Harper House’s claim for deceptive advertisin g und er the Lanham Act was that “defendants deceived consumers by showin g Time Maker I in its promotion and advertisements and then selling Tim e Maker II ,” id. at 208, where “many changes” were made between th e advertised Time Maker I and the production version, Time Maker II. Id. at 200. The court approved the presumption of deception from Jartran II , provid ed that the jury found that defendants engaged in intentiona l deception. Id. at 209. The court noted that the district court had upheld the jury verdict without referring to any actual injury, instead apparentl y relying on a second presumption from Jartran II , that a plaintiff’s damage s equal the amount of money spent by defendants on the deceptive advertising

. Id. The court found that Harper House had “presented no evidence of any injury causally related to the defendants’ deception,” and reversed th e judgment on the Lanham Act claim for insufficien t evidence of injury. Id. at 210. Pall urges that Harper House should govern here. However, as wil l be discussed, we find the facts and law of Harper House distinguishable an d therefore not controlling. In the p resent case, the evidence established that Pall made fals e
or misleading statements involving Pall’s product in comparison t o Porous’s. For example, one of the documents which Porous urges violates the Lanham Act is a publication by Pall

### -8-

entitled “Competitive Filter Evaluation For Optimizing Gas Operations: Pal l
versus Porous Media.” Porous submits that this document, which purports to compare the performance of a Pall filter with a Porous filter, includes both false comparisons and false statements about the performance of a Pal l filte r. Moreover, Porous urges in order to trigger the presumption o f decep tion and the presumption of causation and injury, the jury had t o find, and did so find, that Pall made the false or misleading statements deliberately, “that is with knowledge of their false or misleading nature. ” In fact, here the jury found in its special verdict that Pall’s action s were “willful and done in bad faith.”

In Harpe r House , the defendant made false statements about its ow n product with no refer ence to another’s product. Under the circumstances, the court required specific proof of causation and damage. This is i n contrast to a case of comparative advertising where the plaintiff’s produc t is specifically targeted. Judge Goodwin noted t he factual difference when he stated that Harper House differed from Jartran II , a comparativ e advert ising case, in that “[Harper House] involves not a deceptiv e comparison of plaintiff’s and defendants’ products, but deception regardin g defendants’ product with little overt reference to plaintiff or plaintiff’ s product.” Harper House , 889 F.2d at 209.

As Judg e Goodwin points out, where a defendant is guilty o f mi srepresenting its own product without targeting any other specifi c product, it is erroneous to apply a rebuttable presumption of harm in favo r of a competitor. Otherwise, a plaintiff might enjoy a windfall from a speculativ e award of damages by simply being a competitor in the sam e market. Thus, in cases where there is no comparative advertising involved , the plaintiff must shoulder

### Pall has not cited any other case of comparative 7 

### advertising which holds the presumption of harm to be error.
-9- the full b urden of proof of both cause in fact and injury. The issue we 7 face in the present case is whether the rule applied by Harper House shoul d gove rn in a false comparative advertising case. In other words, th e question we must resolve is whether the district court correctly instructe d the jury to presume causation and harm from Pall’s deceptive comparative advertising.
In applying the presumption of harm in cases where injunctive relief is sought under the Lanham Act, the Second Circuit has specificall y contrasted the rules to be applied where false comparative advertising is involved from the rules governing where a defendant simply misrepresents its own product. In McNeilab, Inc. v. American Home Products Corp. , 848 F.2d 34 (2d Cir. 1988), the defendant advertised that its pain reliever, Adv il, was as safe as Tylenol, a pain reliever manufactured by th e plaintiff. The district court had reasoned that where false or misleading advertising is shown, irreparable harm was to be presumed and injunctive relief was granted. The Second Circuit affirmed , limiting the presumption to cases of comparative advertising. It stated that “an importan t distinction must be drawn” between cases applying the general rule, that causation and injury must be proved, and cases of false advertising where the plaintiff-competitor’s product is specifical ly compared or referenced.

The court observed: This case, by contrast, presents a false comparativ e advertising claim. Thus , the concerns voiced in Coca-Cola and Johnso n & Johnson regarding speculative injury do not arise

. Ami sleading comparison to a specific competing produc t necessarily diminishes that product’s value in the minds of the consumer. By falsely implying

### -10- that Advil is as safe as Tylenol in all respects, AHP deprived McNei l of a legitimate competitive advantage and reduce d consumers’ incentive to select Tylenol rather than Advil. This is analogous to a Lanham Act trademark dispute. An infringing mark, by its nature, detracts from the value of the mark with whichit is confused. In that context, we recently confirmed that irreparable harm will be presumed. See Home Box Office, Inc
. v. Showtime/The Movie Channel Inc. , 832 F.2d 1311, 131 4 (2d Cir. 1987); Charles of the Ritz Group , 832 F.2d at 1321 ; Standard & Poor’s Corp. v. Commodity Exchange, Inc. , 683 F.2d 704, 708 (2d Cir. 1982). Consequently, the district court did not err in presuming harm from a finding of false o r misleading advertising.

Mc Neilab , 848 F.2d at 38; see also Ortho Pharmaceutical Corp. v

. Cosprophar, Inc. , 32 F.3d 690, 694 (2d Cir. 1994 ); Castrol, Inc. v. Quaker State Cor p. , 977 F.2d 57, 62 (2d Cir. 1992); McNeil-P.C.C., Inc. v

. Bristol-Myers Squibb Co. , 938 F.2d 1544, 1549 (2d Cir. 1991).

In Ortho Pharmaceutical , the court emphasized:

While there may be room for such a presumption in cases where there is a question of f alse designation of goods, our circuit has ex pressly disfavored presumptions of harm in cases wher e the products are not obviously in competition or where th e defendant’s advertisements make no direct reference to an y com petitor’s products. See McNeilab, Inc. , 848 F.2d at 38 ; Coca-Cola Co. , 690 F.2d at 316; Johnson & Johnson , 631 F.2d at 190.
Ortho Pharmaceutical Corp. v. Cosprophar, Inc. , 32 F.3d 690, 696 (2d Cir. 1994).
We are cognizant, however, that cases involving injunctive reli ef and those seeking monetary damages under the Lanham Act have differen t standards of proof. A plaintiff suing to enjoin conduct that violates th e Lanham Act need not prove specific damage. In

### A leading commentator demonstrates the fundamental 8 

### difference in cases dealing with injunctions and those dealing with money damages:

Since § 43(a) was passed to protect consumers as well as competitors, the courts are not and should not be reluctant to allow a commercial plaintiff to obtain an injunction even where the likelihood of provable impact on the plaintiff may be subtle and slight. Congressional policy appears to encourage commercial firms to act as the fabled “vicarious avenger” of consumer rights. An injunction, as opposed to money damages, is no windfall to the commercial plaintiff. An injunction protects both consumers and the commercial plaintiff from continuing acts of false advertising. Money damages, on the other hand, primarily aid only the competitor, and he is required to satisfy a much higher standard of proof as to injury in order to recover damages. 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27.04(3)(d), at 27-48 (3rd ed. 1996) (footnotes omitted).
-11- contrast, courts require a heightened level of p roof of injury in order to
recover money damages. See, e.g. , Black Hills Jewelry Mfg. v. Gold Rush, Inc. , 633 F.2d 746, 753 n.7 (8th Cir. 1980). In a suit for money damages 8 where a defendant mis represented its own product but did not specifically target a competing product, plaintiff may be onl y one of many competitors, and without proof of causation and specific injury each competitor might receive a windfall unrelated to its own damage. See Harper House , 889 F.2 d at 209 n. 8. In addition, we note that the statutory language regardin g damages, § 35(a) of the Lanham Act, provides that recovery for violation of the Act “shall con stitute compensation and not a penalty.” Lanham Act § 35(a), 15 U.S.C. § 1117(a) (1984).
We find that in comparative advertising cases where money damag es are sought and where there exists proof of willful

### The court recited this statement of a commentator: “Having 9 

### established falsity, the plaintiff should be entitled to both injunctive and monetary relief, regardless of the extent of impact on consumer purchasing decisions.” Id. at 272-73 (citing Joseph P. Bauer, A Federal Law of Unfair Competition: What Should Be the Reach of Section 43(a) of the Lanham Act? , 31 UCLA L.Rev. 671, 744 n. 277 (1984)).
-12- deception, as here, the reasoning of the injunction cases set fort h primarily in the Second Circuit cases is applica ble. What little case law exists supports the district court’s use of the presumption of causation and harm to the plaintiff.

In PPX En terprises v. Audiofidelity Enterprises, Inc. , 818 F.2d 266 (2d Cir . 1987), the district court had granted defendant’s motion fo r judgment notwithstanding the verdict on plaintiff’s claim for damages unde r the Lanham Act, reasoning that plaintiff was not entitled to damage s bec ause it had failed to present evidence of actual consumer confusion

. The Second Circuit reversed, holding that a plaintiff need not provid e evi dence of actual consumer confusion “in order to prove entitlement t o damages.” Id. at 272. The court reasoned that the plaintiff had provided sufficient evidence to establish its claim, but noted that on remand the plaintiff would “of course, be required to provide ‘an evidentiary basis
on w hich to rest’” an award of damages. Id. at 273 (citation omitted). 9
The requisite evidentiary basis for an award of damages was des cribed in ALPO . In ALPO , th e D.C. Circuit affirmed the district court’s holding that Ralston Purina had violated § 43(a) of the Lanham Act through it s false advertising, but vacated the district court’s choice of remedies

. The court summarized the district court’s task on remand:

### -13- When assessing these actual damages, the district court ma y take into account the di fficulty of proving an exact amount of damages from false adver tising, as well as the maxim that “the wrongdoer shall bear the risk of the uncertainty which his own wrong has created.” Otis Clapp & Son v. Filmore Vitamin Co. , 754 F.2d 738, 745 (7th Cir. 1985) (quoting Bigelow v. RKO Radio Pictures, Inc. , 327 U.S. 251, 265 (1946)). At the same time, the court must ensure that the record adequately supports all items of damages claimedand establishes a causal link between the damages and the defe ndant’s conduct, lest the award become speculative or violate [Lanham Act] section 35(a)’s prohibition against punishment.

ALPO , 913 F.2d at 969 (citations and footnote omitted). The court’s application of the presumption of causation and injur y to the facts of this case, in concert with the damages instructions, was not erroneous. A predicate finding of intentional deception, as a major part of the defendant’s marketing efforts, contained in comparativ e adver tising , encompasses sufficient harm to justify a rebuttabl e presumption of causat ion and injury in fact. Once it had established its claim , Porous still bore the burden of proving an evidentiary basis t o justifyany monetary recovery. These instructions, properly reconciled, balanced a recognition of the basic harm to a pl aintiff who is targeted by del iberatelydeceptive comparative advertising with the statutor y requirement that any monetary recovery under the Lanham Act must represent compensatory damages shown to have been caused by the defendant. We have
no reason to believe that the jury failed to follow instructions in it s formula tion of the $1.5 million damages award. See Forbes v. Arkansa s Educational Television Comm’n , 93 F.3d 497, 501 (8th Cir. 1996), cert
. granted , 1997 WL 1149 47 (March 17, 1997) (“We have great faith in juries, and their desire and ability to follow instructions and make distinctions among the various issues put before them.”). Inaddition, after presiding over the extensive trial, the district

### The only evidence cited by Pall for the assertion that 10 

### Porous attempted to prove Pall’s statements were misleading is a demonstrative exhibit used during the testimony of Michael Spearman. However, in response to Pall’s objection, Porous deleted use of the term “misleading” from the exhibit. Instruction No. 17 provides in relevant part: “Where, on 11 

### the other hand, Porous’ claim is that the advertising is misleading, Porous must demonstrate, by extrinsic evidence, that the challenged advertisement or statement tends to mislead or confuse customers.”
-14- court rejected Pall’s motion for judgment as a matter of law, concluding that “there is sufficient evidence to support the jury’s verdict on th e Lanham Act claim.”

B. Evidence of Customer Perception

Pall argues that it was entitled to judgment as a matter of law o n the Lanham Act claim because Porous failed to offer extrinsic evidence of customer perception t o prove Pall’s statements were misleading. In order to prov e that a statement was misleading, “proof that the advertisin g actuallyconveyed the implied message and thereby deceived a significant portion of the recipients becomes critical.” William H. Morris Co. v. Group W, Inc
. , 66 F.3d 255, 258 (9th Cir. 1995) (citations omitted). Pal l asserts that in proving Pall’s statements about its own products wer e mi sleading, Porous utilized improper opinion testimony and failed t o provide the necessary market research or customer surveys to show how a signif icant number of customers perceived Pall’s statements. We rejec t this argument.
First, Pall’s conclusory statements that the district court per mitted improper opinion testimony are insufficient to e stablish that the district court abused its discretion in admitting this te stimony. Second, the case
was tried by Porous primarily, if not exclusively, on the ground tha t Pall’s statements were literally false rather than misleading. Third, the jury instruction, which 10 11

### -15-

provide d liability for both false and misleading statements, require d Porous to demonstrate by extrinsic evidence tha t any allegedly misleading statement was confusing. This properly states the law urged by Pall

. Finally, given the fa cts of this case, Porous need not have been required to present extrinsic evidence of confusion. Because the jury found that Pall violated the Lanham Act willfully and in bad faith, “we see no need to require [Porous] to provide consumer surveys or reaction tests in order to prove entitlement to damages.” PPX , 818 F.2d at 272.

II. PRODUCT DISPARAGEMENT CLAIM

Th e district court properly instructed the jury that in order t o prevail on its claim of product disparagement, Porous had to prove tha t Pall published a false or disparaging statement concerning Porous’ s product s and that special damages resulted from the publication. Th e product disparagement claim covered statements Pall made about Porous’ s products, and was limited to statements in the paper/power markets.

Porous’s common-law product disparagement claim is governed b y Minnesota law. Pall asserts that Porous failed to claim or prove special damages, an essential element of a claim for product disparagement under Minnesota law. There fore, Pall contends that the district court erred in failing to grant Pall judgment as a matter of law, or in the alternative,
a n ew trial based on the insufficiency of the evidence to support th e verdict.

### We find merit, as indicated below, in some of Porous’s 12 

### argument that Pall failed to preserve for appeal its challenge to the sufficiency of the evidence supporting the product disparagement verdict. However, this legal question, whether Porous’s theory of damages constitutes special damages cognizable in a product disparagement case in Minnesota, was preserved for appeal because it was argued to the district court before the case was submitted to the jury. See Ruyle v. Continental Oil Co. , 44 F.3d 837, 841 (10th Cir. 1994) (“A party who properly raises an issue of law before the case goes to the jury < need not include the issue in a motion for a directed verdict in order to preserve the question on appeal.’”) (citing Landes Constr. Co., Inc. v. Royal Bank of Canada , 833 F.2d 1365, 1370 (9th Cir. 1987)); Bottineau Farmers Elevator v. Woodward-Clyde Consultants , 963 F.2d 1064, 1073 (8th Cir. 1992) (holding that legal issue
-16- We review

the district court’s interpretation of state law de novo. Sondel v. Northwest Airlines, Inc. 56 F.3d 934, 937 (8th Cir. 1995 ) (citations omitted). We also review the district court’s denial of a motion for judgment a s a matter of law de novo. Keenan v. Computer Assoc. Int’l, In c. , 13 F.3d 1266, 1268 (8th Cir. 1994) (citation omitted). I n determining whether there exists sufficient evidence to support the jury
ver dict, we must view the evidence in the light most favorable to th e prev ailing party, remembering that “[j]udgment as a matter of law i s appropr iate only when all of the evidence points one way and i s
< susc eptible of no reasonable inference sustaining the position of th e
nonm oving party.’” Id. at 1269 (citation and footnote omitted). Th e district court’s deni al of a motion for a new trial under Fed. R. Civ. P. 59 is reviewed for a abuse of discretion. Where the basis of the decision is that the verdict is not against the weight of the evidence, the distric t court’s denial of the motion “is virtually unassailable.” Pulla v. Amoco Oil Co. , 72 F.3d 648, 656 (8th Cir. 1995) (citing Keenan , 13 F.3d at 1269)

.

A. Damages Theory Pall arg ues that Porous’s theory of damages to support the produc t disparagement claim d oes not satisfy, as a matter of law, the element of special damages. Pall asserts that Minnesota law does not allow use of a lost growth opportunity measure of damages in a product disparagement clai m and that therefore it was entitled to judgment as a matter of law. 12

### raised in motion for summary judgment did not have to be

reasserted in subsequent motions for directed verdict in order to be preserved for appeal).
-17- Porous’s claim for special damages was based on lost growt h opport unities and specific lost sales. Porous demonstrated that i t ini tiallyachieved sales growth in the paper/power markets but that it s sales plateaued or declined after the disparagem ent by Pall. In fact, the paper/power markets were the only markets in which Porous failed to achiev e significant growth in sales. Porous introduced marketing reports from Pal l which claimed that Pall’s sales literature, which included false o r misleading information about Porous’s products, was helpful in competing against companies like Porous and had resulted in regaining some lost sale s for Pall. One of Pal l’s distributors, Bill Brown, testified that his use of Pal l’s negative literature regarding Porous was helpful in retainin g busines s. Steven Edwards, a salesman for one of Pall’s distributors , testified that his use of Pall’s comparative literature influence d customers and that a specific customer had switched back to Pall’s product s from Porous’s after r eviewing the negative literature. Porous introduced the “Will-Fit Alert,” a memo prepared by an empl oyee of Pall, which Porous argued contained false and deceptive comparisons between Porous’s an d Pall’s filters. The memo states that Pall’s comparison to Porous’s filter s caused Consolidated Paper to abandon Porous and use only Pall’s filters. Patr ick Spearman, a vice president of Porous in charge of marketing , testified that Porous lost a number of specific customers because of Pall’ s disparaging statements, and

### -18-

that Porous was also unable to approach numerous other potential customers

. Spearman and his brot her, Michael Spearman, another principal for Porous,
were both qualified as experts in the filter industry. They testified tha t Pall’s disparagement was the cause of the harm to Porous and excluded othe r potential causes for Porous’s failure to grow in the paper/power markets. Finally, Porous’s expert economist, Dr. Michael Brookshire, testified as to Porous’s lost growth opportunity by comparing Porous’s sales in th e paper/ power markets with the geometric average growth rate of Porous’ s sales in all of its markets, and in the pneumatics and instrumentatio n
ma rkets, which Porous argues are the markets most similar to th e paper/power markets.

In Advanc ed Training Sys. v. Caswell Equip. Co., Inc. , 352 N.W.2d 1 (Minn. 1984), the trial court reversed a jury verdict for the plaintiffs
on a pr oduct disparagement claim, holding, in relevant part, that th e plaintiffs had failed to prove special damages, which are an essentia l element of the cause of action. Id. at 6. The Minnesota Supreme Cour t affirmed this ruling, reasoning that
plaintiff may not recover for product disparagement unles s plaintiff is able to prove special damages in the form o f pec uniaryloss directly attributable to defendant’s fals e stateme nts. Where plaintiff cannot show loss of specifi c sal es, the modern view allows plaintiff to prove a genera l decline of business, so long as this is shown to be the result of defendant’s disparaging statements and other pos sible causes are eliminated.

Id. at 7-8 (citations omitted). Pall argues that the Minnesota Suprem e Court’s discussion of special damages in Advanced Trainingdoes not suppor t Porous’s award for product disparagement. We must disagree.

### -19- First, we do not agree that Advanced Training precludes Porous’ s claim for special damages. In Advanced Training , the plaintiff failed to prove loss of a speci fic sale or a general decline in business due to the alleged disparagement, and in fact the plaintiff company had captured abou t ninety-seven percent of the relevant market. Adv anced Training , 352 N.W.2d at 8. The Minnesota Supreme Court ruled that the plaintiffs’ claim that they would have been more successful earlier but for the disparagement was “too sp eculative”. Id. While recognizing that the element of specia l damages is an importa nt restriction on the product disparagement cause of action, the logic of Advanced Training does not preclude Porous’s damages
awar d. See Prosser & Keeton on Torts , § 128 n.22 (5th ed. 1984 & Supp

. 1988 ) (stating that the holding in Advanced Training that decline i n business due to disparagement was sufficient but failure to grow after the dispar agement was too speculative “is presumably an assessment of th e evidenc e as to loss, not a rule of law”). Porous presented evidence o f specific lost sales and lost growth opportunity, which establishe d pecuni aryloss that the jury could reasonably believe was directl y attributable to Pall’s disparaging statements.

Secon d, the district court instructed the jury that Porous had t o prove special damages in order to establish its product disparagemen t claim. See Instructions Nos. 25 & 26. In describing what Porous had t o prove in order to establish special damages, the jury instructions tracked the relevant language of Advanced Training and described the necessity of proof of special damages in a product disparagem ent claim. Therefore, the district court applied the proper legal standard based on Minnesota law. Given our holding that Porous’s theory of damages was not deficient as a matt er of law, the remaining question is whether there is sufficien t evidence to sustain the damages award.

### Although Porous urges that Pall has waived its right to 13 

### challenge the insufficiency of the evidence of the product disparagement claim by failing to renew by post-verdict motion under Federal Rules of Civil Procedure 50(b), we need not address that argument in light of our finding that there was sufficient evidence to sustain the verdict.
-20- B. Sufficiency of the Evidence 13

Under Ad vanced Training , Porous had the burden not only of provin g that Pall’s statements caused injury, but also of excluding other causes for its loss. 352 N.W.2d at 8. Pall argues tha t Porous failed to satisfy this method of proving special damages because the testimony of Porous’s principals, the Spearmans, was too speculative t o support special damages, and other causes were at least in part responsib le for Porous’s failure to meet its sales projec tions. The district court rejected these arguments, finding that “there is sufficient evidence to support the jury’s verdict on the claim of common-law product disparagement .” District Court Order at 3. Aft er reviewing the evidence in the record, viewing it in the ligh t most favorable to the verdict, we agree and affirm the district court’ s ruling.

First, the testimony of the Spearmans was not too speculative as a matter of law to supp ort the jury’s finding of exclusive causation. Pall argues , citing several antitrust cases, that Porous cannot prove th e
exc lusive cause of its damages through the testimony of its principals

. However, these cases do not present a rule of law that the testimony of a compan y’s principals is too speculative to establish a material fact

. Rather, they focus on the lack of proof specific to each case. See e.g
. Argus Inc. v. Eastman Kodak Co. , 801 F.2d 38, 45 (2d Cir. 1986) (affirming summary judgment for the defendant because plaintiffs failed to present a triable issue of fact on the element of causation);

### -21-

Foremost-McKesson, In c. v. Instrumentation Laboratory, Inc. , 527 F.2d 417 (5th Cir. 1976) (affirming directed verdict for defendant because plaintif f failed to present sufficient evidence of causation). Additionally, a s qualif ied experts in the filter industry, the Spearmans could offe r opinions regarding the industry.

Seco nd, Porous presented competent evidence excluding causes othe r than Pall’s disparagement for its lost business. Pall contends that other factors were responsible at least in part for Porous’s losses, citin g eviden ce that three Porous customers stopped buying Porous products fo r other reasons, that competition increased in the paper/power markets durin g this time, and that Porous reduced its marketing efforts in the paper/powe r markets in the spring of 1990. However, Porous presented evidence that it
was successful initially in the paper/power markets, that its sales levele d off or fell after the disparagement by Pall, that the markets in which it
was disparaged by Pall were the only markets in which Porous failed t o achieve significant growth during this time, and that Porous enjoyed the
same competitive advantages in the paper/power markets that led to great
success in the other markets. The Spearmans testified that Pall’ s disparage ment was the exclusive cause of the harm to Porous an d specif icallyexcluded other possible factors. Porous concedes that i t reduced its marketing effort in the paper/power markets in 1990, but argue s that this was done in order to counteract Pall’s attacks in the oil/ga s markets and was therefore a way of mitigating its overall losses.

We hol d there is sufficient evidence to support the element o f special damages. Accordingly, the district court did not abuse it s discretion in denying Pall’s motion for a new tr ial on Porous’s common-law claim for disparagement of its product.

### Porous moved, pursuant to Rule 606(b) of the Federal Rules of Evidence, to strike 14 

### portions of the affidavit that attempted to relate the juror’s thoughts during the deliberation process. The district court granted the motion, striking “those portions of the Flesher affidavit that relate to juror statements regarding the effect the jury experiment had on the verdict.”
See also Banghart v. Origoverken, A.B. , 49 F.3d 1302, 1306 n.6 (8th Cir. 1995) (“Rule 606(b) establishes very strict requirements for accepting testimony from jurors about their deliberations, and trial courts should be hesitant to accept such testimony without strict compliance with the rule.”) (citation omitted). This ruling is not appealed.
-22- III. JURY MISCONDUCT
After trial, Pall discovered, throug h interviews with members of the jury, that jurors hadtwisted and jumped on Porous’s filters during their deli berations. Pall motioned the district court for relief from th e judgment, and a new t rial, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, for the alleged juror misconduc t. Attached to the motion
was an affidavit from a legal assistant employed by Pall’s counse l 14 stating that she had contacted some of the jurors and that they told her that the jurors had stepped and jumped on Porous ’s filters to determine if theywould collapse. The district court held that the jury’s testing of the strength of the filters constituted extraneo us evidence, but it denied Pall’s motion. The court held that Pall had fai led to establish prejudice from the misconduct, because it failed to prove, “by a preponderance of th e evidence, that the ou tcome of the trial would have been different had the extraneous evidence not been introduced into deliberations.”

We rev iew the district court’s decision to deny a motion for a ne w trial based on alleged juror misconduct for an abuse of discretion

. Banghart v. Origoverken, A.B. et al. , 49 F.3d 1302, 1305 (8th Cir. 1995) (citations omitted). In a civil case, the

### The district court found that the award of attorneys’ fees was also warranted under the 15 

### Minnesota Deceptive Trade Practices Act, Minn. Stat. § 325D.45, subd. 2(2).
-23- exposure of extraneous evidence to the jury “mandates a new trial only upo n
a showing that the materials are prejudicial to the unsuccessful party.” Id. at 1306 (citing Peterson ex. rel. Peterson v. General Motors Corp. , 90 4 F.2d 436, 440 (8th Cir. 1990) (other citations omitted)).

Pall argu es that the district court was correct in finding that the jurors’ “experiments” constituted extraneous evidence, but that it abused its discretion in denying a new trial because the alleged misconduc t improperlyimpeached Pall’s statements about its own collapse testing of Porous’s filters. We disagree. Porous’s filters were introduced int o evidence, and the jury was allowed to examine them in its deliberations. We thin k, contrary to the district court’s reasoning, that the jury’ s examination of the filters did not constitute ex traneous evidence, but was merelypart of the expected process of scrutinizing the evidence as part of its del iberations. See Banghart , 49 F.3d at 1306-07. We find n o prejudicial error.

V. ATTORNEY FEES

The d istrict court denied enhanced damages to Porous on the basi s that there was no evi dence to support such an award under the Lanham Act. This order was not appealed.

However, the court proceeded to award attorneys’ fees and costs under § 35(a) of the Lanham Act on the basis that the facts presented constitute d an exceptional case. The district court stated: 15

### -24- Wit hrespect to Plaintiff’s Lanham Act claim, the jury foun d that Defendant acted willfully and in bad faith. This cour t also finds that the reco rd establishes Defendant intentionally set out to deceive or confuse the public through th e publication of false statements about its product a lone, and in compar ison to Plaintiff’s product, and that such conduct wa s deliberate and willful.

. . . Plaintiff submitted evidence of Defendant’s marketing reports which established Defendant’s intent to regain clients fro m what it called “willfitters.” This evidence, together wit h evid ence establishing Defendant published false statement s abo ut its own products, cannot be characterized as a simpl e disregard for Plaintiff’s rights.
Our review of the record supports the district court’s determin ation. We hold the district court’s findings were not clearly erroneous and an award of attorneys’ fees under the Lanham Act was fully justified.

CONCLUSION
We affirm the verdict on both the product disparagement claim a nd the Lanham Act claim.

JUDGMENT AFFIRMED.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.