Opinion ID: 28599
Heading Depth: 2
Heading Rank: 2

Heading: discussion of fieldturf’s claims

Text: FieldTurf contends that the district court erred in denying its motion for judgment as a matter of law because there was insufficient evidence to support the jury’s actual damages award. Specifically, FieldTurf argues that there is insufficient evidence to support Southwest’s false advertising claims or a finding that FieldTurf’s activities caused Southwest to lose profits on its AstroPlay sales. We review de novo the district court’s denial of a motion for judgment as a matter of law, applying the same standard as the district court.2 But when a case is tried by a jury, a Rule 50(a) motion is a challenge to the legal sufficiency of the evidence.3 In resolving such challenges, we draw all reasonable inferences and resolve all credibility determinations in the light most favorable to the nonmoving party.4 Thus, we will reverse the denial of a Rule 50(a) motion only if the evidence points so strongly and so overwhelmingly in favor of the nonmoving party that no reasonable juror could return a contrary verdict.5 “This is true even when the jury reaches a general verdict based on two alternative theories.”6 A. Sufficiency of Evidence on Southwest’s False Advertising Claim Under this highly deferential standard of review, we find sufficient evidence to support Southwest’s false advertising claims. Section 43(a) of the Lanham Act prohibits businesses and 2 Cozzo v. Tangipahoa Parish Council-President Gov’t, 279 F.3d 273, 280 (5th Cir. 2002). 3 Brown v. Bryan County, 219 F.3d 450, 456 (5th Cir. 2000). 4 Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). 5 Cousin v. Trans Union Corp., 246 F.3d 359, 366 (5th Cir. 2001). 6 United States v. Cisneros, 203 F.3d 333, 344 n.5 (5th Cir. 2000). -5- individuals from misrepresenting the nature and quality of commercial products: Any person who . . . 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, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.7 In Pizza Hut, Inc. v. Papa John’s International, Inc.,8 we explained that a false advertising claim under the Lanham Act includes five elements: (1) A false or misleading statement of fact about a product; (2) Such statement either deceived, or had the capacity to deceive a substantial segment of potential consumers; (3) The deception is material, in that it is likely to influence the consumer's purchasing decision; (4) The product is in interstate commerce; and (5) The plaintiff has been or is likely to be injured as a result of the statement at issue.9 The first prong requires that the false advertising complained of involves, at the very least, a “misleading statement of fact” as opposed to mere “puffery.” We have held that puffery comes in two forms: “(1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over comparable products that is so vague that it can be understood as nothing more than a mere expression of opinion.”10 In contrast, “a statement of fact is one that (1) admits of being adjudged true or false in a way that (2) admits of empirical verification.”11 7 15 U.S.C. § 1125(a)(1)(B). 8 227 F.3d 489 (5th Cir. 2000). 9 Id. at 495. 10 Id. at 497. 11 Presidio Enters., Inc. v. Warner Bros. Distrib. Corp., 784 F.2d 674, 679 (5th Cir. 1986). -6- Our cases also clarify a plaintiff’s burden under the second and third elements. When a defendant makes “ambiguous or true but misleading statements,” the plaintiff must show that consumers were actually misled.12 But where a defendant has made literally false statements, the plaintiff need not demonstrate that the statements actually misled consumers, for we assume that false statements are materially deceptive.13 The exhibits in this case evince literally false statements of fact made by FieldTurf employees attempting to lure customers away from Southwest. For example, in a letter to Humboldt State University, FieldTurf’s president attempted to dissuade the school from purchasing AstroPlay by highlighting FieldTurf’s endorsement from its national spokesman, football coach Tom Osborne. The June 4, 1999 letter falsely states that FieldTurf had not paid for Mr. Osborne’s endorsement: “He is not a paid endorser, but after his research into our product he is completely sold on it and its track record.” The evidence shows, however, that FieldTurf and Osborne signed an agreement on February 19, 1999, whereby Osborne agreed to endorse FieldTurf’s product in exchange for stock options. FieldTurf also dishonestly boasted that its product was the only artificial turf approved by the Fédération Internationale de Football Association (“FIFA”) for use in international soccer competitions. In its April 28, 2000 proposed bid to install a synthetic field at Gannon University, FieldTurf stated that its product had recent ly become “the first artificial surface ever approved by FIFA for all levels of international soccer, up to and including the World Cup Finals.” The proposal went on to state that “[t]his wraps up months of investigation by FIFA on the safety and utility of 12 Pizza Hut, 227 F.3d at 497. Contrary to FieldTurf’s contention, the district court’s instruction on materiality properly stated that Southwest was obligated to “present some evidence of actual deception” if it did not prove that FieldTurf made statements that were literally false. 13 Id. -7- FieldTurf for soccer.” In direct contradiction to that statement, however, Southwest presented a July 14, 2000 letter from FIFA’s legal counsel asking FieldTurf to refrain from using the phrase “approved by FIFA,” or any similar phrase, because FIFA had not approved any artificial surface for international competitions. The statement that FIFA had approved FieldTurf’s product, like the statement that Coach Osborne was an unpaid endorser, is an empirically verifiable, factual statement. Having shown that these statements (and several others like them) were literal fabrications, Southwest was not obligated to prove that FieldTurf actually deceived any given consumer. We therefore find sufficient evidence to support Southwest’s false advertising claims and do not address whether there is sufficient evidence of actual consumer deception. B. Sufficiency of Evidence on Lost Profits FieldTurf also complains that there was insufficient evidence to support the jury’s award of $1,040,000 in actual damages because Southwest presented no objective evidence that FieldTurf caused any customers to choose its product over AstroPlay. Since Southwest presented a cumulative damage question, this award compensates Southwest both for its false advertising claims and for FieldTurf’s breach of the confidentiality provisions in the Kentucky settlement. We find sufficient evidence to uphold the award. The jury heard two Southwest executives testify about how FieldTurf’s ad campaign harmed the company. Reed Seaton, Southwest’s President and CEO, testified that he had personal knowledge of fifteen or twenty prospective accounts that Southwest lost because of FieldTurf’s false statements or violations of the Kentucky settlement. Mr. Seaton explained that FieldTurf’s salespersons had revealed the terms of the Kentucky settlement to Southwest’s potential customers -8- and led them to believe that Southwest’s all-rubber infill was inferior. That is, after learning that the Kentucky settlement precluded Southwest from selling sand and rubber infills, Southwest’s customers viewed its all-rubber infill as an afterthought and lost faith in AstroPlay: We’re trying to stick to the merits of the product [(AstroPlay)]. And all the customer really wants to speak to is why aren’t you selling sand and rubber because we’ve been told that you can’t sell sand and rubber. So it’s a very difficult process because you can’t explain to them why you can’t sell sand and rubber because it was not allowed by the settlement agreement, but yet, the customer, in every case that I was involved with, already knew the terms of the settlement agreement prior to my arrival. Mr. Seaton’s testimony was corroborated in greater detail by James Savoca, Southwest’s Chief Operating Officer of Domestic Turf. Mr. Savoca testified that he knew of twenty-nine prospective AstroPlay installations during 2000 that Southwest lost due to FieldTurf’s unlawful activities. Of those twenty-nine potential customers, Savoca explained that, in nineteen cases, FieldTurf’s negative promotional tactics were the “focal point” and the “reason why we lost the job[s].” He further explained that the average price to install an AstroPlay field was $400,000 and that Southwest typically made a twenty-six to twenty-seven percent net profit on each field. FieldTurf argues that Seaton and Savoca’s testimonies do not constitute objective evidence of lost profits under Great Pines Water Co. v. Liqui-Box Corp., a case in which we set aside an $800,000 damage award for insufficient evidence.14 We find the facts of that case to be materially distinguishable from the present case. Great Pines, a bottled water distributor, sued the manufacturer for making leaky bottles that ultimately caused Great Pines to lose customers.15 Three Great Pines 14 203 F.3d 920, 922–24 (5th Cir. 2000). 15 Id. at 921. -9- employees testified on lost profits.16 The employees offered varying estimates that the company lost between 4,000 and 8,000 orders due to the defective bottles.17 Not only were their estimates inconsistent, but the employees admitted that they had no oral or written customer feedback to support their conclusions.18 The evidence supporting lost profits in this case is clearly more reliable than the evidence offered in Great Pines. Southwest’s managers testified about a relatively small number of lost accounts based on their direct contact with the potential customers. And Mr. Savoca offered objective testimony concerning the average profit earned on an installation that reflected his personal experience in the industry. We conclude that this evidence of lost profits was competent enough for the jury to calculate damages “with reasonable certainty.”19 C. Submission of Damages in the Form of a General Verdict Rather than submitting separate damage questions on its Lanham Act and breach of contract claims, Southwest presented a single question in the form of a general verdict. FieldTurf argues that the district court erred in submitting these claims as a general verdict and that we should therefore grant a new trial. It is well established in this circuit that a single jury question “that submits multiple theories 16 Id. at 923. 17 Id. at 924. 18 Id. 19 Id. at 922 (stating that lost profits need not be “susceptible to exact calculation” and that the amount must only “be shown by competent evidence with reasonable certainty”). -10- is acceptable when each of the theories is sustained by the evidence and legally sound.”20 We have already concluded that there was sufficient evidence to support a judgment on each of Southwest’s claims. We therefore find no error on this ground. D. Instruction on FieldTurf’s Discovery Abuses FieldTurf next complains that the district court abused its discretion in instructing the jury that it could infer that FieldTurf withheld documents that would have been damaging to its defense. Despite repeated requests and warnings from the district judge, FieldTurf failed to produce hundreds of relevant marketing correspondences that Southwest eventually obtained by directly subpoenaing FieldTurf’s customers. When asked why FieldTurf failed to produce these documents, brochures, and E-mails that were sent to prospective customers, FieldTurf executives offered suspect and inadequat e explanations. With regard to FieldTurf’s failure to produce relevant and damaging E- mails, company president John Gilman explained that his computer had been stolen, that FieldTurf computers were infected with the “I Love You” virus, and that the company does not keep its E- mails. With regard to FieldTurf’s failure to produce other relevant documents, Gilman offered no explanation. Based on these facts, the district court did not abuse its discretion21 in submitting the jury instruction as a discovery sanction for FieldTurf’s nondisclosure.22 20 Box v. Ferrellgas, Inc., 942 F.2d 942, 944 (5th Cir. 1991); accord United States v. Tomblin, 46 F.3d 1369, 1385 (5th Cir. 1995); Auster Oil & Gas, Inc. v. Stream, 835 F.2d 597, 603 (5th Cir. 1988); Nowell v. Universal Elec. Co., 792 F.2d 1310, 1312 (5th Cir. 1986). 21 United States v. Katz, 178 F.3d 368, 372 (5th Cir. 1999) (“We review remedies for discovery violations imposed by a district court for abuse of discretion.”). 22 See Fed. R. Civ. P. 37(c) (allowing district courts to inform the jury of a party’s discovery abuse and permitting the judge to order as a sanction that certain matters or facts be taken to be established). -11- E. Southwest’s Award for Attorneys’ Fees Finally, FieldTurf argues that Southwest was not entitled to its $240,480 award for attorneys’ fees. The district court awarded attorneys’ fees under section 38.001 of the Texas Practice and Remedies Code, which makes fees and costs recoverable on a successful breach of contract claim.23 Section 38.002 of the Texas Practice and Remedies Code, however, conditions the recovery of fees on the claimant’s presentment of the claim to the opposing party.24 FieldTurf argues that Southwest failed to present its breach of contract claim and therefore is not entitled to recover fees under section 38.001. The purpose of the presentment requirement under Texas law is “to allow the person against whom the claim is asserted to pay the claim within 30 days after they have notice of the claim without incurring an obligation for attorney’s fees.”25 Although presentment may be informal, it is necessary that the claimant make some form of “presentment of the contract claim to the opposing party . . . .”26 As its sole evidence that it presented its breach of contract claim, Southwest relies on an April 10, 2000 letter, in which it offered to settle its claims against FieldTurf. That letter does not constitute adequate presentment of Southwest’s breach of contract claims. Although the letter offers to settle all pending claims against FieldTurf in exchange for $2.5 million and other stipulations, there 23 See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 1997). 24 Id. § 38.002(2) (“To recover attorney’s fees under this chapter . . . the claimant must present the claim to the opposing party or to a duly authorized agent of the opposing party . . . .”). 25 Jones v. Kelly, 614 S.W.2d 95, 100 (Tex. 1981). 26 Id. (emphasis added). -12- were no contract claims pending against FieldTurf at the time; Southwest did not add breach of contract claims to its complaint until over a month after it presented FieldTurf with the settlement offer. When FieldTurf received the April 10 letter, the only claims pending against it were for trademark infringement, trademark dilution, and unfair competition. Neither Southwest’s original complaint nor its offer letter makes any reference to injuries that Southwest suffered due to FieldTurf’s breach of the Kentucky settlement. The letter refers to the Kentucky settlement only to state that FieldTurf must confirm its terms to settle the present litigation; it does not allege that FieldTurf ever actually breached the Kentucky settlement. Thus, the district court erred in awarding attorneys’ fees on Southwest’s breach of contract claims because Southwest failed to present FieldTurf with an opportunity to pay those claims and avoid the burden of paying attorneys’ fees.