- January 2, 2013
- May Law, LLP
- Civil / Business Law
- 0 Comments
The U.S. District Court in Richmond, Virginia has denied the cross-motions for preliminary injunctions filed by rival grass seed companies, each of whom had asked the court to put a stop to the other’s allegedly false advertising claims.
In the ongoing case of Scotts Company, LLC v. Pennington Seed, Inc., (Civil Action No. 3:12-cv-168) (Nov. 30, 2012), two of the biggest names in the grass seed/plant food business are suing each other over online and radio advertising that each side claims is “false and damaging,” in violation of federal and state laws governing unfair competition. The Scotts Miracle-Gro Company (“Scotts”) first sued Pennington Seed, Inc. (“Pennington”) in March 2012, alleging that Pennington’s claims that its “Smart Seed” grass seed products contain “twice the seed” of Scotts’ “Turf Builder” grass seed products are false and misleading.
Pennington responded with its own lawsuit against Scotts, alleging that Scotts broke the same laws regarding false advertising and unfair competition when it ran advertisements describing Pennington’s “1 Step Complete” grass seed products as just “a bunch of ground-up paper” while claiming that Scotts’ own “EZ Seed” products are superior.
Each side asked the court to issue a preliminary injunction, enjoining the other side’s smear campaign while the matter is being litigated. As Judge John Gibney pointed out in his memorandum opinion, a preliminary injunction is an “extraordinary remedy” that the court does not take lightly. In order to obtain such an injunction, a party must establish that (1) it is likely to succeed on the merits; (2) it is likely to suffer irreparable harm in the absence of an injunction; (3) the “balance of equities” is tipped in the party’s favor; and (4) an injunction is in the best interest of the general public.
In denying the companies’ motions, the court ruled that neither party could establish these requisite elements. Scotts, for example, failed to make a necessary showing of irreparable harm: as the court pointed out, most consumers purchase Scotts’ products at the beginning of the spring grass seed season which ended in May. “[B]y the time the court heard argument on the motions and the matter was fully briefed before the court, the need for urgency had been removed.” Scotts also failed to make a clear showing that Pennington’s claims were “likely to substantially cause consumer confusion such that the public interest factor decidedly tips in Scotts’ favor.”
Pennington, meanwhile, “failed to show that Scotts’ claim is literally false.” In fact, Pennington never disputed that its “1 Step Complete” grass seed products contain paper. Because Pennington could not show that Scotts’ claims were false and misleading (and thus likely to harm Pennington’s sales and/or reputation), it could not establish that it would suffer irreparable harm from the continuation of those advertisements. For the same reason, Pennington could not prove that the balance of equities or public interest tipped in its favor.
This ruling shows that while courts are loath to allow “false and misleading claims to permeate the market,” the threshold question must always be: are the disputed claims actually false or misleading? As Pennington found out, that’s not an easy thing to prove. Likewise, Scotts was confronted with the incredibly high standard for obtaining a preliminary injunction, and undoubtedly learned an important lesson in the process: if you’re claiming that “irreparable harm” will result if the other party’s behavior is allowed to continue, don’t wait more than a year before filing your lawsuit!