Lumps in materiality survey fail to justify its exclusion

Select Comfort Corp. v. Tempur Sealy Int’l, Inc., No.
13-2451, 2016 WL 5496340 (D. Minn. Sept. 28, 2016)
The court resolves various motions surrounding expert
testimony in this false advertising case about the effects of certain
comparative claims on Select Comfort Sleep Number mattress sales.  The claims were made mostly through the flyer
below, though also allegedly through statements from salespeople, the latter including
that Sleep Number beds develop mold and that defendant Mattress Firm chose to
stop selling Sleep Number due to quality issues.

In 2013, the Court granted a TRO enjoining Mattress Firm
from making various representations to consumers regarding Select Comfort and
its products, but lots of issues remain.
For one thing, the court allowed testimony about calculation
of profits to stay in, because disgorgement may be an available remedy even
though the court previously granted summary judgment against Select Comfort on
the issue of willfulness.  Whether
disgorgement is available without willfulness is an issue of law reserved for
later.  However, the court excluded
testimony about Tempur-Pedic’s total profits from sales of products other than
Tempur-Choice, the subject of the comparative ads at issue:
Tempur-Choice is the only
Tempur-Pedic product with the same feature as the Sleep Number bed—the ability
to separately adjust mattress firmness on either side of the bed.
Tempur-Pedic’s other mattress lines (not air-adjustable) vary greatly to the
extent that they offer different features and sell at different prices. An
accounting of profits under the Lanham Act is intended to award profits on
sales that are attributable to infringing conduct. While under a disgorgement
model Plaintiff must only prove Tempur-Pedic’s sales, those sales must be of the
allegedly falsely advertised products.
The court also excluded a lost profits calculation based on
comparing Select Comfort’s sales at stores near defendant Mattress Firm stores
versus sales at stores not near Mattress Firm stores.  Because the expert didn’t distinguish between
Mattress Firm stores where the salespeople made the statements at issue as part
of an organized campaign of disparagement from Mattress Firm stores where there
was no evidence of such statements, the damages model was inappropriate
bootstrapping: it assumed liability to prove liability.  Nor did the model appropriately account for
other differences between stores, such as the amount of local advertising
Select Comfort invested in.
Hal Poret conducted a survey for Select Comfort.  One group was used to test the materiality of
three statements Mattress Firm sales representatives made with regard to Sleep
Number beds; another group was questioned about the flyer or a control version
of the flyer that didn’t use “hammocking” imagery or claim that Select Comfort
used “commodity foam.”  The flyer groups
were asked what they understood the flyer to communicate, such as a comparison
between Tempur-Choice and Sleep Number beds. The survey used open-ended
questions about what the flyer communicated, then questions about specific
sections of the flyers such as as “commodity memory foam” and the “hammocking”
imagery. Respondents were then shown the flyer and asked about specific parts,
with the specific parts marked with a red box, e.g., “What, if anything, does
this phrase (with a red box around it) communicate to you about SLEEP NUMBER
beds?” and followups about why the statement was negative or positive
(depending on the respondent’s answer) and whether it would affect their
purchase intentions.

survey flyer with check marks
Poret concluded, based on the closed-ended question, 44% of
the test group respondents understood the phrase “commodity foam” to
communicate something negative, and 31% of the test group respondents answered
that the phrase “commodity” memory foam would make them less likely to purchase
a Sleep Number bed. In the closed-ended question, 27.5% of the Test Group
respondents answered that that Sleep Number beds allow hammocking, and 55%
answered that this section of the ad would negatively impact their likelihood
of purchasing a Sleep Number bed.  

Poret also tested statements allegedly made by Mattress Firm sales associates
that: (1) the store stopped selling Sleep Number beds because too many
customers returned them; (2) the store stopped selling Sleep Number beds
because too many customers had problems with them; and (3) Sleep Number beds
develop mold.  Poret also asked about
additional statements aimed at being “control statements.”  Poret concluded that the test statements were
“highly material” because high percentages said that the test statements would
influence their decisions.  Respondents
also said that the control statements would influence their decisions to
various degrees, averaging 14%, which he counted as the relevant noise.  Even after subtracting 14% from the test
question results, he concluded that the results still “strongly indicate[d]”
that the statements or substantially similar statements were material.
Defendants challenged the survey for having an overinclusive
sample population: any individual who purchased any memory foam or adjustable
air/memory foam mattress in the past two years, or who planned to purchase any
memory foam or adjustable air/memory foam mattress in the next two years. Poret
did not limit his sample population to those who purchased or planned to
purchase mattresses within the relevant price range, and didn’t control for
current owners of the parties’ products.  Further, defendants argued the survey didn’t
approximate actual market conditions because of the other information consumers
would have encountered in the marketplace and because it forced them to pay
attention to and understand the challenged claims, which might not have
otherwise happened, especially since Poret circled the challenged claims with
red boxes (which has a negative connotation). 
The court found that none of these criticisms merited excluding the
survey, especially given the presence of a control group.
Mattress Firm also challenged Poret’s use of specific
statements to test materiality, arguing that its salespeople didn’t say those
exact things.  “Mattress Firm can
question Poret about his choice of test statements and a jury can decide how
much, if any, weight to afford the survey based on that, and other factors.”  Defendants’ own experts could also criticize
Poret for not including other factors that might influence mattress purchases.
A defendant expert witness on polyurethanes, however, didn’t
have relevant expertise to testify on the meaning of “commodity foam” to

Here, there is no evidence that
Defendants consulted any expert to determine the meaning of “commodity” before
creating their advertisement, and it appears that Fogg’s testimony on this
point is being offered as an after-the-fact explanation for a marketing
decision. Fogg is a polyurethane expert, not a marketing expert, and he has no
particular qualification that would allow him to opine on how a consumer would
perceive the meaning of the advertisement. 

from Blogger

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