Post-sale statements that prevent return of items can constitute advertising & promotion

Boltex Manufacturing Co. v. Galperti, Inc., 2018 WL 1535199,
No. H-17-1439 (S.D. Tex. Mar. 29, 2018)
The parties compete in the market for carbon steel
flanges.  Normalization is a heat
treatment process that changes the physical composition of carbon steel to
increase its machinability and toughness; it’s more expensive to make
normalized flanges than non-normalized (or forged) ones. Boltex sells
normalized flanges, made with processes compliant with ASTM standards, which
require heat treatment for certain types of flanges. Several processes are
available, but many customers will only purchase certain flanges if they are
normalized.  Boltex stamps its normalized
flanges to indicate their compliance with ASTM standards and provide a Mill
Test Report (“MTR”)—an industry-standard report “used to promote and certify a
material’s compliance with the appropriate ASTM standards, applicable
dimensions, and physical and chemical specifications.” Boltex charges more for
normalized flanges than for forged ones.
Defendants allegedly advertise some flanges as normalized
and as meeting the the ASTM standards in the same way as Boltex touts
normalization, but their flanges are allegedly not normalized and not
Defendants argued that stamping flanges and providing MTRs
wasn’t “advertising or promotion,” 
because MTRs and stamped flanges are “post-sale communications to
consumers who have already purchased a product[.]” Further, because the
statements are “only seen by the specific customer who has already purchased
the product” the statements weren’t disseminated sufficiently to the relevant
purchasing public within the carbon steel flange industry.
However, previous cases about package inserts weren’t
binding and were distinguishable. Here, the stamping and inclusion of MTRs,
rather than containing new false statements, allegedly confirmed the assumption
that consumers made when purchasing the flanges.  Stamping and MTRs allegedly allowed defendants
to “convince their distributors to ship and their end use customers to accept
non-compliant shipments” rather than returning them.  This was enough to state a plausible claim.

from Blogger

This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s