“local” is falsifiable but relative, meaning damages for false advertising must be limited

Bimbo Bakeries USA, Inc. v. Sycamore, 2019 WL 1058234, No. 13-cv-00749
(D. Utah Mar. 5, 2019)
Previously, Bimbo
won a false advertising claim
in front of a jury against U.S. Bakery for trade
secret misappropriation and for falsely advertising its bread as “local.” Bimbo
Bakeries’ false advertising damages were limited to Utah and southern Idaho.  At trial, Bimbo’s expert testified about
consumer surveys performed on U.S. Bakery’s fresh/local tagline, and another
expert offered damages testimony; U.S. Bakery offered conflicting expert
testimony.  After the verdict judgment
was entered against U.S. Bakery for $8,027,720 in false advertising damages and
$1,578,942 in trade secret damages, plus exemplary damages of $789,471 for the
trade secret claim.
U.S. Bakery argued that the verdict should be set aside
because (1) the word “local” in U.S. Bakery’s tagline is not a specific
geographic place, and therefore not false or misleading; (2) Bimbo Bakeries’
expert testimony couldn’t support the verdict; and (3) Bimbo Bakeries failed to
present evidence that “localness” was material. These arguments had been made before
and didn’t work now either.  “Local” has
a relative meaning, but it’s still a factual meaning in its context, and Bimbo
showed misleadingness through extrinsic evidence.  U.S. Bakery cited Forschner Group, Inc. v.
Arrow Trading Co., a Second Circuit case, to argue that “local” is not a
specific geographic location that can be verified objectively as either true or
false. Even if it had been binding, it wasn’t relevant: the court there held
that “Swiss Army knife” doesn’t falsely suggest Swiss origin, but “a term does
not need to designate a specific geographic origin to be actionable.”  “Local” is geographically descriptive, and
Bimbo presented evidence that U.S Bakery used the term deceptively, “to suggest
that its bread products were particularly fresh and of high quality because
they were baked within the geographic vicinity of where they were sold.”
At trial, Bimbo’s expert presented admissible results of
consumer surveys performed demonstrating 28% consumer confusion. The jury
properly found materiality through direct testimony as well as survey evidence.
However, remittitur was appropriate on the false advertising
claim. Remittitur is appropriate if the jury award is “so excessive as to shock
the judicial conscience and to raise an irresistible inference that passion,
prejudice, corruption or other improper cause invaded the trial.” The expert’s
damage calculation was based on U.S. Bakery’s profits from all eight states in
which the misleading tagline was used, but only Utah consumers were
surveyed.  (What makes Utah consumers
different in their likely response to the use of “local”?  In the abstract, I don’t see why this isn’t
legitimately extrapolable to the other areas using only common sense. The
expert admitted that consumers in different states might have different
perceptions of what constitutes being “local”; “for example, a consumer in
Vancouver, Washington, may consider Portland, Oregon, to be ‘local.’” This
would be meaningful to the case here if the products were baked in places that
may have been “local” to some consumers within the slogan’s footprint.)  Bimbo’s evidence was sufficient, but only
with respect to consumer confusion in Utah and damages from false advertising
in Utah. Since the jury chose to adopt Bimbo’s expert’s method of calculation,
and since he calculated $83,398 in profits from U.S. Bakery’s use of the
disputed tagline in Utah, no new trial was necessary and the damages were
remitted to that amount.

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