A press release about a lawsuit against a supplier wasn’t commercial speech

Townsend Farms, Inc. v. United Juice Corp., — Fed.Appx.
—-, 2019 WL 6358780, No. 18-55067, No. 18-55068 (9th Cir. Nov. 27, 2019)
Townsend included pomegranate arils supplied by Göknur in
its Townsend Farms Organic Antioxidant Blend; some of those arils were
contaminated with hepatitis A. After consumers of the frozen fruit mixture
contracted the virus, Townsend recalled the product in coordination with the
FDC and the CDC. In the wake of the outbreak and subsequent recall, injured
consumers filed numerous lawsuits against Townsend. Townsend and its insurers
defended and settled most of those lawsuits. Townsend then sued Göknur seeking
equitable indemnification Göknur raised a counterclaim arguing that Townsend’s
recall press releases constituted false advertising under the Lanham Act. This
was correctly dismissed because the recall press release didn’t propose a
commercial transaction.
Denouement: The parties stipulated that Townsend and its insurers
incurred over $13.7 million in relevant litigation and settlement costs; a jury
awarded Townsend $2.7 million for underlying settlements and associated
litigation expenses and $4.8 million in punitive damages. It was ok for the
jury to award only that amount in compensatory damages, because Townsend bore the
burden of proving the degree of Göknur’s fault in causing the stipulated
damages. However, the punitive damages award had to go because California law
required “meaningful evidence of the defendant’s financial condition” in order
to obtain punitive damages. Townsend provided only evidence of Göknur’s income
and assets, not about its expenses and liabilities, which wasn’t enough;
remanded with instructions to dismiss the punitive claims.

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