InSinkErator, LLC v. Joneca Co., No. 25-286 (9th Cir. Dec.
29, 2025)

The court of appeals affirms the grant of a preliminary
injunction, previously
discussed, against Joneca’s advertising of its garbage disposals.
InSinkErator argued that Joneca’s horsepower designations were literally false
because they do not reflect the output power of the disposals’ motor, despite
Joneca’s argument that its designations accurately reflect the electrical power
drawn by its units.

“Joneca attributes its lower prices to various mechanical
advantages, like its use of direct current and the torque of its smaller
grinder turntable.” Horsepower is a unit of power; InSinkErator argued that consumers
necessarily understand references to “horsepower” to mean “output
horsepower”—the amount of power that a disposal’s motor can provide to the
disposal’s grinding mechanism—as opposed to “input horsepower,” the electric
power used by the system as a whole. The parties offered competing evidence, including
expert declarations; Joneca argued that input power was used for rating
disposal units under Underwriters Laboratories standard UL 430.

Was using input power ratings literally false in this
context? The district court held that “[t]he advertisement unequivocally claims
that a given machine has a specific horsepower, such as 1 HP, 1 1/4 HP, 3/4 HP,
or 1/2 HP.” And it accepted a definition introduced by InSinkErator from a
national retailer’s website that described horsepower for a disposal unit as
“[t]he total power output capability from the included motor.” What about the
UL guideline? It was “plainly a safety guide for ensuring that switches and
controls can safely handle the input current drawn by a motor,” which provided
for current input testing “regardless” of horsepower designations on the motor
or accompanying packaging.

Procedural issue: what kind of review should the appellate
court give to the district court’s finding of literal falsity by necessary
implication? Joneca argued for de novo review to determine the meaning of the
ad claims. The court of appeals declined to resolve the issue; even if ad
claims should be construed de novo like contract terms, “subsidiary factual
findings bearing on construction” are reviewed only for clear error. And those
were the factual findings at issue here. The district court found that Joneca’s
“input-based interpretation d[id] not seem reasonable.” When a court construes
“technical words or phrases” by reference to “extrinsic evidence” about usage,
that “factual determination, like all other factual determinations, must be
reviewed for clear error.”

Joneca argued, nonetheless, that input horsepower “more
closely correlates to the performance of the entire waste disposer system” as
it would be used by a consumer. But that wasn’t clear error. “The district
court considered battling expert opinions speaking to these questions alongside
a wide range of supporting resources, including industry resources and a
national retailer’s website.” (The district court also found particularly
persuasive correspondence from UL engineers that “UL 430 is a safety standard
for Waste Disposers and is not meant to be used to determine the horsepower
ratings of Waste Disposers.” This might be hearsay, but hearsay can be
considered on a preliminary injunction.)

It was not clear error to find that the horsepower claims
weren’t ambiguous in context. The district court found Joneca’s proposed
interpretation implausible, “explaining that UL engineers themselves refuted
Joneca’s use of UL 430, its sole supporting reference.” Joneca argued that the
consensus among engineers, or industry usage, wasn’t relevant, but the district
court did consider the audience when it found that “Joneca had no support for
its interpretation other than an inapplicable and non-consumer-facing safety
standard.” Meanwhile, the materiality evidence supported the finding of literal
falsity to consumers, including explanations from a national retailer’s website
that “[g]arbage disposal horsepower (HP) determines what the disposal is
capable of grinding” and evidence from yet another national retailer’s website
discussing that “higher . . . HP” would mean “[f]ood waste will be ground into
finer particles.” Thus, it was not clear error to find that Joneca’s horsepower
claims referred to output horsepower by necessary implication.

Was that literally false? Joneca argued that its claims were
not sufficiently unsubstantiated to meet the standard for literal falsity,
because a literal falsehood has to be “bald-faced, egregious, undeniable, over
the top,” or “completely unsubstantiated.” But those quotes came from
discussions of “per se” falsity, as opposed to discussions of literal falsity
that were “proved by evidence.” The latter category can also be literally
false, and involves considerations of context and audience. (The Seventh Circuit’s
“bald-faced” language is an invitation to err, and raises considerations
probably better dealt with as materiality issues.) “At least when literal
falsity is shown by evidence, a complete lack of substantiation for the
opposing position—or absence of ‘conflicting evidence,’ as Joneca puts it—is
not required.”

Materiality: The district court found that horsepower was
“an inherent part of” garbage disposals because of “the importance of
horsepower to the quality and characteristics of a garbage disposal.” In
addition, InSinkErator’s “market research” showed that “consumers ranked
horsepower as one of the top purchasing considerations for garbage disposals,” and
retailers organized disposals by horsepower in shelving those products, which
“signals that horsepower is an important—if not primary—distinction used by
retailers to market [disposals] to consumers.” Retailer websites also expressly
link horsepower to the effectiveness of disposal units, e.g., “[t]he higher the
HP, the better the disposal will run.”

The court of appeals didn’t have to rule on whether the
Second Circuit’s “inherent characteristic” language was appropriate; it
rejected Joneca’s request for a requirement of “direct evidence showing how
consumers would likely react to the alleged deception”—“like surveys and
consumer declarations”—to show that a deception is material. To the contrary,
“[c]ircumstantial evidence is not only sufficient, but may also be more
certain, satisfying and persuasive than direct evidence.” There was no clear
error in finding materiality.

Joneca argued that it submitted evidence that “consumers
prefer Joneca’s disposers because of their better performance.” But the quoted customer
reviews “primarily discuss how ‘powerful’ Joneca’s units are, indicating that
consumers do care about power.” It didn’t matter that consumers were satisfied
with their Joneca units; that didn’t show that they didn’t care about
horsepower when choosing a disposal. In particular, “[b]ecause retailers
display disposals to consumers by horsepower level, it was reasonable for the
district court to infer that a false claim about a disposal’s horsepower—i.e.,
a horsepower claim that causes a disposal that lacks even the horsepower to
qualify as Medium Duty to be displayed in the Heavy Duty section—would
materially affect whether and how consumers would compare the unit to competing
products.”

Injury: The court of appeals noted with approval the Second
Circuit’s statement that “in many cases the evidence and the findings by the
court that a plaintiff has been injured or is likely to suffer injury will
satisfy the materiality standard—especially where the defendant and plaintiff
are competitors in the same market and the falsity of the defendant’s
advertising is likely to lead consumers to prefer the defendant’s product over
the plaintiff’s.” The district court found that “horsepower—and thereby falsehood—is
prominently displayed at the point-of-sale in retail shops” and reasoned that
“horsepower is commonly used to differentiate garbage disposals.” It was not
error to find that, when “a false statement is prominently displayed on a
direct competitor’s product, and sold side-by-side at the same retailer as if
to compare products and value, there is a real likelihood” of “diverted sales
or diminished goodwill.”

The district court should have presumed irreparable injury
from likely success on the merits, but its error didn’t help Joneca. That court
independently found likely irreparable injury, which was not clearly erroneous.
It apparently credited InSinkErator’s account that a retailer had awarded shelf
space to Joneca instead of InSinkErator and that Joneca’s “fake value
proposition” of inflated horsepower at a low price would influence bidding that
was in process for “private label contracts with major retailers.” But, even if
Joneca’s story had more details than InSinkErator’s, it wasn’t clear error to
side with the latter.

from Blogger http://tushnet.blogspot.com/2025/12/literal-falsity-can-exist-without-bald.html