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Boltex Manufacturing Company, L.P. v. Galperti, Inc.

United States District Court, S.D. Texas, Houston Division

June 21, 2019

Boltex Manufacturing Company, L.P., and Weldbend Corporation, Plaintiffs,
v.
Galperti, Inc. and Officine Nicola Galperti e Figlio S.p.A. Defendants.

          MEMORANDUM OPINION AND ORDER

          GRAY H. MILLER, SENIOR UNITED STATES DISTRICT JUDGE

         Pending before the court is defendants Officine Nicola Galperti e Figlio S.p.A. (“ONG”) and Galperti, Inc.'s (“Galperti”) (collectively, “Defendants”) motion for summary judgment. Dkt. 146. Plaintiffs Boltex Manufacturing Company, L.P. (“Boltex”) and Weldbend Corporation (“Weldbend”) (collectively, “Plaintiffs”) responded. Dkt. 191. Defendants replied. Dkt. 224. Also pending before the court is Plaintiffs' motion for summary judgment. Dkt. 130. Galperti responded.[1] Dkt. 178. Plaintiffs replied. Dkt. 214. Having considered the motions, responses, replies, and applicable law, the court is of the opinion that both motions should be GRANTED.

         I. Background

         This is a false advertising and unfair competition case. Dkt. 1 at 1-3. This dispute centers on the process of normalization. Id. at 1, 8. Normalization is a costly heat treatment process that changes the physical composition of carbon steel to increase its toughness and ductility. Id. The American Society of Testing and Materials sets out standards that require manufacturers to apply heat treatment to certain types of flanges. Id. at 8-9. There are several different methods available for heat treatment, including normalization. Id. at 9. Although it is not required by the standards, many customers require that certain flanges be normalized. Id.

         Both Plaintiffs and Defendants manufacture carbon steel flanges. Id. at 1-3. Plaintiffs sued Defendants for false advertising and unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a), as well as common law unfair competition. Id. at 23. Plaintiffs allege that Defendants advertise their flanges as “normalized” when they are not. Specifically, Plaintiffs allege that Defendants falsely advertise when they: (1) stamp their flanges as normalized; (2) indicate normalization in a Mill Test Report; (3) advertise their flanges in catalogs, brochures, price lists, and web sites of third party distributors of Defendants' flanges; and (4) indicate that their flanges were normalized in emails with potential customers. Id. at 11; Dkt. 77-1 at 9; Dkt. 77-2 at 7-8.

         Galperti counterclaimed that: (1) Plaintiffs Boltex and Weldbend falsely advertised their products as “Made in the USA” and/or “American Made”; (2) Weldbend made misrepresentations regarding the “traceability” of its flanges and yield strength; and (3) Boltex made misrepresentations in the Reference Manual published on its website.[2] Dkt. 46. Both parties have moved for summary judgment. Dkt. 146; Dkt. 130.

         II. Legal Standard

         A court shall grant summary judgment when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for the nonmoving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548 (1986). If the moving party meets its burden, the burden shifts to the non-moving party to set forth specific facts showing a genuine issue for trial. Fed.R.Civ.P. 56(e). The court must view the evidence in the light most favorable to the non-movant and draw all justifiable inferences in favor of the non-movant. Envtl. Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir. 2008).

         III. Applicable law

         To prove a false advertising claim under the Lanham Act, a plaintiff must establish: (1) a false or misleading statement of fact about a product; (2) such a statement either deceived, or had the capacity to deceive a substantial segment of potential customers; (3) the deception is material, in that it is likely to influence the consumer's purchasing decision; (4) the product is in interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the statement at issue. Derrick Petrol. Servs. v. PLS, Inc., Civil Action No. H-14-1520, 2017 WL 3456920, at *5(S.D. Tex. Aug. 11, 2017) (Rosenthal, J.) (internal alterations omitted) (quoting Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir. 2000)). “The failure to prove the existence of any element of the prima facie case is fatal to the plaintiff's claim.” Id.

         IV. Defendant's Motion for Summary Judgment

         A. False Advertising in Violation of the Lanham Act

         Defendants argue that Plaintiffs' claim for false advertising in violation of the Lanham Act cannot survive summary judgment because, inter alia, Plaintiffs cannot show injury. Dkt. 146 at 12-31.

         Under the Lanham Act, a plaintiff must establish that he has been injured or is likely to be injured. Derrick Petrol. Servs., 2017 WL 3456920, at *5. To prove injury, a plaintiff must provide evidence that consumers would have bought the plaintiffs' products instead of those of the defendant in the absence of the allegedly false and misleading statements. IQ Prod. Co. v. Pennzoil Prods. Co., 305 F.3d 368, 376 (5th ...


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