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Boltex Manufacturing Co., L.P. v. ULMA Piping USA Corp.

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

August 9, 2019

BOLTEX MANUFACTURING COMPANY, L.P., et al, Plaintiffs,
v.
ULMA PIPING USA CORP., et al, Defendants.

          MEMORANDUM & ORDER

          ANDREW S. HANEN UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion for Summary Judgment on Traceability (Doc. No. 208) filed by Plaintiff Weldbend Corporation (hereinafter referred to as "Weldbend" or "Plaintiff').[1] The Defendants Ulma Forja S. Coop, and Ulma Piping USA Corp. (hereinafter referred to as "Ulma" or "Defendants") have filed a Response (Doc. No. 217), and Plaintiff has filed a Reply (Doc. No. 226).

         I. Background

         The Court previously wrote more detailed background sections in its prior summary judgment orders in this case (Doc. Nos. 189 & 193) and will only reproduce an abbreviated version here.

         This dispute arises between carbon steel flange manufacturers. Plaintiff and Defendants sell their flanges to distributors who in turn sell the flanges to customers. Defendants allege that Weldbend falsely advertises that its goods are sold with "unquestionable traceability" in violation of § 43(a) of the Lanham Act, codified at 15 U.S.C. § 1125(a).[2] (Doc. No. 68 at 30). Weldbend uses its traceability system to "identify and track flanges from Weldbend's receipt of the incoming material through finishing and inventory placement." (Doc. No. 208 at 2). In other words, Weldbend tells its customers that it keeps track of the originating forges and steel mills from which all of the materials that comprise its flanges originate.

         In the last round of summary judgment motions, the parties disputed whether this "traceability" claim was properly pleaded (or, more specifically, whether it was pleaded at all) and whether Weldbend had moved for summary judgment on the claim if it was pleaded. (See Doc. No. 110 at 3; 129 at 19-20). The Court held in its prior order that Defendants had sufficiently pleaded the "traceability" claim as a separate form of false advertisement. (Doc. No. 68 ¶ 58). This Court also found that Weldbend had not moved for summary judgment on this issue but granted them leave to do so. (Doc. No. 193 at 19).

         The parties have fully briefed the issue, and it is now ripe for decision.

         II. Standards of Review

         A. Summary Judgment

         Summary judgment is warranted "if the 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). "The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact." Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, Ml U.S. 317, 322-25 (1986)). Once a movant submits a properly supported motion, the burden shifts to the non-movant to show that the Court should not grant the motion. Celotex, Ml U.S. at 321-25.

         The non-movant then must provide specific facts showing that there is a genuine dispute. Id. at 324; MatsushitaElec. Indus. Co. v. Zenith Radio Corp., M5 U.S. 574, 587 (1986). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., Ml U.S. 242, 248 (1986). The Court must draw all reasonable inferences in the light most favorable to the nonmoving party in deciding a summary judgment motion. Id. at 255. The key question on summary judgment is whether a hypothetical, reasonable factfinder could find in favor of the nonmoving party. Id. at 248.

         B. False Advertisement Under the Lanham Act

         "The Lanham Act was enacted to protect persons engaged in such commerce against unfair competition." Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1382-84 (5th Cir. 1996) (internal quotation marks omitted). To state a prima facie case of false advertising, 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). "The failure to prove the existence of any element of the prima facie case is fatal to the plaintiffs claim." Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir. 2000).

         "To obtain money damages for false advertising under § 43(a) of the Lanham Act, the plaintiff must first demonstrate that the advertisement was (1) literally false; or (2) likely to mislead and confuse customers." IQProds. Co. v. PennzoilProds. Co.,305 F.3d 368, 375 (5th Cir. 2002). "For a statement to be literally false, the statement must be 'false on its face.'" Derrick, 2017 WL 3456920, at *5. "If the statement at issue is shown to be literally false, the court must assume that it actually misled consumers, without requiring any evidence of such deception from the plaintiff." IQ Prods., 305 F.3d at 375; see also Pizza Hut, 227 F.3d at 497 ("[P]laintiff need not introduce evidence on the issue of the impact the statements had on customers."). On the other hand, "if the statement is . . . misleading or ambiguous ... the plaintiff must demonstrate actual deception." IQ Prods., 305 F.3d at 375. "The statements at issue ...


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