C B Fleet Co Inc v. Smithkline Beecham ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
C.B. FLEET COMPANY, INCORPORATED,
A Virginia corporation,
Plaintiff-Appellant,
v.
No. 96-2606
SMITHKLINE BEECHAM CONSUMER
HEALTHCARE, L.P., A Delaware
limited partnership,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Virginia, at Lynchburg.
James C. Turk, District Judge.
(CA-95-48)
Argued: June 5, 1997
Decided: December 10, 1997
Before WILKINS and MICHAEL, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.
_________________________________________________________________
Affirmed by published opinion. Senior Judge Phillips wrote the opin-
ion, in which Judge Wilkins and Judge Michael joined.
_________________________________________________________________
COUNSEL
ARGUED: Rodney F. Page, ARENT, FOX, KINTNER, PLOTKIN
& KAHN, Washington, D.C., for Appellant. Kenneth Allen Plevan,
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, L.L.P., New
York, New York, for Appellee. ON BRIEF: Peter S. Reichertz,
ARENT, FOX, KINTNER, PLOTKIN & KAHN, Washington, D.C.,
for Appellant. Bruce J. Goldner, SKADDEN, ARPS, SLATE,
MEAGHER & FLOM, L.L.P., New York, New York; William B.
Poff, Sara B. Winn, WOODS, ROGERS & HAZLEGROVE, P.L.C.,
Roanoke, Virginia, for Appellee.
_________________________________________________________________
OPINION
PHILLIPS, Senior Circuit Judge:
This is an appeal by C.B. Fleet Company, Inc. (Fleet), a manufac-
turer of feminine hygiene products, from a judgment dismissing for
failure of proof its Lanham Act false advertising claims against a
competitor, SmithKline Beecham Consumer Healthcare, L.P. (Smith-
Kline). We affirm.
I.
The events leading to this litigation began in 1991 when Smith-
Kline, concerned about a declining market for its principal douche
product, hired a marketing consultant to devise ways to truly differen-
tiate its product from competing brands and so improve its market
position. As a result of this consultation, SmithKline planned two
projects. First, it would re-design and seek to patent a new nozzle for
its Massengill douche in order to make its copying more difficult.
Then it would directly attack its principal competition, Fleet's Sum-
mer's Eve douche, by an advertising campaign designed to persuade
consumers that Massengill douches cleansed better than did the Sum-
mer's Eve douche.
In 1995, after the douche nozzle had been redesigned by Human
Factors, an ergonomics engineering firm, SmithKline began circulat-
ing with its product a freestanding advertising insert coupon which
claimed that the Massengill douche was "Now Designed for Better
Cleansing." No testing of the redesigned douche for specific cleansing
properties preceded its marketing with the advertising insert.
2
In preparation for its follow-up direct attack upon Fleet's Sum-
mer's Eve douche, SmithKline employed Product Investigation, an
independent testing laboratory, to devise a means of testing the spe-
cific cleansing properties of douches. At the time, no such test gener-
ally recognized for its efficacy had been developed for use in the
industry. Product Investigations came up with a testing procedure
using a blue-dye marker which was then used in tests involving
SmithKline's old-nozzle douche, its new-nozzle model, and the Sum-
mer's Eve douche. In quite general terms, the human-subject tests
ultimately used involved a preparatory cleansing process, followed by
the insertion of a blue-dye marker, after which the test douches were
used and their relative efficacies in removing the marker-fluid mea-
sured. The ultimate test used employed as the specific cleansing
agents the "extra cleansing vinegar and water" solutions used respec-
tively in the Massengill (SmithKline) and Summer's Eve (Fleet) dis-
posable douches. The results, as reported by the Product
Investigations testers, showed that in terms of their relative efficacies
in removing quantities of the test marker fluids, both the old and new
Massengill douches outperformed the Summer's Eve douche, though
the old Massengill outperformed the new-nozzle model.
Following completion of these tests, SmithKline ran a television
advertisement claiming that "Massengill cleanses better than Sum-
mer's Eve." This was later withdrawn in conjunction with Smith-
Kline's consent to withholding both advertising claims pending final
decision in this litigation. Instead, SmithKline proposed to use the
more specific advertising claim that "Massengill Extra Cleansing Vin-
egar and Water Douche Cleanses Better than Summer's Eve Extra
Cleansing Vinegar and Water Douche."
Fleet then brought this action against SmithKline alleging viola-
tions of § 43(a) of the Lanham Act, 15 U.S.C.§ 1125(a), by the use
of false advertising claims.1 Specifically challenged were the earlier
"Now Designed for Better Cleansing" ("improved design") claim and
the later proposed "Massengill Extra Cleansing Vinegar and Water
_________________________________________________________________
1 The action also included a state-law claim of product disparagement
that was abandoned along the way, leaving only the Lanham Act claim
for adjudication.
3
Douche Cleanses Better than Summer's Eve Extra Cleansing Vinegar
and Water Douche" ("comparative superiority") claim.
The action was tried to the district court sitting with an advisory
jury pursuant to Rule 39(c), Fed. R. Civ. P. The three-day trial that
ensued was mainly devoted to the parties' conflicting expert opinion
testimony and extensive documentary evidence respecting the
claimed falsity of the two challenged claims.
Fleet's evidence consisted essentially of the testimony of two
expert witnesses who, with supporting documentary evidence, chal-
lenged the scientific reliability of the blue-dye testing procedures
upon which SmithKline concededly based its "comparative superior-
ity" advertising claim, and the essential truth of the "improved
design" claim.
Dr. Frank Dorsey, a statistician, made a number of criticisms of the
blue-dye test methodology used by SmithKline's testers. On that
basis, he questioned the reliability of the test results it produced.
Sarah Post, a Vice President and Director of Administration of
Fleet, testified to the conduct by Fleet of two tests--a "bovine mucus"
test and a "detergency study"--which, she opined, drew in question
SmithKline's blue-dye test results. The detergency study, performed
in 1985, consisted of dipping cloths stained in blood in douche solu-
tions then in use by the two competitors. The bovine mucus test, from
1991, consisted of spinning bovine cervical mucus in douche solu-
tions then in use by the competitors. Neither test used the vinegar and
water solutions which were the subject of the "superior product"
claim at issue.
As to the "improved design" claim, Fleet's witnesses pointed out
that it was first made by SmithKline before any clinical tests were
made of the Massengill douche's performance with the redesigned
nozzle, and that the later blue-dye studies actually revealed that the
later model did not cleanse as efficiently in terms of material removal
as did the older model. This, they opined, indicated that the new
Massengill douche was not, as claimed, "now designed for better
cleansing."
4
SmithKline, in defense, presented the testimony of four expert wit-
nesses: Dr. Morris Shelanski, who as director of Products Investiga-
tion, had developed and performed the blue-dye studies; Dr. Paul
Starkey, SmithKline's Medical Director; Dr. Donald Pittaway, a
gynecologist on the faculty of the Bowman Gray Medical Center; and
Dr. James Leyden, a medical doctor on the faculty of the University
of Pennsylvania School of Medicine. Both of the last two witnesses
were paid consultants to SmithKline.
As to the "comparative superiority" claim, Dr. Shelanski, who
developed and supervised conduct of the blue-dye studies, described
the test methodology's design, purpose, and use, and gave as his opin-
ion that the reported results showing that the Massengill douche
cleansed better than did the Summer's Eve douche were scientifically
reliable. His opinion was supported by those of Drs. Pittaway and
Leyden based upon their studies of the test's methodology, conduct,
and reported results. The test's reliability was also supported by the
testimony of Dr. Starkey in refuting Dr. Dorsey's specific criticisms
of the Shelanski methodology.
As to the "improved-design" claim, SmithKline witnesses
described the new nozzle design, emphasizing those features that
improved its mechanical performance over that of the old model. Spe-
cifically, they noted that it has deeper side channels which improved
outflow, a more rounded tip which made insertion easier, and
improved flow dynamics which made the douching process more gen-
tle and, possibly, safer. As to its actual cleansing properties, as mea-
sured by the blue-dye studies, they conceded that it did not perform
better than did the earlier design (as they had hoped it would) though,
per those studies, it did still outperform the Summer's Eve douche in
this respect.
Following conclusion of the evidence, the advisory jury returned a
verdict in favor of Fleet, finding false both of the advertising claims.
The district court, however, did not accept the verdict, as was its con-
ceded prerogative, see 9 Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 2335 at 211-12 (2d ed. 1994), and,
instead, found for SmithKline as to both of the advertising claims.
5
In a brief memorandum opinion, the court concluded that Fleet had
failed to carry its burden to prove that either advertising claim was
false in violation of § 43(a) of the Lanham Act.
As to the "comparative superiority" claim, the court expressly cred-
ited the expert opinions of SmithKline's witnesses over those of
Fleet's expert as to the reliability of the blue-dye studies in demon-
strating the superior cleansing efficacy of the Massengill douche. The
court found "not only that the tests . . . were solid, even exceptional,
clinical studies, but also that they clearly supported SmithKline's
advertised claim."
As to the "improved design" claim, the court found, concentrating
on evidence that the redesigned nozzle had mechanical features which
"changed the flow dynamics . . . to make the douching process more
gentle and effective," that the "now designed for better cleansing"
claim had not been proven false.
Having found against Fleet on the merits, the court denied its claim
that as "prevailing party" in an "exceptional case," it was entitled
under 15 U.S.C. § 1117(a) (1997), to an award of attorney fees.
This appeal followed.
II.
The false advertising provision at issue, § 43(a) of the Lanham Act,
15 U.S.C. § 1125(a), provides in pertinent part:
Any person who, on or in connection with any goods or ser-
vices . . . uses in commerce any word, term, name, symbol,
or device, or any combination thereof, or any . . . false or
misleading description of fact, or false or misleading repre-
sentation of fact, which--
....
(B) in commercial advertising or promotion, mis-
represents the nature, characteristics, qualities, or
6
geographic origin of his or her or another person's
goods, services, or commercial activities,
shall be liable in a civil action by any person who believes
that he or she is or is likely to be damaged by such act.
15 U.S.C. § 1125(a)(1) (1997). Under this provision, both false adver-
tising of a competitor's products and false advertising of one's own
products are actionable. To constitute a violation of § 43(a), by either
type of advertisement "the contested statement or representation must
be either false on its face or, although literally true, likely to mislead
and to confuse consumers given the merchandising context." Mylan
Labs., Inc. v. Matkari, 7 F.3d 1130, 1138 (4th Cir. 1993), cert. denied,
510 U.S. 1197 (1994). If the advertising claim is literally false, "the
court may enjoin the use of the claim without reference to the adver-
tisement's impact on the buying public." McNeil-P.C.C., Inc. v.
Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir. 1991) (quota-
tion omitted). Fleet's challenge to the advertising claims here in issue
is of literal falsity. Whether an advertisement is literally false is an
issue of fact. See L & F. Prods. v. Procter & Gamble Co., 45 F.3d
709, 712 (2d Cir. 1995).
Fleet challenges the district court's determinations of no literal fal-
sity on the grounds that the court imposed upon Fleet a wrong--
overly stringent--"burden of proof" on the issue, and, relatedly, that
both of the ultimate fact findings were clearly erroneous.
We take these in turn.
A.
In addressing the "comparative superiority" claim, the district court
announced that Fleet's burden was to prove affirmatively that the
asserted fact of superior cleansing ability was literally false. In doing
so, the court differentiated between advertising claims which in
expressly or impliedly asserting a favorable fact about a product, fur-
ther assert that it is based upon or supported by validating tests ("tests
show" claims) and those that make no reference to validating tests but
simply assert baldly a favorable fact about the advertiser's goods or
7
services ("bald" claims).2 According to the court, when a "tests show"
claim is challenged, the challenger must prove only that the refer-
enced test did not validate the claim. When a "bald" claim is chal-
lenged, a "higher" burden is imposed to prove that the favorable fact
asserted is itself false. The court then treated the"comparative superi-
ority" claim as a "bald" claim to which the"higher" burden of proof
applied and, presumably applying it, found the claim of superiority
not proven to be literally false.
Fleet says that in applying this "higher" burden, the court commit-
ted prejudicial legal error requiring reversal as to the "comparative
superiority" claim. Specifically, Fleet contends that, in the first place,
the "comparative superiority" claim is not properly treated as a "bald"
claim since it necessarily implied, though it did not expressly assert,
validation by a comparative test. Next, it says that even if it were
properly treated as a "bald" claim, the "burden of proof" as to such
a claim is not properly considered to be a "higher" one, as the district
court assumed. We disagree on the first point, and think the second
misunderstands the district court's use of the term.
First off, we agree with the district court's basic point that, as sev-
eral of our sister circuits have held, differentiation between the two
types of claims may be required in order to determine what must be
proven false and how that can be done. When an advertising claim of
favorable fact either expressly or impliedly asserts that the fact is test-
or study-validated, the fact of the validation becomes an integral and
critical part of the claim. Such a claim may therefore be proven liter-
ally false by showing only that the test asserted to validate it did not
in fact do so. On the other hand, where the claim is made baldly, with
no assertion of test or study validation, its literal falsity may only be
proven by proof that the favorable fact baldly asserted is false. See,
e.g., Rhone-Poulenc Rorer Pharms., Inc. v. Marion Merrill Dow, Inc.,
93 F.3d 511, 514-15 (8th Cir. 1996) (recognizing different "stan-
dards" of proof for the two types of advertising claims); BASF Corp.
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2 The district court, employing other short-hand descriptives used by
some courts to differentiate the two types, referred to the "tests show"
type as "establishment," the "bald" typeas "non-establishment." See, e.g.,
BASF Corp. v. Old World Trading Co., Inc., 41 F.3d 1081, 1090 (7th Cir.
1994).
8
v. Old World Trading Co. Inc., 41 F.3d 1081, 1091 (7th Cir. 1994)
(recognizing that proof required to prove literal falsity "will vary
depending upon the statement made"--whether it does or does not
make reference to validating tests); Castrol, Inc. v. Quaker State
Corp., 977 F.2d 57, 62-63 (2d Cir. 1992) (holding that falsity of "tests
show" claim may be proven by "showing that the tests . . . were not
sufficiently reliable to permit one to conclude with reasonable cer-
tainty that they established the proposition"; falsity of "bald" claim
may be proven only by evidence affirmatively showing its falsity).
While Fleet quibbles to some extent with whether the need and jus-
tification for this differentiation is settled in decisional law, we
believe it is soundly based, and we take this opportunity to adopt it
for use in this circuit.3 Fleet's principal contention is that even if
applicable as a general rule, it was not properly applied here. The
"comparative superiority" claim here, Fleet says, necessarily implied
that it was validated by some clinical test; it was not therefore prop-
erly treated as a "bald claim" which could only be proven literally
false by affirmative proof of its falsity. Here, instead, the argument
goes, Fleet should only have been required to prove that the blue-dye
tests which were revealed in litigation to be the basis of the claim
"were not sufficiently reliable to permit [the conclusion] with reason-
able certainty that they established the proposition." See Castrol, 977
F.2d at 62-63. We reject that contention.
First, we think that whether an advertising claim implicitly, though
not expressly, asserts that it is test-validated must be considered a
question of fact whose resolution is subject to clearly erroneous
review. Here, the claim contained no express assertion of test valida-
tion nor is there any language in the text that implies it. We think the
trial court need look no further in making this threshold determina-
tion, and we cannot declare its resulting finding of no implied test so
_________________________________________________________________
3 Though we adverted in Mylan Laboratories, 7 F.3d at 1137-38, to the
differentiation principle as it had been applied in the Second Circuit, we
did not have occasion there to apply it directly in reviewing a dismissal
under Rule 12(b)(6), Fed. R. Civ. P. Mylan surely left open the possibil-
ity of eventual formal adoption of the principle by this court, and indeed
has been cited by other courts as having already applied it. See Rhone-
Poulenc, 93 F.3d at 514-15. We make its adoption express here.
9
implausible as to be clearly erroneous. See Anderson v. City of Besse-
mer City, 470 U.S. 564, 575 (1985). The fact that it was later revealed
in litigation that the claim was test-based does not alter this. The rele-
vant question for determining the required proof is whether the adver-
tisement made an assertion of test-validation to the consumer public.
If it was not asserted in the advertised claim, it was not made part of
the claim being challenged as false. If it is later revealed, through dis-
covery or otherwise, that the claim was test-based, the claimant obvi-
ously may challenge the test's reliability in attempting to prove false
the advertised fact, but falsity of that fact remains the required object
of proof. So, we find no error in the district court's threshold determi-
nation that, because the "comparative superiority" claim was not a
"tests show" type, Fleet's burden was to prove affirmatively that the
advertised claim of "comparative superiority" was literally false.
As to the district court's characterization of the burden of proof in
"bald" claim cases as being "higher" than that in "tests show" cases,
we understand the court not to have intended "higher" in the sense of
"greater than the normal preponderance-of-evidence civil burden."
We take the court to have meant only that proving the falsity of a fact
asserted in an advertising claim may well be more difficult than
merely proving that a test asserted to validate the claim is not suffi-
ciently reliable to do so. So understood, the court did not legally err
in imposing the former burden upon Fleet here.
B.
In addition to this burden of proof contention respecting the "com-
parative superiority" claim, Fleet contends that the district court's
ultimate finding that the claim was not false is clearly erroneous. Two
specific grounds are urged. First, and simply, that the finding is
against the overwhelming weight of the evidence. Relatedly, that it
was based upon evidence respecting the blue-dye tests which "fail[s]
to meet the requirements for scientific evidence" established in
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
Neither ground has merit.
Our standard of review of district court fact findings is greatly def-
erential under controlling authority.
10
If the district court's account of the evidence is plausible in
light of the record viewed in its entirety, the court of appeals
may not reverse it even though convinced that had it been
sitting as the trier of fact, it would have weighed the evi-
dence differently. Where there are two permissible views of
the evidence, the factfinder's choice between them cannot
be clearly erroneous.
Anderson, 470 U.S. at 573-74. Deference may be at its peak where
the dispositive findings are based upon credibility choices between
conflicting testimony of witnesses each of whom gives "a coherent
and facially plausible story that is not contradicted by extrinsic evi-
dence"; in such cases, such findings "if not internally inconsistent, can
virtually never be clear error." Id. at 575. And this court has empha-
sized that we "should be especially reluctant to set aside a finding
based on the trial court's evaluation of conflicting expert testimony."
Hendricks v. Central Reserve Life Ins. Co., 39 F.3d 507, 513 (4th Cir.
1994).
Here, the three-day trial to the court was devoted in the main to
expert opinion evidence respecting the scientific reliability of the
blue-dye test upon which the "comparative superiority" claim conced-
edly was based. As went that test, so went the truth or falsity of the
claim asserted on its basis. For SmithKline, four expert witnesses
described the test and opined that it and the results it produced were
scientifically valid. For Fleet, one expert opined directly in opposition
to those opinions that there were flaws in the test methodology that
drew in question, indeed undercut, its reliability. Another expert
described tests done by Fleet which she opined achieved results that
contradicted those obtained by the blue-dye tests. The district court
found on this evidence that SmithKline's experts were well qualified
by training and experience to testify on douche cleansing and prod-
ucts. The court stated: "This testimony and evidence indicated not
only that the tests used by SmithKline were solid, even exceptional
clinical studies, but also that they clearly supported SmithKline's
advertised claim." (JA 14.) In so finding, the court necessarily chose
to credit those witnesses' accounts over any conflicting opinions
advanced by Fleet's experts.
We have studied the opposing testimony, including the critical
opposing opinions as to the reliability of the studies. The most that
11
possibly could be said in support of Fleet's position is that its experts'
opinions are equally as coherent and plausible as are those of Smith-
Kline's experts, and that neither is "contradicted by extrinsic evi-
dence." In such circumstances, we cannot declare clearly erroneous
the district court's acceptance of one and rejection of the other of two
equally "permissible views of the evidence." Anderson, 470 U.S. at
574-75.
Fleet's Daubert contention is also unavailing. As SmithKline
points out, Fleet made no Daubert objection to admission of the
extensive testimony of SmithKline's expert witnesses about the blue-
dye tests' methodology, conduct, and results. Fleet counters that it
need not have: that its challenge here is not to the admissibility of this
evidence but to its insufficiency when tested by Daubert principles to
support the district court's finding of the tests' scientific reliability.
That cannot be right. Daubert deals with the admissibility of this kind
of "scientific" evidence. See Daubert, 509 U.S. at 582, 585 (so identi-
fying dispositive issue). As with all rules governing admissibility, its
application to particular evidence is to be raised and resolved in the
trial court. See id. at 592-97 (outlining"gatekeeper" role of trial court
in applying rule). There the proponent can attempt upon objection to
lay the proper foundation for admitting the evidence and the objector
can challenge its sufficiency. See id. In this way the question of
admissibility can be fairly resolved as a threshold matter. Fleet essen-
tially would have this court engage in a first instance application of
Daubert principles on a record completely inadequate for the purpose.
This cannot be done under the guise of a challenge to the substantive
sufficiency of this evidence.
C.
Fleet challenges the district court's finding that the "improved
design" claim was not literally false on the sole ground that the find-
ing is clearly erroneous.4 We disagree.
_________________________________________________________________
4 Though Fleet indicates awareness that non-comparative advertising
claims as well as comparative claims may involve express or implicit
assertions of test-validation, it makes no contention that the non-
comparative "improved design" claim here implied test-validation
thereby invoking the "tests show" proof requirement. (See Appellant's
Br. 32-35.)
12
The issue here boils down to whether in considering SmithKline's
advertised claim that its Massengill douche was"Now Designed for
Better Cleansing," "better cleansing" should be considered to pertain
only to its specific cleansing function--material evacuation--or
should be considered to describe the total douching process.
Fleet contends that, viewed from the consumer public's viewpoint,
it should be confined to the specific cleansing function, to how well
it performed the critical evacuation function. So confined, Fleet points
out, SmithKline's own blue-dye tests inarguably demonstrate the
claim's literal falsity, hence clear error in the district court's finding
of no falsity. For, as SmithKline concedes, those tests showed that the
new-nozzle douche did not perform the core material evacuation
function as well as did its old-nozzle douche.
To the contrary, SmithKline contends, and the district court
accepted the proposition, that "designed for better cleansing" should
be considered to pertain to the total douching process. So considered,
its truth as advertisement must be assessed in light of evidence dem-
onstrating other, mechanical, improvements in the new nozzle design
which made the douching process gentler and, possibly, safer to the
user. On this aspect of the new design, there was, again, conflicting
opinion evidence. SmithKline's witnesses extolled the virtues of
friendlier consumer use, as consumers would view the matter, brought
about by the improved mechanical design features. Fleet's witnesses,
in opposition, downplayed the claimed beneficial effects.
Here again, confronted with conflicting opinion evidence on these
fact issues--how the consumer public would understand the claim
and whether the new design did make for better cleansing if the terms
were broadly understood--the district court chose to credit the testi-
mony of SmithKline's witnesses over that of Fleet's. Here again,
reviewing that finding, we cannot declare clearly erroneous the dis-
trict court's choice between at least equally plausible conflicting opin-
ions on these fact issues.
D.
Because we affirm the district court's decision rejecting on the
merits both of Fleet's claims of false advertising, we also affirm the
court's denial of Fleet's claim for attorney fees.
AFFIRMED
13