Louisiana-Pacific Corp. v. James Hardie Building Prods. , 928 F.3d 514 ( 2019 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 19a0137p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
LOUISIANA-PACIFIC CORPORATION, ┐
Plaintiff-Appellant, │
│
> No. 18-5913
v. │
│
│
JAMES HARDIE BUILDING PRODUCTS, INC., │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 3:18-cv-00447—Jon Phipps McCalla, District Judge.
Decided and Filed: June 28, 2019
Before: COOK, McKEAGUE, and WHITE, Circuit Judges.
_________________
COUNSEL
ON BRIEF: Samuel F. Miller, Nicholas R. Valenti, A. Grace Van Dyke James, MILLER
LEGAL PARTNERS PLLC, Nashville, Tennessee, for Appellant. Thomas Anthony Swafford,
Rocklan W. King, III, Maia T. Woodhouse, ADAMS AND REESE LLP, Nashville, Tennessee,
Tara L. Swafford, THE SWAFFORD LAW FIRM, Franklin, Tennessee, for Appellee.
_________________
OPINION
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COOK, Circuit Judge. Can termites, woodpeckers, and other pests damage engineered-
wood building siding? According to the district court, maybe. And that “maybe” isn’t enough to
justify granting Louisiana-Pacific a preliminary injunction to stop its competitor from advertising
Louisiana-Pacific’s siding as vulnerable to pest damage. Louisiana-Pacific needed to show that
No. 18-5913 Louisiana-Pacific Corp. v. James Hardie Building Prods. Page 2
it would likely succeed in proving the advertisement unambiguously false under the Lanham Act
and the Tennessee Consumer Protection Act. It did not, so we affirm the district court’s denial
of Louisiana-Pacific’s motion.
I.
Louisiana-Pacific Corporation and James Hardie Building Products, Incorporated
compete for market share in the building siding industry. Louisiana-Pacific produces
“engineered-wood” siding—wood treated with zinc borate, a preservative that poisons termites;
Hardie sells fiber-cement siding. To demonstrate the superiority of its fiber cement, Hardie
initiated an advertising campaign called “No Wood Is Good,” proclaiming that customers ought
to realize that all wood siding—however “engineered”—is vulnerable to damage by pests. Its
marketing materials included (1) digitally-altered images and video of a woodpecker perched in
a hole in Louisiana-Pacific’s siding; and (2) nearby text boasting both that “Pests Love It,” and
that engineered wood is “[s]ubject to damage caused by woodpeckers, termites and other pests.”
The campaign prompted Louisiana-Pacific to sue Hardie, alleging that these ads (and one
other) violated federal and state prohibitions on false advertising, and move for a preliminary
No. 18-5913 Louisiana-Pacific Corp. v. James Hardie Building Prods. Page 3
injunction. The court heard three days of testimony before partially granting and partially
denying Louisiana-Pacific’s motion. Louisiana-Pacific appealed the adverse rulings.
II.
As relevant here, the court determined that Louisiana-Pacific failed to show a strong
likelihood of success on the merits of its false advertisement claims and denied the company an
injunction. R. 171, PageID 6519–20. We temper our deference to the district court’s denying a
preliminary injunction by reviewing any legal conclusions made in the process de novo, findings
of fact for clear error, and its ultimate decision for abuse of discretion. Hall v. Edgewood
Partners Ins. Ctr., Inc., 878 F.3d 524, 527 (6th Cir. 2017).
Courts reserve the extraordinary remedy of a preliminary injunction for those cases where
it is necessary to preserve the status quo pending a final determination of the merits. See Winter
v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). In deciding whether to issue an injunction,
a district court weighs four factors: “(1) whether the movant has a strong likelihood of success on
the merits; (2) whether the movant would suffer irreparable injury absent the injunction; (3)
whether the injunction would cause substantial harm to others; and (4) whether the public
interest would be served by the issuance of an injunction.” S. Glazer’s Distribs. of Ohio, LLC v.
Great Lakes Brewing Co., 860 F.3d 844, 849 (6th Cir. 2017) (quotation omitted). As long as a
plaintiff demonstrates some likelihood of success on the merits, a court should balance rather
than tally these factors. Id. But our cases warn that a court must not issue a preliminary
injunction where the movant presents no likelihood of merits success. Id.; see also Winnett v.
Caterpillar, Inc., 609 F.3d 404, 408 (6th Cir. 2010).
III.
Like the district court, we begin our analysis by assessing Louisiana-Pacific’s likelihood
of success. City of Pontiac Retired Emps. Ass’n v. Schimmel, 751 F.3d 427, 430 (6th Cir. 2014).
To prove false advertising under the Lanham Act, a plaintiff must first establish that the
defendant made “a false or misleading representation of fact” about a product. 15 U.S.C.
§ 1125(a)(1)(B). Similarly, to prevail on a statutory disparagement claim under the Tennessee
Consumer Protection Act—a state law analog to a false advertising Lanham Act claim—a
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plaintiff must prove that the defendant made “false or misleading representations of fact.” Tenn.
Code. Ann. § 47-18-104(b)(8). Under the Lanham Act, if a statement is “literally false,” we
presume that it actually deceived consumers. Wysong Corp. v. APN, Inc., 889 F.3d 267, 270–71
(6th Cir. 2018). If a statement is merely “misleading,” then Louisiana-Pacific must prove that it
deceived a “significant portion” of reasonable consumers. Id. at 271. Beginning with this
element, Louisiana-Pacific maintains that both Hardie’s woodpecker images and statements that
“Pests Love It” are either literally false, or true but misleading.
A. Woodpecker Imagery
While inspecting a Hardie installation one day, a Hardie Technical Sales Representative
noticed that a neighboring home fitted with Louisiana-Pacific siding sported a fist-sized hole.
He took a few photographs of the damage and sent them to Hardie’s head of marketing, who
forwarded them to the company’s advertising agency. The agency incorporated one photograph
into Hardie’s “No Wood Is Good” campaign—sharpening the image’s colors, darkening the
interior of the hole to make it appear deeper, and superimposing a woodpecker. Louisiana-
Pacific contends that these digital alterations make the photograph literally false.
We disagree. The Lanham Act doesn’t require advertisers to lie in wait, cameras in hand,
for an actual woodpecker to drum away at a house’s siding. Reasonable consumers know that
marketing involves some level of exaggeration, and some amount of digital retouching to tell a
story. See Wysong, 889 F.3d at 270–71. Here, neither party contests that the photograph depicts
a real hole in Louisiana-Pacific’s siding.1 And no reasonable consumer would expect that Hardie
caught a woodpecker in flagrante delicto.
Further, the advertisement fairly represents engineered wood’s susceptibility to
woodpecker damage, implying that these birds can drum holes in engineered-wood siding.
Louisiana-Pacific’s corporate representative testified that the company had never tested its
siding’s woodpecker resilience, had no data to support any assertion “that our product is resistant
to some level against woodpecker damage,” and “can’t say [woodpecker damage] won’t happen
1Although Louisiana-Pacific challenges the expert’s qualifications to opine on the source of the hole, he
testified to thirty-five years of experience removing wildlife from homes and businesses, including thousands of
cases involving woodpeckers. The court therefore did not abuse its discretion by crediting the expert’s account.
No. 18-5913 Louisiana-Pacific Corp. v. James Hardie Building Prods. Page 5
. . . . [I]t’s possible.” In contrast, Hardie proffered expert evidence that the picture conveyed an
accurate message—namely, that a woodpecker probably created the photographed hole, and that
woodpeckers often damage wood-based siding. Thus, though its digital enhancements might,
colloquially speaking, render the image “false,” they are not the sort of literal falsity the Lanham
Act targets. See Wysong, 889 F.3d at 270–71.
Because Louisiana-Pacific proffered no evidence that the photographs misrepresent
woodpecker behavior, see Innovation Ventures, LLC v. N.V.E., Inc., 694 F.3d 723, 735–36 (6th
Cir. 2012), it failed to satisfy its burden of proving literal falsity.
The district court also correctly concluded that Louisiana-Pacific did not present
sufficient proof that the woodpecker images and video misled consumers. “[O]ne of the key
elements of a cause of action for misleading advertising under the Lanham Act” when a plaintiff
requests injunctive relief “is that there is . . . a tendency to deceive a substantial portion of the
intended audience.” Am. Council of Certified Podiatric Physicians and Surgeons v. Am. Bd. of
Podiatric Surgery, 185 F.3d 606, 616, 618 (6th Cir. 1999). The aggrieved must present
“evidence of some sort demonstrating that consumers were misled,” id. at 618, “show[ing] how
consumers actually do react” rather than “arguing how consumers could react.” Sandoz Pharm.
Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 229 (3d Cir. 1990) (emphasis added).
Louisiana-Pacific adduced no such proof, instead relying on (1) testimony that Hardie
intended the advertisements to affect consumer-purchasing decisions, (2) documentation that the
campaign’s advertisements reached a large audience, and (3) a Hardie study demonstrating that
consumers rely on manufacturers’ websites for product information, and that an ad featuring a
woodpecker nesting in a hole would be more likely to persuade consumers than just a photo of a
hole. None of this evidence supplies the necessary insight into the reasonable consumer’s
perspective, showing that Hardie’s ads tricked buyers into believing an untruth (here, that
woodpeckers peck holes in Louisiana-Pacific siding when they actually do not). Louisiana-
Pacific therefore failed to carry its burden that the woodpecker imagery was misleading.
No. 18-5913 Louisiana-Pacific Corp. v. James Hardie Building Prods. Page 6
B. “Pests Love It”
Next, Louisiana-Pacific charges the headline on the graphic comparing Hardie siding to
engineered-wood siding with literal falsity. Just above the photo of the woodpecker, Hardie’s
advertisement notes that “Pests Love [engineered wood],” and, in smaller print, that such siding
is “[s]ubject to damage caused by woodpeckers, termites and other pests that can harm wood.”
The advertisement then compares Louisiana-Pacific’s siding with Hardie’s “Way Too Tough”
fiber cement, which “holds no appeal for woodpeckers, termites and other pests.” The district
court found that the headline “Pests Love It,” rather than literal falsity, amounts to puffery—
unverifiable exaggeration to prove a point. We agree.
Puffery protects statements that reasonable consumers would not interpret as reliably
factual. Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 731 (9th Cir.
1999). No reasonable purchaser would believe that Hardie knows—or could discover—whether
pests “love” engineered-wood siding. See Wysong, 889 F.3d at 271–72 (finding that reasonable
consumers would not “believe most of the (cheap) dog food they encounter in the pet-food aisle
is in fact made of the same sumptuous (and more costly) ingredients they find a few aisles over
in the people-food sections”). Further, no buyer would reasonably assume that the phrase “Pests
Love It” conveys a quantifiable, objective fact about pest preference. See, e.g., Coastal Abstract
Serv., 173 F.3d at 731 (explaining that puffery is “not a specific and measurable claim, capable
of being proved false or of being reasonably interpreted as a statement of objective fact”); Am.
Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387, 391 (8th Cir. 2004) (“‘America’s
Favorite Pasta’ is not a specific, measurable claim and cannot be reasonably interpreted as an
objective fact. ‘Well liked’ and ‘admired’ are entirely subjective and vague. Neither . . . provide
an empirical benchmark by which the claim can be measured.”).
That said, the context of a message can transform unactionable puffery into an
empirically verifiable, factual claim. Am. Italian Pasta Co., 371 F.3d at 391. Louisiana-Pacific
maintains that testing has proven Hardie’s second sentence—“[s]ubject to damage caused by
woodpeckers, termites and other pests that can harm wood”—to be false. From the record,
Louisiana-Pacific highlights that tests rated both engineered-wood and fiber-cement siding as
No. 18-5913 Louisiana-Pacific Corp. v. James Hardie Building Prods. Page 7
completely resistant to termite damage. Thus, Louisiana-Pacific argues, pests do not love its
engineered-wood siding.
Hardie disagrees with Louisiana-Pacific’s interpretation of the test results. Further,
Hardie notes that Louisiana-Pacific’s engineered-wood siding resists damage because it’s treated
with zinc borate. But termites must still ingest small amounts of (or “graze” on) the treated
wood before the zinc borate poisons the termites. Thus, Hardie contends, the wood-based siding
is certainly “subject” or “susceptible” to damage; its statement truthfully (or at least
ambiguously) identifies a potential vulnerability of engineered wood.
In response, Louisiana-Pacific explains that grazing causes no structural or obvious
aesthetic damage. But Louisiana-Pacific’s own experts admitted that grazing results in some
damage. And Louisiana-Pacific’s warranty on its engineered-wood siding explicitly excludes
non-structural termite damage.
Our review thus requires that we ask whether reasonable consumers would interpret
Hardie’s use of the word “damage” to unambiguously mean structural damage. United Indus.
Corp. v. Clorox Co., 140 F.3d 1175, 1180–81 (8th Cir. 1998). Louisiana-Pacific has not shown
us that they would. As the party seeking the injunction under a theory of literal falsehood, that
was its burden. The Second Circuit, in contrast, decided that a pregnancy kit’s advertisement
was literally false because the ad’s use of an unambiguous, industry-specific term in a non-
standard way would certainly confuse a reasonable consumer. Church & Dwight Co. v. SPD
Swiss Precision Diagnostics, GmBH, 843 F.3d 48, 66 (2d Cir. 2016).
Here, Louisiana-Pacific’s argument distinguishing structural and obvious aesthetic
damage from all damage doesn’t diminish that word’s ambiguity in Hardie’s advertising. See
Innovation Ventures, 694 F.3d at 737; Novartis Consumer Health, Inc. v. Johnson & Johnson-
Merck Consumer Pharm. Co., 290 F.3d 578, 587 (3d Cir. 2002) (“[O]nly an unambiguous
message can be literally false.”). Thus, though testable, Louisiana-Pacific has not carried its
burden to prove the claim literally false here.
Louisiana-Pacific likewise did not prove that Hardie’s claims that “Pests Love It” were
misleading. As with the woodpecker imagery, Louisiana-Pacific relied on evidence that many
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consumers saw the ads and Hardie’s market studies showing that the ads were influential. But
again, those facts tend to show only that the advertising affected consumers’ purchasing
decisions, not that consumers were duped. Louisiana-Pacific therefore failed to carry its burden.
IV.
Because Louisiana-Pacific, for now, has failed to prove literal falsity or that Hardie’s
advertisements otherwise misled consumers, we need not address the remaining Lanham Act
elements. Only by satisfying all of them can a movant succeed on a false advertising claim.
Given Louisiana-Pacific’s failure to demonstrate a likelihood of success on its Lanham
Act or Tennessee Consumer Protection Act claims at this stage of the litigation, we also need not
second guess the district court’s evaluation of the remaining three preliminary injunction factors.
When a district court determines that the movant has not presented any evidence that he will
succeed on the merits of his claim, it must not issue a preliminary injunction. Thus, the court’s
refusal to enter an injunction here could not amount to an abuse of its discretion. We AFFIRM.