False Advertising Suit Concerning Department of Defense Standards Misfires
In a case that teaches important lessons about the burden of proving an advertisement false at trial, Judge Ronald Lew of the Central District of California held that Elkay Plastics Company was not liable for allegedly false statements that its StratoGrey line of polyethylene products meets military specifications.
In 2012 Caltex Plastics sued Elkay arguing that Elkay’s marketing constituted false advertising under the Lanham Act and California law by falsely claiming to meet certain Department of Defense (DoD) specifications. But Judge Lew found it was Caltex’s arguments, not Elkay’s products, that failed to meet the required standard.
Caltex produces a packaging material qualified by the Department of the Navy as meeting the DoD MIL 81705 Type III specification for “flexible barrier materials, often supplied as bags”. The specification is used by the military for certain types of packaging material that hold electronic components. Only products that have been submitted to the DoD for qualification and met the specification requirements after Government testing are deemed to be qualified. Caltex was, and is, the only company to have gone through the DoD qualifying process for the MIL81705 specification.
Elkay advertised that its product, the StratoGrey static shielding line, “meets the electrostatic requirements for MIL 81705 Type III”. Frustrated at seeing its prices undercut by a non-qualified competitor, Caltex demanded that Elkay withdraw its advertisements and notify customers that DOD had not qualified its product. When Elkay agreed to remove the offending references from its materials but insisted on defending the accuracy of its advertising, Caltex sued.
While the packaging material lines at issue may have been flexible, unfortunately for Caltex, its burden of proof at trial was found not to be so malleable. Judge Lew found that Caltex failed to prove that Elkay’s advertisements were literally false because Caltex did not show that Elkay’s product did not meet the specification requirements, which is all that Elkay’s advertisements claimed its product did. The fact that Elkay had not “qualified” the product under Government testing did not prove that its products did not perform as advertised.
Further Judge Lew dismissed Caltex’s argument that Elkay had “no independent evidence” that its bags met the requirements because the burden of proof was on Caltex as the plaintiff and Courts have rejected such “lack of substantiation” arguments in similar cases. Unlike the Government when it sues on behalf of the Federal Trade Commission, private plaintiffs must show that an advertisement is literally false or actually misleading, not merely unsubstantiated.
Not only did Caltex fail to prove that the materials were literally false, but it also failed to offer extrinsic evidence showing consumers were misled and confused. If anything, it was the DoD’s failure to inform the defense community of their requirements that led to any confusion. And in any case, the consumers in question were sophisticated and had access to a public database of DoD qualified products, which dispelled the danger of confusion. For similar reasons Caltex’s arguments failed to qualify it for relief under California law.
This case offers a word of caution to private false advertising plaintiffs: the burden of proving that an advertisement is unsubstantiated, literally false or actually misleading lies on you. No matter the specifics, that requirement is a vital barrier to clear.