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Euro-Pro Operating LLC v. Euroflex Americas

December 8, 2008

EURO-PRO OPERATING LLC D/B/A EURO-PRO CORPORATION, PLAINTIFF,
v.
EUROFLEX AMERICAS, EUROFLEX SRL ITALY, ANDREA MILANESE PIER ANTONIO MILANESE DEFENDANTS.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., United States District Judge

OPINION & ORDER

Plaintiff Euro-Pro Operating LLC ("Euro-Pro") moves to preliminarily enjoin Defendants Euroflex Americas, et al. (collectively, "Euroflex") from making certain claims in their television "infomercials" that Euro-Pro alleges to be false, in violation of Section 43(a) of the Lanham Act (15 U.S.C. §§ 1051 et seq.) and Sections 349 and 350 of New York's General Business Law. Euroflex separately moves for an order dismissing individual Defendant Pier Antonio Milanese for lack of personal jurisdiction under Fed. R. Civ. Pro. 12(b)(2). For the following reasons Euro-Pro's motion for a preliminary injunction is granted in part and denied in part and Euroflex's motion to dismiss Defendant Pier Antonio Milanese is denied to permit discovery on the jurisdictional issue. Further, the parties are instructed to prepare for trial on an expedited schedule.

FACTUAL BACKGROUND

The parties are competing manufacturers and marketers of portable handheld steam cleaning appliances. Euro-Pro manufactures and markets a line of steam cleaners that include, among others, the Euro-Pro Shark Steam Blaster and the Euro-Pro Steam Mop. Compl. ¶2. Euroflex manufactures and markets a hand-held, electric steam cleaner known as the Monster 1200 Sanitizing Steam Cleaner ("Monster 1200").*fn1 Id. at ¶5. Both parties' market their steam cleaners principally through direct response television infomercials and on the internet. Compl. ¶¶ 5-7; Decl. of Mark Rosenzweig, dated October 6, 2008 ("Mark Rosenzweig Decl.") ¶11.

Euroflex began marketing and selling the Monster 1200 in January 2008. Decl. of Stojan Dragovich, dated Sept. 29, 2008 ("Dragovich Decl.") ¶ 2. Unlike other steam cleaners, including Euro-Pro's Shark Steam Mop, which clean with steam only, the Monster 1200 allows users to combine steam with a disinfectant cleaning solution called "Clean Blast."*fn2

Decl. of Yigal Offir, dated September 12, 2008 ¶ 7. Euroflex claims that this "exclusive technology" makes the Monster 1200 more effective than "ordinary steamers." Second Decl. of Roger Colazzi, dated October 31, 2008 ("Second Colazzi Decl."), Ex. B, Tr. of Revised Euroflex Infomercial (hereinafter, "Infomercial") at 6.

Although Euroflex and Euro-Pro presently compete in direct marketing of portable household steam cleaners, Euroflex previously manufactured a steam cleaner for Euro-Pro under the "Shark" brand. Decl. of Max Rosenzweig, dated October 6, 2008 ("First Max Rosenszweig Decl.") ¶ 5. During the pendency of that business relationship Max Rosenzweig, a Euro-Pro Executive Vice President, traveled to Italy on more than one occasion, visiting the Euroflex factory and dining in the home of Defendant Pier Antonio Milanese. Decl. of Max Rosenzweig, dated November 17, 2008 ("Second Max Rosenszweig Decl.") ¶ 4. The business relationship ended with a dispute not at issue here. First Max Rosenzweig Decl. ¶¶ 7-13.

This action was filed on July 7, 2008 and the instant motion to for preliminary injunction was filed on September 25, 2008. Subsequent to the filing of the instant motion for preliminary injunction, Euroflex modified the Infomercial to, in its words, "focus this dispute on Euro-Pro's central challenges" by "eliminat[ing] or further explain[ing] certain other collateral, challenged claims."*fn3 Defs.' Opp'n. Mem. at 2 n. 2.

His son, Defendant Andrea Milanese is the Chief Executive Officer of Euroflex SRL and Chief Executive Officer of Euroflex Americas. Decl. of Andrea Milanese, dated September 29, 2008 ("A. Milanese Decl") ¶ 1.

Euro-Pro alleges that the Infomercial contains numerous false claims about the Monster 1200 that fall into four general categories: (1) the "EPA Tested and Approved Claims," such as "EPA tested and approved so you know it's safe;" (2) the "Efficacy Claims" or "Sanitizes on Contact Claims" such as "kills 99.99% of all germs and bacteria on contact" and "truly sanitizes on contact;" (3) the "Superiority Claims" such as "kills all the germs and bacteria that it comes in contact with, and regular steam just doesn't do that" and "this is the only one of its kind; it's the only one that can sanitize"; and (4) the "Safety Claims" such as claims the Monster 1200 is "completely safe" and "harmless."

In many cases the allegedly false claims are intertwined. For example, Efficacy Claims are often asserted in conjunction with a Superiority Claim (e.g. "you can truly sanitize your entire bathroom in 15 seconds -- no other steam cleaner in the world can make that claim") and EPA Tested and Approved Claim are joined with Safety Claims (e.g "U.S. EPA tested and approved so you know it's safe."). For clarity, I analyze each category of allegedly false claims in turn.

LEGAL STANDARDS

A. Preliminary Injunction

A party seeking preliminary injunctive relief must establish: (1) either (a) a likelihood of success on the merits of its case or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor, and (2) a likelihood of irreparable harm if the requested relief is denied. Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 152-53 (2d Cir. 2007). Preliminary injunctive relief is an extraordinary and drastic remedy which should not be routinely granted. Procter & Gamble Co. v. Ultreo, Inc. 2008 WL 4104010, *3 (SDNY 2008). The decision to grant or deny injunctive relief "'rests in the sound discretion of the district court.'" Reuters Ltd. v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir.1990) (quoting Thornburgh v. Am. Coll. of Obstetricians and Gynecologists, 476 U.S. 747, 755(1986)).

B. Motion to Dismiss for Lack of Personal Jurisdiction

"The plaintiff bears the burden of establishing that the court has jurisdiction over the defendant when served with a Rule 12(b)(2) motion to dismiss." Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001). But the plaintiff need only make a prima facie showing of jurisdiction when no evidentiary hearing has been held. Hsin Ten Enter. USA, Inc. v. Clark Enters., 138 F. Supp. 2d 449, 451 (S.D.N.Y. 2000). The Court may rely on matters outside the pleadings and such documents are construed in the light most favorable to plaintiff and all doubts are resolved in its favor. CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).

DISCUSSION

A. Preliminary Injunction

1. False Advertising Under the Lanham Act

Section 43(a)(1) of the Lanham Act provides that any person who, in connection with commercial advertising, uses a "false or misleading description of fact" which "(B) . misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities," shall be liable to any person damaged thereby. 15 U.S.C. §1125(a)(1). A plaintiff who brings a false advertising claim under Section 43(a) of the Lanham Act may proceed under either (or both) of two theories of recovery. Time Warner, 497 F. 3d at 153.

Under the first theory, the plaintiff must demonstrate that the advertisement at issue is literally false. "When an advertisement is shown to be literally or facially false, consumer deception is presumed, and 'the court may grant relief without reference to the advertisement's [actual] impact on the buying public.'" Id. (quoting Coca-Cola Co. v. Tropicana Products, Inc. 690 F.2d 312, 317 (2d Cir. 1982) abrogated on other grounds by Fed. R. Civ. P. 52(a). Under the second theory of recovery, a plaintiff may show that an advertisement, though not literally false, is ...


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