Cascade Yarns Inc v. Knitting Fever Inc et al, No. 2:2010cv00861 - Document 891 (W.D. Wash. 2012)
Court Description: ORDER granting in part and denying in part 719 Motion for Summary Judgment by Judge Ricardo S Martinez.(MKB)
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Cascade Yarns Inc v. Knitting Fever Inc et al Doc. 891 1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 8 CASCADE YARNS, INC., Plaintiff/Counterclaim Defendant, 9 10 11 v. Defendants/Counterclaim Plaintiffs/Third-Party Plaintiffs, 13 14 v. ROBERT DUNBABIN, SR., et al., 16 17 Third-Party Defendants. CASCADE YARNS, INC., 18 Plaintiff, 19 20 ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COUNTERCLAIMS UNDER THE LANHAM ACT AND STATE LAW KNITTING FEVER, INC., et al., 12 15 CASE NO. C10-861RSM v. EMMEPIEFFE S.R.L., a foreign limited liability corporation, 21 Defendant. 22 23 This matter is before the Court for consideration of one of plaintiff’s two motions for partial 24 summary judgment as to defendants’ counterclaims. This motion addresses defendants’ counterclaims 25 for unfair competition and false advertising under the Lanham Act, 15 U.S.C. § 1125(a) and common 26 law, as they apply to Cascade’s own yarns. Dkt. # 719. Defendants Knitting Fever, Inc., and KFI 27 28 ORDER - 1 Dockets.Justia.com 1 (together, “KFI defendants” or “KFI”) have opposed the motion. The Court deems it unnecessary to 2 hear oral argument on this motion. After careful consideration of the record and the memoranda of the 3 parties, the Court has determined that the motion shall be granted in part and denied in part, as set forth 4 below. 5 BACKGROUND 6 The background of this dispute is well known to the parties, and only the points relevant to this 7 motion shall be summarized here. Plaintiff Cascade Yarns, Inc., (“Cascade”) sells luxury yarns, some 8 of them a blend of wool with other natural fibers, including kid mohair, silk, and cashmere. The yarns, 9 bearing the Cascade brand label, are sold through retail yarn shops and boutiques around the United 10 States. Defendant Knitting Fever, Inc., (“KFI”) is one of Cascade’s chief competitors. KFI is a 11 distributor of a number of brands of luxury yarn, including the popular Debbie Bliss line. 12 Cascade alleges in the Fourth Amended Complaint that sometime between July 2000 and June 13 2001, Mr. Sion Elalouf, the controlling shareholder and chief executive of KFI, “discovered two 14 versions of a yarn called Cashmerino—one of which contained cashmere and the one which did not 15 contain any cashmere.” Fourth Amended Complaint (“FAC”), Dkt. # 322, ¶ 28. Mr. Elalouf, with all 16 his experience in the yarn trade, was “unable to distinguish between the cashmere and non-cashmere 17 versions of the yarn.” Id., ¶ 29. Indeed, apart from “expert fiber analysis—something to which the 18 majority of KFI’s and Cascade’s customers do not have access—it is virtually impossible to confirm the 19 presence of cashmere is [sic] a spun yarn.” Id. 20 the two versions of Cashmerino, Mr. Elalouf entered into an agreement with defendant Designer Yarns, 21 LTD., a British company, to “substitute the 0% cashmere version of the product for the Cashmerino 22 spun of 12% cashmere.” Id., ¶ 31. The “0% cashmere” version was then marketed in a new line of 23 Debbie Bliss yarns to be launched by Designer Yarns and distributed in the United States by KFI. Id., 24 ¶¶ 33-34. The “non-cashmere” Cashmerino, with a label indicating the fiber content of 55% merino 25 wool, 33% microfiber, and 12% cashmere, was introduced to the market at the U.S. trade show in June 26 2001. Id., ¶¶ 35-39. 27 28 According to the complaint, following this discovery of In 2006, Cascade “became aware of the extent of KFI’s enormous success with its Cashmerino ORDER - 2 1 line of yarn products.” Id., ¶ 40. Apparently suspicious of the accuracy of the label on the yarn, 2 Cascade sent a sample of a KFI Cashmerino brand yarn to the Cashmere and Camel Hair Manufacturers 3 Institute (“CCMI”) for fiber content analysis. Id. CCMI sent the sample to K.D. Langley Fiber 4 Services (“Langley”) to conduct the testing. On May 26, 2006, Langley “issued a report and concluded 5 that ‘[n]o cashmere fibers were observed.’” Id., ¶ 41. The test results “showing that KFI’s Cashmerino 6 yarn products did not contain any cashmere became known” at the National Needlework Association 7 trade show that took place June 10 through June 12, 2006. Id., ¶ 43. Sion Elalouf, KFI’s chief 8 executive, contacted Cascade’s legal counsel concerning the test results soon after their industry release. 9 A series of communications followed between KFI, the other defendants, and Cascade representatives, 10 contesting the May 26 test report. Id., ¶¶ 44-47. Specifically, “according to Mr. Elalouf, the type of 11 cashmere that KFI uses will not show up in fiber tests.” Id., ¶ 44. Counsel for KFI asserted that “fiber 12 tests for cashmere content in spun yarn are inherently unreliable,” and included with his response copies 13 of test reports “purporting to show that Debbie Bliss Cashmerino yarns contained cashmere.” Id., ¶ 47. 14 In September 2006, “amidst the growing controversy in the hand knitting yarn community,” 15 Debbie Bliss sent a letter to retailers who sold Cashmerino throughout the United States, “represent[ing] 16 that the Debbie Bliss branded yarns contain cashmere.” Id., ¶ 53. In the meantime, a Pennsylvania yarn 17 retailer, The Knit With, sent samples of Debbie Bliss Cashmerino, Baby Cashmerino, and Cashmerino 18 Aran to Langley for further testing. All three yarns are labeled as containing 12% cashmere. Langley 19 reported on July 18, 2006, that “[n]o cashmere fibers were observed in any of the samples.” Id., ¶¶ 61- 20 63; Id., Exhibit A. A separate July 25, 2006 quantitative analysis report by Langley described the 21 content of the Cashmerino Aran as 57.2% wool and 43.8% acrylic, with “no cashmere fibers [] observed 22 in the sample.” Id., Exhibit B. 23 In April and May 2010, shortly before initiating this lawsuit, Cascade sent additional KFI yarn 24 samples to Langley for fiber analysis. Langley found no cashmere at all in the Debbie Bliss 25 Cashmerino Astrakan and Louisa Harding Kashmir Aran yarns, despite labels stating that each 26 contained 10% cashmere. Id., ¶¶ 70-71. Other yarns, according to Langley’s analysis, contained 27 cashmere, but in substantially lesser amounts than listed on KFI’s labels. Id., ¶¶ 72, 74-76, 78, 79-81. 28 ORDER - 3 1 In subsequent tests, Langley found no cashmere in samples of Louisa Harding Kashmir Baby yarn, 2 Debbie Bliss Cashmerino Chunky yarn, Debbie Bliss Baby Cashmerino, and another sample of Debbie 3 Bliss Cashmerino Astrakan. Id., ¶¶ 82-85. Additional 2010 fiber test results from Langley are detailed 4 in the FAC at ¶¶ 86-95. These test results from the K.D. Langley lab led to the filing of the original and 5 successive amended complaints in this action, all alleging that KFI yarn is mislabeled as to fiber content, 6 and that such mislabeling constitutes a fraud and a violation of the Lanham Act, 15 U.S.C. § 1125(a), as 7 well as the Washington Consumer Protection Act, RCW 19.86 and common law. 8 After the 2006 report of “no cashmere” in Cashmerino and other yarns, KFI began sending 9 samples of its yarns, together with samples of Cascade’s yarns, to different laboratories for testing. 10 Samples were sent to SGS Cashmere Labs in the United Kingdom, and also to KFI’s expert Adam 11 Varley of Vartest Laboratories in New York (“Varley”). The test results from these laboratories, which 12 appear in the record as exhibits to the expert reports of Adam Varley, indicated that a number of 13 Cascades yarns differed in varying degrees from the fiber content listed on the labels. Declaration of 14 Joshua Slavitt, Dkt. # 742, Exhibits 1-4. Most striking among these were the results of tests on Cash 15 Vero and Cash Vero DK, Cascade’s yarns which are labeled with the same composition as KFI’s Debbie 16 Bliss Cashmerino, namely 55% merino wool, 33% microfiber, and 12% cashmere. In a chart prepared 17 at the direction of Cascade’s counsel, the Varley test results for cashmere content in Cash Vero yarns 18 show values of 13.76%, 5.93%, and 5.95%; while the Cash Vero DK samples were found to contain 19 7.81%, 8.43%, 8.06%, 6.25%, and 5.96% cashmere. Declaration of Robert Guite, Dkt. # 726, Exhibit 20 Q, pp. 2-3. 21 Cash Vero test results. Id. At around the same time, SGS Cashmere Labs in the UK tested some Cash 22 Vero yarn and found only 7.5% cashmere in a sample of Cash Vero DK tested on October 20, 2010.1 Other Cascade yarns varied from the content stated on the label, but not as widely as the 23 24 1 27 A subsequent test of Cash Vero by SGS on February 16, 2011 found 16.4% cashmere in the sample. Dkt. # 742, p. 49. Tests by SGS of Cascade’s Pastaza yarn, which is labeled as 50% wool and 50% llama, yielded results of 62.3% wool and 37.7% llama in one test, and 50.6% llama and 49.4% wool in another done two months later. Id., pp. 58-59. Mr. Langley got similarly variable results for two different color lots of Pastaza: 51.4% llama and 48.6% wool for one sample; 64.9% llama and 35.1% wool for another (a variance opposite to what SGS found). Dkt. # 726, Exhibit Q, p. 6. This variability in test results, both between labs and within the same lab, reinforces the Court’s skepticism 28 ORDER - 4 25 26 1 2 Declaration of Joshua Slavitt, Dkt. # 742, Exhibit 1-D, p. 50. On January 18, 2011, KFI filed an answer to Cascade’s amended complaint, asserting five 3 counterclaims against Cascade and third-party defendants (the Dunbabin family members) for false 4 advertising, unfair competition, defamation and tortious interference with business relations, all based 5 on the fiber test results and certain statements made by Cascade on its website and in the press. Answer 6 and Counterclaims, Dkt. # 182. Cascade has amended the complaint several times, and the action is 7 now proceeding on the Fourth Amended Complaint (“FAC”). In answering the FAC, the KFI 8 defendants reassert the five counterclaims: a First Counterclaim for unfair competition and false 9 advertising under the Lanham Act; a Second Counterclaim for unfair competition at common law; a 10 Third Counterclaim for defamation; a Fourth Counterclaim for tortious interference with existing 11 contractual relationships; and a Fifth Counterclaims for tortious interference with business expectancy. 12 Answer and Counterclaims, Dkt. # 327. 13 Cascade has now moved for partial summary judgment on KFI’s First and Second Counterclaims 14 with respect to Cascade’s statements about Cascade’s own yarns.2 Dkt. # 719. Contemporaneously with 15 filing this motion, the parties filed cross-motions for summary judgment on Cascade’s four claims under 16 the Lanham Act and state law in the FAC. Dkt. ## 715, 717, 724. Shortly thereafter, KFI filed a 17 motion to exclude Cascade’s expert on fiber testing an analysis, Kenneth D. Langley. Dkt. # 823. 18 Additional motions by both sides to exclude each others’ experts followed, but these were not ready for 19 consideration until October 26, 2012. Dkt. ## 826, 838, 839, 840, 841. The Court has ruled on the 20 motion to exclude the reports and testimony of Cascade’s designated expert Kenneth D. Langley, and 21 has found them inadmissible for lack of reliability, pursuant to Daubert v. Merrell Dow 22 Pharmaceuticals, Inc., 509 U.S. 579 (1993) (“Daubert”). Dkt. # 865. Recognizing the reach of that 23 Order, and in response to Cascade’s motion to exclude KFI’s expert on fiber tests Adam Varley, KFI has 24 25 26 regarding the reliability of the fiber test results presented in this case. 2 27 KFI’s counterclaims for unfair competition and false advertising with respect to Cascade’s statements about KFI’s yarns are addressed in a separate motion for partial summary judgment. Dkt. # 722. 28 ORDER - 5 1 withdrawn the offer of Mr. Varley as expert witness. Dkt. # 869. Cascade’s motion to exclude his 2 expert report and testimony has now been granted. 3 4 DISCUSSION 5 I. Legal Standard 6 Summary judgment shall be granted “if the movant shows that there is no genuine dispute as to 7 any material fact and the movant is entitled to judgment as a matter of law.” 8 issue is “genuine” if “a reasonable jury could return a verdict for the nonmoving party” and a fact is 9 material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Fed.R.Civ.P. 56(a). An 10 Lobby, Inc., 477 U.S. 242, 248 (1986). The evidence is viewed in the light most favorable to the non- 11 moving party. Id. However, “summary judgment should be granted where the nonmoving party fails to 12 offer evidence from which a reasonable jury could return a verdict in its favor.” Triton Energy Corp. v. 13 Square D Co., 68 F. 3d 1216, 1221 (9th Cir. 1995). It should also be granted where there is a “complete 14 failure of proof concerning an essential element of the non-moving party’s case.” Celotex Corp. v. 15 Catrett, 477 U.S. 317, 323 (1986). “The mere existence of a scintilla of evidence in support of the non- 16 moving party’s position is not sufficient” to prevent summary judgment. Triton Energy Corp., 68 F. 3d 17 at 1221. 18 19 I. Analysis 20 In the First Counterclaim for unfair competition and false advertising under the Lanham Act, 21 22 23 24 25 26 27 28 KFI alleges in part that [i]n promoting Cascade’s own knitting yarns, the Third Party Defendants have made false and misleading statements about KFI’s yarns, including but not limited to the statements alleged herein. In addition, Cascade, in promoting its own knitting yarns, has made false and misleading statements about the content and/or country of origin of its own yarns. The false and misleading statements of the Third Party Defendants about KFI’s yarns and Cascade’s false and misleading statements about its own yarns have deceived some KFI customers or have the tendency to deceive a substantial segment of KFI’s customers. ORDER - 6 1 .... 2 The acts of Cascade and the Third Party Defendants constitute willful, deliberate, false, and misleading representations of fact as to the nature and characteristics of KFI’s yarns and its own yarns. The false and misleading statements of Cascade and the Third Party Defendants regarding the fiber content of KFI’s yarns and its own yarns constitutes false advertising. 3 4 5 Answer to FAC and Counterclaims, Dkt. # 327, ¶¶ 186-188, 191. The counterclaim complaint also 6 alleges materiality of the statements and injury therefrom. Id., ¶¶ 189-90. 7 In the Second Counterclaim for common law unfair competition, KFI alleges in part: 8 As set forth above, the Third Party Defendants are making false and misleading statements about KFI’s yarns and Cascade is making false and misleading statements about its own yarns, including but not limited to the statements alleged herein. 9 10 11 12 13 The Third Party Defendants’ false and misleading statements about KFI’s yarns and Cascade’s statements about its own yarns were made in bad faith. The Third Party Defendants’ false and misleading statements about KFI’s yarns and Cascade’s statements about its own yarns have deceived some KFI customers or have the tendency to deceive a substantial segment of KFI’s customers. 14 Answer and Counterclaims, Dkt. # 327, ¶¶ 194-196. As with the First Counterclaim, the Second 15 Counterclaim also alleges materiality of the statements and injury therefrom. Id., ¶¶ 197-199. 16 A. Lanham Act Counterclaim 17 KFI’s First Counterclaim for unfair competition and false advertising arise under section 43(a) of 18 19 the Lanham Act, which states in relevant part: 22 (1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any . . . false or misleading representation of fact, which . . . (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or 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. 23 15 U.S.C. § 1125(a). The elements of this claim are: (1) a false statement of fact by the defendant in a 24 commercial advertisement about its own or another’s product; (2) the statement actually deceived or has 25 the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is 26 likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate 27 commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either 28 ORDER - 7 20 21 1 by direct diversion of sales from itself to defendant or by a lessening of the good will associated with its 2 products. Southland Sod Farms v. Stover Seed Co., 108 F. 3d 1134, 1139 (9th Cir. 1997). 3 An advertising claim may be either literally false on its face, or literally true but confusing or 4 misleading to consumers. Id. KFI’s assertion of literal falsity as to Cascade’s statements about its own 5 yarns relies on discrepancies between the label and various test reports. The Court has previously 6 excluded the Langley test reports as unreliable under Daubert. In so ruling, the Court also noted that 7 “accuracy and reliability of the test results are not an isolated problem with K.D. Langley Fiber 8 Services” and that the problem “appears to be industry-wide.” Order, Dkt. # 865, p. 10. KFI has now 9 withdrawn one of its own fiber test experts, namely Adam Varley, who performed the fiber tests upon 10 which KFI’s allegations of falsity in the labeling of Cascade’s yarns are based. As a consequence, KFI 11 now has no evidence that Cascade’s yarns are or were mislabeled as to fiber content. The Lanham Act 12 counterclaim based on false labeling as to fiber content thus fails at the first step. Cascade’s motion for 13 partial summary judgment on the Lanham Act counterclaim shall accordingly be granted as to 14 allegations of false statements of fiber content on Cascade’s yarn labels. 15 A different result obtains, however, as to Cascade’s label statements on country of origin. In 16 answering the FAC, KFI defendants alleged that “many of Cascade’s yarn labels fail to identify a 17 country of origin as required by law.” Answer and Counterclaims, Dkt. # 327, ¶ 180. Further, “Luxury 18 Mohair, Bamboo Cotton DK, Dream Chunky, Mirage, [and] Zig Zag 4 Ply do not identify a country of 19 origin on their labels.” Id., ¶ 184. In arguing for summary judgment as to this aspect of the 20 counterclaim, Cascade states, 21 22 23 24 25 26 There is nothing false about the labels for the King Cole yarns sold by Cascade as yarns distributed by KFI that identify only the name and address of the supplier are alleged by Mr. Deneke, KFI’s Operations Manager, to be properly labeled. Declaration of Robert Guite (“Guite Decl.”), Ex. MM at 312:9-313:11, 315:7-318:5. Mr. Elalouf agreed that this evidenced proper identification of the country of origin. Guite Decl., Ex. V at 107:4109:3. Indeed, KFI has not (and cannot) establish that the purported lack of a country of origin is misleading and, in fact, its own labels for its Katia yarns are just like Cascade’s in that they identify the name and address of the supplier. 27 Cascade’s Motion for Partial Summary Judgment, Dkt. # 719, p. 2. This is a curious argument; Cascade 28 ORDER - 8 1 is in essence pointing a finger at KFI and asserting that “I did no wrong because you did the same 2 thing.” That argument is legally ineffective as proof that Cascade’s yarns were properly labeled as to 3 country of origin. Moreover, the testimony of Mr. Deneke and Mr. Elalouf in the cited sections was not 4 as Cascade represents it, and did not contend that yarns that simply identify the address of the supplier 5 are properly labeled as to country of origin. 6 Mr. Denecke was shown several copies of labels of Katia yarns which are distributed by KFI. 7 As to each he confirmed his understanding that the country of origin was Spain, based on the statement 8 on the label. But he did not confirm that the yarn was in fact “properly labeled” as to country of origin 9 based on the supplier’s address; that was simply his assumption. 10 Q: Do you know if the yarn in front of you and depicted in Exhibit 7 is made in Spain? 11 A: I can only comment on what it says on the ball of yarn. 12 Q: The ball of yarn identifies that the company that distributes it is located in Spain, correct? 13 14 A. Well, they sell it to us. Deposition of Jeffrey Denecke, Exhibit MM to the Declaration of Robert Guite, Dkt. # 726-19, p. 313. 15 The discussion immediately following that response is not cited by Cascade and contradicts 16 17 Cascade’s representations of Mr. Denecke’s testimony: Q: Is it your testimony that exhibit —that the label depicted in Exhibit 37 properly identifies the country of origin? 18 19 20 Id. Counsel for KFI objected that this question was beyond the scope of the allowed testimony, so Mr. Denecke did not answer that question. Id. Counsel then re-phrased and asked, 21 22 Q: Do you have an understanding as to what is required by applicable U.S. law as to the labeling for country of origin? 23 Id., p. 314. Again KFI counsel objected, and after clarification of the scope of the question, Mr. 24 Denecke responded, 25 26 A. I don’t say that I necessarily have an understanding of the exact requirements. Id. 27 28 ORDER - 9 1 Nor did Mr. Elalouf, in the cited section of his deposition, confirm that “identify[ing] only the 2 name and address of the supplier” constitutes proper labeling as to country of origin. When asked 3 whether KFI has an opinion “as to whether the address of the distributor is sufficient to identify the 4 country of origin,” he did not answer the question. Deposition of Sion Elalouf, Exhibit V to the 5 Declaration of Robert Guites, Dkt. # 856-4, p. 107. What he did state was that following Mr. Denecke’s 6 deposition, they looked up records to find the country of origin for the yarns about which he was 7 questioned, and found that the country of origin listed in those documents is Spain. Id., p. 108. Based 8 on those records, he stated, “So it would appear to me that on those particular labels, the country of 9 origin is listed. That’s how I see it.” Id., pp. 108-109. Thus Mr. Elalouf did not testify that listing the 10 address of the supplier or distributor is sufficient on its own to meet legal requirements for country of 11 origin as Cascade asserts.3 12 13 14 Cascade repeats this argument, along with the mischaracterization of Mr. Denecke’s and Mr. Elalouf’s testimony, later in the motion, and adds legal citations: 19 There is, likewise, no evidence that labels for the King Cole yarns are false because the[y] only identify the country of the yarn’s supplier. Indeed, Mr. Denecke and Mr. Elalouf testified that Knitting Fever’s labels that only identify the country of the yarns’s supplier (like the King-Cole-made yarns distributed by Cascade) properly identify the yarn’s country of origin. In any event, even if the King Cole yarns sold by Cascade lacked a designated country of origin, there is no evidence that this would constitute [a] false or misleading statement of fact necessary to establish a Lanham Act claim. Nor is there any evidence that the labels of the King Cole yarns actually deceived or had the tendency to deceive a substantial segment of its audience, that the deception is material or that KFI had been or is likely to be injured as a result of the false statement. 20 Cascade’s Motion for Partial Summary Judgment, Dkt. # 719, p. 9, citing Jarrow Formulas, Inc., v. 21 Nutrition Now, Inc., 304 F. 3d 829, 835 n. 4 (9th Cir. 2002) (internal citations to the record omitted). 15 16 17 18 22 The cited section of Jarrow is simply a footnote setting forth the elements of a prima facie case 23 of a Lanham Act violation, citing to Southland Sod Farms v. Stover Seed Co., 108 F. 3d at 1139. 24 Cascade also includes a footnote to Cashmere & Camel Hair Manufacturers Institute v. Saks 5th 25 26 3 27 Even if Mr. Elalouf had testified in the way that Cascade represents, his testimony would not constitute evidence that Cascade’s yarns were properly labeled as to country of origin. Mr. Elalouf is not an expert on the legal requirements for labeling. 28 ORDER - 10 1 Avenue, 284 F. 3d 302, 312 (1st Cir. 2002). The cited page of that case discusses materiality of a false 2 representation of fiber content, which is element (3) of the Southland Sod Farms formulation. In the 3 footnote, Cascade asserts that “unlike a yarn product’s fiber content, its country of origin does not relate 4 to its ‘inherent quality or characteristic’ and, therefore, materiality cannot be shown without additional 5 evidence, which KFI lacks.” Cascade’s Motion for Partial Summary Judgment, Dkt. # 719, p. 9. This is 6 a conclusory allegation on Cascade’s part, and fails to demonstrate entitlement to summary judgment. 7 Rule 56 requires, in relevant part, that 8 [a] party asserting that a fact cannot be or is genuinely disputed must support the assertion by: 9 10 11 12 (A) citing to particular parts of materials in the record, including deposition, documents, electronically stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact. 13 Fed.R.Civ.P. 56(c)(1). Cascade, as the moving party on KFI’s counterclaim under the Lanham Act, has 14 the burden of showing that there is no dispute of fact as to an essential element of such claim, and of 15 supporting that assertion by citing to particular parts of the record. As shown above, the cited portions 16 of the depositions of Mr. Denecke and Mr. Sion do not state what Cascade alleges they do. Beyond 17 citing to these depositions, Cascade has made only the conclusory allegation that KFI has no evidence as 18 to elements (2), (3), and (4) of its Lanham Act counterclaim. However, KFI properly included 19 allegations as to each element in the First Counterclaim, and the burden on Cascade, as the movant here, 20 is to cite to the record to demonstrate that KFI has no evidence as to those elements. Fed.R.Civ.P. 21 56(c)(1)(A). 22 KFI has argued that failure to designate country of origin is cognizable under the Lanham Act, as 23 a per se violation. KFI’s Opposition, Dkt. # 741, p. 2 n. 2, citing Baden Sports, Inc., v. Kabushiki 24 Kaisah Molten & Molten USA, Inc., 2007 WL 703394 at *4 (W.D.Wash. Mar. 2, 2007). That decision 25 relied in part on a patent case from the United States District Court for the Southern District of New 26 York, holding that failure to designate country of origin in violation of the Tariff Act (19 U.S.C. § 1304) 27 28 ORDER - 11 1 violates section 43 of the Lanham Act as a matter of law.4 Id., citing Alto Products Corp. v. Ratek 2 Industries, Ltd., 40 U.S.P.Q. 1738 (S.D.N.Y. 1996). This Court accordingly concluded that “failure to 3 mark the country of origin is actionable under the Lanham Act.” Id. at *5. Cascade has failed to argue 4 why this reasoning should not apply here. 5 There are genuine issues of material fact as to whether certain Cascade labels failed to properly 6 designate country of origin, and whether that failure constitutes a violation of the Lanham Act. 7 Cascade’s motion for summary judgment as to this aspect of KFI’s Lanham Act claim must accordingly 8 be denied. 9 10 B. Unfair Competition at Common Law KFI’s Second Counterclaim asserts a claim of unfair competition under common law. In moving 11 for summary judgment on this counterclaim, Cascade has set forth the elements, asserting that KFI is 12 required to show that “(1) in the marketing of goods and services (2) [Cascade] made a representation 13 relating to its goods (3) that is likely to deceive or mislead prospective purchasers (4) to the likely 14 detriment of KFI.” Cascade’s Motion for Partial Summary Judgment, Dkt. # 719, p. 11, citing Witham 15 v. Clallam County Public Hospital District 2, 2009 U.S. Dist. LEXIS 123754, *10 (W.D.Wash. 2009). 16 Cascade argues that KFI cannot establish any mislabeling as to the fiber content of Cascade’s yarns, 17 which is correct, and the reason that KFI’s unfair competition counterclaim based on Cascade’s alleged 18 mislabeling of fiber content shall be dismissed on summary judgment. However, Cascade has failed to 19 address the country-of-origin issue with respect to this counterclaim, other than to refer in reply to the 20 same deposition testimony considered above. Cascade’s Reply, Dkt. # 770, p. 8. The Court has already 21 rejected Cascade’s contention that “KFI conceded that labeling that only identifies the country of the 22 yarn’s supplier . . . properly identify [sic] the yarn’s country of origin.” Id. Therefore Cascade’s 23 motion for summary judgment on this aspect of the unfair competition claims shall be denied, for the 24 reasons set forth in the Lanham Act counterclaim analysis. 25 26 4 27 KFI has not specifically alleged a violation of the Tariff Act in the counterclaims, but has alleged that the specified yarns are not properly labeled as to country of origin. 28 ORDER - 12 1 2 CONCLUSION Cascade’s motion for summary judgment (Dkt. # 719) on defendants’ First and Second 3 Counterclaims as they apply to Cascade’s own yarns is GRANTED as to the claim that any Cascade 4 yarn is mislabeled as to fiber content, and that aspect of the two counterclaims is DISMISSED. The 5 motion is DENIED as to Cascade’s labeling of certain specified yarns (Luxury Mohair, Bamboo Cotton 6 DK, Dream Chunky, Mirage, and Zig Zag 4 Ply) as to country of origin. 7 8 Dated this 31st day of October 2012. 9 A 10 11 RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER - 13
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