According to the Complaint, Humane Farm Animal Care
(“Humane”) is a non-profit organization that certifies certain egg producers
for humane treatment of their laying hens.
Handsome Farm Animal Care (“Handsome”) is an egg
producer that Humane does not certify.
In 2016, Humane sent an email to thirty-six grocery
retailers, including some of the largest grocery chains in the nation. The email alleged that Handsome either did
not certify or lacked up to date certifications to support its representations that
its eggs are organic and pasture raised.
The email also included the following language. “I hope you will reconsider changing
suppliers."
As a result, Handsome lost existing and potential
customers and ultimately brought a false
advertising claim against Humane.
Contrary to the email’s statements, Handsome’s organic certifications
were up to date. The District court
issued a preliminary injunction prohibiting Humane from circulating the emails
and directed Humane to publish a retraction email. Humane appealed to the Fourth Circuit to lift
the preliminary injunction.
The question before the court was whether the email
was commercial speech. Notably, neither
the Supreme Court nor the Fourth Circuit define “commercial advertising or
promotion.” The court cited an opinion out of the Southern District of New York
in Gordon and Breach Sci. publishers v. Am. Inst.of Physics, 859 F.
Supp. 1521, (S.D.N.Y.) which was the leading opinion on the issue. While most circuits have adopted the Gordon
& Breach factors, the Fourth
Circuit had not done so and in particular the second part of the test, that the
plaintiff must be “a defendant in commercial competition with the plaintiff.” That notwithstanding, the Fourth Circuit
analyzed the issue and agreed that the evidence should show a competitive
relationship, particularly with regard to standing. As it noted, “a competitive
relationship, therefore, is necessary inasmuch as it gate-keeps who may
appropriately bring suit. This is especially true for realizing Congress’s
intent that the Lanham Act ‘protect persons engaged in [interstate] commerce against
unfair competition.”
Among the arguments addressed was (1) where a
non-profit organization has a direct economic stake in the provision and
structures its message in the hopes of realizing an economic gain rather than
merely informing the public, may it reasonably be viewed as economically
motivated; (2) whether the Humane email promoted a good; (3) whether Humane’s
email was focused on the provision of a service rather than on the advocacy of
its ideology; (4) whether the message of Humane’s email was focused on economic
and legal concerns; and (5) whether Humane’s email appealed to the grocery stores
(recipients) economic and commercial motivations, and was directed at offering
a service – the reliability of its certification – rather than an idea. The
court resolved all of these issues in Handsome’s favor.
At the end, the court found that the email was
commercial advertising or promotion and upheld the preliminary injunction,
including the requirement that Humane issue a retraction email.
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