Bimbo Bakeries USA, Inc. v. Sycamore
372 F. Supp. 3d 1291 (2019)
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Rule of Law:
Under the Lanham Act, a geographically descriptive but ambiguous term like 'local' can constitute misleading advertising if extrinsic evidence shows it is likely to confuse a significant number of consumers about a product's origin. However, damages for such a claim must be limited to the geographic areas where evidence of consumer confusion was actually presented.
Facts:
- United States Bakery ('U.S. Bakery') sold bread products in Utah and seven other states.
- The bread products U.S. Bakery sold in Utah were shipped from bakeries located a substantial distance out of state.
- U.S. Bakery used a company tagline in its advertising that included the word 'local' to describe these bread products.
- Bimbo Bakeries USA, Inc. ('Bimbo Bakeries'), a competitor, alleged this use of 'local' was misleading to consumers.
- Bimbo Bakeries also possessed a specific compilation of ingredients and production steps for its 'granny-style' bread, which it considered a trade secret.
- U.S. Bakery hired a former employee, Mr. Faull, from one of Bimbo Bakeries' competitors.
- After hiring Mr. Faull, U.S. Bakery allegedly modified its bread product to more closely resemble Bimbo Bakeries' 'granny-style' bread, using confidential methods.
Procedural Posture:
- Bimbo Bakeries sued U.S. Bakery in the U.S. District Court for the District of Utah, alleging false advertising and trade secret misappropriation, among other claims.
- On a pre-trial motion for summary judgment, the court dismissed Bimbo Bakeries' trade dress claims but allowed the false advertising and trade secret claims to proceed.
- The court issued pre-trial rulings limiting potential false advertising damages to Utah and southern Idaho due to the limited geographic scope of Bimbo Bakeries' expert evidence on consumer confusion.
- The case proceeded to a jury trial on the remaining claims.
- At the close of the plaintiff's case and again after both parties rested, U.S. Bakery moved for judgment as a matter of law (JMOL).
- The jury returned a verdict for Bimbo Bakeries, awarding $8,027,720 in false advertising damages and additional damages for trade secret misappropriation.
- After the trial court entered judgment on the verdict, U.S. Bakery filed a renewed motion for judgment as a matter of law, or in the alternative, for a new trial or remittitur of damages.
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Issue:
Under the Lanham Act, can a damages award for false advertising based on sales in multiple states be sustained when the plaintiff only presents evidence of consumer confusion from a single state, without providing a basis for extrapolating that evidence to other states?
Opinions:
Majority - David Nuffer, United States District Judge
No. A damages award for false advertising cannot be sustained across multiple states when the evidence of consumer confusion is limited to a single state and no basis for extrapolation is provided. The court upheld the jury's finding of liability for false advertising, reasoning that the term 'local' is a geographically descriptive term, not mere puffery, and whether it is misleading is a question of fact for the jury. Bimbo Bakeries presented sufficient extrinsic evidence—a consumer survey showing 28% confusion in Utah—to support the finding that the term was misleading. However, the court found the jury's $8 million damages award, based on sales in all eight states, was legally insufficient because it was not supported by the evidence. Bimbo Bakeries' expert only surveyed consumers in Utah and provided no basis for extrapolating these findings to other states where consumer perceptions might differ. Because there was no evidentiary foundation for consumer confusion outside of Utah, the court granted remittitur and reduced the damages to $83,398, the amount of U.S. Bakery's unjust enrichment calculated for its Utah sales alone.
Analysis:
This decision reinforces the principle that while liability for false advertising can be established through localized evidence, the scope of monetary damages must be directly tied to the geographic scope of that same evidence. It serves as a crucial precedent for litigants, clarifying that to recover nationwide or multi-state damages, they must present either geographically diverse evidence of deception or a methodologically sound basis for extrapolating single-location results. The ruling highlights the high evidentiary burden for securing large, multi-jurisdictional damage awards in Lanham Act cases, preventing plaintiffs from leveraging localized confusion into a national windfall. It also demonstrates the court's use of remittitur to correct an excessive jury verdict unsupported by evidence, without requiring a new trial.
