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Bobrick Washroom Equipment, Inc. v. Scranton Products, Inc.

United States District Court, M.D. Pennsylvania

May 16, 2017

BOBRICK WASHROOM EQUIPMENT, INC. Plaintiff,
v.
SCRANTON PRODUCTS, INC. Defendant.

          MEMORANDUM OPINION

          Robert D. Mariani United States District Judge

         Presently before the Court is Defendant Scranton Products, Inc.'s ("SP" or "Scranton Products") Partial Motion to Dismiss with Prejudice. (Doc. 324). For the reasons that follow, SP's Motion will be denied in its entirety.

         I- INTRODUCTION AND PROCEDURAL HISTORY

         In May 2014 SP filed a complaint against Bobrick Washroom Equipment Inc. ("Bobrick") alleging, among other things, that Bobrick "carefully orchestrated a campaign to scare architects, product specifiers, procurement representatives, building owners, and others in the construction industry into believing that Scranton Products' toilet partitions are fire hazards, are unsafe and pose health and safety risks if used in building projects across the country." (Doc. 1 at ¶ 1). SP asserted two claims under the Lanham Act, 15 U.S.C. § 1125(a), alleging "literally false advertising, " and "deceptive and misleading advertising" and sought both monetary damages and equitable relief. (Id. at ¶¶ 61-76). SP also brought claims under Pennsylvania law, alleging common law unfair competition, commercial disparagement, and tortious interference with existing or prospective business relations. (W. at ¶¶ 77-92). Bobrick filed its Answer on June 25, 2014. (Doc. 21).

         On November 10, 2016, Bobrick filed a Motion for Leave to file an Amended Answer with Counterclaims.[1] (Doc. 213). The day before Bobrick's Motion was fully briefed SP filed a Motion for Voluntary Dismissal. (Doc. 233). The Court subsequently granted both Motions. (Docs. 240, 287). In the Complaint, Bobrick asserts a claim against SP under the Lanham Act, a claim for wrongful use of civil proceedings under Pennsylvania's Dragonetti Act, as well as common law unfair competition and abuse of process claims. (Doc. 318). On April 3, 2017, SP filed a Motion to Dismiss Bobrick's common law unfair competition and abuse of process claims, and also sought dismissal of Bobrick's request for punitive damages. (Doc. 324). The Court held oral argument on SP's Motion on May 12, 2017.

         II. STATEMENT OF FACTS

         Bobrick's Complaint alleges the following facts, which the Court accepts as true for the purpose of this Motion:

         A. Bobrick's Lanham Act and Unfair Competition Claims

         Bobrick's Lanham Act and unfair competition claims "arise from Scranton Products systematic misrepresentation of its own products in the marketplace." (Doc. 318, at ¶ 2). Specifically, SP "has falsely represented thousands of its high density polyethylene ('HOPE') toilet partitions sold for installation in schools and other public and private buildings as being compliant with applicable fire, life safety, and building code requirements." (Id.). More specifically, SP has falsely represented that its HOPE toilet partitions comply with the requirements of the NFPA 286 room-corner test ("NFPA 286"), a fire performance test promulgated by the National Fire Protection Association. (Id. at ¶ 3).

         According to the Complaint, SP's claims that certain of its HOPE toilet partitions comply with NFPA 286 are false for three reasons:

(a) Scranton Products, acting through Western Fire Center, Inc. ('Western Fire'), the testing laboratory that conducted NFPA 286 testing on its behalf, improperly modified and manipulated the test methodology to produce a favorable result, thereby invalidating the test;
(b) Neither Scranton Products nor Western Fire has any primary documentation or actual knowledge of the chemical composition of the Scranton Products HDPE materials that were actually tested, nor were any of the tested materials preserved by Scranton Products or Western Fire, thereby making it impossible for Scranton P roducts to show that any of the HDPE toilet partitions it has sold as NFPA 286-compliant are made of the same material that Scranton Products actually tested under NFPA 286; and
(c) Scranton Products' own manufacturing records show that the chemical composition and physical structure of the HDPE toilet partitions that Scranton Products has sold as NFPA 286-compliant are substantially different from the chemical composition and physical structure of the HDPE materials that Scranton Products claims to have successfully tested under NFPA 286.

(Id..at ¶¶ 4(a)-(c)).

         SP has alleged, both in the marketplace and throughout this litigation, that its HDPE toilet partition materials have passed the unmodified NFPA 286 test on two separate occasions: (1) on May 3, 2011 (the "2011 Test"); and (2) on August 7, 2013 (the "2013 Test").[2] (Id. at ¶ 12). The NFPA 286 testing protocols require "the tested material to be attached to the walls of the test chamber in the manner that best simulates actual installation conditions in the field." (Id. at ¶ 14). However, in both the 2011 Test and 2013 Test, Western Fire, with SP's knowledge and authorization, attached SP's HDPE material as an interior finish to the walls of the test chamber "using metal 'furring strips' (also called 'hat channels') with screws, which allowed the HDPE material to be affixed to the chamber wall while still being slightly displaced from the chamber wall, creating a one-inch air cavity." [Id. at ¶ 15). Rather than placing the furring strips vertically "which would have more appropriately simulated actual installation conditions by allowing heat, flame, and hot gases to rise behind the HDPE panel as well as in front of the panel, " Western Fire placed the furring strips horizontally. [Id. at ¶ 16). When installed horizontally, "the furring strips effectively served as a fire-stopping, fire blocking, or draft-stopping mechanism that blocked or restricted heat, flame, and hot gases from reaching the full height of the side of the HDPE panel that faced the test chamber well."[3] (Id.).

         The text of the NFPA 286 standards include a section entitled "Specimen Mounting."

(Id. at ¶ 18). That section provides, in relevant part:

5.1.1 Test specimens shall be mounted on a framing or support system that is comparable to that intended for their actual field use, using substrates, backing materials, insulation, or air gaps as appropriate to the intended application, and representing a typical value of thermal resistant for the wall system
5.1.7 A detailed description of the mounting method used shall be given in the test report.
5.1.8 If a special mounting technique is used in order to improve the physical behavior of the specimen during the test, it shall be clearly stated in the report.

(Id.). According to the Complaint, the horizontal placement of the metal furring strips to create a fire block "was an intentional manipulation by Scranton Products of the NFPA 286 test methodology to produce a more favorable result by enabling Scranton Products' HDPE material to barely pass the modified NFPA 286 test." (Id. at ¶ 19). Indeed, "[m]ounting the HDPE toilet partition using non-combustible, horizontal metal furring strips to create a fire block below the resulting air gap was not 'appropriate to the intended application, ' because a HDPE toilet partition is not mounted in the field in a manner that blocks access by heat, flame, and hot gases to one side of the panel." (Id. at ¶ 20). In addition, Western Fire did not include in its test reports for the 2011 Test and 2013 Test a "'detailed description of the mounting method used' that revealed how it installed the horizontal furring strips, and, although Western Fire-at Scranton Products' behest-used a 'special mounting technique ... in order to improve the physical behavior of the specimen during the test, ' it did not so state in any form in its test report." (Id. at ¶ 21). Accordingly, this "modification and manipulation of the NFPA 286 test methodology rendered the results inaccurate, invalidated Scranton Products' NFPA 286 testing for all purposes, and made it improper for Scranton Products to rely on the doctored test results to represent to the public... that any of its HOPE toilet partitions are NFPA 286-compliant based on an unmodified NFPA 286 test." (Id. .at ¶23).

         SP has alleged, both in the marketplace and this litigation, that two different formulations of its HDPE toilet partition material have passed the unmodified NFPA 286 test. (Id. at ¶ 24). SP, either through its parent company CPG International, or its sister company Vycom, "produced both formulations of HDPE material in-house, using the company's own extrusion equipment, for NFPA 286 testing at Western Fire." (Id. at ¶ 25). Despite the in-house production of the materials at issue, SP "has never produced any primary documentation-such as a work order or bill of materials listing the ingredients and their weights-establishing the chemical composition of the HDPE materials actually used in the 2011 Test or the 2013 Test, "[4] (Id. at ¶ 26). According to Bobrick, SP "never maintained primary documentation of the chemical composition of the HDPE materials tested in May 2011 and August 2013, or it destroyed any such documentation when it was already contemplating litigation against Bobrick over the compliance of Scranton Products' toilet partitions with NFPA 286."[5] (Id. at ¶ 29). Therefore, "there is no Scranton Products officer or employee who has actual knowledge of the chemical composition of the HDPE material used in the 2011 Test or the 2013 Test." (Id. at ¶ 31). "Because authentic and credible evidence of the chemical composition of the tested HDPE material does not exist, Scranton Products has no basis to claim that any of the HDPE toilet partitions it has sold to the public as NFPA 286- complaint are, in fact, made of the same material that was tested in May 2011 or August 2013." (Id. at ¶ 48). Thus, according to the Complaint, "when Scranton Products filed its Complaint, it knew that it had no basis to allege that any HDPE toilet partitions it sold to the public as NFPA 286-compliant were made of the same material that was tested in May 2011 or August 2013." (Id. at ¶ 49). Thus, Bobrick asserts that:

[T]he only plausible explanation for the nonexistence of such evidence are that Scranton Products never generated the relevant documentation in the first place, or that Scranton Products destroyed the relevant documentation. In either case, Scranton Products presumably acted as it did to conceal the fact that the HDPE toilet partitions it planned to (and did) market as NFPA 286-compliant are substantially different from the HDPE material that it purportedly tested under NFPA 286.

(Id. at ¶50).

         Putting aside the issue of whether the HDPE material tested by Western Fire in May 2011 and August 2013 in fact had the chemical composition and characteristics that SP claims, SP's "own manufacturing records show that the HDPE toilet partitions that Scranton Products has actually sold to the public as NFPA 286-compliant have chemical compositions and physical characteristics that are substantially different from the alleged chemical compositions and physical characteristics of the Scranton Products HDPE materials purportedly tested successfully under NFPA 286." (Id. at ¶ 51). Specifically, SP has claimed that the HDPE material tested by Western Fire in the 2011 Test "formed the basis of Scranton Products' 'first generation' of NFPA 286-compliant HDPE toilet partitions, which Scranton Products claims to have offered for sale from mid-2011 until May 2014." [Id. at ¶ 52). However, "analysis of Scranton Products' manufacturing records show that the chemical composition and physical properties" of these toilet partitions "do not match the alleged chemical composition and physical properties of the toilet partitions tested by Western Fire in May 2011." [Id. at ¶ 57).

         SP has also claimed that the HDPE material tested by Western Fire in August 2013 "formed the basis of Scranton Products' 'second generation' of NFPA 286-compliant HDPE toilet partitions, which Scranton Products purports to have offered for sale from 'late 2013' through the present." [Id. at ¶ 58). But "analysis of Scranton Products' manufacturing records show that the chemical composition and physical properties" of these toilet partitions materials "do not match the alleged chemical composition and physical properties of the toilet partitions tested by Western Fire in August 2013." [Id. at ¶ 62). Scranton Products has represented "that it has marketed and sold two, and only two, formulations of allegedly NFPA 286-compliant HDPE toilet partitions." [Id. at ¶ 64). "However, Scranton Products' manufacturing records reveal that, out of 557 orders for NFPA 286-compliant HDPE toilet partitions for which Scranton Products quoted prices between March 1, 2012 and November 4, 2015, 218 of those orders involved HDPE toilet partitions whose structure and composition bear no relationship to the HDPE materials allegedly tested in May 2011 and August 2013." [Id. at ¶ 65). Therefore, "as to a significant proportion of its sales of purportedly NFPA 286-compliant HDPE toilet partitions nationwide, Scranton Products sold its customers partitions that were substantially different from any HDPE material it claims to have tested under NFPA 286, "[6] (Id. at ¶ 67).

         Because SP's toilet partitions allegedly do not comply with NFPA 286, SP "has repeatedly made literally false and/or false and misleading representations to purchasers and other market participants nationwide concerning its allegedly NFPA 286-compliant HDPE toilet partitions." (Id. at ¶ 74). In support, Bobrick points to the multiple statements in the Complaint, including:

• On November 29, 2012, counsel for Scranton Products, Wendelynne J. Newton, Esq. of Buchanan Ingersoll & Rooney P.C., sent a letter on behalf of Scranton Products to Tom Becraft of Engineered Concepts, an independent sales representative for Bobrick and other manufacturers of bathroom hardware and accessories. In the letter, Ms. Newtown represented, on behalf of Scranton Products and with Scranton Products* authorization, 'Scranton Products manufactures and sells HDPE bathroom partitions that comply with the unmodified NFPA 286 room-corner test, and any suggestion to the contrary by Bobrick or its sales representatives is incorrect.' (Id. at ¶ 76).
• Ms. Newtown sent identically worded letters to numerous other independent sales representatives for Bobrick in late November and early December 2012. (Id..at ¶ 77).
• Further, in those same letters, and based on the same representations, Ms. Newtown threatened Bobrick's independent sales representatives that if they made any statements to the contrary, they would face legal action by Scranton Products: 'Scranton Products is serious about clearing up any confusion that may exist in the industry regarding the characteristics and performance of its products, and will not tolerate misrepresentation about its products and will seek legal remedies if needed.' (Id. at ¶ 78).

         According to Bobrick, these statements were false, and Scranton Products knew them to be false at the time ...


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