[00:00:10] Speaker 03: You may begin when you're ready. [00:00:16] Speaker 05: Thank you, Your Honor. [00:00:16] Speaker 05: Good morning, and may it please the Court. [00:00:18] Speaker 05: I'm Trent Norris of Hogan Levels, here representing Johnica, the appellant in this matter. [00:00:23] Speaker 05: I'd like to reserve three minutes for rebuttal, if that's okay. [00:00:27] Speaker 05: There are three issues that are presented here, and I'd like to cover all three of them, because we think that the Court below committed legal error with respect to all three. [00:00:35] Speaker 05: The first and central issue is whether literal falsity was shown here. [00:00:40] Speaker 05: In this case, the judge below decided that literal falsity was indeed shown by necessary implication. [00:00:48] Speaker 05: This is a doctrine that the Ninth Circuit has referred to, but never elaborated on. [00:00:52] Speaker 05: And so we're writing on something of a clean slate here. [00:00:56] Speaker 05: Horsepower is the issue in the case, and horsepower is a number presented on the box of a garbage disposal at the point of sale. [00:01:04] Speaker 05: It's a number that we contend is a rating. [00:01:07] Speaker 05: It's a rating that is based on the underwriter's laboratory standard, which demonstrates the load of the particular... Well, wait a minute. [00:01:15] Speaker 01: That's a jump right there, that it's based on the underwriter's laboratory standard. [00:01:22] Speaker 01: That standard says that it's irrespective of anything that's on the box. [00:01:25] Speaker 01: So why are you saying it's based on that? [00:01:27] Speaker 05: Well, you're right, Your Honor, because the standard says you're to determine it regardless of what may have been written on the motor when it was received. [00:01:33] Speaker 05: So why are you saying that's based on that? [00:01:35] Speaker 05: Because the test is performed using the underwriter laboratory. [00:01:38] Speaker 01: I'm sorry? [00:01:38] Speaker 05: The test is performed by Johnica on using the underwriter laboratory standard, and it determines the number. [00:01:45] Speaker 05: Oh, I see. [00:01:45] Speaker 01: So you're saying that in this particular instance, that's where they got it from. [00:01:49] Speaker 05: That's exactly right. [00:01:50] Speaker 05: And indeed, not only Johnica, but the other two competitors in the industry besides Insincorator. [00:01:57] Speaker 05: and Sinkerator is the one of the four that appears to do it in a different manner. [00:02:01] Speaker 05: And what the court found in this case was that the meaning of that number, which it doesn't say it means output or input or any such thing or how it's determined on the label of the product, but that the meaning of that is the output that's provided by the garbage disposal to the consumer ultimately. [00:02:19] Speaker 05: We think it's an ambiguous term because [00:02:21] Speaker 05: there are many in the industry that use an input standard. [00:02:23] Speaker 01: Well, if you were buying a car that had, you know, 50 horsepower, presumably the 50 horsepower has to be what's driving the car, not what's going in at some earlier stage before it gets to drive the car. [00:02:38] Speaker 01: Would you think that? [00:02:39] Speaker 05: Well, that may be, that's one possible interpretation, but it may also be that this is the rating. [00:02:45] Speaker 01: And if, so you would buy a car that said it was 50 horsepower even though, in fact, [00:02:51] Speaker 01: 30 of the horsepower are lost before it gets to the motor that's driving the car. [00:02:56] Speaker 05: Yes, because the 50 horsepower may be stated as a number that relates to something, a unit of the car. [00:03:04] Speaker 05: But let's talk about blenders, for instance. [00:03:06] Speaker 05: A blender is nothing more than an upside down garbage disposal, also grinds food. [00:03:11] Speaker 05: And blenders are sold based on an input number. [00:03:13] Speaker 05: An input wattage, watts and horsepower are just different measures of power. [00:03:18] Speaker 05: But blenders are sold in that manner. [00:03:20] Speaker 04: Where you make that assertion, is that in your brief? [00:03:24] Speaker 04: The blender analogy with supporting record facts that the HP designation on blenders pertain to the input? [00:03:32] Speaker 05: Yes, it's in the record as well. [00:03:34] Speaker 05: I'll give you the expert. [00:03:35] Speaker 04: And that's because it's safer to have a lower input number? [00:03:39] Speaker 05: It's the convention with respect to blenders. [00:03:42] Speaker 04: Right, but isn't that the premise behind UL430? [00:03:45] Speaker 05: The premise of UL430 is a safety standard. [00:03:48] Speaker 04: So therefore you'd want a lower number? [00:03:51] Speaker 05: Not necessarily. [00:03:51] Speaker 04: It just describes what is the load that... Well, like with an AC unit, if it's a higher number, you have anxieties about the input power being too big. [00:04:00] Speaker 05: No, you just have to make sure that the electrical circuit will handle it. [00:04:03] Speaker 04: Right. [00:04:04] Speaker 04: That's a safety consideration. [00:04:05] Speaker 04: I understood the district court to be saying, we're looking at the consumer and whether a reasonable or plausible interpretation would be that HB refers to output. [00:04:14] Speaker 04: And then to my eye, the district court looked at the only record evidence, record evidence, but you're telling me there's other record evidence, which is how is Home Depot shelving them. [00:04:23] Speaker 04: And they're shelving them as to grinding power, output power. [00:04:28] Speaker 05: No, they're not, Your Honor. [00:04:28] Speaker 05: They're shoving them based on horsepower by the number that's written on the box, without that number saying whether it's output power or input power. [00:04:37] Speaker 04: Well, you're familiar with the red brief, right? [00:04:39] Speaker 04: I thought they gave us on pages 9 to 10 the various explanations Home Depot gives. [00:04:45] Speaker 04: They all prefer to grinding power. [00:04:46] Speaker 05: Right, but horsepower relates to grinding power, but it is not a measure of grinding power. [00:04:51] Speaker 05: So grinding power also has to be determined by the compartment that it's in, by the RPM of revolution, by the design of the actual machine. [00:04:59] Speaker 04: The discourse saying the only consumer-facing information he had was the shelving and the explanations. [00:05:07] Speaker 04: Consumer, you're about to buy the insincorator of this one. [00:05:09] Speaker 04: Oh, Johnica's is a lot less expensive, but look, it's got the same grinding power. [00:05:15] Speaker 05: it's that it says the same horsepower right which does not say that but if that's the necessary by implication logic of night circuit caseload that is your honor but there's another but there's another alternative explanation which is that it's the input power used for it and that this and therefore ambiguity and therefore couldn't be literally untrue that's exactly right your honor and there's and there's no evidence here [00:05:35] Speaker 05: as to how consumers understand the horsepower number. [00:05:38] Speaker 04: Well, why can't one infer from how the Lowe's and Home Depot are presenting it to consumers? [00:05:44] Speaker 05: Well, so the Lowe's and Home Depot are not saying this is the output power. [00:05:48] Speaker 05: that the horsepower number is determined based on an output basis. [00:05:52] Speaker 05: That's said by Ferguson once, and Ferguson in fact does not sell Johnica disposers. [00:05:59] Speaker 05: But these are statements made to consumers. [00:06:01] Speaker 05: We don't have any understanding of what consumers understand from those statements as well. [00:06:06] Speaker 05: Certainly horsepower is a factor in consumers' purchases, but the way that it's determined is not ever explained to consumers by either, by any member of the industry. [00:06:16] Speaker 05: Instead, it's used as a proxy to say, here's the approximate light, medium, heavy duty that you could use for this product. [00:06:23] Speaker 01: Sinkerator. [00:06:24] Speaker 01: How do you say it? [00:06:25] Speaker 01: Sinkerator. [00:06:26] Speaker 01: Sinkerator was the original company in this field. [00:06:30] Speaker 05: That's correct, Your Honor. [00:06:32] Speaker 01: And they were using horsepower in this fashion as output. [00:06:37] Speaker 05: Yes, apparently so. [00:06:38] Speaker 01: So if your client, Jernetka, came in and starts using horsepower, [00:06:43] Speaker 01: and it had like 70% of the market or something. [00:06:47] Speaker 01: So in terms of what people looking at the market would think, they would think it was output because that's what it had always been. [00:06:54] Speaker 01: Now, Jonica comes in and starts using it for some completely different meaning and presumably that was an intentional confusion, was it not? [00:07:06] Speaker 05: Well, no, Your Honor, because the Johnica motor is an entirely different model. [00:07:11] Speaker 05: It's a permanent magnet motor. [00:07:12] Speaker 01: Well, that may be, but it didn't say that. [00:07:13] Speaker 01: It didn't say this is input horsepower, not output horsepower. [00:07:17] Speaker 05: It did not, and neither did Insincrator say this is output horsepower. [00:07:21] Speaker 04: But all the preliminary injunctions asking you to do is clarify what you don't disagree with, correct? [00:07:26] Speaker 04: In other words, your whole position is this data is relevant for input power and buyers want it, and that's what the district court has said. [00:07:34] Speaker 04: You have to just clarify. [00:07:36] Speaker 05: That's right. [00:07:37] Speaker 05: That's what it requires us to say, is that indeed it is. [00:07:39] Speaker 05: And that's what you think you were always saying. [00:07:43] Speaker 05: That's exactly right. [00:07:44] Speaker 05: And there's no showing of what consumers ever thought either of us were saying. [00:07:48] Speaker 02: So what's the problem with being more specific and clear? [00:07:52] Speaker 05: Well, there's not any problem, but we weren't required to do that. [00:07:55] Speaker 05: and certainly not on a preliminary injunction basis, because there's ambiguity here about what consumers understand from it. [00:08:03] Speaker 05: Consumers don't necessarily understand. [00:08:05] Speaker 05: In the garbage disposal industry, there are two ways of doing this. [00:08:09] Speaker 05: In the blender industry, there's one way, which is input. [00:08:12] Speaker 05: In the light bulb industry, there's one way, which is input. [00:08:16] Speaker 05: in the garbage disposal industry, which is very similar to a blender. [00:08:20] Speaker 05: Some do input. [00:08:21] Speaker 04: I guess I'm still stuck on Judge Berzon's analogy to an engine like a motorboat engine. [00:08:26] Speaker 04: You're buying the motorboat engine because of output thrust, and no one's considering what the gas being put in the engine is concerned about. [00:08:36] Speaker 05: Well, you might be concerned about that as well, but you may be concerned about the rating of it to determine is this a high, medium, or low load. [00:08:44] Speaker 05: Will this take me, what speed will I go? [00:08:46] Speaker 05: No, but the speed is the output thrust. [00:08:49] Speaker 05: Everyone wants that. [00:08:50] Speaker 05: It may correspond to the horsepower, but it doesn't necessarily. [00:08:53] Speaker 05: And in fact, the record has a variety of information that shows that our grinding rate is better, that the Johnica products perform better on things that consumers care about. [00:09:03] Speaker 05: which is not just the power. [00:09:05] Speaker 05: In fact, we think that the AC motors that a syncretor uses have to be overpowered in order to achieve the same performance. [00:09:11] Speaker 01: But no one is stopping you from saying that. [00:09:13] Speaker 01: The question is whether this horse pair or designation. [00:09:17] Speaker 01: is false, not whether you couldn't come in and say ours, despite the fact that we have less output horsepower, works better, actually. [00:09:27] Speaker 05: Right, Your Honor, but the question is whether it was literally false by necessary implication, whether consumers had to understand it that way and not the way that we intended it, which is [00:09:37] Speaker 05: This is input horsepower, which is the way for blenders. [00:09:40] Speaker 01: Wasn't there a reference in the record to the fact that there was some consumer study and you say, well, that's not usable because it's here safe, but there was a reference to it? [00:09:53] Speaker 05: Well, this refers to the materiality standard. [00:09:56] Speaker 05: Your honor, so besides literal falsity, the second issue in the case is, was this deception material? [00:10:02] Speaker 01: No, but is it only referring to material, or is it also referring to what people understood? [00:10:09] Speaker 05: So the study that was summarized by an incinerator employee, not provided, but just summarized, said that horsepower is an important consideration for consumers. [00:10:17] Speaker 05: We don't disagree with that. [00:10:21] Speaker 05: It doesn't say input or output. [00:10:22] Speaker 01: You're essentially saying it shouldn't be an important consideration. [00:10:25] Speaker 01: You're saying it shouldn't be any consideration. [00:10:27] Speaker 01: It should be only a question of how it actually operates. [00:10:31] Speaker 05: Well, right, that it may or may not relate to the consumer performance, things that consumers care about ultimately. [00:10:37] Speaker 01: Well, they care about it, presumably, because they think it's the key determinant in how the thing operates. [00:10:44] Speaker 05: Well, there's no evidence of that in the record as to what consumers think. [00:10:48] Speaker 05: Well, why else would they care? [00:10:48] Speaker 05: What we have is, on the materiality standard, [00:10:51] Speaker 05: We have evidence that consumers consider horsepower, but we don't have evidence that the deception that's alleged here is actually material to consumers. [00:11:00] Speaker 05: And if I can move to the materiality point, this is another place where we think the district court made a legal error, which is to short circuit the analysis of materiality. [00:11:09] Speaker 05: Materiality is whether the deception at issue has a likelihood of changing consumer behavior and purchasing behavior ultimately. [00:11:18] Speaker 05: And the judge decided that because horsepower is an inherent characteristic or quality of... That's one thing it said, but it said more than that. [00:11:28] Speaker 01: The district court said that, but it's sort of in passing. [00:11:31] Speaker 01: It said more than that. [00:11:32] Speaker 05: Well, but the question here is... [00:11:35] Speaker 05: The deception that's alleged is that it's 14 to 39 percent deficient, the horsepower ratings that Johnica has provided. [00:11:43] Speaker 05: But there's nothing in the record that says that that affects performance of the ultimate garbage disposer or that consumers would care about that particular issue. [00:11:51] Speaker 04: Is your position, well, it's multi-leveled on this point, correct? [00:11:55] Speaker 04: You're saying you can't really do judicial notices to materiality. [00:11:59] Speaker 04: But I sort of agree with Judge Berzon that the district court is careful to point to [00:12:03] Speaker 04: not direct evidence, but inferential evidence that consumers could care. [00:12:07] Speaker 04: And I come back to the shelving and the positioning of these items. [00:12:10] Speaker 05: So we don't doubt that horsepower is a factor in consumer decisions. [00:12:13] Speaker 04: But it's capable of influencing. [00:12:15] Speaker 05: Horsepower is capable, but it's the deception here. [00:12:18] Speaker 05: But it's the deception here, which is the difference between input and output horsepower. [00:12:22] Speaker 05: Right. [00:12:23] Speaker 05: There's no evidence that this is capable of influencing consumers' purchasing decisions. [00:12:28] Speaker 05: So let's take the example. [00:12:29] Speaker 05: Here they say 14% to 39%. [00:12:31] Speaker 05: Let's say it was 1%. [00:12:33] Speaker 05: Would the court have found that that is material just because horsepower is an inherent characteristic of quality of the motor? [00:12:40] Speaker 05: No. [00:12:40] Speaker 05: We think that 1% is obviously not going to be material to consumers ultimately, and it may be made up by other factors in the Johnica model. [00:12:50] Speaker 05: In fact, we think the 14 to 39% is definitely made up by other factors in the Johnica model. [00:12:55] Speaker 05: So the court can't just look at the inherent characteristic of quality and say horsepower is important. [00:13:00] Speaker 01: What the District Court said about this is, nevertheless, even assuming that the horsepower is not an inherent part of the product, it finds that it would likely show false evidence. [00:13:07] Speaker 01: It didn't rely on the inherent. [00:13:09] Speaker 05: It's not at all clear what it's relying on. [00:13:11] Speaker 05: I'm sorry? [00:13:11] Speaker 05: It's not at all clear what the court is relying on. [00:13:14] Speaker 01: Well, then it goes on, but both in your brief scenario, you're saying that that's what you're relying on, but it's not what you're relying on. [00:13:19] Speaker 05: Well, but the fact is there was no evidence that the 14 to 39 percent difference matters to consumers such that they would change their... Counsel, you're into your rebuttal time that you wanted to reserve. [00:13:31] Speaker 03: Is there anything else you want to say on the third issue? [00:13:33] Speaker 03: And I'll give you two minutes on rebuttal. [00:13:35] Speaker 05: Thank you, Your Honor. [00:13:36] Speaker 05: Just very briefly on the irreparable injury issue. [00:13:38] Speaker 05: So here, this is an issue where we agree that the judge below made a clear error of law. [00:13:44] Speaker 05: He applied the wrong standard. [00:13:45] Speaker 05: He applied outdated case law concerning trademark cases. [00:13:50] Speaker 05: This is not a trademark case. [00:13:52] Speaker 05: Now, Insincrator says that was harmless error because, if anything, the presumption was applied in our favor rather than not. [00:14:01] Speaker 05: But it's quite clear from even recent [00:14:04] Speaker 05: decisions of this court that the harmless error doctrine does not apply when you're looking at an abusive discretion standard where there's a clear misstatement of the law on which the court relied. [00:14:14] Speaker 05: And the case I would use for that is NRAE Apple Inc. [00:14:17] Speaker 05: device performance litigation. [00:14:19] Speaker 01: What you're arguing is that even though there actually is now a statutory, or but a little statutory presumption, we should hold that mistake in your favor. [00:14:31] Speaker 05: That's right, Your Honor, because even under the abuse of discretion standard, it needs to be sent back to the district judge to actually apply his discretion using the proper legal standard. [00:14:43] Speaker 05: Thank you. [00:15:07] Speaker 00: Good morning, your honors. [00:15:08] Speaker 00: May it please the court, Michael Gervais on behalf of the appellee and sinkerator. [00:15:14] Speaker 00: Horsepower is how garbage disposers are organized on shelves. [00:15:19] Speaker 00: It's how they are sorted online. [00:15:21] Speaker 00: It's how consumers search for and decide to purchase. [00:15:26] Speaker 00: And what consumers, builders, and retailers all believe is that we're using the same metric. [00:15:33] Speaker 00: The reason for that is because everyone refers to horsepower in the same way, the output of the motor. [00:15:40] Speaker 00: Everyone that is except for Jonica. [00:15:42] Speaker 04: Well, now, he said in oral argument, it may be my recollection, he said that there's record evidence that blenders actually highlight the input horsepower, not the output horsepower. [00:15:52] Speaker 00: What it refers to, what he's referring to in the record is another UL standard, and that is also a safety standard. [00:15:59] Speaker 00: I don't believe that the record evidence reflects that it's used for advertising purposes. [00:16:04] Speaker 04: And for UL430, is there an explicit disclaimer that the safety is not aimed at advertising for consumer purchase? [00:16:11] Speaker 00: That's correct. [00:16:12] Speaker 00: Well, what it says is it expressly disclaims that it uses input current rating regardless of what's on the package or what's in your records. [00:16:22] Speaker 01: And doesn't say regardless of the output. [00:16:25] Speaker 00: It doesn't say regardless of what's on the package. [00:16:31] Speaker 01: It doesn't say that this is not a measure of efficiency. [00:16:37] Speaker 01: You say it's clear from the context that it doesn't. [00:16:40] Speaker 01: It isn't, but it doesn't say that. [00:16:44] Speaker 00: What is also in the record is an email from the United Laboratories engineers confirming that this is not to be used for advertising purposes. [00:16:56] Speaker 01: But that's a different point too. [00:16:57] Speaker 01: He doesn't say that it's not to be used as a measure of efficiency. [00:17:04] Speaker 01: In other words, your argument, as I understand it, is that the UL430, if that's what it is, is a measure of safety input, i.e., you're not going to blow up the electrical system. [00:17:18] Speaker 01: Correct. [00:17:19] Speaker 01: And not a measure of the efficiency of the waste disposer. [00:17:26] Speaker 01: Right. [00:17:27] Speaker 01: And neither of these, neither in the, [00:17:32] Speaker 01: standard self or in the mail does Is that refuted was that accepted? [00:17:39] Speaker 00: The point is is that it's not to be used for Advertising the horsepower of the motor. [00:17:46] Speaker 00: It's it's for a different purpose. [00:17:48] Speaker 01: It's to make sure that they if they advertise this this is Input at horsepower that would be fine, right? [00:17:55] Speaker 00: It depends on the message that's ultimately being conveyed under the Atlanta map you have to look at the the message in context and [00:18:02] Speaker 01: For someone to you, L430, this is input horsepower. [00:18:08] Speaker 00: That could potentially override what consumers understand, but for example... So the notion that it isn't to be used for advertising is really beside the point. [00:18:17] Speaker 00: Your Honor, I think what I'm trying to explain is that when there's a universal understanding of a particular metric, [00:18:26] Speaker 00: what the advertising, if it's going to use a different metric, it will need to explain that it's using a different metric. [00:18:31] Speaker 01: What is there in the record, or what does there have to be in the record that goes to consumer understanding as opposed to expert understanding? [00:18:38] Speaker 00: At this stage? [00:18:39] Speaker 00: Yes. [00:18:41] Speaker 00: Your Honor, I believe that what we have in the record is sufficient. [00:18:44] Speaker 01: You don't... For a literally false statement... But what is it that doesn't deal... Insofar as the information in the record deals with what experts or engineers think, is it relevant? [00:18:56] Speaker 00: Yes, that is relevant. [00:18:58] Speaker 01: Because? [00:18:59] Speaker 00: Because what the experts and the engineers are, so for example, what the expert puts into the record are examples of both consumer facing and non-consumer facing. [00:19:09] Speaker 01: I'm not talking about those experts, I'm talking about experts on these machines. [00:19:13] Speaker 01: A lot of what's in the record is about what people who know these machines on a professional basis understand. [00:19:23] Speaker 01: Correct. [00:19:24] Speaker 01: So the experts say consumer-facing, but what's their evidence? [00:19:28] Speaker 00: There's a number of sources of evidence for consumer-facing from retailer websites, for example, from bill.com, Lowe's, Home Depot, Wayfair, all of which refer to garbage disposal, horsepower in the context of the motor output. [00:19:43] Speaker 00: So, for example, build.com, the total power output capability from the included motor measured in horsepower. [00:19:50] Speaker 00: Lowe's garbage disposal motors come in varying horsepower ratings, again, referring to the motor. [00:19:57] Speaker 00: Home Depot garbage disposals come in different sizes and with different features. [00:20:00] Speaker 00: Motor sizes vary from one-third horsepower to one horsepower. [00:20:04] Speaker 00: All of these consumer... Are these the illustrations in pages 9 and 10 of your brief? [00:20:09] Speaker 00: I believe so, yes. [00:20:13] Speaker 00: pages 355, 359, 368. [00:20:17] Speaker 04: One thing that's just stepping back that would help me would be to understand the sort of the world of untrue by necessary implication as distinct from a misleading claim that you don't have here. [00:20:28] Speaker 04: Yeah. [00:20:29] Speaker 04: So how, what's the limiting principle that means that they can't allege, oh it's untrue by misleading, by necessary implication and thereby avoid the more stringency that comes as to misleading? [00:20:43] Speaker 00: I believe what the cases indicate is that you look at it in context, and if the message that is being unambiguously conveyed is false, that the message that's being received by the consumer is false, then it can be false by necessary implication. [00:20:57] Speaker 00: There may be examples where the message could potentially be false or misleading, and that would then fall into the misleading [00:21:05] Speaker 04: But in this case... Just because from a common sense standpoint, if they're putting their things right next to your clients and they're using a sort of scientifically accurate number, that sounds like misleading more than literally false. [00:21:20] Speaker 00: I don't think so, Your Honor. [00:21:21] Speaker 00: I think what the message that's being conveyed to the consumer is that there's an apples-to-apples comparison, that they are an equivalent horsepower. [00:21:28] Speaker 04: So it would be unreasonable and implausible for any consumer to think that actually that number refers to input power. [00:21:34] Speaker 04: That's the theory. [00:21:35] Speaker 00: Yes, that is, they are referring to, the only source that they have cited to is a single electrical safety standard that consumers don't have access to. [00:21:41] Speaker 01: If I understand what you're saying more precisely is that it would be unreasonable for any consumer to think that it wasn't [00:21:48] Speaker 01: the same as what the incinerator one is reporting. [00:21:52] Speaker 00: I'm sorry, Your Honor. [00:21:53] Speaker 01: What you seem to be saying is that what would be unreasonable is for any or what no consumer would think is that the number on the JNNCO company waste disposals is a different number than the one in the incinerator. [00:22:12] Speaker 01: The incinerator was there long before and they [00:22:14] Speaker 01: As you said, they at least would think that it was the same thing, whatever it is. [00:22:19] Speaker 00: That's right. [00:22:19] Speaker 00: It's equivalent. [00:22:20] Speaker 00: And we have a number of... [00:22:23] Speaker 00: non-consumer-facing resources that are industry standards on how to measure the horsepower in a motor that's introduced through our expert, Dr. Eisenstadt, from the IEEE, from NEMA, all of them refer to measuring horsepower in the context of measuring the output of the motor. [00:22:40] Speaker 04: It would have been pretty simple to find some consumer, direct consumer evidence that they were deceived, but you didn't. [00:22:46] Speaker 04: It doesn't exist in this record, correct? [00:22:48] Speaker 04: It's all by inference. [00:22:50] Speaker 00: It is by inference, Your Honor. [00:22:52] Speaker 00: Again, this is a preliminary injunction. [00:22:54] Speaker 00: It's the stage that we're at. [00:22:55] Speaker 00: Consumer surveys are not required at this stage. [00:22:58] Speaker 00: However, what we do have is, from the Eubanks Declaration, talking about consumer surveys that talk, that explain that one of the primary attributes that consumers care about is horsepower. [00:23:13] Speaker 00: And now they say, well, consumers shouldn't care about that. [00:23:15] Speaker 00: They should care about performance. [00:23:17] Speaker 00: Those aren't the words that they used in their marketing. [00:23:19] Speaker 00: They said that their horsepower is the same as our horsepower. [00:23:22] Speaker 00: They're sitting side by side next to our disposers and it's just not true. [00:23:26] Speaker 00: Their horsepower doesn't measure up. [00:23:28] Speaker 04: Could we affirm on materiality just because the motor's inherent quality is the output power or are you not asking us to do that and you're pointing to... [00:23:37] Speaker 00: You can, yes. [00:23:38] Speaker 00: Inherent quality or characteristic is a presumption that is afforded. [00:23:42] Speaker 00: However, what the lower court said is that even putting that aside, there is evidence that this is material and points to, for example, the Eubanks Declaration. [00:23:52] Speaker 00: that talks about these conservative surveys, that's not only important to consumers but important to retailers, that retailers also care about the horsepower and retailers would not, they would not be able to compete for the white label contracts if retailers understood that they don't offer a full line of disposers. [00:24:10] Speaker 00: They don't have a true one horsepower or one and a quarter horsepower disposal. [00:24:14] Speaker 01: How is the fact that Lowe's and Home Deep Home [00:24:18] Speaker 01: are organized and advertised by horsepower prove what horsepower they were talking about. [00:24:24] Speaker 00: What they were talking about in those ads is motor output. [00:24:27] Speaker 01: Not the ads, I'm talking about the materiality discussion in the district court opinion as demonstrating that it's horsepower that matters. [00:24:38] Speaker 01: Well, I suppose John could say, yes, it's horsepower that matters although their actual argument is not horsepower that matters. [00:24:45] Speaker 01: But that we still don't know [00:24:48] Speaker 01: when they're organizing it by horsepower, they're putting the Gineco ones in with the Incinerator ones as if they were apples and apples, right? [00:24:57] Speaker 01: So how does the fact that they're organizing it by horsepower demonstrate material? [00:25:02] Speaker 01: It demonstrates that people care about horsepower, but how does it prove what horsepower they care about? [00:25:07] Speaker 00: The consumers aren't getting the product capability that they are expecting. [00:25:13] Speaker 00: that they're thinking that they're buying. [00:25:15] Speaker 00: So when they are buying a one-horsepower Jonica Disposal, it's not actually one-horsepower and that's the issue. [00:25:22] Speaker 01: Again... I'm just having trouble understanding how the way the retail stores organize by horsepower demonstrates that. [00:25:33] Speaker 00: it's material because they wouldn't be afforded that shelf space that that jonica would not be able to compete in a head-to-head with our disposers because they don't truly offer one or one and a quarter horsepower disposal they're taking up shelf space [00:25:51] Speaker 00: that they shouldn't get. [00:25:51] Speaker 00: They're not competing on a level playing field, and that's why it's material. [00:25:56] Speaker 00: And again, as I was explaining earlier, they wouldn't even be able to compete for white label contracts. [00:26:00] Speaker 00: This is where they manufacture the product for, let's say, Home Depot or another retailer. [00:26:06] Speaker 00: They wouldn't be able to compete for those contracts that put disposers in thousands of stores if retailers understood that these were not truly one and over one and a quarter disposers. [00:26:16] Speaker 04: If you prevail in these first two issues, do you have any opposition to a remand for the district court in the first instance to apply the statutory presumption or do you think that here the gap filling occurred in the materiality analysis? [00:26:30] Speaker 00: Your Honor, I don't think it's necessary to remand. [00:26:33] Speaker 00: I believe this court can apply that presumption and there's sufficient evidence in this record to suggest that there is irreparable injury. [00:26:42] Speaker 00: And what's what's what's the irrefutable evidence that's that shows that so for example the district judge? [00:26:48] Speaker 00: Credited our evidence that we had lost a prior contract with a retailer And that's judgment not clear error And in addition that we were likely to show that there is going to be harm in the future because we are actively competing Yeah with Jonica for these we are applying our abuttable presumption. [00:27:08] Speaker 01: We would have to [00:27:09] Speaker 01: know what evidence there was on the other side and then it wouldn't be sufficient to convince the district court otherwise and you're saying that since she was convinced without the assumption she would certainly be convinced with the presumption. [00:27:22] Speaker 00: The district court gave them the benefit of the presumption when they should have given us the benefit of the presumption. [00:27:28] Speaker 00: That's harmless error. [00:27:29] Speaker 00: But even in the absence of the presumption, the court still found irreparable injury. [00:27:35] Speaker 00: And so I don't believe that it's necessary to remand to the district court to rehash its findings on irreparable injury. [00:27:43] Speaker 00: And so I don't believe that, again, that's necessary at this stage. [00:27:51] Speaker 00: Unless the court has any other questions, I'm happy to submit on the record. [00:27:58] Speaker 02: Thank you. [00:28:09] Speaker 05: I just have three points to make. [00:28:11] Speaker 05: First is to Judge Higginson's comment about isn't this more a misleading case as opposed to a literal falsity case. [00:28:18] Speaker 05: We couldn't agree more with that. [00:28:20] Speaker 05: That the question here is not whether [00:28:24] Speaker 05: consumers have only one way of understanding it. [00:28:26] Speaker 05: In fact, we don't think consumers have just one way of understanding what a horsepower number is divorced of any further context on the label and therefore the literal falsity finding, which by the way is quite rare and which other circuits have stated should be quite rare, only used for egregious bald-faced lies, et cetera. [00:28:44] Speaker 01: Well, we know that the consumers who are being told by the retailers that garbage disposal horsepower determines what the [00:28:51] Speaker 01: Disposal is capable of grinding. [00:28:54] Speaker 01: The higher the horsepower, the better the disposal will run. [00:28:58] Speaker 01: Food waste will be ground to finer particles. [00:29:00] Speaker 01: You'll have fewer jams, et cetera. [00:29:04] Speaker 01: Isn't that all directed at output? [00:29:07] Speaker 05: It's not necessarily, Your Honor, because it's not necessarily directed at output. [00:29:11] Speaker 05: And it doesn't say to consumers, horsepower is measured on an output basis by disassembling the motor and running it on a dynamometer. [00:29:19] Speaker 05: What it does say, and we agree with this, is that directionally higher horsepower gives you better performance, better grinding capacity, which is exactly what Johnica agrees with. [00:29:29] Speaker 01: Those with Ferguson said the total power output capability from the included motor measures in horsepower. [00:29:35] Speaker 05: Well, and so that I believe is a statement from the Ferguson website, which is one retailer that refers to output power capability. [00:29:43] Speaker 01: And that isn't at the record at three, but your position is that the house power number doesn't determine what the disposal is capable of grinding that your system is a different kind of system and [00:29:54] Speaker 01: despite the lower output, it still has equivalent grinding ability. [00:29:59] Speaker 01: So you seem to be saying the horsepower is really not relevant to that. [00:30:03] Speaker 01: It doesn't matter. [00:30:04] Speaker 05: It correlates with grinding capability, which is what the retailers are saying. [00:30:09] Speaker 05: But it doesn't have to be measured only on an output basis. [00:30:12] Speaker 05: And that's not necessarily the consumer's understanding of what the horsepower reading means. [00:30:17] Speaker 05: The organization in the store is essentially, this is a light duty, this is a medium duty, this is a heavy duty garbage disposal. [00:30:24] Speaker 05: And there's a lot of evidence in the record that shows that the Johnica disposers actually perform better. [00:30:30] Speaker 05: They're more efficient at a lower output horsepower. [00:30:32] Speaker 01: Aren't those organizational decisions based on the assumption that we're comparing apples and apples? [00:30:42] Speaker 05: But it may not be apples and apples of horsepower, Your Honor. [00:30:44] Speaker 05: It's apples and apples of grinding speed. [00:30:45] Speaker 01: Well, no, but they're putting it under the number horsepower. [00:30:49] Speaker 01: They're using horsepower, and they are representing that this is the same horsepower measure. [00:30:57] Speaker 05: Not necessarily. [00:30:57] Speaker 05: They're representing that these are comparable products. [00:31:01] Speaker 01: So why are they putting the horsepower numbers and not simply whether it's [00:31:08] Speaker 01: higher or medium grinding ability. [00:31:10] Speaker 01: That's not what they're saying. [00:31:11] Speaker 01: They're saying this is one horsepower, and actually your product is not one horsepower of output, even if, as you say, it operates equivalently. [00:31:27] Speaker 05: Right, Your Honor, but again, there's nothing here about what the consumers understand from it. [00:31:31] Speaker 01: Well, they're being told this in any event by the retailers. [00:31:34] Speaker 01: They're being told they're equivalent, and in fact, they're not. [00:31:36] Speaker 05: And, but the retailers seem very happy with the Johnica 3.25 horsepower being next to the, in Sinkerator 3.25 horsepower. [00:31:43] Speaker 01: Is there any evidence that the retailers know, or knew before this, that those numbers were not the same numbers? [00:31:48] Speaker 05: There's no evidence they do not know. [00:31:50] Speaker 05: and certainly they're in the business here and could be told exactly how it's determined. [00:31:56] Speaker 01: And you could tell them and that would be fine, but you're very resistant to doing it. [00:32:00] Speaker 05: No, I understand, Your Honor, but the question is whether we're forced to do that by the literal falsity doctrine. [00:32:05] Speaker 01: The question is why you're resisting doing it if you're not trying, you don't think it's untrue in some sense. [00:32:12] Speaker 05: Yes, but we have done it in correspondence with the court's order below. [00:32:17] Speaker 05: We don't think we should have been forced to do that and to incur the expense of doing that on the rush basis that we were forced to do it on. [00:32:25] Speaker 05: There are clearly two different ways of looking at horsepower. [00:32:28] Speaker 05: in the industry. [00:32:29] Speaker 05: There are all the competitors of Insincorator who do it the way Johnica does it, and then there's the way that Insincorator does it. [00:32:35] Speaker 05: Retailers may or may not know about this. [00:32:38] Speaker 05: Consumers have not. [00:32:39] Speaker 05: There's no evidence as to what consumers think about it, and it's not necessarily implied that it's the same way. [00:32:44] Speaker 03: We understand your argument. [00:32:45] Speaker 03: Thank you, Council. [00:32:45] Speaker 03: You're out of time unless any of my colleagues have any other further questions. [00:32:50] Speaker 03: Okay. [00:32:50] Speaker 03: Thank you, Council, all, for your helpful arguments today. [00:32:54] Speaker 03: I believe all the cases are submitted for today and we are in adjournment. [00:32:59] Speaker 03: Thank you. [00:33:00] Speaker 01: All rise. [00:33:12] Speaker 01: This court for this session stands adjourned.