Spangler Candy Co. v. Tootsie Roll Indus., LLC

372 F.Supp.3d 588

SPANGLER CANDY COMPANY, Plaintiff

v.TOOTSIE ROLL INDUSTRIES, LLC, Defendant

Case No. 3:18-cv-1146

United States District Court, N.D. Ohio, Western Division.

Filed March 13, 2019

Matthew T. Kemp, David W. Wicklund, Shumaker, Loop & Kendrick, Toledo, OH, for Plaintiff.

John L. Strand, Stephanie G. Stella, John L. Welch, Wolf, Greenfield & Sacks, Boston, MA, Robert Charles Tucker, Robison, Curphey & O'Connell, Toledo, OH, for Defendant.

MEMORANDUM OPINION

Jeffrey J. Helmick, United States District Judge

I. INTRODUCTION

Plaintiff Spangler Candy Company moved for a preliminary injunction against Defendant Tootsie Roll Industries, LLC. (Doc. No. 17). In response, Tootsie opposed the injunction, (Doc. Nos. 25 (sealed) & 26 (redacted) ), and moved to exclude expert testimony and reports introduced by Spangler in its motion for preliminary injunction. (Doc. No. 24). Spangler then filed a memorandum in opposition to expert exclusion, (Doc. Nos. 39 (sealed) & 40 (redacted) ), and a reply in support of injunctive relief sought. (Doc. Nos. 37 (sealed) & 38 (redacted) ). Following this briefing and at the request of the parties, I held oral argument on these matters.

II. BACKGROUND

This litigation is centered upon the two lollipop bags pictured above.¹ The bag on the left is manufactured by Spangler, the one on the right by Tootsie. The undisputed facts are as follows.

In 2011, after spending 20 months and more than $220,000 in an effort to "refresh its DUM DUMS packaging," Spangler began using the packaging shown above. (Doc. No. 17-2 at 3-4). Since that time, DUM DUMS have been continuously sold in this packaging. (Id. at 4).

In 2016, CHARMS MINI POPS , which then appeared in the packaging above, held only 0.04% of the lollipop market. (Doc. No. 25-1 at 2). Because Spangler had been gaining market share and was approaching that of Tootsie's, Tootsie developed a strategy in which CHARMS MINI POPS would compete with DUM DUMS. (Doc. No. 36-8, Doc. No. 36-13). Although the price and value competition strategy was introduced in January 2017, the idea of changing the packaging was not considered until May 2017.²

(Doc. No. 36-8; Doc. No. 36-12 at 23). By July 2017, the red packaging first appeared in Tootsie materials, and by September 2017, the design had been approved for use. (Doc. No. 36-3 at 4, Doc. No. 36-5, Doc. No. 36-6). Although Tootsie enlisted the services of a third-party consultant, Cassata & Associates, to develop initial designs, none of Cassata's proposed designs were used.³ (Doc. No. 36-1; Doc. No. 36-12 at 17-18). Instead, with knowledge of DUM DUMS trade dress and using no market research, Tootsie completely redesigned the package in only five months. (Doc. No. 36-4; Doc. No. 36-12 at 31-32; Doc. No. 36-13 at 39, 41, 45-46).

Spangler learned of the new CHARMS MINI POPS packaging in March 2018 and sent a cease-and-desist letter on April 3, 2018. (Doc. No. 25-2 at 20; Doc. No. 37-2 at 2-3). Tootsie promptly rejected Spangler's demand on April 12, 2018. (Doc. No. 37-2 at 4-6). After concluding Tootsie intended wide distribution, Spangler filed suit in May 2018. (Doc. No. 1; Doc. No. 37 at 18).

III. EXPERT TESTIMONY

As the trial judge, it is my duty to act as the "gatekeeper" and determine the admissibility of expert testimony. See Kumho Tire Co., Ltd. v. Carmichael , 526 U.S. 137, 147, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ; Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 592, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ; Fed. R. Evid. 104(a). This inquiry is governed in part by Rule 702, which provides,

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. Ultimately, an expert's testimony will be admissible if it "both rests on a reliable foundation and is relevant to the task at hand." Daubert , 509 U.S. at 597, 113 S.Ct. 2786.

A. STEVE ULINE

Tootsie moves to exclude the report of Steve Uline on grounds that it will not help the trier of fact, alleging the report states only conclusory opinions "based on no relevant data or reliable methodology." (Doc. No. 24-1 at 15). In part, I agree. But because Uline has the expertise necessary to testify to the product development process through his background and experience in marketing and branding, this section of the report is admitted. (Doc. No. 17-3 at 7-15; Doc. No. 24-6 at 12-13). Conversely, the remainder of his report must be excluded. (Id. at 5-6, 16-24).

The sections to be excluded are based upon unverified methodology and questionable sources rather than " ‘a reliable basis in the knowledge and experience of [the relevant] discipline.’ " Kumho , 526 U.S. at 141, 149, 119 S.Ct. 1167 (quoting Daubert , 509 U.S. at 592, 594, 113 S.Ct. 2786 ). First, Uline has no "specialized knowledge" of many of the topics on which he opines. (Doc. No. 24-6 at 7, 9). Instead, his opinion is informed by various blogs and articles he discovered through internet searches conducted in preparation of this case. (Id. at 5-6). Second, though he quotes extensively to these articles and blogs in the report and bases his opinion on them, Uline did not know many of the sources or authors and was unable to attest to their reputation. (Id. at 8-14). Finally, Uline did not verify the underlying data and methodology used to reach the conclusions upon which he relies and quotes. (Id. ). Therefore, Tootsie's motion to exclude in granted in part as to Uline's testimony.

B. MARK KEEGAN

Like expert testimony, the admissibility of surveys is governed by the Daubert standard. See Leelanau Wine Cellars, Ltd. v. Black & Red, Inc. , 452 F.Supp.2d 772, 777 (W.D. Mich. 2006). "Because almost all surveys are subject to some sort of criticism, courts generally hold that flaws in survey methodology go to the evidentiary weight of the survey rather than its admissibility." Id. at 778 (citing cases). But "[i]f the flaws in the proposed survey are too great, the court may find that the probative value of the survey is substantially outweighed by the prejudice, waste of time, and confusion it will cause at trial." Id. at 779 (quotation omitted). Tootsie argues the Squirt survey⁴ conducted by Spangler expert, Mark Keegan, must be excluded because the flaws are too great.

Keegan's survey, conducted through online interviewing, began with several screener questions to identify the survey population. Tootsie challenges neither these questions nor the survey population.

After performing screener questions and receiving general instructions, respondents were shown the DUM DUMS package and instructed, "Imagine that you are shopping for candy in a store or online. Please consider this product as you would if you encountered it while shopping for candy and are deciding whether to purchase it." (Doc. No. 18 at 47). Although Keegan testified he was "satisfied" respondents viewed the product for a sufficient amount of time to consider the product as instructed, (Doc. No. 24-2 at 9), no evidence was produced to indicate how long respondents viewed this screen before clicking "Next" to continue. This was the only time respondents were able to view the DUM DUMS product during the survey. (Doc. No. 18 at 16).

Before proceeding to the likelihood-of-confusion measurement questions, respondents were directed to a screen that possessed no question but only the instruction, "Again, imagine that you are shopping for candy in a store or online. You will now be shown several additional candy products and asked your opinions about them." (Id. at 48).

After clicking "Next" again, respondents performed two likelihood-of-confusion measurement questions. Both began with an instruction to "think of the first candy product you saw earlier in this survey." (Id. at 17,19, 49, 51) (emphasis in original). The first question asked, "For each candy product shown below, please drag and drop each product into the boxes on the right to indicate whether you believe that the product is put out by the same company that puts out the first product you saw, a different company from the company that puts out the first product you saw, or you don't know ." (Id. at 17, 49) (emphasis in original).

Respondents then proceeded to the second screen and were asked, "For each candy product shown below, please drag and drop each product into the boxes on the right to indicate whether you believe that the product is put out by a company that is affiliated, connected, or associated with the company that puts out the first product you saw; a company that is not affiliated, connected, or associated with the company that puts out the first product you saw; or you don't know ." (Id. at 19, 51) (emphasis in original).

The controls pictured above were arranged vertically below each question, along with the experimental stimulus – the red CHARMS MINI POPS bag. (Id. at 18, 20, 49-52). Next to the column of products was the column of three boxes, which were headed with the boldfaced language of the three options for each respective question. (Id. ). For each question, respondents were able to "click on each product to view a larger image." (Id. at 17,19, 49, 51). Additionally, "[t]he presentation order of the products was randomized across all respondents in each question to minimize the potential for order bias." (Id. at 20).

Following these two close-ended questions, the survey "concluded with several standard demographic questions regarding household income and education level, as well as a final attention filter question." (Id. at 21).

1. Controls

In support of exclusion, Tootsie first...