U.S. Structural Plywood Integrity Coal. v. PFS Corp.

U.S. STRUCTURAL PLYWOOD INTEGRITY COALITION, et al., Plaintiffs, v. PFS CORPORATION, Defendant.

No. 19-62225-CIV-ALTMAN

United States District Court, S.D. Florida

March 30, 2022

ORDER

ROY K ALTMAN, UNITED STATES DISTRICT JUDGE

Our Plaintiffs are a coalition of American plywood manufacturers who've sued PFS-TECO-a U.S. certification agency whose job it is to ensure that imports of Brazilian plywood comply with American standards. When structural-plywood panels conform to those standards, agencies (like PFS-TECO) authorize the plywood mills to affix a PS 1-09 stamp onto the plywood itself. This stamp tells consumers that the panels are structural grade-which is to say, safe for construction. In this lawsuit, the Plaintiffs allege that PFS-TECO certified certain imported Brazilian plywood as PS-1-09-compliant when it wasn't. According to the Plaintiffs, this mis-labeling constitutes a form of false advertising that's caused them millions of dollars in damages. As we'll see, whether these stamps qualify as advertising (false or otherwise)-and to what extent they caused the Plaintiffs' damages- are the principal points of contention among the parties. In any event, to remedy their (alleged) injuries, the Plaintiffs assert claims under the Lanham Act and Florida's negligence law.

After more than two-and-a-half years of litigation, PFS-TECO moved for summary judgment, contending that: (1) the Plaintiffs lack standing under the Lanham Act; (2) the PS 1-09 stamps do not constitute false advertising; (3) PFS-TECO isn't liable for negligence under Florida law; and (4) the Plaintiffs haven't suffered measurable damages.^[1] This Order follows.

The Facts^[2]

To be used as building material in the United States, plywood must bear a stamp-the PS 1-09 stamp. See Plaintiffs' Statement of Material Facts (“Pls.' SOF”) [ECF No. 360] ¶ 66 (“Building codes across the country including Florida require PS 1-certified plywood” (citing the Florida Building Code [ECF No 369-5] § 23.03.1.5)). That's because every piece of plywood that's used for construction in the United States must be certified (and stamped) as compliant with the PS 1-09 Standard (the “Standard” or the “PS 1-09 Standard”). Id.; see also PFS-TECO's Building Code Requirements for Wood-Based Structural Panels in the United States [ECF No. 369-3] (“PFS-TECO's Building Code Requirements”) at 1 (“When building with plywood, oriented strand board (OSB), or waferboard, the panels must meet the requirements of the building code(s) enforced in your jurisdiction (city, state, etc.). . . . Both the [International Building Code®] and [International Residential Code®] require structural panels such as plywood and OSB, when used for structural purposes, to conform to U.S. Department of Commerce Voluntary Product Standard: PS 1, Structural Plywood[ ], or PS 2, Performance Standard for Wood-Based Structural-Use Panels (PS 2), and to be identified by the mark of an approved testing and grading agency.”). Note the curious appearance of the word “require” in this document. In its MSJ, the Defendant repeatedly argues that the Standard imposes (essentially) no requirements on certification agencies. The Plaintiffs disagree. This document arguably lends strong support to the Plaintiffs' overall position.

The PS 1-09 Standard is a voluntary standard that establishes certain requirements for (almost) every aspect of structural-grade plywood's composition and performance-including specifications for wood species, veneer grading, adhesive bonds, panel construction and workmanship, dimensions and tolerances, marking, moisture content, and packaging. See Defendant's Statement of Materials Facts (“Def.'s SOF”) [ECF No. 349] ¶ 2; Pls.' SOF ¶ 2. The Standard governs the manufacture of structural plywood from 70 different wood species and classifies these species into five different strength-property groups based on where the trees were grown. See Voluntary Product Standard PS 1-09 (“Product Standard”) [ECF No. 349-1] § 2.23. Group 1 consists of the strongest species. Id. To be used for construction, structural plywood must be manufactured either from a Group 1 species or from a species that, in performance tests, has met or exceeded the strength properties of Group 1 plywood. See SAC ¶¶ 75, 88.^[3] The Standard's objective “is to establish recognized requirements for products and to provide all concerned interests with a basis for a common understanding of the characteristics of the products.” Product Standard at iii (emphasis added). Note (again) that pesky word “requirements.”

The Standard, while voluntary, has become industry custom since the National Institute of Standards and Technology (“NIST”) published it in 1966.^[4] Id. And so, even though the Department of Commerce, which oversees the NIST, “has no regulatory power in the enforcement of [the Standard's] provisions, ” the Standard “represent[s] a consensus of all interested groups.” Id. The Standard is thus routinely implemented (and enforced) through sales contracts, federal specifications, purchase invoices, and advertising. Id.; see also SAC ¶¶ 69-71, 75. Indeed, construction codes in all 50 states-including Florida-require builders to use PS-1-09-compliant plywood. See Pls.' SOF ¶ 66; see also Florida Building Code § 2303.1.5 For all practical purposes, then, any structural plywood that's sold for building in the United States must bear a PS 1-09 stamp. See Pls.' SOF ¶ 66.

Our Plaintiffs-the U.S. Structural Plywood Integrity Coalition-are a collection of ten American plywood companies that manufacture PS 1-09 plywood, mostly in the Pacific Northwest.^[5]See SAC ¶¶ 14-22. Together, they've sued our Defendant, PFS TECO, ^[6] one of the two American agencies that's responsible for certifying imported Brazilian plywood.^[7] See id. ¶¶ 3-4. PFS-TECO is an accredited “independent third-party certification, inspection, and testing agency of, among other things, structural plywood.” Def.'s SOF ¶ 18; see also Pls.' SOF ¶ 18 (“Undisputed”). In that role, PFS-TECO is tasked with certifying that its clients-including, as relevant here, “fourteen (14) Brazilian plywood manufacturers who operate a total of fifteen (15) plywood mills”-comply with the requirements of the PS 1-09 Standard. See Def.'s SOF ¶ 22. PFS-TECO authorized those Brazilian clients to affix its proprietary version of the PS 1-09 stamp-the TECO TESTED® stamp-onto their structural-plywood products. See id. ¶ 23; Pls.' SOF ¶ 23 (“Undisputed”). Here's the TECO TESTED® stamp:

(Image Omitted)

See MSJ at 11; see also PFS-TECO Claim Investigation Report 19-003 [ECF No. 370-3] at 4.

But, the Plaintiffs say, PFS-TECO has allowed the Brazilian mills to apply the TECO TESTED® stamp to plywood that it knows (or has every reason to know) isn't PS-1-09-compliant. See generally SAC. In other words, the Plaintiffs believe that the TECO TESTED® stamp, when applied to the Brazilian mills' products, is false. Id. ¶¶ 100 (describing PFS-TECO's defense as “blatantly false”), 138-52 (the Plaintiffs' false-advertising counts). It's undisputed that the Plaintiffs compete with PFS-TECO for business. See Def.'s SOF ¶ 35 (“The APA competes with PFS TECO for business.”); Pls.' SOF ¶ 35 (“Undisputed”). So, to stop this “false advertising”-and to recover damages for past harms-the Plaintiffs brought this action under the Lanham Act and Florida's negligence law. See SAC ¶¶ 138-52, 154-60. In the operative, the Plaintiffs claim that PFS-TECO's sham certification process has allowed the Brazilian mills to sell cheaper, non-compliant wood all over the United States-thus displacing the Plaintiffs' stronger, better, and more expensive products. See SAC ¶¶ 138-44, 148-49, 154-57. On what grounds do the Plaintiffs base these claims? Here's an outline of some of their best evidence.

A year before the Plaintiffs filed this lawsuit, the APA^[8]-a non-profit trade association that promotes the interests of its members (including each of our Plaintiffs)-began testing Brazilian plywood that had been imported into the United States. See Def.'s SOF ¶¶ 33-36; Pls.' SOF ¶¶ 33-36 (not disputing this). They did this because, for several years before that, there'd been such an influx of Brazilian plywood into the American market that some American mills-including some of our Plaintiffs-“consider[ed] imported panels [ ] a threat to their business.” Def.'s SOF ¶ 36; Pls.' SOF ¶ 36 (“Undisputed”).^[9] And (the Plaintiffs claim) the APA became concerned about the quality of Brazilian plywood because its members “had reason to suspect that it was impossible for plywood produced from [the] loblolly and slash pine grown in southern Brazil to consistently meet the bending and stiffness requirements of the PS 1-09 [S]tandard.” SAC ¶ 97. So, over several months in 2017 and 2018, the “APA conducted a series of tests on nine sets of Brazilian plywood imported from seven manufacturers”-including some of the mills PFS-TECO had certified. See APA Product Advisory [ECF No. 1-3] at 1. In its testing, the APA found that “the tested plywood panels failed to meet the PS 1 bending stiffness requirement” for Group 1 species plywood. Id. In June 2018, the APA published its findings in its Product Advisory. See generally id.

Almost as soon as the APA issued its Product Advisory, plywood consumers began contacting PFS-TECO to express their concerns about the quality of Brazilian plywood. See July 2018 Emails Between Michael Patneaude, Steve Winistorfer, and Joe Brown Regarding PFS-TECO Response Letter [ECF No. 367-10] at 10 (noting “concerns from our costumers” as a result of the APA's Product Advisory). In July 2018 trying to address these concerns, PFS-TECO-in collaboration with its largest Brazilian client-issued a letter asserting that “PFS TECO is...