788 F. Supp. 2d 7

EMPIRE TODAY, LLC, Plaintiff, v. NATIONAL FLOORS DIRECT, INC., et al., Defendants.

Civil Action No. 08-11999-JLT.

United States District Court, D. Massachusetts.

June 2, 2011.

*10John C. Blessington, David J. Byer, David M. Glynn, Mark E. Haddad, K & L Gates LLP, Eric D. Levin, Hinckley Allen & Snyder, LLP, Boston, MA, for Counter Claimant.

Matthew J. Caccamo, John Letchinger, Wildman, Harrold, Allen & Dixon LLP, Chicago, IL, Courtney Worcester, Foley & Lardner, LLP, Boston, MA, for Counter Defendant.

Michael DeMarco, K & L Gates LLP, Boston, MA, for Defendant.

Koreen Ryan, Empire Today, LLC, Northlake, IL, for Plaintiff.

MEMORANDUM

TAURO, District Judge.

I. Introduction

This case involves a dispute primarily between Empire Today, LLC (“Plaintiff’) and National Floors Direct, Inc. (“NFD”), two at-home (or on-site) carpet and flooring providers. Plaintiff brought various claims against NFD, including tortious interference, Lanham Act violations (trademark infringement as well as false or misleading advertisement), and alter ego liability. NFD counterclaimed for defamation, tortious interference, false or mis*11leading advertisement under the Lanham Act, and abuse of process.

During a thirteen-day trial, the jury heard most of Plaintiffs and NFD’s claims, excluding those claims under Massachusetts General Laws chapter 93A, which this court has reserved.1 The jury found against Plaintiff on all of its claims and in favor of NFD on its abuse of process counterclaim. Following this adverse jury verdict, Plaintiff filed a Motion for Judgment as a Matter of Law, Pursuant to Fed.R.Civ.P. 50(b) [# 303]. Additionally, both Plaintiff and NFD filed the following motions asserting claims under Chapter 93A: NFD’s Motion for Judgment on Its Counterclaim Under M.G.L. Chapter 93A [# 312], Plaintiff's Motion to Strike Defendant’s Motion for Judgment on Its Chapter 93A Counterclaim [# 324], Plaintiff's Motion for Judgment on Its Chapter 93A Claim [# 327], and NFD’s (1) Opposition to Empire’s Motion to Strike NFD’s Chapter 93A Counterclaim; (2) Opposition to Empire’s Motion to Strike NFD’s Fee Petition, or in the Alternative, (3) NFD’s Motion to Amend Counterclaim [# 333],

Presently at issue are the aforementioned motions as well as NFD’s request for attorneys’ fees: NFD’s Application for Attorney’s Fees and Costs Under Mass. Gen. L. Ch. 93A [# 316], NFD’s Motion for Attorneys’ Fees Pursuant to 15 U.S.C. § 1117(a) [# 321], and Plaintiffs Motion to Strike Defendant’s Application for Attorney’s Fees and Costs Under Mass. Gen. L. Ch. 93A [#331], For the following reasons, Plaintiffs Motions and NFD’s Motions are DENIED.2

II. Background

Plaintiff brought this suit against NFD on December 2, 2008.3 After filing an Answer on March 3, 2009,4 NFD submitted an Amended Answer and Counterclaim on October 12, 2009.5 Eventually Plaintiff filed a Third Amended Complaint, 6 which contained ten counts. Seven of those counts were directed against NFD, five of which were as follows7: tortious interference with Plaintiffs contractual relationships, tortious interference with Plaintiffs advantageous business relationships, Lanham Act violations for trademark infringement8 and false or misleading advertisement,9 and alter ego liability.10

Plaintiff also alleged three counts against former sales representatives and employees for breaching their sales agreements, confidentiality agreements, and *12duties of loyalty.11 Plaintiff reached settlement agreements with these individuals before the end of trial.12

NFD filed its Answer and Counterclaim,,13 including a Chapter 9A claim that this court reserved for its own judgment. NFD’s Counterclaim alleged five counts: defamation, tortious interference with NFD’s advantageous business relationships, a Lanham Act violation for false and misleading advertising, and abuse of process.

Plaintiff brought two Chapter 93A claims against NFD. One Chapter 93A claim alleged that NFD engaged in unfair or deceptive business practices by interfering with Plaintiffs contractual relationships, inducing Plaintiffs employees to violate their duties of loyalty, and using Plaintiffs trade secrets and other confidential and proprietary information.14 Plaintiffs other Chapter 93A claim alleged that NFD engaged in unfair methods of competition and unfair or deceptive business practices in trade or commerce by NFD’s use of certain advertising statements that Plaintiff alleged NFD could not substantiate.15

In its Chapter 93A claim, NFD alleged that Plaintiff engaged in unfair or deceptive acts in the conduct of trade or commerce by its advertising, its defamation of NFD, and its interference with NFD’s business relationships.16

After a thirteen-day trial that excluded the Chapter 93A claims, the jury found against Plaintiff on all of its claims, in favor of NFD solely on its abuse of process counterclaim, and awarded NFD $500,000.00.17

A. Findings of Fact18

Based upon the evidence, the jury could have found the following facts.19 Plaintiff is a shop-at-home, home improvement company that sells and installs carpet and flooring in, among other places, the Boston and Hartford areas.20 NFD is a direct competitor of Plaintiff in the Boston and Hartford markets.21 Unlike other companies, neither Plaintiff nor NFD utilizes storefronts, and both have a comparatively limited selection of inventory.22 Both *13Plaintiff and NFD emphasize next-day installation,23 focus on television advertising,24 and rely on effective salespeople.25

Plaintiffs former employees and sales representatives entered into agreements that included confidentiality, non-compete, and non-solicitation provisions.26 Some of those employees had been managers.27 Roughly ten managers and thirty sales representatives left Plaintiff to work for NFD,28 some under acrimonious conditions.29

Plaintiff argued that NFD, through its employees and management, had solicited Plaintiffs employees to leave Plaintiff and join NFD.30 One former sales representative for both Plaintiff and NFD testified as such.31 This former representative also testified that NFD had Plaintiffs flooring samples and documentation, including (allegedly) confidential par sheets32 and a “pre-installation checklist.”33 Her testimony, however, was sharply disputed by various individuals’ testimony34 and at times contradicted by her cross-examination.35

In fact, both Parties may have had each others’ old par sheets and commission structure.36 But it is unclear whether this material was proven as confidential and the Parties do not press the matter post-trial on the 50(b) or 93A claims.

Since April 2006, NFD has advertised commercials that referenced a “15% or its *14[sic] free” campaign (“15% Promotion”).37 These television commercials promise to beat “anyone’s price by 15% or it’s free.”38

Plaintiff alleged that NFD was not providing the discount advertised in its 15% Promotion.39 Plaintiff pointed to (1) a customer order filled out by a sales representative that contained a discount of less than 15% and (2) customer orders in which NFD, namely Dan Rosenberg, reduced the prices by only 13%, despite claiming that he was offering a 15% discount.40

In both instances, however, customers were only entitled to receive 15% off of their orders if certain conditions were met. Customers, for instance, had to present a written quote from another company for the same quality and quantity of flooring that they were seeking from NFD.41 The aforementioned order filled out by the sales representative did not receive 15% off because it did not demonstrate the necessary prerequisites.42

As for the second point, Dan Rosenberg explained that he sometimes took 15% off a competitor’s price by dividing the competitor’s price by 1.15.43 This price calculation indeed results in only 13% off of the competitor’s price, whereas multiplying by 0.85 would result in a 15% price reduction. Of the 10% of NFD’s orders that beat competitor’s prices, this calculation by Dan Rosenberg was used in about 10% of those orders.44 Otherwise, NFD beat its competitors’ prices by 15%45 Moreover, when *15the conditions of the 15% Promotion were met, the sales representatives calculated the 15% discount in the field by multiplying by 0.85.46 NFD also cast Dan Rosenberg’s calculations both as an issue of internal disagreement47 and a method used by NFD’s own management software.48

NFD asserted various counterclaims against Plaintiff. The only two relevant here are Count IV, abuse of process,49 and Count V, Chapter 93A.50 A chronicling of the evidence paints the following story. Plaintiff had identified NFD as an aggressive challenger in the Boston market by April 2007.51 By September of 2007, Plaintiff expressed that its most significant challenge came from NFD.52 As a marketing tactic, Plaintiff performed at least eight “secret shops.”53

Plaintiffs fortunes worsened as NFD’s market share grew and Plaintiffs market share decreased.54 The causes behind the Parties’ changes in market positions were hotly contested at trial. NFD’s growing market share in Boston was, at least in large part, attributable to NFD’s low prices.55

Although some of Plaintiffs employees were calling for Plaintiff to lower its prices by October 30, 2007 (and likely by June 2007),56 Plaintiff did not decide to cut its *16prices until April 14, 2008.57 Meanwhile, from 2006 to 2009, Plaintiff cut its spending on advertising in the Boston market in half,58 which was more than it had reduced its spending on advertising in other markets.59

Plaintiff also had management problems in its Boston office.60 Plaintiff had planned to close its Boston office in spring of 2008.61 But Plaintiff eventually can-celled this plan partly because it did not want to leave NFD without direct competition, which would ease NFD’s expansion into other areas.62

Plaintiff also felt that NFD was poaching Plaintiff’s representatives.63 In response, Plaintiff began sending cease-and-desist letters to NFD.64

Additionally, two e-mail chains exist that could imply that Plaintiff viewed legal action against NFD as a tactical means of burying its competitor. First, a March 2008 e-mail from Todd Dickson65 to David Elenowitz66 and Steve Silvers67 discussed potential strategies to deal with difficulties in Plaintiffs Boston market. One of the strategies mentioned was: “We should aggressively work on the legal front, (non-competes and potentially their advertising/diselosures/disclaimers) [sic] This could be an expensive distraction at a time where [NFD is] investing in a new facility and heavy advertising.”68 Meanwhile, Plaintiffs sales continued to suffer, and it reduced its prices by April 14, 2008.69

Second, in an October 2008 e-mail, Elenowitz wrote to Silvers and Dickson that he would like to see if it would be feasible to get a “large amount” of damages and take the “most aggressive” legal position, including “appropriate suing individuals [sic].”70 Silvers replied to Elenowitz (and Dickson) that:

[If Plaintiff] truly want[ed] to hurt [a competitor in Chicago] and NFD (including in this conversation at this point as to looking to expand the legal actions to them) we should leverage the profit in other markets to offset loses in Chicago and Boston. The competitors do not *17have this advantage and [in] losing money they will need to continue to dig into their own pockets versus leveraging other profitable markets.... If we do start to make some progress and get back market share via more leads and higher closing, eventually the sale people side will take care of itself.71

These e-mails revealed Plaintiffs top management discussing legal action not merely to right NFD’s wrongs, but also seemingly as a tactical means of competition against NFD and as a tool to force NFD to incur legal fees.

Meanwhile, by May 2008, Plaintiff filed at least one complaint with the Better Business Bureau (“BBB”) regarding NFD’s 15% Promotion.72 On December 2, 2008, Plaintiff filed its initial lawsuit against NFD.73 Plaintiff also named as Defendants Sam Rosenberg and fourteen of Plaintiffs former employees or sales representatives who allegedly began working for NFD.74

By March 2009, Silvers wrote that Plaintiffs Boston office was going to close.75 The poor performance of Plaintiffs Boston office was credited in particular to being beaten on price by NFD, but also to the absence of effective leadership at Plaintiffs Boston office and generally poor economic conditions.76 A sales representative from the Boston office pointed out that after Plaintiff left Boston, NFD would have “free reign.”77 Moreover, Plaintiff would only be able to get back into the Boston market by underselling NFD and the sales representative wondered whether Plaintiff would next have to pull out of the Hartford market78 Plaintiff decided to not close its Boston office.

III. Discussion

This court will consider first Plaintiffs Rule 50(b) Motion, followed by the Parties’ Chapter 93A claims.

A. Plaintiffs Motion for Judgment as Matter of Law

Plaintiff moves for judgment as a matter of law pursuant to Rule 50 on Count IV of NFD’s abuse of process counterclaim, asking for the jury’s verdict to be set aside. Plaintiff claims that NFD fell short of its burden to provide the jury with an evidentiary basis on which to award any fees.79 Plaintiff argues that NFD mentioned its legal fees incurred in the lawsuit only twice at trial, and in merely general and unsubstantiated ways.80 This evidence, Plaintiff argues, does not provide the specificity regarding attorney hours, charges, and rates that is necessary to determine the reasonableness of the attorneys’ fees sought.81 Moreover, none of NFD’s attorneys testified or offered any affidavits as *18to the reasonableness of their bills.82 NFD instead argues that the jury’s award for abuse of process was based not merely on attorneys’ fees and costs incurred in defending against Plaintiffs claims, but on the financial harm caused to NFD’s business as a result of Plaintiffs lawsuit.83 Plaintiff rebuts NFD’s assertion by arguing that the testimony at trial about the financial harm to NFD was never quantified by documentary or expert evidence.84

Upon a Rule 50 motion, a court may (1) let the verdict stand, (2) enter judgment as a matter of law for the moving party, or (3) order a new trial.85 In ruling on a motion for judgment as a matter of law, a court considers the facts and evidence in a light most favorable to the jury’s verdict.86 But Rule 50 authorizes a court to grant a motion for a judgment as a matter of law only if a court finds that a “reasonable jury would not have a legally sufficient evidentiary basis to find for” the non-moving party.87 Additionally, a court “may not set aside the jury verdict and direct the entry of a contrary verdict, unless no reasonable jury could have returned a verdict adverse to the moving party.”88 Finally, it is worth noting that credibility “determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.”89

The jury had a sufficient evidentiary basis upon which to award $500,000 to NFD for its abuse of process counterclaim. First, contrary to Plaintiffs claims, the jury had evidence of specific financial harm caused by Plaintiffs lawsuit against NFD. Aaron Rosenberg, NFD’s president,90 testified that NFD incurred more than $1.5 million in defense costs.91 Moreover, Aaron Rosenberg testified that the diversion of those funds from advertising resulted in lost revenue and, in turn, lost profits of more than $2.7 million.92 This *19testimony was corroborated by Sam Rosenberg, NFD’s consultant with over forty years of experience in the carpet business.93 Specifically, diverting NFD’s legal fees of $1.5 million to advertising would have translated into approximately 6 million dollars in sales and 3 million dollars in profits.94 Second, various excerpts of testimony throughout the trial provided an abundant basis for the jury to decide that NFD had suffered general harm to its business.95 In sum, the testimony explained how the Rosenbergs’ diversion of time, attention, and financial resources was a result of Plaintiffs suit.

Plaintiff offers two replies. First, the Rosenbergs’ estimation of lost profits (or revenue or potential advertising) is based on their underlying estimate of legal fees at trial, which is not supported by credible evidence and, therefore, none of their estimates can support the jury award of $500,000 as NFD’s harm.96 Second, Plaintiff argues, much of NFD’s evidence of financial harm is not quantified.97 But, for the reasons explained below, both replies are insufficient to overturn the jury’s verdict on an abuse of process counterclaim for overall financial damage to NFD.

Plaintiffs first reply falls short for three reasons. First, although it is true that the legal costs incurred in defending against Plaintiffs suit are specific damages and such damages must be affirmatively proved,98 Plaintiff does not provide any authority that the testimony of a company’s president is an insufficient basis for a jury to determine damage to a company resulting from defending against a lawsuit.99 Second, Plaintiff did not provide any evidence contradicting NFD’s calculations on the matter. Third, Plaintiffs attempt to invalidate the jury’s award based upon NFD’s estimated legal fees ignores *20the other grounds for the jury’s award. Specifically, NFD’s estimate of financial harm was not based solely on its estimated legal fees. NFD’s estimated financial harm was instead grounded in various considerations, such as NFD’s inability to operate certain offices and the Rosenberg’s inability to operate NFD during trial.100 And so, even if NFD’s estimate of legal fees is not supported by credible evidence, the jury nonetheless had other sufficient, independent support for its abuse of process award.

Plaintiffs second reply falters for a few reasons. First, it is contradicted by the record: NFD did in fact provide specific damages in some instances.101 Second, Plaintiff does not cite to any authority that (more) quantification of general financial harm to NFD was necessary to support the jury’s finding for abuse of process. Finally, Plaintiffs two supporting points here, regarding this court’s exclusion of Dan Rosenberg’s testimony of specific damages and NFD’s improved financial condition, are insufficient to support overturning the jury’s verdict. First, this court’s act of preventing Dan Rosenberg from testifying at one point about NFD’s costs102 does not change the fact that the jury repeatedly heard testimony about NFD’s specific and general damages.103 Second, the fact that NFD’s financial condition improved after it was sued is an insufficient basis to undermine the jury’s determination that NFD suffered damages that prevented it from an even more profitable financial condition. The jury could have, for instance, also considered that NFD experienced disproportionately large monetary losses before Plaintiffs lawsuit because, while in its infancy, NFD aggressively spent a large amount of money to open new markets, and that NFD perhaps only began to realize the revenue from this spending after Plaintiffs suit.104

Given the above, a reasonable jury had a legally sufficient evidentiary basis upon which to determine that NFD was owed $500,000 as a result of Plaintiffs abuse of process. This court therefore holds that it is inappropriate to disturb the jury’s verdict.

B. Chapter 9SA

1. NFD’s Chapter 93A Request

NFD, in its Motion for Judgment on its Counterclaim Under M.G.L. Chapter 93A [#312], requests entry of judgment on Count V of its counterclaim against Plaintiff for violation of M.G.L. chapter 93A.105 First, NFD argues that Plaintiff engaged in unfair and deceptive conduct in violation of Chapter 93A.106 The unfair and deceptive conduct was Plaintiffs abuse of the legal process by filing suit against NFD, which was intended to hurt NFD’s busin*21ess.107 NFD also points to the manner in which Plaintiff conducted the lawsuit, such as waiting two years to file suit, refraining from seeking injunctive relief, and suing employees individually.108 Second, NFD argues that Plaintiffs conduct was undertaken willfully and knowingly to harm NFD’s business and, therefore, multiple damages are justified under Chapter 98A, Section 11.109

Plaintiff argues, inter alia, that NFD’s Chapter 93A counterclaim should be stricken because NFD, when it asserted its Chapter 93A claim, expressly mentioned only Plaintiffs alleged false advertising, defamation, and tortious interference but did not explicitly reference abuse of process.110 NFD replies that its Chapter 93A counterclaim incorporated by reference all of the previous paragraphs of NFD’s Ansiver and Counterclaim [# 160], including those that set forth the facts surrounding the alleged abuse of process and the abuse of process count itself.111

First Circuit law provides that a party may satisfy its pleading requirements by incorporating by reference other paragraphs within the same complaint or counterclaim.112

This court assumes, for the purposes of deciding NFD’s Chapter 93A counterclaim, that NFD’s abuse of process counterclaim was incorporated by reference into NFD’s Chapter 93A counterclaim. NFD satisfied its pleading requirements because its Chapter 93A counterclaim explicitly incorporated all the previous paragraphs, including its abuse of process counterclaim. NFD’s Chapter 93A counterclaim contained at least two incorporating statements. First, NFD’s counterclaim explicitly “incorporated by reference Paragraphs 1 through 82 of this counterclaim as through fully set forth herein.”113 This reference was meant to include the material that was not explicitly included in the Chapter 93A counterclaim, such as the abuse of process eoun*22terclaim. This conclusion is reinforced by another part of NFD’s counterclaim, the second incorporating statement, which provided that Plaintiffs “interference with [NFD’s] business relationships described herein constitute ‘unfair or deceptive acts or practices in the conduct of any trade or commerce114 This reference was not necessarily limited to NFD’s tortious interference counterclaim. Rather, this statement reinforced that NFD’s Chapter 93A counterclaim was incorporating NFD’s abuse of process, especially because NFD’s abuse of process claim included allegations that Plaintiff was impeding NFD from operating its business.115

Insofar as Plaintiff argues that NFD’s pre-trial memorandum or its initial jury instructions can somehow change the scope of NFD’s counterclaim,116 these claims are without merit. First, and most importantly, the argument is unsupported by the case law. In fact, the counterclaim governs.117 Second, the record indicates that Plaintiff knew NFD’s Chapter 93A counterclaim encompassed NFD’s abuse of process counterclaim. After only three days of evidence and long before Plaintiff had rested, NFD sent Plaintiff a condensed set of jury instructions that included an instruction on NFD’s Chapter 93A claim based on abuse of process.118 On October 8, 2010, the ninth day of trial, Plaintiff provided this court with draft jury instructions that included this same instruction.119

This court now turns to the merits of NFD’s Chapter 93A counterclaim. Although it is true that abuse of process can constitute a violation of Chapter 93A,120 this court, in its determination of the Parties’ 93A claims, is not bound by the jury’s finding on abuse of process.121

*23Chapter 93A, Section 2(a) makes unlawful any “[u]nfair ... acts or practices in the conduct of any trade or commerce.” 122 The Massachusetts Supreme Judicial Court (“SJC”) has instructed that “ ‘a practice or act [is] unfair under G.L. c. 93A, § 2, if it is (1) within the penumbra of a common law, statutory, or other established concept of unfairness; (2) immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to competitors or other business people.’ ” 123 In assessing claims of unfairness, Massachusetts courts have applied what is commonly known as the “rascality” test: the “ ‘objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce.’ ”124 Additionally, although “ ‘whether a particular set of acts, in their factual setting, is unfair or deceptive is a question of fact ... the boundaries of what may qualify for consideration as a c. 93A violation is a question of law.’ ”125

The elements of an abuse of process claim are that “ ‘[1] process was used, [2] for an ulterior or illegitimate purpose, [3] resulting in damage.’ ”126 As the SJC has reaffirmed, the process must be used “to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed.”127 Filing a groundless claim or having an improper motive of “vexation, harassment, or annoyance” is relevant but does not alone suffice to demonstrate ulterior purpose.128 An ulterior purpose “is not simply the intent to harm the other party directly by bringing the suit.”129 In particular, merely intending to “cause a party to expend substantial time and mon*24ey to defend against the claim in a suit” does not prove abuse of process.130 Rather, “there must be [an] intention to use process for coercion or harassment to obtain something not properly part of the suit.”131

The record does not support that NFD is entitled to judgment on its Chapter 93A claim for abuse of process.

First, NFD has not shown that Plaintiffs acts were unfair or deceptive such that NFD would be entitled to judgment on its Chapter 93A claim. NFD relies on two e-mails that reveal a discussion by Plaintiffs top management of using a lawsuit as a means of hurting NFD’s business.132 The two e-mails, however, are not enough to convince this court that Plaintiff engaged in abusive litigation unfair so as to violate Chapter 93A.133 NFD relies on a “conelusory allegation”134 that (1) Plaintiffs discussions of using its deep pockets to compete aggressively and also possibly sue NFD for allegedly wrongful conduct means that (2) the lawsuit was motivated by a desire to injure NFD’s business. But NFD has failed to prove a casual connection between (1) and (2). As for the first e-mail, NFD has shown no casual connection between the March 2008 e-mail sent by Dickson and Plaintiffs (not Dickson’s) decision to bring suit about eight months later.135 The second e-mail reflected a conversation among interested parties who were discussing various legitimate business practices, including leveraging profits in other markets and recovering market share by generating and closing more leads.136 Insofar as Silvers adverted to a speculative desire to “hurt” NFD, there is no showing that Plaintiff sued to hurt NFD’s finances or to drive it out of business. Rather, as far as the context indicates and this court’s Chapter 93A decision is concerned, this language of hurting NFD refers to (1) the legal fees that NFD would incur as a result of a legal action and (2) beating NFD by various legitimate practices, including providing different financing offers. In fact, Plaintiffs primary investor and ultimate decision maker replied to Silvers’s e-mail by endorsing only *25the improvement of financing offers and increase in advertising.137 In sum, mere conversation among interested individuals about a possible lawsuit does not constitute abuse of process.

The other conduct upon which NFD relies, even in conjunction with Plaintiffs two e-mails, is also insufficient to entitle NFD to judgment on its Chapter 93A counterclaim. Parties have been held liable under Chapter 93A for abusive litigation or conduct that was factually different from that of Plaintiff’s, such as racing to litigate claims (that clearly lacked merit) without knowing all the facts,138 or failing to make a reasonable settlement offer in the face of a meritorious claim.139 NFD does not point to evidence revealing such conduct by Plaintiff. To the contrary, Plaintiff pursued a course of conduct that outlined the path a litigant not seeking to abuse the legal process might follow. Plaintiff waited two years to initiate its suit and attempted to resolve its issues outside of court. Plaintiff sent multiple cease-and-desist letters to NFD.140 Plaintiff also attempted to reach an administrative resolution through the BBB and only sued after that avenue proved fruitless.141 In fact, NFD may not have always engaged Plaintiff in good faith during this process.142 This fact further supports that Plaintiff’s conduct was not unfair.143 Moreover, Plaintiff engaged in settlement discussions.144 There is no allegation that Plaintiff refused to discuss a settlement.145

Plaintiffs conduct also did not violate any established concepts of unfairness because Plaintiff did not engage in a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce. NFD has not shown that other corporations do not discuss pursuing legal claims as one of many means of competing against companies that they believe are engaging in illegal conduct.

Second, NFD has also not shown how Plaintiffs conduct was immoral or otherwise unscrupulous. Finally, the cases that *26NFD cites to support its Chapter 93A Motion are all factually distinguishable.146

2. Plaintiff’s Chapter 98A Request

Plaintiff requests judgment on Count IX of its Third Amended Complaint on its Chapter 93A claim, $1.6 million in compensatory damages, $3.2 million in multiple damages, attorneys’ fees and costs, and pre-judgment interest.147 Plaintiff argues that NFD’s false advertising violates Chapter 93A.148 Plaintiff argues that NFD’s 15% Promotion149 was literally false in several ways, including: (a) Aaron Rosenberg’s confirmation that NFD, at most, only provides a 13% discount; and (b) NFD has never given a free carpet or flooring job.150 Plaintiff also pointed to various inconsistencies between the testimony of the Rosenbergs’, such as at one time alleging that the promotion accounted for very little business and at other times claiming that the promotion was used “all day long” and “on every single customer.” 151

To establish a false advertising claim under Chapter 93A, a plaintiff must prove all of the elements of a false advertising claim under Section 43(a) of the Lanham Act.152 As the First Circuit has explained:

[T]o prove a false advertising claim under the Lanham Act, a plaintiff must demonstrate that (1) the defendant made a false or misleading description of fact or representation of fact in a commercial advertisement about his own or another’s product; (2) the misrepresentation is material, in that it is likely to influence the purchasing decision; (3) the misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience; (4) the defendant placed the false or misleading statement in interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the misrepresentation, either by direct diversion of sales or by a lessening of goodwill associated with its products.153

*27A plaintiff can succeed on a false advertising claim by proving either that the defendant’s advertisement is literally false or proving that it is implicitly false (i.e., true or ambiguous yet misleading).154 If an advertisement is literally false, a violation can be established without evidence of consumer deception.155 If the advertisement is implicitly false, the plaintiff has an additional burden to show that the advertisement conveys a misleading message to the viewing public.156 Additionally, a plaintiff seeking damages must show actual harm to its business.157

NFD’s conduct did not rise to the level of unfair or deceptive conduct required under Chapter 93A. In particular, Plaintiff has failed to establish at least three elements under Section 43(a) of the Lanham Act.

a. Falsity

Plaintiff has not demonstrated that NFD’s 15% Promotion was literally false. In this respect, this court agrees with the jury’s finding regarding Plaintiffs Chapter 93A claim.158 This court’s agreement with the jury may well be sufficient to deny Plaintiffs 93A Motion.159 But this court will nonetheless address Plaintiffs arguments.

First, Plaintiffs argument that NFD did not honor the 15% discount as a standard practice and therefore engaged in false or misleading advertising is not supported by the record. All of Plaintiffs examples of alleged falsity of NFD’s 15% Promotion are defeated by the fact that NFD’s 15% Promotion was subject to certain conditions.160 For instance, an exhibit in which a sales representative provided a 10% discount to a customer only demonstrated an instance of the 15% Promotion’s conditions not being satisfied, not of the 15% Promotion being dishonored.161 Likewise, of the various NFD purchase orders where less than 15% was given to customers, none were established as matching the conditions of the 15% Promotion.162 Also, even if sales representatives earned higher commissions for providing discounts under 15% and it was within their discretion to offer certain discounts,163 no evidence indi*28cates that NFD encouraged sales representatives to give less than 15% to customers who qualified for the 15% Promotion. And even the customer orders showing Dan Rosenberg’s alleged miscalculations of 15% (and other percentages)164 were not definitively established as qualifying for the 15% Promotion.165

Second, and separately, the different ways that Dan Rosenberg calculated 15% and the testimony surrounding the issue does not reflect literally false advertising. Instead, the testimony reveals that NFD and the Rosenbergs generally thought that they were consistently providing 15% to customers when the customers qualified for the 15% Promotion.166 At worst, the 15% Promotion more likely suggested an internal disagreement at NFD over a mathematical calculation.167 It was a disagreement that was only used in a small percentage of instances,168 none of which were clearly established as qualifying for the 15% Promotion.169 Such a reasonable but incorrect interpretation of a matter does not alone constitute unfair and deceptive conduct.170 Even if, arguendo, NFD or the Rosenbergs’ behavior was negligent, negligence alone does not support Chapter 93A liability.171 The internal disagreement, therefore, did not indicate that NFD did not intend to honors its intentions or that its 15% Promotion was literally false.

Third, Plaintiffs attempt to paint the Rosenbergs’ testimony as contradictory or not credible is not supported when viewing the record as a whole. For instance, Sam Rosenberg’s statements regarding the *29small share of total orders calculated by this 13% method is not contradicted by the Rosenbergs’ statements about providing 15% “every single day” or “all day long.”172 That is, NFD could beat competitor’s quotes every day without this practice constituting a substantial portion of NFD’s total business.173 Plaintiffs claim that Sam Rosenberg’s testimony is not credible because he was not involved in the day-to-day 15% calculation is irrelevant.174 Sam Rosenberg was merely pointing out that the sales representatives primarily apply the 15% Promotion in the field “by themselves.” 175 The 15% Promotion was nonetheless created by Sam or Aaron.176 Moreover, this is a curious argument given that Plaintiff, through an alter ego claim against Sam Rosenberg, repeatedly claimed that Sam Rosenberg was an integral component of NFD.177 It is therefore reasonable to not immediately discard Sam Rosenberg’s statements regarding NFD’s operations.

Additionally, NFD told the BBB its method of calculating 15%,178 and nothing suggests that the BBB accused NFD of making false statements specifically about its “15% or its free guarantee.”179 Accordingly, Dan Rosenberg’s instances of dividing by 1.15 fall into this pattern of internal disagreement.

Also, Plaintiffs argument that the 15% Promotion is literally false because NFD has never given away carpet or flooring for free180 is flawed. Just because NFD has never been in a position to give away anything for free does not mean that it would not readily do so if it were unable to lower the price by 15% on a qualifying offer.

In sum, there clearly was no practice that would make the 15% Promotion literally false. There is insufficient evidence to conclude that NFD was not providing consumers 15% on qualifying offers or providing products for free when it failed to do so.

b. Consumer Deception

Plaintiff does not argue that the alleged misrepresentation deceived a substantial *30portion of the consuming public. Plaintiff has not shown through consumer surveys, for instance, that consumers were misled by the alleged misrepresentations.181 Plaintiff presumably relies on its view that NFD’s advertisements were literally false.182 Given this court’s conclusion that NFD’s claims were not literally false, Plaintiff has also not satisfied this element,

c. Causation and Damages

Plaintiff calculates $1.6 million in damages based upon $20 on every $1000 of revenue generated since NFD’s inception.183

The First Circuit has explained that “[i]n order to prove causation under § 1125(a) of the Lanham Act, the aggrieved party must demonstrate that the false advertisement actually harmed its business.”184 A “precise showing is not required” and a diversion of sales, for example, may suffice.185 But a plaintiff must prove a casual connection between the alleged misrepresentations and the harm sustained.186

Plaintiff fails to provide sufficient evidence of how it has been harmed by NFD’s alleged conduct in the 15% Promotion. The evidence does not demonstrate a casual connection between NFD’s representations and the alleged harm that Plaintiff sustained. Contrary to Plaintiffs understanding, the money that NFD “saved” would not automatically be Plaintiffs damages. Rather, the evidence provided a bounty of reasons for Plaintiffs suffering sales, most of which focused on Plaintiffs management issues and NFD’s generally low prices.187 Plaintiffs reliance on the fact that an increase in NFD’s sales corresponded to a decrease with Plaintiffs sales188 only proves a correlation, not a causation. Plaintiff may argue that the evidence supported a finding that advertising affected leads and leads affected sales. But, first, Plaintiff has not in fact presented a causal relationship between NFD’s 15% Promotion itself and a decrease in Plaintiffs sales. Plaintiff, for instance, has not presented evidence of any consumers who chose to purchase NFD’s products instead of Plaintiffs products because of the 15% Promotion.189 Second, there is a paucity of evidence supporting Plaintiffs argument and an abundance of evidence pointing to causes that are not the 15% Promotion. If there is evidence presenting “inconsistent positions on a crucial issue of fact,” it is appropriate to agree with the jury, which is “best suited to resolve” such a dispute.190 Plaintiffs claim therefore fails on the fifth element.

*31C. Additional Motions

1. NFD’s Motion for Attorneys’ Fees Pursuant to 15 U.S.C. § 1117(a)

A Lanham Act defendant is entitled to an award of its attorneys’ fees in “exceptional eases” if it succeeds on its defense.191 The “party requesting attorneys’ fees must prove the exceptional circumstances by clear and convincing evidence.” 192 The determination of whether to award attorneys’ fees in an “exceptional case” lies within a court’s discretion.193

NFD requests an award of attorneys’ fees pursuant to the Lanham Act. NFD argues that attorney fees should be awarded to it, the prevailing defendant, because Plaintiff engaged in abusive and expensive litigation and brought unfounded claims.194 Moreover, Defendant relies on a Seventh Circuit decision, Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC,195 which recently held that a plaintiffs abuse of process constitutes an “exceptional case” warranting the award of attorneys’ fees to a successful Lanham Act defendant.196 Because, NFD argues, the jury found that Plaintiff engaged in an abuse of process by bringing this suit, including presumably its Lanham Act claim, this is an exceptional case warranting an award of attorneys’ fees.

NFD’s request for attorney’ fees here fails. First, NFD has not met the more relevant standard for attorneys’ fees in the First Circuit under the Lanham Act.197 The First Circuit has approved (or at least not disapproved of) a standard that requires that NFD, as a defendant, show something less than bad faith, such as a plaintiffs use of groundless arguments, failure to use controlling law, and generally oppressive nature of the case.198 Here, NFD has not pointed to the use of any groundless arguments or Plaintiffs failure to use controlling law. NFD has not argued here (nor demonstrated) that the suit is generally oppressive.199 Plaintiffs suit *32was not, for instance, completely lacking in merit.200 In fact, Plaintiff presented a substantial amount of evidence on its false advertising and trademark infringement claims. Both claims went to the jury201 and there was seemingly no dispute regarding two of the three elements of the trademark infringement claim.202

Second, even if this court were to consider the Seventh Circuit’s Nightingale decision, would not be entitled to attorneys’ fees. Nightingale is factually distinguishable from this case. In Nightingale, the district court had granted summary judgment in favor of defendant on the plaintiffs Lanham Act false advertising claim early in the litigation because the claim lacked “any merit” and was “disingenuous.” 203 Here, however, Plaintiffs claim was meritorious enough to go to the jury and falter on perhaps only one of three statutory elements.204 Moreover, the Seventh Circuit’s vision of a typical “exceptional” case was far removed from this case. NFD is correct that Nightingale held that a case is “exceptional” if a plaintiff is guilty of abuse of process. But the Seventh Circuit described the conditions sufficient to make a case “exceptional” as when the party’s claim is “objectively unreasonable” — that is, a claim that a rational litigant would pursue “only because it was extortionate in character if not necessarily in provable intention.” 205 As this court has already found in denying NFD’s Chapter 93A claim, however, Plaintiffs conduct did not signify an unfair or unscrupulous,206 or similarly, extortionate, character. NFD fails to fit this case within the facts or the spirit of the Seventh Circuit’s decision.

IV. Conclusion

This court has chosen not to disturb the jury’s verdict. Plaintiffs Motion for Judgment as a Matter of Law, Pursuant to Fed.R.Civ.P. 50(b) [# 303] is therefore DENIED. The various motions asserting claims under Chapter 93A-NFD’s Motion for Judgment on Its Counterclaim Under M.G.L. Chapter 93A [#312], Plaintiff's Motion to Strike Defendant’s Motion for Judgment on Its Chapter 93A Counterclaim [# 324], Plaintiff's Motion for Judgment on Its Chapter 93A Claim [# 327], *33and NFD’s (1) Opposition to Empire’s Motion to Strike NFD’s Chapter 93A Counterclaim; (2) Opposition to Empire’s Motion to Strike NFD’s Fee Petition, or in the Alternative, (3) NFD’s Motion to Amend Counterclaim [# 333]-are also DENIED for the reasons detailed above. Moreover, NFD’s Application for Attorney’s Fees and Costs Under Mass. Gen. L. Ch. 93A [# 316], for the foregoing reasons, is DENIED. Lastly, NFD’s Motion for Attorneys’ Fees Pursuant to 15 U.S.C. § 1117(a) [# 321] and Plaintiffs Motion to Strike Defendant’s Application for Attorney’s Fees and Costs Under Mass. Gen. L. Ch. 93A [# 331] are DENIED.207

AN ORDER HAS ISSUED.

ORDER

After a Motion Hearing held on January 19, 2011, this court hereby orders that, for the reasons set forth in the accompanying Memorandum:

1. Plaintiffs Motion for Judgment as a Matter of Law, Pursuant to Fed. R.Civ.P. 50(b) [# 303] is DENIED.
2. The various motions asserting claims under Chapter 93A — NFD’s Motion for Judgment on Its Counterclaim Under M.G.L. Chapter 93A [# 312], Plaintiffs Motion to Strike Defendant’s Motion for Judgment on Its Chapter 93A Counterclaim [# 324], Plaintiffs Motion for Judgment on Its Chapter 93A Claim [# 327], and NFD’s (1) Opposition to Empire’s Motion to Strike NFD’s Chapter 93A Counterclaim; (2) Opposition to Empire’s Motion to Strike NFD’s Fee Petition, or in the Alternative, (S) NFD’s Motion to Amend Counterclaim [# 333]-are also DENIED.
3. NFD’s Application for Attorney’s Fees and Costs Under Mass. Gen. L. Ch. 93A [# 316] and Plaintiffs Motion to Strike Defendant’s Application for Attorney’s Fees and Costs Under Mass. Gen. L. Ch. 93A [# 331] are DENIED.
4. NFD’s Motion for Attorneys’ Fees Pursuant to 15 U.S.C. § 1117(A) [# 321] is DENIED.
5. Plaintiffs Assented to Motion to Redact Portions of Trial Record [# 320] and NFD’s Assented to Motion to Redact Portion of Trial Record [#337] are ALLOWED. All the trial records, including transcripts and exhibits, after having been appropriately redacted, shall be UNSEALED.

IT IS SO ORDERED.

Empire Today, LLC v. National Floors Direct, Inc.
788 F. Supp. 2d 7

Case Details

Name
Empire Today, LLC v. National Floors Direct, Inc.
Decision Date
Jun 2, 2011
Citations

788 F. Supp. 2d 7

Jurisdiction
United States

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