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Merisant Co. v. McNeil Nutritionals, LLC
Citations: 242 F.R.D. 303; 2007 U.S. Dist. LEXIS 27676; 2007 WL 1118387Docket: Civil Action No. 04-5504
Court: District Court, E.D. Pennsylvania; April 9, 2007; Federal District Court
Merisant Company, Inc. alleges that McNeil Nutritionals, LLC and McNeil-PPC, Inc. engaged in false and misleading advertising regarding Splenda No Calorie Sweetener, violating Section 43(a) of the Lanham Act and Pennsylvania common law of unfair competition. A jury trial is set for April 9, 2007, following extensive discovery and the exchange of pretrial memoranda, which included multiple motions in limine concerning evidence admissibility under Federal Rules of Evidence 402 and 403. The Court outlines that evidence is generally admissible if relevant, making a disputed fact more probable. However, under Rule 403, relevant evidence may be excluded if its probative value is substantially outweighed by potential unfair prejudice, confusion, misleading the jury, or other factors like undue delay. The Third Circuit emphasizes a strong presumption for the admission of relevant evidence, requiring the party seeking exclusion to demonstrate that the evidence's probative value is significantly outweighed by its prejudicial effects. McNeil has filed a motion to exclude inflammatory and irrelevant evidence related to the manufacturing process of Sucralose and Splenda, arguing that Merisant intends to reference 'toxic' or 'hazardous' chemicals improperly. McNeil expresses concern that Merisant may exaggerate the details of its chemical process for manufacturing Splenda in front of the jury. The relevance of this manufacturing process is critical since Merisant's claim of literal falsity hinges on the assertion that Splenda's 'sugar-like' taste arises from its manufacturing rather than its sugar origins. The Court deems a fair and accurate description of the process appropriate, finding that McNeil will not experience unfair prejudice from this evidence, although it acknowledges McNeil's apprehension about references to 'toxic' chemicals that could imply safety issues regarding Splenda. The Court prohibits any inflammatory language related to toxicity. Regarding Merisant’s Motion in Limine No. 6, which seeks to exclude evidence of any government approval of McNeil's advertising for Splenda, the Court agrees with McNeil that relevant evidence about FDA approvals is admissible to counter Merisant's claims of an 'evolutionary' marketing strategy. Such evidence includes McNeil’s initial FDA interactions regarding Splenda and highlights its consistent emphasis on sugar origins. The Court finds no unfair prejudice to Merisant from this evidence and denies the motion. In McNeil's Motion to Exclude Third Party Statements Characterizing its Splenda Advertising, McNeil seeks to exclude various criticisms from third parties, arguing these statements constitute inadmissible hearsay and are prejudicial. Additionally, in its Motion to Exclude Anecdotal Evidence of Consumer Confusion, McNeil contends that anecdotal evidence lacks probative value, is misleading, and constitutes hearsay under federal rules. The Court considers these motions concerning the admissibility and relevance of the proposed evidence. McNeil's motion to exclude all "anecdotal evidence" is broad and aims to eliminate various types of evidence rather than specific exhibits. This includes statements from journalist Ann Curry and QVC's Bob Bowersox, as well as consumer comments to McNeil's customer service. Additionally, McNeil references a news article from the Ottawa Sun. The Court has decided not to exclude wide categories of evidence, such as “all third party statements” or “all anecdotal evidence of consumer confusion,” and has denied both of McNeil's motions. The Court recognizes the likelihood that specific evidence will arise during the trial that may need scrutiny. McNeil has claimed a defense of laches, arguing that Merisant delayed unreasonably in filing the lawsuit and that this delay has prejudiced McNeil. Merisant counters that it did not delay and that McNeil was aware of consumer confusion regarding its advertising but failed to address it. The Court indicates that any evidence presented by Merisant after the filing of its Complaint cannot be used to establish notice for laches, as the relevant time frame for this defense is prior to the lawsuit. Furthermore, Merisant asserts that certain widely disseminated statements, like Curry's remark, illustrate McNeil's neglect in correcting consumer misconceptions, potentially undermining McNeil's laches defense. The Court cites the principle that a defendant must demonstrate good faith to succeed in a laches claim, implying that McNeil must show it did not intend to mislead consumers. The Court also notes the possibility that Merisant may selectively present instances of McNeil's alleged failures to correct misconceptions, to which McNeil can respond with admissible evidence. The Court will assess the relevance of evidence introduced by either party, with a focus on avoiding cumulative evidence and ensuring clarity to prevent jury confusion. Merisant contended that certain third-party statements or anecdotal evidence could demonstrate 'actual confusion' under the Lanham Act; however, the Court is hesitant to admit such evidence without direct testimony, such as that of Ann Curry, who was not included in Merisant's pretrial witness list. This absence raises doubts about verifying any claims of confusion associated with Splenda advertising. Merisant's Motion in limine No. 1 seeks to exclude Brian Perkins' testimony due to McNeil's late disclosure of his involvement, claiming it violates Rule 37(c)(1) of the Federal Rules of Civil Procedure. Merisant argues that this nondisclosure could prejudice its case, as they were unable to prepare adequately for his testimony. The Court, however, will deny the motion to exclude but will allow Merisant to depose Mr. Perkins for up to two hours before the trial. If McNeil fails to provide Mr. Perkins for deposition or related documents, Merisant may renew its motion. In Merisant's Motion in limine No. 3, the company seeks to exclude McNeil's report titled 'Consumer Perceptions About Splenda', which evaluates consumer beliefs regarding Splenda’s naturalness. Merisant argues that McNeil has improperly withheld discovery about the report's origins under attorney-client privilege, asserting that McNeil should not selectively present favorable conclusions from the report at trial. The Court acknowledges that the report is not protected as attorney work product but emphasizes that the issue lies in whether discovery was improperly denied regarding the report's creation. McNeil asserts it has properly disclosed the Report while safeguarding privileged communications among its personnel and in-house counsel. The Report, prepared by Anne Haudrich at the direction of Eric Paul, was intended for discussion with counsel. During Haudrich's deposition, McNeil's counsel allowed inquiries about the Report’s preparation but objected when asked why Paul requested it. Merisant contends the Report was counsel-directed, a claim McNeil disputes. Haudrich testified that she believed the Report was primarily for counsel discussions and mentioned that Johnson & Johnson's in-house counsel, Mark Sievers, had requested its preparation. The attorney-client privilege cannot serve both as a protective measure and an evidential tool, as established in case law. A party cannot leverage privileged documents to support factual claims while denying the opposing party the chance to challenge those claims. Merisant argues McNeil has engaged in such conduct. The Court determined that Merisant had sufficient discovery regarding the Report's origins to effectively cross-examine McNeil’s witnesses. Additionally, Merisant claims the Report is inadmissible hearsay, but the Court has not yet ruled on this due to ambiguity surrounding McNeil's intent in introducing the evidence. Furthermore, Merisant seeks to exclude documents related to the Shugr brand sweetener, arguing they are irrelevant and prejudicial. McNeil defends the relevance of these documents to its laches defense, suggesting they demonstrate that Merisant did not unreasonably delay in challenging Shugr's advertising practices. Merisant challenged the advertising of Shugr approximately six months post-launch. McNeil contends that the timeline undermines Merisant's claims related to laches, arguing for the relevance of NAD filings and Shugr's advertising details. However, the Court disagrees, deeming such evidence largely irrelevant, with only the potential for brief comparisons to Merisant's actions permitted for laches defense. The Court emphasizes that McNeil should focus on Merisant’s conduct leading to the lawsuit rather than unrelated Shugr details, which could complicate the jury’s understanding and prolong proceedings. While acknowledging a low threshold for admitting relevant evidence, the Court finds McNeil's claims of the Shugr advertising's probative value to be lacking. Consequently, Merisant's motion to exclude this evidence is granted, but McNeil may provide a detailed offer of proof concerning Shugr's relevance to the laches issue. In a separate matter, Merisant seeks to exclude evidence regarding an unrelated trade dress lawsuit initiated by McNeil in February 2004, which involved claims of similarity between the trade dress of Merisant's product, Same With Sugar, and Splenda. Although the trade dress litigation concluded with Merisant changing its packaging, Merisant argues that this evidence is irrelevant and prejudicial as it does not pertain to false or misleading advertising claims. McNeil counters that the trade dress case illustrates common advertising practices in the industry; however, the Court previously allowed McNeil to present evidence on Merisant’s packaging as a custom within the artificial sweetener market. Thus, McNeil's argument for the necessity of introducing the trade dress litigation itself is rejected. Additionally, McNeil aims to use testimony from that litigation to highlight distinctions between advertising claims made by Merisant and Splenda, which the Court will evaluate further. McNeil intends to introduce evidence from trade dress litigation as a potential 'party admission' but has not explicitly argued this point. If McNeil insists on the necessity of this evidence, it must present it to the Court outside the jury's presence, detailing the relevant statements and context to establish its admissibility. Regarding Merisant’s Out-of-Time Motion in limine No. 8 to exclude two television commercials added by McNeil after the discovery period, Merisant contends that this late submission violates Rule 37(c)(1) of the Federal Rules of Civil Procedure due to McNeil's failure to supplement discovery under Rule 26(e)(2). Merisant claims it cannot adequately respond due to the lack of prior access to the commercials, accusing McNeil of bad faith. McNeil defends the inclusion of the commercials, asserting they do not represent a significant change in advertising despite one commercial lacking the established tagline. The Court expresses concern over McNeil’s statements regarding the commercials being similar to previously produced ones, especially in light of its previous assertions made during the summary judgment phase that all commercials included the tagline. The Court notes that McNeil's argument of potential 'untold prejudice' from changing its advertising position conflicts with the release of new commercials omitting the tagline shortly after the summary judgment ruling, without correcting its earlier statements. The Court establishes a high standard for excluding evidence under Rule 37. Despite Merisant's potential surprise regarding the late disclosure of commercials by McNeil, totaling 45 seconds of new evidence, the Court concludes that Merisant can adapt its trial strategy, which already involves assessing numerous other commercials. Consequently, the additional commercials will not be excluded under Rule 37. Merisant's objections based on Rules 402 and 403 are also rejected, as the commercials are deemed relevant and probative to the claims of false advertising, without resulting in unfair prejudice to Merisant. In terms of motions in limine: 1. McNeil's motion to exclude evidence about the sucralose manufacturing process is partly granted; while relevant information may be presented, any inflammatory language is inadmissible. 2. Merisant's motion to exclude evidence about FDA approval related to Splenda is denied, as such evidence is pertinent to the case without causing unfair prejudice. 3. McNeil's motion to exclude third-party statements about its advertising is denied without prejudice. 4. McNeil's motion to exclude anecdotal evidence of confusion regarding its advertising is also denied without prejudice. 5. Merisant’s motion to exclude Brian Perkins' testimony is denied without prejudice, but Merisant is allowed to depose him with specific conditions on document access beforehand. 6. Merisant’s motion to exclude a report on consumer perceptions about Splenda is denied without prejudice. An appropriate order follows these determinations. Merisant’s Motion in limine No. 10 to exclude pleadings from an unrelated National Advertising Division matter regarding the Shugr brand sweetener is granted, as the court finds this evidence irrelevant to the current claims and defenses, and its inclusion would confuse the jury and delay proceedings. However, McNeil is allowed to present an offer of proof regarding evidence related to the Shugr circumstances on the laches issue. Merisant’s Motion in limine No. 12 to exclude evidence or argument about unrelated trade dress litigation is denied without prejudice. Merisant's Out-of-Time Motion in limine to exclude post-discovery Splenda advertising is denied. The court determines that the post-discovery advertising, specifically two identified television commercials, is relevant to the claims and defenses and does not unfairly prejudice Merisant. The court warns that any suggestion that the FDA 'approved' McNeil's marketing would be improper, clarifying that the FDA lacks jurisdiction to approve such materials. The court will provide a limiting instruction if McNeil implies tacit FDA approval based on its review of technical information. Additionally, the court addresses McNeil's attempt to exclude a news article and notes that under the Federal Rules of Evidence, hearsay is generally inadmissible unless provided for by specific rules. Newspaper articles and statements by individuals other than the author are typically considered hearsay and may involve double hearsay issues. In Green v. Baca, the court granted the defendant's motion to exclude two newspaper articles as evidence, citing their lack of trustworthiness and probative value. Newspaper articles are typically inadmissible as hearsay when used to prove the truth of their content. In Lanham Act cases, actual evidence of confusion is significant, and statements indicating confusion can be classified into two categories: those demonstrating confusion and those simply stating it. The former type is not considered hearsay, as they are not offered for their truth but to illustrate confusion, while the latter can be admitted under Fed. R. Evid. 803(3) as indicative of the declarant's state of mind. Under Fed. R. Civ. P. 37(c)(1), a party that fails to disclose required information without substantial justification is barred from using such evidence at trial, unless the failure is harmless. Courts evaluate four factors to determine if excluding evidence is a suitable sanction for discovery violations: (1) prejudice to the opposing party, (2) ability to remedy that prejudice, (3) potential disruption to the trial, and (4) whether there was bad faith in the non-compliance. A precedent case affirmed exclusion of an expert witness due to late disclosure, highlighting that such exclusion is a severe measure typically reserved for cases of deliberate non-compliance. The importance of excluded evidence is also a factor in these decisions. In this instance, McNeil indicated that new commercials were produced over eight months after the close of discovery, which ended on July 14, 2006. McNeil also noted that these commercials did not contradict previous statements made by the company's President and counsel.