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Vitamins Online, Inc. v. HeartWise, Inc.

United States District Court, D. Utah, Central Division

September 24, 2019

VITAMINS ONLINE, INC., a Delaware corporation, Plaintiff,
v.
HEARTWISE, INC., an Oregon corporation d/b/a NATUREWISE, Defendant.

          MEMORANDUM DECISION AND ORDER

          DALE A. KIMBALL, UNITED STATES DISTRICT JUDGE

         This matter is before the court on Plaintiff Vitamins Online's, Inc.'s Motion for Summary Judgment on Review Claims [ECF No. 299], Motion for Summary Judgment on Product Claims[1][ECF No. 302], Motion for Summary Judgment Dismissing Counterclaims [ECF No. 308], Motion to Exclude Testimony of HeartWise, Inc's Expert Witness Richard S. Hoffman [ECF No. 304], Motion to Exclude Expert Testimony of Dr. You [ECF No. 305], Motion to Exclude Testimony of Mollie Kober [ECF No. 306], and Motion to Exclude testimony of Thomas Barman [ECF No. 307], and Defendant HeartWise, Inc.'s Renewed Motion for Summary Judgment on Review Claims [ECF No. 274], Motion for Partial Summary Judgment on Ingredients Claims [ECF No. 298], Motion for Summary Judgment to Preclude Disgorgement Remedy [ECF No. 300], Motion to Exclude Testimony of Julian McAuley [ECF No. 288], Motion to Exclude testimony of Michael A. Belch [ECF No. 289], Motion to Exclude Product Testing Testimony of Norman Howe [ECF No. 290], Motion to Exclude GMP Testimony of Norman Howe [ECF No. 291], Motion to Exclude Testimony of Tommy Noonan [ECF No. 292], Motion to Exclude Testimony of Stan V. Smith [ECF No. 293], Motion to Strike Plaintiff's Jury Demand [ECF No. 376], Objection and Motion to Strike [ECF No. 406], and Omnibus Objections to Evidence Cited in and Submitted in Support of Vitamins Online's Reply Memoranda [ECF No. 407]. The court held a hearing on the Motions for Summary Judgment on September 4, 2019. At the hearing, Plaintiff was represented by James E. Magleby, David F. Mull, and Edgar R. Cataxinos, and Defendant was represented by Joseph R. Trojan and E. Scott Savage. The court took the matters under advisement. The court considered carefully the memoranda and other materials submitted by the parties, as well as the law and facts relating to the motions. Now being fully advised, the court issues the following Memorandum Decision and Order.

         BACKGROUND

         Vitamins Online, Inc. (“Vitamins Online”) is a Utah-based company that manufactures and sells a variety of dietary supplements online, including on Amazon.com (“Amazon”), under the brand name NutriGold. Osman Khan (“Khan”) is the Chief Financial Officer (“CFO”) of Vitamins Online. HeartWise, Inc. d/b/a NatureWise's (“NatureWise”) also sells dietary supplements, including on Amazon. DavidPaul Doyle (“Doyle”) is NatureWise's Chief Executive Officer (“CEO”). For purposes of this suit, Vitamins Online and NatureWise sell two competing dietary supplements: one that contains an extract of garcinia cambogia and one that contains an extract of green coffee.

         Vitamins Online began selling its NutriGold Garcinia Cambogia and NutriGold Green Coffee products on Amazon before 2010. Before 2010, there was little demand and competition on Amazon for these products because they were not well known to consumers.

         After Dr. Mehmet Oz, the famous television personality known as “Dr. Oz, ” showcased dietary supplements containing garcinia cambogia and green coffee extract for weight loss purposes on his television show, “The Dr. Oz Show, ” in 2011 and 2012, the demand for those dietary supplements increased. With the increase in demand, other companies, including NatureWise, began to offer competing products to Vitamins Online's products. NatureWise advertised its products as having the qualities and characteristics that Dr. Oz recommended.

         After entering the green coffee and garcinia cambogia markets on Amazon, NatureWise began a practice of having its employees vote on the helpfulness of some of the reviews on its product pages. Amazon lists the reviews on its product pages using a complex algorithm that takes into account the helpfulness of the review based on the voting. By having its employees vote that positive reviews were helpful and negative reviews were unhelpful, NatureWise increased the likelihood that potential customers would see positive reviews of its products first and negative reviews last. NatureWise also encouraged customers to post or repost their positive reviews on Amazon by offering them free products or gifts cards. NatureWise would review and, in some cases, make minor edits to the reviews before asking the customers to post them on Amazon. The number of positive reviews a product receives on Amazon affects that product's position in results for product searches.

         On October 28, 2013, Vitamins Online filed a complaint against NatureWise and Doyle in this court alleging unfair competition under the Lanham Act and common law for false advertising and demanded a jury trial. The Complaint alleged false advertising based on two types of conduct: (1) manipulating Amazon's customer review system (“Review Claims”); and (2) falsely advertising and misrepresenting the content and characteristics of its green coffee and garcinia cambogia products (“Ingredients Claims”). On November 20, 2013, NatureWise filed its Answer and moved to dismiss Doyle from the case for lack of personal jurisdiction. Vitamins Online consented to his dismissal, and the court dismissed him from the case without prejudice in February 2014. The Answer included counterclaims against Vitamins Online and a third-party complaint against NutriGold and Khan. The counterclaims and third-party complaint alleged six causes of action: (1) violation of section 43(a)(1)(A) of the Lanham Act (28 U.S.C. § 1125(a)(1)(A)); (2) violation of section 43(a)(1)(B) of the Lanham Act (28 U.S.C. § 1125(a)(1)(B)); (3) common law unfair competition; (4) defamation per se; (5) defamation; and (6) intentional interference with economic relations. The counterclaims alleged that Vitamins Online had interfered with NatureWise's suppliers and consumers and made various false accusations about NatureWise's products. NatureWise alleged that Kahn purchased over one thousand bottles of one of its garcinia cambogia products and then resold those bottles with an insert that was entitled “AS IS.” The insert cautioned purchasers to read it before opening the bottle or else the purchaser would unable to return it for a refund. The insert then explained that the product did “not contain inside the bottle what is claimed on the outside label, ” that a third-party laboratory had tested and concluded that the label did not entirely match the content of the bottle, and that NatureWise's online product reviews were not genuine. The insert also claimed that the manufacturer was being sued for its scams and purported fraudulent practices. Lastly, Vitamins Online and Nutrigold posted comments on negative reviews that consumers left on NatureWise's Amazon page in which they allegedly further disparaged NatureWise.

         Eventually, both Vitamins Online and NatureWise filed motions for summary judgment. Specifically, Vitamins Online argued that the undisputed material facts established the validity of its Ingredients Claims. NatureWise responded by arguing that Vitamins Online had failed to demonstrate that the representations regarding its Ingredients Claims were material or had caused Vitamins Online actual injury. NatureWise further moved for summary judgment on the Review Claims arguing that Vitamins Online had failed to demonstrate that NatureWise's alleged conduct amounted to either literally false or impliedly false representations. The court denied both the motions (the “First Order”) but denied the Review Claims portion of NatureWise's motion without prejudice. Instead of granting the Review Claims portion of the summary judgment motion, the court granted Vitamins Online's 56(d) motion to conduct additional discovery.

         After the additional discovery was complete, NatureWise filed a new motion for summary judgment to dismiss the Review Claims. The court granted in part and denied in part NatureWise's motion (the “Second Order”). Specifically, the court granted summary judgment with respect to Vitamins Online's claim for false advertising based on the offering of free products in exchange for the posting of positive reviews but denied summary judgment with respect to Vitamin's Online claims for false advertising based on NatureWise's practice of block voting on the helpfulness of customer reviews. Then, on May 11, 2017, the court vacated the Second Order because the court had granted it based on various assumptions, including that expert discovery was complete, but at that point, it was not. Thus, the court vacated the part of the Second Order granting NatureWise summary judgment and allowed Vitamins Online to continue its expert discovery.

         Then, in January 2019, when Vitamins Online again moved for summary judgment, it clarified which remedies it would continue pursuing in this case: disgorgement and injunctive relief. It therefore elected to limit its monetary recovery to “defendant's profits.”

         On March 29, 2019, after both parties had moved for summary judgment again, NatureWise moved to dismiss all its claims with a right to a jury. More specifically, it moved to dismiss its Fourth, Fifth, and Sixth Causes of Action. It also clarified that the only remedies it now seeks are an injunction and disgorgement of Vitamins Online's profits, and it withdrew its demand for a jury trial. The court granted NatureWise's Motion on August 19, 2019.

         DISCUSSION

         Both parties now move for summary judgment on the Review Claims and Ingredients Claims, NatureWise seeks summary judgment to preclude disgorgement, and Vitamins Online seeks summary judgment to dismiss the counterclaims. In addition, each party seeks to exclude the testimony of the other's expert witnesses and raises evidentiary objections, and NatureWise moves to strike Vitamins Online's jury trial demand. Given the number of motions pending before the court, the court will proceed with its analysis in the following manner: first, the court will address the motions to exclude expert testimony and evidentiary objections as the motions for summary judgment depend on that testimony and evidence; the court will then address the motions for summary judgment by addressing the Review Claims motions together and the Ingredients Claims motions together, and then resolve the remaining motions regarding disgorgement and the counterclaims; lastly, the court will conclude by addressing NatureWise's motion to strike Vitamins Online's jury trial demand.

         I. Motions to Exclude Expert Testimony

         The standard for the admissibility of expert testimony is governed by Federal Rule of Evidence 702. Rule 702 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. When applying Rule 702 to analyze whether an expert will be allowed to testify, it is important to remember that the exclusion of expert testimony is generally treated as “the exception, not the rule.” Randolph v. QuikTrip Corp., No. 16-1063-JPO, 2017 WL 2181120, at *2 (D. Kan. May 18, 2017). Still, a district court must play a “gatekeeping role” to ensure that only proper expert evidence under Rule 702 is introduced to the fact finder at trial. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993). That gatekeeping role, however, “is not intended to serve as a replacement for the adversary system.” Bimbo Bakeries USA, Inc. v. Sycamore, No. 2:13-CV-00749, 2017 WL 1377991, at *2 (D. Utah Mar. 2, 2017). Rather, “the appropriate means of attacking shaky but admissible evidence is through vigorous cross-examination, and the presentation of contrary evidence.” Id.

         “In assessing whether testimony will assist the trier of fact, district courts consider several factors, including whether the testimony ‘is within the juror's common knowledge and experience,' and ‘whether it will usurp the juror's role of evaluating a witness's credibility.'” United States v. Gutierrez de Lopez, 761 F.3d 1123, 1136 (10th Cir. 2014) (quoting United States v. Garcia, 635 F.3d 472, 476-77 (10th Cir. 2011)). In making this assessment, courts are to “conduct a common-sense inquiry into whether a juror would be able to understand certain evidence without specialized knowledge.” Id. (quotation marks omitted). Significantly, if there are any doubts as to whether an expert's testimony will be useful, such doubts “should generally be resolved in favor of admissibility.” Id. Therefore, Rule 702 permits an expert's testimony “if it will simply help the trier of fact to understand the facts already in the record, even if all it does is put those facts in context.” Id. (quoting 4 Jack B. Weinstein & Margaret A. Berger, Weinstein's Federal Evidence § 702.03 [1] (Joseph M. McLaughlin, ed., Matthew Bender, 2d ed. 2014)).

         Lastly, a district court has “‘wide discretion' in determining whether a witness's experience is sufficient to qualify him [or her] as an expert.” Ronwin v. Bayer Corp., 332 Fed.Appx. 508, 513 (10th Cir. 2009) (quoting United States v. Arney, 248 F.3d 984, 991 (10th Cir. 2001)). “[A]s long as an expert stays within the reasonable confines of his [or her] subject area, ” Tenth Circuit case law dictates that “a lack of specialization does not affect the admissibility of [the expert] opinion, but only its weight.” Ralston v. Smith & Nephew Richards, Inc., 275 F.3d 965, 970 (10th Cir. 2001). Put differently, if “there is a logical basis for an expert's opinion, the weaknesses in the underpinnings of the opinion go to the weight and not the admissibility of the testimony.” McDonald v. N. Am. Specialty Ins. Co., 224 Fed.Appx. 761, 767 (10th Cir. 2007) (citing Compton v. Subaru of Am., Inc., 82 F.3d 1513, 1518 (10th Cir. 1996)).

         In this case, both parties seek to exclude the other side's experts from testifying. Specifically, NatureWise moves to exclude the testimony of Julian McAuley, Michael A. Belch (“Dr. Belch”), Norman Howe, Tommy Noonan, and Stan V. Smith. On the other hand, Vitamins Online moves to exclude the testimony of Richard S. Hoffman (“Hoffman”), Hong You, Mollie Kober, and Thomas Barman. Despite the numerous attacks that both parties launch on the admissibility of the other's experts, the majority of these motions can be resolved by simply applying the standard above. In particular, much of the argumentation the parties employ in their briefing goes to the weight of the experts' testimony, not the admissibility. As discussed above, the court must keep in mind that its gatekeeping role is not meant to replace the judicial system's adversary system. Because the parties' arguments go mostly to the weight of the experts' testimony and not the admissibility, the court concludes that the proper place to attack the challenged testimony is through cross-examination at trial. There, the parties will have ample opportunity to challenge the experts' testimony and present contrary evidence that undermines the experts' claims.

         The court does, however, find some potential issues with the proposed testimony of Hoffman. There are several purposes for which an expert may offer his or her testimony, but those purposes do not include opining on what constitutes the law; that purpose is within the sole discretion of the court. Thus, while the court will permit Hoffman to opine on some subject matters, the court will preclude him from offering testimony that interprets the law. More specifically, Hoffman will not be allowed to testify regarding the burden-shifting framework under the Lanham Act; whether there are legal presumptions of injury in this case; or his interpretation of (1) relevant case law or (2) any secondary source's explanation of relevant case law. These are strictly legal questions that are to be left to and explained by the court.

         Therefore, the court denies each of the parties' motions to exclude expert testimony, with the exception of Vitamins Online's motion to exclude Hoffman's testimony, which the court grants in part and denies in part. The court will thus consider all the evidence from the parties' experts in deciding the motions for summary judgment, except as clarified regarding Hoffman's testimony.

         II. Evidentiary Objections

         When determining whether evidence should be considered to decide a motion for summary judgment, the general rule is that evidence submitted at the summary judgment stage may be in a “form of evidence that is usually inadmissible at trial” so long as “the content or substance of the evidence [is] admissible.” Johnson v. Weld County, 594 F.3d 1202, 1210 (10th Cir. 2010); see also Fed. R. Civ. Proc. 56(c)(2) (“A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible at trial.” (emphasis added)). But this general rule does not give the court “a license to relax the content or substance of the Federal Rules of Evidence when viewing” summary judgment evidence. Id. For example, the court should not consider hearsay evidence on summary judgment, see id., and the court should only consider evidence that has been properly authenticated, see Law Co. v. Mohawk Const. & Supply Co., 577 F.3d 1164, 1170 (10th Cir. 2009).

         Throughout the motions for summary judgment and motions to exclude expert witnesses, the parties, but almost exclusively NatureWise[2], raise a litany of objections to evidence submitted with those motions. The objections that NatureWise raises pertain to relevance (Federal Rule of Evidence 402), expert testimony (Federal Rule of Evidence 702), hearsay (Federal Rule of Evidence 802), and foundation (Federal Rule of Evidence 901). Regarding the objections NatureWises raises under Rule 702 (which are essentially reiterations of its arguments in its motions to exclude experts), the court need not entertain them given its decision to deny NatureWise's motions to exclude Vitamins Online's experts. As for NatureWise's objections under Rules 402, 802, and 901, the court, just as it did in the First Order, finds that NatureWise has incorrectly applied the principles of the Federal Rules of Evidence. The court further concludes that NatureWise's objections are without merit.

         NatureWise also objects to Vitamins Online's reliance on evidence that it claims was untimely produced. On January 9, 2019, two days before summary judgment motions were due, Vitamins Online's counsel sent to NatureWise's counsel an additional 10, 000 pages of documents. NatureWise therefore asks the court to strike these documents for being untimely and prohibit Vitamins Online from relying on any evidence contained in those documents.

         Federal Rule of Civil Procedure 37(c)(1) governs situations where a party fails timely to disclose information. It provides, in relevant part:

Failure to Disclose or Supplement. If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.

Fed. R. Civ. P. 37(c)(1). When considering whether a violation of Rule 26(a) is justified or harmless, courts analyze the following four factors: “(1) the prejudice or surprise to the party against whom the testimony is offered; (2) the ability of the party to cure the prejudice; (3) the extent to which introducing such testimony would disrupt the trial; and (4) the moving party's bad faith or willfulness.” Jacobsen v. Deseret Book Co., 287 F.3d 936, 953 (10th Cir. 2002) (quoting Woodworker's Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999)).

         Here, in response to NatureWise's objection, Vitamins Online provided the court with important context: of the 10, 729 documents that it produced, 10, 658 were comprised of printouts from Amazon reviews and comments on NatureWise's product pages. Further, the remaining documents consisted of Amazon's online policies, a screen capture of NatureWise's website, an Amazing Selling Machine Training Guide produced by NatureWise in 2016, screen captures from the Amazing Selling Machine website, a testimonial video of Doyle, and slides from an FTC presentation. Importantly, most of this information is publicly available, and NatureWise was already aware of it. Given this added context, the court concludes that the four factors weigh in favor of finding that Vitamins Online's conduct was harmless. Thus, the court rejects NatureWise's objection.

         Lastly, Vitamins Online objects to a graph that NatureWise included in its Reply in supports of its Motion to Preclude Disgorgement Remedy. Vitamins Online argues that the graph lacks any citation to any evidence that supposedly supports it. NatureWise contends that the objection should be overruled because the graph simply takes information and evidence from the underlying motion and places it in visual form. The court agrees with NatureWise. The court therefore rejects Vitamins Online objection because the graph is a visual representation of evidence submitted in the underlying motion, and Vitamins Online makes no objection to that evidence in its other form.

         Because the court rejects each of the parties' evidentiary objections, it will consider all the evidence to resolve the issues raised in the motions for summary judgment.

         III. Motions for Summary Judgment

         Summary judgment is appropriate “when there exists no genuine issue of material fact, such that the moving party is entitled to judgment as a matter of law.” Lindsey v. Hyler, 918 F.3d 1109, 1113 (10th Cir. 2019). “An issue is ‘genuine' if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way. . . . An issue of fact is ‘material' if under the substantive law it is essential to the proper disposition of the claim.” Sidlo v. Millercoors, LLC, 718 Fed.Appx. 718, 725 (10th Cir. 2018) (quoting Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998)). Importantly, when analyzing a party's motion for summary judgment, the court must view the evidence “in the light most favorable to the non-moving party, ” Donner v. Nicklaus, 700 Fed.Appx. 877, 878 (10th Cir. 2017), and refrain from “judg[ing] witness credibility or weigh[ing] evidence, ” Daniels v. United Parcel Serv., Inc., 701 F.3d 620, 627 (10th Cir. 2012).

         a. Review Claims

         Both parties move for summary judgment on the Review Claims.[3] Vitamins Online contends that there exist no genuine issues of material fact that it has established its claim for false advertising under the Lanham Act. Conversely, NatureWise avers that, based on the undisputed evidence, Vitamins Online's false advertising claim must fail as a matter of law.

         The Lanham Act provides that:

(1) [a]ny person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a) (2012). The Tenth Circuit has interpreted this statute to require a plaintiff to produce evidence of four elements to establish a false advertising claim:

(1) that defendant made material false or misleading representations of fact in connection with the commercial advertising or promotion of its product; (2) in commerce; (3) that are either likely to cause confusion or mistake as to (a) the origin, association or approval of the product with or by another, or (b) the characteristics of the goods or services; and (4) injure the plaintiff.[4]

Cottrell, Ltd. v. Biotrol Int'l, Inc., 191 F.3d 1248, 1252 (10th Cir. 1999) (citations omitted). Under this test, courts have concluded that “a failure to disclose facts is not actionable [for false advertising], unless the failure is relevant to an affirmative statement that is made false or misleading by its omission.” Wellnx Life Scis. Inc. v. Iovate Health Scis. Research Inc., 516 F.Supp.2d 270, 285-86 (S.D.N.Y. 2007) (quotation marks omitted) (citing Register.com, Inc. v. Domain Registry of Am., Inc., 2002 U.S. Dist. 24795, at *50 (S.D.N.Y. Dec. 27, 2002). In other words, whether the plaintiff is alleging ...


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