Tenth Circuit Reverses, Finds Bakery’s Lanham Act Claim Under-Proofed
A common maxim in the service industry is that the customer always knows best. But a recent decision from the Tenth Circuit suggests that the maxim has its limits when it comes to interpreting ambiguous marketing claims. In Bimbo Bakeries USA, Inc. v. Sycamore, the court held that the advertiser’s use of the word “local” in promoting its bread was not actionable under the Lanham Act, even though both a consumer survey and a jury of consumers had found the term to be misleading. The decision reflects courts’ growing comfort in rejecting proffered interpretations of labeling claims as objectively unreasonable, notwithstanding evidence that certain consumers may in fact subscribe to that unreasonable interpretation.
Bimbo Bakeries arises from a litigation in the District of Utah brought by Bimbo Bakeries USA, Inc. (“Bimbo”) against United States Bakery (“U.S. Bakery”) and Leland Sycamore. Bimbo owns, bakes, and sells a brand of bread that is marketed as “Grandma Sycamore’s Home-Maid Bread.” U.S. Bakery sold a competing bread product marketed as “Grandma Emilie’s.” Leland Sycamore is the originator of the recipe for Grandma Sycamore’s, and previously worked with U.S. Bakery on the production of Grandma Emilie’s.
Bimbo alleged that U.S. Bakery and Sycamore stole Grandma Sycamore’s recipe—a trade secret—in creating Grandma Emilie’s; infringed Bimbo’s trade dress; and, most relevant here, falsely marketed Grandma Emilie’s with the tagline “Fresh. Local. Quality.” In Bimbo’s view, the “local” claim was false because Grandma Emilie’s was sold, but not actually made, in Utah.
The district court granted summary judgment to U.S. Bakery as to Bimbo’s trade dress infringement claim, finding no infringement. But following trial, the jury found in Bimbo’s favor on the misappropriation and false advertising claims, and the district court denied motions for judgment as a matter of law on those claims. Regarding the false advertising claim, the district court denied the motion for judgment as a matter of law because it found that the term “local” is a factual statement that can be objectively proved false or misleading—as opposed to mere puffery, as U.S. Bakery argued. Moreover, the district court found that the jury properly relied on consumer survey data showing that 28% of consumers believed that “local” meant that the bread was produced in-state.
THE TENTH CIRCUIT’S DECISION
On appeal, the Tenth Circuit ruled in U.S. Bakery’s favor on all three of Bimbo’s claims. First, the Court affirmed the district court’s dismissal, at summary judgment, of Bimbo’s trade dress infringement claim. The Court agreed with the district court’s finding that the packaging used for Grandma Sycamore’s was generic and unprotectable because its appearance was “customary for homemade bread products.” Bimbo Bakeries USA, Inc. v. Sycamore, 29 F.4th 630, 639 (10th Cir. 2022). Next, the Court reversed the district court’s (and the jury’s) finding that defendants had misappropriated Bimbo’s trade secret (which was redacted from the decision), concluding that the “trade secret” was merely a compilation of generally known and readily ascertainable information and therefore unprotectable. Id. at 642.
Finally, the Court held that the Tagline “Fresh. Local. Quality.” could not support a claim for false advertising. In so holding, the Tenth Circuit made three key findings. First, the court held that the term “local” was non-actionable puffery because it “cannot be ‘adjudged true or false in a way that … admits of empirical verification.’” Id. at 643-44. The problem with the word “local,” according to the Tenth Circuit, is that there is no consensus as to what that word objectively means. Does it mean that the bread is baked locally but the ingredients can come from a more distant locale? Does every part of the bread-making process have to take place near the point of sale? Moreover, what are the spatial limits to local? The answer, as the Tenth Circuit recognized, is that there are none—“there is no principled, universal, or intuitive magic number of miles at which something stops being ‘local.’” Id. at 645. As a result, the word local is simply “an indeterminate and unverifiable adjective” akin to “favorite,” “fresh,” and “regional”—and its use, standing alone, does not create false-advertising liability under the Lanham Act. Id.
Second, the panel recognized that “[c]onsumer surveys in Lanham Act cases are properly limited to proving that factual claims that are not literally false nonetheless mislead consumers,” and cannot convert a vague term “into a statement of fact.” Id. at 645-46. As discussed above, to prove its false advertising claim, Bimbo submitted a survey of Utah consumers asking those consumers what the word “local” meant to them. But given that the Tenth Circuit had already found that the term “local” is inherently a matter of opinion and not a factual statement, the survey results merely “juxtapose[d] U.S. Bakery’s own opinion about when something qualifies as ‘local’ with the opinions of its customers.” Id. at 645. And in so doing, the survey evidence simply reinforced that divining an objective meaning of “local” through a customer survey is “unworkable”: For instance, several survey respondents had opined that “local” meant that the bread was baked in-store; if this definition were adopted, the court reasoned, a supermarket advertising bread made one block away as “local” would be liable for false advertising. It should be noted that the panel’s skepticism of consumer surveys is consistent with authority from other circuits. See, e.g., Mead Johnson & Co. v. Abbott Labs., 201 F.3d 883, 887 (7th Cir. 2000), opinion amended on denial of reh’g, 209 F.3d 1032, 1034 (7th Cir. 2000) (“[N]ever before has survey research been used to determine the meaning of words, or to set the standard to which objectively verifiable claims must be held.”)
Third, the panel considered the context in which “local” appeared in U.S. Bakery’s tagline—Fresh. Local. Quality”—and concluded that context did not lend any additional objectivity or measurability to the term. See id. at 646-47. The tagline as a whole did not “narrow the word’s focus to a particular place or proximity”; if anything, the three words, “[p]laced in proximity, … water[ed] down whatever meaning each might individually possess, reinforcing their own generality and subjectivity.” Id. In short, the Court found that “[c]ombining ‘local’ with ‘fresh’ and ‘quality’ fails to ‘suggested a benchmark by which the veracity of ‘local’ can be assessed.” Id. at 647.
Bimbo Bakeries teaches that, at least in the Tenth Circuit, if an advertiser uses marketing language that is “fundamentally subjective,” no amount of consumer evidence—such as the results of a survey—can imbue that subjective term or phrase with “empirically verifiable” meaning. That lesson dovetails with the growing body of case law highlighting courts’ reluctance to substitute standard, dictionary definitions of words with a consumer’s personal, unreasonable interpretation of them. Taken together, these decisions show that courts are increasingly willing to reject consumer interpretations of labeling claims that they find unreasonable—e.g., because they impute a singular objective meaning to an inherently subjective term (e.g. “fresh” and “local”), or because they impute an idiosyncratic interpretation to terms with fixed, ordinary meanings (e.g., interpreting “hypoallergenic” to mean a product contains no ingredients that can cause any sort of negative reaction in the body).
The Tenth Circuit’s decision is also a valuable reminder to advertisers that even when using puffery, context matters. The word “local” on its own may not be an actionable advertising claim, but if it is coupled with an image of the Empire State Building, a scenic vista of Napa Valley, or an outline of the state of Michigan, a court could conceivably conclude that this otherwise-subjective term has taken on an objective meaning in light of that surrounding context. Advertisers, therefore, should not treat decisions like Bimbo Bakeries as a blank check to use particular words and phrases, and should always consider the impression their labels and advertisements convey when taken holistically.