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Law firm wins $44M judgment in false advertising case
A local trial law firm has won a $44.5-million judgment for its client in a case concerning false advertising.
The Howard Law Group in Grand Rapids said this month that its client, Hazlet, New Jersey-based LidoChem, which is a supplier of products to the agriculture and turf industries, lost significant business after a competitor, Stoller Enterprises in Houston, spread lies about the company’s products in the marketplace.
Earlier this month, U.S. District Court for the Western District of Michigan Judge Robert Jonker awarded a $44.5-million judgment to LidoChem. The final judgment includes attorney fees, interest and other costs.
Bill Howard, attorney with Howard Law Group, said the amount is more than three times the original amount awarded by a jury.
Howard said the amount reflects the court’s finding that the defendants had willfully tried to knock out the competition by spreading false information.
Stoller Enterprises could not be reached for comment prior to publication.
“We had substantial evidence that Stoller and its executives were intentionally spreading falsehoods about LidoChem and its Performance Nutrition products over a 10-year period that ultimately interfered with LidoChem’s business relationships, resulting in a substantial impact on the company and its brand,” Howard said.
The decision comes nearly two years after a jury found defendants Stoller Enterprises, Jerry Stoller and David Alexander willfully violated the Lanham Act due to their anti-competitive business activities.
The original verdict came down on March 26, 2014 after a 20-hour trial in the U.S. District Court for the Western District of Michigan Southern Division, when a unanimous jury awarded LidoChem a $12-million judgment.
Howard said the judge decided to treble the award to $36 million, due to the “egregious actions” of Stoller, as well as the “jury’s determination that the actions were intentional,” in addition to awarding the plaintiff pre-judgment interest in the amount of $7 million and attorney fees and costs in the amount of $1.5 million.
Howard said the underlying case began in 2002 in Ottawa County Circuit Court, when a farmer from Holland sued LidoChem based on the false advertising undertaken by Stoller Enterprises and its executives.
The farmer had come to believe LidoChem’s products contained a crop-damaging poison, and he claimed his crops had been damaged by its application.
The Howard Law Group won the case on behalf of LidoChem, according to Howard.
At that point, the Howard Law Group filed a lawsuit under the Lanham Act against Stoller Enterprises.
Howard explained the Lanham Act gives a company the ability to pursue a competitor that makes false statements about that company in the marketplace.
Jean Howard, attorney with the Howard Law Group, said there is a misconception that to commit false advertising, a competitor has to actually pay for advertising in some way, such as in a newspaper or on a billboard, but she said that is not true.
“Mouth-to-mouth advertising counts,” she said.
Jean Howard said in the age of Facebook and Twitter, there is increased potential for word-of-mouth advertising to cause harm, and the LidoChem case reflects that.
“This decision was the proverbial nail in the coffin in convincing at least one other circuit to finally recognize that word of mouth, person-to-person communications constituted ‘commercial advertising and promotion,’” Jean Howard said.
The fact that the companies involved are part of the agriculture industry is also important, according to Bill Howard.
He noted the Midwest is a testing ground for a lot of new agriculture products and word-of-mouth advertising spreads like “wildfire” in the farming community.
Bill Howard said in the 10-year period when Stoller executives were spreading misinformation about LidoChem, Stoller Enterprises grew from a $20-million company to a $200-million company.
“He enjoyed significant sales, while our company almost went bankrupt,” he said.
He said the LidoChem brand was tarnished to the point the company has had to go under private label to sell its products.
Bill Howard said since the final judgment was handed down, LidoChem and Stoller Enterprises have reached a confidential settlement.
Don Pucillo, president of LidoChem, said the company is “pleased” to have its “reputation cleared.”
He said the company plans to continue to “develop quality products that protect the environment and help farmers to increase yields to feed the world.”