Eco Electrical Systems, LLC v. Reliaguard Inc.

Background

Eco Electrical Systems designs, manufactures, and sells covers for electrical equipment used by utility companies. The dispute concerned Eco’s relationship with Pacific Gas and Electric Company and Reliaguard’s effort to sell a competing cover. Pacific Gas and Electric Company stopped purchasing Eco’s ECC-3 cover in 2019 and approved Reliaguard’s cover for purchase.

Eco alleged that Reliaguard and Maydwell & Hartzell carried out a campaign to damage Eco’s reputation and business relationship with Pacific Gas and Electric Company. The alleged conduct included developing personal relationships with Pacific Gas and Electric Company employees, obtaining Eco product samples and pricing information, distributing videos that portrayed Eco covers as unsafe, and sending Pacific Gas and Electric Company an altered laboratory report concerning Eco’s ECC-2 cover.

Claims and summary-judgment analysis

Eco asserted claims for trade libel, intentional interference with prospective economic advantage, false advertising under California law, unfair business practices under California law, and false advertising under the federal Lanham Act. Summary judgment is a decision without a trial when the evidence shows that no reasonable jury could find for the opposing party. At this stage, the court viewed the evidence and reasonable inferences in Eco’s favor.

The court held that Eco had presented enough evidence for a jury to decide whether Reliaguard’s altered test report was false or misleading. The report omitted information that the tested sample had already been burned and changed the description of the sample from a component, or “pin,” to the ECC-2 cover itself. A jury could therefore find that Pacific Gas and Electric Company was led to believe it had received test results for an undamaged, complete cover.

The court also held that Eco had presented a triable issue concerning Reliaguard’s videos. The videos showed an ECC-10 cover, designed for larger porcelain cutouts, placed on a smaller polymer cutout. The court found that a jury could determine whether this presentation was literally false or misleading and whether it affected Pacific Gas and Electric Company’s decision or weakened the value of Eco’s products.

Because the videos were published online and shared by email, the court rejected Reliaguard’s argument that the federal Lanham Act’s interstate-commerce requirement was not met. The court denied Reliaguard’s motion for summary judgment on Eco’s Lanham Act claim.

For trade libel, the court found a genuine dispute over whether Reliaguard intentionally disparaged Eco’s products and acted with knowledge of falsity or reckless disregard for the truth. The court denied Reliaguard’s motion on that claim. The court granted Maydwell & Hartzell’s motion as to Eco’s Lanham Act claim and granted Maydwell & Hartzell’s motion for summary judgment overall; the supplied opinion text does not provide a separate, complete explanation of every claim-specific ruling involving Maydwell & Hartzell.

For intentional interference with prospective economic advantage, the court found that a jury could determine whether Eco and Pacific Gas and Electric Company had a business relationship likely to produce future economic benefits and whether Reliaguard’s allegedly misleading statements disrupted that relationship. The court denied Reliaguard’s motion on this claim. It granted Maydwell & Hartzell’s motion because Eco did not show that Maydwell & Hartzell substantially participated in the alleged false advertising or trade libel and did not identify a legal rule that the alleged entertaining of Pacific Gas and Electric Company employees violated.

The court granted the defendants’ motions for summary judgment on Eco’s California unfair-business-practices claims. It reasoned that Eco had not presented a damages theory allowing restitution and had not identified specific conduct suitable for a forward-looking injunction.

Disposition

Maydwell & Hartzell’s motion for summary judgment was granted. Reliaguard’s motion was granted in part and denied in part. Eco’s Lanham Act, trade libel, and intentional-interference claims against Reliaguard remained for trial. The supplied opinion names GreenJacket, Inc. as a defendant but does not clearly state a separate disposition for GreenJacket’s motion or claims.

Judge William Alsup stated that trial was scheduled for November 28, 2022.