Watkins Incorporated v. McCormick and Company, Incorporated

Background

Watkins Incorporated competes with McCormick and Company, Incorporated in the consumer market for black pepper. In 2015, Watkins sued McCormick under the Lanham Act, alleging that McCormick filled its tins with less ground black pepper than the tins could hold and thereby deceived consumers about the comparative prices of the products. Watkins seeks money damages, disgorgement of McCormick’s profits, and injunctive relief.

After discovery ended, McCormick moved for summary judgment. It argued, among other things, that Watkins could not recover McCormick’s profits because Watkins had not shown that those profits were caused by the alleged conduct or that sales had been diverted from Watkins. Watkins argued that the Lanham Act did not require proof of either attribution or diversion. In a December 7, 2021, order, the court agreed with Watkins and denied McCormick’s summary-judgment motion.

McCormick then asked the court to certify the legal question for an interlocutory appeal under 28 U.S.C. § 1292(b) and to stay, or pause, the proceedings while an appeal was considered.

Legal standard

An interlocutory appeal is an appeal before a final judgment. Under § 1292(b), certification requires: (1) a controlling legal question; (2) substantial grounds for disagreement about that question; and (3) a finding that an immediate appeal may materially advance the end of the litigation. Certification is supposed to be used sparingly in exceptional cases, and the party seeking it has a heavy burden.

Court’s analysis

The court found that the proposed appeal involved a controlling question of law: whether a Lanham Act disgorgement claim requires proof that the defendant’s profits were attributable to the challenged conduct and diverted from the plaintiff. The court described this as a pure legal question. It also found that the issue was controlling because Watkins had offered no evidence of attribution or diversion, and its disgorgement claim would fail if those items were required.

The court treated the second requirement as a closer question. McCormick argued that conflicting decisions created a substantial ground for disagreement. The court noted that some of the authorities McCormick cited addressed statutory standing rather than causation, but it also recognized conflicting case law in other jurisdictions and no controlling precedent in the Eighth Circuit. The court therefore stated that the second requirement might be met.

The court held that McCormick failed to establish the third requirement: that an immediate appeal would materially advance the litigation. Even if McCormick prevailed on the proposed legal issue and eliminated the disgorgement claim, Watkins’s claims for money damages and injunctive relief would remain and proceed to trial. The appeal might eliminate some financial evidence and witnesses, but the litigation would otherwise remain substantially the same. The court also weighed that limited benefit against the costs and inefficiency of possible multiple appeals in the same case.

Disposition

The court concluded that the case did not present the exceptional circumstances required for certification under § 1292(b). It denied McCormick’s motion to certify an interlocutory appeal and for a stay. The order did not state that either motion was denied with or without prejudice.

Classification

This is a procedural order because it addresses an interlocutory-appeal request and a stay of proceedings rather than deciding the underlying Lanham Act dispute on the merits.