Opinion
C041176.
7-31-2003
DAVID GOOD, Plaintiff and Appellant, v. BROYHILL FURNITURE, INC., Defendant and Appellant.
In this unfair competition/false advertising case, plaintiff David Good claimed defendant Broyhill Furniture, Inc., a North Carolina furniture manufacturer, was misleading consumers about the wood content of its "Cherry Hill" line of furniture by using that very name for the furniture, as well as by other means. The trial court rejected most of Goods claims, including claims the Cherry Hill "tear sheet" and national advertisements were likely to deceive reasonable consumers into believing the entire furniture line was constructed of solid cherry wood. The court did find, however, that Broyhills Web site was likely to deceive reasonable consumers about the wood content of the furniture because certain pages on the Web site described the furniture line as "Available in Cherry" — a phrase the court concluded consumers would understand to refer to the type of wood used to construct the furniture, rather than the color of stain used to finish it. Even though Broyhill had modified its Web site by the time of trial to eliminate the offending statement, the court nonetheless enjoined Broyhill from using the statement "Available in Cherry" on its Web site unless the exposed surfaces of the furniture referenced were constructed entirely of solid cherry wood or the Web page on which the statement appeared explained that they were not.
A "tear sheet" is a promotional pamphlet made available to consumers at the point of sale to "give the consumer an overall impression of the [furniture] collection."
On appeal, Broyhill contends the judgment must be reversed because: (1) this action was not a proper representative action under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL) because there were no injured parties; (2) the UCL cannot constitutionally be applied to the operation of a "passive" Web site outside of California; (3) the injunction was based on an unwarranted assumption that Internet users would not follow a link to another Web page that described the furnitures "cherry finish"; and (4) there was no substantial evidence Broyhill was likely to use the unqualified statement "Available in Cherry" again on its Web site.
All further statutory references are to the Business and Professions Code unless otherwise indicated.
A "passive Web site" is one "that does little more than make information available to those who are interested in it." (Jewish Defense Organization, Inc. v. Superior Court (1999) 72 Cal.App.4th 1045, 1060.)
On cross-appeal, Good contends the trial court erred in finding that Broyhills tear sheet and national advertisements, which Good contends contained "deceptive representations" similar to those on the Web site, were not likely to deceive consumers.
We conclude substantial evidence supports the trial courts finding that Broyhills tear sheet and national advertisements were not likely to deceive reasonable consumers about the wood content of Broyhills Cherry Hill furniture. We also conclude, however, that substantial evidence does not support the trial courts finding that Broyhills Web site was likely to deceive reasonable consumers. Accordingly, we will reverse the judgment and direct the trial court to enter judgment in favor of Broyhill.
FACTUAL AND PROCEDURAL BACKGROUND
Broyhill is a household furniture manufacturer located in North Carolina. Broyhill manufactures a line of furniture under the name "Cherry Hill" that includes tables, desks, chairs, book cases, armoires, entertainment units, and other pieces. Broyhill uses various materials to construct Cherry Hill furniture, including three-quarter-inch thick cherry wood, cherry veneer (which is 1/28th of an inch thick cherry wood), particle board, plywood, hardboard, poplar, and maple. Some of the particle board and hardboard used to construct Cherry Hill furniture is printed or engraved with ink to simulate the grain of cherry wood.
In April 1999, Good filed a complaint on behalf of himself and "the general public of the State of California" for injunctive and other relief under sections 17204 and 17535, alleging that Broyhill was misrepresenting to consumers in "catalogs, brochures, newspaper layouts and the like," as well as by the Cherry Hill name itself, that its Cherry Hill line of furniture was made of solid cherry wood.
Section 17204 provides that actions for relief under the UCL may be prosecuted "by any person acting for the interests of itself, its members or the general public." Similarly, section 17535 provides that actions for injunctive relief under the false advertising law (§ 17500 et seq.) may be prosecuted "by any person acting for the interests of itself, its members or the general public."
The case was tried to the court in January 2001. The court entered its statement of decision in November 2001, and a judgment was finally entered in March 2002.
The court found in favor of Broyhill on every claim for relief except for Goods claim directed at Broyhills Web site. In reaching its conclusion, the court found that a consumer survey offered by Good to support his claims was "unreliable as evidence." Accordingly, Goods entire case rested on the testimony of his two experts "as to the Cherry Hill trade name and the content of the promotional materials." The court "did not find [Goods] experts persuasive on the issues of the Cherry Hill trade name, the catalogs, or the newspaper advertisements."
As relevant here, the court found the tear sheet was not likely to deceive consumers about the wood content of Cherry Hill furniture "even though its front cover uses the phrase available in Oak or Cherry because the entire tear sheet would be available to the consumer and inside there are references to solid wood and select veneers as well as rich cherry finishes." The court also found the national advertisements were not likely to deceive because "the national ads advise that Cherry Hill occasional pieces are created with . . . cherry solids and feature hand-rubbed finishes of antique cherry."
The court did find, however, that Broyhills Web site "was likely to deceive reasonable consumers" because it described the Cherry Hill line as "Classic 18th century designs available in Cherry." According to the court, "in the context of the two paragraphs that appear on this page of the Web site, there is nothing else on the page that might alert a consumer that the reference is to anything other than to cherry wood furniture. In addition, there is a legitimate concern about how far into the Web site a person will venture and whether they will go so far as to find language that qualifies the wood composition. In this regard the court agrees with [Goods] expert, Berger. See also In re the Matter of Levitz Furniture Corp. (1976) 88 FTC [2]63."
Even though Broyhill had modified its Web site before trial to change the offending statement to "Classic 18th century designs available in cherry stain finish," the trial court concluded injunctive relief was appropriate because "there was a likelihood that the prior deceptive conduct [on the Web site] might repeat itself." Accordingly, the court enjoined Broyhill from "altering its current website in such a manner as to use the phrase Available in Cherry in reference to any item of Cherry Hill furniture, unless the exposed surfaces of the item(s) so identified are constructed entirely of solid cherry wood, or unless Broyhill includes a disclosure on the same page of the website that the exposed surfaces of the item(s) referenced are not constructed entirely of solid cherry wood."
The court also found that Broyhills use of a "Solid Cherry" hang tag on a hall tree with an exposed surface of cherry veneer over poplar was likely to deceive consumers; however, the court declined Goods injunctive relief on that claim because Broyhill had stopped manufacturing the hall tree in March 2000 and "there was nothing to indicate that the hall tree might be re-manufactured at some point in the future."
DISCUSSION
I
Good had Standing to Bring a Representative Action Under the UCL
Before trial, Broyhill moved for summary judgment in part on the ground Good was not a competent plaintiff to pursue a representative action under the UCL. The trial court denied the motion and later affirmed in its statement of decision that Good had standing to maintain an action for injunctive relief under the UCL on behalf of the general public.
On appeal, Broyhill renews its contention that this action was not a proper representative action under the UCL because Good was not injured, nor did he produce any evidence any other California consumer was injured, by Broyhills advertisements. Like the trial court, we reject Broyhills argument.
"Any person acting for the interests of itself, its members or the general public" may prosecute an action to enjoin false or misleading advertising under the UCL. ( §§ 17204, 17535; see also § 17500, Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 453, 153 Cal. Rptr. 28, 591 P.2d 51.) "As interpreted by our Supreme Court, the UCL allows a private plaintiff who himself has suffered no injury to file a lawsuit under the UCL in order to obtain relief for others. [Citation.] The representative plaintiff need only show that members of the general public are likely to be deceived. Allegations of actual deception, reasonable reliance, and damage are unnecessary." (Rosenbluth Internat., Inc. v. Superior Court (2002) 101 Cal.App.4th 1073, 1077, quoting Committee on Childrens Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 211, 197 Cal. Rptr. 783, 673 P.2d 660.)
Broyhill contends "not every UCL plaintiff should be permitted to prosecute a representative action." Broyhill suggests Good is an improper plaintiff because he agreed to be the plaintiff as a "favor" to one of the attorneys who filed the action. Broyhill also complains that before the action was filed, Good had never even heard of Broyhill, let alone read any of its advertisements, and he was not even aware of the alleged misrepresentations on which the action was based. Broyhill contends these facts "demonstrate that this lawsuit was nothing more than a lawyers [sic] enterprise."
While we do not disagree with Broyhills characterization of the action, Broyhill has failed to identify any authority that prohibits the prosecution of a representative action under the UCL simply because the representative plaintiff was recruited to serve as a party by the attorneys who were the actual instigators of the suit. Broyhill cites Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 999 P.2d 718 and Rosenbluth Internat., Inc. v. Superior Court, supra, 101 Cal.App.4th at page 1073 in support of its argument; however, for the reasons that follow, those cases are inapposite.
A
Kraus v. Trinity Management Services, Inc.
In Kraus, our Supreme Court concluded that an order for disgorgement into a fluid recovery fund is not a remedy available in a representative action under the UCL. (Kraus v. Trinity Management Services, Inc., supra, 23 Cal.4th at p. 121.) Because of that conclusion, the court did not reach the "defendants due process-based argument that UCL defendants must be accorded the protections against multiple suits and duplicative liability, protections available only in a class action." (Id. at p. 138.) The court went on to note, however, that "because a UCL action is one in equity, in any case in which a defendant can . . . show that the action is not one brought by a competent plaintiff for the benefit of injured parties, the court may decline to entertain the action as a representative suit." (Ibid.) The court cited its decision in Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 153 Cal. Rptr. 28, 591 P.2d 51 in support of this proposition.
Relying on this passage from Kraus, Broyhill suggests that because there was no evidence Good or any other California consumer was injured by Broyhills advertisements, this action "is not one brought by a competent plaintiff for the benefit of injured parties." A brief examination of Fletcher, however, reveals why the cited passage from Kraus is of no assistance in this case.
Fletcher was an unfair trade practice case involving the "banking practice of computing so-called per annum interest rates on the basis of a 360-day year." (Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 445.) The trial court determined that "an order of restitution under section 17535 must be predicated upon individualized proof of lack of knowledge" and denied the case class action status on that basis. (Id. at p. 454.) The Supreme Court concluded that under section 17535, a trial court "possesses the authority to order restitution of moneys, in the absence of individualized proof of lack of knowledge, in order to preclude an entity which has engaged in an unlawful trade practice from improperly profiting from its wrongdoing." (Id. at p. 446.) Thus, the Supreme Court reversed and remanded for reconsideration of whether the case should be certified as a class action in light of the Supreme Courts opinion. (Id. at pp. 454-455.) In explaining the trial courts task on remand, the Supreme Court wrote: "On remand, the court should determine the appropriateness of the requested relief in light of the statutory language and purpose. [P] We recognize, of course, that the trial court may determine in subsequent proceedings that the maintenance of the present suit as a class action is precluded on other grounds. Under section 17535, any person acting for the interests of itself, its members or the general public (italics added) may bring an action for injunction to enjoin violations of the unfair trade practice statute. As we explained in People v. Superior Court (Jayhill) [(1973)] 9 Cal.3d 283, 107 Cal. Rptr. 192, 507 P.2d 1400, the trial court has authority to order restitution as a form of ancillary relief in such an injunctive action. Although an individual action may eliminate the potentially significant expense of pretrial certification and notice, and thus may frequently be a preferable procedure to a class action, the trial court may conclude that the adequacy of representation of all allegedly injured borrowers would best be assured if the case proceeded as a class action. Before exercising its discretion, the trial court must carefully weigh both the advantages and disadvantages of an individual action against the burdens and benefits of a class proceeding for the underlying suit." (Id. at pp. 453-454.)
It was this part of Fletcher the Supreme Court cited in Kraus for the proposition that a trial court may decline to entertain an action as a representative suit under the UCL when the defendant can show the action is not one brought by a competent plaintiff for the benefit of injured parties. What the Supreme Court was referring to was the trial courts choice between entertaining a class action or entertaining a representative suit when the plaintiff is seeking restitution in an action for unfair competition or an unfair trade practice. The Supreme Court was not suggesting that, in a UCL action solely for injunctive relief, a trial court could dismiss the action entirely based on a determination that the action was not one "brought by a competent plaintiff for the benefit of injured parties." Any such suggestion would contravene the well- established principle that any person acting for the interests of the general public may prosecute an action to enjoin false or misleading advertising under the UCL, and to prevail the representative plaintiff need only show that members of the general public are likely to be deceived. (See Rosenbluth Internat., Inc. v. Superior Court, supra, 101 Cal.App.4th at p. 1077.) Accordingly, the passage from Kraus on which Broyhill relies is of no assistance to them.
B
Rosenbluth Internat., Inc. v. Superior Court
Like Kraus, Rosenbluth does not support Broyhills argument that Good lacked standing to pursue this action. In Rosenbluth, the plaintiff (Serrano) brought a UCL action against a travel agency serving large corporate clients, claiming the agency was using "fraudulent accounting methods in order to understate significantly the amount of rebates, or overrides, that are due to its customers." (Rosenbluth Internat., Inc. v. Superior Court , supra, 101 Cal.App.4th at p. 1076.) The travel agency established on summary judgment that "only [its] largest corporate customers had the negotiating power to procure contracts with override sharing provisions of the type at issue in the lawsuit." (Id. at p. 1076.) Although none of the agencys customers were parties to the action, the trial court denied summary judgment on the agencys claim that Serrano was not a "competent plaintiff." (Ibid.)
On writ review, the appellate court "concluded, as a matter of law, that Serrano lacked standing as a competent plaintiff to bring this action because he . . . failed to demonstrate that he filed the action on behalf of the general public." (Rosenbluth Internat., Inc. v. Superior Court , supra, 101 Cal.App.4th at p. 1076.) The court explained that "where [a] UCL action is based on a contract, the representative plaintiff may seek to vindicate the rights of individual consumers who are parties to the contract. [Citations.] However, a UCL action based on a contract is not appropriate where the public in general is not harmed by the defendants alleged unlawful practices." (Id. at p. 1077.) The court also noted that "by purporting to act as their self-appointed representative and asserting claims on their behalf in a UCL action, Serrano could in fact deprive Rosenbluths alleged victims of the individual opportunity to seek remedies far more extensive than those available under the UCL, which limits the plaintiffs to injunctive relief and restitution." (Id. at p. 1079.)
Unlike Rosenbluth, this action was not premised on a contract, let alone a contract between Broyhill and a limited number of parties. Instead, this action was premised on alleged misrepresentations Broyhill made on its Web site and in its national advertisements and tear sheets (among other places). Broyhill does not claim that its Web site, national advertisements, or tear sheets were directed to an audience so small that it did not qualify as the "general public." Thus, Broyhill failed to establish that this action was not brought on behalf of the "general public," and therefore Rosenbluth is inapposite.
While we may dislike the idea of attorneys recruiting clients to serve as plaintiffs in unfair competition cases the attorneys have concocted, we know of no authority that would allow a trial court to dismiss an unfair competition action on that basis alone. Any such limitation on the UCL is a matter for the Legislature, not the courts. Accordingly, the trial court properly rejected Broyhills challenge to Goods standing to pursue this action.
Legislative efforts are underway to revise the UCL. (See, e.g., Rapattoni, Section 17200 Bill Sheared Of Clause on Disgorgement, S.F. Daily J. (May 9, 2003) p. 1.) One proposed revision would have required that, to maintain a representative action under the UCL, the plaintiff must have suffered "a distinct and palpable injury" as a result of the defendants conduct. (Id. at p. 7; Assem. Bill No. 102 (2003-2204 Reg. Sess.) § 3.)
II
Broyhills Statements Regarding its
Cherry Hill Furniture were not Actionable
A
The Reasonable Consumer Standard
"Sections 17200 and 17500 are consumer protection statutes designed, in part, to protect the public by prohibiting false, unfair, misleading or deceptive advertising." (Day v. AT & T Corp. (1998) 63 Cal.App.4th 325, 331-332.) Section 17500 prohibits the dissemination of any statement about a product "which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading." "Under this section, a statement is false or misleading if members of the public are likely to be deceived." (Chern v. Bank of America (1976) 15 Cal.3d 866, 876, 127 Cal. Rptr. 110, 544 P.2d 1310.) " Likely to deceive implies more than a mere possibility that the [statement] might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. Rather, the phrase indicates that the [statement] is such that it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled." (Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 508.) "Unless the [statement] targets a particular disadvantaged or vulnerable group, it is judged by the effect it would have on a reasonable consumer." (Id. at pp. 506-507.) "The standard applied in UCL and false advertising cases is that of the ordinary consumer acting reasonably under the circumstances." (Id. at p. 512.)
"Under the reasonable consumer standard, [the] plaintiff is required to show not simply that the defendants [statements] could mislead the public, but that they were likely to mislead the public." (Haskell v. Time, Inc. (E.D.Cal. 1997) 965 F. Supp. 1398, 1406-1407.) To establish a likelihood of deception, the plaintiff "must show probable, not possible, deception." (Southwest Sunsites, Inc. v. F.T.C. (9th Cir. 1986) 785 F.2d 1431, 1436.)
As will be seen, the question of whether Broyhills various statements about its Cherry Hill furniture were likely to deceive reasonable consumers about the wood content of that furniture rests largely on the meaning consumers could be expected to attribute to the word "cherry." By definition, the word "cherry" has two meanings that are relevant here. It can refer to the wood of a cherry tree, or it can refer to a reddish color. (Merriam-Websters Collegiate Dict. (10th ed. 2000) p. 196, col. 1.) Thus, by definition, the word "cherry," when used in relation to wood furniture, could refer either to the wood from which the furniture is constructed or to the stain used to finish the furniture.
A "stain" is "a preparation (as of dye or pigment) used in staining [i.e., coloring]; esp: one capable of penetrating the pores of wood." (Merriam-Websters Collegiate Dict., supra, p. 1140, col. 2.)
B
There is no Substantial Evidence that Broyhills
Statements were Likely to Deceive Reasonable
Consumers about Cherry Hill Furnitures Wood Content
We now turn to whether substantial evidence in the record supports the trial courts finding that Broyhills Web site was likely to deceive reasonable consumers about the wood content of Cherry Hill furniture, and whether the trial court erred in finding Broyhills tear sheet and national advertisements were not likely to deceive reasonable consumers in that regard.
To prevail in this case, it was incumbent on Good to supply the court with substantial evidence that the ordinary, reasonable consumer, acting reasonably under the circumstances, would probably (that is, more likely than not) understand that the word "cherry," as used in Broyhills Web site, tear sheet, and national advertisements, described the wood from which the furniture was made, rather than the stain used to finish the furniture, or something else altogether. More than that, it was incumbent on Good to supply substantial evidence that a reasonable consumer would likely understand the word "cherry" to mean that the furniture was constructed entirely of solid cherry wood, rather than of some cherry wood, solid, or veneer. For the reasons set forth below, we conclude Good did not succeed in this regard.
1. Broyhills Web Site
Hard copies of the pertinent Web pages from Broyhills Web site were admitted into evidence. An Internet user accessing the home page for Broyhills Web site (appen. A) would reach the information about Cherry Hill furniture by choosing the "product information" link on the home page. On the "product information" page (appen. B), there were links for "wood" and "upholstery." On the "wood" page (appen. C), an Internet user could choose one of three links: "style," "group name," or "division." It appears the Web pages for Cherry Hill could be accessed either through the link to the "style" page (appen. D) or the link to the "group name" page.
There appear to have been three primary Web pages relating to Cherry Hill furniture. The main Cherry Hill page (appen. E) featured the name "Cherry Hill" at the top, followed by two paragraphs of text. The first sentence of the first paragraph read: "Classic 18th century designs available in Cherry." Beneath the text were two pictures, one of five tables and one of an entertainment center, with the captions "Tables" and "Entertainment" beneath each, respectively.
It appears that these photographs provided links to the other two Cherry Hill Web pages. Each page contained the same two paragraphs of text as the main page, along with an enlarged photograph of either the tables (appen. F) or the entertainment center. Beside the photograph on each of these pages was a link to take the user to a "line art" Web page that displayed drawings of the various pieces of furniture in the Cherry Hill line (appen. G). At the top of that page, the words "line art" appeared, and beneath those words the words "Cherry Hill" and "Oak Hill." It appears from this page and from other evidence in the record that many of the same pieces of furniture were available in two lines — Cherry Hill and Oak Hill — and this page displayed the pieces from both lines. To show the user which pieces were available in which line, this page contained a "key," with a dark colored square representing "Cherry Finish" and a lighter colored square representing "Natural Oak Finish."
The trial court found Goods consumer survey was "unreliable as evidence" and looked solely to the testimony of Goods two experts to determine whether Broyhills promotional materials, including its Web site, were likely to deceive reasonable consumers. Because Good does not challenge the trial courts finding regarding the consumer survey on appeal, like the trial court, we look to the expert testimony alone to determine whether it provides substantial evidence to support the trial courts finding the Web site was likely to mislead consumers about the wood content of Cherry Hill furniture.
Robert Robicheaux, a professor of marketing from the University of Alabama, testified as an expert in marketing. Professor Robicheaux opined that pages on Broyhills Web site were "likely to deceive and mislead" because they "contained the trade name Cherry Hill, and lacked the important descriptor that the furniture is not solid cherry wood" and "because the furniture that is depicted in the images is likely to be perceived to be made of cherry wood." Professor Robicheaux explained that he based his opinion on "the name Cherry Hill, in the absence of any descriptors [that] would qualify that [the furniture] is not made of cherry, or that [the furniture] is not made of solid cherry wood."
On cross-examination, Broyhills counsel asked Professor Robicheaux about the likelihood that a person viewing the Cherry Hill Web pages would be interested in moving forward to the "line art" Web page, where the word "cherry" was qualified by the word "finish." Professor Robicheaux admitted that was "an empirical question about which [he] had no evidence," and the most he could say, based "on [his] own experience surfing web sites" and on "the marketing literature," was that the photographic images would be "more likely to gain attention and interest" than the drawings on the line art page. He later testified there was "very limited empirical evidence about consumer behavior and shopping experiences on web sites."
Charles Berger, a professor of communication at the University of California, Davis, testified as an expert in the field of communication. Professor Berger opined that representations in Broyhills Web site "would mislead readers into believing that the furniture included in the Cherry Hill line is constructed of solid cherry wood." With regard to the Cherry Hill tables Web page, Professor Berger observed that "Cherry Hill is displayed prominently with respect to a unique type face and unique type size. It stands out and there is nothing in the text below it thats in smaller type that would disabuse a reader of the inference that the furniture that is subsumed under that title is made of solid cherry wood. Theres nothing about — no information about wood types and so on." He further opined that the statement "Available in cherry again prompts, I think, the reader to infer just the use of the word cherry, the first letters capitalized, prompts the reader to infer that the furniture thats included within this line is made of solid cherry." Professor Berger explained that studies had shown "people are prone to remember . . . highlighted items [in text], the items that stand out better, more reliably then [sic] they remember the text thats — that looks like all the other text." He then reiterated that "the phrase available in cherry strongly promotes the inference that the furniture included in this line is made of solid cherry wood."
When asked whether reviewing the line art Web page — with its reference to "Cherry Finish" — would "disabuse [an Internet user] of any deception that was caused by what they read on [the previous] page," Professor Berger said, "No, I dont think so," and explained his answer as follows: "Finish refers to something thats put on the surface of wood and usually is associated, I think, in most peoples thinking with stains of various kinds and so on that are put on wood to change their color, their outward appearance, their surface appearance. [P] Clearly the term finish does not address the nature of the wood that lies beneath the finish, and so the reader really has no — is given no — is given no additional information about the nature of the wood thats been used to build the furniture itself. Its only — this phrase cherry finish only addresses something thats put on the surface of the wood. It doesnt address the central issue if you want to know what type of wood is in fact or whether its veneered or whether its particle board or whatever it happens to be underneath, it does not address that issue."
We conclude that neither Professor Robicheauxs testimony nor Professor Bergers testimony provides substantial evidence to support the trial courts finding that Broyhills Web site was likely to deceive reasonable consumers about the wood content of Cherry Hill furniture.
Because we conclude Professor Bergers testimony does not constitute substantial evidence on the point in issue, we do not address Broyhills argument that the trial court erred in allowing Professor Berger to testify as an expert.
"Expert testimony is no stronger than the facts upon which it is predicated." (Mark v. Industrial Acc. Com. (1938) 29 Cal. App. 2d 495, 500, 84 P.2d 1071.) "Expert opinion testimony constitutes substantial evidence only if based on conclusions or assumptions supported by evidence in the record. Opinion testimony which is conjectural or speculative cannot rise to the dignity of substantial evidence." (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.) Furthermore, " the chief value of an experts testimony . . . rests upon the material from which his opinion is fashioned and the reasoning by which he progresses from his material to his conclusion . . . . [Citation.] In short, Expert evidence is really an argument of an expert to the court, and is valuable only in regard to the proof of the facts and the validity of the reasons advanced for the conclusions." (People v. Bass ett (1968) 69 Cal.2d 122, 141.)
With regard to the factual basis for the testimony of Goods experts, we reiterate that the consumer survey upon which both of Goods experts relied (in part) in formulating their opinions was found to be unreliable by the trial court and that finding is not challenged on appeal. Thus, no valid empirical evidence of how consumers actually perceived Broyhills Web site supported their opinions.
Deprived of any valid empirical support, the opinion testimony of Professors Robicheaux and Berger rested solely on their own interpretations of Broyhills promotional materials, in light of their respective expertise in marketing and communication. Even assuming, however, that both men were qualified by their expertise to express their opinions on how consumers would likely interpret Broyhills statements about its Cherry Hill furniture, their opinions in that regard do not constitute substantial evidence because of the faulty reasoning by which they progressed from Broyhills statements to their conclusions about the likely effect of those statements.
Professor Robicheaux expressly based his opinion that Broyhills Web site was likely to deceive consumers about the wood content of Cherry Hill furniture on the Web sites use of the name Cherry Hill without any qualifying language. According to Professor Robicheaux, consumers were likely to conclude that Cherry Hill furniture was made of solid cherry wood simply because of the Cherry Hill name. Professor Robicheaux did not explain, however, why the word "cherry," as used in this context, was more likely to connote wood content than stain color to a reasonable consumer.
During cross-examination, Professor Robicheaux did testify that "the literature of language suggests to me that the use of the term cherry capitalized connected with a line of furniture would cause people naturally to infer cherry wood, [because] theres no such thing as cherry plastic or cherry fabric, so it must be cherry wood." He went on to explain that "the context in which the trade name [Cherry Hill] is applied [is] the furniture business, not the automobile business, were not talking about a cherry finish automobile which could be a red color automobile . . . ." This explanation suggests that Professor Robicheaux never even considered the possibility that the word "cherry," when used in reference to a line of furniture, might be understood as referring to the color of the stain used on the furniture, or the place where it was manufactured, i.e., Cherry Hill, New Jersey, rather than its wood content.
Professor Robicheaux also did not explain why, even if a reasonable consumer was likely to understand the name Cherry Hill as suggesting the wood content of the furniture, a reasonable consumer would conclude that the furniture was made entirely of solid cherry wood, as opposed to simply being composed in some part of cherry wood, either solid or veneer.
Absent a cogent explanation of why reasonable consumers would likely infer that Cherry Hill furniture was made entirely of solid cherry wood, rather than infer that the furniture was composed partly of cherry wood, whether solid or veneer, or that the furniture was finished with a cherry stain, Professor Robicheauxs opinion testimony that Broyhills Web site was likely to deceive reasonable consumers does not rise to the dignity of substantial evidence.
Indeed, the trial court specifically found the testimony of Professors Robicheaux and Berger was not persuasive on whether the trade name Cherry Hill was likely to deceive reasonable consumers, finding the name alone did not convey "the impression that the entire line of furniture is constructed of Cherry wood or of solid Cherry wood." Since Professor Robicheauxs testimony about Broyhills Web site was based entirely on the sites use of the Cherry Hill name, even under the trial courts findings, Professor Robicheauxs Web site testimony was not persuasive and could not support the trial courts judgment.
That leaves us with Professor Bergers testimony. Disregarding (as the trial court did) his testimony based on the use of the Cherry Hill name, Professor Berger opined that the Web site was likely to deceive consumers because the statement "Available in Cherry," with the "C" in "cherry" capitalized, "prompts the reader to infer that the furniture thats included within this line is made of solid cherry." He tied this conclusion to what is known as "the von Resdorf effect" or "the isolation effect," which manifests itself in the fact that people are more prone to remember text that is highlighted than text that is not.
Professor Bergers opinion as to why the Broyhill Web site was likely to deceive reasonable consumers is unpersuasive for the same reasons Professor Robicheauxs opinion is unpersuasive. Like Professor Robicheaux, Professor Berger did not explain why the word "cherry," as used in this context, was more likely to connote wood content than stain color to a reasonable consumer. Professor Berger also did not explain why, even if a reasonable consumer was likely to understand the statement "Available in Cherry" as suggesting the wood content of the furniture, a reasonable consumer would conclude that the furniture was made entirely of solid cherry wood, as opposed to simply being composed partly of cherry wood, either solid or veneer.
Moreover, Professor Bergers reference to the von Resdorf effect did not supply the missing support for his conclusion. As Broyhill argues, "theories about the importance readers place on capital letters and large type sizes say absolutely nothing about whether [the statement Available in Cherry] was likely to mislead reasonable consumers into believing that Broyhills furniture was constructed entirely of solid cherry wood. Indeed, [those] theories provide no explanation as to why capitalizing the word Cherry would be likely to cause the consumer to think cherry wood rather than cherry finish or cherry color."
In summary, there is no substantial evidence to support the trial courts implicit finding that reasonable consumers were likely to draw the two inferences necessary to render Broyhills Web site misleading — first, that the statement "Available in Cherry" referred to the wood content of Cherry Hill furniture, rather than to the color of the stain used on the furniture; and second, that the statement "Available in Cherry" meant Cherry Hill furniture was constructed entirely of solid cherry wood, as opposed to partly of cherry wood, either solid or veneer.
We do not deny that the statement "Available in Cherry" was ambiguous and possibly might have led some reasonable consumers to draw false conclusions about the wood content of Broyhills Cherry Hill furniture. But the standard Good had to meet in this case was higher than that. He was obligated to produce substantial evidence that the statement "Available in Cherry" likely would have misled a significant portion of the general consuming public, acting reasonably under the circumstances, about the wood content of Cherry Hill furniture. (Lavie v. Procter & Gamble Co. , supra, 105 Cal.App.4th at p. 508; Haskell v. Time, Inc., supra, 965 F. Supp. at pp. 1406-1407.) Good did not meet this burden.
On this point, we note that the trial courts apparent reliance on a decision by the Federal Trade Commission (FTC) from 1976 — In re the Matter of Levitz Furniture Corp., supra, 88 FTC 263 — was misplaced. In the Levitz case, the FTC charged Levitz, a furniture retailer, with misleading the public about the composition of some of its wood furniture by using terms such as "Walnut," "Pecan," and "Solid Rock Maple" to describe furniture, "the exposed surfaces [of which] were constructed of a combination of veneers of the woods named and other woods." Levitz agreed to the entry of a consent order precluding it from using such terms in the future "to describe furniture not having all exposed surfaces constructed of solid wood of the type named."
The Levitz case is of no value here for at least two reasons. First, the case involved a consent order, not an adjudicated outcome; thus, it does not represent an actual adjudication of whether the use of a word such as "cherry" or "walnut," which could describe both a type of wood or a color of wood stain, is likely to mislead reasonable consumers about the wood content of the furniture to which that word refers. For this reason, it has no precedential value.
Second, the Levitz case dates from a time when the FTC used a much broader standard of deception than the standard applicable under the UCL. Originally, the FTC could find an unfair and deceptive practice if an advertising representation had "the tendency and capacity to mislead or deceive a prospective purchaser." (Southwest Sunsites, Inc. v. F.T.C., supra, 785 F.2d at p. 1435.) In 1984 — after the Levitz case — the FTC adopted a narrower standard of deception, identical to the standard we have applied here under the UCL — that is, whether the representation " is likely to mislead the consumer acting reasonably in the circumstances." (Ibid.) Thus, the Levitz consent order was entered at a time when an advertiser could be held liable for a statement that possibly could deceive consumers, rather than one that was likely to deceive. (See id. at p. 1436.) For this reason also, the Levitz case is of no value here.
Having found no substantial evidence to support the trial courts finding that Broyhills Web site was likely to deceive reasonable consumers about the wood content of Broyhills Cherry Hill furniture, we turn to whether the trial court erred in finding Broyhills tear sheet was not likely to deceive.
Because there is no substantial evidence the statement "Available in Cherry" was likely to deceive reasonable consumers, we need not reach Broyhills argument that the injunction was based on an unwarranted assumption that Internet users would not follow the link to the line art page, which noted the furniture was available in "cherry finish," or its argument that there was no substantial evidence Broyhill was likely to use the unqualified statement "Available in Cherry" again on its Web site.
2. Broyhills Tear Sheet
The Cherry Hill tear sheet is a two-page brochure that actually covers two lines of furniture — Cherry Hill and Oak Hill. The front and back of the first page and the front of the second page contain photographs of some of the furniture pieces, along with text. The back of the second page consists of drawings of the furniture pieces like those on the line art page of the Web site.
On the front page of the tear sheet, beneath the names of the two furniture lines, the following text appears: "Classic 18th century designs available in Oak or Cherry. Choose from a wide array of tables, entertainment units, desks, wall systems and home theater pieces with the elegant, traditional design you want and the modern convenience you need." This text appears over a photograph of a living room which includes some pieces of Cherry Hill furniture.
The back of first page and the front of the second page contain photographs of various pieces of Oak Hill and Cherry Hill furniture, along with text descriptions. Beneath the names of the two furniture lines at the top center of the two pages is the following text: "Traditional Design, Features And flexibility have made the Oak Hill and Cherry Hill collections a perennial favorite. Functional to match your lifestyle and adaptable to fit your decorating needs, these beautiful collections from Broyhill can be combined to suit your needs for the bedroom, living room or family room. [P] Almost every piece is available in both the warm oak and rich cherry finishes."
On the right side of the front of the second page is a column entitled "Features," which includes the following paragraph immediately below the title: "Broyhill multi-step finish gives depth, color and clarity to the solid wood and select veneers."
The back of the second page, which displays the drawings of the various furniture pieces, includes a key identical to the key on the line art page of the Web site, showing which pieces are available in "Cherry Finish" and which are available in "Natural Oak Finish."
The trial court found the tear sheet was not likely to deceive reasonable consumers about the wood content of Cherry Hill furniture because the references inside the tear sheet to "solid wood and select veneers" and "rich cherry finishes" were sufficient to dispel any misconception engendered by the statement on the front of the tear sheet, "available in Oak or Cherry," that Cherry Hill furniture was made entirely of solid cherry wood.
On his cross-appeal, Good contends the trial courts analysis was flawed. According to Good, "Under the UCL, an initial representation — if false, as this one clearly is — is likely to deceive even if subsequent representations clarify the initial representation and attempt to remove the potential deception conveyed initially." Thus, Good contends the initial statement "available in Oak or Cherry" contained on the first page of the tear sheet is actionable under the UCL, regardless of whether subsequent statements on other pages of the tear sheet might have clarified the meaning of the initial statement.
Goods argument fails because under the reasoning set forth above with relation to Broyhills Web site, there is no substantial evidence in the record that the statement on the front of the tear sheet was likely to mislead reasonable consumers about the wood content of Cherry Hill furniture. It appears neither Professor Robicheaux nor Professor Berger testified specifically about the tear sheet. Nevertheless, as Good himself recognizes, the statement on the front of the tear sheet he contends was misleading is, for all intents and purposes, identical to the statement on the Web site he contended was misleading. As we have explained, however, there is no substantial evidence in the record that the statement "available in . . . Cherry" was likely to deceive reasonable consumers about the wood content of Broyhills Cherry Hill furniture, let alone likely to deceive them into believing that furniture was made entirely of solid cherry wood. Accordingly, regardless of whether other statements in the tear sheet clarified the meaning of the word "cherry" as used on the front page, the trial court did not err in finding the tear sheet was not likely to deceive reasonable consumers about the wood content of Cherry Hill furniture.
3. Broyhills National Advertisements
Broyhills national advertisements consisted of three four-page print ads that Broyhill ran in consumer home magazines such as Better Homes & Gardens in the spring of 1995, 1996, and 1997. Goods complaint relates only to the first two ads, which for our purposes are the same; accordingly, we will refer only to the first ad.
As the second page of the advertisement makes clear, the ad covers two Broyhill furniture collections — Cherry Hill and Chesapeake. The first page of the advertisement contains a photograph of a living room similar to the photograph on the first page of the tear sheet. The photograph includes two tables and an entertainment center. Text on the page describes those pieces as follows: "Cherry Hills Dropleaf End Table, $ 290. Oval Cocktail Table, $ 290. For information on our Wall Unit, please see next page."
On the second page of the advertisement, there is another picture of the entertainment center, accompanied by the following text: "Keep VCRs, TVs, and CDs on the QT. Cherry Hills Entertainment Center, $ 1290, masterfully wrought with Georgian pilasters and pocket doors. Shed a little light on the subject of your collectibles. The handsome lighted Door Unit, $ 550, invites leather-bound books and family photos. Drawer Unit, $ 565. Corner Unit, $ 315. Throughout, our hand-rubbed antique cherry finish enriches the warm character of the wood."
The third page of the advertisement contains a photograph of another living room with Cherry Hill tables, accompanied by this description: "Oval End Table, $ 290. The Dropleaf Cocktail Table, $ 375, with an antique cherry finish as warm as your hospitality." At the bottom of the page, the following statement appears in italicized text: "ABOUT THE WOODS: Chesapeake is crafted for your dining room and bedrooms, with solid cherry, cherry and maple veneers, and selected American hardwoods finished in antique cherry. Cherry Hill occasional pieces are created with richly grained cherry solids and feature hand-rubbed finishes of antique cherry."
The trial court found the national advertisements were not likely to deceive reasonable consumers about the wood content of Cherry Hill furniture because they "advise that Cherry Hill occasional pieces are created with . . . cherry solids and feature hand-rubbed finishes of antique cherry."
Good contends the trial court erred for the following reasons. According to Good, Broyhills statement on the second page of the advertisement with regard to the entertainment center that "our hand-rubbed antique cherry finish enriches the warm character of the wood" "implies . . . that the entertainment center is made exclusively of [solid cherry] wood with a hand-rubbed cherry finish," which Good claims is not true. Good then contends that from the note "ABOUT THE WOODS" contained on the third page of the advertisement, "[a] reasonable reader of this ad would almost certainly conclude . . . that Cherry Hill furniture [including the entertainment center shown on the first two pages of the ad] was made of cherry solids and nothing else." On the basis of this reasoning, Good contends Broyhills national advertisements were likely to mislead reasonable consumers about the wood content of Cherry Hill furniture.
The entertainment center apparently includes a back made of hardboard finished in black and sides made of particle board engraved with cherry grain.
Goods argument that the national advertisements were misleading rests on a series of inferences. First, the reader must infer from the statement on the second page, "our hand-rubbed antique cherry finish enriches the warm character of the wood," that the Cherry Hill entertainment center is made entirely of wood. Then, the reader must infer from the statement on the third page that "Cherry Hill occasional pieces are created with richly grained cherry solids" that the entertainment center is an occasional piece and that, therefore, the wood of which the entertainment center is entirely made (based on the inference drawn from the statement on the second page) is solid cherry wood.
Even if we were to conclude it is possible that an ordinary consumer, acting reasonably under the circumstances, would draw the inferences Good suggests, that is a far cry from concluding, as a matter of law, that it is likely a significant portion of the general consuming public would do so. Good points to no evidence in the record that would have compelled the trial court to find reasonable consumers likely would have been deceived by Broyhills national advertisements about the wood content of Cherry Hill furniture. Rather, he appears to rely primarily on what he sees as the inherent logic of the inferences he draws and mentions only in passing, without any specific cite to the record, that his "conclusion is supported by [his] experts."
While Good failed to direct us to the pertinent portion of the record, our own examination of the record reveals that Professor Bergers opinion regarding the misleading nature of the national advertisements is as insubstantial as his opinion regarding the Web site. When asked to state the basis for his opinion that a reader of the national advertisements was likely to be deceived "about the actual wood content of the furniture items in the Cherry Hill collection," Professor Berger said: "Well, if you take the case . . . of the entertainment center, the $ 1290 entertainment center, theres no information there about the actual wood thats used in the piece. They do make reference to our hand rubbed antique cherry finish, but do not stipulate the nature of the wood that goes into the entertainment center that are [sic] depicted. [P] And then the information is provided on the next page . . . at the bottom, and I assume that that entertainment center is an occasional piece, thats what theyre referring to. They say — it says here, Cherry Hill occasional pieces are created with richly grained cherry solids and feature hand rubbed finishes of antique cherry. So if that entertainment center is not made of solid cherry, then that is misleading."
Professor Bergers testimony reveals no basis for his opinion about how a reasonable consumer would likely interpret Broyhills advertisement other than his own inferential reasoning that the entertainment center is an occasional piece, that all occasional pieces are constructed entirely of solid cherry wood, and therefore that the entertainment center is constructed entirely of solid cherry wood. But without pertinent explanation from Professor Berger, grounded in evidence, of why a reasonable consumer is more likely to draw those particular inferences than other available inferences, Professor Bergers reasoning is no more indicative of how a reasonable consumer would likely interpret the advertisement than the reasoning of any other individual.
In any event, the trial court was not compelled to accept the testimony of Professor Berger as true, particularly when it was not supported by any valid empirical evidence of what consumers actually perceived the national advertisements to say about the wood content of Cherry Hill furniture. On this point, the trial court was entitled to accept the testimony of Broyhills expert, Gary Ford, a professor of marketing at American University. Professor Ford testified that "you would need a competently designed [consumer] survey to make a determination that" the national advertisements were likely to deceive reasonable consumers. Here, the trial court found Goods survey was unreliable. Based on this finding, and the testimony of Professor Ford, the trial courts finding that Broyhills national advertisements were not likely to deceive reasonable consumers was eminently reasonable.
III
We need not Decide Whether the UCL can
Constitutionally Apply to Passive Web Sites
Maintained Outside California
Before trial, Broyhill moved to exclude any evidence relating to its Web site on the ground the UCL "does not regulate conduct occurring entirely outside California." The trial court denied the motion, concluding that because it had personal jurisdiction over Broyhill, it could "consider all evidence of statements likely to deceive reasonable California residents when transmitted to California residents," including statements California residents had viewed on Broyhills Web site.
"We ordinarily presume the Legislature did not intend the statutes of this state to have force or operation beyond the boundaries of the state. [Citations.] Accordingly, we do not construe a statute as regulating occurrences outside the state unless a contrary intention is clearly expressed or reasonably can be inferred from the language or purpose of the statute." (Norwest Mortgage, Inc. v. Superior Court (1999) 72 Cal.App.4th 214, 222.)
There can be little question the California Legislature intended the UCL to apply to false advertising on Internet Web sites, regardless of where they are maintained. Section 17500, which is enforceable in a UCL action (see § 17200), provides that "it is unlawful for any person . . . with intent directly or indirectly to dispose of . . . personal property . . . or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state . . . in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, including over the Internet, any statement, concerning that . . . personal property . . . or concerning any circumstance or matter of fact connected with the proposed performance or disposition thereof, which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, . . ." (Italics added.)
By its terms, section 17500 encompasses false or misleading statements disseminated over the Internet, and it does not distinguish between Web sites maintained in California and those maintained outside the state. The only geographical limitation in the statute is that the statements must be disseminated "before the public in this state."
Broyhill does not contend the allegedly misleading statements on its Web site were not disseminated before the public in California. Broyhill does contend, however, that applying the UCL to a passive Web site (one that provides information but does not allow consumers to make purchases on-line) maintained outside the state of California violates the due process clause and the commerce clause of the United States Constitution.
"We do not reach constitutional questions unless absolutely required to do so to dispose of the matter before us." (People v. Williams (1976) 16 Cal.3d 663, 667, 128 Cal. Rptr. 888, 547 P.2d 1000.) Here, we dispose of both the appeal and the cross-appeal on the ground there is no substantial evidence to support a finding that Broyhills tear sheet, national advertisements, or Web site were likely to mislead reasonable consumers about the wood content of Broyhills Cherry Hill furniture. Accordingly, we decline to address Broyhills constitutional arguments.
IV
Conclusion
We conclude there is no substantial evidence in the record to support the trial courts finding that Broyhills Web site was likely to deceive reasonable consumers about the wood content of Broyhills Cherry Hill furniture. We also conclude the trial court did not err in finding that Broyhills tear sheet and national advertisements were not likely to deceive reasonable consumers.
DISPOSITION
The judgment is reversed, and the trial court is directed to enter judgment in favor of defendant Broyhill Furniture, Inc. Defendant shall recover its costs on appeal. (Cal. Rules of Court, rule 27(a).)
We concur: NICHOLSON, Acting P.J., MORRISON, J.