ULTRA BOND FILES A MOTION FOR SUMMARY JUDGEMENT

ULTRA BOND'S SUMMARY JUDGEMENT OVERVIEW

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

                                                                      RICHARD CAMPFIELD, et al.                                                                               Case No. 2:15-cv-2733   

        Plaintiffs                                                                           Judge Michael H. Watson

                                                                                                     Magistrate Judge Chelsey M. Vascura
                                                                             

v.

     SAFELITE GROUP, INC., et al.

         Defendants

PLAINTIFFS’ MEMORANDUM IN SUPPORT OF PARTIAL MOTION FOR

SUMMARY JUDGMENT ON THEIR LANHAM ACT CLAIM AND MOTION FOR

SUMMARY JUDGMENT AS TO SAFELITE’S COUNTERCLAIM PRELIMINARY STATEMENT

I. PRELIMINARY STATEMENT 

This case presents a text book example of an industry giant’s deployment of an organized marketing campaign to bury an industry standard that threatened its profits, and any competitor that dared to practice it—regardless of the admitted harm to consumers. The cornerstone of Safelite’s1 business model is based on the demonstrably false “dollar bill rule,” the Safelite messaging that automobile windshields must be replaced and cannot be repaired whenever they are damaged by a crack that is longer than six inches (or roughly the size of a dollar bill). In promulgating the dollar bill rule through commercial advertisement and promotion, Safelite purposefully ignores and subverts the U.S. industry standard allowing for repairs of windshield cracks up to fourteen inches in length.

Safelite employs its dominant market position to set six inches as the universally incontrovertible windshield crack repair standard—as opposed to simply a Safelite policy—by flooding

(1) “Safelite” refers collectively to Defendants Safelite Group, Inc., Safelite Solutions LLC, and Safelite Fulfillment, Inc. (“Safelite”). 

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Dated: August 30, 2019                                      Respectfully submitted,

                                                                         s/ Kurt B. Olsen Kurt B. Olsen, Esq.

                                                                         KLAFTER OLSEN & LESSER, LLP

                                                                                                                                                                                 1250 Connecticut Ave., NW, Suite 200 Washington DC 20036

                                                                         T. (202) 261-3553
                                                                         F. (202) 261-3533

                                                                         E. ko@klafterolsen.com

                                                                          Fran L. Rudich, Esq.
                                                                          Morgan Stacey, Esq. (application for admission pro hac vice to be filed)
                                                                          KLAFTER OLSEN & LESSER, LLP
                                                                          Two International Drive, Suite 350
                                                                          Rye Brook, New York 10573
                                                                          T. (914) 934-9200
                                                                          F. (914) 934-9220
                                                                          E. fran@klafterolsen.com

                                                                           Peter R. Kahana, Esq.

                                                                                                                  BERGER MONTAGUE PC 1818 Market Street, Suite 3600 Philadelphia,

                                                                           Pennsylvania 19103 T. (215) 875-3000
                                                                           Y. Michael Twersky, Esq.

                                                                           F. (215) 875-4604
                                                                           E. pkahan@bm.net,

                                                                                                                               mitwerseky@bm.net

                                                                           Drew Legando (0084209)

                                                                           MERRIMAN LEGANDO WILLIAMS & KLANG, LLC

                                                                           1360 West 9th Street, Suite 200 Cleveland, Ohio 44113
                                                                           T. (216) 522-9000
                                                                           F. (216) 522-9007

                                                                                                                               E. drew@merrimanlegal.com

                                                                                                                              Counsel for Plaintiffs and Counterclaim Defendants 

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

                                                                      RICHARD CAMPFIELD, et al.                                                                               Case No. 2:15-cv-2733   

        Plaintiffs                                                                           Judge Michael H. Watson

                                                                                                     Magistrate Judge Chelsey M. Vascura
                                                                             

v.

     SAFELITE GROUP, INC., et al.

         Defendants

PLAINTIFFS’ MEMORANDUM IN SUPPORT OF PARTIAL MOTION FOR SUMMARY JUDGMENT

ON THEIR LANHAM ACT CLAIM AND MOTION FOR

SUMMARY JUDGMENT AS TO SAFELITE’S COUNTERCLAIM

I. PRELIMINARY STATEMENT

This case presents a text book example of an industry giant’s deployment of an organized marketing campaign to bury an industry standard that threatened its profits, and any competitor that dared to practice it—regardless of the admitted harm to consumers. The cornerstone of Safelite’s1 business model is based on the demonstrably false “dollar bill rule,” the Safelite messaging that automobile windshields must be replaced and cannot be repaired whenever they are damaged by a crack that is longer than six inches (or roughly the size of a dollar bill). In promulgating the dollar bill rule through commercial advertisement and promotion, Safelite purposefully ignores and subverts the U.S. industry standard allowing for repairs of windshield cracks up to fourteen inches in length.

Safelite employs its dominant market position to set six inches as the universally incontrovertible windshield crack repair standard—as opposed to simply a Safelite policy—by flooding

1 “Safelite” refers collectively to Defendants Safelite Group, Inc., Safelite Solutions LLC, and Safelite Fulfillment, Inc. (“Safelite”).

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the market with the dollar bill rule message in virtually all formats, including point-of-sale oral communications, on the internet, in videos and brochures, on the radio, and through so-called “educational” materials for insurance companies and insurance agents. Safelite’s messaging is often conveyed to insurers and consumers in a literally false format, e.g. stating that if the windshield crack is longer than six inches a replacement windshield is necessary and/or that it is not safe to repair a windshield crack longer than six inches. The reason is simple. Windshield replacements are far more lucrative to Safelite than windshield crack repairs.

2 Safelite’s misrepresentations have damaged, and continue to damage, Plaintiffs , whose

business is both repairing windshields with cracks longer than six inches (“Long Cracks”), and selling the tools and supplies to third parties to perform repairs of Long Cracks for their customers. The uncontroverted evidence shows that Safelite’s false advertisements have damaged Plaintiffs’ Long Crack repair business, and have caused Plaintiffs to suffer significant lost sales and lost business opportunities. In addition, Safelite admits that windshield crack repairs are safer and far less expensive than windshield replacements. Thus, Safelite’s knowing and willful misrepresentations have also caused great public harm.

In its March 28, 2019 Opinion and Order (the “Order”; ECF No. 113), the Court denied Safelite’s motion to dismiss Plaintiffs’ Amended Complaint to the extent that Safelite’s statements about the dollar bill rule “were directly made by Safelite to insurers or end consumers[.]” Id. at 11. The Court noted (as argued by Safelite itself) that Safelite’s false dollar bill rule messaging falls into two general categories:

2 “Plaintiffs” refers collectively to Ultra Bond, Inc. and Richard Campfield.

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■ “Type I statements” which focus on when a windshield replacement is purportedly necessary—e.g. “If the damage spreads beyond the size of a dollar bill, a replacement is necessary”; and 

■ “Type II statements” which focus on the length of a repairable crack in a windshield without expressly stating that a replacement is necessary—e.g. that “when a [crack] is smaller than a dollar bill, it can usually be repaired.”
Id. at 12-14 (discussing examples of each).

The Court rejected Safelite’s arguments that Plaintiffs did not adequately plead that the Type I and II statements are actionable under the Lanham Act. With respect to the Type II statements, the Court denied Safelite’s motion to dismiss stating that “it is at least plausible that Type II statements, which state that cracks less than or up to six inches can be repaired, mislead a significant number of consumers to believe the inverse—that cracks over six inches cannot be repaired.” Id. at 15. However, the Court stated that Safelite’s Type I statements “are affirmative misrepresentations that could be proven false.” Id. at 13 (emphasis added).

Safelite’s internal admissions prove that its self-described Type I statements are indeed literally false. Similarly, Safelite’s uniform statements to insurers and consumers in promoting the false dollar bill rule that it is “not safe” to repair a windshield crack longer than six inches, or that “a replacement is the only option for insuring the structural integrity of the windshield within the vehicle’s overall safety features”, are affirmative misrepresentations that can be proven false— and Safelite’s internal admissions likewise show such statements are literally false.

Plaintiffs bring a claim for relief under section 43(a) of the Lanham Act, codified at 15 U.S.C. § 1125(a)(1)(B). The undisputed evidence shows that summary judgment under Section 43(a) of the Lanham Act is warranted on two issues: 

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(1) That Safelite’s organized marketing campaign to promote the dollar bill rule as an objective standard for windshield crack repair (as opposed to a Safelite company standard) constitutes “commercial advertising or promotion” under Grubbs v. Sheakley Grp., Inc., 807 F.3d 785, 801 (6th Cir. 2015) (“Grubbs”); and

(2) That Safelite’s self-described Type I statements, and similar affirmative misrepresentations about the danger of repairing windshield cracks longer than six inches, made directly to insurers or end consumers as part of its organized marketing campaign are literally false and violate the Lanham Act.

There are no genuine disputes of material fact that Plaintiffs have satisfied their evidentiary burden as to each of the required elements of proof for these two issues. As such, Plaintiffs seek: (1) immediate injunctive relief as it relates to Safelite’s Type I statements and similar affirmative misrepresentations about the safety of following the industry standard for windshield crack repair, including an order barring Safelite from making these misrepresentations, and an order to make corrective disclosures in the market to remedy Safelite’s deceptive marketing campaign; and (2) a finding that Plaintiffs may recover damages based on Safelite’s ill-gotten profits in connection with Safelite’s violation of the Lanham Act in promulgating these literally false statements in an amount to be determined after a trial related to the remaining issue about Safelite’s promulgation of Type II messaging.

In addition, Plaintiffs are moving for summary judgment on Safelite’s seven-count Counterclaim against Plaintiffs. See Safelite’s Answer, Affirmative Defenses, and Counterclaims (ECF. No.93) at ¶¶ 152-276 (“Counterclaim”). In a transparent attempt shift attention away from its own misconduct and intimidate Plaintiffs (and others who might try to challenge Safelite), 

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Defendants filed their Counterclaim after three years of litigating this matter, while the parties were in engaged in expert discovery on the Lanham Act claim.

Three of Safelite’s common law causes of action—tortious interference with contract, misappropriation of trade secrets, and conversion—are preempted by the Ohio Uniform Trade Secrets Act (“OUTSA”), which Safelite pleads at Count II of its Counterclaim. As such, these claims fail as a matter of law. Safelite’s Computer Fraud and Abuse Act (“CFAA”) fails because it is barred by the statute of limitations, and more importantly, for the simple reason that Safelite admits that it has no evidence that the supposed Safelite trade secrets were downloaded from Safelite’s computer system. Safelite’s Unfair Competition cause of action is barred by the statute of limitations, as Safelite admits that it has been on notice of the underlying information on which these claims are predicated for at least eight years.

Finally, Safelite’s OUTSA claim fails as a matter of law because Safelite has presented no evidence establishing the required elements of this claim. Many of the documents Safelite claims here to be “trade secrets” are publicly available, and Safelite admits that it has zero evidence establishing that Plaintiffs used any purported Safelite “trade secrets” or confidential information. These issues are fatal to Safelite’s OUTSA claim.

Safelite’s admitted lack of evidence to support its causes of actions only further exposes that Safelite’s true intentions for bringing its last minute Counterclaim were to throw up unsupported claims to distract the Court and the jury from Safelite’s own misconduct. Safelite’s Counterclaim should be dismissed in its entirety. 

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II. STATEMENT OF UNDISPUTED FACTS CONCERNING SAFELITE’S VIOLATIONS OF THE LANHAM ACT3

A. Safelite Dominates the Vehicle Glass Repair and Replacement (“VGRR”) Services Industry

VGRR services are a huge business. In 2015, Safelite estimated that the annual VGRR market encompassed 16.5 million repairs and replacements. Tab 1, Herron Ex. 15 at SL0065753.

By way of demonstration of its market power, in 2012, Safelite estimated that its next largest competitor after itself commanded only

of the fulfillment market. See Tab 3, SL0063247-89, at 62.

B. Safelite Endorses The ROLAGS 14 Inch Windshield Crack Repair Standard But Immediately Begins A Marketing Campaign To Mislead Insurance Companies and Consumers When It Realizes ROLAGS Threatens Its Profits

Safelite has long employed the dollar bill rule as part of its “advertising and marketing slogan”—historically employing the ubiquitous catch line that “if it fits under a buck, send the little red truck.” Tab 4, Pearson Ex. 15 at SL0006939; Tab 5, Johnson Tr. 30:1-31:24 (Safelite has been using a dollar bill “as a marketing tool” to represent repairable crack length for over 10 years).

Safelite markets, and continues to market, the dollar bill rule to insurance companies and consumers despite admitting that it conducted no technical studies supporting a statement or belief that six inches is the upper crack length limit for windshield crack repair and despite knowing that

3 Unless otherwise specified, all evidentiary cites are compiled in the Compendium of Exhibits In Support of Plaintiffs’ Partial Motion For Summary Judgment On Their Lanham Act Claim And Motion For Summary Judgment As To Safelite’s Counterclaim. 

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the dollar bill rule has “no basis in science.” See Tab 6, Syfko Tr. 44:6-45:6; 133:13-234 (Safelite itself has conducted no studies on the viability of long crack repair, and does not know of any study by anyone else since 1998); Tab 7, SL0004991-93 at SL0004992 (the “practice [of using the length of a dollar bill to limit long crack repair] has no basis in science”). Industry insiders described the origin of the rule as nothing more than “a marketing concept by a company that was under pressure from a primary insurance customer opposed to repairing cracks over six inches.” Id.

Not only does the dollar bill rule have no scientific basis, but it is demonstrably false as it contravenes the 14 inch crack repair standard in the Repair of Laminated Automotive Glass Standards (“ROLAGS”)—the VGRR industry’s “best practices” standards first approved on June 20, 2007. See Tab 8, SL0005038-54 at SL0005044 and SL0005049. The ROLAGS industry standard was jointly created by the National Glass Association (“NGA”) and the National Windshield Repair Association (“NWRA”) under the auspices of the American National Standards Institute (“ANSI”) and clearly states that a windshield crack up to 14 inches can be repaired—i.e. 8 inches longer than the dollar bill rule. Id.

The ROLAGS were developed over a multiple year period by a Standards Development Committee that encompassed industry participants including both Safelite’s National Repair Development Manager, David Erwin, and Belron’s Paul Syfko. See Id. at ‘5044; Tab 6, Syfko Tr. 34:17-35:5. On February 13, 2007 all sixteen ROLAGS Standards Development Committee

4. Paul Syfko is the Global Repair Development Manager of Belron Technical, Safelite’s parent corporation. Id. at 9:21-24. Mr. Syfko was designated by Safelite as a 30(b)(6) witness to testify about a number of topics related to the technical aspects of Long Crack repair including “Any studies, tests, surveys, reports, or other analysis by [Safelite] or anyone concerning either the safety and efficacy of, or customer satisfaction with, Long Crack Repair[.]” See Tab 14 (Syfko Ex.1).