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Title: United Fabricare Supply, Inc. v. 3hanger Supply Company

June 27, 2012

TITLE: UNITED FABRICARE SUPPLY, INC.
v.
3HANGER SUPPLY COMPANY, INC.



The opinion of the court was delivered by: Honorable Michael W. Fitzgerald, U.S. District Judge

CIVIL MINUTES -- GENERAL

PRESENT: HONORABLE MICHAEL W. FITZGERALD, U.S. DISTRICT JUDGE

Rita Sanchez None Present Courtroom Deputy Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFF: ATTORNEYS PRESENT FOR DEFENDANT:

None Present None Present

PROCEEDINGS (IN CHAMBERS): ORDER DENYING PRELIMINARY INJUNCTION [4]

INTRODUCTION

Plaintiff United Fabricare Supply, Inc. ("United") is a dry cleaning supply company founded in 1983 in Compton, California. (Compl. (Docket No. 1)). Defendant 3Hanger Supply Company, Inc. ("3Hanger") is a dry cleaning supply company founded in 2009 in Hawthorne, California.

The material facts are not in dispute:

On February 27, 2012, an article entitled "Hanger Makers Swing in Wind?" was published in the Los Angeles Business Journal (the "LABJ Article"). The LABJ Article discussed the possibility that the federal government would impose tariffs on companies that import hangers from Vietnam or Taiwan. The LABJ Article reported that U.S. Hanger Co. LLC ("U.S. Hanger") and some other American hanger makers had petitioned for such tariffs and that their complaints had led to a federal investigation.

The LABJ Article contained numerous false statements regarding United's involvement in the tariff proposal. For example, the LABJ Article asserted that United is the parent company of U.S. Hanger, but United has no ownership interest in that company. In addition, the LABJ Article included statements from Sam Monempour, 3Hanger's Vice President, that "U.S. Hanger's parent company, the largest dry- cleaning supply distributor in Southern California, is trying to squeeze out other suppliers," and that "[t]hey won't sell hangers to me." United does not manufacture hangers.

Shortly after the LABJ Article was published, 3Hanger prepared a pamphlet in which it reprinted the LABJ Article and included a discussion explaining why the "costs of [customers'] supplies will be increasing at such an alarming rate." 3Hanger distributed this pamphlet in hard copy and by email to various industry entities throughout Southern California, including many of United's customers. The pamphlet included excerpts from different portions of the LABJ Article, combined together without correct attribution, and in some instances added United's name in bold print to sentences in which United had not been mentioned in the original text. 3Hanger also posted this information on its website.

The Los Angeles Business Journal acknowledged the errors in the LABJ Article, published a retraction, and on April 26, 2012, issued a cease-and-desist letter to 3Hanger, stating that 3Hanger did not have permission to republish the LABJ Article. 3Hanger took the LABJ Article off of its website, and has ceased any other republication of the LABJ Article.

In addition, in or around September 2010, 3Hanger sold dry cleaning "poly bags" in boxes which originally had been printed with United's logo and other marks. (United had cancelled an order for poly bags from a mutual supplier.) The supplier affixed labels with 3Hanger's name on the boxes to cover United's name, which still was printed on the boxes and could be seen by peeling back the label. This was an isolated incident.

On or about May 12, 2011, 3Hanger sold boxes of United's copyrighted caped hangers (bearing the phrase "Your Clothes Cleaned & Pressed For Your Success") to Hispanic Indoor Media, Inc. ("HIM"). (Again, United had rejected these caped hangers from a mutual supplier.) HIM apparently attached print advertising (relating to the premier of TNT's television show "Franklin and Bash") over United's copyrighted material, although the print advertising did not completely cover United's marks. HIM then shipped the hangers to a third-party logistics company, Promotional Fulfillment Services, Inc. On June 21, 2011, 3Hanger received a cease-and-desist letter from an attorney representing United with respect to these caped hangers, and 3Hanger has not knowingly sold any United hangers since.

On May 1, 2012, United filed a Complaint against 3Hanger alleging five claims for relief: (1) unfair competition and false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) et seq.; (2) false advertising under California Business & Professions Code § 17500 et seq.; (3) unfair business practices under California Business & Professions Code § 17200 et seq.; (4) ...


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