False advertising claim under the Lanham Act; The FedEx Ground Package Sys, Inc v Route Consultant, Inc test; Whether defendant made false or misleading statements of fact; 15 USC § 1125(a)(1); “Literally false” versus simply “misleading”; Whether defendant’s claim “actually deceived” the intended audience; Whether the claim was “material” to consumers

The court held that plaintiff-Brough Brothers failed “to identify any unambiguously false statements” by defendant-Fresh Bourbon, and because it did not introduce any evidence that customers were deceived by defendant’s statements, the district court properly granted defendant summary judgment on plaintiff’s false advertising Lanham Act claim. The case involved the right to be known as the first African American-owned company to distill bourbon in Kentucky. Plaintiff claimed to be the first, having opened “its physical distillery in 2020. But Fresh Bourbon counters that it was the ‘first’ because its owners physically distilled their brand at another company’s distillery two years earlier.” Plaintiff sued defendant for false advertising under the Lanham Act. Applying the multi-part test in FedEx, the court noted that the parties only disputed the first three elements. “The first one requires a ‘false or misleading’ statement of fact.” The court has “divided actionable factual claims into two categories: those that are ‘literally false’ and those that are merely ‘misleading.’” If a statement qualifies as the former, “the defendant can identify no possible framing in which one could consider the statement true.” By contrast, a misleading statement “requires a reader to engage in some mental processing to determine its truth or falsity.” And the distinction between the two “matters to the second element[,]” which considers “if the challenged statement has deceived or could deceive consumers.” The court presumes “that a literally false statement ‘actually deceived’ consumers.” However, it does “not accept this presumption for misleading claims.” Rather, it requires “plaintiffs to present proof of deception.” The court held that plaintiff’s claims failed “on deception grounds alone.” Plaintiff failed to show that defendant “expressly made a literally false statement[.]” Plaintiff also contended that all of defendant’s “statements, taken together, ‘left . . . the clear impression that Fresh Bourbon was the first black owned distillery in Kentucky.’” The court concluded it “may simply assume the validity of Brough Brothers’ false-by-necessary-implication theory. Fresh Bourbon’s collective statements were still, at most, ambiguous. Even if they could convey the (false) claim that [it] opened its venue first, they could also convey the (true) claim that [it] made and sold Kentucky bourbon first. And courts do not treat as literally false a statement (whether express or implied) that a reader could take to convey both a truthful assertion and a mistaken one.” Affirmed.