A Tea Related Pain In the Foot Becomes a Headache for Wal-Mart: Amber McCarthy-Shreve and Mark Shreve vs. Wal-Mart Stores, Inc.

An injured foot became a headache for Wal-Mart in the case of Amber McCarthy-Shreve and Mark Shreve vs. Wal-Mart Stores, Inc.

The United States District Court, Southern District of Indiana, Evansville Division recently denied Wal-Mart’s motion to exclude the testimony of the Plaintiff’s expert, Dr. Leroy J. Grossman, who gave his opinion as to McCarthy-Shreve’s loss of earning capacity. Ms. McCarthy-Shreve alleges she sustained injuries to her left foot after a gallon of tea fell off the bag carousel at an Owensboro, Kentucky Wal-Mart. She claimed in her March 29, 2007 Complaint that the injury caused her to retire from her secretarial position for a circuit judge in Henderson, Kentucky.

Dr. Grossman, an economist, calculated her lost of earning capacity to be $233,970.00.
In denying Wal-Mart’s motion, the court held Dr. Grossman’s opinion was supported in “sound methodology and helpful to the jury.”

LegalTEAS Lesson: Most people are familiar with “slip and fall” cases and usually attribute those types of claims with grocery stores and the like. However these cases, known as premises liability cases, can involve anyone who is in possession of land, of a place of business, or of a “premise” – whether it be a home, building, spa, or tea shop. While the laws of most jurisdictions categorize an individual who enters a premise as an “invitee,” a “licensee,” or a “trespasser,” each having separate protections, it’s best to keep your premise in good working order regardless of how the guest is defined. Wiping up spills immediately, keeping doors and windows in working order, and ensuring that all equipment is secure are just some of the ways to guard against these types of lawsuits. Make a note to complete routine checks of your entire premise, outside and inside, on a regular basis to ensure the safety of your guests and employees. Knowledge of problems, without prompt attention to having them fixed, may be brought up in court, and become a detriment to your case and your company. Safety is an important part of success.

The Tea Trademark Line: When Placing Second is Not an Option

In the case Honest Tea Inc. v. Teavolution Pty Ltd., 72 IPR 431 (Australian Trade Marks Office March 9, 2007), the U.S. based Honest Tea company opposed Teavolution’s submission to register trademarks[1] containing the words “honest tea” for tea beverages sold in Australia. Honest Tea claimed that while it did not directly promote its products in Australia, it had been using the words “honest tea” as its company’s name on the World Wide Web and on advertisements in publications available in Australia; thus, Honest Tea argued the words should not be allowed to be part of Teavolution’s Australian trademark.

The Hearing Officer, while noting that the goods and services of both companies were substantially identical, concluded that Honest Tea could not claim ownership of the words “honest tea” in the Australian marketplace since Honest Tea could not produce substantial evidence of an intent to trade its products in Australia nor a measurable reputation in Australia. Accordingly, the Hearing Officer reasoned that Teavolution was the actual first party to use “honest tea” in association with its products in Australia.

LegalTEAS Lesson: This Australian case represents a common tenet of trademark law: the first one to use a term in the marketplace, be associated with the term, and apply for a trademark, is generally the company entitled to the protection and economic advantages a trademark affords.

While the web can provide a worldwide customer base for your product, do not overestimate the weight of your company’s message in the global marketplace. A trademark in one country does not entitle you to protection in all countries. If you have evidence that your product is engrained in a county’s economy to the extent that certain terms are associated with your product, be the first in line to protect this valuable commodity by filing a trademark application. In the competitive global economy, being second is not an option when it comes to trademarks.

[1] While Australia uses the term “trade mark,” the word trademark will be used in this article in accordance with traditional American grammar.

An “Advertising Injury” in the Tea Marketplace

How often do you take the time to read, and more importantly to understand, all of the terms of your liability insurance policy? Do you understand your obligations as well as the obligations of the insurance company who issued the policy? The case of R.C. Bigelow, Inc. v. Liberty Mutual Insurance Company, 287 F.3d 242 (2nd Cir. 2002) illustrates the importance of understanding all of the terms of a liability insurance policy in the tea industry.

The R.C. Bigelow, Inc. v. Liberty Mutual Insurance Company case addressed whether the “advertising injury” provision of a liability insurance policy obligates the issuing insurance company to defend its insured’s published advertisements. In 1995, Celestial Seasonings, Inc. filed a lawsuit against Bigelow for claims surrounding Bigelow’s tea advertisements. Celestial Seasonings claimed that Bigelow’s tea packaging was confusingly similar to Celestial Seasonings’ packaging and that Bigelow failed to indicate that its teas were “artificially flavored,” thus misappropriating the public’s trust. Bigelow, in compliance with its liability insurance, provided Liberty Mutual Insurance Company with all the pleadings and requested the insurance company defend Bigelow in the suit. Liberty Mutual, however, denied Bigelow coverage claiming Bigelow’s suit with Celestial Seasoning was outside the “advertising injury” as defined in the liability insurance policy.

Without the financial support of Liberty Mutual, Bigelow was forced carry the costs for defending itself in the lawsuit with Celestial Seasonings. While costly, Bigelow’s defense was ultimately successful when the District Court in Colorado entered judgment in favor of Bigelow on all counts.

While thankful for the victory, Bigelow was saddled with all of the costs and attorneys’ fees associated with the Celestial Seasonings suit. In turn, Bigelow filed a lawsuit against Liberty Mutual alleging that advertisements at issue in the Celestial Seasoning case were encompassed in the “advertising injury” provision of its liability policy; accordingly, Liberty Mutual should have indemnified and defended Bigelow.

In determining whether the “advertising injury” provision of the insurance policy was triggered by the Celestial Seasonings suit, the court looked to Connecticut law to determine the meaning of the “advertising injury” clause. Connecticut law, like most states, provides that the interpretation of an insurance policy involves the determination of: 1) the intent of the parties as expressed by the language used in the policy; 2) the coverage the insured (Bigelow) expected; and 3) the natural and ordinary meaning of the words used. Finally, the law advises that any ambiguity related to a term(s)’s meaning should be resolved in favor of the insured (Bigelow) since the insurance company is the party that drafted the policy. Finding that the advertisements in question materially contributed to the injuries claimed by Celestial Seasonings and that the advertisements at issue would qualify as an “advertising injury” if the words were ascribed their “natural and ordinary meaning,” the court held that Liberty Mutual was responsible for the costs in defending the Celestial Seasoning case.

LegalTEAS Lesson: This case should be a catalyst for you to review all of your insurance policies and understand the mutual responsibilities described. Your failure to execute the obligations assigned to you may relieve the insurance company from its obligations.

An “advertising injury” in the context of liability insurance is often defined as “coverage for legal liability arising out of your oral or written publication of material causing ‘economic damage’ or ‘personal injury’ to a third party.”

[1] Here is a short, and certainly not exhaustive, list of questions to consider in assessing your liability insurance policies as they relate to advertisements and/or promotions:

1) Does your liability insurance cover possible slander and libel suits?
2) Where permitted by your state’s laws, does the policy cover punitive damages?
3) Is your coverage for advertisements based on an occurrence basis (covering advertisements published during the policy period regardless of when a claim is filed) or a claims basis (covering advertisements made during the policy period)?
4) Is coverage for ancillary promotions, such as publicity materials, included?
5) Do you additional insurance for coverage in cyberspace (known as “Cyber Liability”) or for error and omissions related to advertisements?
6) Does the policy provide for cooperation between your company and the insurance company in determining when a retraction is necessary?

[1] As defined in “Facing the Risk – Liability Insurance Checklist” by Kenneth A. Hall of Robertson Hall Insurance.

A Tea Trademark in Europe: What Recent Changes Mean for You

When should a company, interested in doing business in Europe, apply for a Community Trademark (referred to as a “Community Trade Mark” or “CTM” in Europe) or a national trademark? Previously, weighing the options did not necessarily require extra funds as both a community and national search report was completed. However, a revision of the Community Trade Mark Regulation by European Council Regulation No 422/2004 made national trademark application search reports optional and performed only when explicitly requested and purchased for €192.

To understand when the extra cost and search is worth your company’s investment, it is important to evaluate the unique features of the CTM and the national trademark.

The Community Trademark

The CTM system provides a single registration process for granting its proprietor an exclusive right to use its unique mark to differentiate itself from similar products in the 27 member states of the European Union. While the CTM’s one registration procedure is convenient, if the trademark application is successfully opposed in any one state, the entire submission collapses.

Some of the benefits of the CTM include: 1) the use of the CTM in a single member state is generally sufficient to protect your trademark for the entire EU; 2) the option to assign a CTM becomes an asset to your business; and 3) as the EU expands, so does the coverage of your CTM.

The National Trademark

If your application for a CTM is successfully opposed or your company plans to only direct marketing efforts in a few EU countries, the choice to purchase the extra national search – and likewise register a trademark in individual Member States – should be considered. In some instances, it is a necessity. Such is the case in Greenland where a Danish trademark, not a CTM, affords your company protection.

LegalTEAS Lesson: If your company is considering obtaining trademark protection in Europe, an application should be filed expeditiously and any available priority rights should be implemented so that the execution of the trade mark registration can be backdated. In accordance with the WIPO Paris Convention for the Protection of Industrial Property, if you apply for a United States trademark and then submit for a CTM within a six month period, the submission date of your United States trademark will be assigned as the priority date of your CTM.

A Good Deed CAN Go Unpunished

The 1943 Glasgow Corporation v. Muir case presents a timeless lesson that good deeds are not always punished. In this case, a tea shop owner allowed a group of people into her tea room to escape bad weather. When two members of the party crossed the tea room, an urn of boiling tea spilled onto small children causing serious injuries. The court was asked to decide whether the tea shop owner was liable for the children’s injuries. The court, in applying the “reasonable man” standard, determined the owner could not have reasonably foreseen that allowing individuals to enter her shop would have caused the injuries sustained by the children.

LegalTEAS Lesson: Whether a person enters your shop as guest or escapee from a storm, ensure that all safety precautions are observed. If an individual begins to exhibit erratic or unsafe behavior on your premises, it is your responsibility to eliminate the risk. Your good deed, of protecting your guests and your establishment, should be rewarded by the court.

Minding Your Business

Quality is a goal, not a guarantee. The very taste of tea depends on this aspiration. How do you ensure that the tea you are providing your patrons is of the highest quality, and above all, safe? The answer is perseverance. Perseverance in employing business practices that safeguard these goals and in understanding the regulatory framework in place at the national and international level that monitors the safety of the tea you purchase, import, and/or serve.
The following article provides fundamental guidelines for protecting your business at home and abroad. While the tea industry is a global endeavor, the government safeguards examined in this piece are limited to those used by the United States (“US”) and the European Union (“EU”).
PROTECTING YOUR INVESTMENT
In order to ensure that the tea you sell meets the high standards for quality and consistency that you demand, it is crucial to establish sound business practices. By demanding that your vendors comply with your exacting standards at the outset, you ensure that guests will enjoy the indulgent experience you hope to create for them.
The Comprehensive Contract
The first step in establishing your expectations is a thorough contract that explicitly states the terms and conditions you require with respect to safety and quality. A hand shake or oral promise will not suffice in the highly sophisticated global tea industry. Whether the contract is with a tea plantation or equipment supplier, it should state in detail the quality, quantity, and price you expect. Clarity and specificity is imperative.
The cost of a product can fluctuate with the currency market. As the US dollar continues to lose value against many other currencies, it is wise to lock in a price for a specific period of time, regardless of currency fluctuations. Agreeing to split the difference if the price changes in either party’s favor is an additional option to buffer the impact of a volatile market. Whichever cost protection approach you choose, ensure it is detailed in the contract.
The right to inspect should be included and exercised. Ideally, a quality control inspection clause in the contract will describe your right to perform timely and appropriate inspections of the goods purchased. Whether a vendor has an opportunity to correct quality problems should be detailed along with the timeframe allowed for curing such defects.
A contingency plan should be detailed in the contract if a product recall occurs. A risk shifting provision in your contract, whereby a foreign manufacturer agrees to indemnify or buy back defective products, is one way to address this danger.
Obtaining a “recall insurance policy” will also offer protection. Since a commercial general liability policy does not generally cover the costs associated with a product recall, a separate “recall insurance policy” will cover the costs to inform your customers of a recall, to provide a suitable replacement, to resolve business interruptions related to the recall, and to provide a defense should litigation related to the recall ensue.
Promises, Promises…
Don’t make promises you can’t keep – not in your company’s written literature, not in your words, and not on your website. Earlier this year, the Federal Drug Administration (“FDA”) warned several tea companies regarding internet advertisements promoting their tea’s ability to prevent or cure cancer.
Even less obvious claims can result in fines and liability. In a recent case brought by the Federal Trade Commission (“FTC”), the U.S. District Court for the District of Connecticut held the defendants involved in advertisements of the “Chinese Diet Tea” were liable for publishing materially misleading advertisements that made “the alleged claims [of dramatic weight loss] expressly, or by such strong implication as to constitute the functional equivalent of express claims…” (Emphasis added). Thus, in order to avoid the threat of liability, it is important not to attest or suggest that your tea can provide miraculous results. Ignoring this lesson could result in potential liability and disappointed patrons; which, as any proprietor can attest, is the worst advertisement a business can have.

SAFEGUARDS PROVIDED BY THE US AND THE EU
You’re not the only one minding your business. Most countries have laws and inspection mechanisms to ensure the safety of locally grown or manufactured products. Similar principles exist to protect the citizens of various countries from imported goods. As the presence of European tea growers and manufacturers continues to grow on the global scale, it is important to understand the applicable regulatory framework employed by the US and the EU to monitor and protect the tea industry.
US Safety Measures
In the US, there are a number of federal agencies that monitor the food that is produced and imported by its citizens. The FDA is responsible for ensuring the safety of domestic foods such as tea, milk, and produce. The FTC ensures that the advertisements for such goods are truthful and that the advertisers can substantiate any claims. The Environmental Protection Agency (“EPA”) tests many foods produced in or imported to the US to ensure that they do not exceed the “Maximum Residue Limit” of pesticides. The Centers for Disease Control and Prevention (“CDC”) examines and detects food borne illnesses and evaluates studies such as the relationship between tea intake, the COMT genotype, and breast cancer in Asian-American women. Finally, the Department of Homeland Security, Office of Health Affairs, gauges the vulnerability of certain foods for contamination and inspects specified products at the US’s borders.
EU Safeguards
Just as the US provides a regulatory scheme to meet the needs of the citizens of various states, the EU provides a similar system to protect the member states of the EU as well as all citizens of Europe in certain instances. The EU created the Directorate General for Health and Consumer Affairs (“DG-SANCO”) to concentrate on food safety, public health, and consumer affairs. DG-SANCO is responsible for the advancement of EU safety legislation. Recognizing the separate but equally important needs of risk assessment and risk management, the European Food Safety Authority (“EFSA”) was formed to monitor risk assessment and the European Commission (“EC”) was created to address risk management.
Should a serious risk arise, the Rapid Alert System for Food and Feed (“RASFF”) electronically notifies the member states (and non-member states Iceland, Liechtenstein, and Norway) to allow each to verify whether the specific product is on the market and initiate a recall or withdrawal of the product if necessary.

CONCLUSION
Whether you purchase from the Charleston Tea Plantation or the Gorreana Tea Plantation in São Miguel, it is essential that you take some basic steps to protect your company from the damage that can result from tea that does not meet your, or your country’s, high standards. A comprehensive contract that provides explicit details as to price, quality, and safety will enable your local or international vendors to understand and to meet your expectations. By understanding the patchwork of regulatory agencies that monitor the quality of the tea you purchase and the safeguards in place in the event an unsafe ingredient is discovered in the marketplace, you will be armed with the recourse outlined in your contract and the knowledge of how the government is managing the problem. Taking such an active role in the business of your tea company allows your customers to enjoy the peace of mind they need to sink into the sublime sedation that ensues with each contemplative moment from sipping their favorite tea.
Sarah E. Carson, J.D. is an attorney and president of LegalTEAS, LLC. She is a national speaker on legal issues related to commercial transactions and has taught law courses at the undergraduate and graduate level. The information in this article is provided for informational purposes only and does not constitute legal advice. Additional information on this article and related links may be obtained at http://www.legalteas.com/