The opinion of the court was delivered by: WEINFELD
Plaintiffs, Leandro P. Rizzuto, and Conair Corporation ("Conair"), of which Rizzuto is the chief executive officer, instituted this action charging they were libelled by statements contained in two advertisements in trade journals. The defendants are The Nexxus Products Company ("Nexxus") engaged, as is Conair, in the manufacture and distribution of hair shampoo, conditioner and hair products throughout the United States; Jheri Redding, chief executive officer of Nexxus, at whose instance the advertisements were published; and the publishers of the two journals in which the advertisements appeared, Service Publications, Inc., publisher of American Hairdresser Salon Owner, ("American Hairdresser") and Vance Publishing Corporation, publisher of Modern Salon ("Modern Salon"). Each plaintiff seeks damages in the sum of $15,000,000 allegedly sustained by reason of the claimed false and libellous publications. The defendants move for summary judgment pursuant to Fed. R. Civ. P. 56(c).
Redding, now 78 years of age, for more than five decades has been a recognized leader as a formulator of hair care products, including shampoos, conditioners, rinses and permanent wave solutions. At various times he has conducted business on his own or in association with others. In 1957 Redding and another formed a California partnership to develop and formulate hair care and health products which were to be licensed for manufacture and distribution by others. The partnership functioned under the name of Jheri Redding Products Company and used Redding's name in connection with the sale of its products. In 1959 the partnership was dissolved and a corporation formed under the name of Jheri Redding Products, Inc., in which Redding was to acquire a one-third stock interest. The corporation similarly used Redding's individual name, variants thereof, such as "Jheri Redding Products," "Jheri Redding Products Co.," "Jheri Redding Products Company" and his script signature on hair care products distributed by it to the hair dressing industry. Redding asserts that although he agreed during the partnership's existence to execute at some later date a consent to the use of his name on products formulated by him, "to the best of [his] recollection" he never executed such a written consent. He also asserts that a document filed in the United States Patent Office on November 22, 1960 by Jheri Redding Products, Inc. to register the trademark "Jheri Redding's" which purports to bear his signature consenting to the use of his name, is either a forgery or was fraudulently transposed from some document signed by him during his partnership relationship. On November 21, 1960, one day prior to the filing of the application in the Patent Office, Redding and his wife served a "Notice of Recission" upon Jheri Redding Products, Inc. and its stockholders on the ground that their agreement which included the consent to the use of his name by Jheri Redding Products, Inc. was procured by fraud. However, the certificate of registration filed in the Patent Office remained in effect despite the "Notice of Recission."
After the termination of his relationship to the aforesaid partnership and the corporation, in the succeeding years Redding was a principal in a number of other companies, all of which used his name on products formulated by him. During this period Jheri Redding Products, Inc., with which he was no longer associated, also used the trade name "Jheri Redding" on many of its hair care and related products.
In 1973 Conair acquired all the stock of Jheri Redding Products, Inc. which in 1979 was merged into Conair and became a division of Conair. Conair thereby acquired as part of its purchase the registered trademark "Jheri Redding's," including the script representation thereof and the good will attaching thereto. Conair has since maintained laboratories in Edison, New Jersey known as Jheri Redding Laboratories, where it has developed products, many of which are distributed under the name Jheri Redding Products.
In 1979 Redding formed the defendant Nexxus Products Company ("Nexxus") as a family enterprise. It is not disputed that Nexxus became a highly successful company in the hair products business and that Redding's association with it as the formulator of its products is a significant part of its success. Similarly, it is not disputed that Conair has marketed a successful line of hair care products using on some of them the trade name "Jheri Redding." A feature of the industry in which the litigants compete is the styling and packaging of their respective products generally attempting to imitate the styling or packaging of a competitor's successful product.
In the early 1980's Jheri Redding formulated a variety of hair care products which were marketed by Nexxus packaged with a trade design and the use of double "X's" as a symbol on its advertising and brochures. Soon thereafter in 1981, Conair developed hair care products for sale to beauty parlors, which utilized the name "Extra" and were packaged, styled and designed to compete with Nexxus' products. These products were not introduced into the market until late 1982. In conformity with the common industry practice for manufacturers "to come out with new and imitative products to compete for the lucrative hair-care market,"
Conair's Extra line had a large "X" in the background and Nexxus' contained two "X's."
Conair's products were and are distributed almost entirely through independent dealer distributors. Conair also licensed other companies to use the Jheri Redding trademark and to indicate that the products were formulated at its "Jheri Redding Laboratories."
Redding and Nexxus, based upon the deliberate and imitative packaging and styling of plaintiffs' products, charge that plaintiffs thereby encouraged and gave credence to false statements by representatives of distributors in the industry that the Conair products were formulated by Jheri Redding at the Jheri Redding Laboratories, with the result that much confusion existed as to who in fact was the formulator and distributor of the products delivered to the consumer. Depositions of salon operators and others in the industry attest to the confusion in the trade as to who was the formulator of the competing products.
Conair, of course, asserts that it had the right to use the name Jheri Redding and variants thereof by virtue of its acquisition of Jheri Redding Products, Inc. stock in 1973 and its merger in 1979 into Conair. It denies it made or authorized any of the false statements as charged by defendants or that it encouraged its representatives or distributors to do so. Conair further asserts that it has no control over the independent distributors or jobbers who buy its products or their selling practices and thus it is not responsible for such false statements about Redding and Nexxus. Defendants respond that since in some instances plaintiffs licensed others to use the trademark Jheri Redding on products distributed by them, they as licensors must bear responsibility for false advertising and statements circulated by the licensees.
With the issue as to the ownership of the trade name "Jheri Redding" unresolved, despite various lawsuits in the California state courts by their predecessors, none of the litigants to this action resorted to the courts to obtain a definitive final legal adjudication as to their respective rights to use the trade name "Jheri Redding."
Conair and Nexxus each continue to market hair care products in competition with another using the name Jheri Redding or its variants and the "X's" on the packaging. That distributors to the trade as well as ultimate purchasers of the competing products were and are confused as to their source cannot seriously be disputed. Indeed, Conair's decision to style one of its products, Extra, imitative of the styling of defendants' product served to add to the confusion. Nexxus decided, in the words of Jheri Redding, to advertise so as to "set the record straight" and "to get the truth to the trade so that the beauty salon owners could exercise an informed judgment if they wished to use products actually formulated by" him.
It is against the foregoing history of the relationship of the parties, their competitive and prominent positions in the industry and other factors which led to the advertisements that the defendants' motion for summary judgment is to be considered. All defendants in support of their motions for summary judgment rely primarily upon the constitutional defense under New York Times Company v. Sullivan5 and its progeny. Further, since this is a diversity action as to which the New York State substantive law of libel applies,
they advance defenses of truth of the facts contained in the advertisements and that other matters are opinions fairly expressed.
The advertisements were published in the two defendant trade journals, Modern Salon and American Hairdresser, in December 1983 in the form of a message to those engaged in the hair-care industry, and are similar in factual content except for several changes in the American Hairdresser advertisement, effected at the instance of that periodical's management. They were distributed nationwide. The ...