The opinion of the court was delivered by: MORRIS E. LASKER
Windsurfing International, Inc. moves for reconsideration of that portion of the March 31, 1994 Opinion of this Court which held that BIC Leisure Products, Inc. is entitled to its costs in this action from the date of its offer of judgment under Fed. R. Civ. P. 68. BIC Leisure Prods. v. Windsurfing Intern., 1994 WL 109760 (S.D.N.Y. Mar. 31, 1994).
The March 31, 1994 decision granted BIC Leisure's Rule 68 application because there was "no basis for concluding that the final judgment in this case will be more favorable, within the meaning of Rule 68, to Windsurfing than the offer it rejected." BIC Leisure Prods. v. Windsurfing Intern., 1994 WL 109760, at *5. One aspect of that determination was the rejection of Windsurfing's claim that the Rule 68 offer was "virtually worthless" when made because of BIC Leisure's financial condition.
The March 31, 1994 decision held that Windsurfing had no good reason to believe that BIC Leisure's offer was worthless because "Windsurfing knew that BIC Leisure's parent company, BIC Corporation, was prepared to pay whatever damages might be awarded against its subsidiary." BIC Leisure Prods. v. Windsurfing Intern., 1994 WL 109760, at *4. That holding was supported by BIC Corporation's letter of August 29, 1985 stating that BIC Corporation would "guarantee any damages that BIC Leisure may be required to pay Windsurfing" and the October 24, 1985 Order of this Court providing specifically that "based on the guarantee filed in this Court, BIC Corporation is Ordered to pay to Windsurfing International, Inc. all damages, attorneys' fees and costs, if any, awarded by this Court in the future for infringing activities of BIC Leisure Products, Inc."
On the present motion, Windsurfing requests reconsideration of the finding that it "knew that BIC Leisure's parent company, BIC Corporation, was prepared to pay whatever damages might be awarded against its subsidiary." It argues that, to the contrary, Windsurfing had no reason to believe that BIC Corporation intended to stand behind BIC Leisure's offer because BIC Corporation had i) appealed the guarantee provision shortly after it was incorporated in the October 24, 1985 Order and (after the parties agreed to a dismissal of the appeal because it was interlocutory) ii) reserved the right to appeal the guarantee provision again in the future just three weeks before BIC Leisure's Rule 68 offer.
In spite of these facts, however, the October 24, 1985 Order, specifically ordering BIC Corporation to pay its subsidiary's damages, attorneys' fees and costs, gave Windsurfing substantial reason to believe that BIC Corporation would stand behind its obligations. That BIC Corporation had reserved the right to appeal certainly did not insure that it would have been successful on appeal. Moreover, any doubt Windsurfing may have had about whether BIC Corporation was willing to stand behind its subsidiary's obligations could easily, without any risk or expense to Windsurfing, have been resolved by putting that question to the parent corporation. It certainly is reasonable to believe that BIC Corporation would have been willing to guarantee payment by BIC Leisure if, as is the case when a Rule 68 offer is accepted, that would have ended the case.
Finally, Windsurfing's claim that it believed BIC Leisure's Rule 68 offer to be worthless is undermined by the fact that Windsurfing nevertheless pursued the action thereafter for a much larger amount. If Windsurfing had really believed that it would not have been able to collect on the offer, there would have been no point to continuing the action at all. Since Windsurfing did pursue the action, it seems more likely that Windsurfing believed, not that the offer was worthless, but that it could ultimately collect more than the $ 2,000,000 it declined to accept.
Submit proposed judgment on notice.
Dated: New York, New York