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GIDATEX, S.R.L. v. CAMPANIELLO IMPORTS

January 31, 2000

GIDATEX, S.R.L., PLAINTIFF,
V.
CAMPANIELLO IMPORTS, LTD., CAMPANIELLO IMPORTS OF FLORIDA, LTD., AND CAMPANIELLO ENTERPRISES, INC., DEFENDANTS.



The opinion of the court was delivered by: Scheindlin, District Judge.

OPINION AND ORDER

Plaintiff Gidatex, S.r.L. ("Gidatex") sued Campaniello Imports, Ltd., Campaniello Imports of Florida, Ltd., and Campaniello Enterprises, Inc. (collectively "Campaniello") for violations of the Lanham Act, 15 U.S.C. § 1114(1) and 1125(a), common law trademark infringement, and common law unfair competition. Gidatex's claims arose from Campaniello's alleged use of the trademark of Saporiti Italia ("Saporiti"), an Italian furniture company whose assets are owned by Gidatex. Campaniello asserted counterclaims for breach of contract, unfair competition, misappropriation and unjust enrichment.

This Court dismissed Campaniello's first three counterclaims and granted summary judgment in favor of Gidatex on the fourth. Gidatex's claims were tried to a jury from August 23 to August 31, 1999; the jury found Campaniello liable on all three claims. The jury then awarded Gidatex $25,000 of Campaniello's profits for the federal claims and $25,000 of Campaniello's profits for the state claims, but did not award any actual damages. Following the trial, this Court rejected Campaniello's equitable defenses of unclean hands, laches and acquiescence and permanently enjoined Campaniello from using the Saporiti mark, except in limited circumstances.

Campaniello now moves, pursuant to Fed.R.Civ.P. 50(b), for judgment as a matter of law, asserting that the jury had no evidentiary basis for awarding Campaniello's profits to Gidatex. Alternatively, Campaniello seeks to limit the jury's award by arguing that the award constituted an impermissible double recovery. Gidatex, for its part, seeks an enhancement of the jury's award of Campaniello's profits, as well as attorneys' fees, costs and prejudgmentg interest.

I. BACKGROUND

A. Facts

The background of this case has been detailed in several opinions previously issued by this Court.*fn1 I review only the facts relevant to the motions at issue.

From 1974 to 1994, Campaniello acted as the exclusive sales representative for Saporiti. See Gidatex VI, 1999 WL 796181, at *1. In March 1994, Campaniello sued Saporiti for breach of contract, fraud, and misrepresentation. See id. During that litigation, Saporiti filed for the Italian equivalent of bankruptcy; under the supervision of an Italian bankruptcy court, Gidatex leased Saporiti's assets with the option to purchase them at a later date. See id.

In June 1994, Gidatex entered into a distributorship agreement with Campaniello; this agreement was similar to the prior one between Saporiti and Campaniello. See id. As part of this agreement, Campaniello withdrew its claims against Saporiti, while Gidatex engaged Campaniello as the exclusive distributor of Saporiti furniture in the United States and other Western Hemisphere countries through March 31, 1995. See id. The agreement, which contained an automatic five-year extension if Gidatex purchased Saporiti's assets, required Campaniello to make certain minimum purchases of Saporiti furniture. See id. Between June 1994 and March 1995, Campaniello was displeased with the quality of the Saporiti goods and Gidatex's delays and inaccuracies in filling its orders. See id. at *2. Ultimately, Campaniello did not place sufficient orders with Gidatex to meet its minimum purchase requirements. See id. Although Gidatex eventually purchased Saporiti's assets, it refused to continue Campaniello's distributorship an additional five years, as contemplated by the distributorship agreement. See id.

In April 1995, Gidatex verbally terminated its relationship with Campaniello. See id. At the time of the termination, Campaniello had approximately $1,000,000 worth of Saporiti furniture in its warehouses and showrooms. See id. Gidatex refused to buy back the furniture but allowed Campaniello to sell its remaining stock to the public. See id.

Despite the termination of the agreement, Campaniello continued to use the Saporiti trademark. See id. Eight months after Gidatex's oral termination of the agreement, in December 1995, Gidatex's counsel advised Campaniello's counsel that Campaniello was permitted to use the Saporiti trademark only in connection with the sale of the remaining Saporiti inventory. See id. Twenty-two months later, in October 1997, Gidatex's counsel sent Campaniello's counsel a "cease and desist" letter. See id. at *3. Campaniello replied that it had "`no intention of removing the name Saporiti Italia from our wholesale showrooms. . . .'" See id. (quoting October 21, 1997 Letter of Thomas Campaniello to Thomas G. Bailey, Jr., Esq.). Gidatex then sent undercover investigators into Campaniello's New York showroom to determine whether Campaniello was using the Saporiti Italia trademark to "pass off" other brands of furniture similar in style to authentic Saporiti merchandise. See id.

At trial, Thomas Campaniello testified that after the termination of the distributorship agreement in April 1995, no one from Gidatex gave Campaniello permission to use the Saporiti signs or trademark. See id. Campaniello remembered that his lawyer had given him a copy of the December 1995 letter from Gidatex's counsel. See id. Although Campaniello understood that the letter requested that he take down the Saporiti sign, he disregarded the letter because he considered it "incidental." See id. Campaniello also recalled seeing the October 1997 cease and desist letter and taking this second warning more "seriously." See id. Campaniello agreed with plaintiff's counsel that the two letters "left no doubt" in his mind that Gidatex did not approve of Campaniello's use of the Saporiti sign and trademark. See id.

Nevertheless, Saporiti signs remained on the storefront of Campaniello showrooms in New York, Dallas and Miami and Dania, Florida where Saporiti stock continued to be sold. See id. at *4. Campaniello also continued to use the Saporiti name on delivery trucks and in telephone and building directories. See id.

B. Procedural History

On December 29, 1997, Gidatex sued Campaniello, alleging violations of the Lanham Act, 15 U.S.C. § 1114(1) and 1125(a), common law trademark infringement, and common law unfair competition. On March 18, 1998, Campaniello asserted counterclaims for breach of contract, unfair competition, misappropriation, and unjust enrichment.*fn2

The parties engaged in a substantial amount of pre-trial litigation, resulting in four written opinions by this Court. On June 2, 1998, this Court denied Gidatex's motions for a preliminary injunction and for expedited discovery. See Gidatex I, 13 F. Supp.2d at 419-20. On June 10, 1998, this Court granted Gidatex's motion to dismiss Campaniello's counterclaims for breach of contract, unfair competition, and misappropriation, but denied Gidatex's motion to dismiss Campaniello's counterclaim for unjust enrichment. See Gidatex II, 13 F. Supp.2d at 424-30. In addition, this Court denied Campaniello's motion for a preliminary injunction. See id. at 430. On May 17, 1999, this Court granted summary judgment in favor of Gidatex on Campaniello's counterclaim for unjust enrichment. See Gidatex III, 49 F. Supp.2d at 300-04. On July 22, 1999, this Court denied Campaniello's motion for entry of a final judgment pursuant to Fed.R.Civ.P. 54(b). See Gidatex IV, 73 F. Supp.2d at 346-49.

Before trial, Campaniello asserted the equitable defenses of unclean hands, laches and acquiescence. See Gidatex VI, 1999 WL 796181, at *1. The Court bifurcated the equitable and legal claims, and the latter were tried to a jury from August 23 to August 31, 1999. See id. On Gidatex's federal claims, the jury found that the Saporiti trademark was "arbitrary" and that Campaniello had infringed the mark; it also found that Campaniello had "engaged in conduct which is likely to confuse or mislead numerous ordinarily prudent purchasers." See Court Exhibit 3 (Verdict Sheet), at Questions 1-3. As for damages, the jury answered "yes" to both parts of the following question:

Has Gidatex proven by a preponderance of the evidence that Campaniello acted in bad faith by either:
(a) intending to capitalize off the reputation of Saporiti Italia by diverting potential sales of Saporiti Italia furniture caused by Campaniello's sales of Il Loft brand furniture between April 1995 and the present?
OR (b) intentionally setting out to deceive the public?

See id., at Question 5. The jury then stated that it did not need an accounting and awarded Gidatex $25,000 of Campaniello's profits. See id., at Question 6. Finally, the jury found that Gidatex had suffered damages as a result of actual consumer confusion caused by Campaniello's actions, but awarded Gidatex no actual damages stemming from either injury to the reputation of Saporiti or expenses incurred by Gidatex in an effort to prevent customers from being confused. See id., at Questions 7, 10.

On Gidatex's state claim, the jury found that Campaniello had engaged in unfair competition. See id., at Question 4. The jury then found that Campaniello had acted in bad faith, answering a question with the identical wording as Question 5. See id., at Question 12. Again, the jury stated that it did not need an accounting and awarded Gidatex $25,000 of Campaniello's profits. See id., at Question 13. Finally, as with the federal claim, the jury awarded no actual damages to Gidatex on the state claim. See id., at Question 14.

After the jury delivered its verdict, the parties discussed with the Court*fn3 whether the jury had made two separate $25,000 awards. See Trial Transcript ("Trial Tr.") at 989-97. In response, the Court asked the jury: "Are you making one $25,000 damages award or are you making two separate $25,000 damages awards?" Id. at 997. After deliberating further, the jury responded, in writing: "We the jury make two awards of $25,000 each." Court Exhibit 4.

On October 6, 1999, this Court found that defendants had failed to meet their burden of proof on the equitable defenses of unclean hands, laches and acquiescence. See Gidatex VI, 1999 WL 796181, at *4-*9. The Court then permanently enjoined Campaniello from using the Saporiti mark, except in connection with its sale of the remaining Saporiti inventory and subject to stringent conditions. See id. at *10.

II. DISCUSSION

A. Award of Campaniello's Profits

Both parties challenge the jury's $50,000 award to Gidatex of Campaniello's profits. Campaniello argues that the jury lacked an evidentiary basis to award any profits or, alternatively, that the jury's two awards of $25,000 each constituted an impermissible double recovery. Gidatex, on the other hand, urges this Court to enhance the jury's award of Campaniello's profits.

1. Whether the jury had a sufficient evidentiary basis to award any profits

Campaniello moves for judgment as a matter of law, pursuant to Rule 50(b), arguing that the jury lacked a sufficient evidentiary basis to award any of Campaniello's profits to Gidatex. ...


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