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April 8, 2001


The opinion of the court was delivered by: Robert L. Carter, District Judge.


Plaintiff New York Stock Exchange moves for summary judgment on its claims that defendants David Gahary and John Zito have used variations of the name "Richard Grasso," without plaintiff's permission, to post offensive messages to certain internet bulletin boards, in violation of Section 43(a) of the Lanham Act,*fn1 New York State's General Business Law Sections 349 and 350, and New York common law. Plaintiff also moves, pursuant to Rule 12(c), Fed. R. Civ. P., for judgment on the pleadings with respect to counterclaims brought by defendants for harassment and abuse of process. Defendants oppose both motions and bring their own motion for summary judgment on grounds that their use of the Grasso name is parody protected by the First Amendment, and that defendant Zito never posted any messages under any variation of the Grasso name. For the reasons set forth below, both parties' motions for summary judgment are denied. However, plaintiff's motion for judgment on the pleadings regarding defendants' counterclaims is granted.


The parties disagree on much to do with this case. What is undisputed is that, in or about August 1999, defendant David Gahary ("Gahary") began posting messages to certain internet bulletin boards hosted by the website*fn2 (Gahary Tr. 97-99.) The website is home to a number of such on-line forums, which are devoted to discussion of a wide variety of issues. (Id. at 89-90.) As the name suggests, however, the site's primary focus is on financial subjects, such as the stock market. (Id. at 89.) The typical stock-related bulletin board on is ostensibly organized around discussion of a specific stock, such as Biocontrol Technology (BICO)*fn3, Cyber-Care (CYBR), or Evironmental Solutions Worldwide (ESWW). In practice, however, the dialogue seems to range well beyond that, routinely encompassing talk of financial matters and the stock market generally. (Gahary Tr. 90-91.) Participants post messages under "screen names" (essentially, on-line aliases) that they choose for themselves.*fn4 For his screen names, Gahary chose several variations of the name "Richard Grasso," who has been the Chairman and Chief Executive Officer of the New York Stock Exchange ("the Exchange" or "NYSE") since 1995. This choice was no mere coincidence: Gahary concedes that he consciously sought to evoke the name and identity of Richard Grasso, C.E.O. of NYSE. (Gahary Tr. 94-95, 163, 164.)

Gahary posted most of the messages at issue in this case using one of five similar screen names: "dickgrasso," "DickGrasso," "richardgrasso," "RichAGrasso," and "Grasso2." (Gahary Decl. ¶ 5.) It further appears, though the record is not completely clear on this point, that he did not mean to use the aforementioned aliases contemporaneously. Rather, when one name would be "TOS'ed" (or deleted) by administrators at,*fn5 Gahary would simply create a related but distinct alias and resume posting messages. Defs.' Opp'n Mem. at 4 n. 8. In this way, he was able to maintain the continuity of his on-line identity. Id. Eventually, however, the five aforementioned screen names were all TOS'ed, and Gahary found himself unable to create new ones.*fn6 Eager to continue posting, he turned to defendant John Zito ("Zito"), whom he had met while posting to certain bulletin boards under the alias "richardgrasso." (Zito Decl. ¶ 5.) On or about July 24, 2000, Zito secured three new screen names at Gahary's request — "richardgrasso 3," "richardgrasson4," and "RichieGrass" — bringing the total number of Grasso aliases to eight. (Zito Answer and Countercls. — 17.) While Zito does not deny that he created these names for Gahary, he insists (and nothing on the record contradicts his claim) that he never personally posted any messages using them.*fn7 (Id.) Whatever reprieve Zito's efforts may have earned Gahary, however, was apparently short-lived. The latter's final post, using any of the eight aforementioned screen names, was recorded only a few days later, on or about July 27, 2000.*fn8 (Compl., Exs. 1A-4Q.)

Gahary concedes the controversial character of the messages he posted using the eight Grasso aliases. He freely admits that his comments were frequently rude, crude, and demeaning:

Grasso [the on-line persona] is very confrontational. He was abusive. He was hopefully obscene, harassing, definitely — he was not unlawful. He was not harmful. But you can't harm anybody. He did not invade anyone's privacy. Tortious, I don't know. He was hopefully very objectionable.

(Gahary Tr. 113.) A representative rant confirms this depiction:

sellnow: no, the U235 is actually from merlin olsen's rectum: seems that stan cottrell got a little close to that area recently and developed testicular cancer hence the discovery of olsen's radioactive poop chute. I know it sounds weird, but it's right up Bico's alley, wouldn't you agree?

Gahary's tirades were even, on occasion, explicitly vulgar:

to all you new fuckkin fools:

you will all be crushed soon by bico's mm's simply b/c you are here, don't even think about insulting sell now, sell low, 2centsin, big fish, and a few others. they forgot more than you know or will ever know about this stock, that will certainly separate you from your $$. just shut the fuckk up and watch, and then come back humbly and share in the successful stock tips some of these good men freely hand out.

(Compl., Ex. 4A.) Indeed, Gahary seems to have reveled in the disconcerting effect his abrasive on-line persona had on others. In his final message posted using any of the eight Grasso screen names, Gahary laments: "Honestly, you guys are so much fun to rattle, or at least you were." (Compl, Ex. 3Q.)

Understandably alarmed by the unauthorized use of the Grasso name in such a deliberately offensive manner, the Exchange filed suit, on August 3, 2000, seeking unspecified damages and an injunction against any further such posts using any variations of the Grasso name. (Compl. ¶ 1.A.) Initially, since the Exchange did not yet know either the identities of the posters or how many there were, the complaint simply named "John Doe Nos. 1-10" as defendants. On November 20, 2000, however, the Exchange filed an amended complaint explicitly naming David Gahary, John Zito, and Michael Watson as defendants. On December 20, 2000, Gahary answered the complaint and interposed counterclaims against the Exchange for harassment and abuse of process. Shortly thereafter, on December 28, 2000, Watson entered into a "Stipulated Consent Judgment" with the court, leaving only Gahary and Zito as defendants. On January 23, 2001, Zito also answered the complaint and interposed counterclaims identical to Gahary's. The parties pursued discovery for several months thereafter; then, on October 2, 2001, the Exchange moved for summary judgment on all counts of the complaint, and for judgment on the pleadings with respect to defendants' counterclaims. Defendants opposed and, on November 1, 2001, cross-moved for summary judgment, bringing events to where they now stand.


Summary Judgment

Under Rule 56(c), F.R. Civ. P., summary judgment is appropriate when "there is no genuine issue as to any material fact." and "the moving party is entitled to a judgment as a matter of law." The moving party "bears the burden of establishing that no genuine issue of material fact exists and that the undisputed facts establish her right to judgment as a matter of law." Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir. 1995). In ruling on the motion, the court must "resolve all ambiguities and draw all reasonable inferences against the moving party." Flanigan v. Gen. Elec. Co., 242 F.3d 78, 83 (2d Cir. 2001). If the moving party discharges its burden of demonstrating the absence of a genuine issue of material fact, the onus shifts to the nonmoving party to show that a genuine issue exists for trial. Celotex Corp. v. Catrett, 477 U.s. 317, 324 (1986). To satisfy its obligation, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Moreover, in making the requisite showing, the nonmoving party may not "rely on mere speculation or conjecture . . . ." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir. 1986).*fn9

Moving from the procedural to the substantive, one point merits clarification at the outset. As specified previously, the Exchange advances distinct state and federal causes of action. However, the parties seem to agree that the central factual inquiries remain much the same across the various legal claims. There are a few important contrasts: most notably, a party must demonstrate that an unregistered mark like the Grasso name has acquired "secondary meaning" to enjoy protection under the Lanham Act, see, e.g., Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 68 (1992), whereas no such showing is necessary to prevail on a New York state common law claim for unfair competition. See e.g., Coach Leatherware v. Anne Taylor, Inc., 933 F.2d 162 (2d Cir. 1991). But the differences are slight, and defendants' defense that Gahary's use of the Grasso name was protected by the First Amendment would, if successful, trump plaintiff's state and federal claims equally. Yankee Publ'g, Inc. v. Int'l Licensing Mgmt., Inc., 809 F. Supp. 267 (S.D.N.Y. 1992) (Leval, J.). For simplicity's sake, therefore, the court will follow the parties' lead and discuss the factual disputes primarily within the framework this Circuit has established for assessing claims of unfair competition under the Lanham Act.

Gahary's Intent

The Exchange argues that, because Gahary has conceded he intended to appropriate the "Richard Grasso" name and evoke the identity associated with it, this evidences a bad faith "intent to trade on the goodwill of that name." Pl.'s Reply Mem. at 3. The Exchange is right in one sense, but wrong in a more important one. When Company A appropriates name and identity of Company B in the ordinary commercial context, it is reasonable to assume that the former is acting deceptively in an attempt to free ride illegitimately on the business success of the latter. Defendants, however, insist that Gahary was engaged not in deception but parody. (Gahary Tr. 108-09.) And applying such a blanket presumption in the context of parody makes no sense.

Virtually all parody "depends upon association with the original" — otherwise the parody would be incomprehensible. New York Stock Exch., Inc. v. New York, New York Hotel, L.L.C., 69 F. Supp.2d 479, 487 (S.D.N.Y. 1999) (Cederbaum, J.). To presume bad faith on the part of every parodist would be both unfair and inefficient. The critical question, in this context, is whether the parody, in addition to referencing the original, simultaneously conveys the contradictory message "that it is not the original." Cliff's Notes, Inc. v. Bantam Doubleday Dell Publ'g Group, Inc., 886 F.2d 490, 494 (2d Cir. 1989). See also Hormel Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 503 (2d Cir. 1996). And here, both the sheer ...

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