The opinion of the court was delivered by: Tucker L. Melan§on United States District Judge
This matter was tried before the Court as a bench trial on July 25-29 and August 1 and 2, 2011. At the close of trial, the Court advised the attorneys for the parties that it would issue a written ruling as soon as practicably possible after receipt of the attorneys' post-trial filings that they had previously been verbally ordered to file prior to and during trial and memorialized by the Court's Order dated August 2, 2011. (Rec. Doc. 515).
In this ten-year old case, a number of issues were resolved by motion practice prior to trial on the merits and are law of the case. "Under the law of the case doctrine, a decision on an issue of law made at one stage of a case becomes binding precedent to be followed in subsequent stages of the same litigation. '[T]he doctrine posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.'" In re PCH Assocs., 949 F.2d 585, 592 (2d Cir. 1991) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 815-16, 108 S.Ct. 2166, 2177 (1988)). "We have limited district courts' reconsideration of earlier decisions . . . by treating those decisions as law of the case, which gives a district court discretion to revisit earlier rulings in the same case, subject to the caveat that 'where litigants have once battled for the court's decision, they should neither be required, nor without good reason permitted, to battle for it again.' Thus, those decisions may not usually be changed unless there is 'an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent a manifest injustice.'" Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 167 (2d Cir. 2003)(quoting Zdanok v. Glidden Co., 327 F.2d 944, 953 (2d Cir.1964) and Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.1992)). The Court sets out with specificity in its findings of fact and conclusions of law when it relies on decisions made previously by other District Court Judges in this litigation that are "law of the case" and are relevant to its decision on the issues that remained before the Court that were resolved by trial on the merits.
In any bench trial, the trial judge, as the finder of fact, has to evaluate the credibility of the witnesses that testify, based on the witnesses' demeanor, any previous inconsistent statements made by a witness prior to and during the witness's trial testimony, the witness's explanation for any such inconsistent statements as well as the documentary evidence in the record. The United States Supreme Court has stated that "[t]rial judges have the unique opportunity to consider the evidence in the living courtroom context, while appellate judges see only the cold paper record." Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 438, 116 S. Ct. 2211, 2225 (1996) (citations omitted). The United States Court of Appeals for the Second Circuit has observed that "the full flavor of a hearing cannot be sensed from the sterile sheets of a transcript." ABC, Inc. v. Stewart, 360 F.3d 90, 100 (2d Cir. 2004) (quoting Soc'y of Prof'l Journalists v. U.S. Sec'y of Labor, 616 F. Supp. 569, 578 (D. Utah 1985)). The Court's findings of fact that follow are in no small part based on the trial judge's view of the credibility of the witnesses that testified, based on their trial testimony, as well as the documentary evidence and the explanation of, or reconciliation or lack thereof, of any previous inconsistent statements, written or oral, made by a witness.
As a result of the footprint of the courtroom in which the trial was conducted, the trial judge was seated between three and six feet of each witness that testified as the witness testified.
The first witness to testify on July 25 and 26, 2011 in plaintiff's case-in-chief was defendant Harry Aini (H. Aini). The second witness to testify on July 26, 2011 was defendant Michael Aini (M. Aini). The third witness to testify on July 27 and 28, 2011 was defendant Jacob Aini, a.k.a. Jack Aini (J. Aini). The fourth witness to testify on July 29 and August 1, 2011 was plaintiff Martal Cosmetic's director Marcus Sarner (Sarner). H. Aini was recalled to testify in defendants' case-in-chief on August 1 and 2, 2011. The fifth witness to testify on August 2, 2011 was Raquel Aini, a.k.a. Rachel Aini (R. Aini), whose testimony was given in plaintiff's case-in-chief.
In sum the Court found the testimony of H. Aini, M. Aini, J. Aini and R. Aini riddled with inconsistencies, contradicted time and again by the documentary evidence, contradictory to their own testimony during and prior to trial and to the testimony of one another on the same issue(s) on numerous occasions and almost totally devoid of any reasonable, understandable explanation between the documentary evidence and their oral testimony despite being given the opportunity, in some instances more than one opportunity, to explain the contradiction in the documentary evidence and their trial and previous testimony and statements.
The Court found Sarner's testimony to be credible, generally consistent and, given his age, sight and other medical infirmities, thoughtful and deliberate, correcting himself after reflection, in some instances when such correction might not necessarily be advantageous to the claims his company asserted in this litigation.
In any trial, civil or criminal, there are two types of evidence the trier of fact may consider: direct evidence, such as testimony of an eye witness, and indirect or circumstantial evidence, the proof of circumstances that tend to prove or disprove the existence or nonexistence of certain other facts. The law makes no distinction between direct and circumstantial evidence. In a civil case such as this one, depending on the nature of the claim, the law simply requires that the trier of fact find the facts from a preponderance of all the evidence or by clear and convincing evidence. In this case, plaintiff's claims had to be proven by a preponderance of the evidence and defendants' affirmative defense had to be proven by clear and convincing evidence.
The Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). In some instances a finding of fact may also be a mixed conclusion of law and in other instances a conclusion of law may include findings of fact.
1. Plaintiff's complaint in this action was filed on November 15, 2001 in the United States District Court for the Eastern District of New York. (Rec. Doc. 1).
2. The case was originally assigned to the Honorable John Gleeson, United States District Judge. The case was re-assigned to the Honorable Sandra J. Fuerstein, United States District Judge, on October 16, 2003. The case was next re-assigned to the Honorable Roslynn R. Mauskopf, United States District Judge, on December 26, 2007. The case was transferred to the undersigned, as visiting United States District Judge, on August 19, 2009. (Rec. Doc. 409).
3. Martal Cosmetics, Ltd. (Martal) is a British corporation founded by Marcus Sarner in 1966 that sells a variety of health and beauty products and began selling Symba products, including Symba cream and Symba soap in West Africa and in the United Kingdom in the early 1970s. Martal used contract manufacturers to produce its product. Sarner was the only employee of Martal, although his wife assisted him. (Sarner, Trial Tr., 802-07, July 28, 2011).
4. The defendant Ainis are all members of the same family. H. Aini, M. Aini and J. Aini are brothers, and R. Aini is married to J. Aini. (J. Aini, Trial Tr., 529-30, July 27, 2011).
5. The remaining defendants, all corporations, are part of a hydra of corporations that were owned by the Ainis: Homeboys International, Homeboys Discount, K.A.K. Group, Inc. d/b/a International Beauty Exchange (KAK), I.B.E. Cosmetics (IBE-NY) and I.C.E. Marketing Corp (ICE).
a. H. Aini is the president and H. Aini and M. Aini each own 50 percent of 5 Homeboys International, which was a retail store with up to four locations. (H. Aini, Trial Tr., 58, 61-62, 69, 76, July 25, 2011; M. Aini, Trial Tr., 324, July 26, 2011). H. Aini and M. Aini purchased the fixtures and inventory of Homeboys Discount from their brother J. Aini in 1995 to create Homeboys International. (H. Aini, Trial Tr., 69-70, July 25, 2011; J. Aini, Trial Tr., 533, 710-12, July 27, 2011; Defendants' Exhibit 2). J. Aini testified that his brothers paid $27,000 in cash and paid the balance of the $150,000 purchase price over time, but he could not remember over what period of time. (J. Aini, Trial Tr., 711-12, July 27, 2011). H. Aini testified that Homeboys International dissolved in 2010. (H. Aini, Trial Tr., 57, July 25, 2011).
b. H. Aini and M. Aini are also both 50 percent owners of ICE. (H. Aini, Trial Tr., 78, July 25, 2011; M. Aini, Trial Tr., 289, July 26, 2011). ICE was an importer and wholesaler of beauty products and contracted to manufacture health and beauty products outside the United States. (H. Aini, Trial Tr., 175, July 25, 2011; M. Aini, Trial Tr., 295, July 26, 2011). M. Aini was president of ICE. (M. Aini, Trial Tr., 280, July 26, 2011).
c. H. Aini was the 100 percent owner of IBE-NY. (H. Aini, Trial Tr., 165, July 25, 2011; H. Aini, Trial Tr., 1285, August 1, 2011). IBE-NY was a distributor of health and beauty products to retailers, including Homeboys International.
(H. Aini, Trial Tr., 170-71, July 25, 2011). In 1999, H. Aini purchased the assets of KAK to form IBE-NY. (H. Aini, Trial Tr., 171-73, July 25, 2011).
M. Aini was a 33 percent owner of KAK. (H. Aini, Trial Tr., 171-73, July 25, 2011; M. Aini, Trial Tr., 380). H. Aini testified that he was not employed at KAK, but that he used a desk there as a buyer from 1997 to 1999. (H. Aini, Trial Tr., 171, July 25, 2011; H. Aini, Trial Tr., 1433-34, August 2, 2011).
d. ICE and IBE-NY shared the same warehouse location at 56-25 Flushing Avenue in Maspeth, New York. (H. Aini, Trial Tr., 175, July 25, 2011). H. Aini and M. Aini testified that part of IBE-NY's rental agreement was for it to maintain the facilities, pay all the building's expenses and pay for all the employees, so ICE used IBE-NY's employee to do all of the manual labor for ICE. (H. Aini, Trial Tr., 176, July 25, 2011; M. Aini, Trial Tr., 306-309, 421, July 26, 2011). The Flushing Avenue property was owned by Choul Realty, which was owned by M. Aini. (H. Aini, Trial Tr., 176-77, July 25, 2011; M. Aini, Trial Tr., 307, July 26, 2011). H. Aini testified that IBE-NY dissolved in 2006 when he sold all the assets to Sadi Srour, his first cousin, who had been the warehouse manager for IBE-NY, who then formed International Beauty Trade. (H. Aini, Trial Tr., 1353-55, August 1, 2011). International Beauty Trade operates out of the same building, 56-25 Flushing Avenue, as did IBE-NY, and H. Aini testified that at the time of trial he worked at International Beauty Trade, buying and selling merchandise. (H. Aini, Trial Tr., 168-170, July 25, 2011; H. Aini, Trial Tr., 1353-55, August 1, 2011).
e. M. Aini was also a 50 percent owner of IBE-FL, a former defendant in this action, with Symcha Horowitz, another former defendant. (M. Aini, Trial Tr., 319, July 26, 2011).
f. H. Aini testified he worked in his parents' store, Sheila Discount, which sold health and beauty products, full-time after he finished eighth grade. (H. Aini, Trial Tr., 54-55, July 25, 2011).
g. Prior to 1995, J. Aini had retail stores in New York called Homeboys Discount, and wholesale operations called ABCE Wholesale, which was in the export business, and Zuri, which was in the import business. (J. Aini, Trial Tr. 731-33, July 28, 2011). J. Aini testified that Homeboys Discount and ABCE Wholesale were held in J. Aini's name, and Zuri was in R. Aini's name although he testified in a hearing in Aini v. Sun Taiyang Co., a case in the Southern District of New York before United States District Judge Lewis A. Kaplan, on December 17, 18 and 19, 1996 that all four companies were in his wife, R. Aini's, name. (J. Aini, Trial Tr., 729-39, July 28, 2011). The Court found his explanation, that money between him and his wife is shared even if that is not what is technically reflected in the legal documents, not to be credible.
6. The individual defendants contradicted themselves on the issues of ownership of and their relationship to the defendant corporations on numerous occasions.
a. H. Aini contradictions:
i. H. Aini testified at trial that he was the president and 50 percent shareholder in defendant corporation Homeboys International (H. Aini, Trial Tr., 58, July 25, 2011). However, in his deposition in Sara Lee Corp. v. Aini taken July 17, 2003, H. Aini testified that he was the only owner of Homeboys International. (H. Aini, Trial Tr., 58-63, July 25, 2011). M. Aini owns the other 50 percent of Homeboys International.
(H. Aini, Trial Tr., 69, July 25, 2011). H. Aini also stated in an affidavit (Plaintiff's Exhibit 1) in this action that ICE was "my brother Michael's separate company" but testified at trial that he was in fact a 50 percent owner of ICE. (H. Aini, Trial Tr., 95-96, July 25, 2011). The Court found H. Aini's explanation, that he was only involved in the day-to-day running of Homeboys International and that M. Aini ran ICE (H. Aini, Trial Tr., 96-99, July 25, 2011), not to be credible. Plaintiff's Exhibit 2A is a business card for ICE that reads "ask for Mike or Harry"; however, H. Aini testified that the card was never used. (H. Aini, Trial Tr., 100-03, July 25, 2011; Plaintiff's Exhibit 2A).
ii. At trial H. Aini testified that he was the 100 percent owner of IBE-NY; however, in his deposition in Sara Lee Corp. v. Aini taken July 17, 2003, he claimed he could not recall whether he was the 100 percent owner. (H. Aini, Trial Tr., 165-67, July 25, 2011).
iii. At trial, H. Aini testified that his parents lent him the money to buy Homeboys International (H. Aini, Trial Tr., 70-71, July 25, 2011), but in his deposition taken July 17, 2003 in Sara Lee Corp. v. Aini, he was unable to remember which family member lent him the money (H. Aini, Trial Tr., 73-75, July 25, 2011).
iv. On the first day of his testimony, July 25, 2011, H. Aini testified that when J. Aini was working in Paris, he did not know if J. Aini was doing business for Homeboys and that he did not know where his brother was working when he was in Paris. (H. Aini, Trial Tr., 111-12, 114, July 25, 2011). However, the next day, H. Aini testified that he knew J. Aini "was working in Paris using the Homeboy's name and had nothing to do with my company" but he gave J. Aini permission to use the Homeboys name. (H. Aini, Trial Tr., 240, 263-64, July 26, 2011).
b. M. Aini contradictions:
i. At a contempt hearing conducted in 2002*fn1 in this proceeding before United States Magistrate Judge A. Simon Chrein, M. Aini testified that he was the owner of ICE; however, at trial, M. Aini testified that he and
H. Aini were each 50 percent shareholders in ICE. (M. Aini, Trial Tr., 287-91, July 26, 2011). The Court found M. Aini's explanation, that he just forgot, not to be credible, particularly in light of M. Aini's deposition testimony of January 11, 2001 in International Cosmetics Exchange, Inc. v. Gapardis Health and Beauty, Inc. when he stated, correctly, that he and H. Aini were each 50 percent shareholders of ICE. (M. Aini, Trial Tr., 292-95, July 26, 2011).
ii. At his deposition in Sara Lee Corp. v. Aini taken on August 5, 2004, M. Aini did not know the difference between Homeboys Discount, the company whose assets his brother J. Aini sold to him and his brother H. Aini, and Homeboys International, the company M. Aini and H. Aini formed with those assets and each owned 50 percent of. (M. Aini, Trial Tr., 325-29, July 26, 2011). At that same deposition on August 5, 2004, M. Aini also stated he did not have any ownership in Homeboys International. (M. Aini, Trial Tr., 326-29, July 26, 2011).
iii. Further, in his August 5, 2004 deposition in Sara Lee Corp. v. Aini, M. Aini stated that J. Aini did not have a position at ICE; however, at trial
M. Aini testified that J. Aini was secretary for ICE. (M. Aini, Trial Tr., 334-40, July 26, 2011).
c. J. Aini contradictions:
i. J. Aini testified at trial that he sold his Homeboys Discount stores to his brothers H. Aini and M. Aini in 1995 when he moved to Paris; however, in his deposition taken in this proceeding on November 27, 2001, he stated that he sold Homeboys Discount to his brother H. Aini.
(J. Aini, Trial Tr., 533-36, July 27, 2011). ii. J. Aini further testified in his November 27, 2001 deposition in this proceeding that M. Aini was the only owner of ICE. (J. Aini, Trial Tr. 644-45, July 27, 2011). The Court found J. Aini's explanation, that he found out about H. Aini's interest in ICE when plaintiff's counsel subpoenaed tax returns during this litigation, not to be credible. (J. Aini, Trial Tr., 647-49, July 27, 2011).
7. Since the early 1980s, J. Aini has owned and operated businesses in the beauty products industry. (J. Aini, Trial Tr., 532, July 27, 2011). He started Homeboys Discount retail stores in the early 1980s and ABCE, a wholesale business, in around 1987. (J. Aini, Trial Tr., 533, 536-38, July 27, 2011).
8. At some point in 1988 or 1989, J. Aini and R. Aini met Sarner in England to discuss importing Symba into the United States. (J. Aini, Trial Tr., 676-78, July 27, 2011; J. Aini, Trial Tr., 756-57, July 28, 2011; Sarner, Trial Tr., 857-58, July 28, 2011).
9. In 1989, Martal began distributing large commercial quantities of Symba products directly into the United States through J. Aini. (Sarner, Trial Tr., 1139-43, July 29, 2011).
10. J. Aini testified that he started a company with the same name as a well-known African line of makeup, Zuri, and was sued by the owner of the trademark. (J. Aini, Trial Tr., 551-53, July 27, 2011). He testified that he settled the case and dissolved Zuri after liquidating the company's assets. (J. Aini, Trial Tr., 553-56, July 27, 2011). ICE took over Zuri's customer list when it dissolved and J. Aini moved to Paris. (Finding of Fact 12.a).
11. J. Aini sought to enter into an exclusive distribution agreement with a Dominican Republic company called Laboratorias Roldan, (J. Aini, Trial Tr., 574-75, July 27, 2011). When Laboratorias Roldan refused to enter into an exclusivity agreement, J. Aini and R. Aini partnered with Symcha Horowitz to start a corporation named Roldan in the United States in 1993. (J. Aini, Trial Tr., 560-62, July 27, 2011). J. Aini's Roldan, on advice of counsel, contracted to have manufactured its own version of Roldan beauty products and applied for the United States trademark of the Roldan mark. (J. Aini, Trial Tr., 575, July 27, 2011). J. Aini chose the name Roldan. (J. Aini, Trial Tr., 562, July 27, 2011). J. Aini testified that he made all of the major decisions in the Roldan company. (J. Aini, Trial Tr., 564, July 27, 2011). Although there are some factual differences between the Roldan case and the case presently before the Court, the Second Circuit has relied on prior trademark suits as evidence of willfulness. Bambu Sales v. Ozak Trading Inc., 58 F.3d 849, 854 (2d Cir. 1995).
J. Aini, R. Aini, Horowitz and J. Aini's companies Roldan, Zuri, Homeboys Discount and ABCE Wholesale were all sued by the Dominican Republic company Laboratorias Roldan and United States District Judge K. Michael Moore of the Southern District of Florida, issued a preliminary injunction against the defendants in the Roldan case. Defense counsel stipulated that the case settled and was dismissed. (Trial Tr., 584-85, July 27, 2011).
12. J. Aini's involvement with ICE: J. Aini testified that he "had nothing to do with ICE." (J. Aini, Trial Tr., 613-14, July 27, 2011). However, his testimony and the record contradict that statement.
a. ICE took over the customers of J. Aini's company, Zuri, when J. Aini liquidated Zuri and moved to Paris in 1995. (M. Aini, Trial Tr., 284-87, July 26, 2011; see also Finding of Fact 10).
b. J. Aini was the secretary for defendant ICE and a buyer, with the authority to make purchases of beauty products from foreign manufacturers on ICE's behalf. (M. Aini, Trial Tr., 296-97, July 26, 2011; J. Aini, Trial Tr., 640-41, July 27, 2011). J. Aini also testified that he was only a buyer's agent for ICE, trying to bring in new projects, i.e. product lines, to earn a commission. (J. Aini, Trial Tr., 601, July 27, 2011). J. Aini later testified that he was not involved with buying any goods for ICE. (J. Aini, Trial Tr., 756, July 28, 2011).
c. J. Aini stated in a sworn declaration dated June 11, 2007 in I.C.E. Marketing, Corp. v. Neutrogena Corp. that he was the secretary of ICE from April 1995 to 2007, but H. Aini testified that J. Aini was not the secretary of ICE. (H. Aini, Trial Tr., 178-81, July 25, 2011).
d. M. Aini testified that whenever ICE was involved in a lawsuit, J. Aini handled it for ICE. (M. Aini, Trial Tr., 343-44, July 26, 2011). J. Aini also signed a loan of about $300,000 on behalf of ICE; M. Aini testified that he gave J. Aini permission to sign the loan contract. (M. Aini, Trial Tr., 344-45, July 26, 2011). M. Aini also testified he gave J. Aini permission to file a complaint on behalf of ICE that stated that J. Aini and his father-in-law owned ICE. (M. Aini, Trial Tr., 348-52, July 26, 2011). M. Aini also testified that J. Aini was copied on a letter to ICE's insurance carrier about coverage for this litigation because J. Aini "was responsible for handling the insurance." (M. Aini, Trial Tr., 354-56, July 26, 2011; Plaintiff's Exhibit 40).
e. J. Aini testified that when he returned from Paris in 1997 he used an office in the 56-25 Flushing Avenue, where ICE and IBE-NY were located, to watch the stock market with M. Aini. (J. Aini, Trial Tr., 613, July 27, 2011).
13. J. Aini's involvement with Homeboys: a. Plaintiff's Exhibit 2B is a business card for J. Aini and R. Aini that lists them as buyers and agents of both ICE and Homeboys. (H. Aini, Trial Tr., 104, 107, July 25, 2011; Plaintiff's 2B). H. Aini testified that the information contained on the card was not correct. (H. Aini, Trial Tr., 105, July 25, 2011). Although H. Aini testified that the Homeboys International in Paris had nothing to do with his New York-based Homeboys International (H. Aini, Trial Tr., 263-64, July 26, 2011) and that the information on the card was not true (H. Aini, Trial Tr., 104-05, July 25, 2011), the card listed offices in New York, as well as Paris and Belgium, for Homeboys, and Paris and New York for ICE, and listed 56-25 Flushing Avenue as the New York office address, which was the location of ICE and IBE-NY. (Plaintiff's Exhibit 2B).
b. Plaintiff's Exhibit 3 is a business card for J. Aini and R. Aini, listed as Cosmetique Consultants, which lists the Homeboys International address and the store's phone number and fax number. (H. Aini, Trial Tr., 115-17, July 25, 2011; Plaintiff's Exhibit 3).
c. J. Aini testified that he received a letter from an insurance company, addressed to him at Homeboys, Inc., at the 1805-07 Church Street, Brooklyn address of the Homeboys International owned by his brother H. Aini. (J. Aini, Trial Tr., 619-22, July 27, 2011; Plaintiff's Exhibit 5). The Court found J. Aini's explanation, that the claim was for a product he had worked on and the insurance company contacted him because it was his ...