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4 Pillar Dynasty LLC v. New York & Co., Inc.

United States District Court, S.D. New York

July 3, 2017



          JED S. RAKOFF, U.S.D.J.

         Following a trial, a jury found defendants New York & Company, Inc. and New York & Company Stores, Inc. (collectively, "New York & Company") liable for infringing the trademark of plaintiffs 4 Pillar Dynasty LLC ("4 Pillar") and Reflex Performance Resources, Inc. ("Reflex"). The Court entered judgment awarding plaintiffs $5, 593, 011.87 -- three times defendants' stipulated gross profits from the infringing products -- and enjoining defendants from using plaintiffs' trademark in connection with their products (the "Judgment"). Now before the Court is defendants' motion for judgment as a matter of law and to alter or amend the Judgment, which seeks to vacate the monetary award. Also before the Court is plaintiffs' motion for attorneys' fees and for pre- and post-judgment interest. For the reasons explained below, the Court amends the Judgment to reduce the monetary award to $1, 864, 337.29, and also grants plaintiffs' motion and instructs plaintiffs to submit a calculation of their attorneys' fees and interest.

         The relevant facts and background may be briefly summarized as follows. 4 Pillar and Reflex, two companies owned by Behrooz Hedvat and his brothers, design and sell women's apparel, including spandex clothing intended to be used for yoga and other "activewear." Trial Transcript ("Tr.") 38. On March 12, 2012, plaintiffs applied to register the trademark "Velocity" (the "Velocity mark"). Plaintiffs' Trial Ex. ("PX") 1. On March 11, 2014, the Velocity mark was registered for "clothing and performance wear" including, as relevant here, leggings, pants, sports bras, tank tops, and hooded sweatshirts. PX 2; Tr. 50. 4 Pillar holds the trademark, and Reflex pays a royalty to 4 Pillar to use the trademark on the goods that Reflex produces. Tr. 38. Reflex sells clothing with the Velocity mark to retailers such as TJ Maxx, Marshalls, Ross, and Foot Locker, and it also sells clothing online, through or its own website. Tr. 51-52. Plaintiffs maintain a showroom in Manhattan where buyers representing retailers can view samples of plaintiffs' products. Id.

         In 2015, a buyer came to plaintiffs' showroom and asked Hedvat whether 4 Pillar had licensed the Velocity mark to New York & Company. Tr. 82. Surprised by the question, Hedvat looked at New York & Company's website and discovered that New York & Company was marketing a collection of activewear using the label "NY&C Velocity" (the "NY&C Velocity mark"). Tr. 82-83; see PX 11.

         Plaintiffs thereupon filed this action on April 15, 2016. See Compl., ECF No. 1. While they asserted several causes of action under the Federal Lanham Act and New York law, all of their claims rested on the allegation that defendants' use of the NY&C Velocity mark infringed plaintiffs' Velocity mark. Compl. ¶¶ 13-51. In their pre-trial submissions, plaintiffs made clear that they did not seek to prove that they suffered actual damages from any infringement, but rather they sought to recover defendants' profits from the sale of NY&C Velocity products. Proposed Pre-trial Consent Order 6, ECF No. 25.

         The case went to trial on February 6, 2017. In defendants' opening statement, they asserted that Yelena Monzina and Christine Munnelly -- respectively the creative director and the head of merchandising of New York & Company - would testify that when they decided to use the NY&C Velocity mark they believed that no consumer would be confused. Tr. 33, 36-37. Specifically, defendants asserted that Monzina would testify that after she came up with NY&C Velocity as a name she ran a trademark search that turned up several trademarks including the word "Velocity, " but that she did not recall encountering plaintiffs' mark. Tr. 33-34.

         Plaintiffs called only one witness, Hedvat, who testified during his direct examination about the creation and registration of the Velocity mark and the products on which it was used. See generally Tr. 37-91. After describing his discovery of the products bearing the NY&C Velocity mark following the buyer's inquiry about a licensing arrangement between 4 Pillar and New York & Company, Hedvat testified that he called his lawyers and asked them to request that New York & Company stop using the Velocity mark. Tr. 86. He further testified that defendants did not stop using the mark after being contacted by plaintiffs' lawyers, id., though on cross examination he could not recall whether the lawyers sent defendants a cease-and-desist letter or simply initiated this action, Tr. 210-11. After Hedvat's examination concluded, plaintiffs read into evidence a stipulation by the parties that defendants' gross profits from the sale of products bearing the NY&C Velocity mark were $1, 864, 337.29. Tr. 275.

         Plaintiffs then rested, and defendants moved for judgment as a matter of law, which the Court denied:

THE COURT: All right. Does plaintiff rest?
MR. SOLOMON: Yes, your Honor.
THE COURT: Okay. The defense will call their first witness.
MR. O'REILLY: Your Honor, before we do that, we'd just like to move for a judgment --
THE COURT: Ah, yes, okay. That motion is properly made and is equally properly denied.
MR. O'REILLY: As expected. Thank you, your Honor.

Tr. 276. Defendants then rested without putting on any evidence, id., despite their earlier representation that they would call Monzina and Munnelly.

         Later the same day, while the Court discussed with the parties the instructions of law for the jury, defendants expressed their position that an award of profits under the Lanham Act required a finding of willfulness. Tr. 301-02. Both sides agreed that the determination of whether any infringement was willful was a matter for the Court to decide. Tr. 300-01. The Court decided, however, that it would seek an advisory verdict from the jury on the issue of willfulness (as well as the binding verdict on the issue of infringement).

         On February 10, 2017, the case was submitted to the jury with instructions as to the determination of whether there was infringement and, if so, whether such infringement was willful. Tr. 336-49. The jury returned a verdict of infringement with an advisory finding that the infringement was willful. Tr. 354. That same day, the Court entered judgment "agree[ing] with the jury's opinion as to willfulness" and "holding defendants jointly and severally liable to plaintiffs in the amount of $5, 593, 011.87, " as well as "enjoin[ing] defendants from using in connection with their products the term 'NY&C Velocity' as well as the term 'Velocity, ' alone or in conjunction with other words." Judgment (Feb. 10, 2017), ECF No. 34. The Judgment indicated that an opinion explaining the reasons for the rulings therein would issue shortly. Id.

         On February 22, the Court granted defendants' request that the Court stay the execution of the Judgment and forebear issuing an opinion pending the disposition of defendants' post-trial motion. Memo Endorsement (Feb. 22, 2017), ECF No. 39. On February 24, plaintiffs filed a motion seeking a declaration that they were entitled to attorneys' fees, a fourteen-day period in which to submit their invoices for those fees, and an award of pre- and post- judgment interest. Notice of Mot. (Feb. 24, 2017), ECF No. 40; Decl. of Aaron J. Solomon in Supp. of Mot. ("Solomon Decl. dated Feb 24, 2011"), ECF no. 41. on March 2, defendants riled their motion. Notice of Mot. (Mar. 2, 2017), ECF No. 52; Mem. of Law (1) in Supp. of Defs.' Mot. for J. as a Matter of Law and to Amend or Alter the J., and (2) in Opp. to Pls.' Mot. for Att'ys' Fees and Pre-J. Interest ("Defs. Mem."), ECF. No. 53.

         The Court turns first to defendants' motion, which is styled as a motion for judgment as a matter of law dismissing plaintiffs' claim for damages under Federal Rule of Civil Procedure 50(b) and to alter or amend the Judgment under Rule 59(e). The relief defendants seek is straightforward: they do not challenge the jury's determination of infringement, and they therefore accept the injunction contained in the Judgment, [1] but they seek to vacate the monetary award on the ground that there is no legal basis for such an award. Specifically, they contend that a monetary award under ...

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