Opinion
98 Civ. 0234 (KMW)(FM)
November 6, 2001
OPINION AND ORDER
I. Introduction
This trademark action arises out of the internecine warfare between two branches of a family that has been engaged in the subtitling of motion pictures for more than 70 years. In early March 2000, after extensive settlement discussions, the parties consented to the entry of a Final Judgment which resolved their differences by setting forth their respective rights to conduct business in the United States and France. In the Final Judgment, the parties further consented to have any future disputes arising thereunder be determined by me, pursuant to 28 U.S.C. § 636(c), or, if I was unavailable, by Judge Kimba M. Wood, to whom the case originally was assigned. (See Final J. ¶ 7). Additionally, the Court retained jurisdiction over the case for this limited purpose. (Id. ¶ 10).
Accordingly, the family has been in the subtitling business since shortly after the release of The Jazz Singer, starring Al Jolson, which is often described as the first Hollywood feature film with a soundtrack. See Ephraim Katz, The Film Encyclopedia 707 (4th ed. 2001).
Plaintiff Titra California, Inc. ("Titra CA") has now moved for an order adjudging defendant Titra Film ("Titra Paris") in contempt for transmitting more than fifty "faxes" to motion picture-related companies in the United States in violation of the Final Judgment and awarding Titra CA the attorney's fees reasonably incurred in the making of that motion. For the reasons set forth below, the motion is granted in part and denied in part.
II. Relevant Facts
Although the parties disagree as to the legal conclusions to be drawn therefrom, the relevant facts are largely undisputed. In brief, both Titra CA and Titra Paris have for many years been engaged in the business of subtitling films using laser technology which Titra Paris has licensed to Titra CA. (Compl. ¶ 18; Answer ¶ 18). There is no formal corporate tie between the two entities, but Michael Kaganski, the President of Titra CA, and Isabelle Frilley, the President of Titra Paris, are cousins. In addition, Mr. Kaganski owns forty-nine percent of Titra Paris.
These relationships were disclosed to the Court during settlement discussions. Additionally, they are alluded to in the deposition of Ms. Frilley. (See Frilley Dep. at 9-10).
Prior to the filing of this lawsuit, the two companies evidently had an informal understanding that each would refrain from any large-scale poaching in the other's principal sales territory. In 1998, however, certain disputes arose regarding the use of a Titra logo that consisted of a "triangle bisected by a green laser ray beam either with or without the term `TITRA' thereon" ("TITRA LOGO"). (See Final J. ¶ 1). As a consequence, Titra CA and Titra Europe Holding By, a related corporation, commenced this action against Titra Paris in an effort to secure a judgment declaring that Titra CA had a superior interest in various trademark rights associated with the name "Titra" and the TITRA LOGO, or, in the alternative, that Titra CA was not infringing upon Titra Paris' rights in that name and logo. (Compl. ¶¶ 25-31). In its answer, Titra Paris maintained that Titra CA was estopped from securing such relief because Titra Paris had made prior use of the Titra name and TITRA LOGO in the United States. (See Answer at 4).
This fact was discussed at length with the Court during the course of settlement talks on November 19, 1999.
In November and December, 1999, following Judge Wood's referral of this matter for settlement discussions, the parties, their counsel, and the Court held several meetings and discussions to develop a protocol which would permit Titra CA and Titra Paris to carry out their principal business activities in their home jurisdictions without undue interference by the other entity. This protocol subsequently was memorialized in the Final Judgment, which was itself the product of extensive negotiations involving counsel, the parties' principals, and the Court.
The Final Judgment awarded Titra CA the exclusive right to use the "mark TITRA and the mark TITRA LOGO" in the United States (the "No Use Provision"). (Final J. ¶ 1). In addition, subject to certain exceptions, Titra CA and Titra Paris each agreed not to solicit "any film subtitling services or related business" or "advertise" in the nation where the other entity was headquartered. (Id. ¶¶ 2-3, 5-6). The term "solicit" was defined to mean "any overt act wherein either [Titra Paris] or [Titra CA] respectively requests that its subtitling services be used by an existing or potential customer." (Id. ¶ 4). The term "advertise" was not defined.
Insofar as relevant here, Paragraph 2 of the Final Judgment (the "No Solicitation" Provision) states that:
[Titra Paris] shall not hereinafter solicit in the United States any film subtitling services or related business, except only as follows:
* * *
(b) [Titra Paris] may attend any film festival held in the United States, as long as such attendance is in conjunction with a French "pavilion" or is under the auspices of a French trade association or the French government;
(c) [Titra Paris] may attend any trade shows for the film industry held in the United States, as long as such attendance is in conjunction with a French "pavilion" or its attendance is under the auspices of a French trade association or the French government; and [Titra Paris] may attend the Sundance Film Festival; provided that any such solicitation at the film festivals and trade shows defined in paragraphs (a)-(c) above shall be limited to subtitling services for subtitles in the French language, to be performed by [Titra Paris] in France, for films intended for distribution only in France and French territories.
(Id. ¶ 2).
The ban against any advertising by Titra Paris in the United States (the "No Advertising" Provision) contains a similar exception which states, in part, that:
[Titra Paris] may advertise in any language in any publication printed primarily for distribution at any of the film festivals or trade shows specified in subparagraph (a) through (e), of paragraph 2 above.
(Id. ¶ 5). If Titra CA believes that Titra Paris has violated the "No Advertising" Provision, it is required to provide five days' written notice before seeking any relief from the Court. (Id. ¶ 7).
Following the entry of the Final Judgment containing these terms, Titra Paris evidently made arrangements to be part of a French Film Commission pavilion at the "Show Biz Expo 2000." This trade show was held in Los Angeles, California, from June 23 through 25, 2000.
On June 14, 2000, more than one week before the show, Titra Paris sent approximately fifty-three identical one-page "faxes" to entities engaged in aspects of the motion picture business in the United States. (See letters dated June 23 and 26, 2000 from Wm. Lee Kinnally, Esq. to Maria A. Savio, Esq.). The faxes, which bore a Titra logo markedly different from the TITRA LOGO described in the Final Judgment, each conveyed the following message:
[Titra Paris] is accompanying the French Film Commission to the Los Angeles Convention Center on June 23rd, 24th, and 25th at Booth n° 704. We are looking forward to meeting you. We will be in Los Angeles for this event from June 19th to 25th. We would very much appreciate to meet you more personally. Could you contact us (le Meridien at Beverly Hills tel: 310 247 0400 — Fax: 310 247 0315) as soon as you can to set up an appointment at your convenience.
We look forward to meeting you.
(Id.) (emphasis in original). The faxes had typewritten signature lines for Ms. Frilley and Jean-Louis Lefevre, the Sales Manager of Titra Paris, but were unsigned. (Id.).
Upon learning of the faxes, Titra CA sent a letter to Titra Paris' counsel on June 19, 2000, asking that certain curative steps be agreed to by "noon tomorrow" failing which Titra CA would "pursue its rights and remedies." (Decl. of Danièle Allen, dated June 20, 2000, Ex. C (letter dated June 19, 2000 from Maria A. Savio, Esq. to Brian Brokate, Esq.)). Three days later, Titra CA submitted a proposed order to show cause why Titra Paris should not be held in contempt for sending the faxes, which I declined to sign after hearing from counsel for both sides. Instead, by order dated June 22, 2000, I directed Titra Paris to turn over to Titra CA within twenty-four hours copies of any letters that it had sent to persons or entities in the United States in connection with the Show Biz Expo 2000 trade show. I further authorized Titra CA to take the deposition of Mr. Lefevre in Los Angeles the following day. Thereafter, by orders dated June 27, August 8, and October 2, 2000, I granted Titra CA further discovery, including a deposition of Ms. Frilley, and established a briefing schedule for Titra CA's motion to have Titra Paris adjudged in civil contempt.
At the time that the order to show cause was presented, I did not recall Local Civil Rule 83.9(a) which states that a civil contempt proceeding "shall be commenced by the service of a notice of motion or order to show cause." Although no notice of motion ever was filed, Titra Paris had ample notice of the alleged misconduct being complained of by Titra CA. Moreover, Titra Paris was eventually afforded more than six weeks to respond to Titra CA's papers. Titra Paris therefore was afforded the due process that the Local Rule is intended to ensure.
During the course of the ensuing discovery, both Mr. Lefevre and Ms. Frilley were deposed. Mr. Lefevre testified that he identified the entities to which the faxes were sent through the use of an entertainment industry "Blue Book." (Lefevre Dep. at 12). He testified further that he sent a total of fifty-three faxes, which Ms. Frilley advised him was proper because they were issued "under the cover of the French Commission." (Id. at 19-20). Mr. Lefevre indicated that Ms. Frilley never gave him a copy of the Final Judgment so that he could verify for himself whether the text of the faxes was permitted. (Id.).
Mr. Lefevre also testified that he received only a handful of responses to the faxes, which generated a few meetings but did not lead to any new business for Titra Paris. (See id. at 25-27, 35-36, 40-45; Certification of Jean-Louis Lefevre, dated Jan. 8, 2001 ("Lefevre Cert"), ¶ 3). During the only meeting where one of the fax recipients proposed a subtitling assignment for Titra Paris, Mr. Lefevre was forced to reject the overture because Titra Paris did not have the United States facilities that would have been necessary. (Lefevre Dep. at 62). After Titra CA complained about his activities in California, Mr. Lefevre also cancelled two planned meetings with representatives of Universal Studios and Noble Productions, Inc. (Lefevre Cert. ¶ 3).
At her deposition, Ms. Frilley testified that Mr. Lefevre was aware of the "No Solicitation" Provision of the Final Judgment. (Frilley Dep. at 21). She also steadfastly denied that Mr. Lefevre was in the United States for any reason other than to support the mission of the French Commission. (See id. at 28). Nevertheless, Ms. Frilley conceded that it was her expectation that the faxes and any meetings that resulted might redound to the benefit of Titra Paris in the future. As she explained, a United States company that needed to subtitle a motion picture in French for the Cannes film festival several years later might look more favorably upon Titra Paris than a competitor if it had "found that Jean-Louis is a personable man." (See id. at 70).
In its answers to interrogatories, Titra Paris conceded that "[t]he intended purpose of the meetings [referenced in the faxes] was, in connection with SHOW BIZ EXPO 2000, to discuss the subtitling business that could be performed for the trade in France by [Titra Paris]." (Titra CA, Ex. G, Titra Paris Answer to Titra CA Interrog. No. 20). Titra Paris also conceded that the contents of the Final Judgment were explained to Mr. Lefevre only "after the commencement of the instant motion." (Id., Answer to Interrog. No. 34).
III. Discussion A. Issue To Be Decided
In its motion papers, Titra CA contends that Titra Paris violated the "No Use," "No Advertising," and "No Solicitation" Provisions of the Final Judgment by sending the faxes. Two of these provisions do not require extended discussion. First, the "No Advertising Provision" states that Titra CA must give Titra Paris five days' written notice before seeking judicial relief (Final J. ¶ 7). Here, Titra CA afforded Titra Paris only three days' notice; it therefore is not in a position to enforce the "No Advertising" Provision against Titra Paris, even if it the Court were to assume that this provision was violated. Second, Titra Paris clearly did not use the TITRA LOGO referenced in the Final Judgment in connection with any of the actions about which Titra CA complains. Although Titra Paris did employ the mark "Titra" in the faxes, common sense dictates that this use would not constitute a violation of the Final Judgment so long as it falls within a recognized exception to the "No Solicitation" Provision. Indeed, any other interpretation would render the exceptions to that provision a nullity since Titra Paris obviously could not engage in any act of solicitation if it could not use the word "Titra" in connection therewith.
Accordingly, the key issues before the Court are (1) whether Titra Paris violated the "No Solicitation" Provision of the Final Judgment and (2) if so, what sanctions, if any, should be imposed.
B. Applicable Law
"A party may be held in contempt only if it is proven by `clear and convincing' evidence that the party violated a `clear and unambiguous' order of the court." City of New York v. Local 28, Sheet Metal Workers' Int'l Ass'n, 170 F.3d 279, 282-83 (2d Cir. 1999). There is no requirement that the party's contumacious act be wilful. Id. Rather, because the purpose of civil contempt is remedial and compensatory, rather than punitive as in criminal contempt, even an inadvertent violation of a court's order may lead to the imposition of sanctions. McComb v. Jacksonville Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1949); Weitzman v. Stein, 98 F.3d 717, 719 (2d Cir. 1996). All that the complainant need show is that the contemnor "was not reasonably diligent in attempting to comply." Local 28, 170 F.3d at 283; Aspira of New York, Inc. v. Bd. of Educ., 423 F. Supp. 647, 654 (S.D.N.Y. 1976).
An order is "clear and unambiguous" if "the party enjoined [is] able to ascertain from the four corners of the order precisely what acts are forbidden." Drywall Tapers, Local 1974 v. Local 530, Operative Plasterers Int'l Ass'n, 889 F.2d 389, 395 (2d Cir. 1989). Moreover, it is the spirit of the order, not the letter, that must be obeyed. John B. Stetson Co. v. Stephen L. Stetson Co., 128 F.2d 981, 983 (2d Cir. 1942); Nat'l Res. Bur. v. Kucker, 481 F. Supp. 612, 615 (S.D.N.Y. 1979) (party may not avoid compliance through "hypertechnical" reading of a court order). Accordingly, when an order takes the form of a consent decree rather than a judicial fiat, the court "may consider extrinsic evidence to ascertain the parties' intent, including the circumstances surrounding the formation of the decree." King v. Allied Vision, Ltd., 65 F.3d 1051, 1059 (2d Cir. 1995).
If a party is adjudged to be in civil contempt, the court must determine the sanctions necessary to coerce future compliance with the order and make the complainant whole for past noncompliance. See United States v. Mine Workers of America, 330 U.S. 258, 303-04, 67 S.Ct. 677, 701, 91 L.Ed. 884 (1947); Vuitton Fils S.A. v. Carousel Handbags, 592 F.2d 126, 130 (2d Cir. 1979). A trial judge has considerable discretion in determining whether a coercive sanction is necessary and, if so, the form it will take. Id. When compensation is the goal of a civil contempt sanction, however, it typically must take the form of a fine payable to the complainant. United Mine Workers, 330 U.S. at 304, 67 S.Ct. at 701. In the absence of any loss to the complainant, any fine that may be imposed is necessarily coercive, rather than compensatory, and therefore should be made payable to the court. See New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1354 (2d Cir. 1989).
When a party is adjudged in contempt, the court may also award the complainant its reasonable attorney's fees. Weitzman, 98 F.3d at 719. Although the case law in this Circuit is undecided as to whether a showing of wilfulness is a prerequisite to such an award see id. at n. 1, it is, at a minimum, a commonly offered justification. See Vuitton, 592 F.2d at 130. "Indeed, to survive review in [the Court of Appeals], a district court, having found wilful contempt, would need to articulate persuasive grounds for any denial of compensation for the reasonable legal costs of the victim of contempt." Weitzman, 98 F.3d at 130.
C. Application of the Law to the Facts
As the parties agreed at the time of their settlement, and the "No Solicitation" Provision makes clear, Titra Paris is barred from soliciting any business in the United States unless its efforts fall within one of several narrow exceptions. Under the second such exception, when Titra Paris attends a trade show, such as the Show Biz Expo 2000, as part of a French pavilion, it may solicit both existing and potential customers for French subtitling work. (Final J. ¶ 2). Although the exception, insofar as relevant, applies only to solicitation undertaken "at" trade shows, the discussions among counsel and the principals of the parties, including Ms. Frilley, prior to the entry of the Final Judgment, establish that the parties expected that representatives of Titra Paris, while they were in attendance at trade shows, would engage in such common promotional activities as off-site meetings and dinners with clients. Stated somewhat differently, the parties plainly understood and contemplated that during such shows the representatives of Titra Paris would be free to engage in the full range of sales activities that Titra CA or another domestic competitor of Titra Paris might pursue. By the same token, however, the Final Judgment, by its terms, prohibited Titra Paris from engaging in sales solicitations at times or locations that did not fall within one of the limited exceptions to the "No Solicitation" Provision that the parties had negotiated.
Titra Paris contends that the sending of its faxes and any subsequent meetings fall within the trade show exception because they occurred only days before, and therefore in conjunction with, the trade show. (Titra Paris Mem. at 10). Titra Paris also argues, in the alternative, that the text of the faxes does not constitute an act of "solicitation" within the meaning of the Final Judgment. (Id. at 11). As to the first of these arguments, the faxes make clear that Mr. Lefevre planned to be in Los Angeles for four full days prior to the trade show, during which time he was available to meet with the fax recipients. (See letters dated June 23 and 26, 2000 from Win. Lee Kinnally, Esq., to Maria A. Savio, Esq.) Indeed, Mr. Lefevre testified that he actually did meet with representatives of several film companies during this period. (Lefevre Dep. at 35-36). Although Mr. Lefevre undoubtedly would not have traveled to Los Angeles had there been no trade show, meetings which both were arranged and took place before the show opened cannot reasonably be interpreted to have occurred "at" or "in conjunction with" the show.
Second, in its interrogatory answers, Titra Paris has conceded that the purpose of the meetings was not to engage in some abstract discussion about attributes of the French film industry, but, rather, "to discuss the subtitling business that could be performed for the trade in France by [Titra Paris]." (Titra CA, Ex. G, Answer to Interrog. No. 20). Ms. Frilley similarly declared that she did not expect that business would flow directly from these meetings, but anticipated that the persons contacted by Mr. Lefevre might look more favorably upon Titra Paris when it came time to commission any future French subtitling work. (Frilley Dep. at 70). Accordingly, even if Mr. Lefevre did not expressly request any subtitling work while he was in Los Angeles, the meetings that the faxes sought to arrange were unquestionably part of a solicitation directed to existing or potential customers of Titra Paris. To suggest otherwise would be to resort to a prohibited "hypertechnical" reading of the Final Judgment. See Kucker, 481 F. Supp. at 615. It furthermore would contradict the experience of any lawyer who has met with a potential client at the client's place of business, or taken the client to dinner or a sports event, without making an overt "sales pitch." Such contacts, even if not so denominated, obviously are efforts to solicit business. As the Second Circuit has noted in an unrelated context, "[j]udges are not required to exhibit a naievete from which ordinary citizens are free."See United States v. Stanchich, 550 F.2d 1294, 1300 (2d Cir. 1977). This, however, is what Titra Paris urges here in arguing that its approach was not an attempt to "solicit" business.
In sum, when the spirit as well as the letter of the Final Judgment are considered, it is clear that Mr. Lefevre's transmission of the faxes and subsequent attendance at pre-trade show meetings do not fall within any of the exceptions to the "No Solicitation" Provision. Accordingly, Titra CA has shown by clear and convincing evidence that Titra Paris violated the "No Solicitation" Provision of the Final Judgment by sending the faxes and arranging private off-site meetings with potential customers during the days preceding the Show Biz Expo 2000 trade show.
It is, of course, not sufficient that Titra CA merely establish a violation of the Final Judgment. To prevail on its motion, Titra CA also must show that Titra Paris was not reasonably diligent in its efforts to comply with the Final Judgment. See Local 28, 180 F.3d at 283. In that regard, the record establishes that Ms. Frilley participated in the negotiations leading to the Final Judgment and was familiar with its terms, but made no effort to furnish a copy to Mr. Lefevre, who obviously played an important role in Titra Paris' sales efforts. Indeed, Ms. Frilley testified that she did not give a copy of the Final Judgment to anyone else at Titra Paris prior to the sending of the faxes. (Frilley Dep. at 17). As a consequence, every other employee of Titra Paris had to rely on Ms. Frilley's interpretation of the Final Judgment. That this was not a mechanism likely to result in full compliance with the Final Judgment is further established by Titra Paris' admission that "Ms. Frilley's English is better than Mr. Lefevre's, but she, too, ha[s] difficulties, even with a translator." (Titra Paris Mem. at 4). Given the likelihood that the two warring factions of the Titra "family" would each insist on careful compliance with the Final Judgment, Ms. Frilley's failure to provide Mr. Lefevre and others with further information regarding its terms does not constitute reasonable diligence.
Accordingly, the Court finds that Titra Paris' sending of the "faxes and subsequent meetings in Los Angeles prior to the trade show warrant a determination that Titra Paris is in civil contempt.
D. Sanctions
Turning to the question of sanctions, Titra CA does not contend that it has suffered any direct pecuniary loss as a result of Titra Paris' violation of the "No Solicitation" Provision of the Final Judgment. Similarly, Titra CA does not ask this Court to impose a coercive sanction such as a fine. In fact, apart from a determination that Titra Paris is in contempt, the only relief that Titra CA seeks is the award of its attorney's fees, in the amount of $51,591.88. (See Aff. of George Gottlieb, Esq., sworn to Nov. 20, 2000, ¶ 3).
At the outset, I note that the Court has an interest in avoiding future violations of the Final Judgment by Titra Paris. For that reason, in the exercise of its discretion, the Court will require that prior to its attendance at any future trade shows or festivals, Titra Paris have the Final Judgment translated into French at its own expense by an interpreter certified by the Interpreter's Office of this Court. The Court will further require that Titra Paris furnish a copy of the translated Final Judgment to any present or future employees of Titra Paris whose duties may require any contact with representatives of actual or potential customers for subtitling services who are located in the United States.
In addition to arguing that its actions did not violate the Final Judgment, Titra Paris maintains that the attorney's fees sought by Titra CA are "grossly excessive and disproportionate to the offense alleged." (Titra Paris Mem. at 13). There is no need to determine the correctness of this view, however, because Titra Paris' conduct, although plainly negligent, cannot fairly be characterized as wilful. Moreover, although it is difficult to say what might have happened had Titra CA not interceded, the fact remains that Titra CA has not suffered any financial loss as a direct result of Titra Paris' activities in the United States prior to the trade show. In these circumstances, an award of attorney's fees does not seem warranted. See Terry, 886 F.2d at 1354; Vuitton, 592 F.2d at 130.
Titra Paris should not view this partial victory as a vindication of its position. Moreover, while the events of June 2000 may be attributable to inadvertence, Titra Paris is now on notice that the spirit of the Final Judgment must be obeyed. Any future violations of the Final Judgment by Titra Paris consequently will result in the imposition of more serious sanctions, including an award of reasonable attorney's fees.
IV. Conclusion
Titra CA's motion is granted insofar as it seeks to have Titra Paris adjudged in civil contempt but is denied insofar as it seeks an award of attorney's fees. Additionally, Titra Paris is ordered to comply with the other sanctions set forth in this Opinion and Order.