162 F.2d 893 (2nd Cir. 1947), 210, California Apparel Creators v. Wieder of Cal.

Docket Nº:210, 20513.
Citation:162 F.2d 893, 74 U.S.P.Q. 221
Case Date:July 30, 1947
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 893

162 F.2d 893 (2nd Cir. 1947)

74 U.S.P.Q. 221




Nos. 210, 20513.

United States Court of Appeals, Second Circuit.

July 30, 1947

Page 894

Katz & Heimowitz, of New York City (Simon Katz, of New York City, of counsel), for defendant-appellee Wieder of California, Inc.

Leon Lauterstein, of New York City (Lauterstein, Spiller & Brown and Lincoln W. Lauterstein, all of New York City, on the brief), for defendant-appellee Cortley Shirt Company, Inc.

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Fred N. Howser, Atty. Gen., of California, Hartwell H. Linney, Chief Asst. Atty. Gen., and W. R. Augustine, Deputy Atty. Gen. as amicus curiae in support of the claims of plaintiffs-appellants.

Haight, Trippet & Syvertson and Lyle C. Newcomer, all of Los Angeles, Cal., for Los Angeles Chamber of Commerce, amicus curiae, in support of the claims of plaintiffs-appellants.

Before L. HAND, SWAN, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

In this appeal we must decide whether or not a group of manufacturers and dealers in wearing apparel located in the State of California may prevent manufacturers and dealers in wearing apparel located in New York from using the names 'California' or 'Californian' in connection with their businesses. There are 76 plaintiffs, comprising an incorporated trade association and 75 of its members. The defendants are three corporations of New York City--Wieder of California, Inc., California Sportswear, Inc., and Cortley Shirt Company, Inc. Defendant Courtley does not use any variant of the word 'California' in tis trade name, but it does use the term 'California' as a brand name for a line of its sportswear and on the labels affixed to such sportswear. Purporting to act not only for themselves, but also for all California manufacturers of wearing apparel, plaintiffs joined together to bring this action for unfair competition against defendants. In it they demanded damages, an accounting for profits, and an order enjoining the defendants from using the word 'California' or any variation of it in their trade names or in describing their products. Defendants in their answers counterclaimed for declaratory judgments. Defendants Weider and Sportswear sought declarations of their rights to continue to use their trade names, and defendant Cortley sought a declaration of its right to use its label and brand name. Plaintiffs moved for a preliminary injunction, and all defendants moved for summary judgment dismissing the complaint and on their counterclaims. The District Court denied plaintiffs' motion and granted defendants' motions--Wieder's in toto, and those of the other defendants in part. The District Court excepted from its order and preserved for future trial the claim of one of the plaintiffs, California Sportswear Co., against the defendant Sportswear because of similarity of their trade names, and against defendant Cortley because of similarities in their labels. D.C.S.D.N.Y., 68 F.Supp. 499. From this judgment plaintiffs have appealed.

In their complaint and later affidavits submitted to the District Court, appellants maintained that California-made wearing apparel was generally superior in quality and design to that made in all other sections of the country. They argued further that California apparel manufacturers had spent large sums of money advertising their wares and had succeeded in getting this idea accepted by the buying public. The answer and answering affidavits of the defendants challenged these claims and asserted the contrary. As was perhaps inevitable from the nature of the case, the statements on both sides tended in general to be opinions or conclusions of the affiants, rather than basic facts, however vigorously the respective views were advanced or asserted. Defendants claim, however, that whatever weight be given to the assertions on behalf of the plaintiffs, they show no right to relief in the premises; and the District Court was of this view, except for those cases of asserted direct injury to a specific plaintiff by the use of clearly similar names which it reserved for trial.

It is obvious that this presents an interesting and an important issue. The manufacturers of California have so considered it, as shown by the large numbers who have grouped together to enforce these claims as against businesses at so great a distance and seemingly not of nationwide scope. This is shown also by the support given the plaintiffs' plea by briefs amici curiae by the Attorney General of California and the Los Angeles Chamber of Commerce. On the other hand, the rather far-reaching scope of the plaintiffs' claims is emphasized by the defendants, who suggest the numerous instances of well-known products, such as Manhattan shirts, Palm

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Beach suits, and Paris garters, which do not come from the localities indicated. The extent of the change in business practice which a plaintiffs' judgment might forecast may be suggested by an examination of any city directory showing the widely prevalent usage of state and city names by business houses. Thus the New York City telephone directory has seemingly countless such cases, including 40 or more involving California. 1 So far as the consumer is concerned, he is not dependent upon the private remedial actions brought by competitors; for the remedies under the Federal Trade Commission Act, at least as amended in 1938, 15 U.S.C.A. § 45, are now extensive, and are employed by the Commission to prevent misleading of the public as to the origin of an article sold at retail. 2 Here, therefore, we are concerned only with the remedial rights of individual businesses and whether or not such businesses have been damaged by the unfair competition of the defendants.

First we should note the character and capacity of the plaintiffs and the effect of their declaration that they sue on behalf of other California manufacturers similarly affected. Plaintiff California Apparel Creators is a non-profit organization, organized some three months before the institution of this suit, which includes as members 17 associations of wearing apparel manufacturers and their respective members composed in the aggregate of 'hundreds of firms manufacturing wearing apparel within the metropolitan area of the County of Los Angeles, California.' It asserts that it has spent and is spending many thousands of dollars in advertising to create consumer demand for California wearing apparel manufactured and styled by plaintiffs; but it shows no direct interest in itself, such as ASCAP had in the royalties of composers as appeared in Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111. There also appear as plaintiffs 28 individuals, 36 copartnerships, and 11 corporations, or a total of 75 named parties who assert individual wrongs. These plaintiffs claim not only to represent themselves as manufacturers of various types of men's, women's, and children's wearing apparel, with their factories and places of business within the State of California, but also to represent all other California manufacturers who would be similarly affected and as to whom there is a common question of law and fact affecting their rights in the same manner as the rights of the named plaintiffs. Defendants assert that there are upwards of 4, 500 such manufacturers in California; and this is not only not denied, but appears to be accepted as fact by the plaintiffs. In other words, the named plaintiffs represent less than 2 per cent of the potential number. There is no showing of the relative value of their investments; the large number of unincorporated businesses among the plaintiffs, considered in the light of American business practice generally, suggests certainly no greater proportionate investment than do the numbers.

So far as these plaintiffs assume to represent others they can do so only by

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virtue of subd. (3) of Rule 23(a), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, which has been commonly referred to as granting authority for the so-called 'spurious' class suit. None of the requirements of subds. (1) and (2) are fulfilled; and the basis of representation is only, as indeed plaintiffs themselves assert, the existence of common questions of law or fact affecting the several rights. But this is merely a device of permissive joinder of plaintiffs, found unnecessary under state procedures and only helpful in the facilitation of the broad disposition of suits within the confines of federal jurisdiction. It does not grant authority to adjudicate finally rights as to nonappearing parties or to confer any additional substantive rights upon the plaintiffs suing. Oppenheimer v. F. J. Young & Co., 2 Cir., 144 F.2d 387; 2 Moore's Federal Practice 2235-2245, 2291; 46 Col.L.Rev. 818; 55 Yale L.J. 831; cases cited in Clark on Code Pleading, 2d Ed. 1947, 405, 407. 3 Hence the rights of the rest of the 4, 500 potential plaintiffs are actually not to be settled here, and we cannot give judgment as though they were. We stress this point because at times there appear to be suggestions that the representative character of a suit may aid in recovery. 4 Of course where there is a true class suit, as in Gibbs v. Buck, supra, the consequences are otherwise; but in this situation there is no safety in potentially greater numbers of property claimants. Indeed, it but serves to accentuate the fundamental weakness of plaintiffs' claim here that the rights claimed are so diffused and attenuated that they do not show convincing reality as to any...

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