176 F.3d 669 (3rd Cir. 1999), 98-5287, Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros

Docket Nº:98-5287.
Citation:176 F.3d 669
Party Name:50 U.S.P.Q.2d 1665 MAX'S SEAFOOD CAFE, by LOU-ANN, INC., successor to Max's Seafood Cafe, Inc. v. Max QUINTEROS; Jack-Mack, LLC; and all others in active concert or participation with Appellants, jointly, severally, and in the alternative, Appellants.
Case Date:May 05, 1999
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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176 F.3d 669 (3rd Cir. 1999)

50 U.S.P.Q.2d 1665

MAX'S SEAFOOD CAFE, by LOU-ANN, INC., successor to Max's

Seafood Cafe, Inc.

v.

Max QUINTEROS; Jack-Mack, LLC; and all others in active

concert or participation with Appellants, jointly,

severally, and in the alternative, Appellants.

No. 98-5287.

United States Court of Appeals, Third Circuit

May 5, 1999

Argued Jan. 25, 1999.

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[Copyrighted Material Omitted]

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Scott R. Knapp (Argued), Steven J. Fram, Archer & Greiner Haddonfield, New Jersey, for Appellants.

Carlo Scaramella (Argued), Scott Freemann, Hunt & Scaramella, Cherry Hill, New Jersey, for Appellee.

Before: SLOVITER, McKEE and RENDELL, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

I.

INTRODUCTION

Max Quinteros and Jack-Mack Seafood, LLC ("Jack-Mack") appeal from the District Court's order holding them in civil contempt for violations of a consent order to which Quinteros was a party. Quinteros urges that the District Court erred in holding him liable for Frank Miraglia's violations of that consent order. The other appellant, JackMack, complains that because it was not in existence at the time of the contumacious acts in question, the District Court erred in holding it in contempt. We consider their contentions in turn.

II.

BACKGROUND

Max's Seafood Cafe is a well-known restaurant in Gloucester City, New Jersey, that had been in operation under that name since at least 1940. Max Quinteros, who had purchased the restaurant in 1977, sold it to Lou-Ann, Inc. ("Lou-Ann") in 1983, who in turn sold it to Stephen Renzi. Several years later, in 1990, Renzi sued Quinteros for trademark infringement. The complaint alleged that, in operating a competing restaurant nearby, Quinteros was breaching his agreement to transfer to the purchaser all goodwill associated with Max's Seafood Cafe and all rights in the trade name "Max's." The lawsuit resulted in a consent order entered in June 1990--signed by Quinteros--that enjoins "Max Quinteros, their [sic] employees, agents, servants and all others in active concert or participation with Defendants" from "(1) Using the name 'The Original Max's Seafood,' ... 'Max's Cafe,' 'Max's,' 'Max,' ... or any confusingly similar designation or name or mark ... [t]o market, designate, or identify Defendants' restaurant business or vocation," and "(2) Communicating to any person ... that one or more Defendants are the 'original' or 'authentic' or 'genuine' Max, or any indication of present association with [plaintiff's restaurant]." The consent order further provides that Quinteros can use the name "Max" in advertisements, provided it is followed immediately by "Quinteros." Max's Seafood Cafe, Inc. v. Jim E. Kay, Inc., Civ. Action No. 90-2137(SSB) (D.N.J. June 13, 1990). The court retained jurisdiction over enforcement of the consent decree.

Lou-Ann repurchased Max's Seafood Cafe from Renzi in 1992. Louis and Antoinette Del Brocco are the principal shareholders of Lou-Ann, Inc. In 1995, Quinteros began operating the kitchen of an establishment owned by Frank Miraglia called "Frank's Place;" the restaurant part of the operation was called "Bayshore Seafood Restaurant." The Del Broccos' attorney sent Quinteros a letter on June 29, 1995, complaining that Quinteros was telling people that he was "the original Max" associated with Max's Seafood Cafe and directing him to cease and desist. The Del Broccos did not pursue the matter further until 1997.

Quinteros, who left the Bayshore establishment for one month in a dispute with Miraglia, finally quit in August of 1996 because, according to Quinteros, Miraglia had not followed through on his promise to make Quinteros a full partner. In 1997, however, Quinteros and his wife returned to the Bayshore, at which point they,

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through a newly formed corporation, appellant Jack-Mack Seafood, LLC, purchased the business on April 23, 1997. The new entity dropped the name "Frank's Place" and began placing advertisements which stated that the Bayshore Seafood Restaurant and Tavern was under new management and which identified Max Quinteros by name.

The contempt proceeding that is the subject of this appeal was initiated when Lou-Ann, proceeding in the name Max's Seafood Cafe, 1 filed an "order to show cause" in the District Court on September 3, 1997, seeking to have Quinteros and Jack-Mack, the new corporation, held in contempt. The District Court held a hearing on October 14, 1997. The gravamen of Lou-Ann's complaint at the hearing was that Quinteros had been violating the consent order since April 1995 by referring to himself as "the original Max," and, after his purchase of the restaurant, by placing advertisements which set the word "Max" in letters larger than the word "Quinteros." Lou-Ann further alleged that Jack-Mack was liable "on an aiding and abetting theory." Lou-Ann did not specify which acts it alleged Jack-Mack aided and abetted. Testimony was taken from several witnesses, including Max Quinteros, Frank Miraglia, and Louis Del Brocco.

The District Court issued its decision on December 18, 1997. The court concluded that the print advertisements did not violate the consent order. Max's Seafood Cafe v. Quinteros, Civ. No. 90-2137(SSB), slip op. at 11 (D.N.J. Dec. 18, 1997). The court found the testimony regarding Quinteros's alleged oral communications to be "unclear and imprecise," "lack[ing in] specificity," and "no better than vague." Id. at 7. It noted that none of Lou-Ann's witnesses alleged that any of these oral communications had occurred after August 1996, and it concluded that the contempt allegations relating to Quinteros's alleged statements were barred by the doctrine of laches (a ruling that is not cross-appealed). The court did find, however, that there was clear and convincing evidence "that Frank Miraglia did, on approximately twenty-five (25) occasions, refer to Max Quinteros as the 'original Max' to customers," but that "[I]t has not been clearly established that Max Quinteros ever referred to himself that way." Id.

Nonetheless, the District Court found Quinteros liable for Miraglia's statements because Quinteros and Miraglia had split profits from the restaurant. The court stated: "Max Quinteros had influence with Frank Miraglia. He was not a mere 'employee' who simply had no control whatsoever over the actions of Frank Miraglia." Id. at 8. The court further found that "Quinteros told Frank Miraglia that he could not introduce Quinteros as the 'original Max,' " but that "[a]fter being advised that he could not introduce Max Quinteros as the 'original Max,' Frank Miraglia nevertheless continued to introduce Max Quinteros as the 'original Max.' Thus, whatever efforts Max Quinteros made to prevent Frank Miraglia from violating the order were ineffective and inadequate. Max Quinteros knew that simply telling Frank Miraglia to stop ... had been ineffective, yet he took no other steps to curb Frank Miraglia's conduct." Id. The court ultimately concluded that Max Quinteros was liable in contempt "for his ineffective efforts at ensuring Miraglia's compliance." Id. at 18.

Additionally, the court found Jack-Mack in contempt, although there is no discussion in the court's memorandum opinion disclosing the rationale for this decision. As a remedy, the court ordered that advertisements for the Bayshore include the words "not affiliated with Max's Seafood Cafe," fined Quinteros and Jack-Mack each $25 (representing $1 for each of Miraglia's statements), and awarded attorney's fees to Lou-Ann pursuant to the consent order, the amount to be determined after the submission of a fee petition.

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Id. at 24-27. Lou-Ann submitted a fee petition, to which Quinteros and JackMack filed objections. The fee issue is currently pending, and the District Court reserved decision pending this appeal.

Quinteros and Jack-Mack moved for reconsideration. They argued that (1) Quinteros cannot be held liable for Miraglia's violations of the consent...

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