Food Fair Stores v. Food Fair

• Decision Date: 11 October 1949
• Docket Number: 4403.,No. 4402,4402
• Citation: 177 F.2d 177
• Parties: FOOD FAIR STORES, Inc. v. FOOD FAIR, Inc. FOOD FAIR, Inc. v. FOOD FAIR STORES, Inc.
• Court: U.S. Court of Appeals — First Circuit

177 F.2d 177 (1949)

FOOD FAIR STORES, Inc. v. FOOD FAIR, Inc. FOOD FAIR, Inc. v. FOOD FAIR STORES, Inc.

Nos. 4402, 4403.

United States Court of Appeals First Circuit.

September 21, 1949.

Rehearing Denied October 11, 1949.

COPYRIGHT MATERIAL OMITTED

Arthur L. Sherin, Boston, Mass. (Norwood Cox, Edward W. Lider and Sherin & Lodgen, Boston, Mass., and Stein & Stein, Union City, N. J., on brief), for Food Fair Stores, Inc.

Maurice Tobey, Boston, Mass. (William L. Berger and Gabriel V. Mottla, Boston, Mass., on brief), for Food Fair Inc.

Before MAGRUDER, Chief Judge, WOODBURY, Circuit Judge, and LINDLEY, District Judge.

WOODBURY, Circuit Judge.

These are cross appeals from a final decree enjoining the defendant from using the words "Food Fair" in its business (that of operating a supermarket on Harvard Street in Brookline, Massachusetts) "unless such words are prefaced by a descriptive word or words such as Rodman's, Brookline or New England." The plaintiff on its appeal assigns the limited scope of the injunctive relief afforded as error. The defendant as appellant contends, first, that federal jurisdiction is lacking for want of a sufficient amount in controversy, and, second, that even if federal jurisdiction exists, the plaintiff is not entitled to any relief under the applicable law.

At the outset of its complaint the plaintiff alleges that it is a Pennsylvania corporation, that the defendant is a corporation existing under the laws of the Commonwealth of Massachusetts, and that the value of the matter in controversy, exclusive of interest and costs, is in excess of $3,000. Next the plaintiff alleges that it is, and for many years has been, engaged in the business of operating a chain of supermarkets in Maryland, Delaware, New York, New Jersey and Pennsylvania in which it sells at retail the products usually sold in grocery stores; that beginning in 1935 it adopted the practice of incorporating subsidiaries using the words "Food Fair" in their names to operate its markets; that in 1942 it merged these subsidiaries with itself at which time it changed its name from its original one of Union Premier Food Stores, Inc. to its present one of Food Fair Stores, Inc. by which it has since continuously been known; and then it alleges that beginning in 1935 it "adopted and used, and since that date has continuously to the present time used, the unique trade name Food Fair in connection with the conduct by it and by its subsidiary corporations of said retail food supermarkets."

Following this the plaintiff sets out its growth from a single store in 1935 to 95 stores having gross sales during the calendar year 1947 amounting to approximately $120,000,000 making it the eighth largest retail food chain in volume of national sales in the country and subjecting it to comment in magazines of national circulation; that in April, 1946, it caused a wholly owned corporate subsidiary known as Food Fair Stores Corporation to be registered and qualified to do business in Massachusetts as a foreign corporation;¹ that its advertising expense over the period of its expansion amounted to approximately $4,000,000, and that in its advertising it had long made prominent use of the unique phrase "The Food Department Store", which, it says, "is intended to and does build up and maintain the reputation, good-will and value of the name Food Fair." Then the complaint continues: "Because of the nature and extent of the business and advertising of plaintiff, the name Food Fair and the phrase The Food Department Store, as used in connection with the name Food Fair, have become known throughout the United States, including the area known in the Commonwealth of Massachusetts as Greater Boston, as referring to plaintiff and its stores, and both said unique name and said unique phrase, used singly or together, have acquired such a secondary meaning as to have become associated by the public generally, including the public in said Greater Boston, with plaintiff and its retail supermarkets."

Furthermore the plaintiff alleges that its stock is widely held throughout the United States, having had since 1937 approximately 500 stockholders in Massachusetts, particularly in Greater Boston; that its stock is listed on the New York Stock Exchange and its price quoted in the daily newspapers under the name Food Fair, and that such papers from time to time publish its financial statements and make comments concerning its business; and that its stockholders periodically receive its financial statements wherein "the trade name, nature, extent and volume" of its business are described in detail.

Then the complaint goes on to allege that when the defendant opened its supermarket in Brookline on December 18, 1947, it was well aware of the plaintiff's chain and the value of its unique name and its unique advertising phrase but nevertheless appropriated both, and, in addition, simulated the plaintiff's stores in architecture, style, color scheme, layout, design, and method of operation; prominently displayed the name Food Fair on signs affixed to the building both inside and outside and sold large quantities of food products bearing labels containing, among other things, the phrase Food Fair.

All this it is alleged was done by the defendant knowingly and "with the purpose of trading upon and appropriating for its own profit the reputation, good-will and value connected with plaintiff's said trade name and unique phrase, and with the purpose and intent of inducing the public to believe that defendant is connected with the plaintiff, that defendant's store is one of the stores owned and operated by plaintiff, and the quality of the merchandise and service offered the public by defendant is similar in kind and equal in quality to that offered the public by the plaintiff."

Wherefore, it is alleged "there is reasonable probability that the general public, investors in stocks and securities, and vendors of merchandise to the retail trade, will be deceived into believing that the defendant is affiliated with or connected with the plaintiff" and "The use by the defendant of said trade name, Food Fair and the unique phrase The Food Department Store, either singly or together, will result in injury to the plaintiff's business reputation, and will further result in dilution of the distinctive quality of the plaintiff's said trade name, Food Fair, and the plaintiff's said unique phrase The Food Department Store."

The defendant in its answer denied that the matter in controversy exceeds the sum of $3,000; said that it had no knowledge as to the truth of the plaintiff's allegations with respect to the growth of its business since 1935, the present scope thereof, and its use therein of its name and advertising slogan; denied that either was unique; admitted that it had adopted and was using the name Food Fair for its supermarket but denied its use of the advertising slogan "The Food Department Store"; denied that it had selected its name either with full knowledge of the plaintiff's existence or with any intention "to appropriate any rights or benefits belonging to the plaintiff"; denied that it ever intended to induce the public to believe that it was "connected with the plaintiff"; and further answering said "that the words Food Fair and the Food Department Store are in common use in the New England area and elsewhere to describe the sale of food generally, and that such words as so used are in the public domain and not subject to exclusive appropriation by anyone."

I. Jurisdiction

Since there is no suggestion of a federally registered trade mark, federal jurisdiction, if it exists, must rest upon the diversity of the citizenship of the parties, which is conceded, and an amount in controversy between them in excess of $3,000, which is not. 28 U.S.C.A. § 1332(a) (1). Thus on the jurisdictional phase of the case the sole question is the value of the matter in dispute.

In considering this question we turn first to the plaintiff's complaint, for to litigate in a federal court a plaintiff "must allege in his pleading the facts essential to show jurisdiction. If he fails to make the necessary allegations he has no standing." McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135. In the complaint there is a clearly adequate formal allegation that the requisite jurisdictional amount is involved. And "Such a formal allegation is sufficient, unless the bill contains others which qualify or detract from it in such measure that when all are considered together it cannot fairly be said that jurisdiction appears on the face of the complaint, in which case the suit should be dismissed by the court sua sponte or upon the defendant's motion." KVOS, Inc. v. Associated Press, 299 U.S. 269, 277, 57 S.Ct. 197, 200, 81 L. Ed. 183.

Looking at the allegations in the complaint as a whole it would appear that the plaintiff is using, and for years has used, the name Food Fair in its business of operating a large and expanding chain of retail supermarkets in the Middle Atlantic States, each store no doubt doing an essentially local business, and that the defendant recently opened a similar market, also no doubt doing an equally local business, under the identical name in Brookline, Massachusetts. Thus it is made to appear that the parties are using the same name in the same line of business but not in the same locality. And there is no allegation that the defendant is diverting any customers away from the plaintiff. Indeed the present spheres of the parties' operations are so far apart geographically that considering the essentially local nature of the business involved, there is no immediate likelihood of the plaintiff losing any customers to the defendant. It cannot be seriously suggested that any prospective customer of a retail supermarket in Brookline would for a moment consider the relative advantage of being served by such a market in his...