Lisa's Party City v. Town of Henrietta

• Citation: 185 F.3d 12
• Decision Date: 01 August 1998
• Docket Number: Docket No. 98-7695
• Parties: (2nd Cir. 1999) LISA'S PARTY CITY, INC., doing business as Party City, and GARY R. BLUM, Plaintiffs-Appellants, v. TOWN OF HENRIETTA, TOWN OF HENRIETTA ZONING BOARD OF APPEALS, ROGER GATES, ANDREW MALCOLM, JODY PULSIFER, ROBERT STEIDLE, VALERI SCHILLINGER, PATRICIA LAROCCA, FLORIAN SOBOLEWSKI and A. DAVID PIRRELLO, Defendants-Appellees
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 12

185 F.3d 12 (2nd Cir. 1999)

LISA'S PARTY CITY, INC., doing business as Party City, and GARY R. BLUM, Plaintiffs-Appellants, v. TOWN OF HENRIETTA, TOWN OF HENRIETTA ZONING BOARD OF APPEALS, ROGER GATES, ANDREW MALCOLM, JODY PULSIFER, ROBERT STEIDLE, VALERI SCHILLINGER, PATRICIA LAROCCA, FLORIAN SOBOLEWSKI and A. DAVID PIRRELLO, Defendants-Appellees.

Docket No. 98-7695

August Term, 1998

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

Argued: Feb. 22, 1999

Decided: July 20, 1999

Appeal from a judgment entered on April 29, 1998, in the United States District Court for the Western District of New York, Michael A. Telesca, Judge, granting defendants' motion to dismiss plaintiffs' complaint alleging violation of the Lanham Act, 15 U.S.C. § 1121(b), and civil rights violations under 42 U.S.C. § 1983, arising out of defendants' denial of a request for a sign permit variance at plaintiffs' store located in the Town of Henrietta, New York.

Affirmed.

GLENN E. PEZZULO, Esq., Culley, Marks, Tanenbaum, Capell & Pezzullo, Rochester, NY, for Plaintiffs-Appellants.

THOMAS A. LENWEAVER, Esq., Trevett, Lenweaver & Salzer, P.C., Rochester, NY, for Defendants-Appellees.

Before: LEVAL, POOLER, and HEANEY,^*. Circuit Judges.

HEANEY, Senior Circuit Judge:

Lisa's Party City, Inc., doing business as Party City, and its president, Gary Blum (collectively "Party City"), appeal from an adverse grant of summary judgment in an action alleging violation of the Lanham Act, 15 U.S.C. § 1121(b), and civil rights violations under 42 U.S.C. § 1983, arising out of a decision by the Town of Henrietta ("the Town") denying Party City's request for a sign permit variance. Party City contends that a provision of the Henrietta Town Code requiring uniformity in sign color compels the alteration of its trademark in violation of § 1121(b) of the Lanham Act by prohibiting the use of its multicolor trademark on an exterior sign in a red-only shopping center. Additionally, Party City claims that because other businesses located within the same shopping plaza display multicolor signs, the Town's refusal to grant a variance rises to a violation of equal protection and substantive due process. We reject these arguments and affirm the judgment of the district court.

Background

Party City, a franchisee of Party City, Inc., sells paper products and party supplies from a retail space in the Jay Scutti Plaza, located in Henrietta, New York. During the summer of 1995, after it entered into a lease agreement for its current space, Party City submitted a written application and received a permit for a sign in all red letters. This application comported with the Henrietta Town Code ("the sign ordinance"), which provides, in relevant part, that "[i]n shopping plazas, each individual store or other enterprise shall be permitted to have one (1) wall or roof sign . . . [t]he design and style of [which] shall be coordinated so as to create aesthetic uniformity within the plaza." Henrietta Town Code, § 97-8-B(2). In compliance with this uniformity requirement, the owner of the Jay Scutti Plaza had selected the color red for all signs in its plaza.

On or about September 28, 1995, Party City applied for a variance granting it permission to erect a sign with five alternating colors in conformity with its federally- registered trademark. After Party City received a written denial of its variance request, it commenced an Article 78 proceeding under the Civil Practice Law and Rules of the State of New York appealing the decision of the Zoning Board. On March 27, 1996, Party City withdrew its Article 78 petition and subsequently commenced the instant suit. The district court found that the Town had neither required appellant Party City to alter its trademark in violation of the Lanham Act, 15 U.S.C. § 1121(b), nor violated appellants' civil rights, and accordingly entered summary judgment for the Town, dismissing appellants' cause of action.¹

Discussion

Summary judgment is appropriate if the record demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 36 (2d Cir. 1994). We review the grant of a motion for summary judgment de novo. See Fund For Animals v. Babbitt, 89 F.3d 128, 132 (2d Cir. 1996).

1. The sign ordinance does not require "alteration" of a registered trademark within the meaning of the Lanham Act.

Appellants contend that the Town's actions require alteration of a federally-registered trademark in violation of the Lanham Act. Section 1121(b) of the Lanham Act provides, in relevant part, that "[n]o State . . . or any political subdivision . . . thereof . . . may require alteration of a registered mark." 15 U.S.C. § 1121(b).

Section 1121(b) was added to the Lanham Act in 1982 to remedy a problem that arose from the efforts of states to dictate aspects of the appearance of trademarks. See H.R. Rep. No. 97-778, at 1 (1982), reprinted in 1982 U.S.C.C.A.N. 2621, 2621. In the best-known case giving rise to the enactment of § 1121(b), Century 21, a national real estate corporation, brought suit under the Lanham Act to challenge a Nevada regulation requiring realtors to designate at least 50% of the surface area of their signs for display by local franchisers. Century 21's registered trademark designated 80% of the sign's surface area for display of its corporate logo and the remaining 20% for display of the local franschisee's name. The district court ruled that the Nevada regulation did not violate the Lanham Act, and the Supreme Court affirmed. See Century 21 Real Estate Corp. v. Nevada Real Estate Advisory Comm'n, 448 F. Supp. 1237, 1241 (D. Nev. 1978), aff'd, 440 U.S. 941 (1979). In the aftermath of the Century 21 decision, other states adopted rules similar to Nevada's requiring designation of differing percentages for the use of local franchisees. See H.R. Rep. No. 97-778, at 1 (1982), reprinted in 1982 U.S.C.C.A.N. 2621, 2621. These rules resulted in confusion and ultimately in the "technical" change implemented by § 1121(b). Id. at 2, reprinted in 1982 U.S.C.C.A.N. at 2622.

Appellants first argue that the term "alteration" is so unambiguous as to admit of no other construction than one which prohibits application of city zoning regulations in a manner that inhibits the use of a federally-registered trademark. We disagree.

In resolving the meaning of statutory text, we are mindful that a central axiom of statutory construction holds that "'the starting point in every case involving construction of a statute is the language itself.'" Kelly v. Robinson, 479 U.S. 36, 43 (1986) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756 (1975) (Powell, J., concurring)). However, "[w]here the scope of a statutory provision is not made crystal clear by the language of the provision, it is appropriate to turn to the legislative history of the statute." In re Palm Coast, Mantanza Shores L.P. v. Bloom, 101 F.3d 253, 257 (2d Cir. 1996) (quoting Berger v. Heckler, 771 F.2d 1556, 1571 (2d Cir. 1985)). The statutory language of § 1121(b) bars state or local regulations from requiring "alteration" of a federally-registered trademark. What this means is not self-evident. Appellants urge a reading of the statute that broadly prohibits a state or local government from restricting or interfering with the display or reproduction of a trademark in any manner that alters its appearance as exhibited in the Certificate of Registration issued by the U.S. Patent and Trademark Office. It is far from clear that the statute sweeps so broadly. It is at least as consistent with the language of the statute to understand it as allowing a local government to restrict businesses in a narrowly circumscribed location from using exterior signs in any color other than red. Such regulation does not compel a businesses to alter their trademark, since they remain free to use their trademarks without alteration in every manifestation other than the exterior sign at the covered location - on letterhead, leaflets, billboards, magazines, newspapers, television and Internet advertising, point-of-sale displays inside the store, and external signs at other locations. Under this narrower construction of § 1121(b), a restriction on external signs in a narrowly circumscribed locality would not come within the statute's prohibition on requiring businesses to alter their trademarks.

We think the more plausible interpretation of § 1121(b) reads its use of the term "alteration" "to describe state-mandated changes in the mark itself, which are, of necessity, reflected in every subsequent display of that mark within the relevant jurisdiction." Blockbuster Videos, Inc. v. City of Tempe, 141 F.3d 1295, 1304 (9th Cir. 1998) (Browning, J., dissenting). As noted above, Congress enacted § 1121(b) of the Lanham Act because state regulations compelled trademark holders to change the character and design of their trademarks throughout an entire statewide jurisdiction. See Lanham Trademark Act Amendment: Hearing on H.R. 5154 Before the Subcomm. on Courts, Civil Liberties, and the Admin. of Justice of the House Comm. on the Judiciary, 97th Cong., 2d Sess. 18-21 (1982) (statement of Iris D. Reeves, Manager, Century 21 Reeves Realty, Inc.) ("Hearings"). By contrast, local uniform aesthetic and historic regulations simply limit color typefaces and decorative elements to certain prescribed styles. These regulations have no effect on the businesses' trademark. They limit only the choice of exterior sign at a particular location. As such, though entirely disallowing the use of a registered trademark in carefully delimited instances, these regulations do not require "alteration" at all.

Appellants next argue that even if the term "alteration" is not free from ambiguity, the statutory history does not support the district court's interpretation of §...