Marshak v. Treadwell

• Citation: 595 F.3d 478
• Decision Date: 02 July 2009
• Docket Number: No. 08-1837.,No. 08-1771.,No. 08-1836.,08-1771.,08-1836.,08-1837.
• Parties: Larry MARSHAK v. Faye TREADWELL; Treadwell's Drifters, Inc.; The Drifters, Inc., Appellants, Larry Marshak, v. Faye Treadwell; Treadwell's Drifters, Inc.; The Drifters, Inc. Lowell B. Davis, Appellant, Larry Marshak v. Faye Treadwell; Treadwell's Drifters, Inc.; The Drifters, Inc. Larry Marshak; Andrea Marshak; Paula Marshak; Charles Mehlich; Barry Singer; DCPM, Inc.; Live Gold Operations Inc; Cal Cap Ltd; Barry Singer; Singer Management Consultants, Inc.; Dave Revels, Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

595 F.3d 478

Larry MARSHAK v. Faye TREADWELL; Treadwell's Drifters, Inc.; The Drifters, Inc., Appellants, Larry Marshak, v. Faye Treadwell; Treadwell's Drifters, Inc.; The Drifters, Inc.

Lowell B. Davis, Appellant, Larry Marshak v. Faye Treadwell; Treadwell's Drifters, Inc.; The Drifters, Inc.

Larry Marshak; Andrea Marshak; Paula Marshak; Charles Mehlich; Barry Singer; DCPM, Inc.; Live Gold Operations Inc; Cal Cap Ltd; Barry Singer; Singer Management Consultants, Inc.; Dave Revels, Appellants.

No. 08-1771.

No. 08-1836.

No. 08-1837.

United States Court of Appeals, Third Circuit.

Argued: March 10, 2009.

Filed: July 2, 2009.

John A. DeMaro, Esq., Ruskin Moscou Faltischek, P.C., Uniondale, NY, for Appellant-Cross Appellee Larry Marshak and Non-Party Appellants-Cross Appellees Andrea Marshak, Paula Marshak, Charles Mehlich, Barry Singer, Dave Revels, DCPM, Inc., Live Gold Operations, Inc., Cal-Cap Ltd., and Singer Management Consultants.

Jeffrey Schreiber, Meister, Seelig & Fein, East Brunswick, NJ, for Barry Singer and DCPM Operations, Inc.

Lowell B. Davis, Esq., Carle Place, NY, pro se.

Cindy D. Salvo, Esq., The Salvo Law Firm, P.C., Roseland, NJ, for Appellees-Cross Appellants Faye Treadwell, Treadwell's Drifters, Inc., and The Drifters, Inc.

Before: FUENTES, CHAGARES, and ALDISERT, Circuit Judges.

FUENTES, Circuit Judge.

For over a decade, Faye Treadwell ("Treadwell"), widow of the late music executive George Treadwell, and Larry Marshak ("Marshak"), a promoter of various doo-wop groups, have fought tooth and nail over the rights to use the trademark of "The Drifters," the legendary singing group. In the late nineties, Marshak sued Treadwell for infringement of a federally registered mark for The Drifters that Marshak had obtained in 1978. Treadwell counterclaimed to cancel the registration, arguing that the mark had been procured by fraud, and that Marshak was infringing on Treadwell's senior common-law rights. In August 1998, a jury issued a split verdict: it found that Marshak had procured his mark by fraud, but that Treadwell had abandoned her common law rights to the mark through inaction. However, approximately one year after the jury verdict, Judge Politan granted judgment as a matter of law for Treadwell. Marshak v. Treadwell, 58 F.Supp.2d 551 (D.N.J.1999). Judge Politan agreed with the jury that Marshak had made misrepresentations to the Patent and Trademark Office, but determined that the mark had not been abandoned, as the music of The Drifters was still played on the radio and sold in stores. Marshak appealed Judge Politan's decision and we affirmed. Marshak v. Treadwell, 240 F.3d 184 (3d Cir.2001).

The case now before us focuses on the breadth of the injunction and efficacy of the remedies that were issued along with Judge Politan's ruling. Judge Politan enjoined Marshak and his company from marketing The Drifters anywhere—not On Broadway, not Up On the Roof, and not Under the Boardwalk—and ordered a full accounting of profits. In the years that followed, however, various family members and associates of Marshak picked up where Marshak left off, and began again promoting The Drifters, just as Marshak had. Treadwell, thinking that these actions were not Some Kind of Wonderful, thus brought the instant motion for contempt, arguing that the Politan injunction applied to Marshak's associates as well as to Marshak. After a lengthy hearing, the District Court found that Marshak and his associates were in contempt of the Politan injunction, but limited Treadwell's remedies to an award of attorneys' fees. Both sides then appealed: Marshak and his associates appealed the merits of the decision, while Treadwell challenged the paucity of the remedies.

For the reasons that follow, we affirm in part and reverse and remand in part.

I.

A.

The dispute in this case centers on the trademark rights to The Drifters, a popular singing group from the 1950s and 1960s.¹ The Drifters first appeared in 1953 and came under the management of George Treadwell the following year. George Treadwell hired and paid the individual performers as employees, replacing them frequently. For nearly two decades, The Drifters as an entity persisted, though the membership of the group was constantly in flux. George Treadwell passed away in 1959, and his wife, Faye Treadwell, took over management of the group.

By 1970, The Drifters had largely ceased to perform in the United States, although their songs were still played on the radio. Marshak, an editor for a rock magazine, saw this as an opportunity. Working with CBS Radio, which had shifted to an "oldies" format, Marshak reunited some of the former members of the group—those who had been replaced over the years by the Treadwells—for a series of reunion concerts. Capitalizing on the success of these concerts, Marshak signed the former members to exclusive management contracts and began marketing them as "The Drifters."

Over the next three decades, Marshak continued marketing The Drifters in the United States. His efforts at promotion were occasionally interrupted by trademark infringement litigation—Faye Treadwell sued Marshak, and Marshak in turn sued other Drifters promoters—but these lawsuits were often inconclusive.² By the late nineties, however, the litigation over The Drifters finally produced a decisive result: as described above, in July 1999, Judge Politan determined that Marshak had acquired his rights to The Drifters mark by fraud and that Treadwell's rights to The Drifters were superior. Marshak, 58 F.Supp.2d at 568, 575. Judge Politan enjoined Marshak and his company, RCI Management ("RCI"), from promoting groups performing under the name of The Drifters, Marshak v. Treadwell, No. 95-CV-3794 (D.N.J. Aug.16, 1999) (order of contempt, permanent injunction, and accounting) ("Politan Injunction"), and we affirmed, Marshak, 240 F.3d at 200.

With the issuance of the injunction, Marshak should have been out of The Drifters business. In the year and a half leading up to the issuance of this injunction, however, Marshak and his associates had begun to reorganize his promotion business in ways that complicated the effect of Judge Politan's injunction. It is the nature of this reorganization that lies at the center of the contempt proceeding now before us.

B.

In the years before the injunction was issued, Marshak promoted groups like The Drifters through RCI. Andrea Marshak, Marshak's wife, and Paula Marshak, Marshak's sister-in-law, both worked for RCI, as did Dave Revels ("Revels"). Charles Mehlich ("Mehlich") served as RCI's accountant, and Lowell Davis ("Davis") served intermittently as RCI's attorney. The business was run out of Marshak's basement.

Beginning in 1996, Marshak began to experience some health difficulties. According to Andrea Marshak, for the next year or so she and Paula Marshak handled much of the business of RCI, allowing Marshak to convalesce. Finally, in early 1998, after the work became too "overwhelming," they collectively decided to dissolve RCI and form a new company called DCPM, Inc. ("DCPM").³ DCPM was officially formed on January 21, 1998, and was co-owned by Andrea Marshak, Paula Marshak, Mehlich, Revels, and Dave Backer ("Backer"). These same owners also formed Cal-Cap, a licensing corporation created to work alongside DCPM. DCPM was formed as a "sort of successor to RCI." (App. 229 (Marshak Decl.) ¶ 3.) It "basically picked up where RCI left off," (App. 519 (Paula Marshak Decl.) ¶ 5), and was "engaged in the same kind of singing group promotion business as ... RCI," (App. 162 (Mehlich Decl.) ¶ 5). In addition, DCPM was operated out of the same offices in Marshak's basement that housed RCI.

For a brief period of time, RCI and DCPM coexisted. RCI's last show was in November of 1998—over eight months after DCPM was formed—although RCI was not officially dissolved until March 2003. After the reorganization, Marshak was officially retained as an employee of DCPM, not as an owner.

In August 1998, six and a half months after DCPM was formed, the jury returned a verdict in Marshak v. Treadwell, the underlying case. Overall, the verdict was favorable to Marshak—although the jury found that Marshak had procured his Drifters trademark by fraud, the jury also found Treadwell had abandoned her common law rights to the mark through inaction. As a result, Marshak retained common law rights in The Drifters mark. Marshak's victory, however, was relatively short-lived. On July 30, 1999, approximately a year later, Judge Politan vacated the jury verdict and issued judgment in favor of Treadwell, rejecting the jury's finding that Treadwell had abandoned The Drifters mark.

Up until February 9, 2001, when the Politan Injunction was affirmed by a panel of this Court, The Drifters had been appearing nightly at the Sahara Hotel and Casino with The Platters and The Coasters. All three groups were provided by DCPM, which had been assigned Marshak's rights to The Drifters under his employment contract. Once the injunction became effective and Marshak lost his rights to The Drifters name, however, DCPM also lost its rights to The Drifters, and thus DCPM could only market The Platters and The Coasters. Shortly thereafter, the Sahara show closed—The Drifters were the biggest box office draw of the three groups, and the show could not survive with only The Platters and The Coasters.

Barry Singer, a longtime business associate of Marshak, had brokered the original deal between RCI and the Sahara prior to the issuance of the injunction. Once the injunction barred The Drifters from appearing with the Platters and the Coasters, Singer attempted to obtain independent rights to The Drifters name, even going so far as to negotiate with Treadwell. These efforts, however, were unsuccessful.

In August 2001, around the time that Singer was attempting to secure independent rights to The Drifters mark, Davis, who had previously worked as an attorney for Marshak,...