Universal Furniture Intern. v. Collezione Europa

• Decision Date: 12 February 2009
• Docket Number: No. 1:04CV977.,1:04CV977.
• Parties: UNIVERSAL FURNITURE INTERNATIONAL, INC., Plaintiff, v. COLLEZIONE EUROPA, USA, INC., Defendant.
• Court: U.S. District Court — Middle District of North Carolina

599 F.Supp.2d 648

UNIVERSAL FURNITURE INTERNATIONAL, INC., Plaintiff, v. COLLEZIONE EUROPA, USA, INC., Defendant.

No. 1:04CV977.

United States District Court, M.D. North Carolina.

February 12, 2009.

George L. Little, Jr., William M. Bryner, Laura Craver Miller, Kilpatrick Stockton,

L.L.P., Winston-Salem, NC, W. Swain Wood, Wood Jackson PLLC, Raleigh, NC, for Plaintiff.

Brett M. Hutton, Nicholas Mesiti, Heslin Rothenberg Farley & Mesiti, P.C., Albany, NY, Harry G. Gordon, Gordon Law Offices, Greensboro, NC, for Defendant.

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER REGARDING DAMAGES

OSTEEN, JR., District Judge.

This matter is now before the court for a final determination and award of damages. This court incorporates by reference the Findings of Fact and Conclusions of Law dated September 14, 2007, 2007 WL 2712926, (Doc. 203) and the Permanent Injunction and Order dated November 30, 2007, 2007 WL 4262724, (Doc. 214).

PROCEDURAL HISTORY

This case was bifurcated into two parts: the first part proceeded as a bench trial in order to determine liability, and the second part proceeded as a hearing to calculate any resultant damages. The Honorable William L. Osteen, Sr. presided over the bench trial from May 14-18, 2007. On September 14, 2007, Judge Osteen, Sr. entered his Findings of Fact and Conclusions of Law. (Doc. 203.) Those findings of fact and conclusions of law resolved all liability issues but reserved a ruling on damages, thus creating a bifurcation. Subsequently, Judge Osteen, Sr. retired and this case was assigned to the undersigned court.

In his Findings of Fact and Conclusions of Law, Judge Osteen, Sr. determined that Defendant, Collezione Europa USA, Inc. ("Collezione" or "Defendant"), was liable to Plaintiff, Universal Furniture International, Inc. ("Universal" or "Plaintiff"), on the following grounds: (1) false designation/reverse passing off of Plaintiffs furniture in violation of the Lanham Act; (2) infringement of Plaintiffs copyright in violation of the Copyright Act; and (3) reverse passing off of Plaintiffs furniture in violation of North Carolina's Unfair and Deceptive Trade Practices Act. (Findings of Fact and Conclusions of Law (Doc. 203) at 38.) Following a finding of liability, Plaintiff moved for the entry of a permanent injunction (Doc. 204) and Collezione responded by submitting a motion to stay any injunction pending appeal (Doc. 206). The court granted Plaintiffs injunction and denied Collezione's request for a stay (Docs. 213, 214).¹ Collezione subsequently filed a petition under Title 11 of the United States Code in the United States Bankruptcy Court for the District of New Jersey ("Bankruptcy Court"). (See Doc. 225.) On April 10, 2008, the Bankruptcy Court lifted the automatic stay for the purpose of permitting this court to conduct a hearing on Universal's damages. (Doc. 226-2.) The hearing on damages took place on June 4, 2008. The notice of hearing advised both parties that they could present evidence and argument. (Doc. 227.) Collezione chose to present argument only and did not present any additional evidence.

At the June 4, 2008 hearing ("the Hearing"), this court received arguments from both parties, as well as their damages calculations based on the evidence presented at trial. (See Trial Tr., May 14-18, 2007 (Docs. 189-92); Hr'g. Tr. June 4, 2008.) Plaintiff presented evidence of its damages and Collezione's gross profits through, among other evidence, Plaintiffs Exhibits 29, 31-34, 49, 50, 52, and 56. Collezione presented evidence related to damages and gross and net profits through, among other evidence, the testimony of Paul Frankel and Defendant's Exhibits 19-30. During the Hearing, Plaintiff submitted a document (Pl.'s Ex. 56) containing its mathematical calculation of Collezione's gross profits related to Collezione's violation of the Copyright Act and Lanham Act. Plaintiff based its calculations on the trial evidence, adding together all sales Collezione made to customers who originally ordered furniture between October 1, 2004 and April 1, 2005.

At the close of the Hearing, Defendant was given until June 13, 2008 to file any responses or objections to Plaintiffs calculations. Defendant raised no objections. Thereafter, this court directed Plaintiff to resubmit its calculations of gross profits and damages under the Lanham Act for the period of October 1, 2004 through January 26, 2005. (Text Order, June 25, 2008.) This court gave Defendant until June 30, 2008 to submit its own calculation or file any objections to Plaintiffs calculation. (Id.) Defendant filed a response. (Doc. 233.) This court rejected Defendant's recalculation as set forth in the exhibit because it was an unverified spreadsheet presented during discovery that was not based on evidence presented at trial. (Order, July 3, 2008 (Doc. 236).) Consequently, Defendant was then ordered to provide a summary of the total sales and itemized costs associated with each of the items previously determined to be in violation of the Lanham Act and Copyright Act. (Id.) This court further ordered Defendant to base its calculations on evidence presented at trial, and to organize its calculations by itemizing each category of cost. (Id.) As part of this order, Plaintiff received ten days to review Defendant's calculations and submit any objections. (Id.) Defendant submitted a response to the court's order, along with three spreadsheets attached as exhibits. (Doc. 237.) Plaintiff submitted objections to Defendant's submission attacking Defendant's methodology. (Doc. 238.)

This court notes that it did not sit as the trier of fact at the original bench trial. However, based on the various motions and requests of the parties (see, e.g., Doc. 218), this court has considered the full court and trial record, as well as the various briefs and arguments of counsel, to determine whether judgment may be entered as to damages on the record as it currently exists.

Rule 63 of the Federal Rules of Civil Procedure provides that

if a judge conducting a hearing or trial is unable to proceed, any other judge may proceed upon certifying familiarity with the record and determining that the case may be completed without prejudice to the parties. In ... a nonjury trial, the successor judge must, at a party's request, recall any witness whose testimony is material and disputed and who is available to testify again without undue burden.

Fed.R.Civ.P. 63.

In Henry A. Knott Co. v. Chesapeake Potomac Telephone Co., 772 F.2d 78 (4th Cir.1985), the Fourth Circuit Court of Appeals discussed the standard applicable to a successor judge under Rule 63. Although that case involved disability of a master rather than a judge, the Fourth Circuit held that "absent the consent of the parties, a successor master or judge may not be appointed to make findings of fact and conclusions of law based solely upon the transcript developed before the original judge or master, unless no credibility determination as to the testimony of the witnesses needs to be made." Id. at 87.

In the present case, Judge William L. Osteen, Sr., conducted the bench trial and entered his Findings of Fact and Conclusions of Law as to liability. However, he retired prior to reaching a decision on the issue of damages. The case was subsequently assigned to the undersigned court. In accordance with Rule 63, this court certifies that it is familiar with the record and believes the case may be completed without prejudice to either party.

Prior to reaching the decision that this case could be completed without prejudice to either party, this court set this case for a hearing on damages. (Doc. 227.) The notice of hearing advised both parties that they could present evidence and argument. Id. As previously noted, Collezione chose not to present any additional evidence. Collezione has had ample opportunity to present evidence and/or object to this court proceeding with a determination of damages on the present record, but has not done so. Accordingly, this court finds that Plaintiff and Collezione have waived the right to present further evidence.

Based upon the evidence presented at trial, the Findings of Fact and Conclusions of Law dated September 14, 2007 and incorporated herein by reference, and the arguments of the parties, the court makes the following findings of fact and conclusions of law. This court finds that Defendant is liable to Plaintiff for a total of $11,225,777.18.

FINDINGS OF FACT

LANHAM ACT

1. A portion of Collezione's gross revenues from its 20200 collection were generated in violation of the Lanham Act and North Carolina's Unfair and Deceptive Trade Practices Act. Collezione obtained these profits through the unauthorized display of certain pieces of Universal's English Manor collection (as the court found previously in its Findings of Fact and Conclusions of Law, the mirror, dresser, head-boards, armoire, marble top night stand, serpentine credenza, large china cabinet, and rectangular and round dining tables) in Collezione's showroom and promotional photographs.

2. The court finds that the amount of gross profit attributable to Collezione's display of Universal's furniture totals $196,921.00. This amount represents the gross profit from the sales of furniture obtained during the time Collezione first displayed the furniture at the High Point Furniture Market in October 2004, until the time Collezione released the redesigned pieces of furniture at the San Francisco Home Furnishings Market on January 26, 2005. This figure includes sales to Rhodes Home Furnishings. While Collezione presented testimony of James Hendricks in an effort to rebut Plaintiffs evidence as to the Rhodes Home Furnishings orders, that testimony does not establish by a preponderance of the evidence that Rhodes's purchase of furniture was the product of factors other than the Lanham Act violation.

3. The amount of damages is calculated based on the dates that customers...