858 F.2d 103 (2nd Cir. 1988), 494-496, Getty Petroleum Corp. v. Bartco Petroleum Corp.

Docket Nº:494-496, Dockets 87-7668, 87-7674 and 87-7770.
Citation:858 F.2d 103
Party Name:U.S.P.Q.2d 1336 GETTY PETROLEUM CORP., Plaintiff-Appellee, Cross-Appellant, v. BARTCO PETROLEUM CORP., Nicholas J. Bartolomeo, Miracle Petroleum Corp., Prugig Realty Corp., Anthony Golio, Peter Ciorciari, Lena Petroleum Corp., A.E.N. Trucking, Corp., Patrick O'Reilly, Paddy O's Service Inc., and Daniel J. Feigenbaum, Defendants, Anthony Golio, Bart
Case Date:September 22, 1988
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
FREE EXCERPT

Page 103

858 F.2d 103 (2nd Cir. 1988)

U.S.P.Q.2d 1336

GETTY PETROLEUM CORP., Plaintiff-Appellee, Cross-Appellant,

v.

BARTCO PETROLEUM CORP., Nicholas J. Bartolomeo, Miracle

Petroleum Corp., Prugig Realty Corp., Anthony Golio, Peter

Ciorciari, Lena Petroleum Corp., A.E.N. Trucking, Corp.,

Patrick O'Reilly, Paddy O's Service Inc., and Daniel J.

Feigenbaum, Defendants,

Anthony Golio, Bartco Petroleum Corp., and Nicholas J.

Bartolomeo, Defendants-Appellants, Cross-Appellees.

Nos. 494-496, Dockets 87-7668, 87-7674 and 87-7770.

United States Court of Appeals, Second Circuit

September 22, 1988

Argued Jan. 13, 1988.

Page 104

Clifford J. Chu, Great Neck, N.Y. (Hayt, Hayt & Landau, Attys. for defendants Bartco Petroleum Corp., Roy Broudny, P.C., Ralph Pernick, Great Neck, N.Y., of counsel), for defendants-appellants, cross-appellees Bartco Petroleum Corp. and Nicholas J. Bartolomeo.

Lawrence A. Berger, Great Neck, N.Y., for defendants-appellants cross-appellees Anthony Golio and Prugig Realty Corp.

Robert G. Del Gadio, Garden City, N.Y. (Harry R. Dreizen, of counsel), for plaintiff-appellee, cross-appellant Getty Petroleum Corp.

Page 105

Before LUMBARD, CARDAMONE, and PRATT, Circuit Judges.

CARDAMONE, Circuit Judge:

The purposes underlying the Lanham Trademark Act of 1946 are to protect the public so it may buy a product bearing a particular trademark with confidence that it will get the product it wants and to protect the holder of the mark's investment in time and money from its misappropriation by pirates and cheats. The defendants-appellants on this appeal violated the Lanham Act by infringing the "Getty" trademark "willfully, intentionally and with a callous and reckless disregard" for plaintiff's rights.

The question before us--one neither this court nor the Supreme Court have expressly ruled upon--is whether punitive damages may be imposed against a trademark infringer under Sec. 35 of the Lanham Act. The district court thought that punitive damages could be imposed and permitted a jury award for plaintiff of over $2 million in such damages against appellants to stand. Under the statutory scheme the emphasis is on an award constituting "compensation and not a penalty," and a plaintiff's entitlement to recover such an award is "subject to the principles of equity." Punitive damages therefore constitute judicial punishment that under the Lanham Act does not fit the crime.

BACKGROUND

The Federal Trade Commission, as a condition to its approval of the 1984 purchase of Getty Oil Company (Getty) by Texaco, Inc. (Texaco), required Texaco to transfer the "Getty" tradename and trademark and to divest itself of the acquired company's northeastern marketing facilities. See Russo v. Texaco, Inc., 630 F.Supp. 682 (E.D.N.Y.), aff'd, 808 F.2d 221 (2d Cir.1986). Power Test Corp. bought Getty's northeastern business in February 1985 from Texaco and obtained an exclusive trademark license for the "Getty" marks. On July 11, 1985 ownership of the "Getty" marks was transferred to Power Test, which thereupon changed its name to Getty Petroleum Corp. (Getty Petroleum). Getty Petroleum continued the business formerly conducted by Getty and is the plaintiff in the instant litigation.

Appellants Anthony Golio, Bartco Petroleum Corp. (Bartco), and Nicholas Bartolomeo--along with their eight codefendants--owned and operated three retail Getty gasoline service stations in Oceanside, New Hyde Park, and Garden City Park, New York, respectively. From February 1985 to April 1986 these service stations sold gasoline purchased from sources other than Getty Petroleum in violation of their franchise agreements with Getty. Getty Petroleum sued appellants in January 1986 alleging infringement of the registered "Getty" trademark and service mark and wrongful use in commerce of false designations of origin, false descriptions, and false representations in violation of the Lanham Trademark Act of 1946, 15 U.S.C. Secs. 1051, 1114(1), 1116-1118, and 1125(a) (Lanham Act). Plaintiff also alleged unfair competition under the common law and various violations of state law, including dilution of trademark value, false advertising, and breach of contract.

There have been two jury trials of this suit. We briefly set out the events in those trials that relate to this appeal. At the first trial in June 1987, the jury found appellants Bartco, Bartolomeo, and Golio--along with their codefendants--had violated the Lanham Act by infringing Getty Petroleum's trademark rights "willfully, intentionally and with a callous and reckless disregard" for the latter's rights. It awarded plaintiff compensatory damages totalling $107,579.75. The jury assessed in addition $6.5 million in punitive damages for the Lanham Act violations against Bartco ($1.5 million), Bartolomeo ($3 million), and Golio ($2 million).

Following that verdict, defendants moved, inter alia, for a judgment notwithstanding the verdict (j.n.o.v.) pursuant to Fed.R.Civ.P. 50(b) or, alternatively, for a new trial on the issue of punitive damages pursuant to Fed.R.Civ.P. 59. Plaintiff moved for increased compensatory damages pursuant to Sec. 35 of the Lanham Act.

Page 106

Interpreting Quaker State Oil Ref. Corp. v. Kooltone, Inc., 649 F.2d 94 (2d Cir.1981), as approving punitive damages as a remedy under the Lanham Act, the district judge denied defendants' motion for a j.n.o.v. but nonetheless vacated the award of punitive damages as against the appellants, finding it "so high as to shock the judicial conscience and constitute a denial of justice," Zarcone v. Perry, 572 F.2d 52, 56 (2d Cir.1978). The trial judge denied plaintiff's request for increased compensatory damages, but ordered a new trial on the issue of punitive damages, unless plaintiff agreed to a remittitur, which Getty Petroleum refused.

A second jury trial solely on the issue of Bartco's, Bartolomeo's, and Golio's liability for punitive damages was therefore held before the same district court judge a month later in July 1987. The second jury awarded over $2 million punitive damages to Getty Petroleum--$1,833,000 from Bartco and Bartolomeo, jointly, and $172,000 from Golio. Defendants again moved for a j.n.o.v. or, alternatively, a remittitur, which Judge Mishler denied. Finally, in a decision and order dated September 2, 1987 the district court assessed attorney fees of $157,192 and costs against Bartco and Bartolomeo severally and jointly with eight codefendants.

Bartco, Bartolomeo, and Golio appeal from the award of punitive damages for the Lanham Act violations and from the assessment of attorney fees and costs. Plaintiff Getty Petroleum cross-appeals from the order vacating the first jury's award of punitive damages and denying its motion for enhanced compensatory damages.

DISCUSSION

I Punitive Damages Under Sec. 35 of the Lanham Act

  1. Threshold Issues

    Getty Petroleum urges us not to reach the question of whether Sec. 35 of the Lanham Act, 15 U.S.C. Sec. 1117(a) (Supp. IV 1986), authorizes punitive damages for infringement of a registered trademark. It argues first that it presented an overall claim of unfair competition of which its Lanham Act cause of action was only a part, and that the jury's punitive damages award could be justified under a common law unfair competition theory and its state law claims. Second, plaintiff asserts that defendants' failure to object to the district court's jury charge on punitive damages waived any objection under Fed.R.Civ.P. 51.

    We need not address whether plaintiff proved a common law unfair competition or state law claim or whether punitive damages are available under those theories because the record before us reveals that the jury considered only plaintiff's federal trademark infringement cause of action. Although plaintiff's complaint purported to state contract and common law unfair competition claims and various causes of action under the Lanham Act and the New York General Business Law, such allegations are irrelevant. What are pertinent are the theories of recovery actually charged to the jury. Baas v. Hoye, 766 F.2d 1190, 1194 (8th Cir.1985).

    The record discloses that on June 3, 1987--early in the first trial--plaintiff withdrew its claim for injury to its good will and reputation. On June 9 plaintiff withdrew its New York General Business Law claims for dilution of trademark value and false advertising and its breach of contract claims pertaining to the franchise agreements. During an on-the-record discussion of plaintiff's requested jury charges, the trial judge was of the opinion that plaintiff had withdrawn all its asserted causes of action, except its claim of trademark infringement. Plaintiff's counsel agreed that no other legal theories remained in the case.

    The district court charged the plaintiff's theory of damages to the first jury in the following words

    The Plaintiff, Getty Petroleum, brings this action claiming trademark infringement in the sale of gasoline by operators of three gasoline service stations.... They also claim a false description of the nature and quality of the gasoline sold to

    Page 107

    the public by using the Getty Trademark for the sale of non-Getty unleaded gasoline. The claims are based on two particular sections of an act of Congress commonly called the Lanham Act.

    Further, the jury's special verdict form premised the imposition of punitive damages on a finding that appellants willfully infringed the "Getty" trademark with a "reckless disregard for Getty's trademark rights." No unfair competition issues were presented on the special verdict form for the jury to decide. Finally, the district judge apparently assumed both in its decision vacating the first punitive damages award (but approving punitive damages as a remedy under the Lanham Act) and during the second trial that the sole basis for awarding punitive damages was appellants' willful...

To continue reading

FREE SIGN UP