Abraham Zion Corp. v. Lebow
| Citation | 761 F.2d 93 |
| Decision Date | 26 April 1985 |
| Docket Number | No. 763,D,763 |
| Parties | ABRAHAM ZION CORPORATION and Lebow Clothes, Inc., Plaintiffs-Appellants, v. Harry P. LEBOW, individually and as trustee of the Estate of Benjamin Lebow, Deceased, H. Poe Lebow, Ltd. and Oakloom Clothes, Inc., doing business as a joint venture, Defendants-Appellees. ocket 84-7654. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Kenneth E. Newman, New York City (Allan R. Freedman, Jeffrey A. Conciatori, Donovan Leisure Newton & Irvine, New York City, on brief), for plaintiffs-appellants.
Mark D. Lebow, New York City (Coudert Brothers, New York City, on brief), for defendants-appellees.
Before NEWMAN, KEARSE and PRATT, Circuit Judges.
Plaintiffs Abraham Zion Corporation ("AZC") and Lebow Clothes, Inc. ("Lebow Clothes"), appeal from a judgment of the United States District Court for the Southern District of New York, Constance Baker Motley, Chief Judge, dismissing their complaint seeking declaratory and injunctive relief, damages, and an accounting against defendants Harry Poe Lebow ("Harry" or "Harry Lebow"), Oakloom Clothes, Inc. ("Oakloom"), and H. Poe Lebow, Ltd. ("HPL"), for, inter alia, unfair competition, breach of contract, and trademark infringement in violation of the Lanham Act, 15 U.S.C. Sec. 1051, et seq. (1982), following a consolidated hearing on plaintiffs' motion for a preliminary injunction and on the merits of the action. On appeal, plaintiffs contend that the district court abused its discretion in advancing the trial on the merits and erred in holding that Harry had not committed breach of contract or trademark infringement. We find none of plaintiffs' arguments persuasive and we affirm the judgment of the district court.
Lebow Clothes, a subsidiary of AZC, manufactures and sells fine men's clothing, largely to men's specialty shops, for resale to a market consisting primarily of affluent, well-educated, middle-aged and older males. Sales of so-called "cruise wear," which is sportswear worn by such men at resorts, accounts for a substantial portion of Lebow Clothes' sales volume. AZC owns the federally registered trademark "Lebow Clothes," "The Lebow Collection," and a stylized "LB" logo. Lebow Clothes garments bear these trademarks and the "Lebow" name.
Harry Lebow is a designer of fine men's clothing. Until mid-1981 he had designed for and held various high managerial positions at Lebow Clothes' predecessor company, Lebow Brothers, Inc. ("Lebow Brothers"); from 1981 to August 1982, Harry designed clothes for Lebow Clothes. Oakloom is a manufacturer of men's clothing, including cruise wear, selling such clothing to retail merchants. Shortly after leaving Lebow Clothes, Harry formed HPL and executed an agreement between HPL and Oakloom, calling for HPL to design men's resort apparel to be manufactured by Oakloom.
Plaintiffs contend that, in light of various contracts described below, including agreements pursuant to which the stock of Lebow Brothers was sold to After Six, Inc. ("After Six"), and the assets of Lebow Brothers were thereafter sold by After Six to AZC, Harry Lebow may not use the name "Harry Lebow" on his designs for Oakloom.
Lebow Brothers was formed by Benjamin Lebow, Harry's grandfather. The company manufactured and sold fine men's clothing to retailers, using the "Lebow" name as well as the federally registered trademarks "Lebow Clothes," "Lebow Collection," and the stylized "LB" logo. After the death of Benjamin Lebow, all of the common stock of Lebow Brothers was owned by (1) Victor D. Lebow, Sr. ("Victor Sr." (Harry's father)), and Meyer Lebow, individually, and (2) Victor Sr., Joseph A. Waldman, and Meyer Kushnick as trustees of a trust established by Benjamin Lebow's 1957 will, from which Victor Sr. was to receive income during his lifetime and in which Harry was to receive a 50% interest upon Victor Sr.'s death if Harry survived him.
In an agreement dated June 30, 1969 ("1969 Agreement"), Victor Sr., Waldman, and Kushnick (the "Sellers") agreed to sell all of their common stock in Lebow Brothers to After Six. The agreement recited that After Six was simultaneously entering into agreements whereby it would also acquire all of the Lebow Brothers common stock owned by Meyer Lebow and all of the Lebow Brothers preferred stock from its various owners. In the 1969 Agreement, the Sellers warranted that Lebow Brothers had title to, inter alia, the trade name "Lebow Clothes" and all trademarks and trade names necessary to conduct the business of Lebow Brothers and its subsidiary. In p 3(g) of the 1969 Agreement, the Sellers agreed not to use, in connection with the men's clothing business, the trade name "Lebow" or "any variant thereof":
Use of Name "Lebow". In order further to secure to After Six the benefits of the trade name "Lebow", Sellers hereby agree not to use the said name or any variant thereof in any business transaction (other than those of After Six or its subsidiary or affiliated companies) in which they or any of them directly or indirectly have an interest as owner, employee or otherwise in connection with the men's clothing business. Except for the license agreements referred to in Exhibit C, neither Sellers nor Lebow [Brothers] nor L.B. [International, Inc., a Lebow Brothers subsidiary] have licensed or granted to any person or entity the right to use the name Lebow, and Sellers know of no person or entity who claims the right to the use of the name "Lebow" in the men's clothing industry.
At the time the 1969 Agreement was signed, Harry was a vice president of Lebow Brothers. His duties consisted principally of calling on accounts in the southwest region of the country, selling to retailers in the New York showroom, and assisting in selecting piece goods, which are the fabrics used in the garments. He did not design piece goods or apparel at that time, and Lebow Brothers had never used the names "Harry Lebow" or "H. Poe Lebow" in connection with its garments.
The 1969 Agreement required that Lebow Brothers enter into employment contracts with Harry, his father, and his brother ("Victor Jr."). Harry accordingly entered into a five-year contract with Lebow Brothers upon its sale to After Six, which provided that Harry would be vice president of Lebow Brothers, to perform such duties as "heretofore have been performed by him." In that employment contract, Harry agreed not to compete with After Six in the sale of men's clothing for a period ending not less than three years after the December 31, 1974 termination date of the contract. Harry entered into three subsequent employment contracts with After Six, effective July 1, 1974, January 1, 1978, and July 1, 1980. Each of these three agreements called for Harry to receive, inter alia, a salary plus a bonus calculated with reference to Lebow Brothers' pre-tax earnings; none contained a covenant not to compete. None of the four employment contracts contained any provision restricting Harry's right to use his own name in the men's clothing business.
Shortly after the sale of Lebow Brothers, Harry was substituted as a trustee under his grandfather's will. On February 25, 1971, as one of the trustees, he executed an agreement ("1971 Agreement") that set forth terms for the payment of part of the purchase price of the stock of Lebow Brothers by After Six. The first "WHEREAS" clause of the 1971 Agreement stated, inter alia, that "the parties hereto are a party to [the 1969 Agreement]...."
In 1971, upon the death of his father, Harry assumed additional sales responsibilities and became the piece goods buyer for Lebow Brothers. He became president of the company in 1972. Approximately four years later, he began designing piece goods.
For some time after Harry began to design piece goods, which is the principal function of a menswear designer, he was not identified to the public as a designer of Lebow Brothers clothes. Then, in the fall of 1978, Bernard Toll, a vice president of After Six, suggested to Samuel Rudofker, the company's President and Chairman, that "perhaps we talk to Harry Lebow and see if Harry Lebow could not be persuaded to lend us his name." Toll testified that Harry's response to the proposition was that his agreement would be contingent on his having "complete control" and freedom to withdraw the use of his name at any time. Toll testified that he assented to these conditions, recognizing that the company was not offering to pay Harry license fees, and thereupon After Six entered into an oral licensing agreement to use Harry's name.
The licensing agreement between Harry and After Six was not put into writing, and apparently was the only licensing agreement entered into by After Six that was not in writing. Rudofker testified that Toll had authority to discuss, but not to enter into, such agreements.
Nonetheless, in 1979, garments that Harry designed were affixed with the label "A Harry Lebow Design" and sometimes with a label identifying Harry as having designed the garment for a particular retailer. Lebow Brothers launched an advertising and promotion campaign featuring the "Harry Lebow" name. The campaign included print advertising and personal appearances by Harry. After Six paid for these advertising and promotional materials as it did for similar materials used to promote clothing designed by its other licensors. Toll estimated that from 1979 through 1981, After Six spent approximately $100,000 advertising the Harry Lebow name in the print media, excluding cooperative advertising. In contrast, the company had spent approximately that amount for the entire preceding decade's advertising.
By agreement dated June 30, 1981, ("1981 Agreement"), AZC purchased certain assets and rights owned by Lebow...
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