American Optical Company v. Rayex Corporation

• Decision Date: 26 April 1967
• Docket Number: No. 66 Civ. 1633.,66 Civ. 1633.
• Citation: 291 F. Supp. 502
• Parties: AMERICAN OPTICAL COMPANY, C'Bon, Inc., and Cool-Ray, Inc., Plaintiffs, v. RAYEX CORPORATION and Monaco Optical Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

291 F. Supp. 502

AMERICAN OPTICAL COMPANY, C'Bon, Inc., and Cool-Ray, Inc., Plaintiffs, v. RAYEX CORPORATION and Monaco Optical Corporation, Defendants.

No. 66 Civ. 1633.

United States District Court S. D. New York.

April 26, 1967.

Amster & Rothstein, New York City, for plaintiffs; Morton Amster, James Reisman, New York City, J. Albert Hultquist, Southbridge, Mass., of counsel.

John Vaughan Groner, New York City (Gilbert Ehrenkranz, Orange, N.J., Jules

P. Kirsch, New York City, on the brief), for defendants.

TENNEY, District Judge.

On July 1, 1966, after a hearing had been held on plaintiffs' motion for a preliminary injunction, this Court ordered that the defendants be restrained and enjoined pending determination of the within action from continuing further activity and further ordered defendants to take certain affirmative steps, both of which directives will be more fully described hereinafter. See prior opinion in American Optical Co. v. Rayex Corp., 266 F.Supp. 342, S.D.N.Y., June 28, 1966. Plaintiffs move to cite defendants for contempt for failure to comply with the aforementioned order, in response to which the defendants have cross-moved for vacation of the order.

This litigation involves the alleged use by defendants, in their ski-sunglass catalog, of a photograph of plaintiffs' higher quality sunglass in connection with sales of defendants' inferior quality glass.

Plaintiff American Optical Company (hereinafter referred to as "AO") is a leading manufacturer and seller of sunglasses and lenses. Plaintiff C'Bon, Inc. (hereinafter referred to as "C'Bon") is a wholly-owned subsidiary which was created in 1965 for the purpose of creating, promoting and selling a quality line of high-style sunglasses. Defendants Rayex Corporation (hereinafter referred to as "Rayex") and Monaco Optical Corporation (hereinafter referred to as "Monaco") are also in the sunglass field. The sunglass catalog in issue herein is primarily directed toward the ski enthusiast.¹

In defendant Rayex' "Astro-Ski" catalog circulated during 1965-1966, a photograph of sunglasses appeared designated as Alpine style No. 1011. Plaintiffs contend that this picture of Alpine style No. 1011 is in fact a photograph of plaintiff C'Bon's "Camelot" style glass. Indeed, this Court, in its prior order, found that sufficient evidence had been submitted preliminarily to justify a finding that the catalog photograph was of the Camelot.

An order was entered on July 1, 1966, enjoining and restraining defendants inter alia from using a photograph of the Camelot to sell defendants' Alpine model; using such a photograph in defendants' catalogs and advertisements; circulating a catalog or advertisement which contained such photograph; and selling said Alpine model pursuant to orders received but not filled as of June 28, 1966 or pursuant to orders received after June 28, 1966 but prior to circulation of defendants' new catalog.

Additionally, defendants were ordered to withdraw their "Astro-Ski" ski-glass catalog "By mailing to all persons * * known or believed to possess a copy of same, a letter in the form annexed as Exhibit A to this Order"; destroying all copies of said catalog in defendants' custody or control; and changing the designation of the 1011 Alpine. Defendants neither sought reargument nor appealed this decision.

Plaintiffs' Motion to Punish for Contempt.

The basic argument presented by plaintiffs is that, although thousands of catalogs had been printed, only eleven so-called Exhibit A letters were circulated (if that many) and that these letters varied from the format of the letter designated by the Court as the letter to be used. Defendants contend that plaintiffs have failed to sustain their burden of proof that the injunction order was not complied with, and that the variation present in the letter allegedly sent was necessary as a matter of sound business judgment.

While it is fundamental law that a party seeking to punish his adversary for civil contempt must satisfy his burden of proof by clear and convincing evidence, Hart Schaffner & Marx v. Alexander's Dep't Stores, Inc., 341 F.2d 101, 102-03 (2d Cir. 1965) (per curiam); Stringfellow v. Haines, 309 F.2d 910, 912 (2d Cir. 1962), this Court is of the opinion, contrary to defendants' contention, that plaintiffs have more than amply sustained this burden, and that defendants' conduct has been in blatant disregard of the aforesaid preliminary injunction. The consistent manner in which defendants' "evidence" has disappeared,^1a the convenient appearance at this time of material evidence nowhere accounted for at the time of the prior hearing, the haphazard manner in which defendants have kept their business records, the inconsistencies in statements made by defendants' employees on oral deposition and the superficial manner in which defendants have attempted to explain away these inconsistencies lead the Court to believe that, both for the purposes of this motion and for defendants' cross-motion, the evidence and testimony submitted by defendants is untrustworthy.

Raymond Tunkel, president of defendants Rayex and Monaco, stated in his deposition dated August 15-16, 1966 that in full compliance with the abovementioned order eleven Exhibit A letters were sent to wholesale distributors. In his affidavit submitted in conjunction with last June's application for an injunction, Tunkel stated that "The printer delivered to RAYEX a single edition of several thousand copies of the ASTRO-SKI catalog in color, in mid-July, 1965." Tunkel Affidavit of June 13, 1966, at ¶ 14. (Emphasis added.) This "several thousand" turned out to be 15,250 copies, 9,000 of which were delivered to Rayex, New York, with the remaining catalogs being sent to Rayex, Canada, to Mail Pouch Tobacco Company, a distributor in the tobacco field, and Beconta, Inc., who was to be Rayex' exclusive distributor in the ski industry.

When Tunkel allegedly wrote to the eleven wholesale distributors, he did not request that these distributors ask their customers to withdraw the catalogs sent to them nor did he seek customer lists from his distributors because they would have become "indignant" as a result of such a request and would have threatened to stop doing business with Rayex, Although I do not think the injunction order would have required that Rayex attempt to obtain customer lists from its wholesale distributors and thereby endanger customer relations, a proper compliance with the "spirit" of the injunction would have obliged defendants at least to attempt to have their wholesalers pass on the message to their respective customers. This was not done. See Hollander v. Hollander, 318 F.2d 818 (2d Cir.) (per curiam), cert. denied, 375 U.S. 831, 84 S.Ct. 78, 11 L.Ed.2d 63 (1963); Cassidy v. Puett Elec. Starting Gate Corp., 182 F.2d 604, 606 (4th Cir. 1950). In this case it would be more than simply complying with the "spirit" of the order since defendants were to notify all persons "known or believed to possess a copy of" the offending catalog.

Moreover, in paragraph 15 of the Tunkel affidavit of June 13, 1966, it was stated that "This edition the Astro-Ski catalog in issue was promptly sent out by mail to wholesale distributors of our regular glasses, as well as to an exclusive ski distributor Beconta." (Emphasis added.) In his deposition, Mr. Tunkel drastically limits this statement: "Immediately after receipt from the printer, they were circulated to those few people who I thought would be proper for this catalog." Tunkel Deposition of November 14-15, 1966, at 817. (Emphasis added.) The first Tunkel statement creates an impression that all or quite a few of the regular customers of Rayex had received such a catalog while the second statement negates any such connotation. The reason for the inconsistency is obvious: At the time the Tunkel affidavit was prepared, there was no necessity of showing any limitation in the possible number of distributed catalogs but at the time of the Tunkel deposition such a need had arisen, for if the catalog had been sent to Rayex' regular customers why was a letter not sent to each of these customers directing the withdrawal of such catalog? Again, in the earlier Tunkel affidavit it is stated that certain changes were made in the 1011 Alpine but these changes were not reflected in the catalog picture because the catalog "had then already been widely distributed." Tunkel Affidavit of June 13, 1966, at ¶ 19. Obviously, this does not jibe with Tunkel's limited distribution statement made on oral deposition in November of 1966 which has been set forth supra. I therefore conclude that Tunkel's later statement in his deposition, made at a time when he had a reason to falsify, is not worthy of belief.²

Accepting Tunkel's earlier statement that the catalog was sent to wholesale distributors of Rayex' regular sunglasses, it appears that Rayex reached between three and five thousand names on its Addressograph mailing list (Tunkel Deposition of November 14-15, 1966, at 866-67) rather than the approximately eleven names it claims were reached. Accordingly, it is my opinion that a minimum of three thousand letters should have been sent.

However, the word "minimum" must be stressed because further evidence leads me to believe that additional persons should have been contacted. Gordon Hallerman, the assistant sales manager of Rayex, stated on oral deposition that he had been on a number of selling trips during the months of September to December, 1965. During that period of time, he worked with Rayex sales representatives and called upon between 200-300 accounts. For those glasses that were not as yet available, sales were made by reference to the Astro-Ski catalog. Hallerman stated that at this time he and the sales representatives had the Astro-Ski catalog and that this was shown to prospective customers. Hallerman Deposition of November 8-9, 1966, at 403-04. Defendants contend that the...