Coca-Cola Co. v. Dixi-Cola Laboratories

• Decision Date: 04 October 1944
• Citation: 57 F. Supp. 911
• Parties: COCA-COLA CO. v. DIXI-COLA LABORATORIES, Inc., et al.
• Court: U.S. District Court — District of Maryland

57 F. Supp. 911

COCA-COLA CO. v. DIXI-COLA LABORATORIES, Inc., et al.

Civ. 198.

District Court, D. Maryland.

October 4, 1944.

Brown & Brune, Hilary W. Gans and Charles Ruzicka, all of Baltimore, Md., Spalding, Sibley, Troutman & Brock, of Atlanta, Ga., and Nims & Verdi, of New York City, for plaintiff.

J. S. Mead, of Birmingham Ala., and W. Hamilton Whiteford, of Baltimore, Md., for defendant.

COLEMAN, District Judge.

This case is before the Court on exceptions which have been filed by both the plaintiff and the various defendants to the Special Master's report.

The questions involved in the reference to the Special Master requiring determination by him, and upon which he has now ruled in a very comprehensive report, marked by its clarity and care in preparation, consisting of sixty-seven pages, may be consolidated and briefly summarized as follows:

I. What profits, if any, is plaintiff entitled to recover from defendants by reason of sale of defendants' various products either directly to the retailer, including fountain dispensers, taverns and bars, or through distributors or bottlers, in substitution of plaintiff's product at defendants' own instance, or without defendants having first obtained reasonable assurance that their products would not be so used?

II. What counsel fee, if any, should plaintiff be allowed as an item of compensatory damages?

III. What exemplary or punitive damages, if any, should plaintiff be awarded?

I. Taking up these questions in the order in which they are above stated, we conclude that the Special Master's finding that the plaintiff is entitled to profits earned by the defendants during the years specified in his report on sales of Marbert Cola, Lola Kola, Apola Cola, and from use of the name "Kola", but not other profits, is correct. This Court, as a result of the trial of the case on the merits—see 31 F.Supp. 835—found that, in numerous respects, which need not be recited here, the defendants had resorted to unfair competition with respect to plaintiff's product and the Court of Appeals affirmed this finding. See 117 F.2d 352. Accordingly, it became the duty of the Special Master to determine the precise character and extent of such competition. We concur in the Special Master's findings in these respects; and also in his findings with respect to what items of cost are properly deductible in determining defendants' profits derived from their wrongdoing.

As to the total amount, however, of profits to which plaintiff is entitled, we believe, as plaintiff contends, that the Special Master is in error due to the method of computation which he has followed. That is to say, plaintiff contends that it is entitled to recover profits with respect to each product for the profitable years without deducting from such profits the losses incurred in unprofitable years; in other words, that since the defendants kept their books on a calendar year basis, as respects each product, each year should be treated separately and only the losses during a particular year should be offset against profits of that year.

The Special Master, however, while admitting the soundness of this contention as a general rule, held that while the particular business done with respect to each of the different products should be treated as separate and distinct from that of the others, the sales of each product in the various years could not properly be considered as independent transactions and, therefore, he treated the matter of all profits and losses with respect to each product throughout the various years as an entirety. He said, for example, with respect to Marbert Cola (Report, pages 17-18): "The only year in which the sales to fountain trade were unprofitable was 1937, in which year defendants began to market their product. The sales in this year were necessary preliminary steps without which the profitable sales in subsequent years could not have been effected. The defendants in 1937 were endeavoring to build up their business and put their product on the market. The subsequent profitable sales were the result of these initial efforts, and consequently the defendants should be required to account for only the net profits resulting from both the final and the preliminary sales. Restatement of the Law of Torts, Sec. 747, Comment (d)."

Plaintiff's position appears to be supported by the weight of authority, and we do not feel that the reason given by the Special Master is sufficient to justify departure from the usual method of computing the profits in cases of this kind. See Starr Piano Co. v. Auto Pneumatic Action Co., 7 Cir., 12 F.2d 586; National Carbon Co. v. Richards & Co., 2 Cir., 85 F.2d 490. See also Duplate Corp. v. Triplex Co., 298 U.S. 448, 453, 56 S.Ct. 792, 80 L.Ed. 1274. The section in the Restatement of the Law of Torts upon which the Special Master relies, and related sections, should not be construed, we believe, as contrary to the well established rule.

It follows from the aforegoing that instead of an allowance to the plaintiff which the Special Master recommends of all profits from sales in the amount of $2,302.03, the plaintiff should be allowed the profits separately for each year where found to have existed, which appear from the Special Master's report, pages 17 and 21, to have been as follows:

                        Fountain Trade         Distributors
                1938       $1239.85
                1939        1703.16
                1940         131.70                 4.21
                       ____________________________________
                           $3074.71                 4.21
                            Lola Kola        Apola Cola
                1938                             $159.73
                1939                              301.99
                1940           4.74               148.83
                1941                               13.94
                      _____________________________________
                              $4.74               624.49
                

Thus, the total amount of profits from the above named sources allowable to plaintiff is $3,708.15 instead of $2,302.03, as fixed by the Special Master.

In addition to the profits just referred to, the Special Master made an allowance to the plaintiff for profits in the amount of $250 from the use of the name "Kola", and as the result of sales to seven bottling companies, in the amount of $617.92. However, as appears from the Special Master's Report, the correctness of the amount of the first of these items is not contested, and as respects the second item, the profits which it represents were computed only on profit and loss figures for 1943, complete data with respect to other years being unavailable. Accordingly, there would appear to be no reason to change these items.

II. With respect to the second question, namely, whether plaintiff is entitled to allowance of a counsel fee, we agree with the Special Master that there is no provision in the Federal statutes that either expressly or by implication warrants such allowance; also, that while this Court, in certain equity proceedings of this kind, has the power to allow a counsel fee, such should be exercised only in exceptional cases and for dominating reasons of justice, which, we believe, are nonexistent here. We further agree with the Special Master's conclusion that in Maryland the general rule is that costs and expenses of litigation, other than actual court costs, are not recoverable in an action for damages.

However, plaintiff and also the Special Master take the position that since the Federal trade mark statutes, upon which plaintiff relies in part, are silent on the subject of counsel fees, and since plaintiff's suit is also grounded in part on the law of unfair competition as it exists in Maryland, plaintiff may invoke any applicable Maryland statutory provision allowing counsel fees. Hence, plaintiff has invoked Section 57 of Article 27 of the Code of Maryland, Edition of 1939, which is as follows: "Every such person, association or union...