Finance Inv. Co. (Bermuda) Ltd. v. Geberit AG

• Decision Date: 23 December 1998
• Docket Number: Nos. 95-2871,97-2685,97-2603,s. 95-2871
• Citation: 165 F.3d 526,1998 WL 890372
• Parties: FINANCE INVESTMENT CO. (BERMUDA) LTD., et al., Plaintiffs-Appellants-Cross-Appellees, and Andrew J. Goodman and Frederick Eichhorn, Appellants-Cross-Appellees, v. GEBERIT AG, et al., Defendants-Appellees-Cross-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 526

165 F.3d 526

49 U.S.P.Q.2d 1289

FINANCE INVESTMENT CO. (BERMUDA) LTD., et al Plaintiffs-Appellants-Cross-Appellees and Andrew J. Goodman and Frederick Eichhorn, Appellants-Cross-Appellees, v. GEBERIT AG, et al., Defendants-Appellees-Cross-Appellants.

Nos. 95-2871, 97-2603, 97-2685.

United States Court of Appeals, Seventh Circuit.

Argued April 2, 1998.

Decided Dec. 23, 1998.

Andrew J. Goodman (argued), Marianne F. Murray, Rosner & Goodman, New York, NY, for Financial Inv. Co., Closomat, Inc., and Joseph Muller Corp. Zurich, in No. 95-2871.

R. Clifford Potter (argued), Freeborn & Peters, Julius Pohlenz, Potter & Thorelli, Chicago, IL, for Geberit AG, Geberit, Inc., and Faenza Editrice Iberica S.L. in Nos. 95-2871 and 97-2685.

Andrew J. Goodman (argued), Rosner & Goodman, New York, NY, for Financial Inv. Co., Closomat, Inc., and Joseph Muller Corp. Zurich, in Nos. 97-2603 and 97-2685.

R. Clifford Potter (argued), Freeborn & Peters, Chicago, IL, John J. Lorber, May, Oberfell & Lorber, South Bend, IN, for Geberit AG and Geberit Mfg., Inc. in No. 97-2603.

Marianne F. Murray, Rosner & Goodman, New York, NY, for Andrew J. Goodman and Frederick Eichhorn in No. 97-2603.

Frederick Eichhorn, Hammond, IN, pro se, in No. 97-2603.

Andrew J. Goodman, Rosner & Goodman, New York, NY, for Frederick Eichhorn and Andrew J. Goodman in No. 97-2685.

Before MANION, ROVNER, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Almost the only thing left of this case, which originally involved a dispute about trademark rights, is a peripheral fight over sanctions and attorneys' fees. The present appeals are from an order granting $100,000 in sanctions against three plaintiffs and holding the plaintiffs' lead counsel jointly liable for 25% of that amount. The plaintiff-appellants have also made a perfunctory argument that the district court should not have granted summary judgment to the defendant, but those arguments, which consume exactly eight lines of a 45-page brief, are undeveloped and therefore waived. Colburn v. Trustees of Indiana Univer., 973 F.2d 581, 593 (7th Cir.1992). The defendants have cross-appealed, seeking to have the plaintiffs' lead counsel (and his law firm) held jointly liable for the full amount of the sanctions, to have the amount of sanctions increased to $800,000, and to subject the plaintiffs' local counsel to some amount of sanctions as well. We find no abuse of discretion in the district court's decision to grant sanctions, and we therefore affirm its decision on the appeal. Because the judge did not offer any explanation for the amount he chose, however, we remand for his further consideration of that point.

I

Hans Maurer AG ("Maurer") is a Swiss company that holds the patent and trademark rights to the CLOSOMAT brand of toilet designed for "paperless" use. Maurer licensed its invention to one of the plaintiffs, the Finance & Investment Company ("FIC"). The other two plaintiffs in this lawsuit--Closomat U.S. ("Closomat") and the Joseph Muller Corporation Zurich ("JMCZ")--were authorized distributors of the CLOSOMAT toilet (not, it may be worth noting, sublicensees). Joseph Muller controlled all three of the plaintiff companies, but Muller himself is not a party to this lawsuit. For the sake of simplicity, we will refer to the plaintiffs collectively as the Muller companies. Evidently, Maurer's effort to develop and sell a "paperless" toilet was not purely quixotic. The defendant companies, Geberit Manufacturing Inc. and its parent Geberit AG (collectively, "Geberit," which is a large Swiss manufacturer of plumbing equipment), apparently hold the rights to a competing "paperless" toilet of their own. In fairness to the concept of "paperless" toilets--which some skeptics have likened to the elusive "paperless office," see David Harrison, The Observer, Oct. 5, 1997--we note the existence of a niche market for the physically disabled, see Eric Rich, State of the Art House Accommodates Age-Related Disabilities, Hartford Courant, June 21, 1998, and the fact that there is apparently a growing market outside the United States for these devices. See Harry Bruce, Ottawa Citizen, Jan. 21, 1989 (stating that the $5,000 toilets are "getting popular" in Europe).

The trouble giving rise to this lawsuit began with an article that appeared in the March 1989 issue of Sala Bano, a bathroom fixtures trade magazine distributed mostly in Europe but with a small circulation in the United States. The article pictured a Geberit toilet but repeatedly and incorrectly referred to it as a "Geberit, series 'Closomat' " device. When Muller learned of the article's misidentification of the Geberit product, he complained to the editors of Sala Bano, who apologized in a letter. Unmollified, Muller caused FIC, Closomat, and JMCZ to sue Geberit and the publishers of Sala Bano, Faenza Editrice Iberica S.L. ("Faenza"), in January 1992 in the U.S. District Court for the Southern District of Florida. The Florida complaint alleged that Geberit (with Faenza's negligent assistance) had violated various provisions of the Lanham Act. The Muller companies sought injunctive relief and damages of "no less than" $12,000,000 plus treble damages and attorneys' fees. Lead counsel Andrew Goodman signed these pleadings for the plaintiffs.

Geberit officials filed uncontested affidavits at summary judgment swearing that they had nothing to do with the Sala Bano article. In December 1992, the Florida court entered summary judgment in favor of Geberit. It found that the plaintiffs' failure to controvert the Geberit affidavits left nothing in the record suggesting that the company had committed a tort in the state of Florida, and thus it concluded that the court lacked in personam jurisdiction over Geberit. The plaintiffs filed a motion for reconsideration under Fed.R.Civ.P. 60(b); Geberit responded with a motion for sanctions and entry of judgment under Fed.R.Civ.P. 54(b). In February 1993, the court denied the plaintiffs' Rule 60(b) motion, granted Geberit's Rule 54(b) motion, and denied the motion for sanctions. The plaintiffs appealed the Rule 54(b) final judgment to the Eleventh Circuit, which affirmed per curiam without opinion. Finance & Investment Co. v. Geberit, 11 F.3d 167 (11th Cir.1993). The Florida district court did not enter a judgment on the plaintiffs' claims against Faenza.

In April 1993, a few months after the Florida court granted summary judgment, the same Muller companies filed a substantially identical complaint against Geberit in the U.S. District Court for the Northern District of Indiana. (One of the Geberit companies maintains its principal place of business in Indiana.) Again, lead counsel Goodman signed the complaint, though he was joined this time by local counsel Frederick Eichhorn. In relevant part, the complaint alleged that Geberit knowingly paid for, drafted, or otherwise assisted Faenza with the publication of the Sala Bano article in violation of the Lanham Act. In February 1994, the remnants of the Florida lawsuit were transferred on the Muller companies' motion under 28 U.S.C. § 1404(a) to the Indiana court, and the two actions were consolidated in July 1994. In February 1995, Geberit moved for summary judgment on all of the plaintiffs' claims; the district court granted that motion in July 1995 and ordered the Muller companies and their counsel to show cause why they should not be required to pay Geberit's reasonable attorneys' fees. In August 1995, the Muller companies filed a notice of appeal from the grant of summary judgment.

The notice of appeal did not stop events related to the fee petition from proceeding in the district court. The following week, Geberit filed a motion for $800,000 in attorneys' fees and expenses. Plaintiffs' counsel responded to both Geberit's motion and the district court's order to show cause. So things remained for nearly two years--though Geberit and the Muller companies continued to fire back and forth a steady stream of memoranda on the outstanding sanctions issue and various other matters. In May 1997, this court suspended the pending appeal from the July 1995 summary judgment and ordered counsel to file a report about the status of proceedings at the district court level. A week later, the district court ruled on the outstanding sanctions issue, as well as all other pending motions, and ordered the Muller companies to pay $100,000 in "monetary sanctions toward their attorney's fees" to Geberit. The order made lead attorney Goodman jointly liable for 25% of this amount; local counsel Eichhorn escaped with an admonishment. The district court also dismissed the Muller companies' left-over claim against Faenza from the Florida litigation. The court then entered the May 1997 order pursuant to Fed.R.Civ.P. 58 and 79(a). The Muller companies, Goodman, and Eichhorn filed a timely appeal challenging the grant of sanctions; Geberit cross-appealed.

II

The district court's May 1997 order granting sanctions (directed toward attorneys' fees) discussed three alternative grounds for its decision: Fed.R.Civ.P. 11, 28 U.S.C. § 1927, and 15 U.S.C. § 1117. We review a decision to grant sanctions under any of these grounds for an abuse of discretion. See Anderson v. County of Montgomery, 111 F.3d 494, 501 (7th Cir.1997) (Rule 11); Fox Valley Construction Workers' Fringe Benefit Funds v. Pride of the Fox Masonry & Expert Restorations, 140 F.3d 661, 666 (7th Cir.1998) (§ 1927); BASF Corp. v. Old World Trading Co., Inc., 41 F.3d 1081, 1092 (7th Cir.1994) (§ 1117). We review the factual findings underlying the district court's imposition of sanctions for clear error, Melendez v. Illinois Bell Tel. Co., 79 F.3d 661, 671 (7th Cir.1996), and the choice of sanction for an abuse of discretion. Id. at 670. Finally, we are not bound by the district court's specific reasoning and may affirm a grant of sanctions on any basis supported by the record and the law. In re Volpert, ...