Flag Fables, Inc. v. Jean Ann's Country Flags & Crafts, Inc., Civ. A. No. 89-30109-F.

• Decision Date: 17 December 1990
• Docket Number: Civ. A. No. 89-30109-F.
• Parties: FLAG FABLES, INC., Plaintiff, v. JEAN ANN'S COUNTRY FLAGS AND CRAFTS, INC., Jean Ann Fede and Michael Fede, Defendants.
• Court: U.S. District Court — District of Massachusetts

753 F. Supp. 1007

FLAG FABLES, INC., Plaintiff, v. JEAN ANN'S COUNTRY FLAGS AND CRAFTS, INC., Jean Ann Fede and Michael Fede, Defendants.

Civ. A. No. 89-30109-F.

United States District Court, D. Massachusetts.

December 17, 1990.

COPYRIGHT MATERIAL OMITTED

Donald S. Holland, Malcolm J. Chisholm, Jr., Longmeadow, Mass., for plaintiff.

William S. Strong, Kotin, Crabtree and Strong, Boston, Mass., for defendants.

MEMORANDUM AND ORDER

FREEDMAN, Chief Judge.

I. INTRODUCTION

In this case, plaintiff Flag Fables, Inc. sued defendants Jean Ann's Country Flags and Crafts Inc., Jean Ann Fede and Michael Fede for copyright infringement, in violation of the Copyright Act, 17 U.S.C. §§ 101 et seq. Defendants counterclaimed for malicious interference with business relations. Defendants prevailed on all counts at trial, and the parties have filed various post-trial motions.

Four motions, two by plaintiff and two by defendants, are now before the Court. First, plaintiff Flag Fables has filed a motion for judgment notwithstanding the verdict and for a new trial. In this motion, plaintiff seeks a new trial on the copyright claims. Plaintiff also seeks judgment notwithstanding the jury's verdict on defendants' counterclaim for malicious interference with business relations or, in the alternative, a new trial on the counterclaim. Second, plaintiff moves for an order compelling discovery. With this motion, plaintiff hopes to gain access to documents which defendants allegedly withheld from plaintiff during discovery.

Third, defendants have filed a motion for costs, attorney's fees, and sanctions against plaintiff. Fourth, defendants have moved to recover against plaintiff's bond. Defendants argue that the preliminary injunction issued by the Court pursuant to plaintiff's request caused defendants to suffer economic injury, and that defendants should be recompensed out of plaintiff's bond.

The Court will consider each motion seriatim.

II. PROCEEDINGS BELOW

On June 19, 1989, the Court granted plaintiff's request for a preliminary injunction. The Court thereby enjoined defendants from selling eight decorative flags at an upcoming crafts show or in any other commercial setting. Flag Fables, Inc. v. Jean Ann's Country Flags and Crafts, Inc., et al., 730 F.Supp. 1165 (D.Mass.1989). Pursuant to defendants' motion, the Court in December 1989 required plaintiff to post a bond to protect defendants against the loss of profit and goodwill in the event that they should succeed in the litigation. Plaintiff posted bond in the amount of $20,000 shortly thereafter, and the preliminary injunction remained in force.

On August 24, 1990, after seven days of trial and more than six hours of deliberation, a jury of six returned a verdict in favor of defendants on all of plaintiff's claims. In addition, the jury found plaintiff liable to defendants for malicious interference with business relations, awarding as damages $75,600. The Court immediately dissolved the outstanding preliminary injunction, and soon thereafter entered judgment in defendants' favor and in accordance with the jury's verdict.

Subsequent to the entry of judgment, the parties filed the instant motions, along with memoranda. The Court, having fully considered the four motions and the abundant affidavits, exhibits, and memoranda, denies all of the motions.

III. DISCUSSION

A. Plaintiff's Motion for Judgment Notwithstanding the Verdict and New Trial

Plaintiff seeks judgment notwithstanding the verdict on defendants' counterclaim or, in the alternative, a new trial on the counterclaim. See Fed.R.Civ.P. 50. Plaintiff also requests, pursuant to Federal Rule of Civil Procedure 59, a new trial on the copyright claims. Id. The Court will first address plaintiff's arguments for judgment notwithstanding the verdict and then proceed to the new trial arguments.

1. Judgment Notwithstanding the Verdict on the Counterclaim

"When the evidence is such that without weighing the credibility of the witnesses there can be but one reasonable conclusion as to the verdict, the court should determine the proceeding by non-suit, directed verdict ... or by judgment notwithstanding the verdict." Brady v. Southern Railway Co., 320 U.S. 476, 479-80, 64 S.Ct. 232, 234-35, 88 L.Ed. 239 (1943). A party's motion for judgment notwithstanding the verdict must be granted if, viewing the evidence and reasonable inferences in a light most favorable to the non-moving party, reasonable men would nonetheless find in the movant's favor. Jordan v. United States Lines, Inc., 738 F.2d 48, 49 (1st Cir.1984) (citations omitted); accord de-Mars v. Equitable Life Assurance Society, 610 F.2d 55, 57 (1st Cir.1979). This Court will not grant a judgment notwithstanding the verdict unless the jury's verdict is untenable under any reasonable assessment of the evidence adduced at trial.

Plaintiff argues that the Court must set aside defendants' verdict on the counterclaim of malicious interference with business relations. Under Massachusetts law, in order to prove a claim of malicious interference, defendants must prove by a preponderance of the evidence that plaintiff committed intentional and willful acts; that these acts were designed to damage defendants' business; that the acts were done maliciously; and that the acts caused defendants to sustain actual damages. Chemawa Country Golf, Inc. v. Wnuk, 9 Mass.App.Ct. 506, 509, 402 N.E.2d 1069, 1072 (1980); see also Kazmaier v. Wooten, 761 F.2d 46, 51-52 (1st Cir.1985).¹

In essence, plaintiff proffers four arguments as to why the Court should grant judgment in plaintiff's favor on the counterclaim. The Court will address each in turn. First, plaintiff contends that defendants never established proximate cause as required by law. See Chemawa Country Golf, supra. Plaintiff's Memorandum Supporting Its Motions for Judgment Notwithstanding the Verdict and for New Trial at 18 (September 11, 1990) ("Plaintiff's JNOV Memorandum"). Plaintiff concedes that it sent malevolent letters to past Flag Fables customers and other persons in the country crafts business. However, plaintiff argues that defendants offered no evidence linking plaintiff's conduct to defendants' damages.

The Court disagrees. Defendants offered evidence that plaintiff attacked the quality of defendants' product in a letter mailed to many crafts show patrons; that plaintiff caused the complaint to be served on defendants at a crafts show, in the presence of potential customers and business associates; and that plaintiff wrote letters to various crafts shows, informing the shows of the pending lawsuit and accusing defendants of copyright infringement. This evidence, combined with evidence of lost sales and profits, provided the jury with ample evidence from which it could infer that plaintiff's conduct proximately caused defendants to suffer economic injury. The jury may and often must make reasonable inferences based on the evidence offered by the parties. Given the evidence summarized above, the Court will not now hold that the jury's determination as to causation goes against the clear weight of the evidence.

Second, plaintiff argues that any damages sustained by defendants resulted from the Court's preliminary injunction, not from any conduct by plaintiff. However, a brief inspection of the chronology of the events and the evidence itself exposes this argument as meritless. Plaintiff served its complaint on defendants prior to the issuance of the injunction, and in the presence of customers and business associates at a crafts show. Likewise, plaintiff sent letters alleging copyright infringement by defendants before the Court issued the preliminary injunction. Furthermore, the jury could reasonably have found that some of plaintiff's activities independently caused defendants to suffer injury, regardless of whether or when the Court took any equitable action.

Third, plaintiff argues that defendants' evidence did not establish malice, as required by law, and that defendants' counterclaim for malicious interference must therefore fail. Massachusetts courts have determined that an act is done with malice when "done with the unlawful purpose to cause ... damage and loss, without right or justifiable cause...." Chemawa Country Golf, 9 Mass.App.Ct. at 509, 402 N.E.2d at 1072, quoting Walker v. Cronin, 107 Mass. 555, 562 (1871).

The jury could reasonably have found that plaintiff's activities constituted acts done with malice. Defendants offered evidence that plaintiff demanded that defendants discontinue the promotion and sale of particular flags for copyright reasons, but that plaintiff constantly changed the identity of the alleged infringing flags. Testimony also indicated that Wendy Diamond² harbored spiteful feelings toward defendants and that she acted on these feelings in various ways: by sending the cease and desist letter; by mailing the customer letters; by serving process at the crafts show; and through other conduct. This evidence supports a finding of malice.³

Fourth, plaintiff contends that the conduct in question was merely lawful conduct taken by plaintiff to enforce the injunction. The Court rejects this argument. As previously detailed, some of plaintiff's tortious conduct actually took place before the Court issued the injunction. Other conduct, like frequently changing the list of allegedly infringing flags and attacking the quality of defendants' flags in customer correspondence, indicates that plaintiff went beyond mere enforcement of the injunction.

2. New Trial on the Counterclaim and the Copyrights Claims

Having found judgment notwithstanding the verdict inappropriate, the Court must now consider whether plaintiff is entitled to a new trial on the counterclaim or on the copyright claims. The Court may set aside a verdict and grant a new trial "when the verdict is against the clear weight of the evidence, or is based upon evidence which is false, or will result in a clear...