FRA S. p. A. v. Surg-O-Flex of America, Inc.

• Decision Date: 17 May 1976
• Docket Number: No. 75 Civ. 3363 (CHT).,75 Civ. 3363 (CHT).
• Citation: 415 F. Supp. 421
• Parties: FRA S. p. A. et al., Plaintiffs, v. SURG-O-FLEX OF AMERICA, INC. and Joseph Ventura, Defendants.
• Court: U.S. District Court — Southern District of New York

415 F. Supp. 421

FRA S. p. A. et al., Plaintiffs, v. SURG-O-FLEX OF AMERICA, INC. and Joseph Ventura, Defendants.

No. 75 Civ. 3363 (CHT).

United States District Court, S. D. New York.

May 17, 1976.

COPYRIGHT MATERIAL OMITTED

Pavia & Harcourt, New York City, for plaintiffs; Frances B. Bernstein, New York City, of counsel.

Dahan & Appel, New York City, for defendants; Paul H. Appel, New York City, of counsel.

TENNEY, District Judge.

Defendants have moved this Court pursuant to Rule 12 of the Federal Rules of Civil Procedure for an order dismissing substantial portions of the plaintiffs' complaint; an order striking certain counts of the complaint; an order for a more definite statement as to the counts not dismissed or stricken; an order pursuant to Rule 2 and Rule 15 of the Civil Rules of the Southern District of New York directing plaintiff FRA S.p.A. to file a security bond; and for costs of this motion. For the reasons set forth below, defendants' motion is denied in all respects with prejudice to future renewal.

After institution of this action, based on common law and statutory claims of trademark violations and unfair competition,¹ plaintiffs sought a preliminary injunction pursuant to Fed.R.Civ.P. 65, which in turn prompted defendants to cross-move under Rule 12(b) for dismissal of plaintiffs' motion. This Court issued an opinion on August 15, 1975, granting the relief requested by plaintiffs and denying defendants' motion. The facts underlying the dispute were summarized in that opinion as follows:

"Plaintiff, FRA S.p.A. ("FRA"), is the Italian manufacturer of an elasticized, net bandage sold in this country. FRA Surgifix, Inc. is its exclusive United States distributor and a wholly-owned subsidiary of FRA. Plaintiff William Gruen is the Vice President of FRA Surgifix, Inc. Defendant SURG-O-FLEX of America, Inc. ("SURG-O-FLEX") is the former United States distributor of Surgifix products and now sells a similar elasticized, net bandage under the trademark SURG-O-FLEX. Defendant Joseph Ventura is the President of SURG-O-FLEX of America, Inc.

"Defendant SURG-O-FLEX, through a predecessor corporation, became the sole United States distributor of the products of FRA in 1970. The relation, however, proved to be a strain, and in late 1972, the parties severed their ties and memorialized the parting with a written settlement agreement. . . . That agreement contained a provision requiring plaintiffs to supply defendants with plaintiffs' product for 120 days after the date of the settlement agreement (¶ 1). . . .

"The problem herein arose when plaintiffs allegedly found samples of its product in many areas of the country with defendants' trademark literally pasted on the box, thereby obscuring plaintiffs' product name. Since the names are similar—Surgifix and SURG-O-FLEX— plaintiffs allege that the public has been and will be misled and that the confusion in the marketplace has caused and will continue to cause damage to plaintiffs' reputation." 415 F.Supp. 418, at 419-420, No. 75 Civ. 3363 (S.D.N.Y.1975) (unreported opinion).

Accordingly, an order of preliminary injunction was entered on October 6, 1975 restraining defendants from placing SURG-O-FLEX labels on the plaintiffs' packages and requiring the recall of all such falsely labelled packages then on the market or, in the alternative, removal of the misleading labels. Defendants' next step was to proceed by order to show cause to restrain plaintiffs from, inter alia, distributing and commenting upon the injunction order in the course of their business dealings. After a hearing in November on this application, the Court denied the motion in all respects. In addition to their cross-motion, defendants further pursued their litigative assault in September with the submission of the instant motion raising a multitude of objections to the complaint. Consideration of the arguments presented by defendants reveal many of the objections to be repetitive and frivolous, and the Court will therefore refrain from addressing each of the objections individually.

Basically, defendants' omnibus motion can be divided into three categories: (1) an application for an order under Rule 12(b)(6) dismissing the complaint as to certain parties for failure to state a claim upon which relief can be granted; (2) an attack on each count of the complaint individually on various grounds by way of an order pursuant to Rule 12(f) to strike certain counts as redundant and/or immaterial, and an order pursuant to Rule 12(e) for a more definite statement as to each count not dismissed under 12(b)(6) or 12(f); and (3) a demand for a security bond.

It is well-settled that for purposes of a Rule 12 motion, the well-pleaded allegations of the complaint are taken as true. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 174-75, 86 S.Ct. 347, 348, 15 L.Ed.2d 247, 249 and n. 4 (1965); see also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90, 96 (1974); 2A Moore's Federal Practice ¶ 12.08. Construing the allegations favorably toward the pleader, a complaint will not be dismissed unless no interpretation of the facts would entitle plaintiff to relief. See 5 Wright & Miller, Federal Practice & Procedure § 1356. The established standard for judging the sufficiency of a complaint is as follows:

"In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

Conley v. Gibson, 355 U.S. 41, 45-6, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84 (1957). See also Clay v. Martin, 509 F.2d 109, 112 (2d Cir. 1975); Byram River v. Village of Port Chester, New York, 394 F.Supp. 618, 628-29 (S.D.N.Y.1975); Owens v. Housing Authority of City of Stamford, 394 F.Supp. 1267, 1270 (D.Conn.1975).

The purpose of a Rule 12(b) motion is to expedite a hearing on the merits of an action, not to outfit a party with tactical armaments for delay and harassment of his adversary. Rule 1 states that the federal rules "shall be construed to secure the just, speedy, and inexpensive determination of every action." Rule 8(f) continues to instruct that "all pleadings shall be so construed as to do substantial justice." The principle of liberal construction of pleadings embodies the Federal Rules' fundamental design to preserve the substance of an action from failing because of irregularities and peccadilloes in form. 2A Moore's Federal Practice ¶ 12.08 at 2274; ¶ 8.34. See A. T. Brod & Co. v. Perlow, 375 F.2d 393, 398 (2d Cir. 1967). The Supreme Court has reiterated this principle:

"The Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits."

Conley v. Gibson, supra, 355 U.S. at 48, 78 S.Ct. at 103, 2 L.Ed.2d at 86, citing Maty v. Grasselli Chemical Co., 303 U.S. 197, 58 S.Ct. 507, 82 L.Ed. 745 (1938).

The gravamen of the complaint, with the exception of Counts VI and VIII, is trademark infringement and unfair competition. Count VIII sounds in breach of contract and Count VI charges the inducement of a breach of contract, a prima facie tort. In various and sundry objections to each of the counts, defendants contend that the "Settlement Agreement" constitutes a contractual release thereby barring the instant action. Construction of this document is an issue more appropriately raised as an affirmative defense in a pleading under Fed.R.Civ.P. 8(c), or in a motion for summary judgment under Rule 56, accompanied by the necessary documentary submissions.² Rather than proceeding in either such manner, defendants instead chose to bring a Rule 12(b)(6) motion, ostensibly relying upon plaintiffs to incorporate the Settlement Agreement in their pleadings. (Defs. Reply Memo. at 10).

Defendants' circumlocutionary challenge to the capacity and standing of plaintiffs FRA Surgifix, Inc. and William Gruen, by seeking to dismiss the complaint as to those parties, also involve matters which should be specifically pleaded as affirmative defenses in the answer to the complaint. Although defendants place great reliance upon the purported release of the Settlement Agreement, they did not choose to convert their motion into one under Rule 56, a tactical decision, very likely made with a view towards prolonging dilatory motion practice.³

The sophistry of the objections, primarily concerning the Settlement Agreement, becomes apparent when viewed in light of this Court's earlier observations and comment on that agreement. (See unreported opinion of this Court, 415 F.Supp. 418, at 421, No. 75 Civ. 3363, dated August 15, 1975). Despite defendants' peremptory depiction of that contract, this Court is unconvinced that it disposes of certain of plaintiffs' claims. Defendants have not been able to satisfy the strict test for a Rule 12(b)(6) motion under Scheuer v. Rhodes, supra, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90; Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., supra, 382 U.S. 172, 86 S.Ct. 347, 17 L.Ed.2d 247; and Conley v. Gibson, supra, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80.

Defendants' challenge under 12(b)(6) to the standing of certain plaintiffs in this action is likewise belied, at least for purposes of this motion, by colorable authority to the contrary. Use of the broad phrase "any person" in 15 U.S.C. § 1125(a) denotes a legislative design not to limit the right of action to trademark owners. Cases have held that a nonowner of a trademark may maintain an action under the Lanham Act. See Norman M. Morris Corp. v. Weinstein, 466 F.2d 137 (5th Cir. 1972) (exclusive distributor may bring suit); Potato Chip Institute v. General Mills, Inc., 333 F.Supp. 173, 179 (D.Neb.1971)...