E. & J. Gallo Winery v. Gallo Cattle Co.

Decision Date22 June 1992
Docket NumberNo. 89-16271,89-16271
PartiesE. & J. GALLO WINERY, a California corporation, Plaintiff-counter-defendant-Appellee, v. GALLO CATTLE COMPANY; Michael D. Gallo; Joseph Gallo, Defendants-counter-claimants-Appellants, v. Ernest GALLO; Julio Gallo, Counter-defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Roy G. Weatherup, Haight, Brown & Bonesteel, Santa Monica, Cal., for defendants-counter-claimants-appellants.

Patrick Lynch, O'Melveny & Meyers, Los Angeles, Cal., for plaintiffs-counter-defendants-appellees.

Appeal from the United States District Court for the Eastern District of California.

Before: TANG, FLETCHER, and REINHARDT, Circuit Judges.

FLETCHER, Circuit Judge:

Defendant/Counterclaimant Joseph E. Gallo ("Joseph") appeals. Plaintiff/Counterdefendant E. & J. Gallo Winery ("the Winery"), owned by Joseph's older brothers Ernest and Julio Gallo, initially brought a trademark infringement action against Joseph for the use of the name GALLO on retail packages of cheese. Joseph counterclaimed against the Winery and Ernest and Julio, asserting that he had inherited a one-third ownership interest in the Winery (and thus its trademarks) from their parents who died in 1933. The district court granted summary judgment in favor of Ernest and Julio on the counterclaims, granted judgment following a bench trial in favor of the Winery on the trademark claims, and permanently enjoined Joseph from using the GALLO name as a trademark on retail packages of cheese and in advertisements.

On appeal, Joseph seeks reversal of the judgments, but challenges as well the scope of the injunction. He also appeals the denial of his motion for a new trial, arguing that Judge Coyle should have disqualified himself. We AFFIRM, but modify the scope of the injunction.

FACTS

This lawsuit arises out of a tortuous family history apparently involving sibling rivalry on a grand scale. Because Joseph's counterclaims concern his parents' estates, the relevant facts date back nearly a century.

I. The Rise of the Gallo Family, the Establishment of the Winery, and Ernest and Julio's Guardianship of Joseph

The individual parties to the action, Ernest, Julio, and Joseph, are the children of Joseph Gallo ("Joseph Sr.") and Assunto ("Susie") Bianco, immigrants to Northern The Great Depression caused the grape business to suffer. Prices dropped; the 1932 season was a financial disaster for Joseph Sr. and Susie. On June 21, 1933, Joseph Sr. took Susie's life and his own.

                California from Italy in the early 1900s.   Joseph Sr. and Susie married in 1908.   Ernest was born in 1909, Julio in 1910, and Joseph in 1919.   Following their marriage until the advent of Prohibition in 1919, Joseph Sr. and Susie operated various boarding-houses and saloons, in connection with which they served and sold wine purchased from other California wine dealers.   Evidently they stenciled the family name GALLO on the ends of the wine kegs, although they did not make the wine themselves.   Throughout the 1920's, the family purchased a series of vineyards, where they grew their own wine grapes, bought wine grapes from other local growers, and shipped the grapes to the midwest and the east coast, where customers made wine with them for their home use under an exception to Prohibition.   Ernest and Julio became involved in this shipping business during the mid- to late-1920s.   While Joseph Sr. did have a brush with the law for bootlegging during Prohibition, there is no other evidence that he and Susie sold wine after 1919
                

In a holographic will, Susie left each son a one-third interest in her estate. On April 4, 1935, the probate court approved the first and final account of Susie's estate, and entered a decree distributing a one-third interest in her stock and real property holdings to each son. The accounting for Susie's estate listed no wine business nor assets of a wine business.

Joseph Sr. died intestate. Ernest obtained a court order authorizing him to continue Joseph Sr.'s business, described as "that of raising grapes and other crops and farming and selling produce." On April 29, 1935, the probate court approved Ernest's second and final account of Joseph Sr.'s estate, and entered a decree distributing a one-third interest in the remaining assets of the estate to each son. The account did not list any wine business or assets of a wine business, but it did list "E. & J. Gallo Winery" as a creditor of the estate.

"E. & J. Gallo Winery" refers to the partnership Ernest and Julio formed after their parents' deaths. The brothers had obtained a license to establish a bonded winery which could lawfully produce wine for medicinal purposes during Prohibition. Prohibition ended on December 5, 1933, and on that day the E. & J. Gallo Winery began shipping wine out of Modesto in barrels marked GALLO.

During all of this, Joseph was still a child. He was only 13 years old when his parents died, and Ernest and Julio did not make him a partner in the Winery. He lived with his brothers, who became his legal guardians by order of the probate court on February 19, 1934. Ernest and Julio did not conduct a model guardianship. They filed no inventory of the guardianship estate at its inception, nor did they file any annual accountings during the ensuing years of the guardianship. In 1936 they obtained an order from the probate court authorizing them to sell the shares of stock Joseph had inherited from Susie, but then loaned the proceeds to the Winery without the court's authorization. Joseph attained majority on September 11, 1940, and on June 20, 1941, Ernest and Julio filed a first and final account of the guardianship.

A month after Ernest & Julio filed the account, Joseph and his counsel filed objections, claiming, in addition to the proceeds of Joseph's stock, the sum of $25,000 as his portion of the profits generated by the Winery through unauthorized investment of guardianship funds. On July 2, 1941, the probate court entered its decree, adopting Ernest and Julio's account, as supplemented by a payment from the Winery to Joseph of $20,000. This sum was declared to be "in full and complete settlement of" Ernest and Julio's liability arising from their use of Joseph's capital for investment in the Winery.

II. The Gallo Brothers Develop their Businesses

Ernest and Julio continued to develop their wine business through the 1930s, selling Including its first trademark in 1942, the Winery has acquired eleven different registered trademarks containing GALLO. Ernest and Julio themselves registered all but one of the eleven. The exception is a trademark initially obtained by a company called Gallo Salame that developed in the late 1940s independently from the Gallo family--nobody in the company bore the name of Gallo. Gallo Salame initially sold salami and other prepared meat products to the service delicatessen trade, but in 1959 it began selling its products directly to consumers. By 1970 Gallo Salame was selling combination packs of sliced cheese and salami or pepperoni, and that year it obtained a registered trademark consisting of a shield with the word "Gallo" in script, together with a depiction of the Golden Gate Bridge and a cable car. In 1979, the Winery sued Gallo Salame for trademark infringement and dilution, and in 1983 the parties settled, with Gallo Salame assigning its registered trademark to the Winery as part of the settlement. The settlement also licensed the GALLO SALAME mark back to Gallo Salame, which continues to manufacture and sell its products under the mark.

                the wine in barrels and tank cars to regional bottlers, who in turn sold the wine under their own trademarks.   It was not until 1940, when the Winery began its own bottling operations, that the GALLO label was seen by the consuming public.   In 1942, the Winery obtained its first registered trademark including the word GALLO.   The following year Ernest and Julio moved the bottling operations to Modesto, and by the early 1960s, they had established distribution of the Gallo brand in all major U.S. markets.   Today, following several decades of extensive advertising and promotion, GALLO wine has become the best-selling brand in the country
                

Joseph's involvement with the Winery was limited. He lived and worked with his brothers on the ranches and in the Winery until he entered military service in 1942. Four years later, Joseph returned to manage several of the Winery's ranches. At some point during the early development of the Winery, Ernest and Julio invited Joseph to become a partner, but he declined.

Joseph managed the Winery's ranches until 1967, during which time he purchased and farmed several pieces of land, including vineyards and a dairy. In many of these ventures he used his name, "Joseph Gallo", as a trade name. He sold grapes from his vineyards--many to the Winery--under the trade name "Joseph Gallo Vineyards", and he operated his ranches under similar trade names incorporating his own name. In 1955, he established the "Gallo Cattle Company", a partnership, and he proceeded to raise and sell dairy cattle on the land not dedicated to the vineyards. In the late 1970s, the Gallo Cattle Company established a large dairy, and in 1983, it entered the cheese business.

Joseph's original intention in entering the cheese business was to sell cheese in large blocks to commercial purchasers, who would then repackage the cheese for consumer distribution. However, in 1984, Joseph began distributing consumer size packages of cheese for the retail market, labeled with a trademark consisting of his name, "Joseph Gallo", and a pastoral scene of cows and a dairy barn.

Later that year, Ernest and Julio learned that Joseph was selling retail cheese labeled JOSEPH GALLO, and Ernest told him that this infringed the Winery's trademarks and...

To continue reading

Request your trial
431 cases
  • Upper Deck Co. v. Panini Am., Inc., Case No.: 20cv185-GPC(KSC)
    • United States
    • U.S. District Court — Southern District of California
    • 29 Junio 2020
    ...likelihood of consumer confusion. The same analysis applies here and Defendant's argument fails. See E. & J. Gallo Winery v. Gallo Cattle Co. , 967 F.2d 1280, 1288 n. 2 (9th Cir. 1992) ("the elements of infringement and unfair competition claims are essentially the same; the rulings stand o......
  • In re Wright
    • United States
    • U.S. Bankruptcy Court — Central District of California
    • 24 Octubre 2006
    ...customers about the source of the products." Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1391 (9th Cir.1993) (quoting E. & J. Gallo Winery, 967 F.2d at 1290). Likelihood of confusion "exists when customers viewing [a] mark would probably assume that the product or service it represe......
  • Stone Brewing Co. v. Millercoors LLC
    • United States
    • U.S. District Court — Southern District of California
    • 27 Marzo 2020
    ...courts will presume an intent to deceive the public." Official Airline Guides , 6 F.3d at 1394 (citing E. & J. Gallo Winery v. Gallo Cattle Co. , 967 F.2d 1280, 1293 (9th Cir. 1992) ). This factor is of "minimal importance." GoTo.com, Inc. , at 1208 (declining to attempt to divine the defen......
  • Aurora World Inc. v. Ty Inc.
    • United States
    • U.S. District Court — Central District of California
    • 15 Diciembre 2009
    ...Rather, they “are intended to guide the court in assessing the basic question of likelihood of confusion,” E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th Cir.1992). The court need not address all of the factors, nor must plaintiff establish that each weighs in its favor ......
  • Request a trial to view additional results
2 books & journal articles
  • Table of Cases
    • United States
    • James Publishing Practical Law Books Preparing for Trial in Federal Court
    • 4 Mayo 2010
    ...v. Watergate at Landmark Condominium, 24 F.3d 635, 640 (4th Cir. 1994), Form 11-04 E.J. Gallo Winery v. Gallo Cattle Company, et al., 967 F.2d 1280, 1290 (9th Cir. 1992), Form 7-10 E.J. Stewart, Inc. v. Aitken Prods., Inc. , 607 F.Supp. 883, 894 (C.D. Pa. 1985), §§4:52, 4:63 E.R. Squibb and......
  • Motions
    • United States
    • James Publishing Practical Law Books Preparing for Trial in Federal Court
    • 4 Mayo 2010
    ...of the marks is likely to confuse customers about the source of the products.” E.J. Gallo Winery v. Gallo Cattle Company, et al. , 967 F.2d 1280, 1290 (9th Cir. 1992) in order to prevail on a claim of infringement and unfair competition. In determining whether there is a likelihood of confu......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT