Jim Bouton Corp. v. Wm. Wrigley Jr. Co.
| Decision Date | 03 May 1990 |
| Docket Number | No. 560,D,560 |
| Citation | 902 F.2d 1074 |
| Parties | JIM BOUTON CORPORATION, a New Jersey Corporation, Plaintiff-Appellee, v. WM. WRIGLEY JR. COMPANY, a Delaware Corporation, and Amurol Products Company, an Illinois Corporation, and subsidiary of Wm. Wrigley Jr. Company, Defendants. Appeal of AMUROL PRODUCTS COMPANY. ocket 89-7805. |
| Court | U.S. Court of Appeals — Second Circuit |
Steven B. Pokotilow, New York City (Blum Kaplan, Anita K. Yeung, New York City, of counsel), for plaintiff-appellee.
John G. Koeltl, New York City (Jonathan H. Hines, Colby A. Smith, Debevoise & Plimpton, New York City, of counsel), for defendant-appellant.
Before VAN GRAAFEILAND, CARDAMONE and ALTIMARI, Circuit Judges.
Amurol Products Company appeals from a judgment of the United States District Court for the Southern District of New York which followed a nonjury trial before Judge Leisure. The judgment awarded Jim Bouton Corporation (JBC) substantial damages and gave it injunctive relief in its action for breach of contract. It also dismissed Amurol's counterclaim seeking recovery against JBC on a theory of unjust enrichment. We reverse those portions of the judgment that awarded damages and granted injunctive relief to JBC. We affirm the dismissal of Amurol's counterclaim. We also affirm the dismissal of the causes of action asserted in Counts II and III of JBC's amended complaint.
Jim Bouton, a former major league baseball player, is president and 50 percent shareholder of JBC. The only other shareholder is Rob Nelson, a former teammate of Bouton. Amurol, a wholly-owned subsidiary of Wm. Wrigley, Jr. Company, which was relieved of liability by the district court, is engaged in the manufacture of candy, gum, and other food products. Bouton and Nelson formed JBC in 1979 to capitalize on their idea of marketing bubble gum that resembles chewing tobacco. In 1979, Bouton filed a trademark application for "BIG LEAGUE CHEW," shredded bubble gum packaged in a pouch. JBC's agent contacted Amurol about marketing the product. Amurol already had developed the concept of shredded bubble gum, but expressed interest in using the BIG LEAGUE CHEW trademark. The parties entered into a series of licensing agreements which culminated in a formal agreement signed in June 1982, but effective as of July 1981 (the 1981 agreement).
Under the agreement, JBC was to receive royalties on Amurol's sale of BIG LEAGUE CHEW. The royalties were calculated on a sliding scale, 2.5 percent for the first $20 million in sales, 3.5 percent on the second $20 million, and 5 percent on sales over $40 million. JBC retained the right to approve all advertising. Finally, the document provided that it was the entire understanding between the parties and could not be modified except in writing.
Bouton, as president of JBC, frequently objected to proposed advertising. However, because Amurol sometimes did not consult Bouton until substantial time and money had been invested in a particular advertising program, on at least two occasions Bouton consented to advertising he did not like, reserving the right to exercise disapproval during the ensuing season. In 1984, a dispute arose over a promotional campaign based on a "Baseball Bonanza" giveaway game. Amurol organized the campaign, announced its use to its brokers, and purchased media time for commercials, but Bouton refused to consent to the format. A.G. Atwater, an Amurol executive, contacted Bouton by telephone on February 22, 1984, to try to obtain his consent. After some discussion, they orally agreed that JBC would relinquish advertising approval rights in return for a flat 5 percent royalty on all sales of BIG LEAGUE CHEW. Atwater further agreed orally that Amurol would refrain from marketing any other shredded bubble gum that would compete with BIG LEAGUE CHEW, but that Amurol could continue to sell two products, "BUCKAROO CHEW" and "POPEYE", which already were on the market. Bouton then gave his approval to run the Baseball Bonanza advertising campaign.
Following this oral conversation, Atwater sent Bouton a mailgram dated February 22, 1984, which read as follows:
This is the text we talked about. Will be in touch with Gilson to draw up final papers next week.
If Amurol Products Company elects to continue advertising, it will create and run advertising for BIG LEAGUE CHEW with a masculine sports theme featuring the brand in a quote macho unquote image.
If promotional advertising is run, it will make every attempt to feature the brand in the same image.
Any promotions to the consumer will continue to feature prizes which are sports-oriented and in keeping with the image of the brand.
Amurol, in consideration of Jim Bouton Corporation relinquishing all approval of advertising and promotions, will, during the life of the contract, refrain from introducing another quote shredded unquote bubble gum which would compete with BIG LEAGUE CHEW. POPEYE and BUCKAROO CHEW, already on the market can continue to be produced and sold.
JBC's contention, as set forth in the Amended Pre Trial Order, is that it entered into a "valid binding and enforceable agreement" with Amurol on February 22, 1984, the terms and conditions of which were "set forth, memorialized, and incorporated" in the February 22 mailgram. Although the district court's opinion is somewhat obscure on this point, a fair reading of it indicates that the district court agreed. We disagree.
The 1981 agreement, in which millions of dollars were at stake, contains thirty-three paragraphs and takes up seventeen pages of the printed appendix on appeal. The parties, experienced in the ways of business, simply could not have intended that the cursory mailgram message, which did not even discuss a change in plaintiff's substantial royalties, constituted a legally enforceable modification of the carefully prepared 1981 contract. The mailgram's reference to the drawing up of "final papers" by Amurol's lawyer evidences a clear intent to the contrary. The word "final" has the commonly understood lay meaning of "conclusive," "decisive," or "definitive." Webster's Third New International Dictionary 851. In legal parlance, its meaning is substantially the same. See People v. Gaggi, 104 A.D.2d 422, 424, 478 N.Y.S.2d 732 (1984) (mem.); Standard Oil Co. v. United States, 81 Ct.Cl. 174, 10 F.Supp. 550, 560 (Ct.Cl.1935); Black's Law Dictionary, 757 4th ed.
The conduct of the parties which followed the dispatch of the mailgram demonstrates that they recognized the need for a conclusive, decisive and definitive document prepared by, or under the supervision of, their lawyers. At Bouton's request, a copy of the mailgram was sent directly to James Silberman, JBC's lawyer, and Silberman was JBC's spokesman in most of the negotiations that followed. Silberman promptly questioned the absence of any provision in the mailgram for increased royalties and also informed Atwater that JBC wanted to retain the right to restrict the use of the package in connection with the sale of other products and to approve package graphics. Moreover, although in the final paragraph of the mailgram JBC is said to have relinquished all right to approve advertising and promotions "during the life of the contract", Atwater believed it necessary to obtain a letter from Silberman specifically approving the Baseball Bonanza commercial. On February 28, 1984, Silberman sent Atwater a letter reading as follows:
You have requested written confirmation that Amurol can use for 1984 the TV advertisement previously submitted to Jim Bouton based on the understandings as to modification of the Agreement which is to be reduced to writing in due course.
Part of the understanding is set forth in your Mailgram of February 22, 1984. The understanding is also based on the following conditions:
1. Relinquishment of approval of advertising and promotion covers all "Articles" (BIG LEAGUE CHEW shredded bubble gum and BIG LEAGUE PLUG candy).
2. On all sales of "Articles" for the period January 1, 1984 through the end of the Agreement, the payment under paragraph 4 will be five percent (5%) on Net Sales.
3. Relinquishment of approval of advertising and promotion shall not be construed as a relinquishment of any other rights that JBC has under the Agreement including:
(a) the right to prohibit use of the package (exterior or within the pouch) to sell another product without a separate agreement; and
(b) the right to approve package graphics.
If your understanding comports with the above, we will operate on the assumption that an acceptable writing will come into being and, on behalf of The Jim Bouton Corporation, I hereby give Amurol authorization to run the TV ad for 1984.
JBC's contention, as set forth in the Amended Pre Trial Order, is that the foregoing letter "reiterated and clarified" the terms of the mailgram and incorporated "related conditions" that were "implied" in the mailgram. This simply is not so. Silberman's letter recognized that only "[p]art of the understanding" was contained in the mailgram. In addition to the royalty provisions, which were not referred to at all in the mailgram, Silberman's letter proposed that JBC would retain the right to restrict the use of the gum packages and their graphics or appearance, two additional matters concerning which the mailgram was completely silent. Moreover, the authorization given for the Baseball Bonanza commercial was only for the year 1984, not for the "life of the contract," thus indicating that JBC was acting under the assumption that it had not relinquished its right to reject other advertisements or this one in the years following 1984. Lastly, and most importantly, an "acceptable writing" between the parties was not to come into being unless the contents of the letter met with Amurol's approval. Significantly, the contents did not meet with Amurol's approval. See Willmott v. Giarraputo, 5 N.Y.2d 250,...
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