Menendez v. Faber, Coe & Gregg, Inc.

• Decision Date: 14 June 1972
• Docket Number: 61 Civ. 584,No. 61 Civ. 472,61 Civ. 869 and 61 Civ. 3336.,61 Civ. 582,61 Civ. 849,61 Civ. 848,61 Civ. 583,61 Civ. 850,61 Civ. 472
• Citation: 345 F. Supp. 527
• Parties: Alonso MENENDEZ et al., Owner-Plaintiffs, The Republic of Cuba et al., Interventor-Plaintiffs, v. FABER, COE & GREGG, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

345 F. Supp. 527

Alonso MENENDEZ et al., Owner-Plaintiffs, The Republic of Cuba et al., Interventor-Plaintiffs, v. FABER, COE & GREGG, INC., et al., Defendants.

Nos. 61 Civ. 472, 61 Civ. 582, 61 Civ. 583, 61 Civ. 584, 61 Civ. 848, 61 Civ. 849, 61 Civ. 850, 61 Civ. 869 and 61 Civ. 3336.

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

March 17, 1972.

Supplemental Memorandum June 14, 1972.

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Brush & Bloch, New York City (Jac M. Wolff, New York City, Monroe P. Bloch, of counsel), Hubbell, Cohen & Stiefel, New York City (Myron Cohen, Maurice B. Stiefel, Irving Newman, New York City, of counsel), for owner-plaintiffs.

Rabinowitz, Boudin & Standard, New York City (Victor Rabinowitz, Leonard B. Boudin, Kristin Booth Glen, David Rosenberg, New York City, of counsel), for interventor-plaintiffs.

Paul, Weiss, Goldberg, Rifkind, Wharton & Garrison, New York City (Allan Blumstein, David A. Rahm, New York City, of counsel), for defendant Faber, Coe & Gregg, Inc.

Strasser, Spiegelberg, Fried & Frank, New York City (Victor S. Friedman, Matthew Gluck, New York City, of counsel), for defendant Alfred Dunhill of London, Inc.

Solinger & Gordon, New York City (John C. Grosz, New York City, of counsel), for defendant Saks & Co.

OPINION

FREDERICK van PELT BRYAN, District Judge:

These nine consolidated actions were tried without a jury.¹ They involve complicated controversies arising out of the take-over by the Castro Government of Cuba of the five leading manufacturers of Havana cigars whose factories, businesses and principal assets were situated in Cuba, and whose products were shipped to importers in this country.

Three of these five Cuban business entities, F. Palicio y Compania, S.A. (Palicio), Tabacalera Jose L. Piedra, S.A. (Tabacalera) and Por Larranga, S.A. (Larranga), are corporations organized and existing under Cuban law. The fourth, Cifuentes y Compania (Cifuentes), is a Cuban partnership. The fifth, Menendez, Garcia y Compania, Limitada (Menendez) is an entity unfamiliar to American law, designated as a "limited liability company" or a "limited partnership" under Cuban law. At the time of the take-over substantially all of the stockholders, officers and directors of the three corporations, the partners in the partnership and the owners of the limited liability company were Cuban citizens residing in that country. None were American citizens.

For many years these entities manufactured, in Cuba, Havana cigars which were of the highest quality and reputation throughout the cigar-smoking world.² These cigars, sold under trademarks registered in the United States Patent Office, Cuba and other countries, were sold in large quantities to importers in the United States, principally the defendants, Faber, Coe & Gregg (Faber), Alfred Dunhill of London (Dunhill) and Saks & Company (Saks).

On September 15, 1960, the Castro Government of Cuba, acting under Cuban law, "intervened" these five entities?€” took possession of their businesses and assets and ousted the owners and those who had managed and controlled the enterprises on their behalf. The Cuban Government designated so-called "interventors" for each of the entities, who assumed complete possession and control of the businesses and assets and continued to operate them on behalf of the Government, to the exclusion of the officers, directors, shareholders, partners or other persons who otherwise would have continued to manage and conduct them.

The interventions, in practical effect, were complete confiscations. The owners were ousted without their consent from all properties and excluded from any participation in the businesses. Their rights to any receipts or profits were eliminated and no compensation was provided.

Subsequent to intervention, the interventors, acting on behalf of the Cuban Government, continued to manufacture cigars in the Cuban plants taken over and continued to export them under the same names and trademarks to the defendant-importers in the United States. The importers accepted the cigars shipped by the interventors but have not as yet paid for them and substantial sums remain due and owing for the purchase price of such cigars.

Following the interventions of September 15, 1960, most of those who had owned and controlled the five Cuban entities fled to the United States where they retained the New York law firm of Brush & Bloch to represent their interests. The nine actions now before me were commenced in this Court by Messrs. Brush & Bloch in the names and on behalf of the respective entities and their owners in the United States against the three defendant-importers. These plaintiffs sought (1) an injunction restraining the defendant-importers from infringing the plaintiffs' United States trademarks and from paying to anyone else the price of goods belonging to plaintiffs, originating from their plants, or bearing their United States trademarks; (2) an accounting, damages, and any sums found to be due to plaintiffs; and (3) the purchase price or value of cigars bearing plaintiff's trademarks and shipped from their plants in Cuba.³

Shortly after these nine actions were started, an action was brought in this Court in the names of these five Cuban entities by Rabinowitz & Boudin, a New York law firm, as attorneys for the interventors who had continued the operation of these businesses on behalf of the Cuban Government. Named as defendants were the members of the law firm of Brush & Bloch. Plaintiffs in that action sought (1) an injunction against Brush & Bloch restraining them from prosecuting the nine actions which they had commenced in this Court in the names of the entities; and (2) an order directing that the attorneys for the interventors, Rabinowitz & Boudin, be substituted as attorneys for the plaintiffs in the original nine actions.

The nine pending actions now before me were, for obvious reasons, held in abeyance pending final determination of the action brought by the interventors represented by Rabinowitz & Boudin against Brush & Bloch. The facts and the law in that case are fully discussed in my opinion, F. Palicio y Compania, S.A., et al. v. Brush et al., 256 F.Supp. 481 (S.D.N.Y.1966), affirmed on opinion below, 375 F.2d 1011 (2d Cir.), cert. denied, Brush v. Republic of Cuba, 389 U.S. 830, 88 S.Ct. 95, 19 L.Ed.2d 88 (1967). It is unnecessary to repeat that discussion here. After extensive proceedings before me, final judgment in that action was entered holding that:

1. The interventors, through their attorneys Rabinowitz & Boudin, were entitled to pursue the claims for debts due from the American importers of Cuban cigars shipped to them by the interventors after intervention had taken place. The owners of the intervened entities were not entitled to pursue such claims.

2. The former owners, through their attorneys Brush & Bloch, were entitled to pursue claims for trademark infringement asserted in the pending actions and the interventors were not entitled to pursue such claims. However, the leave given to the owners to pursue the trademark infringement claims was not to be construed as a definitive holding that they were in fact the owners of the trademarks or were entitled to any rights thereunder. That issue remained to be litigated and determined in these actions together with questions of infringement.

Since the importers who are defendants in these nine pending actions were not parties to the action brought by the interventors against Brush & Bloch, and had not been heard, that decision was confined to rights as between the interventors, on the one hand, and the former owners of the entities, on the other. The defendant-importers were not precluded from raising and litigating in the nine pending actions any issues they might choose to raise between themselves and the sets of plaintiffs?€”the interventors and the owners of the entities.

Following the entry of final judgment in Palicio v. Brush & Bloch, appropriate steps were taken to adjust the posture of the nine actions now being decided, to conform to that decision. The nine actions were consolidated. The original plaintiffs (the owner-plaintiffs), represented by Brush & Bloch, were permitted to continue as parties plaintiff in the actions and to assert their claims for trademark infringement and unfair competition. The interventors and the Republic of Cuba (the interventor-plaintiffs) were permitted to intervene in the action as additional parties plaintiff and to assert claims for the purchase price of cigars shipped to the importer-defendants by the interventors after September 15, 1960, the date of intervention. These claims aggregated some $700,000, less various offsets claimed by the defendant-importers.

When Palicio v. Brush & Bloch was decided, it had been erroneously understood by all the parties to that action and by the Court that the amounts owed by the defendant-importers on the date of intervention for cigars shipped by the owner-plaintiffs prior to intervention were so small as to be of no significance. In an effort to avoid confusing further the already complex issues in that case, the interventors agreed to turn over to the owners this small sum and this issue was thus removed from that case. 256 F.Supp. 489, n. 8. For this reason, the question of who was entitled to pursue claims for the price of cigars shipped by the intervened entities before the intervention occurred was not passed upon in Palicio v. Brush & Bloch.

However, it subsequently developed that all parties in Palicio v. Brush & Bloch were under a complete misapprehension as to the facts on this subject. It now appears that the defendant-importers at the date of intervention had owed some $477,600 for shipments of cigars made prior to that date. The defendant-importers had paid out these amounts on the premise that such payments discharged their debts for such cigars. On the basis of these newly...