Nora Beverages, Inc. v. Perrier Group of America, Inc.

• Citation: 164 F.3d 736
• Decision Date: 30 December 1998
• Docket Number: Docket No. 98-7041
• Parties: NORA BEVERAGES, INC., Plaintiff-Appellant, v. PERRIER GROUP OF AMERICA, INC., Poland Spring Corporation, Zephyrhills Corporation, Arrowhead Water Corporation, and Calistoga Mineral Water Company, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 736

164 F.3d 736

49 U.S.P.Q.2d 1385

NORA BEVERAGES, INC., Plaintiff-Appellant, v. PERRIER GROUP OF AMERICA, INC., Poland Spring Corporation,

Zephyrhills Corporation, Arrowhead Water

Corporation, and Calistoga Mineral Water

Company, Inc., Defendants-Appellees.

Docket No. 98-7041.

United States Court of Appeals,

Second Circuit.

Argued Sept. 14, 1998.

Decided Dec. 30, 1998.

Martin Flumenbaum, Paul, Weiss, Rifkind, Wharton & Garrison, New York, N.Y. (Brad S. Karp, Lynn B. Bayard of Counsel; Howard G. Slavitt, Steven J. Wadyka, Jr., Slavit & Gill, P.C.) for Plaintiff-Appellant.

Jeffrey M. Garrod, Orloff, Lowenbach, Stifelman & Siegel, P.A., Roseland, N.J. (Linda B. Lewinter, Craig A. Ollenschleger of Counsel) for Defendants-Appellees.

Before: CABRANES and POOLER, Circuit Judges and TRAGER, District Judge. ^*

POOLER, Circuit Judge:

Plaintiff Nora Beverages, Inc., ("Nora") appeals from a grant of summary judgment entered on December 10, 1997, in the United States District Court for the District of Connecticut (Ellen Bree Burns, Judge ). The judgment dismissed Nora's trade dress and Connecticut statutory and common law claims against defendants Perrier Group of America, Inc. ("PGA"), Poland Spring Corporation ("Poland Spring"), Zephyrhills Corporation ("Zephyrhills"), Arrowhead Water Corporation ("Arrowhead"), and Calistoga Mineral Water Company, Inc. ("Calistoga") (collectively, "Perrier"). We affirm the grant of summary judgment on most of Nora's state law claims but we vacate and remand Nora's trade dress claim for further findings and reverse the district court's entry of judgment on one of Nora's two contractual claims. Remanding the trade dress claim requires that we also remand one of Nora's state statutory claims.

BACKGROUND

Nora, a Canadian company with its principal place of business in Quebec, Canada, bottles at the source and markets a natural spring water brand known as NAYA. ¹ Since beginning its spring water operation in May PGA, a Delaware corporation with its headquarters in Connecticut, distributes and markets various brands of domestically produced bottled water throughout the United States. PGA's former subsidiary corporations--Poland Spring, Zephyrhills, Arrowhead, and Calistoga--are all American companies principally engaged in the distribution and marketing of spring water under various brand names in diverse regions of the United States. Although Poland Spring, Zephyrhills, Arrowhead, and Calistoga all sold spring water in the United States prior to Nora's entry into the market, defendants did not sell spring water in "convenience-size" 1.5-liter bottles.

                1986, Nora has bottled and sold NAYA water in 1.5-liter clear plastic bottles, made from a resin called polyethylene terephthalate ("PET").  Prior to introducing NAYA in 1986, Nora reviewed approximately fifty to sixty potential designs, ultimately adopting a 1.5-liter PET ribbed bottle with a "waist" that created a "bottle upon bottle" effect. 2  The NAYA bottle bears a dark blue label with a lighter blue insert containing the word "NAYA" in dark blue letters outlined in white
                

Wishing to enter the market for convenience-size spring water, PGA--in 1986 and 1987--negotiated with both Johnson Controls, Inc. ("Johnson") and Sewell Plastics, Inc. ("Sewell") to produce PET bottles for its waters. In dealing with both bottlers, PGA indicated a preference for all or part of the NAYA bottle design. PGA selected Sewell as its bottler, but Sewell proved technically unable to perform the work.

Thus, in early 1988, PGA began to discuss with Nora the possibility of Nora supplying bottles to PGA and its subsidiaries. On March 1, 1988, Nora sent Perrier a letter offering two prices for its bottles: (1) to the extent that defendants furnished their own water, Nora would bottle it in 1.5-liter bottles for $3.25 per case and (2) Nora would provide both NAYA water and bottling services for $3.75 per case. Nora proposed that it would provide approximately three million bottles during 1988 and indicated that its quote would be valid for one month. Nora also promised PGA a quote on twelve-ounce bottles within three weeks.

On March 23, 1988, Frank Szczesniak, PGA's purchasing manager, wrote to Dr. Malek Basbous, a former president of Nora who acted on Nora's behalf in the contract negotiations with PGA:

This letter will serve as our agreement and understanding between Nora Beverages and the Perrier Group regarding contract packaging a 1.5-liter container.

-- The contract price will be $3.25 per case without water or $3.75 using your water.

-- The contract price will include a bottle, label, case, and cap.

-- Our projections are 1/2 to 1 million cases for the 1.5 liter container.

-- We expect to make the initial finished product shipments the first week in May.

-- We will provide Poland Springs water in 6300 tankers to your Mirabel facility. The Zephyrhills product will use your water.

Over the next several months, the parties circulated draft contracts for some of the PGA subsidiaries. In a communication received by Basbous on April 6, 1988, Nora's president, Ahmad Hbouss, confirmed that Basbous would receive a five percent commission "in the event of conclusion of a contract between our company and Perrier." On May 17, 1998, Naji Barsoum, Nora's export manager, sent Jean-Guy Lord, Nora's executive vice-president, an office memorandum indicating that negotiations with PGA had stopped.

PGA selected Johnson to supply its bottles in May 1988. In early 1989, defendants introduced convenience-size bottles of Poland Spring, Arrowhead, and Zephyrhills water, packaged in 1.5-liter ribbed PET bottles. PGA's bottles--with the exception of distinctive labels--are virtually identical to Nora filed a complaint in the district court for the District of Connecticut on December 3, 1991. Nora sued (1) all defendants for unjust enrichment, trade dress infringement, and trade secret misappropriation, (2) all defendants except Calistoga for breach of confidential relationship, (3) PGA and Poland Spring for violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. St. Ann. § 42-110a et seq., and (4) PGA for breach of contract (with respect to both the 1.5-liter and twelve-ounce bottles) and in quantum meruit. On October 13, 1994, defendants moved for summary judgment dismissal of Nora's complaint. Nora cross-moved for partial summary judgment on its 1.5-liter contractual claim and its twelve-ounce contractual claim with respect to the Poland Spring and Zephyrhills brands only and on its trade dress infringement claim against all defendants.

                NAYA's. 3  Both the NAYA bottles and the various PGA brand bottles are made of clear PET.  The top half of each bottle has an indentation for the product's label.  Below the label is a rib and below the rib is an indented rib or "waist."   Below the waist is a series of ribs
                

In a December 3, 1997, ruling, the district court granted defendants' motion for summary judgment and denied plaintiff's motion for partial summary judgment. The court found that (1) Nora failed to establish the formation of a contract for sale of either the 1.5-liter or the twelve-ounce bottles because the March 23, 1988, letter was "merely a predicate to further negotiations among the parties," the Statute of Frauds barred reliance on the March 23, 1988, letter, and the March 23 letter could not be construed as a requirements contract; (2) the facts did not support a claim for quantum meruit or unjust enrichment; (3) Nora's trade dress claim failed because its trade dress was generic and Nora failed to demonstrate consumer confusion; (4) Nora could not establish a claim for trade secret misappropriation because Nora voluntarily showed its 1988 marketing plan--the alleged trade secret--to defendants and the plan also was readily ascertainable by observation of the marketplace; (5) Nora's common law claim for "breach of confidential relationship" duplicated its statutory claim for trade secret misappropriation and was preempted by the governing statute; and (6) because Nora's CUTPA claim relied on acts incorporated from earlier counts of the complaint, which the court previously had dismissed, the CUTPA claim must also be dismissed. Nora appealed from the December 10, 1997, judgment incorporating the district court's holding.

DISCUSSION

I. Summary Judgment Standard

We review de novo the district court's grant of summary judgment. Adams v. Dep't of Juvenile Justice of the City of New York, 143 F.3d 61, 65 (2d Cir.1998). Several often-cited principles guide our analysis. First, summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. Second, the movant has the burden of showing that no disputes of material fact exist. Id. However, as to issues on which the non-moving party bears the burden of proof, the moving party may simply point out the absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Finally, the court must "resolve[ ] all ambiguities and draw[ ] all factual inferences in favor of the nonmoving party." Adams, 143 F.3d at 65.

II. The Trade Dress Infringement Claim

Nora claims that the defendants violated Section 43(a) of the Lanham Trademark Act ("Lanham Act"), 15 U.S.C. § 1125(a), by copying Nora's trade dress. ⁴ In its complaint Trade dress "encompasses the design and appearance of the product together with all the elements making up the overall image that serves to identify the product presented to the consumer ... includ[ing] the appearance of labels, wrappers and containers used in packaging [the] product." Fun-Damental Too, Ltd. v. Gemmy Indus. Corp., 111 F.3d 993, 999 (2d Cir.1997) (citing Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.3d 27, 31 (2d Cir.1995)). The Lanham Act protects trade dress that (1) is...