Professional Sound Services, Inc. v. Guzzi

• Decision Date: 27 December 2004
• Docket Number: No. 02 CIV. 8428(DC).,02 CIV. 8428(DC).
• Citation: 349 F.Supp.2d 722
• Parties: PROFESSIONAL SOUND SERVICES, INC., Plaintiff, v. Roland J. GUZZI et al., Defendants.
• Court: U.S. District Court — Southern District of New York

349 F.Supp.2d 722

PROFESSIONAL SOUND SERVICES, INC., Plaintiff, v. Roland J. GUZZI et al., Defendants.

No. 02 CIV. 8428(DC).

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

December 27, 2004.

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Stephen E. Feldman, P.C. by Robert H. Morse, Esq., New York City, for Plaintiff.

Meister Seelig & Fein LLP by Christopher J. Lutzo, Esq., Howard S. Koh, Esq., New York City, for Defendants.

OPINION

CHIN, District Judge.

In this case, plaintiff Professional Sound Services, Inc. ("PSS") alleges product disparagement and false designation of origin under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and makes various state law claims as well. Defendants move for summary judgment dismissing all claims. For the reasons that follow, the motion is granted as to the two Lanham Act claims, and the Court declines to exercise subject matter jurisdiction over the remaining state law claims. The second amended complaint is dismissed.

BACKGROUND

A. The Facts

Construed in the light most favorable to plaintiff, the non-moving party, the facts are as follows:

1. The Parties

PSS is a New York corporation in the business of sales, rental, and repair of professional on-location sound recording equipment. (Second Am. Comp. ¶ 13; Topham Dep. at 11). Richard Topham is the president of PSS. (Topham Dep. at 10). Defendant Gotham Sound and Communications, Inc. ("Gotham") is a New York corporation also involved in the sales and rental of professional on-location sound recording equipment, in the same market as PSS. (Second Am. Comp. ¶ 15; Schneider Dep. at 3). Defendants Roland J. Guzzi and Peter Schneider are shareholders of Gotham. (Defs.' 56.1 Statement ¶ 8).¹ Guzzi is a former employee of PSS and is Topham's cousin. (Defs.' 56.1 Statement ¶¶ 11, 12).

2. The Disparaging Comment

Guzzi left PSS on January 11, 2002. (Guzzi Dep. at 9-10). Sometime thereafter, Guzzi initiated contact with at least one of its customers, making the following statement: "Rich lies to his customers about the prices he gets when he resells their equipment on consignment, for which by agreement he is only supposed to take a 20% commission. He actually resells their equipment at a much higher price than he tells these customers, and then pockets the difference." (hereinafter "disparaging statement"). (Mohan Decl. ¶ 5). PSS alleges that Guzzi made the disparaging statement to "virtually all" of its customers. (Second Am. Compl. ¶ 50).² PSS makes this allegation with no evidentiary support; as discussed below, the only evidence is the affidavit of one customer. Guzzi has denied ever making the statement, but for purposes of this motion, I assume he did make the statement to at least one customer.

3. Plaintiff's "Mark"

PSS alleges that it uses as its trademark the capital letter "S" to identify itself as the source of its products. (Second Am. Compl. ¶ 104). PSS states that it "always" places an "S" on invoices, documents accompanying shipments, and the outsides of packages it sells. (Topham Decl. ¶ 6). PSS would "place[] it in a leading position in front of a few letters that were closely related to the manufacturer's name," followed by a catalog number. (Id. ¶ 5). As an example, PSS states that a product manufactured by Lectrosonics, with catalog number 0211, is resold by PSS with the code "SLEC0211." (Id.). PSS does not allege, nor does the record reflect, that it employed any unique design or stylized appearance of the letter "S." Rather, the letter "S" was either typed in the same basic font as the rest of the invoice, or was handwritten by whichever employee wrote up an order form. (See Defs.' Ex. P). PSS has not registered this trademark. (Defs.' 56.1 Statement ¶ 47; Topham Dep. at 153).

4. Defendants' Use of the Letter "S"

Since its inception in June, 2002, Gotham has used the letter "S" in inventory codes in a similar manner as PSS. (Guzzi Decl. ¶ 16; Defs.' Ex. I; www.gothamsound.com (last visited Dec. 14, 2004)). Gotham's website lists individual items by the name of the manufacturer, with the inventory code below, in smaller, bold font. (Id.).

B. Procedural History

PSS filed its complaint on October 22, 2002, and a first amended complaint on March 3, 2003. Defendants moved to dismiss the first amended complaint, on the basis that the sole federal claim alleged at the time, product disparagement under the Lanham Act, failed to state a claim upon which relief can be granted. The Court granted defendants' motion in part and denied it in part. Prof. Sound Services, Inc. v. Guzzi, No. 02 Civ. 8428(DC), 2003 WL 22097500 (S.D.N.Y. Sept. 10, 2003). Plaintiff's motion to file a second amended complaint, adding the claim of false designation of origin under the Lanham Act, was granted on December 10, 2003.

The parties engaged in discovery and the instant motion for summary judgment followed.

DISCUSSION

First, I set out the legal standard for summary judgment. Next, I discuss separately PSS's two claims under the Lanham Act, for product disparagement and false designation of origin. Finally, I briefly address PSS's state law claims.

A. Summary Judgment Standard

Summary judgment will be granted when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Accordingly, the Court's task is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate if, resolving all ambiguities and drawing all inferences against the moving party, there exists a dispute about a material fact "such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248-49, 106 S.Ct. 2505 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)); accord Bay v. Times Mirror Magazines, Inc., 936 F.2d 112, 116 (2d Cir.1991).

To defeat a motion for summary judgment, however, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus., 475 U.S. at 586, 106 S.Ct. 1348. There is no issue for trial unless there exists sufficient evidence in the record favoring the party opposing summary judgment to support a jury verdict in that party's favor. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505. To that end, any "[a]ffidavits submitted in support of or in opposition to a summary judgment motion must `be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.'" Patterson v. County of Oneida, 375 F.3d 206, 219 (2d Cir.2004) (quoting Fed.R.Civ.P. 56(e)). The requirement set forth in Rule 56 that the affiant have personal knowledge and be competent to testify to the matters asserted in the affidavit "also means that an affidavit's hearsay assertion that would not be admissible at trial if testified to by the affiant is insufficient to create a genuine issue for trial." Id. at 219; see also H. Sand & Co. v. Airtemp Corp., 934 F.2d 450, 454-55 (2d Cir.1991) (hearsay assertion that would not be admissible if testified to at trial is not competent material for a Rule 56 affidavit).

B. Defamation and Disparagement under the Lanham Act

1. Applicable Law

Plaintiff's first cause of action alleges defamation and disparagement in violation of section 43(a)(1)(B) of the Lanham Act. See 15 U.S.C. § 1125(a)(1)(B). The Lanham Act provides in pertinent part that:

Any person who, on or in connection with any goods or services,... uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, service, or commercial activities,

shall be liable in a civil action....

15 U.S.C. § 1125(a).

Hence, in a product disparagement case under the Lanham Act, a plaintiff must show (1) the use of a false or misleading statement of fact (2) in commerce (3) for commercial advertising or promotion (4) resulting in damages. Randa Corp. v. Mulberry Thai Silk, Inc., No. 00 Civ. 4061(LAP), 2000 WL 1741680, at *2 (S.D.N.Y. Nov. 27, 2000). Subjective claims or opinions are not actionable because they are not statements of fact that can be proven true or false. See Groden v. Random House, Inc., 61 F.3d 1045, 1051 (2d Cir.1995) ("statements of opinion are generally not the basis for Lanham Act liability"); Randa Corp., 2000 WL 1741680, at *2; Cytyc Corp. v. Neuromedical Sys., Inc., 12 F.Supp.2d 296, 300-01 (S.D.N.Y.1998); Licata & Co. v. Goldberg, 812 F.Supp. 403, 408 (S.D.N.Y.1993).

To constitute commercial advertising or promotion, a statement must be (1) commercial speech (2) made by a defendant who is a competitor of the plaintiff (3) to influence consumers to buy defendant's goods or services and (4) is disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion. Gordon & Breach Sci. Publishers S.A., STBS v. Am. Inst. of Physics, 859 F.Supp. 1521, 1536 (S.D.N.Y.1994). The level of dissemination required varies depending on the industry involved. Fashion Boutique of Short Hills v. Fendi USA, 942 F.Supp. 209 (S.D.N.Y.1996).

2. Application

PSS claims Guzzi intentionally made the disparaging statement "for the sole purpose of defamation and disparaging [p]laintiff so as to misappropriate [p]laintiff's business." (Pl.'s Mem. at 4). Defendants argue that summary judgment should...